Lane v. Lampkin, 2015 Miss. LEXIS 503 (Oct. 8, 2015)
A Mississippi trial court’s cavalier approach to determining economic damages in a dispute involving allegations of breach of fiduciary duty and usurpation of a business opportunity triggered a petition with the state Supreme Court to clarify the applicable measure of damages. The trial court used the wrong standard and accounting procedures for calculating the loss to the plaintiff, the Supreme Court decided.
The case involved a business that bought and sold rock and was owned in equal measure by two partners. After one partner died in 2006, the surviving partner (defendant) unilaterally set up a new company that assumed the existing company’s operations. The decedent’s estate accused the defendant of violating his fiduciary duty to the old company by usurping a business opportunity and sued for present and future lost profits. The parties’ damages experts disagreed over the proper way of calculating damages.
The trial court dismissed the experts’ arguments over valuation methodology as “just splitting hairs.” “Whether you call it asset based or net book value or lost profits, the Court is merely concerned with how and when to value this business,” the trial court said. In what seemed to be an exercise in splitting the baby, the court performed its own assessment by drawing on parts of both experts’ calculations.
A majority of judges on the Court of Appeals affirmed the trial court’s determination, but a vigorous dissent called the lower court’s approach erroneous under the law and just plain “illogical.”
To read about the final outcome of the case, click here.