## Facts

- Collins Entertainment Corporation leased and operated video poker machines.
- In March 1996, Collins entered a six-year lease granting it the exclusive right to place video poker machines at two bingo hall locations operated by Coats and Coats Rental Amusement (doing business as Ponderosa Bingo and Shipwatch Bingo) and Wayne Coats.
- The placement lease provided that if the premises were sold, the buyer would assume the lease.
- In 1997, American Bingo & Gaming Corporation negotiated to purchase the bingo businesses and related ground leases.
- The purchase agreement required the sellers to indemnify American if sued for interfering with Collins’s machine-placement contract.
- After the purchase, American did not assume Collins’s lease and removed Collins’s machines from the premises.
- Collins sued American and the Coats defendants alleging, among other claims, intentional interference with contract.
- A master-in-equity found American liable for intentional interference with contract and awarded Collins $157,449.66 in actual damages and $1,569,013.00 in punitive damages.
- The Court of Appeals affirmed; the Supreme Court granted certiorari limited to the damages-calculation method.

## Issues

1. Whether the court erred in applying the “lost volume seller” doctrine to calculate damages and thereby concluding Collins had no duty to mitigate by reallocating machines to other locations.

## Decision

- The Supreme Court of South Carolina affirmed the Court of Appeals.
- The court held that applying the lost volume seller doctrine was proper and supported the conclusion that Collins had no mitigation offset based on subsequent machine placements.
- The affirmed judgment left intact the master’s awards of actual and punitive damages.

## Legal Principles

- A lost volume seller may recover for the lost transaction when it could and would have performed both the breached contract and later transactions; later transactions are not substitutes that reduce damages.
- Restatement (Second) of Contracts § 347 cmt. f supports treating a subsequent contract as non-substituting when the injured party could have obtained the benefit of both agreements absent the wrongdoing.
- When lost volume status is shown, damages are not reduced by profits from later contracts because using those later contracts as mitigation would undercompensate the injured party.
- Lost volume seller analysis may be used to measure economic loss in intentional interference with contract where the injury is the loss of expected contractual profits and capacity supports performance of both sets of transactions.

## Conclusion

The court affirmed damages calculated under the lost volume seller doctrine, holding that Collins’s later machine-placement contracts did not mitigate the loss from American’s interference because Collins had capacity to perform both the original lease and the later transactions.


Collins Ent. Corp. v. Coats & Coats Rental Amuse., 368 S.C. 410, 629 S.E.2d 635 (2006)