Claims for Damages and Lost Profits in Pennsylvania
As a general rule, damages need not be proved with mathematical certainty. Nevertheless, sufficient evidence must be produced so that a court can arrive at an intelligent estimate without conjecture. See, Delahanty v. First Pennsylvania Bank, N.A., 318 Pa.Super. 90, 119, 464 A.2d 1243, 1257-1258 (1984). The plaintiff bears the burden of proving damages by a fair preponderance of the evidence. Id. at 118, 464 A.2d at 1257. Loss of profits are recoverable upon proper proof both in contract and tort cases. Id. at 120, 464 A.2d at 1258. The amount of such damages is an issue of fact to be decided by the fact finder. Id. at 117, 464 A.2d at 1257. See also, Glomb v. Glomb, 366 Pa.Super. 206, 216, 530 A.2d 1362, 1368 (1987); Simmons v. Mullen, 231 Pa.Super. 199, 214, 331 A.2d 892, 900 (1974). The fact finder’s determination of damages “should not be interfered with unless it clearly appears that the amount awarded resulted from partiality, caprice, prejudice, corruption or some other improper influence.” Delahanty v. First Pennsylvania Bank, N.A., supra 318 Pa.Super. at 117, 464 A.2d at 1257.
Under Pennsylvania law, it is well settled that fixed overhead costs are not properly deductible from lost profits. Jessup & Moore Paper Co. v. Bryant Paper Co., 297 Pa. 483, 147 A. 519 (1929); Burd v. Campbell Hosiery Co., 150 Pa.Super. 367, 28 A.2d 365 (1942). Fixed overhead costs are costs which are constant in nature, and which would not have been affected by a breach of contract. The inverse of this principle of law is that variable costs (i.e., those which are not constant in nature) are properly deductible from lost profits in a breach of contract action. See, Kutner Buick v. American Motors Corp., 868 F.2d 614, 617–18 (3d Cir.1989) (“[A]s a matter of both fact and law, fixed costs are irrelevant to the determination of loss of net profit from the determination of a business activity. The only proper focus is revenue generated less variable costs …”).
If you are on either side of a breach of contract or tort claim in Pennsylvania, please feel free to contact an attorney at Sidkoff, Pincus & Green, located in Philadelphia, Pennsylvania.