This case shows that a breach of a business contract can be an expensive proposition, regardless of whether it occurs in Florida or another state. A contract between two business entities is a legally enforceable agreement, and each party should evaluate in advance what might happen should it breach the agreement. In some cases, the non-breaching party may be entitled to collect its lost profits from the breach of contract, which can sometimes be a substantial sum of money.
The Supreme Court of one state recently upheld a jury verdict in the amount of $52 million awarded to an MRI center against a regional hospital. The two businesses had a contract initiated in 1985 to develop a way to make magnetic resonance imaging and other tests more accessible. The agreement had the partnership lasting until 2015 but the hospital decided to create its own MRI operation in 1998.
In essence, the hospital, St. Alphonsus Regional Medical Center of Idaho, breached the partnership agreement with MRI Associates and went into direct competition with the company. Breach of contract lawsuits were filed, and in 2007, a jury awarded $63.5 million to MRI Associates for its lost profits. The Supreme Court of Idaho sent the case back for a new trial, and the jury awarded MRI Associates $52 million.
The high court upheld the $52 million breach of contract judgment on appeal, which was announced on June 17. The general rule in Florida and other jurisdictions is that if the non-breaching party’s lost profits are reasonably capable of being calculated and proved in court, then the party may collect those lost profits from a breaching party. If there are speculative profits, on the other hand, as when a venture is new and has no track record to calculate lost profits, may result in no award or a minimal one for the lost profits request.
Source: Idaho Press-Tribune, “Idaho justices order hospital to pay $52M in suit“, Kimberlee Kresi, June 17, 2014
