No. The court said giving the agency money for both the lowered sale price and future lost profits isn't fair. When you figure out what a business is worth, you are already considering how much money it will make in the future. That's why someone would buy it. Giving the owner extra money for 'lost future profits' on top of the money for the 'lost value' is like paying him twice for the same loss. The goal of a lawsuit is to make the person whole, not to give them a huge bonus.

Yes, the lower court made a mistake. I think it's not fair to give Protectors money for both future earnings and for selling the business for less. Here's why: When we figure out how much a business is worth, we already think about how much money it might make in the future. So if we give money for both, it's like paying twice for the same thing. That's not fair. Instead, we should only give Protectors the difference between what their business was really worth and what they had to sell it for. That's why I'm saying they can keep the $35,000 for selling the business for less than it was worth, but they can't have the extra $810,000 for future earnings.

Yes. An award for both diminished sale value and lost future profits is an impermissible double recovery. In a breach of contract case, the objective is to place the injured party in the position they would have been in but for the breach, not to provide a windfall. The 'going concern value' or fair market value of a business is fundamentally based on its ability to generate a future income stream. The plaintiff's own expert testified that his valuation methods all took into account the agency's ability to generate future profits. Therefore, awarding damages for the diminished market value (the difference between fair market value and the actual sale price) already compensates the plaintiff for the loss of future earning potential. To also award a separate sum for lost future profits is to compensate for the same injury twice. Citing precedent from Colorado and other jurisdictions, the court concluded that damages for the destruction of a business are measured by one of two alternative methods: the going concern value or lost future profits, but not both.

Yes, the district court's damage instruction was erroneous because it allowed for a double recovery. I hold that awarding both lost profits and the diminished sale value of the business constitutes an impermissible double recovery in this case. The objective in a breach of contract case is to make the injured party whole, not to provide them with an excess recovery. The damages for the decreased sale price were based on the agency's ability to generate future profits, which overlaps with the lost profits damages. Thus, awarding both damages results in a double recovery, which is impermissible. The proper measure of damages in this case is the 'going concern value,' which is the difference between the fair market value of the business without the injury and the price actually received upon sale. This measure already takes into account the business's future profit-earning potential. Therefore, I vacate the portion of the judgment awarding $809,650 in lost profit damages and affirm the $35,000 award for diminution in market value.

Protectors Insurance Service, Inc. v. United States Fidelity & Guaranty Company

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