Wednesday, August 17, 2022
A plaintiff in an action that in part involves allegations of legal malpractice may claim loss of future profits according to a decision of the New Jersey Supreme Court
Reiterating the general rule under New Jersey law that lost profits may be recoverable if they can be established with a reasonable degree of certainty, but anticipated profits that are remote, uncertain or speculative are not recoverable, the
Court concurs with the majority of courts that reject a per se rule barring any new business’s claim for lost profits damages. To the extent that Weiss can be read to adopt such a per se bar, the Court departs from the test prescribed in that case. The Court does not view a new business to be in the same position as an established business with respect to damages claims, however. Consistent with the Restatement and the New York and Illinois decisions discussed in the opinion, the Court recognizes that it is substantially more difficult for a new business than for an experienced business to prove lost profits with reasonable certainty. A trial court should carefully scrutinize a new business’s claim that, but for the conduct of the defendant, it would have gained substantial profit in a venture in which it had no experience. If a new business seeks lost profits that are remote, uncertain, or speculative, the trial court should bar the evidence supporting that claim and enter summary judgment. The trial court here applied a per se ban on lost profits claims by a new business pursuant to Weiss. The Court remands so that these matters can be decided under the correct standard and provides relevant guidance.
The court reversed the Appellate Division's affirmance of dismissal.