September 15, 2008
Contracts Limerick of the Week: Evergreen
I am fortunate to live in a town that still has a drive-in movie theater, and I am pleased to be using a casebook that includes a case about a drive-in theater. Evergreen Amusement Corp. v. Milstead illustrates the difficulties of the "new business rule," that is, the rule that new businesses cannot get lost profits because they cannot establish a track-record of profits.
The new business rule is largely being abandoned, at least as a bright-line rule, as most states will allow a new business to introduce evidence of lost profits. However, as Evergreen illustrates, some states that have abandoned the new business rule are extremely skeptical that a new business will show profits and so new businesses still have a hard time. Evergreen's opening was delayed because Milstead did not level the property in time for the theater to open for summer shows. Evergreen proferred a witness who had built and operated most of the drive-ins in the area. That expert would have discussed a market survey that showed demand for a new drive-in in the area. He would testify as to reasonably anticipated profits based on the performance of Evergreen in its second summer of operation and he would show that other drive-ins in the area showed the same profits in their second summer as they did in the first. This proffer was refused and no error was found.
Just a warning, this Limerick is rated PG-13. Sensitive minors and people prone to become nauseated easily should not click on the link!
Evergreen Amusement Corp. v. Milstead
If drive-ins were all ever green,
Lost profits would be routine,
Though the business be new,
And the picture askew,
Showing Michael Moore naked on screen.
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