Abstract
Prior to Ameristar Jet Charter, Inc. v. Dodson International Parts, Inc., a split of authority existed among appellate cases in Missouri as to how to calculate lost profit damages. One line of cases stood for the proposition that all overhead expenses, including fixed expenses, should be deducted from estimated lost revenues to determine lost profit damages. Another set of cases explicitly refused to deduct all overhead; those courts only deducted variable expenses from estimated lost revenue to determine lost profit damages. The Missouri Supreme Court resolved this conflict in a unanimous decision in Ameristar. The court held that fixed expenses should not be deducted from the estimation of lost revenues in the calculation of lost profit damages. This decision achieves the theory behind damage awards; it puts the plaintiff in as good a position as he would have been had the tort not been committed. The holding presents a problem, not in its reasoning, but in the rigidity of its terminology. A plaintiff will not be put in as good a position as he was before by the deduction of only "variable" expenses from estimated lost revenues in many cases. Some cases, like Ameristar, may involve a third type of cost, termed by cost accountants as "step function" or "semi fixed" costs. Furthermore, in other cases the deduction of fixed expenses may be appropriate. The calculation of lost profit damages should focus on deducting the costs actually saved by the defendant, rather than on the classification of the different expenses as "fixed" or "variable." An additional problem presented by the decision is the court's ambiguity as to whether the classification of expenses as fixed or variable is a question of law or fact.
Recommended Citation
Jennifer Koboldt Bukowsky,
Calculating Lost Profit Damages: The Missouri Supreme Court Semi-Fixed the Variable Appellate Caselaw,
71 Mo. L. Rev.
(2006)
Available at: https://scholarship.law.missouri.edu/mlr/vol71/iss1/11