## Facts

- A landlord’s predecessor leased 175 square feet in an apartment complex to Jetz Service Co., Inc. for a coin-operated laundry facility for a six-year term.
- Jetz installed five washers and five dryers and paid an initial $3,000 decorating allowance.
- Under the lease, Jetz was entitled to the first $300 per month or 50% (whichever was greater) of the machines’ gross receipts.
- The lease stated the parties assumed landlord-tenant duties under Kansas law.
- With 16 months remaining, Salina Properties disconnected Jetz’s equipment and replaced it with its own laundry equipment.
- Jetz removed and stored its machines at a cost of $187.50.
- After removal, Jetz re-leased four sets of laundry equipment in the Kansas City area, despite having other suitable equipment available for those placements.
- Jetz sued for lost profits for the remaining lease term, calculated as one-half of anticipated gross income for the final 16 months.
- The district court found Salina breached the lease, treated Jetz as a “lost volume” lessee, credited Salina for one month of unpaid rent, and awarded Jetz $6,383.08 plus $2,165 in attorney fees.
- Salina appealed only the damages award, not liability.

## Issues

1. Whether Jetz qualified as a “lost volume” lessee such that later placements of equipment were not substitute performance for the breached lease.
2. Whether a lost-volume lessee has a duty to mitigate damages by re-leasing the equipment and offsetting those earnings against lost-profit damages.
3. Whether the award of lost profits for the remaining 16 months (without offset for later transactions) was supported by the evidence and consistent with expectation damages.

## Decision

- The Court of Appeals affirmed the damages judgment.
- The court held Jetz was a lost-volume lessee because it had sufficient inventory and capacity to service both the breached location and additional locations.
- The court held Jetz had no duty to mitigate by re-leasing the equipment because the later transactions were additional business Jetz could have performed even if Salina had not breached.
- The court upheld the trial court’s lost-profits calculation as damages directly caused by Salina’s breach and affirmed the attorney-fee award as entered.

## Legal Principles

- Expectation damages aim to place the nonbreaching party in the position it would have occupied had the contract been performed.
- The lost-volume doctrine (developed in sales cases) can apply by analogy to lessees and service suppliers with excess capacity.
- When a plaintiff proves it had the capacity and intent to perform both the breached contract and subsequent transactions, later transactions are not mitigation because they do not replace the breached deal.
- In a lost-volume setting, the breaching party is not entitled to reduce lost-profit damages by pointing to the plaintiff’s later revenues from additional contracts.

## Conclusion

The court affirmed an award of lost profits to a laundry-equipment service provider after a landlord replaced its machines before the lease term ended, holding that because the provider was a lost-volume lessee with excess capacity, it had no duty to mitigate by re-leasing the equipment and was entitled to full lost profits for the remaining term.


Jetz Serv. Co. v. Salina Props., 19 Kan. App. 2d 144, 865 P.2d 1051 (Kan. Ct. App. 1993)