## Facts

- Protectors Insurance Service, Inc., a Colorado insurance agency owned by Earl Colglazier, derived over 80% of its business from policies written with USF&G.
- Protectors and USF&G operated under an agency agreement authorizing Protectors to solicit applications; USF&G paid commissions on accepted policies.
- The agreement included a provision requiring the parties to make a good-faith effort at “rehabilitation” to avoid termination.
- In 1992, USF&G placed Protectors on a rehabilitation program setting profitability targets, including earned loss ratio goals.
- USF&G later notified Protectors it would terminate the personal lines portion of the relationship unless goals were met; Protectors contended personal and commercial lines were operationally linked and that termination would effectively end the agency.
- Colglazier sold Protectors’ assets for $148,000, claiming the sale was compelled by USF&G’s breach and reflected distress-sale pricing.
- In the district court, USF&G conceded breach of the rehabilitation obligation; the jury decided only damages and awarded (1) $35,000 for the gap between the sale price and fair market value absent breach and (2) $809,650 for lost future profits.
- USF&G appealed, arguing the damages constituted double recovery and that the lost-profits proof was insufficient.

## Issues

1. Under Colorado law, may a plaintiff recover both the difference between actual sale price and fair market (going-concern) value and additional lost future profits for the same forced sale or destruction of a business?
2. Was the evidence sufficient to support the jury’s lost future profits award with reasonable certainty?

## Decision

- The court vacated the $809,650 lost-profits award and remanded with instructions to eliminate that component of the judgment.
- The court left undisturbed the $35,000 award representing the difference between the sale price and the business’s fair market value absent the breach.
- The court held that awarding both measures on this record amounted to an impermissible double recovery under Colorado law.
- Because the lost-profits award was vacated as duplicative, the court did not need to resolve the sufficiency-of-evidence challenge to dispose of the appeal.

## Legal Principles

- When a wrongful act causes the loss of a business, Colorado law generally permits damages to be measured by either (1) the business’s going-concern value or (2) lost future profits, but not both for the same loss.
- A going-concern valuation necessarily reflects the business’s future profit-earning capacity; separately awarding the same future profits duplicates compensation.
- Courts must prevent double recovery where a valuation method capitalizes or otherwise incorporates expected future earnings into present value.

## Conclusion

The Tenth Circuit held that Colorado damages law bars stacking a going-concern (fair market) valuation recovery with a separate lost-profits award when both compensate the same business loss, and it therefore removed the lost-profits component while leaving the fair-market-value differential in place.


Protectors Ins. Serv., Inc. v. U.S. Fid. & Guar. Co., 132 F.3d 612 (10th Cir. 1998)