Page 38 - Acertaining Economic Damages Calculation

It is clear that the ruling in this case was affected by plaintiff’s repeated failure to provide adequate
proof of its claims, including the payment of certain expenses, or its assertions regarding lack of respon-
sibility to do so. Thus, the court’s ruling in this matter should be read with this in mind. However, it is
noteworthy that the Court of Federal Claims reasoned that when calculating lost profits, a plaintiff has
the burden of constructing a "plausible" but-for world, which includes identification and deduction of
avoided costs to calculate lost net profits. Thus, the practitioner would be wise to consider the factual
basis for including or excluding particular costs when calculating net lost profits in an engagement.

Jackson HMA, LLC v. Morales, 130 So.3d 493 (Miss. 2013)

Dr. Adolfo P. Morales (Morales) brought suit against Jackson HMA, LLC, d/b/a Central Mississippi
Medical Center (Jackson HMA), alleging breach of contract after a Jackson HMA vice president refused
to provide "final" approval on the contract offer Morales had signed and returned to Jackson HMA that
was the result of negotiations between the parties, including communications that Jackson HMA corpo-
rate had approved the contract terms and offer contained in its letter to Morales. At trial, the jury re-
turned a verdict in favor of Morales finding total damages of $2.275 million. Jackson HMA filed an ap-
peal asserting that there was not sufficient evidence for the jury to find the letter of intent and the Physi-
cian Recruitment Agreement as forming a contract between Jackson HMA and Morales. Jackson HMA
also asserted that there was not sufficient evidence to prove Morales’ claim for damages to a reasonable
certainty.

The Supreme Court of Mississippi concluded that based on the analysis, "Morales presented sufficient
evidence for the jury to find that a contract existed." Turning to the question regarding the sufficiency of
evidence used to prove damages, the Supreme Court of Mississippi relied on its previous decisions de-
tailing plaintiff’s burden regarding evidence of damages, stating

‘[i]t is well-understood that in an action seeking damages, the plaintiff bears the burden of proof
as to the amount of damages.’ ‘[D]amages... must be proved to a reasonable certainty and must
not place the injured party in a better position than they otherwise would have been in.’ fn 19 [ci-
tations omitted]

The Supreme Court of Mississippi further noted that damages for future lost profits "should reflect net
profits as opposed to gross profits." fn 20

At trial, Morales had not hired a financial expert to testify to damages but, rather, provided testimony
himself regarding damages by relying on a physician-compensation survey provided by Jackson HMA
to him during the recruitment process that included compensation information for ophthalmologists. In
deciding the issue, the Supreme Court of Mississippi focused on the nature of the information in the
physician-compensation survey.

Morales testified that the survey contained regional-based compensation information for doctors but
could not recall the compensation information for the region in which the Jackson HMA hospital was
located. Moreover, the document itself did not indicate whether the figures contained therein were gross
or net income, and Morales could not provide additional information. However, a Jackson HMA em-

fn 19 Jackson HMA, 130 So.3d at 499.

fn 20 Id.

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