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Posted: August 10, 2017

Lost Profits Found to be Recoverable as General, Not Consequential, Damages

On August 3, 2017, Justice Kornreich of the New York County Commercial Division issued a decision in AGE Group, Ltd. v. Martha Stewart Living Omnimedia, Inc., 2017 NY Slip Op 31639(U), holding that lost profits were recoverable as general rather than consequential damages, explaining:

MSLO also wrongly contends that this case may be dismissed if AGE cannot prove, without resort to impermissible speculation, that it suffered damages proximately caused by MSLO’s breach. It is well settled that nominal damages may be awarded on a breach of contract claim. Therefore, summary dismissal is not appropriate.

That said, AGE has developed a record on which it might be capable of proving damages in the form of the profits it would have earned on Pet Product sales had MSLO not breached. It is the law of the case that AGE may seek such damages. Indeed, the only damages AGE could have suffered from MSLO’s breach are the profits it lost the opportunity to make on the MSLO Agreement. Contrary to MSLO’s contentions, where, as here, the lost profits are the direct and immediate fruits of the contract, and not purely related to collateral business dealings, such lost profits are recoverable as general (as opposed to consequential) damages. Even if AGE’s lost profits were considered collateral to the contact because they involved sales to another retailer, they could still be recoverable if (1) it is demonstrated with certainty that the damages have been caused by the breach, (2) the extent of the loss is capable of proof with reasonable certainty, and (3) it is established that the damages were fairly within the contemplation of the parties. These factors are issues for trial and not amenable to resolution on this summary judgment motion. At trial, AGE may seek to recover lost profits if it can establish they were the natural and probable consequence of defendant’s breach.

(Internal quotations and citations omitted) (emphasis added).

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