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Kraatz v. Heritage Imports6/12/2003
(For Official Publication)
BACKGROUND
This appeal originates from an employment contract signed by Appellant William Kraatz and Appellee Heritage Imports (Heritage) in May 1990. Heritage hired Kraatz as its manager, and the contract provided an employment term of five years. Twenty-seven months later, Heritage terminated Kraatz and their contract. Kraatz filed suit for wrongful termination in January 1993, seeking $3,507,980, plus interest, in direct (general) and consequential (special) damages. A four-day trial ensued in August 1996. Later in 1996, the trial court ruled that Heritage did not wrongfully terminate Kraatz.
Kraatz appealed, and in March 1999, we reversed the trial court's ruling and remanded the case for determination of damages. See Kraatz v. Heritage, 1999 UT App 70 (Kraatz I) (memorandum decision). After the parties filed memoranda and exhibits, the trial court conducted a brief motion hearing on March 26, 2001. On April 30, 2001, the trial court entered its amended findings and conclusions awarding Kraatz certain direct damages, and excluded all consequential damages as a matter of law. Judgment was entered June 28, 2001, for $188,775.81 in damages, and $432,941.36 in attorney fees.
Kraatz appealed again, asserting that he was entitled to damages of $649,915.94, and $432,941.36 in attorney fees, totaling $1,082,857.30. Heritage cross-appealed, challenging the amount of attorney fees.
ANALYSIS
Damages for Breach of Contract
The primary remedy for economic losses caused by the non-performance of contracts is an action for damages for breach. See 24 Samuel Williston, A Treatise on the Law of Contracts §64:1 (4th ed. 2002). The fundamental principle underlying availability of contract damages is that of compensation. See id. The disappointed promisee is usually entitled to an award of money damages reasonably calculated to make him whole. See id. Damages are measured according to pecuniary loss suffered. See id. Thus, an award of monetary damages supplies the compensation. See id. The idea is to place the plaintiff-promisee in as good a position as he would have been in had the defendant-promisor not breached the contract. See id. In addition to recovery of direct (general) damages, the non-breaching party may also be entitled to recover so-called consequential (special) damages. See id.
In Kraatz I, the only issue before us was whether Heritage had breached Kraatz's employment contract by wrongfully terminating the contract and the employment. There, the trial court ruled that the termination was not wrongful. On appeal, we ruled that the termination was wrongful. Thus, we remanded the case to the trial court to assess Kraatz's damages, i.e., all economic losses. Where an employment contract
is for a definite term, the employee may recover damages for benefits, such as pension contributions, insurance, and the use of an automobile, which would have been received had the employment agreement not been breached, since limiting damages solely to the salary payable for the remainder of the contract would not make the employee whole. The discharged employee may thus recover damages for lost tangible benefits, such as insurance, and rights in stock ownership or pension plans, and there is even authority permitting the recovery of damages for lost intangible benefits . . . .
Id. § 66:5.
We first review the trial court's damage awards made pursuant to the express terms of the contract. Then we review the trial court's rulings with respect to consequential damages, attorney fees, and prejudgment interest.
I. Direct Damages
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