Del Monte Fresh Produce Co. v. Net Results, Inc.
77 So. 3d 667
| Fla. Dist. Ct. App. | 2011Background
- Del Monte signed a July 2002 consultative services agreement with Net Results, paying a 35% fee on any recovered or saved amounts, but no fee if there were no savings.
- Net Results was to prepare a Summary Benchmark Proposal (SBP) outlining potential savings above $300 per month, after which Del Monte could terminate or pay the 35% fee for twelve months.
- The agreement auto-renewed annually unless Del Monte provided 60 days’ notice before the anniversary date.
- Net Results produced an internal memo in November 2002 claiming potential historic refunds and future savings, including a projected $10,000,000 in recoveries and $24,700,000 in total potential refunds, without clearly connected support for how savings would materialize.
- Del Monte terminated the agreement by a backdated May 1, 2003 letter, which Net Results argued constituted repudiation and breach, extending the contract term through July 8, 2004 and triggering a 35% fee on identified or potentially identified savings during that term.
- A damages model prepared by Net Results, led by Chopek, claimed $22,618,056 in total U.S. and worldwide savings, with a 35% fee yielding substantial fees, but the model relied on extrapolation and missing data, and did not document Net Results’ own performance costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Lost profits vs. lost gross revenue | Net Results claims lost profits under the contract. | Del Monte argues Net Results failed to prove profits after deducting costs. | Damages must reflect lost profits after deducting costs; methodology improper. |
| Reasonable certainty for damages | Proof shows anticipated savings through ongoing performance. | Most damages based on assumptions and extrapolation without sufficient fact base. | Damages lacked reasonable certainty; extrapolation unsupported; remand for new damages trial. |
| Breach and termination | Backdated termination notice constitutes repudiation and breach excusing performance. | Termination was proper and time may have been valid. | Contract breach established; liability for net results affirmed; damages retrial on remand. |
Key Cases Cited
- Pathway Fin. v. Miami Int'l Realty Co., 588 So.2d 1000 (Fla. 3d DCA 1991) (lost profits principles in contract damages)
- RKR Motors, Inc. v. Associated Uniform Rental & Linen Supply, Inc., 995 So.2d 588 (Fla. 3d DCA 2008) (de novo review of damages method; substitute substantial evidence standard)
- Marbella Park Homeowners Ass’n, Inc. v. My Lawn Serv., Inc., 12 So.3d 807 (Fla. 3d DCA 2009) (detailed discussion of costs and overhead in damages calculation)
- Nat’l Papaya Co. v. Domain Indus., Inc., 592 F.2d 813 (5th Cir. 1979) (economic damages may lack exactness but require reasonable basis)
- Sundie v. Lindsay, 166 So.2d 152 (Fla. 3d DCA 1964) (proof of lost profits requires some factual basis)
- Smith v. Austin Dev. Co., 538 So.2d 128 (Fla. 2d DCA 1989) (damages must have a factual basis and not be guesswork)