## Facts

- A church organization agreed to purchase a country club property that included buildings and related furniture, fixtures, and equipment.
- As part of that transaction, a broker made known that certain cocktail-lounge bar fixtures, equipment, tables, and chairs were for sale, with proceeds to be credited in escrow.
- Henry J. Gerwin, who had acquired a hotel and intended to operate a bar and restaurant, inspected the items and submitted a bid.
- The trial court found the bid was accepted, Gerwin performed required conditions, and the seller refused to deliver the equipment.
- After a bench trial, the court ordered specific performance or, if delivery did not occur, $15,000 in lieu of specific performance, and also awarded $20,000 for anticipated lost profits.
- Gerwin testified (without contradiction) that substitute equipment would cost between $25,000 and $75,000, but he did not purchase substitutes.
- Gerwin’s lost-profit proof did not include operating history or comparable-business data; the seller did not know it was dealing with Gerwin specifically or of his intended bar/restaurant venture when accepting the bid.

## Issues

1. Whether substantial evidence supported the finding that a contract was formed and breached by nondelivery of the equipment.
2. Whether the evidence supported an award of $15,000 in damages in lieu of specific performance for nondelivery of the used equipment.
3. Whether $20,000 in consequential damages for anticipated lost profits was recoverable given foreseeability and certainty limits on contract damages.

## Decision

- The court affirmed the judgment as to contract formation and breach.
- The court affirmed the $15,000 award of damages in lieu of specific performance as supported by the evidence of value and replacement cost.
- The court reversed/modified the judgment to eliminate the $20,000 consequential damages award for anticipated profits.

## Legal Principles

- On appellate review of evidentiary sufficiency, the evidence is viewed in the light most favorable to the prevailing party, and the reviewing court does not reweigh conflicts resolved by the trier of fact.
- When specific performance is unavailable or not achieved, a court may award monetary relief reflecting general contract damages for nondelivery of goods, including an approximation of market/cover-type damages supported by the evidence.
- Consequential damages for lost profits require (1) foreseeability at the time of contracting, including notice of special circumstances placing such losses within the parties’ contemplation, and (2) proof with reasonable certainty.
- Anticipated profits from a new or unestablished venture are not recoverable when based on unsupported projections rather than business history or reliable comparable-business data.

## Conclusion

The court sustained liability for nondelivery and upheld $15,000 as a supported monetary substitute for performance, but it disallowed lost-profit recovery because the seller lacked notice making those profits foreseeable and the claimed profits were not proven with reasonable certainty.


Gerwin v. Se. Cal. Ass’n of Seventy-Day Adventists, 14 Cal. App. 3d 209 (Ct. App. 1971)