No. 4-486 / 03-1213.Court of Appeals of Iowa.
August 26, 2004.
Appeal from the Iowa District Court for Dickinson County, David Lester, Judge.
Terry Stammer appeals the damages portion of the district court’s judgment. AFFIRMED.
Edward Bjornstad of Bjornstad Law Office, Spirit Lake, for appellant.
Larry Stoller of Stoller Johnson, Spirit Lake, for appellee.
Considered by Mahan, P.J., and Miller and Vaitheswaran, JJ.
VAITHESWARAN, J.
Terry Stammer hired Don Kruse, principal of Faulkner Plumbing
Heating, Inc. to complete a plumbing project at Stammer’s soon-to-be-opened laundromat, Suds For Your Duds. The project went awry and Stammer sued. Kruse counterclaimed for work performed. Following trial, the district court entered judgment in favor of Stammer for $8,089.21 and for Kruse, on his counterclaim, in the amount of $13,251.21. Stammer appealed.
Stammer’s sole challenge is to the district court’s failure to award damages for lost profits. He contends this type of damage award is mandated by Harsha v. State Savings Bank, 346 N.W.2d 791 (Iowa 1984).[1] Our review is on error. Iowa R. App. P. 6.4.
“Profits are the net pecuniary gain from a transaction, the gross pecuniary gains diminished by the cost of obtaining them.” Restatement (First) of Contracts § 331 cmt. b, at 516 (1932). For new businesses, profits may be deemed “too speculative to be recoverable.” Harsha, 346 N.W.2d at 797. This principle is known as the new business rule. Id.
In Harsha, the Iowa Supreme Court declared that the new business rule “is not absolute.” Id. at 798. The court explained that “[i]f factual data are presented which furnish a basis for compilation of probable loss of profits, evidence of future profits should be admitted and its weight, if any, should be left to the jury.” Id.
The problem here is not a failure of proof in the amount of lost profits but a failure to establish an entitlement to lost profits for the period in question. See Lakota Girl Scout Council, Inc. v. Havey Fund-Raising Mgmt., Inc., 519 F.2d 634, 639-40 (8th Cir. 1975) (citing Orkin Exterminating Co. v. Burnett, 160 N.W.2d 427, 430 (Iowa 1968) (“Lost profits are recoverable under Iowa law, provided . . . there is proof that some loss occurred. . . .”)). At trial, Stammer testified Kruse was to complete his plumbing work by December 15, 1999 but he did not finish until December 31, 1999. In Stammer’s view, this delay resulted in lost profits of $85 per day for a total of $1275. The district court rejected this contention, finding that the parties’ oral contract called for a completion date of December 31, not December 15, and for the laundromat to become fully operational after the later date. This finding is supported by substantial evidence. See Frontier Props. Corp. v. Swanberg, 488 N.W.2d 146, 147 (Iowa 1992). The finding is dispositive of Stammer’s request for lost profit damages. As the district court determined, “Stammer did not suffer any loss of business or income as a result of Faulkner’s failure to properly perform under the terms of the oral contract.”
AFFIRMED.