ADC Fairways Corp. v. Johnmark Const., Inc – Case Brief Summary (Virginia)

In ADC Fairways Corp. v. Johnmark Const., Inc. (Va. 1986) 343 S.E.2d 90, the Supreme Court of Virginia considered whether a trial court had erred in awarding a contractor (Johnmark) lost profits on a breached agreement to rehabilitate various apartment units.

The court noted that Johnmark presented the following evidence in support of its claim for lost profits:

"Johnmark's president, Richard McCarty, described how lost profits were calculated on the work it did not complete because of the dispute with ADC. He said, on direct examination, that the units were to be rehabilitated for a price of $2,562.50 per unit, a figure which he had bid to secure the contract with ADC. He testified further that in his bid he computed 'approximately 15 percent' of the $2,562.50 as profit. He went on to say that the contract called for the completion of 171 units. Thus, profits were calculated by taking 15% of $2,562.50 and multiplying that number by 171." (Id. at p. 92.)

The ADC Fairways Corp. court rejected Johnmark's argument that this testimony constituted sufficient evidence to allow the court to estimate Johnmark's lost profits with reasonable certainty:

"Lost profits should not have been awarded in this case. They were completely speculative. The $47,781.13 figure was nothing more than the profit Johnmark hoped to make at the time of the bid. There was no evidence to establish that this is the profit that would have been made had Johnmark completed the project. Indeed, there was evidence from Johnmark's president that on a similar rehabilitation project for the same developer no profit had been made whatever.

"We said in Boggs v. Duncan, 202 Va. 877, 883, 121 S.E.2d 359, 363 (1961), that 'It is well settled that damages are recoverable for loss of profits prevented by a breach of contract "only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty.' " (Citations omitted.) That standard was not met in this case. We hold, therefore, that the trial court erred in awarding Johnmark lost profits of $47,781.13." (ADC Fairways Corp., supra, 343 S.E.2d at p. 93.)