Collins Entertainment Corp. v. Coats and Coats Rental Amusement

Collins Entertainment Corporation (Collins) (plaintiff) contracted to lease video-poker machines to two bingo-hall operations, Shipwatch Bingo (Shipwatch) and Ponderosa Bingo (Ponderosa), which were owned by Coats and Coats Rental Amusement (defendant). The six-year lease required that any purchaser of the bingo halls’ premises assume the lease. American Bingo and Gaming Corporation (American) (defendant) bought the bingo halls’ assets but refused to assume the lease. Collins brought suit for intentional interference with contract. The suit was referred to a master in equity for trial. American argued that Collins had found other contracts for the machines. Collins presented evidence that it had ample machines for its other contracts in addition to the original leases for Shipwatch and Ponderosa, and could have benefited from all of those contracts had American not breached. The master in equity found for Collins, awarding actual and punitive damages. American appealed. The court of appeals affirmed the master’s award, applying the lost-volume-seller doctrine, which states that if an injured seller would have entered into a subsequent contract even if the first contract had not been breached and would therefore have had the benefit of both contracts, the subsequent contract is not a substitute for the first. American argued that the court of appeals erred in adopting and applying the lost-volume-seller doctrine because the doctrine eliminated the seller’s duty to mitigate damages. The Supreme Court of South Carolina granted certiorari to review.