## Facts

- Doering Equipment Company became a distributor of John Deere golf and turf products under a 1993 distributorship agreement.
- The agreement allowed purchases using floor plan financing and required Doering to maintain adequately trained staff and inventory to meet distributorship obligations.
- Deere had broad termination rights (including immediate termination for cause and termination on notice under specified conditions); Doering could terminate only on 180 days’ written notice unless by mutual consent.
- The agreement stated that upon termination, neither party would be entitled to compensation.
- Doering operated at a loss throughout the distributorship relationship, losing money each year from the outset.
- Deere later required Doering to purchase a large number of “turf gators” and allegedly imposed additional staffing and inventory demands; Doering believed these requirements were commercially unreasonable.
- Doering terminated the distributorship and sued, alleging breach of the covenant of good faith and fair dealing and an unfair trade practice under Massachusetts General Laws chapter 93A.
- Doering sought roughly \$500,000, measured as three years of operating losses, and characterized those losses as reliance damages.
- The trial court granted a pretrial motion excluding Doering’s damages claims, finding no causal link between the turf-gator demand and the prior operating losses and no viable damages theory.

## Issues

1. Whether reliance damages may be awarded when they would place the plaintiff in a better position than full performance of the contract would have produced.
2. Whether Doering’s pre-termination operating losses were recoverable as reliance damages where the losses were not caused by the alleged breach and were losses Doering would have suffered even if the contract had been fully performed.

## Decision

- The Massachusetts Appeals Court affirmed the trial court’s exclusion of Doering’s claimed operating-loss damages.
- The court held Doering could not recover three years of operating losses as reliance damages because the losses were not caused by the alleged turf-gator and related demands.
- The court further held that the claimed losses were the type Doering would have suffered under full performance of the contract, barring recovery under reliance-damages doctrine.

## Legal Principles

- Contract damages ordinarily protect the injured party’s expectation interest.
- Reliance damages may compensate for expenditures made in performance or preparation for performance, but they may not include losses the injured party would have suffered had the contract been fully performed. (Restatement (Second) of Contracts § 349)
- A court may not award reliance damages that place a plaintiff in a better position than full performance would have provided.
- A plaintiff must show causation between the alleged breach and the claimed damages; later alleged misconduct does not make earlier, unrelated operating losses recoverable.

## Conclusion

Because Doering’s distributorship was unprofitable from inception and the claimed operating losses were neither caused by the alleged turf-gator demands nor recoverable under the limitation on reliance damages, the court affirmed exclusion of the damages theory and left Doering without recovery for its prior operating losses.


Doering Equip. Co. v. John Deere Co., 61 Mass. App. Ct. 850, 815 N.E.2d 234 (2004)