In a recent lost profits case decided by the Court of Appeals of Tennessee, DBK Trucking Co., LLC v. JNJ Express, Inc., that court held that the owner of a 1998 Kenworth tractor could recover the profits it was not able to earn because of the damage to the tractor caused by the defendant in that case. The Kenworth tractor which was damaged was a “wet line” tractor which was able to haul hazardous waste.
At trial, the owner of the Kenworth testified that it took three months to obtain all of the necessary government permits and licenses to put a wet line tractor, like the Kenworth which was damaged, into service. He also testified that the “average revenue” earned by the Kenworth had been approximately $3,700.00 per week. The jury in the case awarded the owner of the Kenworth $44,000.00 in lost profits.
The trial judge in the case set aside the verdict of the jury on the grounds that the owner of the Kenworth was only permitted to recover the fair market value of the tractor at the time it was damaged. The Court of Appeals of Tennessee reversed the decision of the trial judge, and reinstated the jury verdict for lost profits.
The court of appeals stated that Tennessee law allows a plaintiff to recover lost profits for damage to personal property when the property cannot be replaced within a reasonable period of time. The court reasoned that, while it was true that the owner of the Kenworth tractor could have obtained a replacement tractor fairly quickly after the accident occurred, the owner would still have had to wait for the government to issue the proper licenses and permits before it could put a replacement tractor into service. Since the testimony of the owner of the tractor that the amount of time needed to obtain the proper licenses and permits was about three months, and since that testimony was unrebutted, the court of appeals held that the jury verdict should not have been set aside.
The key to winning cases where a client has lost profits because of damage to personal property is to obtain, and to use at trial if the case proceeds to trial, credible testimony as to why the plaintiff could not just go out and replace the damaged or destroyed personal property overnight. We had a case fairly similar to the case above many years ago where our client’s chipper truck was damaged. The insurance company did not want to pay for the profits which our client lost as a result of the fact that the damaged chipper truck was out of service for repairs for many weeks. Only after we obtained the testimony of a dealer who sold and rented chipper trucks that, during the period that our client’s truck was out of service, there were no chipper trucks that could have been leased, did the insurance company agree to pay our client’s significant lost profits.
It is interesting that the opinion in the above case states that the trial testimony from the owner of the Kenworth was based on the “average revenue” earned by the tractor. In Tennessee, gross revenues, or gross profits, are never recoverable as lost profits damages: In Tennessee, a party is only allowed to recover lost net profits.