CACI jury instructions
Because costs under Code Civ. Proc., § 1032, subd. (b), were awarded to consumers as prevailing parties in their action against a lender as an assignee of a consumer installment sale contract, not as part of the recovery on the cause of action provided by the Holder Rule, 16 C.F.R. § 433.2, the rule's limitation of recovery to the amount paid was inapplicable to the cost award; The consumers could recover prejudgment interest under Civ. Code, § 3287, subd. (a), because the award was not based on the cause of action, and thus the Holder Rule did not apply; The American rule, as codified in Code Civ. Proc., § 1021, barred recovery of attorney fees because the consumers did not prevail under Civ. Code, § 1717, on a contract claim, nor could they recover fees from the lender under Civ. Code, § 1780, or private attorney general fees under Code Civ. Proc., § 1021.5.
Defendant franchisors appealed a judgment from the Superior Court of Orange County (California), which awarded a substantial amount of damages to plaintiff franchisee for lost profits, lost franchise fees, and consequential expenses sustained when the franchisors unilaterally terminated a subfranchise CACI jury instructions. The jury also awarded damages to plaintiff limited partnerships for intentional interference with prospective economic advantage.
The franchisors entered into an agreement with the franchisee to develop restaurant subfranchises. The franchisee established two limited partnerships to build restaurants. After the franchisors terminated the agreement, the franchisee presented expert testimony regarding lost anticipated profits from restaurants that had not yet been opened, including the two restaurants to be built by the limited partnerships. The expert's calculations relied on projections provided by the franchisee and market data about other restaurants. The court found the evidence insufficient to establish the amount of lost anticipated profits. There was no testimony as to the facts underlying the projections or the calculations used to prepare them. The data about other restaurants did not show a similar profit and loss experience. Franchise fees based on a percentage of the projected gross revenue were recoverable only as to one restaurant for which the franchisee provided actual financial information. The franchisee could recover expenses incurred in developing new locations. The limited partnerships did not show that the franchisors' conduct was the proximate cause of their lost economic advantage.
The court reversed the judgment as to the cause of action for intentional interference with prospective economic advantage, remanded to the trial court with directions to reduce the award of damages, and affirmed the judgment in all other respects.