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Underground Vaults & Storage, Inc. v. Cintas Corporation

United States District Court, D. Kansas

April 16, 2014

UNDERGROUND VAULTS & STORAGE, INC., Plaintiff,
v.
CINTAS CORPORATION, et al., Defendants.

MEMORANDUM AND ORDER

MONTI L. BELOT, District Judge.

Before the court are the following:

1. UVS's motion in limine (Doc. 121);

2. Cintas' response (Doc. 124); and

3. UVS's reply (Doc. 132).

The pretrial order, signed by Judge John Lungstrum, was filed on February 4, 2013 (Doc. 52). Thereafter, by his memorandum and order dated July 22, 2013 (Doc. 77), Judge Lungstrum concluded that a question of fact remains for trial concerning the existence of a joint venture between the parties. He went on to deny Cintas' motion for summary judgment on UVS's claim for breach of contract because the jury will have to determine, in the first place, whether a joint venture existed. For essentially the same reasons, Judge Lungstrum denied Cintas' motion for summary judgment on UVS's claim for breach of fiduciary duty. Obviously, if the jury determines there was no joint venture, UVS's claim for damages is no longer an issue. The case then was transferred to the undersigned.

UVS hired Richard West as its expert on lost profits.[1] This court held a so-called Daubert hearing on November 18, 2013 and thereafter issued a memorandum and order (Doc. 118). Cintas challenged some of West's opinions on the basis that they are speculative. The court both disagreed and agreed, as follows:

Cintas objects to West's opinions on the basis that Boeing could terminate the contract at any time and, therefore, lost profits for the initial seven years is speculative. The court disagrees. Under Kansas law, "loss of profits resulting from a breach of contract may be recovered as damages when such profits are proved with reasonable certainty, and when they may reasonably be considered to have been within the contemplation of the parties." CoreFirst Bank & Trust v. JHawker Capital, LLC , 282 P.3d 618, 631 (Kan.Ct.App. 2012).
The contract between Boeing and Cintas is currently being performed with no suggestion that Boeing or Cintas has given notice of a termination or are likely to do so during the remainder of the seven-year term. Therefore, a reasonable inference could be drawn by the trier of fact that plaintiff would have provided the storage as set forth in the proposed bid had Cintas not terminated its relationship with plaintiff. Moreover, given the terms of the contract and the proposed lease agreement, the profits from the initial seven year terms were within the contemplation of the parties. Therefore, any argument regarding the potential termination of the contract goes to the weight of the evidence and not its admissibility.
Next, Cintas argues that the lost profits for years 8, 9, and 10 are speculative because several assumptions must be made in order for those profits to occur. Essentially, both Boeing and Cintas would have had to agree to the option. Additionally, plaintiff would also have to execute the option on the lease agreement. West testified that the option years were highly likely to occur because of the enormous cost in moving the documents. The initial move and preparation of the 2.5 million drawings spanned over two years at a substantial cost to Boeing. West testified that it would be highly likely that all parties involved would continue their relationship through ten years due to the significant cost and planning involved in obtaining a different contractor to store the documents.
Moreover, the contract executed by Boeing and Cintas contemplates the contractual relationship continuing for a total of 10 years. The unexecuted lease agreement also tracks the term of the Boeing contract. Additionally, plaintiff has identified several exhibits which demonstrate that all parties assumed that the contract would extend through the full 10 year term. Therefore, the court finds that the lost profits for years 8 through 10 were within the contemplation of the parties at the time the agreements were circulated. See CoreFirst Bank & Trust , 282 P.3d at 631.
West further opined that the contract would be extended an additional 8 years, a time period that is not contemplated in the contract or the lease agreement. West calculated this time period by determining plaintiff's history of client retention. West opined that plaintiff's relationships with its customers averaged 18 years and, therefore, it is reasonable to conclude that plaintiff would continue its relationship with Cintas for 18 years. West, however, admitted that he has never used this type of methodology and that it is not used by others in his field.
This opinion is not scientific but pure unsupported speculation, at best. "To be reliable under Daubert, an expert's scientific testimony must be based on scientific knowledge... and not mere subjective belief or unsupported speculation." Goebel v. Denver and Rio Grande W. R. Co. , 346 F.3d 987, 991 (10th Cir. 2003). Therefore, ...

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