Case Summary:
In March 2003 this Court issued a memorandum decision and judgment awarding Plaintiff, Western Wisconsin Water, Inc. d/b/a La Crosse Premium Water (“Western”) damages against the Defendant, Quality Beverages of Wisconsin, Inc. (“Quality”) for Quality’s breach of contract to give Western a first right of refusal to acquire certain accounts. In mitigating its damages, Western recovered 400 of the 552 accounts that Quality should have offered. Western was awarded sums for lost profits based on the 152 accounts that Western did not recover and in mitigation expenses.

Western moved to amend the judgment on two theories. First, Western argued that profits from the resale of the 400 accounts that it recovered should have been included in its damages because the market for the accounts evaporated after Quality’s actions. Western stated that it showed that it could resell the 400 accounts. They further argued that the court should add to Western’s damages the difference between the value of all 552 accounts before Quality’s breach and the value of the 400 accounts recovered after Quality’s breach.

Second, Western contended that its mitigation expenses were higher than the estimated net profit Western would have realized in the future from its mitigation efforts and produced exhibits detailing its actual out-of-pocket expense in establishing its own distributorship.

Western’s first claim amounted to a request for damages that Western did not make successfully at trial. Western sought the profits that it claimed it could not realize from the resale of the recovered accounts because of the effects of Quality’s actions on the market. At trial, however, Western did not establish that Quality’s actions affected the market in the manner and to the extent claimed. Western also failed to demonstrate that the expected net profit is in fact the market price. It was determined that the potential windfall of retaining the recovered accounts and receiving the profits from the resale of the recovered accounts is inconsistent with Wisconsin’s application of the expectation interest in breaches of contract.

As to Western’s second claim, it was determined that mitigation damages in a breach of contract are an injured party’s actual expenditures made in reasonable efforts to minimize its losses. In arguing its motion, some confusion arose as to Western’s reference to its “net mitigation amount” and to its “startup costs”. It appears that a manifest factual error had been made and Western’s claimed actual cost of mitigation incurred

Statute/Rule References:
Fed. R. Civ. P. 59 -- New Trials

Key Terms:
Breach of Contract
Expectation Interest
First Right of Refusal
Lost Profits
Mitigate Damages