## Facts

- Prospective tenants executed a ten-year commercial lease for space in a planned shopping center to operate a “book and bottle” shop.
- The lease required a \$1,000 minimum monthly rent plus 5% of annual receipts over \$240,000, and the tenants paid a \$1,000 deposit.
- After execution, the tenants agreed to surrender approximately 600 square feet; in exchange, liquor sales were excluded from the percentage-rent calculation.
- Construction delays and financial problems led to the developer’s default; a bank took title by deed in lieu of foreclosure, and a management company operated the property for the bank.
- When the space became ready, the tenants were refused possession because the lease was “misplaced” and the space had been leased to others.
- The tenants rejected alternative space offered in the center as unsuitable for their planned business.
- The tenants sued for damages, including anticipated lost profits for a business that never opened.
- After extensive lay and expert testimony on projected profitability and liquor licensing prospects, a jury awarded \$200,000 in lost profits against all defendants.

## Issues

1. Whether anticipated lost profits are recoverable for breach of a commercial lease when the tenant’s intended enterprise is a new business.
2. Whether the evidence supported lost-profit damages with reasonable certainty rather than speculation.

## Decision

- The Michigan Supreme Court reversed the Court of Appeals and reinstated the jury’s \$200,000 verdict.
- The Court held that lost profits may be awarded for breach of a lease even for a new business if proven with reasonable certainty.
- The Court concluded the damages issue was fully tried, the jury was properly instructed against speculative damages, and the record contained sufficient evidence to support the award.
- The Court declined to limit damages to the difference between rental value and contract rent where foreseeable consequential lost profits were supported by adequate proof.

## Legal Principles

- Lost profits are not barred merely because they are profits; they are excluded only when the proof is too uncertain or speculative.
- A “new business” is not categorically barred from recovering anticipated profits; the controlling question is whether the evidence provides a reasonable basis for calculation.
- Consequential damages, including lost profits, may be recovered for breach of a commercial lease when they are foreseeable and established with reasonable certainty.
- Appellate courts should not set aside a jury’s damage award solely because damages involve projections, if the verdict falls within the range supported by the proofs and the jury is properly instructed.

## Conclusion

The court held that a commercial landlord’s failure to deliver possession may support an award of anticipated lost profits, even for a new business, when the plaintiff presents evidence permitting a reasonably certain estimate and the jury is properly instructed to reject speculation.


Fera v. Village Plaza, Inc., 396 Mich. 639, 242 N.W.2d 372 (Mich. 1976)