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Logixx Automation9/12/2002
inst Arete and Michels, alleging, among other things, breach of the settlement agreement. In 2000, the companies filed an amended complaint alleging (1) conspiracy to violate the settlement agreement and misappropriate trade secrets and (2) misappropriation of trade secrets. After a lengthy trial, a jury found Michels liable for breach of contract and conspiracy and awarded $1,170,000 in lost profits to the companies. The jury found Arete not liable on the misappropriation of trade secrets claim. The trial court awarded $559,287.24 in statutory prejudgment interest. The parties stipulated to an award of $290,000 in attorney fees to the companies, subject to this appeal. The trial court also awarded costs to the companies in the amount of $22,445.
This appeal followed.
II. Evidentiary Support for Damages Award
Michels' principal contention is that the companies did not provide a reasonable basis for the computation of damages and that the evidence was too speculative to support the damages awarded. Specifically, Michels contends that the evidence did not provide an adequate basis for the jury to determine net profits. We disagree.
The fact finder has the sole prerogative to assess the amount of damages, and its award will not be set aside unless it is manifestly and clearly erroneous. Sonoco Prods. Co. v. Johnson, 23 P.3d 1287 (Colo. App. 2001).
However, a damage award may not be based on speculation or conjecture. Wojtowicz v. Greeley Anesthesia Servs., P.C., 961 P.2d 520 (Colo. App. 1997).
The breach of a covenant not to compete gives rise to damages for a purchaser's loss of profits attributable to the breach. DBA Enters., Inc. v. Findlay, 923 P.2d 298 (Colo. App. 1996).
However, a claim for profits may not be sustained by evidence that is speculative, remote, imaginary, or impossible of ascertainment. Damages for lost profits are measured by the loss of net profits, meaning net earnings or the excess of returns over expenditures, not lost gross profits or gross sales revenues. Wojtowicz v. Greeley Anesthesia Servs., P.C., supra; see also Lee v. Durango Music, 144 Colo. 270, 355 P.2d 1083 (1960)(profits means net earnings, or the excess of returns over expenditures, and relates to any excess which remains after deducting from the returns the operating expenses, depreciation of capital, and interest on the capital employed); Black's Law Dictionary 1227 (7th ed. 1999)(net profits means " otal sales revenue less that cost of the goods sold and all additional expenses").
When recovery of lost net earnings is sought, it is sufficient for the plaintiff to provide a reasonable basis for computation, using the best evidence obtainable under the circumstances that will enable the trier of fact to arrive at a fairly approximate estimate of the loss. Evidence of past performance may form the basis for a reasonable prediction of future profits. Airborne, Inc. v. Denver Air Ctr., Inc., 832 P.2d 1086 (Colo. App. 1992).
However, there is no per se rule requiring a showing of past profits. See Western Cities Broad., Inc. v. Schueller, 849 P.2d 44 (Colo. 1993)(plaintiff had no history of prior profitability and had never operated at a profit under its present ownership; court declined to adopt a per se rule requiring a showing of past profits); Cope v. Vermeer Sales & Serv., Inc., 650 P.2d 1307, 1309 (Colo. App. 1982)(" lthough a plaintiff seeking to enter evidence of loss of profits in a newly established business does not have a 'prior track record' to ground a claim upon, this does not create a 'per se' exclusion of such loss if other competent evidence is proffered").
Documentary evidence o
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