255 P.3d 324
N.M. Ct. App.2011Background
- Sunnyland Farms operates a hydroponic tomato greenhouse and purchased Agstar’s tomato facility; CNMEC disconnected Sunnyland’s electricity for alleged Agstar delinquencies; Sunnyland opened four accounts, paid deposits, and disputed Agstar-related bills after the disconnection; fire destroyed most facilities; district court awarded substantial breach-of-contract and negligence damages plus punitive damages based on pre- and post-fire conduct; appellate issues focused on contract consequential damages, punitive damages, and lost profits evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Consecutive damages in contract were proper | Sunnyland contends Hadley/Globe Refining rule supports contract-consequential damages | CNMEC argues no comparable-conduct basis and damages were not contemplated | Contractual consequential damages reversed; not supported by NM rule |
| Existence of punitive damages for post-fire conduct | Punitive damages warranted by post-fire threats of liability | No contractual breach or corporate liability shown for punitive damages | Punitive damages reversed as to contract; not supported by Chavarria corporate-liability proof |
| Reasonableness/certainty of lost profits (negligence claim) | Future profits were foreseeable and calculable from expert | Estimations were speculative and not reasonably certain | Lost profits for negligence reduced to a verifiable, reasonable-certainty figure (53.4 kg/m2) not 95 kg/m2; remanded for calculation |
Key Cases Cited
- Price v. Van Lint, 46 N.M. 58, 120 P.2d 611 (1941) (foreseeability/or contemplation in contract damages)
- Hadley v. Baxendale, Hadley v. Baxendale, 9 Exch. 341 (Eng. 1854) (-) (origin of consequential damages rule (contemplation))
- Globe Refining Co. v. Landa Cotton Oil Co., 190 U.S. 540, 23 S. Ct. 754 (1903) (1903) (tacit-agreement/contemplation approach to damages)
- E & B Specialties Co. v. Phillips, 86 N.M. 331, 523 P.2d 1357 (1974) (Hadley-derived rule; special circumstances must be known by both parties)
- Wall v. Pate, 104 N.M. 1, 715 P.2d 449 (1986) (foreseeability/contemplation framework for special damages)
- Camino Real Mobile Home Park Partnership v. Wolfe, 119 N.M. 436, 891 P.2d 1190 (1995) (consequential damages limited to contemplated losses; integration with Hadley/Globe Refining)
- Jones v. Lee, 1998-NMCA-008, 126 N.M. 467, 971 P.2d 858 (1998) (adopts Hadley/Globe Refining framework for contract damages)
- State Farm General Insurance Co. v. Clifton, 86 N.M. 757, 527 P.2d 798 (1974) (damages recoverable are those contemplated at contracting; no arbitrary foreseeability)