Opinion
No. CV 03-0476159 S
September 27, 2006
MEMORANDUM OF DECISION
(A.)
This case involves a claim by the Southern New England Telephone Company (SNETCO) for unpaid advertising placed in the company's phone books. The defendant Jeffrey Coho denies this claim by arguing that SNETCO breached the contract it had with him for the advertising as to certain yellow page directories. He also maintains that at trial SNETCO never established the amount it claims he owed for the advertising it placed in its yellow pages.
Mr. Coho also brings a counterclaim against SNETCO. He argues that by breaching the contract for advertising on 1999-2000 books he lost business which he would have garnered if the correct advertising was put in the phone books. As will be discussed much of the dispute centers on the wording in the original contract document signed by Coho for the heading to his business and the heading actually put in the phone books. Mr. Coho also argues that the advertising put into the 1999-2000 phone book misstated the actual nature of his business.
Mr. Coho at first ran a florist business out of his home; he then decided to sell caskets. He claims he competed directly with funeral directors and wished to sell directly to the public and could offer caskets at a price much lower than funeral homes could. He ran this casket aspect of his business out of a furnished basement room. He also offered for sale crosses, urns, cards, and rosary beads.
SNETCO makes a claim for advertising for Mr. Coho's florist business in the years 1997-1998, and in the 1998-1999 Manchester book. In November 1998 a SNETCO agent and Mr. Coho signed a contract for florist and casket advertising in several 1999-20000 yellow page directories. The court will describe the casket showroom advertising which actually ran in the 1999-2000 SNET yellow pages for the Hartford, Glastonbury, and Manchester/Rockville phone books. From the towns listed on these books which were introduced as exhibits it can be seen that they were distributed over a fairly wide area of north central Connecticut. Mr. Coho ran his business as Kamco Florists and Kamco Caskets Showroom. Mr. Coho had advertising for his florist business in the 1997-1998, 1998-1999, and 1999-2000 SNET Manchester and South Windsor-East Hartford yellow pages and the 1999-2000 Manchester white pages directory. There appears to be no dispute as to the contents or placement of the florist advertisement yellow page advertisements.
As noted the litigated dispute centers on the heading and ad placed in the 1999-2000 books for his casket business. The court will try to describe these advertisements.
All three books have a square box in which is written "Funeral Directors Equipment and Supplies." Beneath this small box it has only one listing which is for Kamco and each one says:
Kamco Casket Showroom 1670 Ellington Rd, South Windsor (with the phone number on the same line as the address).
Beneath this information it says (SEE ADVERTISEMENT THIS PAGE) in caps. Two of the books have the foregoing information in bright red print.
The actual picture advertisement is the same for each three books and they all appear prominently on the top of their respective pages. One of the advertisements is in black and white, two have coloring — Manchester/Rockville and Hartford.
All three on the top line in large type say "Kamco Caskets Showroom." Immediately below that are what might be described as two separated four-line statements. The one on the left which is in color in Manchester/Rockville and Hartford say in the following format with the same large type size:
Funeral Directors
Welcome to Inquire
About All
Wholesale Products
To the right and to the opposite of this in block print in all three books appears the following:
TO THE GENERAL PUBLIC
At 1/2 of what the Funeral Homes charge with no sacrifice of quality or dignity
Mahogany Finished Casket $1600
The first line is in large type, slightly larger than the just discussed language aimed at funeral directors.
Below these two statements in large black lettering with each word preceded by a black square in three lines are the words Caskets, Crosses, Urns, Cards, Rosary Beads. At the bottom left of each ad appears Kamco's phone number in large, prominent type with the street address underneath the number.
As a background to all three advertisements over which some of the print is overlaid there appears an open, empty casket which appears to be of wood, the Manchester/Rockville Book is the only one that presents the casket in full color.
It should also be noted that in the Glastonbury book directly beneath the box saying "Funeral Directors Equipment and Supplies" below which Kamco's address and phone number is given is another box in which the words "Funeral Plans-Pre-arranged" appears with one listing underneath for a funeral home. There is no other advertising for this funeral home on this page or any other.
The Manchester/Rockville book also has a box directly beneath the Kamco listing which says "Funeral Plans-Prearranged" with one listing for a funeral home which has no other advertisement on this page or any other.
The Hartford book, directly below the Kamco listing has a box for "Funeral Motor Cars" which says "See also Limousine Service" directly beneath the box with two listings, one in bold red letters but with no other advertising in the book. Directly below this listing is a box with the words "Funeral Plans-Prearranged." There are two listings, both funeral homes neither of which have any other advertising in the yellow pages.
(B.) SNETCO Claim
There are two aspects to the plaintiff's claim. One claim appears to be in implied contract for the florist advertising appearing in the two 1997-1998 directories, and the florist advertisement in the 1998-1999 Manchester directory. Mr. Coho does not complain about the nature of the advertisement or deny that he did not have the advertising placed in these directories.
The second aspect of the claim arises out of a November 1998 agreement signed by Mr. Coho and a SNETCO sales representative for advertising in several 1999-2000 yellow page directories. The advertising contemplated was for the florist business and Mr. Coho's desire to sell caskets and funeral merchandise.
First it is necessary to examine the November 12, 1998 agreement between the parties. A sales representative of the plaintiff, Mr. Crouse, came to Mr. Coho's home and place of business to sell advertising space in the company's directories for Coho's florist and casket business. Mr. Crouse was subpoenaed to court to testify; he does not work for the plaintiff any longer, seemed like a candid witness and had no ascertainable reason to engage in falsehoods about the case.
Mr. Crouse could not fully recall the conversation with Coho several years after the fact but he believed Coho wanted to advertise under the title "Funeral homes and directors" heading. There seems no dispute that Coho was not a licensed funeral director as required by state law so any contract for advertising on that basis would violate public policy, see generally Calamari On Contracts "Illegal Bargains," § 22.3 p. 851-53 discussing effect of licensing statutes, 17A Am.Jur.2d "Contracts," §§ 237 et seq., Restatement 2d Contracts, Vol. II, § 178, 12 Havemeyr Place Co., LLC v. Gordon, 76 Conn.App. 377, 389 (2003).
Mr. Coho testified that Mr. Crouse suggested the heading "Funeral plans pre-arranged." This would seem to be likely since some of the books introduced into evidence have this every heading for funeral homes and it is not the type of term that one would think the ordinary consumer of advertising services such as Mr. Coho would have on the tip of his tongue. An advertising sales representative would be expected to be aware of the use of such headings in its company's directories.
Interestingly despite Coho's claim that the November 12, 1998 agreement was an integrated contract no objection was made under the parol evidence rule to Crouse's testimony that he or the sales representative he was with, to be more exact, told Mr. Coho that he could not guarantee the heading "funeral plans prearranged" would be placed in the directories. However, this version of events is supported by the very nature of the regular way SNETCO processed these orders. A sales representative like Crouse would not have the authority to finally approve an ad; another SNETCO employee, here Mr. Sanscomb who testified, would have to review the advertising language agreed to in the contracts created by the sales representatives. This makes business sense since there would be a need to insure uniform practice, as to advertisers, compliance with state law and an intelligle format in the advertising process. Mr. Sanscomb who no longer worked for SNETCO at the time of the trial was the Manager of Process and Standards. Another important part of his job was preventing what he called "billboarding." Advertisers must be prevented from publishing under a particular heading where the advertiser does not really provide the product or service represented by that heading. Such a control person as Sanscomb is necessary if advertisers are not given unfair competitive advantage. Mr. Coho never directly contradicted Crouse's statement that during the November 12, 1998 discussions with him Crouse told him the "Funeral plans prearranged" could not be guaranteed.
In any event Mr. Crouse had a so-called "bubble jet printer" with him at the time of the November 12th meeting and printed out the claimed contract document on the date of the meeting. The document was signed by both Crouse and Coho. It provided for florist advertising in several directories and then had the language "Funeral Plans Prearranged" for several directories. This was the proposed heading under which Mr. Coho's business would be listed. The document is entitled "Advertising Contract" and it also lists the costs of the proposed advertising in some detail. At the end of the document it states: "I the undersigned, hereby represent that I am duly authorized to enter into this contract on behalf of the Advertiser and do approve the above advertising or other agreed services, which I have reviewed in detail via computer display. I agree to pay the amounts shown above. I verify, that I have reviewed, understand, and agree to be bound by the Terms and Conditions as attached to this Advertising Contract." Then there appears the following: "I verify that I have reviewed, understand and agree to be bound by the Terms and Conditions as attached to this Advertising Contract. This contract shall continue until withdrawn or rejected as provided in said Terms and Conditions." The referenced "Terms and Conditions" were not produced by either side so the court cannot weigh the possible bearing of this language on any issue before the court.
Mr. Coho argues he is not obligated to pay for the advertising actually placed in the directories regarding his casket business because it did not comport with the terms of the November 12th contract which was meant to appeal to the general public. The advertising actually published listed his business under the heading "Funeral Directors and Supplies." A clear distinction in the court's mind must be made between three aspects of the advertising placed in the 1999-2000 directories. First there was the florist advertising, then there was the advertising for the casket business (1) the heading under which Kamco was listed and (2) the advertisement that appeared near the top of the page in each of the 1999-2000 directories.
(1)
The plaintiff of course cannot deny that the advertising regarding the heading under which Kamco Caskets appeared in its directories was not the heading explicitly set forth in the November 12th agreement. It argues, however, that after November 12th and prior to the placement of the ads the parties modified the language as to the heading that was to appear in the directories, that is "Funeral Directors Equipment and Supplies."
In Hess v. Duinouchel, 154 Conn. 343, 347 (1966) the court said "The parties may validly agree to substitute or materially change a contract, but as required in originally making it, mutual assent to its meaning and conditions is necessary . . . They must assent to the same thing in the same sense . . . if they are to vary the contract in any way after it has been executed; in New England Petroleum Corporation v. Groppo, 214 Conn. 44 (1990) the court said, quoting from an earlier case: "A written contract can be modified by a subsequent parol agreement if that is the intention of the parties . . . because the parties to a written contract retain the power to alter or vary or discharge any of its provisions by a subsequent agreement." In Consiglio v. White, 72 Conn.App. 236 (2002) at footnote 5 the court said . . . "for modifications of a contract to be enforceable there must be new consideration . . . Mutual promises qualify as sufficient consideration for a binding contract; however, for a valid modification, there must be mutual assent to the meaning and conditions of the modification," see also Harris Calorific Sales Co. v. Manifold Systems, Inc., 18 Conn.App. 559, 563 (1989). The Restatement (2d) Contracts, § 89 takes a more liberal view. Saying that a modification "under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made"; comment (a) does not seem to require consideration for "fair and equitable" modifications for the evident reason that such modification would often occur at or near the time of contract formation when there are ongoing transactions between the parties, cf. 17A Am.Jur.2d "Contracts," § 511, p. 483-85. Neither side specifically addressed the consideration issue as a prerequisite for modification.
In any event the court will try to discuss the facts on which a modification claim can be based. Mr. Crouse testified that after November 12th discussions were had at SNETCO about the heading. Mr. Sanscomb testified that he decided Mr. Coho could not advertise his business under the heading "Funeral Plans Prearranged." Mr. Crouse told Mr. Coho of the decision; Coho was quite upset apparently and said that he would sue because he had a contract, signed on November 12th, which provided for the heading "Funeral Plans Prearranged."
As to the advertisement at the top of each page the facts become quite convoluted. Mr. Crouse had memory problems as to the conversations with Mr. Coho but his testimony was that Mr. Coho agreed to the proposed ads after meeting with Coho and discussing their contents. The copy sheet (Ex. 12) sets forth, according to Crouse the result of their conversation but it was not signed by Mr. Coho. Mr. Coho testified that he adamantly opposed the heading of "Funeral Directors Supplies and Equipment" but interestingly at a deposition said that as to the ads he would just wait and see what they looked like before taking a position which can certainly be considered a party admission. O'Brien v. John Hancock Mutual Life Ins. Co., 143 Conn. 25, 29-30 (1955), Evidence Code § 8-3(a)(A). In fact there is every reason for the court to conclude that the ads were in fact approved by Coho. They are located in a prime position near the top of the page. In the upper right hand corner in bold letters there is a sales pitch "To the General Public." Their very content indicates Mr. Coho gave input on the nature of the ads. Where would a SNET sales representatives have garnered the information that he sold caskets at half the price of funeral homes or that, as the ad says, a member of the public could get a mahogany casket for $1600. The details that Kamco offered in addition to caskets "crosses, wins, cards, and rosary beads" could hardly have been expected to come from information supplied at the November 12th Crouse-Coho encounter which seemed to have dealt with the heading to be used. In fact the placement on the left of the ad directed to funeral directors "about all wholesale products" can hardly be said to have diluted the sales pitch to the public despite the fact that Mr. Coho testified and the court agrees that he was in competition with funeral directors and did not engage generally in the business of selling to funeral directors. In fact because he advertised selling to funeral directors at wholesale this would impress the public by convincing them they must be getting a good deal if they bought from Kamco.
Perhaps oddly, the parties did not directly address separately the fact that the services to be provided Kamco were, as noted, # 1 the heading and #2 the display ad and nor did they discuss what legal effect this might have on the modification of contract argument and SNETCO's damage claim.
(2)
The November 12, 1998 document talking about "Funeral Plans Prearranged" appears to have encompassed the heading and the ad which is referred to as "display ad" in that document. The language in the document for "Funeral Plans Prearranged" is "DBL Quarter Column + 1 Color Display." On the basis of this record the court finds it difficult to conclude Mr. Coho assented to the heading "Funeral Directors Supplies and Equipment" and that there was mutual assent as to the oral modification of the contract as to the heading; see cases cited on prerequisites of oral modification.
The fact that the copy ad which the court concludes he did agree to have run contains in a small box at the top of the first page "Heading Funeral Directors Equipment Supplies" in Crouse's handwriting when the document was not signed by Coho does not convince the court Coho had a change of heart in this regard when he approved the ad and agreed to this heading.
The court concludes that there was partial performance by SNETCO. In this case, Connecticut appears to follow the general rule that although there are exceptions "partial performance of an entire and indivisible contract by one of the parties does not entitle that party to performance of the contract by the other party or to recovery on the contract . . . However, there is considerable authority supporting a recovery of the value of the benefit occurred even though a party who has only partially performed cannot prevail in an action on the price." "Contracts" 17 Am.Jur.2d § 621 p. 579-80; Weinstein v. Mutual Trust Life Ins. Co., 116 Conn. 654, 666 (1933); Vines v. Orchard Hills, Inc., 181 Conn. 501, 505 (1980).
The court will now discuss the damage claim of SNETCO for the 1997-1998 florist advertising in the South Windsor — East Hartford books and the 1998-1999 florist advertising in the Manchester directory. Apart from a statute of limitations defense Mr. Coho does not directly dispute these bills or the content, quality or location of the advertising. On this aspect of the SNETCO claim the court concludes Mr. Coho owes the plaintiff $3,509.90. As to the 1999-2000 directories Mr. Coho should pay SNETCO for the bold listing in the Manchester white pages and the 1999-2000 florist ad in the South Windsor directory. These two matters come to a total of $666.
As to the casket advertising in the 1999-2000 Glastonbury, Hartford and Manchester yellow pages the court, as noted, has concluded that it cannot find Mr. Coho assented to the "Funeral Directors Equipment and Supplies" heading. Therefore it concludes Mr. Coho should have to pay only 1/2 of the charge for the 1999-2000 ads in the Glastonbury and Hartford yellow pages or $2,034 since the court assumes he was charged for the heading which appears on the same page as the display advertisement. The court has decided the display advertisement does contain language aimed at funeral directors but this does not dilute the prominent position of the ad as it is directed to the general public and for the reasons stated may enhance its appeal.
As to the 1999-2000 charge for the Manchester directory the court concludes Mr. Coho should pay for the florist advertising and the display advertisement but not the heading which appears on the same page as the advertisement and concludes that portion of the debt is $1330.
The defendant introduced into evidence a letter from a SNETCO collection manager which indicated in 1999 or 2000 the yellow page account balance had been carried in the telephone account but had recently been moved to a "Yellow Page Bill." That letter makes clear what the changes were for unpaid Yellow Page Advertising which does not differ substantially from Mr. Dauria's trial testimony as to the amount Mr. Coho currently owes. Mr. Dauria is a service specialist for credit and collections. The defendant's brief also states Dauria could not ascertain "what portions of payments made by Mr. Coho were directed to yellow pages versus telephone charges." But no evidence was introduced by Mr. Coho of what if any payments were made by him and when and the foregoing statement cannot be used to indicated Coho was being sued in this case for telephone bill charges.
The court awards $7,439.90 on the SNETCO claim.
(C.)
The court will now discuss Mr. Coho's claim against SNETCO regarding the 1999-2000 directory. The court has difficulties with the defendant's claim against SNETCO on both on the basis of liability and the request for damages.
Mr. Coho relies on his claim that SNETCO breached his November 12, 1998 agreement by failing to present his business as one of "Funeral Plans Prearranged." Both sides spent much time and energy over the nuances of whether in fact Mr. Coho's activities violated state regulations. Defense counsel at trial and in his brief argued that nothing in state or federal law prohibited Mr. Coho from conducting his business the way he had been and under the foregoing heading. The Federal Trade Commission per a consumer guide introduced into evidence encourages people and families to engage in "funeral planning" under a section identified as "Pre Need." But the booklet notes that the states have licensing boards regulating the funeral industry. At another point the booklet acknowledges that "Laws of individual states govern the prepayment of funeral goods and services."
We have two statutes, § 42-200 and § 42-201 which stated as follows at the time of contract formation:
Section 42-200
For the purposes of this section and sections 42-201 to 42-206c, inclusive, " funeral service contract" means a contract which requires the payment of money or the delivery of securities in exchange for the final disposition of a dead human body, including funeral, burial or other services, or the furnishing of personal property or funeral merchandise in connection with any such disposition, wherein the use or delivery of such services, property or merchandise is not required immediately." (Emphasis added.)
Section 42-201
No person, firm or corporation shall enter into a funeral service contract to provide such services, property or merchandise unless such person, firm or corporation is licensed in accordance with the provisions of chapter 385. No person may arrange, promote or sell any funeral service contract on behalf of a funeral service establishment unless such person is an embalmer or funeral director licensed in accordance with the provisions of chapter 385. Any person who violates the provisions of this section shall be guilty of a class A misdemeanor.
The court would refer to the explicit underlined language of § 42-200. The statue makes no distinction between oral and written contracts. In other words, the statutes seem to say that if you have a situation where the final disposition of a body presents itself a "funeral service contract" involves the furnishing of funeral type merchandise where the merchandise is not required immediately that is the type of preplanning that it is not permissible without a license which Mr. Coho did not have. To blanketly permit an unlicensed person as defined in § 42-201 to engage in such transactions and to enable such trade by advertising of course violates the statute. But in fact Mr. Coho did in his business and whether he violated § 42-201 because he had no license, which he does not, misses the point. The point is to permit anyone without a license to make such a blanket advertisement would violate the statute and to enforce a breach of contract claim against SNET, even if such a contract claim could be made would violate public policy. A cursory examination of § 178 of the Restatement (2d) Contracts section (3) indicates such a contract would be unenforceable on grounds of public policy. The state has an important interest in regulating the funeral industry; it is a time where consumers in the market place are peculiarly vulnerable, refusal to enforce the stated policy would encourage a complete disregard of the law if advertisers were thereby permitted to publish such information to the general public. The very publishing of such an ad by unlicensed actors is the misconduct which would be at issue.
Interestingly in the phone books presented to the court there was a heading for "Funeral Plans Prearranged." But all of the listings under this heading were for funeral homes which presumably had licensed funeral directors operating them.
It is also true that even if SNETCO can be said to have breached its agreement as to the heading and that heading is not unenforceable on the just stated public policy grounds the court has concluded the ad was approved by Mr. Coho and of course it was published. The court described the ad, its contents and location previously. It substantially touted the very business Mr. Coho wanted to engage in and was directed at the very audience he wanted to reach. The fact that the ad was directed and even baselessly directed at funeral directors does not distract from its appeal to the public Coho was interested in reaching. How on earth can the court separately determine the damages that resulted from the failure to place the desired heading in the directories apart from the ad and conclude that certain damages suffered by Mr. Coho were suffered because of the wrong heading which could not be said to have been cancelled or reduced by the ad. The ad was quite effective, certainly more prominent than the heading itself so that any award of damages would be entirely speculative. As said in Restatement (2a) Contracts, § 352 "Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty." A "court must have evidence by which it can calculate the damages which is not merely subjective or speculative, but which allows for some objective ascertainment of the amount." Bronson Townsend v. Battistori, 167 Conn. 321, 326-27 (1974).
But even if the court's position on the two last discussed areas is incorrect and the lost profit claim is squarely before it the court does not believe that such a claim has been proven. First the court will make general remarks it has taken from another case involving a lost profits claim. A lost profit claim falls within the definition of "contract damages." In comment a to § 347 of the Restatement (2d) Contracts it says that:
Contract damages are ordinarily based on the injured party's expectation interest and are intended to give (it) the benefit of (its) bargain, by awarding (the injured party) a sum of money, that will, to the extent possible, put (it) in as good a position as (it) would have been had the contract been performed.
It has been said specifically with regards to lost profit claims that such claims are permitted "only if the profits were reasonably within the contemplation of the defaulting party at the time the contract was made," 22 Am.Jur.2d "Damages," § 448, page 400; Schonfeld v. Hilliard, 218 F.3d 164, 175 (CA 2, 2000). On the other hand "nearly all commercial contracts are entered into in contemplation of future profits," Trikorian v. Dailey, 197 S.E. 442, 448 (Va. 1938). In the above section of Am.Jur. just referred to it says:
Thus, if profit is an inducement to making a contract, a loss of profits as a result of the breach of that contract is generally considered to be within the contemplation of the parties and recovery of lost profits will be allowed as damages if causation is proved with reasonable certainty.
See Camino Real Mob. Home Park Partnership v. Wolfe, 891 P.2d 1190, 1200 (N.M. 1995) for excellent discussion.
In this case it is clear that profit was an inducement to making the advertising contract.
It is the measuring of lost profits that presents the real difficulty. There are first of all various categories of lost profit situations. One type of claim involves lost profits for a new business, Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, 247 Conn. 48, 631 (1998), long standing businesses can also make a lost profit claim, Granoto v. Bercettieri, 5 Conn. Cir. 150, 154 (1968), Cheryl Terry Enterprises Ltd. v. Hartford, 270 Conn. 619, 641 (2004).
All authorities and cases seem to agree that "measuring unrealized profits entails extensive problems of proof," Granoto at 5 Conn. Cir. p. 154, and is "one of the most difficult subjects with which courts have to deal," id., p. 156. The governing principle is set forth in Restatement (2d) Contacts where at § 352 it says:
§ 352. Uncertainty as a Limitation on Damages
Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.
The ensuing commentary at page 145 of volume 1 of the Restatement says: "The main impact of the requirement of certainty comes in connection with recovery for lost profits." But then the commentary goes on to add that in calculating damages. Doubts are generally resolved against the party in breach. A party who has by (its) breach, forced the third party to seek compensation in damages should not be allowed to profit from (its) breach where it is established that a significant loss has occurred. A court may take into account all the circumstances of the breach, including willfulness, in deciding whether to require a lesser degree of certainty giving greater discretion to the trier of fact. Damages need not be calculable with mathematical accuracy and are often at best approximate.
The problem with the foregoing is that it is premised on the predicate establishment of a "significant loss." How does one decide that? And certainly the broad discretion given to the trial court would not sanction guessing. But it is true that broad statements are made in the commentaries and case law. At § 457, 22 Am.Jur.2d "Damages" says at page 408.
if the wrongful act of the defendant prevents determination of the exact amount of damages, the defendant is not allowed to insist on absolute certainty but only that the evidence show the lost profits by reasonable inference.
Message Center Management v. Shell Oil Products, 85 Conn.App. 401, 421 (2004) cf. Gilmore v. Cohen, 386 P.2d 81, 82 (Ariz. 1963), Contemporary Mission, Inc. v. Famous Music Corp., 557, F.2d 918, 926 (CA 2, 1977).
But there are qualifications on this just quoted broad language. The Granoto case said that in these lost profit cases absolute certainty cannot be required nor could it be obtained but the court went on to say a court cannot resort to a mere guess but (quoting from a commentator), "should be guided by some rational standard"; if the litigant furnishes the best available proof of the amount of loss — the most satisfactory date the situation allows — this would suffice, 5 Conn. Cir. at p. 156-57; also see Gilmore v. Cohen, 386 P.2d at page 82. Where the contract said: "In other words the plaintiff in every case should apply some reasonable basis for computing the amount of damage and must do so with such precision as, from the nature of his (her) claim and the available evidence, is possible." Gilmore is a case where the court said doubts as to the extent of injury should be resolved in favor of the innocent party and against the wrong doer. But using the just mentioned reasoning upheld the trial court's denial of a lost profit claim for failure to meet the reasonable certainty test. Thus lost profits need not be established with certainty but . . . "evidence of lost profits must be based upon objective data from which the loss can be determined with a reasonable degree of exactness." Maxvill-Glasco v. Royal Oil, 800 S.W.2d 384, 386 (Tex.App. 1990), Southwest Battery v. Owen, 115 S.W.2d 1097, 1099 (Tex. 1938).
Although Beverly Hill Concepts, supra, involved a new business scenario and a tort claim was made the court did say that: "In order to recover lost profits, therefore, the plaintiff must present sufficiently accurate and complete evidence for the trier of fact to be able to estimate those profits with reasonable certainty," 247 Conn. at page 47 cf. W.W. Gay Mechanical Contractor v. Wharfside Two Ltd., 545 So.2d 1348, 1351 (Fla. 1989); cf. 22 Am.Jur.2d "Damages," § 444: "The law does not require that lost profits be proven with absolute certainty but only with such reasonable certainty that damages are not based wholly upon speculation and conjecture." P. 395.
The court will conclude this preliminary discussion of the standards it will apply to the facts of this case by mentioning two other observations made in these lost profit cases.
When the courts speak of lost profit calculations they of course talk in terms of net profits, Cheryl Terry Enterprises Ltd. v. Hartford, supra, Ellwest Stereo Theaters, Inc. v. Davilla, 436 So.2d 1285, 1288 (La. 1983) (cited in Beverly Hill Concepts); Lindevig v. Dairy Equipment Co., 442 N.W.2d 504 (Wis.Ct.App. 1989); The Drews Co. v. Ledwith-Wolfe Assoc., 371 S.E.2d 532 (S.C., 1988); Maxvill-Glasco v. Royal Oil, 800 S.W.2d 384, 386-87 (Tex.App. 1990).
In Cheryl Terry Enterprises Ltd. the court upheld the lost profit claim after noting the meticulous way in which the plaintiff calculated her costs in the busing contracts she had previously bid on in the past. The jury could rely on this testimony to determine future costs which could then be subtracted from the contract price to determine net profits. In Ellwest, the plaintiff was deprived of the opportunity to run a retail store, an accountant calculated net profit figures from other stores run by the plaintiff after taking out all operating expenses, bonuses and other compensation to officers. In Lindevig the court stated that to establish lost profits a claimant must show business revenue as well as expenses. The court held that "because the plaintiffs produced no evidence of expenses, the evidence showing gross profits had no evidentiary value." id., page 508. In Drews Co. the court quoted from Rest of Contracts § 331, comment B (1932) "Profits" have been defined as "the net pecuniary gain from a transaction, the gross pecuniary gains diminished by the cost of obtaining them." Simply put "net profits are what remains after a business deducts expenses," Maxvill-Glasco v. Royal Oil, 800 S.W.2d at page 836.
Another observation that should be made is that in trying to calculate lost profits our court has "permitted lost profits to be calculated by extrapolating from past profits see e.g., Westport Taxi Service, Inc. v. Westport Transport District, supra, 235 Conn. 32-33; Humphreys v. Beach, ( 149 Conn. 14, 21) ("in the absence of evidence to the contrary, the court was entitled to draw the inference that the plaintiff's business would continue to be as profitable as it had been in the year and a half before the fire"), quote from Beverly Hill Concepts, Ltd., 247 Conn. at p. 69-70. One would imagine that the corollary of this is also true — failure to show profit must have some bearing on the ability to earn future profits. In Metropolitan Express Services, Inc. v. City of Kansas, 71 F.3d 273, 275 (CA 8, 1995) the court noted that the plaintiff "must demonstrate those lost net profits by offering `proof of the income and expenses of the business for a reasonable time anterior to its interruption with a consequent establishing of the net profits during the previous period . . . Put simply, "to show that it lost profits (the plaintiff) must first show that it was previously earning profits." Interestingly perhaps for this case the court noted that although the plaintiff "argue(d) that the loss figures (for previous two years) are deceptive because they represent the company's overall loss for tax purposes and ignore individual gains within segments of the company, (the plaintiff) offered no documentary evidence to explain the contradiction." ( Id.)
Moving from the general to the particular the defendant Mr. Coho advances two variations of a lost profit claim. He has introduced the census records of the towns which were serviced by the subject directories and maintains that what he bargained for was that his business would be advertised to each household in the areas covered by the directories. Therefore, his damages, and the only way to make him whole would be to award him damages for the cost of mailing to each of the households in the defined area. An award based on such a theory would mean that he would be entitled to damages in the amount of $326,192 for the year 1999 and the same amount for the year 2000 resulting in a damage claim of over $750,000.
He relies on the case of Lexington Products Ltd v. BD Communications, 677 F.2d 251 (CA 2, 1982). In that case the Second Circuit held that the trial court erred in awarding only nominal damages. Lexington, a foreign corporation, wished to market a polishing brush and liquid in this country. The defendant entered into an exclusive marketing agreement with Lexington, it agreed to buy 200,000 brushes a year at cost for the life of the contract, to pay Lexington royalties for each brush sold, and to spend $500,000 in television advertising and promotion each year of the contract. The trial court found that Lexington had successfully marketed the product in Britain but it also found in 1977 only 60843 brushes were sold in America and that the defendant spent well below the sum supposed to be allocated for advertising; "with BD's steady decline in advertising there was a corresponding decline in (the product's) sales," id., p. 252. Lexington suggested two bases for recovery (1) the court should decide the money actually spent on advertising by the number of brushes sold to reach a ratio for each brush of almost 60 cents per brush. Using this ratio it was argued that if the defendant had spent the agreed amount on advertising over half a million brushes would have been sold and the defendant would owe Lexington almost a quarter of a million dollars minus royalties already paid. (2) The second theory argued that at least Lexington would have been expected to sell 200,000 brushes each year for the life of the contract so damages could have been easily calculated based on markup minus royalties.
Lexington offers no basis for the defendant's lost profit claim. In Lexington there was a successful history of prior sales of the product and a basis in that sales record and the parties' very agreement to calculate damages. Here the testimony was clear that Mr. Coho did not have a successful business, for several years of its operation he apparently did not earn the minimum $6,000 necessary to mandate the filing of federal income tax returns and even if his profits in those years were somewhat larger than some of his testimony indicated they would not have supported the enormous damage claim made here. Lexington in fact referred to Fruend, Washington Square Press, 357 NYS.2d 857 (1974, Ct.App.) which the Lexington court said was a case where the New York court correctly held only nominal damages were appropriate. In Fruend the court of Appeals, as Lexington, noted based its decision of the fact that the author who sued the defendant publishing company did not prove "any public acceptance of his unpublished work," id., p. 253. In Lexington the court said contrary to Mr. Fruend "Lexington had shown a track record of (brush) sales before (the defendant's) breach where Mr. Fruend's drama book had no prior sales history," id., p. 254. Neither does Mr. Coho's sales history justify the huge damage figure requested here. The Lexington court made a point of saying the damages awarded in the case before it was based on competent evidence because it was based on "the record of sales and advertising," id. Query would even the Lexington court award the mailing cost to all the households in U.S. reached by its media coverage?
Also no expert testimony was offered relative to market conditions and prospects for Coho's casket business. The possibility for such an analysis was presented by the fact that there were operating businesses listed in the directories under "Funeral Plans/Prearranged." No evidence was offered as to the demographics of the households in the census tracts, i.e., the age of various inhabitants related to mortality productions, how many of the households might be inhabitated by out-of-state residents who in all likelihood would not be buried in state or have a need for Mr. Coho's products.
On a more practical level, if phone companies were exposed to damage claims such as the one made here their businesses would not be viable given the possibilities of human error and failure of communication from customer to sales representative to content control officer to printer. This aspect of the damage claim is not accepted by the court.
Another damage claim made by Mr. Coho is based on his advertising in the so called "Reminder" book which has no relation to SNET and advertises to the public. The argument runs as follows. The "Reminder" reaches 67,321 households, the SNET contract reached 299,259. The first figure is divided into the last figure and the figure of 4:445 is arrived at. The brief says Coho testified he had $21,000 net profits from casket sales during the period covered by the 1999-2000 yellow page publication. That figure could be multiplied by 4.445 for a lost profit claim of $93,335. But if one examines the Reminder ads submitted into evidence none of them refer to the logo "Funeral Plans Prearranged." In fact exhibit G on the page before the Kamco Casket Showroom ad has a listing for "Funerals-Prearranged" under which funeral homes appear and not Kamco. Kamco is listed under "Funeral Products."
In any event the premise of this argument is the $21,000 profit figure. But Mr. Coho kept no record of expenses associated with his casket business and even seemed to imply the casket portion of his business had no expenses although be it had advertising expenses, auto expenses for transportation, rental and mortgage expenses on the property from which he ran his business and several other ordinary office expenses, some shipping costs and taxes. But Mr. Coho kept no ledger book or any records of expenses. Mr. Coho did not even have definite notion as to how many contacted him as a result of the Reminder ads in the towns in question. As noted on neither of the lost profit theories was any expert testimony presented on a demographics, estimates of lost profits because of failure to get the advertising Mr. Coho wanted coupled for example of what comparative prices funeral directors or other funeral merchandise suppliers were selling in the area which is the subject of this claim.
Finally the court will discuss the mitigation of damages issue. In a contract action a party claiming breach has a duty to mitigate damages and must make reasonable efforts to do so; also the party who has breached bears the burden of proving someone in Mr. Coho's position has failed to mitigate damages. Ann Howard's Apricots Restaurant, Inc. v. CHRO, 237 Conn. 209, 229 (1996), see also Restatement (2d) Contracts § 353. If a court determines no such reasonable efforts were made the damage award "will be reduced by the amount that could have been avoided," 22 Am.Jur.2d § 353, page 323. It is true that there is no reasonable substitute for the yellow pages but query whether radio or television advertising or newspaper advertising could have been resorted to by Mr. Coho. The court will not factor in this element into its analyses, however, because the record is too nebulous for the court to arrive at any conclusions on mitigation especially in light of the fact that the SNETCO has the burden of proof on mitigation.
In any event the court concludes that the defendant has not established his claim against the plaintiff and in any event has not proven damages beyond a nominal amount. The court therefore denies recovery in the counterclaim.
The defendant has raised several special defenses which the court concludes have not been established.
(1) Statute of Limitations. The Practice Book, § 10-3(a) requires a defendant to plead a statue that he is relying on in a special defense. The defendant did not plead the particular limitations statute he is relying on and even his post-trial brief does not do so.
However, the relevant statutes seem to be § 52-576 and § 52-581. Section 52-576 provides for a six-year statute of limitations. The plaintiff relies on a theory of modification of a written contract as to the 1999-2000 advertising; interestingly the defendant relies on the same "written contract" in his counter claim and the damage claim he makes thereunder. It would seem to the court that therefore § 52-576 with its six-year limitation applies to the 1999-2000 advertising period so the suit was commenced within the statutory period.
That leaves for discussion the charge for florist advertising in the two 1997-1998 directories. Section 52-581 provides for a three-year statute of limitations for actions based on an "oral contract." Section 52-576 says that "no action for an account, or on any simple or implied contract, or on any contract in writing shall be brought but within six years after the right of action accrues . . ." The case of Hitchcock v. Union New Haven Trust Co., 134 Conn. 246, 258-59 (1947) explains the differences between these two statutes. Hitchcock held that the predecessor statute to § 52-581(6010) applied to executory contracts Ballentine Law Dictionary defines such contracts as "A contract to be performed, each party having bound himself to do or not to do a particular thing." The advertising claim for the 1996-1997 directories is not based on executory contract theory but is an action on account based on an implied contact theory. So it would appear that § 52-576 applies.
(2) The defendant claims that the plaintiff failed to state a claim upon which relief may be granted. A special defense can not be used in lieu of a motion to strike to challenge the complaint's sufficiency. In any event the court's opinion, if correct, disposes of this claim.
(3) The set off claim is rejected. The burden is on the defendant to prove it. Any set off is a debt independent of the action sued upon. The defendant offered no evidence that SNET owed any debt to Mr. Coho. This set off claim is no more than a denial that SNET proved its monetary claim.
(4) The defendant offered absolutely no evidence of payments made on the claim by SNET. Thus Mr. Coho cannot claim the SNET claim is barred in whole or in part because SNET received payment.
(5) The statute of frauds defense (§ 52-550). The court accepts the plaintiff's well reasoned comments on pages 12 through 15. The court has concluded that SNET can bring its claim or the basis of written contract that was orally modified only in certain respects. In any event no evidence was presented to indicate the agreement was not capable of being performed within one year, CR Klewin v. Flagship Properties, 220 Conn. 569, 580 (1991).
(6) Estoppel will not lie since no evidence was presented that the plaintiff was grossly negligent or intentionally deceived the defendant the court's discussion makes clear that this is the conclusion it arrived at. In fact the court reduced the SNET claim insofar as it sought to charge him for a heading it could not find that he assented to.
(7) See (6); SNET's full claim is not obviated by this special defense.
(8) No evidence of waiver presented.
(9) There was consideration here. SNET published advertisements in its directories, Mr. Coho agreed to pay. Insofar as Coho did not agree to certain portions of what was published, the court did not order payment.
(10) The special defense of negligence has no real applicability to this case.
Interestingly although he did not specifically abandon any of his special defenses. Mr. Coho's post-trial memorandum only briefed the statute of limitations, set off and unclean hands special defense.