Sure-Trip, Inc. v. Westinghouse Engineering

Westinghouse Engineering (Westinghouse) (defendant) had a contract with Sure-Trip, Inc. (Sure-Trip) (plaintiff) to purchase 1200 retrofit kits in 1988. At the end of 1988, Westinghouse had bought only 75 kits from Sure-Trip. Sure-Trip sued Westinghouse for lost profits under Uniform Commercial Code (UCC) § 2-708. At trial, Sure-Trip alleged that it would have made a $530 profit on each of the 1125 units that Westinghouse failed to buy. Sure-Trip calculated this alleged lost-profit amount by taking the kit price in the Westinghouse contract and subtracting Sure-Trip’s costs for material, labor, and packaging for each kit. Sure-Trip based its cost figures on the 621 units it had sold in 1988. The trial court asked Sure-Trip to submit evidence regarding how its variable expenses would have increased if Sure-Trip had ramped up production to manufacture an additional 1125 units in one year. Sure-Trip claimed that none of its expenses would have increased with a larger production volume. However, Sure-Trip’s 1988 tax return showed Sure-Trip’s income as just $12,000, with deductions for rent, advertising, travel, office supplies, insurance, legal expenses, and contracting fees. Westinghouse argued that Sure-Trip’s lost profits should be calculated at $12,000 divided by the 621 units sold, or just over $19 per kit. The trial court found that Westinghouse had breached the contract. However, the trial court rejected Sure-Trip’s assertion that its variable costs would not increase if it had more than doubled its kit production for the year, and held that Sure-Trip’s lost profits should be calculated at just $19 per kit, for a total of $21,656. Sure-Trip appealed.