PROVING AND DEFENDING LOST PROFITS DAMAGES
Hon. Martin “Marty” Lowy
Judge, 101st Judicial District Court
600 Commerce Street, Suite 685
Dallas, Texas 75202
(214) 653-6937
Email: [email protected]
Business Litigation Section
Dallas Bar Association
June 14, 2011
I.
Introduction
Virtually every cause of action that can be asserted seeking monetary relief incorporates as an element of the
claim a requirement of proof by legally competent evidence of some quantum of damages. In many cases, the
damages element of the case is likely to be the most difficult (and expensive) for the plaintiff to prove, and the one
most vulnerable to the defendant’s attack. As in other areas, there is a clear trend on the part of the appellate courts
towards increasing use of Rule 702 gate-keeping standards and legal sufficiency review of admitted evidence to
eliminate the damages element of plaintiffs’ verdicts and judgments, or to sustain summary judgments or judgments
n.o.v. on similar grounds.
This paper will review Texas law on the admission, exclusion, and sufficiency of evidence of lost profits
damages. Particular attention will be paid to the application of Daubert/Robinson gate-keeping standards to this type
of evidence, and to the application of the enhanced City of Keller v. Wilson standard of legal sufficiency review to
such evidence. The paper will conclude with some practical pointers for practitioners and references to a few non
legal resources for further research. Along the way, a few observations based on my experiences in four years as a
trial judge will be offered.
Significant parts of this paper are drawn from papers presented at Texas Bar CLE programs. I am deeply
grateful for the scholarship and insight of these authors. All of the cited papers are available in the Texas Bar CLE
library, and I recommend them highly to you.
II. The Basics
A. The definition of lost profits damages
Lost profits are “damages for the loss of net income to a business measured by reasonable certainty.” Miga v.
Jensen, 96 S.W.3d 207, 213 (Tex. 2002).
B.
Lost profits damages are available in a wide variety of contract and tort claims
Lost profits are available in numerous types of commercial cases in Texas, including in various business tort,
tortious interference, breach of fiduciary duty, breach of contract, fraud, and DTPA actions. See, e.g., Formosa
Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 50 (Tex. 1998) (fraud action); S.W.
Battery Corp. v. Owen, 115 S.W.2d 1097, 1099 (1938) (breach of contract action); KoldServe Corp. v. Ward, 736
S.W. 2d 750, 755 (Tex. App.—Corpus Christi 1987) (DTPA action), writ dism‘d, 748 S.W.2d 227 (Tex. 1998); Bell
Helicopter Co. v. Bradshaw, 594 S.W.2d 519, 536 (Tex. Civ. App.—Corpus Christi 1979, writ ref‘d n.r.e.) (tort
action); Gonzales v. Gutierrez, 694 S.W.2d 384, 390 (Tex. App.—San Antonio 1985, no writ) (action for tortious
interference with prospective business relations); British Overseas Airways Corp. v. Tours & Travel of Houston, 568
S.W. 2d 888, 894 (Tex. Civ. App.—Houston[1st Dist.] 1978, writ ref‘d n.r.e.) (action for business defamation).
In a personal injury case, evidence of loss of profits from a proprietorship or closely held business may be competent
evidence in support of a claim for loss of earning capacity. U-Haul International, Inc. v. Waldrip, 322 S.W.3d 821,
853 (Tex. App. – Dallas 2010, no pet.); Strauss v. Continental Airlines, Inc., 67 S.W.3d 428, 437 (Tex. App. –
Houston [14th Dist.], no pet.). Evidence of lost profits alone does not establish loss of earning capacity; other factors
must be considered, “such as the character and size of the business, the capital and labor employed, and the extent
and nature of the plaintiff’s own participation” in the business. Id.
C. Lost profits may be recoverable as direct damages or as “special” or consequential damages
In most cases, particularly those sounding in contract, lost profits will be treated as consequential or “special”
damages that the injured party must plead and prove separately from direct or “general” damages. See, e.g., Alaniz v.
Jones & Neuse, Inc., 907 S.W.2d 450, 452 (Tex. 1995). In some contract cases, however, “Lost profits may be in the
form of direct damages, that is, profits lost on the contract itself, or in the form of consequential damages, such as
profits lost on other contracts or relationships resulting from the breach.” Mood v. Kronos Products, Inc., 245 S.W.2d
8, 12 (Tex. App. – Dallas 2007, pet. denied).
D. Lost profits must be causally related to the wrongful conduct , and alternative causes must be considered
and excluded
For lost profits to be recoverable on a tort claim, “they must naturally and proximately arise from the defendant's
wrong. … In other words, they must be a foreseeable consequence of the misconduct.” First State Bank, N.A. v.
Morse, 227 S.W.3d 820, 829 (Tex. App. – Amarillo 2007, no pet.)(Conversion; citations omitted). Further, in
evaluating evidence that lost profits were caused by a defendant’s wrongful conduct, the courts are guided by a core
holding of Robinson: “An expert who is trying to find a cause of something should carefully consider the alternative
causes.” E.I. du Pont de Nemours & Co., Inc. v Robinson, 923 S.W.2d 549, 559 (Tex. 1995). “Further, if there are
other plausible causes of the injury or condition, the plaintiff must offer evidence excluding those causes with
reasonable certainty.” Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 720 (Tex. 1997). This
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principle has been applied by the Dallas Court of Appeals in a case to be discussed in detail below. Wyndham Int’l,
Inc. v. Ace American Ins. Co., 186 S.W.3d 682, 688 (Tex. App. – Dallas 2006, no pet.) Additional cases are
discussed in M. Doyle & A. Daughtry, Papering Your Damages: 10 Tips to Insulate a Jury Verdict Against Attack on
Appeal, Ch. 1 at 3-5, in STRATEGIES FOR DAMAGES AND ATTORNEY FEES (Dallas 2010).
E. Damages must be proven as net profits, not gross income or gross profits
The appropriate measure of damages for lost profits is net profit, not gross profit. See, e.g., Holt v. Atherton
Indus. v. Heine, 835 S.W.2d 80, 83 n.1 (Tex. 1992). Courts generally define net profits as a business‘s total receipts
minus its expenses. See, e.g.,, Turner v. PV Intern. Corp., 765 S.W.2d 455, 465 (Tex. App.– Dallas 1988), writ
denied per curiam, 778 S.W.2d 865 (Tex. 1989). In determining lost profits, it is necessary to consider not only the
revenue lost to the plaintiff as a result of the defendant’s wrongful conduct, but the expenses the plaintiff would have
been forced to incur but for that wrongful conduct. See, e.g., R.A. Corbett Transport, Inc. v. Oden, 678 S.W.2d 172,
175-176 (Tex. App. – Tyler 1984, no writ)(calculation of “lost profits” that did not take all of the plaintiff’s expenses
into account was factually insufficient to support verdict).
F.
Lost profits are usually proven through expert testimony, but may be shown through competent
testimony of the “owner” or principal under the Property Owner Rule
In most cases, one or both parties will offer expert witness testimony on the calculation of lost profits.
However, this is not always required. An owner of a business can testify regarding lost profits. ERI Consulting
Engineers, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010); see also, Am. Heritage, Inc. v. Nevada Gold &
Casino, Inc., 259 S.W.3d 816, 827 (Tex. App.– Houston [1st Dist.] 2008, no pet.); Ishin Speed Sport, Inc. v.
Rutherford, 933 S.W.2d 343, 351 (Tex. App – Fort Worth 1996, no writ). This appears to be an extension of the
“Property Owner Rule” that allows an owner of real property to testify to its market value without qualifying as an
expert. Porras v. Craig, 675 S.W.2d 503, 504 (Tex. 1984).
The Supreme Court recently elaborated on the application of the Property Owner Rule to business entities in the
context of a condemnation case:
[W]e believe the better rule is to treat organizations the same as natural persons for purposes
of the Property Owner Rule, with certain restrictions on whose testimony can be considered as that
of the property owner. We hold that the Property Owner Rule is limited to those witnesses who are
officers of the entity in managerial positions with duties related to the property, or employees of the
entity with substantially equivalent positions and duties. Further, the Property Owner Rule falls
within the ambit of Texas Rule of Evidence 701 and therefore does not relieve the owner of the
requirement that a witness must be personally familiar with the property and its fair market value,
but the Property Owner Rule creates a presumption as to both.
Reid Road M.U.D. No. 2 v. Speedy Stop Food Stores, Ltd., – S.W.3d –, 54 Tex. Sup. J. 508 (Mar. 11, 2011). A
majority of the court went on to hold that an officer of the corporate general partner of the limited partnership
property owner, because he was not an offier or employee of the limited partnership, was not within “the category of
entity representatives to whom the Property Owner Rule applies.” Id. (The majority opinion also determined that the
officer’s opinion had been properly excluded because he failed to demonstrate personal familiarity with the property
and its value.)
Justices Willett and Lehrman, while concurring in the result, took a different view of how the Property
Owner Rule should be applied to limited partnerships:
Limited partnerships, including real-estate limited partnerships, are popular investment vehicles.
They commonly consist of passive limited partners and a general partner that is a corporation. Since
limited partnerships are managed by the general partner or partners, there is no particular reason for a
limited partnership to have any managerial employees–or indeed any employees at all. Therefore, the
Court’s treatment of the Property Owner Rule means that many, if not most, limited partnerships
could never proffer a witness on the value of their real estate holdings under the Property Owner
Rule.
Yet the Court does contemplate application of the Property Owner Rule to a managing
officer of the entity owning the property or an employee of the entity in a “substantially equivalent”
position. In the case of a limited partnership, I would hold that a managing officer of the corporate
general partner with duties relating to the property may testify as to the value of partnership property
without being qualified as a expert witness, provided the officer is familiar with the specific property
in issue and its value. Such a rule would provide some parity of treatment of limited partnerships and
corporations…
Id., Willett, J. concurring (footnotes omitted).
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The majority opinion in Speedy Stop also considers the distinction between expert witnesses whose
testimony is governed by Rule of Evidence 702 and lay witnesses offering opinions under Rule 701:
The line between who is a Rule 702 expert witness and who is a Rule 701 witness is not always
bright. But when the main substance of the witness’s testimony is based on application of the
witness’s specialized knowledge, skill, experience, training, or education to his familiarity with the
property, then the testimony will generally be expert testimony within the scope of Rule 702. A
witness giving such testimony must be properly disclosed and designated as an expert and the
witness’s testimony is subject to scrutiny under rules regarding experts and expert opinion. … Any
other principle would allow parties to conceal expert testimony by claiming the witness is one whose
opinions are merely for the purpose of explaining the witness’s perceptions and testimony.
… Instead, we hold that subject to the provisions of Rule 701, … a witness who will be giving
opinion evidence about a property’s fair market value must be disclosed and designated as an expert
pursuant to discovery and other applicable rules.
Id. (citations and footnotes omitted). Application of this holding in Speedy Stop resulted in exclusion of the
opinion of Speedy Stop’s valuation witness as a Rule 702 expert because he had not been properly and
timely designated and disclosed.
While it remains to be seen exactly how these principles will be applied in the context of lost profits
evidence, several suggestions can be offered. First, even though the Property Owner Rule does not apply
directly except to opinions of property value, the restrictive approach of the majority in Speedy Stop to
determining who is an “owner” witness counsels caution in sponsoring Rule 701 witnesses, especially in
cases of larger organizations or multi-level entity structures. Second, while lay opinions within the scope of
Rule 701 can be offered without full-blown expert disclosures and discovery, the courts can be expected to
apply a fairly rigorous requirement of personal knowledge or familiarity with the subject matter before
allowing such opinions. Finally, absent an oversight or some unanticipated emergency, the prudent course of
action in nearly every case will be to designate anyone who will offer opinion testimony as an expert.
Reliance on Rule 701 to gain a tactical advantage almost will rarely be rewarded.
The authors of Papering Your Damages, supra, suggest that owner witnesses can offer opinions on damages
“without the typical restrictions and constraints on expert testimony,” and that “a trial court can admit any non-expert
opinion testimony that is rationally based on the perceptions of the witness and would be helpful to a determination
of a fact issue. TEX. R. EVID. 701. Whereas expert testimony can be excluded on grounds of reliability or
speculativeness, coupling that evidence with testimony from a party suddenly makes that area impervious to a ‘noevidence’ challenge.” Papering Your Damage at 7. Given the trends discussed below and the particularly stringent
standards applied to evidence of lost profits, it seems doubtful that owner testimony on lost profits will in fact prove
“impervious” to no-evidence review. See, e.g., ERI Consulting Engineers, supra at 876-77; Ameristar Jet Charter
Inc. v. Cobbs, 184 S.W.3d 369, 376 (Tex. App. – Dallas 2006, no pet.)(owner/plaintiff’s testimony that his company
made “positive money” before being wrongfully enjoined held no evidence of any amount of lost profits).
III. The Traditional Approach
G. The standard of proof with “reasonable certainty”
At least since 1938, the stated rule in Texas has been that, “In order that a recovery may be had on account of
loss of profits, the amount of the loss must be shown by competent evidence with reasonable certainty.” Texas
Instruments v. Teletron Energy Management, 877 S.W.2d 276, 279 (Tex. 1994), quoting Southwest Battery Corp. v.
Owen, 131 Tex. 423, 115 S.W.2d 1097, 1098-1099 (Tex. 1938). The requirement of reasonable certainty “is
intended to be flexible enough to accommodate the myriad circumstances in which claims for lost profits arise.”
Texas Instruments, 877 S.W.2d at 279. Whether lost profits have been proven with reasonable certainty in a
particular case “is a fact intensive determination.” Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 82 (Tex.
1992). “Profits which are largely speculative, as from an activity dependent on uncertain or changing market
conditions, or on chancy business opportunities, or on promotion of untested products or entry into unknown or
unviable markets, or on the success of a new and unproven enterprise, cannot be recovered. Factors like these and
others which make a business venture risky in prospect preclude recovery of lost profits in retrospect.” Texas
Instruments, 877 S.W.2d at 279.
Evidence of lost profits should comprise a complete calculation predicated on a single method, rather than a
piecemeal calculation based on “several different methods.” Heine, 835 S.W.2d at 85; see, e.g., Fluor Ents., Inc. v.
Conex Int’l. Corp., 273 S.W.3d 426, 448 (Tex. App.– Beaumont 2008) (finding an expert‘s lost profits opinion
unreliable because he “did not consistently apply his methodology”). Not surprisingly, an estimate of lost profits
unsupported by any method of determining the amount is legally insufficient. Heine, 835 S.W.2d at 85; Ameristar Jet
Charter, supra.
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While the rules permit opinion testimony to be admitted without supporting documentation being admitted, or
even admissible, in evidence, the quality of that supporting documentation can be critical. In one court‘s opinion,
“[t]he distinguishing feature between Texas cases permitting and denying recovery for lost profits is reliance upon
routinely kept business records produced in court to show an evaluation of the business‘ decreased profitability based
upon objective facts, figures and data, and not upon the subjective opinions of interested parties.” Holland v. Hayden,
901 S.W. 2d 763, 755 (Tex. App.—Houston [14th Dist.] 1995, writ denied) (citing Automark of Texas v. Discount
Trophies, 681 S.W.2d 828, 830 (Tex. App.—Dallas 1984, no writ)).
H. The problem of start-ups and businesses with no history of profitable operations
Proving lost profits when the plaintiff is a newly formed entity or is engaged in a new or unproven line of
business is especially difficult. Nonetheless, the Supreme Court has said that the requirement of reasonable certainty
“does not deny recovery by a new business simply lost profits was new, risky, or speculative, not on whether the
business entity conducting the activity is newly formed: “For example, if lost profits were recoverable for damage to
a business activity of the XYZ Corporation, they should not be denied simply because the activity was conducted by
a subsidiary newly formed for that purpose which XYZ controlled and managed. The focus is on the experience of
the persons involved in the enterprise and the nature of the business activity, and the relevant market.” Id. For
additional discussion of this issue, see D. Bishop, A. Dawson, & C. Goolsby, Damages Update 2009, Ch. 9 at 4-6, in
22nd Annual Advanced Evidence and Discovery Course (Houston 2009).
I. Closely held businesses – is owner compensation an expense or a component of profits?
The plaintiff in a case seeking recovery of lost profits often will be a closely held business entity that distributes
the bulk of its net income to its owners in the form of salary, bonuses, and other forms of compensation that appear
as expenses on the entity’s income statement. Can those “expenses” validly be included in a calculation of the
entity’s lost profit damages? It appears that only one reported Texas case has considered the question, and answered
in the affirmative:
In a closely held corporation such as Blind Maker, evidence of salaries to its owner/executive is
relevant to a determination of lost profits. See Bettius & Sanderson, P.C. v. National Union Fire Ins. Co.,
839 F.2d 1009, 1014 (4th Cir. 1988). In Bettius, the Fourth Circuit Court of Appeals explained this concept
in the context of a professional corporation:
The professional corporation desires to disburse its earnings in order to avoid having income
taxes imposed twice on what is in reality the same group of people. . . . This is accomplished by
distributing all or most of its earnings to the principals as compensation before calculating the
professional corporation's net income. The result, of course, is that the corporation's net income
for tax purposes is almost always at or near zero, but it is unrealistic to suggest that the
corporation is not earning a profit. If we were to treat a net income as its net profit for the purpose
of proving loss of profits it would rarely, if ever show a profit even when its shareholders were
earning large incomes. It would never be able to prove damages for lost profits if the wrongful act
of another caused it harm.
Id. at 1013.”
Springs Window Fashions Div., Inc. v. Blind Maker, Inc., 184 S.W.3d 840, 887 (Tex. App. – Austin 2006).
IV. Application of Daubert/Robinson gate-keeping standards and no evidence review to evidence of lost
profits
J. The requirements of relevance and reliability apply
The Supreme Court of Texas made it clear more than a decade ago that the gate-keeping principles of Daubert and
Robinson apply to all expert witness opinions:
Rule 702's fundamental requirements of reliability and relevance are applicable to all expert testimony
offered under that rule. Nothing in the language of the rule suggests that opinions based on scientific
knowledge should be treated any differently than opinions based on technical or other specialized
knowledge. It would be an odd rule of evidence that insisted that some expert opinions be reliable but not
others. All expert testimony should be shown to be reliable before it is admitted.
That said, it is equally clear that the considerations listed in Daubert and in Robinson for assessing the
reliability of scientific evidence cannot always be used with other kinds of expert testimony. … The court
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in discharging its duty as gatekeeper must determine how the reliability of particular testimony is to be
assessed.
Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 726 (Tex. 1998). Gammill also adopted for Texas what
has become the often-invoked “analytical gap” rule, requiring the exclusion of evidence “which is connected to
existing data only by the ipse dixit of the expert. A court may conclude that there is simply too great an analytical gap
between the data and the opinion proffered.” Id., citing General Electric Co. v. Joiner, 118 S.Ct. 512, 519 (1997).
Several cases applying these principles in the context of expert testimony on lost profits are discussed below. For a
detailed discussion of the development of these standards under both Federal and Texas law in the context of
valuation testimony, see A. Conley, J. Davis, & D.M. Lynn, Valuation Experts, Ch. 19 at 1-10., in 27TH ANNUAL
ADVANCED BUSINESS BANKRUPTCY COURT (Houston 2009).
K. Pre-trial objections or motions to exclude unreliable expert testimony may not be required; Rendition vs.
remand
In Kerr-McGee Corp. v. Helton, 133 S.W.3d 245 (Tex. 2004), the Supreme Court of Texas extended its
Gammill holding to expert testimony on damages in an oil and gas case, applying the “reasonable certainty” standard
for lost profits to evidence of lost royalties presented by a petroleum engineer. 133 S.W.3d at 255. Because the
engineer assumed that a hypothetical well on the plaintiff’s leasehold would have produced at the same rate as nearby
wells, even though he admitted that the target formation would be thinner under the plaintiff’s lease, the Supreme
Court held that the engineer’s opinion violated the “analytical gap” rule and was no evidence. 133 S.W.3d at 258.
Because Kerr-McGee had not moved to exclude the expert’s testimony prior to trial, or even objected to it until
after cross-examining the expert, Helton claimed he had been “ambushed” and sought to have the case remanded for
a new trial in the interest of justice under TRAP 60.3. This final attempt to save the case also failed:
The United States Supreme Court recently observed: "It is implausible to suggest, post-Daubert that
parties will initially present less than their best expert evidence in the expectation of a second chance
should their first try fail." … We agree with that observation. The exacting standards for expert testimony
set forth by the United States Supreme Court in [Daubert], [Joiner], and [Kumho Tire], and by this Court in
[Robinson], [Havner], and [Gammill] are well-known to Texas litigators.
Helton had more than two years to prepare for the trial and does not contest Kerr-McGee's assertion
that, before trial, Kerr-McGee "produced all of their records for wells in the West Park Field, including
geological records, well records, well logs, Railroad Commission reports, pressure and production records,
etc." In addition, Helton had four trial days following Riley's direct testimony in which to put on additional
damages evidence in response to Kerr-McGee's objections, but did not do so.
133 S.W.3d at 259(citations omitted). Citing the unfairness and expense that would be imposed on Kerr-McGee by
giving Helton “another bite at the apple,” the Court rendered a take-nothing judgment against Helton. 133 S.W.3d at
260.
The Court in Helton noted but distinghished its earlier holding in Maritime Overseas Corp. v. Ellis, 971 S.W.2d
402, 409 (Tex. 1998), that “[t]o preserve a complaint that scientific evidence is unreliable and thus, no evidence, a
party must object to the evidence before trial or when the evidence is offered. … Without requiring a timely
objection to the reliability of the scientific evidence, the offering party is not given an opportunity to cure any defect
that may exist, and will be subject to trial and appeal by ambush.” Although the Court has not yet expressly
overruled Ellis, it would appear that practitioners can rely on it only at their peril.
The Supreme Court reached a different result in ERI Consulting Engineers, supra. In that case, the owner of the
plaintiff business offered evidence of a 25-30 percent net profit margin on revenue from a certain customer, and of a
drop in that business of approximately $18,000 per month over a 33-month period, claiming the drop was caused by
the defendants’ wrongful conduct. The trial court awarded $300,000 in lost profits damages. Both the Court of
Appeals and the Supreme Court concluded that the evidence was legally insufficient to support the trial court’s
award, since the maximum loss that could be calculated from the plaintiff’s evidence was $178,601.05. 318 S.W.3d
at 877. However, while the Court of Appeals had reversed and rendered the damage award, the Supreme Court held
that a remand for the court of appeals to consider a possible remittitur was in order: “[W]hile the evidence does not
prove $300,000 in lost profits, ERI’s evidence is legally sufficient to prove a lesser, ascertainable amount of lost
profits with reasonable certainty. In this situation, such a discrepancy between two reasonably certain amounts will
not defeat recovery by ERI.” 318 S.W.3d at 877-78, citing Akin, Gump, Strauss, Hauer & feld, L.L.P v. Nat’l Dev. &
Research Corp., 299 S.W.3d 106, 109 (Tex. 2009).
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L. The trial court’s exclusion of expert testimony under gate-keeping standards is reviewed for abuse of
discretion. Or is it?
The Courts of Appeals and Supreme Court of Texas continue to say that a trial court’s decision to admit or
exclude expert testimony is reviewable only for abuse of discretion. See, e.g., Wyndham Int’l, Inc., supra, 186
S.W.3d at 685, citing Gammill, 972 S.W.2d at 728, and Robinson, 923 S.W.2d at 558. They continue to recite the
traditional rule that an abuse of discretion can only be shown when the trial court’s decision is arbitrary or
unreasonable or the court acts without reference to any guiding rules or principles. Id. The question is whether these
statements of principle remain true in practice as Daubert/Robinson principles are more and more frequently
imported into no-evidence review of jury verdicts and trial court judgments.
M. No-evidence review incorporates Daubert/Robinson standards
In City of Keller v. Wilson, the Supreme Court of Texas adopted the rule that irrelevant or unreliable expert
testimony cannot be legally sufficient evidence to support a verdict or a judgment:
When expert testimony is required, lay evidence supporting liability is legally insufficient. In such
cases, a no-evidence review cannot disregard contrary evidence showing the witness was unqualified to
give an opinion. And if an expert’s opinion is based on certain assumptions about the facts, we cannot
disregard evidence showing those assumptions were unfounded.
After we adopted gate-keeping standards for expert testimony, evidence that failed to meet reliability
standards was rendered not only inadmissible but incompetent as well. Thus, an appellate court conducting
a no-evidence review cannot consider only an expert’s bare opinion, but must also consider contrary
evidence showing it has no scientific basis. Similarly review of an expert’s damage estimates cannot
disregard the expert’s admission on cross-examination that none can be verified.
Thus, evidence that might be “some evidence” when considered in isolation is nevertheless rendered
“no evidence” when contrary evidence shows it to be incompetent.
City of Keller v. Wilson, 168 S.W.3d 802, 812-13 (Tex. 2005). Further, incompetent expert testimony will not
support a verdict or judgment even when it has been admitted without objection. Id.
Queries: If expert testimony later deemed incompetent has been admitted without objection, how can the trial
court have abused its discretion by admitting the evidence? How can a judge act arbitrarily or unreasonably, or
without reference to guiding rules or principles, when given no opportunity to act at all? Has the standard in fact
become that the trial court’s action in excluding expert testimony is reviewed for abuse of discretion, but its action in
admitting expert testimony is reviewed de novo under the rubric of legal insufficiency?
N. Illustrative cases
1. Toshiba Machine Co., America v. SPM Flow Control, Inc., 180 S.W.3d 761 (Tex. App.--Fort Worth 2005,
pet. granted, judgm't vacated w.r.m.)
This was a suit for breach of contract brought by SPM, a manufacturer of oilfield pumps, over the failure of
machine tools purchased from Toshiba to perform as promised. Evidence of lost profits was presented by the
plaintiff’s vice president of finance, who had an accounting degree and more than 30 yeats’ experience “managing
the financial and accounting functions of companies engaged in the manufacture and distribution of various
products.” 180 S.W.3d at 779. SPM recovered judgment on a jury verdict for just over $6 million in lost profits.
Among other issues on appeal, Toshiba challenged the damages testimony on the grounds that the vice president was
not qualified to testify, that he relied on inadmissible hearsay to determine whether the failure of the machine tools
caused SPM to lose sales, and that his conclusions about lost profits were unduly speculative.
The Court of Appeals rejected all of these arguments. Of particular interest is its response to the argument that
the trial court should not have allowed the witness to testify about his conversations with customers:
Gilbert testified that he personally contacted SPM customers to ascertain why certain sales were lost
or certain orders cancelled. Toshiba made timely hearsay objections to Gilbert's testimony.
…
An expert may rely on inadmissible facts or data to form an opinion or inference if the facts or data are
of a type reasonably relied upon by experts in the particular field. We cannot think of a more appropriate
method to determine why sales were lost than to ask the customer.
Id. The Court of Appeals affirmed the judgment of the trial court. The case was settled while Toshiba’s petition for
review was pending before the Supreme Court of Texas.
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2.
Wyndham International, Inc. v. Ace American Ins. Co., 186 S.W.3d 682 (Tex. App. – Dallas 2006, no pet.)
In this case, Wyndham sued 10 of its insurers and its insurance brokers, claiming more than $66 million dollars
in profits allegedly lost by its 163 hotels in the two months following the September 11, 2001terrorist attacks.
(Interestingly, the procedural posture of the case made it unnecessary for the Court of Appeals to discuss what form
of insurance was at issue, or whether the attacks might have been a covered occurrence.) Wyndham proffered only
one damages expert, CPA and consultant David A. Borghesi.
Borghesi’s damage calculations were based on
monthly forecasts of room revenues prepared by managers at 101 of the subject properties. It appears these forecasts
were prepared before the 9/11 attacks, and in the ordinary course of Wyndham’s business. Borghesi compared the
forecast revenues to actual revenues, made certain adjustments, and then extrapolated the results of the comparison
to the 62 hotels for which no forecasts were available. The insurers moved to exclude Borghesi’s opinions as
irrelevant and unreliable. The trial court granted the motion to exclude and then granted the insurers’ no-evidence
motions for summary judgment.
Writing for the Court of Appeals, Justice Lang considered three of the reasons offered by the insurers for the
exclusion of Borghesi’s opinion:
(1) Borghesi bases his entire calculation on a comparison of monthly forecasts of hotel room revenue
which are demonstrably unreliable;
(2) Borghesi improperly extrapolates his already unreliable calculation for 101 hotel properties to an
additional sixty-two hotel properties; and
(3) Borghesi fails to account for market factors affecting the hospitality industry in September and
October 2001, instead concluding that the entire difference between Wyndham's forecast and actual results
for a fifty-one day period is attributable to a covered loss.
186 S.W.3d at 686. The Court described the competing evidence on the first issue as follows:
Specifically, the Insurance Companies offered evidence at the Robinson hearing of the following: (1)
the forecasts were prepared by employees at each of Wyndham's individual hotels, who were not required
to follow any type of internal forecasting standards, did not adhere to any economic model, did not have a
consistent reference point, and the forecasts were not reviewed by employees with training in forecasting;
(2) Borghesi acknowledged that many of the forecasts were not accurate; (3) Wyndham's managers
considered the forecasts to be accurate if they were within 5%, plus or minus, of actual revenues; (4) for the
month prior to September 11, August 2001, less than 1/3 of the forecasts for the properties met Wyndham's
5% accuracy standard; and (5) Borghesi admitted he made adjustments to the forecasts as he used them in
his analysis and the adjustments would yield some erroneous results.
On the other hand, Wyndham asserted: (1) Borghesi was aware of the accuracy standard of 5%, and
that many of the August forecasts did not meet that standard, but he allowed for those issues in his
calculations; (2) the managers at each property who made the forecasts had extensive experience in
preparing such projections, used computer models which took into account economic trends that affect each
property, and relied upon the forecasts to run the hotels and track their performance. The record reflects the
managers of Wyndham had no "hard and fast rules" for preparation of the forecasts, 5% accuracy tolerance
was the rule, and less than 1/3 of the August 2001 forecasts were within Wyndham's 5% accuracy tolerance
standard.
186 S.W.3d at 687. The Court of Appeals, after reviewing similarly competing evidence and arguments for and
against the insurers’ second and third objections, concluded that Borghesi’s opinion “is not based upon a reliable
foundation, and, accordingly, is irrelevant … [W]e are unable to conclude the trial judge abused her discretion in
granting the motion of the Insurance Companies to exclude Borghesi’s testimony.” 186 S.W.3d at 689. Since the
only evidence of damages had been properly excluded, the no-evidence summary judgment was affirmed.
3. Exel Transportation Services, Inc. v. Aim High Logistics Services, LLC, 323 S.W.3d 224 (Tex. App. –
Dallas 2010, pet. denied)
This was a suit for breach of contract and tortious interference with contract brought by Aim High against Exel
and others. Aim High alleged that the wrongful conduct of the defendants had caused it to lose four specific accounts
with a resulting loss of profits in excess of $6,000,000. Aim High’s damages expert, E.J. Janik, however, prepared
several damages models on a “company-wide” basis; he failed to attribute any amount of loss to any of the specific
accounts at issue. Defendants’ motion to exclude the expert’s testimony was denied by the trial court, and a jury
found that Aim High had sustained a total of $375,00 in lost profits, past and future.
7
On appeal, the defendants challenged the legal sufficiency of the evidence to support the damages award. The
Court of Appeals concluded that, “because the ‘company-wide’ lost profits Janik calculated did not ‘relate’ to the
profits Aim High lost as a result of the acts alleged, Janik’s testimony, alone, did not constitute reasonably certain
evidence of Aim High’s lost profits in this case.” 323 S.W.3d at 234. The court went on to conclude that there was
no evidence establishing any amount of lost profits with reasonable certainty, and rendered judgment that Aim High
take nothing. Id. at 235, citing ERI Consulting Engineers, supra, 318 S.W.3d at 880.
4.
Mood v. Kronos Products, Inc., 245 S.W.3d 8 (Tex. App. – Dallas 2007, pet. denied)
This was a dispute arising out of a distributorship agreement. After both parties had breached the agreement –
the supplier by selling directly to one of the distributor’s customers and the distributor by failing to make timely
payment of his account – the supplier terminated the agreement without giving 60 days’ notice as required by its
terms. The supplier sued on its unpaid invoices, and the distributor counterclaimed for breach of the agreement,
seeking lost profits damages. A jury award on the distributor’s counterclaim was disregarded by the trial court, and
the distributor appealed.
The distributor’s damages expert calculated lost profits projected over a ten-year period, assuming that the
distributorship agreement would remain in place over that entire time even though it could have been terminated at
any time on 60 days’ notice. The Court of Appeals agreed that,
[T]he termination notice period itself does not necessarily set the limits of damages in this type of
case. For instance, a termination in violation of a notice provision could have a severe impact on the
continuation of a well-established business and might include the loss of customer goodwill or damaged
customer relationships. The damage evidence here, however, does not support consequential damages in
the form of lost profits as awarded by the jury. … Payne assumed that Mood's profits would have continued
as they had been, even after the distribution agreement was terminated, so long as Mood had the requisite
sixty-day notice. This assumption, however, is nothing more than speculation with no support in the
evidence. He made no computations with respect to consequential damages incurred at the time of breach,
such as loss in value of the business as a going concern due to customer goodwill. Because Payne's lost
profit analysis was based on figures that assumed ten years of profits given the continuance of the
distributorship agreement, his damage model is no evidence of either direct or consequential lost profits
that Mood suffered as a result of Kronos's violation of the sixty-day notice provision.
245 S.W.3d at 12. The trial court’s decision to disregard the jury’s award of lost profits was affifrmed.
5.
Spin Doctor Golf, Inc. v. Paymentech, L.P., 296 S.W.3d 354 (Tex, App. – Dallas 2009, pet. denied)
This was a suit for breach of contract involving allegedly wrongful withholding of funds from a merchant by its
credit card processor. The trial court excluded the damages testimony of the plaintiff’s president and granted a noevidence summary judgment. In reviewing the exclusion of the president’s testimony, the Court noted his testimony
(in a 74-page affidavit) that,
his opinions "were rooted in the methodology and common sense that anyone who has ever seen 'As Seen
on TV' label on a product or display header at a retail store knows." He states that his expertise is based on
experience. He states that he also relied upon a media financier expert and an expert in the golf retail
market in formulating his opinions. Davenport also relies upon his thirty years' experience in evaluating
business opportunities and executing marketing plans for businesses. As further qualification, Davenport
says that for eight years he has monitored business results for golf club manufacturers through on-line
reports, trade publications, and SEC filings. Davenport admitted in his deposition that he had not done any
other lost profit analyses.
The type of education and experience pertinent to lost profits testimony relates to accounting and
finance.
…
We hold that Davenport's experience in evaluating business opportunities, executing marketing plans
for businesses, and monitoring business results for golf club manufacturers, no matter how extensive, does
not amount to knowledge, skill, experience, training, or education so as to qualify him as an expert on the
issue of lost profits.
296 S.W.3d at 360-361(citations omitted). The Court concluded that the trial court had not abused its discretion in
excluding the testimony.
8
6. Dana Corporation v. Microtherm, Inc., 2010 Tex. App. LEXIS 408 (Tex. App – Corpus Christi 2010, no
pet.)
Microtherm, a manufacturer of tankless water heaters, sued Dana Corporation and several other suppliers of
components that failed and caused Microtherm’s water heaters to fail. A jury found in favor of Microtherm on
breach of warranty and DTPA claims against Dana and two others defendants, and awarded separate amounts of lost
profits and lost business value damages against each defendant. The trial court entered judgment on the verdict.
The only issues remaining by the time of the Court of Appeals opinion were those between Dana and
Microtherm. A key issue was whether Microtherm had presented legally sufficient evidence of its lost profits and
lost business value damages. Microtherm, which contended in the trial court that the damages caused it by the
several defendants were indivisible, had presented only a single calculation of its damages resulting from the alleged
conduct of all the defendants. The Court of Appeals held that this was no evidence of any amount of damages caused
by Dana’s conduct:
It is undisputed that Microtherm presented no evidence of defendant-by-defendant damages.
Microtherm knew when the trial began that the case was being tried on separate damages, and Microtherm
had the opportunity to present evidence of separate damages. The trial court asked the jury to find an
amount of lost profits and an amount of lost value caused by Dana, a separate amount caused by Puget, and
a separate amount caused by UPG. The verdict awarded separate damages on a defendant-by-defendant
basis. Yet, Microtherm did not provide any evidence as to what amount of the total damages was caused by
Dana. Thus, reviewing the evidence presented at trial in the light most favorable to the jury's verdict,
crediting evidence favorable to that party if reasonable jurors could and disregarding contrary evidence
unless reasonable jurors could not, we conclude that the evidence was legally insufficient to support the
divisible lost profit damages and the divisible lost value damages awarded against Dana.
2010 Tex. App. LEXIS 408, *59-60 (footnote omitted), citing City of Keller v. Wilson, 168 S.W.3d at 827. The
Court of Appeals then rejected Microtherm’s argument that the Court of Appeals should order a remittitur or a new
trial. “Unlike [cases relied on by Microtherm], where the courts remanded the cases so that the plaintiffs would have
the opportunity to prove up separate damages, Microtherm had both the opportunity and the burden at trial to develop
its damages – divisible among the defendants. It did not.” Id. at *64.
7. Texas Energy Innovation, Inc. v. Hino Electric Power Co., Inc., 2010 Tex. App. LEXIS 1024 (Tex. App. –
Austin 2010, no pet.)
Texas Energy Innovation (TEI) contracted with Hino to assist it in entering the Texas electricity resale market.
In return, Hino agreed to purchase all of its electricity through TEI for a 30-year period and to pay TEI a five percent
commission on its purchases. When Hino began purchasing electricity from companies other than TEI, TEI sued for
breach of contract. “Discovery ensued, and TEI named an accountant as its damages expert. The trial court
eventually struck the accountant as a witness to sanction TEI for various discovery abuses. After the court did so,
Hino moved for partial summary judgment on the basis that TEI could not establish its damages without an expert
witness.” 2010 Tex. App. LEXIS at *4-5. The trial court granted Hino’s motion for summary judgment.
On appeal, TEI argued that it had presented sufficient evidence to defeat summary judgment in the form of the
five percent commission contract and ledgers showing the amounts of electricity Hino had purchased from others in
violation of the contract. The Court of Appeals disagreed:
Contrary to TEI's assertion, Hino Power's ledgers do not provide a measure of TEI's lost gross profits.
Even if we assume, as TEI says we must, that TEI was ready, willing, and able to perform under the parties'
contract, TEI provided no evidence from which a fact-finder could determine with reasonable certainty the
amount of TEI's gross profits. TEI offered no evidence to support the conclusion that it could have
brokered Hino's power purchases at the prices or from the sources reflected in Hino Power's ledgers. TEI's
performance depended on the cooperation of third-party electricity suppliers, and those suppliers could
have chosen not to deal with TEI or to charge it prices different from those reflected in Hino Power's
ledgers. Absent any evidence that TEI would have obtained the power at the rates reflected in the ledgers,
TEI has not established that it would have made a gross profit under the contract. It necessarily follows that
TEI has provided no evidence that it lost profits, i.e., suffered damages.
2010 Tex. App. LEXIS at *12-13. The summary judgment in favor of Hino was affirmed.
9
8. Additional Cases
The following recent cases also illustrate issues raised in proving lost profits: Kellmann v. WorkstationIntegrations,
Inc., 332 S.W.3d 679 (Tex. App. – Houston [14th Dist.], no pet.)(testimony of business owner, who had finance
degree, to gross revenue figures without any deduction for expenses was not legally sufficient evidence of lost
profits); Rusty’s Weigh Scales and Service, Inc. v. North Texas Scales, Inc., 314 S.W.3d 105, 110-111 (Tex. App. –
El Paso 2010, no pet.)(opinion of witness who “specifically testified that he did not know how he determined” the
amount of plaintiff’s loss was legally insufficient evidence of lost profits); South Plains Switching, Ltd. v. BNSF
Railway Co., 255 S.W.3d 690, 696 (Tex. App –Amarillo 2008, pet. denied)(Calculation of lost profits did not include
sufficient evidence of expenses to meet standard of reasonable certainty; Judgment n.o.v. for defendant affirmed);
Blase Industries Corp. v. Anorad Corp., 442 F.3d 235, 237 (5th Cir. 2005)(Texas law)(Consulting firm could not
recover one year’s lost profits for hiring of consultant by client in violation of no-hire agreement when consultant
was an at-will employee; damages could not be proven with reasonable certainty).
V. Accounting Basics1
O. Determining the Loss Period
The first step in a lost profits calculation is to determine the period of time covered by the calculation. In most
cases, the loss period will begin on the date of the wrongful act giving rise to the claim.
1.
Breach of Contract
In contract cases, the loss period will usually be the time from the date of the breach until the end of the contract
term. However, in cases of long-term contracts, or contracts with no specified duration, selection of an extended loss
period may cause the courts to question whether the calculation meets the standard of reasonable certainty. On the
other hand, if there is a history of renewals of a series of short-term contracts between the parties, it may be
reasonable to select a loss period that assumes one or more additional renewals. See also Mood v. Kronos Products,
Inc., supra, discussing the possibility that consequential damages for premature termination of a contract might
extend beyond the termination period.
2.
Torts
In tort cases, the loss period usually continues until the plaintiff’s business has recovered to the position it would
have been in but for the wrongful conduct of the defendant. In cases where the plaintiff’s loss of an opportunity or
line of business is permanent, it may be more appropriate to present the damages as a loss of market value as of the
date of the wrong.
P.
Calculating Lost Revenues
There can be numerous approaches to calculating lost revenues depending on the facts of the case and the legal
theories asserted. Several of the most common are discussed below.
1.
The “Before and After” Method
This method compares the results of the plaintiff’s operations before the loss-causing event with results
afterward and to the end of the loss period. Revenues for the “before” period and actual revenues for the “after”
period should be based on the plaintiff’s actual financial records. Assumed revenues for the “after period” may be
projected from past performance, or estimated based on internal budgets or forecasts if they can be shown to be
reliable. Several graphs illustrating “Before and After” calculations are attached as Appendix “A.” These and the
other graphs in the Appendix are from a presentation by Karl Weisheit, CPA, to the Business Litigation Section of
the Dallas Bar Association on March 9, 2010. 2
2.
The “Yardstick” Method
In this method, a “yardstick” or “benchmark” is used as a basis for estimating what the revenues of the
plaintiff’s business would have been but for the wrongful conduct of the defendant. The estimate might be based on
a similar business not affected by the loss-causing event, the plaintiff’s performance at another location, or on
1
See generally R. Pollack, et al., Calculating Lost Profits, AICPA Practice Aid 06-4 (2006). This publication can be purchased
as a PDF download at www.cpa2biz.com. See also N. Fallon, Ed., The Comprehensive Guide to Lost Profits Damages:
For Experts and Attorneys (2009). (2009).
2
Mr.
Weisheit’s
presentation
is
available
for
download
http://www.dallasbar.org/_upload/uploads/sections/Karl%20Weisheit%20DBA%203-920%20Lost%20Profits%20Presentation.pdf. Many thanks to Mr. Weisheit for permission to use his slides.
10
at
industry averages, among other possibilities. A graph illustrating a “yardstick” calculation is attached as Appendix
“B.”
3.
Calculation Based on the Terms of the Contract
In some cases, elements of the lost revenue calculation may be supplied by the terms of the contract giving rise
to the action. These may include unit prices, units to be purchased or sold, commission percentages, cost-plus
provisions, or the like.
Q. Calculating Avoided Costs
The plaintiff’s estimated lost revenues are reduced to lost net profits by deducting the costs that the plaintiff
would have incurred to generate the lost revenues but for the loss-causing event, usually referred to as “avoided
costs.” If the plaintiff has incurred costs that would not have been incurred but for the loss-causing event, those
should be deducted from the avoided costs.
As a general proposition, “variable” costs of producing additional goods or performing additional services, not
produced or performed because of the loss-producing event, will be treated as avoided costs, while “fixed” costs not
directly attributable to the generation of lost revenues will not. However, when the loss period is long, some costs
that ordinarily would be considered fixed may become at least partially variable. For example, if the plaintiff has
plant or personnel costs that it reasonably could have reduced over the loss period, the reduction of those costs should
be taken into account in the lost profits calculation. These may be referred to as “semi-variable” costs. Detailed
discussion of the proper characterization and estimation of costs is beyond the scope of this paper (not to mention to
ability of the author to explain).
R. Discounting
1. Discounting to present value
Discounting lost profits to present value can be necessary in two contexts: where the loss period extends beyond
the date of the calculation, and lost profits after that date need to be discounted to their present value as of the
calculation date; or, where the loss is calculated as of the date of the loss-causing event, and all lost profits need to be
discounted to present value as of that date. The former method is referred to as the “ex post” method, and the latter
as the “ex ante” method. In some cases, a hybrid of the two may be used.
The selection of an appropriate discount rate can be a major point of contention, and even relatively small
variations in the discount rate can have a major impact on the net result if the loss period is long. Common measures
of a proper discount rate include the plaintiff’s cost of equity, its cost of debt, and its weighted average cost of capital
(debt and equity).
2.
Discounting for risk
There are two ways to account for the risk that the plaintiff would have incurred in earning the estimated lost
profits. Usually, that risk will be accounted for in the selection of the discount rate applied to the projected net
profits to account for the time value of the money. An alternative approach is to discount the profit projections
themselves for risk, and then to discount for time using a lower, low-risk or risk-free rate. Proponents of the latter
method “believe that this approach is easier for judges and juries to understand.” Pollack, supra n.1, at 41.
S.
Reasonableness
Whatever methods are used, the final calculation, as well as all of its elements, should be reasonable. Put
another way, the expert, like the jurors, should not leave common sense behind. See Pollack at 27, 32. Two graphs
illustrating unreasonable projections are attached as Appendix “C.”
VI. Practical pointers3
T. Make Your Disclosures Promptly
It seems to be a common tactic to withhold expert witness designations and reports until the deadlines set either
by Rule 195.2 or by a scheduling order. If early designations have been made, supplementation probably will be
withheld until the deadline. Keep in mind that under Rule 193.5(b), an amended or supplemental response to a Rule
194 request for disclosure “must be made reasonably promptly after the party discovers the necessity for such a
response.” Arguably, if your response to a request for disclosure of expert witnesses made early in the case was
“None at this time,” your amended or supplemental response should be made reasonably promptly after the expert is
retained and/or develops an opinion. Even if Rule 193.5 shelters you from exclusion because of deadline-day
disclosures, the practice leads to unnecessarily compressed schedules for deposing experts and holding Robinson
3
See generally Papering Your Damages, supra.
11
hearings, and frequently results in continuances. Aside from imposing unnecessary stress on the lawyers and
expense on the parties, this is calculated to aggravate the judge if he or she thinks the disruption of their docket could
have been avoided.
U. Have an Alternative
A single, all-or-nothing presentation of lost profits damages, even when successful at trial, exposes the plaintiff
to a high risk of a judgment n.o.v. or reversal on appeal. If the defendant is arguing that the calculation doesn’t give
proper weight to an alternative cause of loss, consider requesting that the expert prepare an alternative calculation
that gives some weight to it. If there were multiple loss-causing events and some of them might not have been
actionable, request that the expert calculate the loss caused by each event separately. The same might apply to
multiple defendants if their liability is not joint and several. Your verdict is less vulnerable if it is within a range of
damages supported by the evidence.
V. Draw me a picture
The graphs included in the Appendix are great examples of the use of visual aids to simplify and explain what
may be complex testimony about lost profits calculations. In an appropriate case, such visuals may be extremely
helpful in cross-examining an expert whose assumptions or projections are extreme. Line graphs and bar charts are
relatively easy to prepare using Excel, among other programs. If you plan to use such graphs or charts, even as
demonstrative aids that will not be offered into evidence, be sure you can show that they fairly depict the underlying
data, and that you have disclosed or exchanged them as required by any scheduling order governing the case.
Word pictures also can be powerful. In one lender liability case, the plaintiff’s closing argument depicted the
plaintiff’s start-up business, whose brief history was a steadily deteriorating story of losses and debts, as an airplane
taxiing down the runway and just about to take off when the bank shot the wheels off by bouncing payroll checks
drawn on an overdrafted account. The jury found that the aborted flight was worth more than $11 million.
W. Know the expert’s professional standards
CPA’s in particular are required to adhere to professional standards when rendering litigating support services.
See Pollack, supra, at 5-9. You should be sure your expert can testify knowledgeably about those standards, and
convincingly about adhering to them in carrying out your assignment. The same standards may provide useful
material for cross-examination if the expert is not expecting the questions.
X. Study the expert’s literature
There is a fair-sized body of literature, from both legal and accounting perspectives. on the calculation of lost
profits and other commercial damages. If an expert’s approach is unorthodox, the expert may be subject to
impeachment using such literature.
VII. Conclusion
Proving lost profits damages has never been easy or simple. With the recent evolution of Daubert/Robinson
gate-keeping and Keller v. Wilson no-evidence review, it has become an extraordinary challenge. The field is strewn
with land mines that may blow up even a meritorious case. Plaintiffs must prepare and present their cases with the
utmost caution to obtain verdicts that will stand on appeal. Defendants should never overlook an opportunity to
challenge the basis or methodology of a lost profits opinion.
12
Appendix A-1
Graphs Courtesy of:
Karl D. Weisheit, CPA, CFF, CVA
Director of Litigation Services
Southern Region
Hagen Streiff Newton & Oshiro
Accountants, PC, CPAs
15601 Dallas Parkway
Suite 1050
Addison, Texas 75001
[email protected]
972.980.5095 (direct)
972.980.5060 (reception)
972.314.9621 (fax)
214.621.0658 (mobile)
13
VIII.
Appendix A-2
14
Appendix A-3
15
Appendix A-4
16
Appendix B
17
Appendix C-1
18
Appendix C-2
19