On November 17, 2023, the Fourth Department issued a decision in Buffalo Riverworks LLC v. Schenne, 2023 NY Slip Op. 05823, holding that a plaintiff was not entitled to lost profits damages because such an award was not contemplated by the parties, explaining:
We agree with defendants, however, that the court erred in denying the motion insofar as it sought summary judgment dismissing plaintiff’s claim for damages for lost profits, and we therefore modify the order accordingly. To recover damages for lost profits, “it must be shown that: (1) the damages were caused by the breach; (2) the alleged loss must be capable of proof with reasonable certainty; and (3) the particular damages were within the contemplation of the parties to the contract at the time it was made.
We conclude that defendants met their initial burden on the motion of demonstrating that damages for lost profits were not within the parties’ contemplation at the time they entered into their contract. Here, the oral contract between the parties made no provision for the recovery of lost profits and it did not provide that the construction was to be completed by a date certain. In the absence of any provision in the contract for such damages, the commonsense rule to apply is to consider what the parties would have concluded had they considered the subject. In determining the reasonable contemplation of the parties, the nature, purpose and particular circumstances of the contract known by the parties should be considered. i.e., what liability the defendant fairly may be supposed to have assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed, when the contract was made. Under the circumstances of this case, we conclude that it would be highly speculative and unreasonable to infer an intent to assume the risk of lost profits in what was to be a start-up venture. We further agree with defendants that it is immaterial whether they became aware of project deadlines during weekly project meetings after the contract was formed inasmuch as the relevant inquiry is whether the particular damages were within the contemplation of the parties to the contract at the time it was made.
Further, even assuming, arguendo, that defendants contemplated liability for lost profits at the time they made the contract, we conclude that defendants met their initial burden of establishing that plaintiff’s damages are not capable of measurement based upon known reliable factors without undue speculation and that plaintiff failed to raise a triable issue of fact in opposition. Plaintiff did not identify any benchmark in the form of comparable businesses to permit a factfinder to determine that the claimed lost profits are reliable or demonstrated with reasonable certainty, nor did it adduce any expert proof. The lay assumption by plaintiff that it would have earned the same net profit during the months in which completion of the project was delayed as it did during the same months of the following year is too speculative to support a calculation of damages.
(Internal quotations and citations omitted).