Capshaw v. Schieck

Summary

The Wyoming Supreme Court reviewed a breach-of-contract dispute arising from the sale of a corporation and the sellers’ contractual indemnification obligation for a reduced net operating loss carryforward. The court held that the trial court did not abuse its discretion in admitting testimony concerning future profits and that sufficient evidence supported future damages. However, it held that the trial court improperly relied on an expert calculation based on incorrect tax-return computations and remanded for entry of judgment in the reduced amount of $12,101.31.

Holdings

1. The trial court did not abuse its discretion by admitting the buyers' testimony concerning the likelihood of future corporate profits. The testimony was rationally based on the witnesses' perceptions and was not offered to prove the contents of a writing, so the best evidence rule did not apply.
2. The trial court erred by relying on the buyers' expert's $50,086 damage calculation because the calculation was based on tax returns that improperly applied Internal Revenue Code § 382. The proper damages award, supported by the sellers' expert's calculation, was $12,101.31.
3. The evidence was sufficient to support the trial court's finding that the corporation would have future profits and would sustain a loss from the reduction of its net operating loss carryforward, even though the buyers did not present a precise forecast of future taxable income.

Questions Presented

1. Whether the trial court properly admitted lay and expert testimony concerning the corporation's future profits over objections based on lack of foundation and the best evidence rule.
2. Whether the trial court could award damages based on tax returns that were prepared using an incorrect application of Internal Revenue Code § 382.
3. Whether the evidence was sufficient to support future damages for lost tax benefits despite the absence of precise evidence of future taxable income.

Disposition

reversed_and_remanded