What evidence is required to prove lost profits damages in Utah breach of contract cases? Sunridge Development v. RB&G Engineering Explained

The Utah Court of Appeals decision in Sunridge Development v. RB&G Engineering provides crucial guidance on the evidentiary requirements for proving lost profits damages in breach of contract cases. This case demonstrates how insufficient evidence can doom even seemingly straightforward damages claims.

Background and Facts

Sunridge Enterprises sued RB&G Engineering for breach of contract and negligence, claiming lost profits from fourteen housing units it allegedly could not build due to RB&G’s failure to correctly identify fault lines. After years of litigation and a remand from the Utah Supreme Court, the trial court granted summary judgment for RB&G, finding that Sunridge had failed to provide sufficient admissible evidence of damages. The court also denied Sunridge’s request to reopen discovery, finding that discovery had been completed years earlier when Sunridge certified readiness for trial.

Key Legal Issues

The case presented two main issues: whether the trial court abused its discretion in denying additional discovery time, and whether Sunridge provided sufficient evidence to create a genuine issue of material fact regarding damages. The damages issue centered on Sunridge’s reliance on a Cost/Loss Analysis that the trial court found inadmissible under Utah Rule of Evidence 1006, and whether testimony from company principal Stephen Stewart could establish the required elements for lost profits damages.

Court’s Analysis and Holding

The Court of Appeals affirmed on both issues. Regarding discovery, the court found no abuse of discretion where Sunridge had certified readiness for trial in 2005 after discovery was complete. On damages, the court emphasized that proving lost profits requires evidence of net loss, not just gross revenue. The court explained that “net profits are determined by computing the difference between the gross profits and the expenses that would be incurred in acquiring such profits.” The Cost/Loss Analysis was inadmissible because underlying cost records were never produced, and Stewart’s deposition and affidavit testimony merely restated conclusions from the inadmissible summary without independent personal knowledge of the calculations.

Practice Implications

This decision underscores the importance of developing a complete evidentiary foundation for damages claims early in litigation. Practitioners must ensure they have admissible evidence of all cost components when seeking lost profits damages, not just gross revenue figures. The case also illustrates how Rule 1006 summaries require strict compliance with foundational requirements, including making underlying records available for examination. Finally, the discovery ruling emphasizes that parties cannot indefinitely delay building their damages case—once discovery closes and trial readiness is certified, courts have discretion to enforce those deadlines even after intervening appeals.