Dean W. Knight & Sons, Inc. v. First Western Bank & Trust Co.

This appeal is from a judgment on a cross-complaint awarding Dean W. Knight & Sons, Inc., and its sole stockholder $831,388 in damages for the fraud of First Western Bank and Trust Company. In addition to an attack upon the adequacy of the trial court findings to establish materiality of the bank’s misrepresentations and to establish reliance upon the misrepresentations, and a wholesale assault upon the sufficiency of the evidence to establish damage, the appeal involves an apparently novel issue of the measure of damages for loss of profit caused by fraud where, by reason of the peculiar nature of the defrauded business, profit is delayed rather than forever lost.

We conclude: (1) that the court’s findings of fact are adequate to support the judgment and the evidence is sufficient to support findings of damage to the cross-complainant; but that (2) the measure of damage to the cross-complainant’s profit is the financial loss in the delay in the realization of profit rather than the total profit temporarily denied to it by the cross-defendant’s fraud. Because the trial court relied upon expert testimony applying an improper measure of damages, we remand the matter to the…