## Facts

- Pinnacle supplied coin-operated entertainment and vending machines to businesses; The Corner operated a cocktail lounge and liquor store offering customer entertainment.
- The parties signed a three-year personal property lease (Sept. 9, 1993) covering a compact disc jukebox, a pool table, an electronic dartboard, and two vending machines.
- The pool table arrangement required a $400 down payment and $250 monthly payments for 12 months, followed by an option to purchase for $1 and then pay a $75 monthly service fee for the remainder of the term.
- Within days, The Corner repudiated and refused to perform; it later admitted breach, leaving damages as the only trial issue.
- Pinnacle re-leased the dartboard but could not re-lease the other equipment.
- Pinnacle returned the pool table and jukebox to suppliers and incurred a $650 restocking fee.
- Although the contract contained a liquidated-damages clause keyed to gross profits, Pinnacle presented evidence of net lost profits (contract payments minus expenses avoided due to the breach), with discounting to present value.
- The district court awarded Pinnacle damages based on lost profits (including attorney’s fees) and treated the pool-table arrangement as one in which The Corner would exercise the $1 purchase option after year one and then pay the service fee.

## Issues

1. Whether the damages award improperly enforced an unenforceable liquidated-damages provision measured by gross profits.
2. Whether the proper UCC/contract measure of damages for repudiation of the lease was net lost profits (with mitigation and avoided costs) without placing Pinnacle in a better position than full performance.
3. Whether the trial court erred in its pool-table component of damages by failing to deduct costs Pinnacle avoided after returning the table.

## Decision

- The Wyoming Supreme Court affirmed the lost-profits methodology because the trial court did not apply the gross-profits liquidated-damages clause and instead relied on evidence of net lost profits.
- The court approved calculating damages from expected contract revenue, subtracting expenses actually saved by nonperformance, accounting for mitigation (including the re-leased dartboard), and discounting future amounts to present value.
- The court held fixed overhead generally is not deducted because it is not avoided by the breach.
- The court found one error: because Pinnacle returned the pool table and avoided its cost, the full cost of the pool table (not merely depreciation) had to be deducted from damages.
- The judgment was affirmed in part and remanded for entry of a corrected (reduced) damages award reflecting the pool-table adjustment.

## Legal Principles

- The standard remedy for breach/repudiation of a lease-type transaction is expectation damages designed to place the nonbreaching party in as good a position as performance, but not better.
- Net lost profits are calculated as anticipated revenues under the agreement minus costs actually avoided due to the breach; future amounts may be discounted to present value.
- A liquidated-damages clause tied to gross profits risks operating as a penalty when it does not approximate actual loss; a court may instead award proven actual damages based on net loss.
- Fixed overhead that continues regardless of performance is generally not a deductible “saved” cost in a net lost-profits calculation.
- Mitigation and avoided costs must be credited; if the lessor avoids a cost by returning equipment or otherwise not incurring an expense, that avoided cost must be deducted from recovery.

## Conclusion

The Wyoming Supreme Court upheld a net lost-profits damages award for a repudiated coin-operated equipment lease because the trial court relied on actual-loss evidence rather than a gross-profits liquidated-damages clause, but remanded to reduce damages where Pinnacle avoided the pool table’s cost by returning it.


The Corner, Inc. v. Pinnacle, Inc., 907 P.2d 1281 (Wyo. 1995)