Appeals Court Reduces Lost Profits to Account for Fixed Costs
KR Motors, Inc., d/b/a Autohaus of Pompano (“RKR Motors”), appeals a final judgment awarding Associated Uniform Rental & Linen Supply, Inc. (“Associated”), $82,444.00, in lost profits.
RKR Motors, Inc. v Associated Uniform Rental & Linen Supply, Inc.
KR Motors, Inc., d/b/a Autohaus of Pompano (“RKR Motors”), appeals a final judgment awarding Associated Uniform Rental & Linen Supply, Inc. (“Associated”), $82,444.00, in lost profits.
Progressive Child Care Systems, Inc. v. Kids ‘R’ Kids International, Inc.
Court awards lost profits damages for breach of franchise agreement through remainder of 25-year contract term.
Federal Court Issues New Rule for Valuing Stock in Insurance Demutualization
Federal Claims Court rules against long-standing IRS position that stock in insurance company demutualization has a cost basis of zero value.
Structural Polymer Group, Ltd. v. Zoltek Corporation
Expert bases solid lost profits calculations for breach of sales on management-provided projections as well as actual performance data and other corroborating sources.
Tax Court Rejects Appraisal of Donated Stock for Incorrect Premise of Value
Tax Court approves 64% combined discounts (advocated by IRS) for valuing medical service corporation slated for conversion to a nonprofit.
Are Damages Opinions Based ‘Almost Exclusively’ on Management Opinions Too Unreliable?
Lost profits calculations, based exclusively on management projections, called into question by U.S. District Court.
Fisher v. U.S.
Federal Claims Court rules against long-standing IRS position that stock in insurance company demutualization has a cost-basis of zero value.
Bergquist v. Commissioner of Internal Revenue
Tax Court approves 64% combined discounts (advocated by IRS) for valuing medical service corporation slated for conversion to a non-profit.
U.S. Salt, Inc. v. Broken Arrow, Inc.
Lost profits calculations, based exclusively on management projections, called into question by U.S. District Court.
Business Valuation Cases in Brief
Business Valuation Cases in Brief by John J. Stockdale, Jr., JD Estate Valuations In the Estate of Farnam v. CIR, 130 T.C. No. 2 (February 4, 2008), the U.S. Tax Court concluded that loans made to a family business may not be aggregated with equity interests in that business in order to satisfy the 50% ‘‘interest’’ requirement needed to qualify for the family-owned business tax exemption. The court con- cluded that interest as used in ...
Guang Dong v. ACI International, Inc.
In the absence of actual data, expert relies on emails and depositions to arrive at lost profits value.
Holes in Economic Damages Model Preclude Admission under FRE 702
Economic damages models fail for faulty assumptions based on unverified sales forecasts and growth expectations for distributor of surgical instruments.
Fisherman Surgical Instruments, LLC v. Tri-Anim Health Services, Inc.
Economic damages models fail for faulty assumptions based on unverified sales forecasts and growth expectations for distributor of surgical instruments.
Reversal of Fortune: $1.45 Billion Verdict Vacated for Lack of Fraud-Free Valuation
Court reverses $1.45 billion jury verdict based on lack of “fraud-free” valuation of securities.
Court Questions Whether Non-BV Expert May Testify to Lost Profits/Damages
In case of stolen employees (breach of noncompetes), a report from non-BV expert fails to provide reliable basis for lost profits, economic damages calculation.
Two Economic Damages Cases Dismissed for Lack of Reliable Valuation Evidence
As Nancy Fannon explained in her BVU article last month, “What Every Valuation Expert Needs to Know to Prepare a Lost Profits Calculation,” courts have “set the bar high for opinion evidence offered by the damages expert, rejecting speculative and problematic testimony."
Try Hours, Inc. v. David L. Swartz, et al.
The Court of Appeals of Ohio reversed the trial court’s granting of summary judgment for defendants on the basis that plaintiff’s damages were speculative and that the methodology used by plaintiff’s expert to calculate lost profits was flawed. The reviewing court found that the damages calculation gave rise to genuine issues of material fact that precluded the summary dismissal of plaintiff’s claims.
Morgan Stanley & Co. Inc. v. Coleman (Parent) Holdings Inc.
Florida Court of Appeals reverses largest jury verdict to date for economic damages ($1.45 billion) for lack of "fraud-free" evidence related to claims that investment bank helped to fraudulently inflate the value of plaintiff's target acquisition (Sunbea ...
TruGreen Companies, L.L.C. v. Scotts Lawn Service, et al.
In case of stolen employees (breach of non-competes), a report from non-BV expert fails to provide reliable basis for lost profits, economic damages calculation.
Gordon Partners v. Blumenthal
Hedge fund unable to prove damages from securities fraud without an expert analysis of market conditions and effect of public information on stock prices.
‘9/11 Defense’ Fails to Justify Unfair Merger
A “9/11 defense” fails to obviate unfair merger price, and valuation highlights difficulties inherent in assessing specific and small-company risk in overseas markets.
Bero Motors, Inc. v. General Motors Corporation
The Michigan Court of Appeals concluded that a lower court did not abuse its discretion when it admitted economic experts testifying to the quantum of lost profits in this breach of contract action.
Lost Profits Award Based on Comparable Dealerships and Management Projections Affirmed
The Michigan Court of Appeals concluded that a lower court did not abuse its discretion when it admitted economic experts testifying to the quantum of lost profits in this breach of contract action.
Hicks Oil & Butane Co. v. George Garza
The Texas Court of Appeals, Fourth District, reversed a lost profits award to a gasoline dealer because the lost profits evidence was speculative.