Lewis River Golf, Inc. v. O.M. Scott & Sons

Lewis River Golf, Inc. (Lewis) (plaintiff) was in the business of growing sod for sale. Lewis purchased sod seed from O.M. Scott & Sons (Scott) (defendant) under an express warranty. The sod grown from Scott’s seed had weeds, which Lewis claimed was a breach of warranty. Lewis was unable to resolve the weed problem and lost most of its commercial customers. Lewis also had to cut its sod production from 275 acres to 45 acres. Lewis sued Scott for damages under the Uniform Commercial Code. In 1985, a jury awarded unsegregated damages of about $1.3 million to Lewis, including lost profits. On appeal, the verdict of liability was affirmed, but the matter was remanded for a new trial on damages. By the time of the new trial in 1989, Lewis had sold its sod business. Lewis argued at trial that it had to sell its sod business at a substantial loss due to damage to its reputation or goodwill, supported by an estimate of loss provided by Lewis’s economic expert. The expert calculated the value of Lewis’s business based on Lewis’s financial records and facts developed at trial and compared the estimated value to the lower actual sales price. The jury awarded Lewis approximately $1 million for the lower sales price caused by loss of goodwill, and the trial court entered judgment on the verdict. Scott appealed, challenging the admission of expert testimony on lost business value as overly speculative. The court of appeal reversed the judgment. The Washington Supreme Court agreed to review the matter.