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When are damages too speculative?

On May 7, 2015, the Texas Supreme Court addressed the issue of when damages are too speculative Phillips v. Carlton Energy Group.  In this case, Carlton Energy Group ("Carlton") contends Phillips Oil interests ("Phillips") tortuously interfered with Carlton's attempts to acquire an interest in a Bulgarian Coalbed methane exploration prospect.  Philips responded that it did not interfere but even if it did interfere, the damages suffered by Carlton were too speculative to recover.  Specifically, Phillips said Carlton's lost profits could not be proven to a reasonable certainty.  But the Supreme Court disagreed in part.  The Supreme Court said reasonable certainty must be measured in context and when projected profits are considered in determining the value of the prospect to be sold, then some recovery can occur.

Specifically, the jury in this case found that Phillip tortuously interfered with Carlton's contract and that Carlton's interest in the project was $66.5 million.  The jury also assessed $8.5 million in exemplary damages.  The trial court refused to render judgment on the $66.5 million in actual damages but suggested $31.16 million in actual damages, the amount argued by Carlton's lawyer in closing.  The Court of Appeals found in favor of Carlton and awarded Carlton the $66.5 million judgment and remanded the case.  On remand, the damages of $31.16 million are likely going to be entered.

the take away from this case is that lost profits are recoverable in a speculative investment situation if the lost profits can be proven to a reasonable certainty with objective facts, figures or data, such as evidence of what a willing buyer was going to pay a willing seller.

Jim M. Zadeh
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Attorney at Law