Schonfeld v. Hilliard

AFFIRMED IN PART, REVERSED IN PART, VACATED AND REMANDED. [Copyrighted Material Omitted][Copyrighted Material Omitted][Copyrighted Material Omitted]

BRUCE E. FADER, Proskauer Rose LLP, New York, NY (David A. Picon and Amy S. Park, of counsel), for Plaintiff-Appellant.

WILLIAM G. DITTRICK, Baird, Holm, McEachen, Pedersen, Hamann and Strasheim, Omaha, Neb. (Jill Robb Ackerman and D. Nick Caporale, of counsel, Gary Greenberg, Orans, Elsen & Lupert, New York, NY, of counsel), for Defendants-Counter-Claimants-Appellees Russ Hilliard and International News Network, Inc.

JAMES P. MURPHY, Murphy, Kirkpatrick & Fain, PLLP, Billings, Mont. (Allen P. Rosiny, New York, NY, of counsel), for Defendant-Counter-Claimant-Appellee Les Hilliard.

Before: McLAUGHLIN, SACK AND KATZMANN, Circuit Judges.

This case involves a closely-held cable television corporation that imploded just as it was about to launch its flagship channel. In 1988, brothers Russ and Les Hilliard formed International News Network, Inc. ("INN") to distribute a British news and information channel in the United States (the "Channel"). Prior to this ambitious venture, the Hilliard brothers owned small mid-western cable television companies with an aggregate of only 66,000 subscribers.

To secure large-scale expertise and prestige, INN brought in Reese Schonfeld, a founder and former President of Cable News Network ("CNN") - initially as a consultant, and later as a shareholder - to help INN negotiate with the British Broadcasting Corporation (the "BBC") for a programming license. INN also retained Daniels & Associates ("Daniels"), the nation's leading financial services company for the cable industry, to prepare a business plan and to drum up investors.

In February 1994, the Hilliards and Schonfeld executed a written Shareholders' Agreement whereby each became a one third shareholder in INN in return for a $10,000 capital contribution. In addition, the Hilliards, who had each already lent $300,000 to INN, agreed to lend up to another $350,000 to INN if necessary to meet its obligations to the BBC. In lieu of a further cash contribution, Schonfeld agreed to invest his time and effort.

The Shareholders' Agreement confirmed the parties' understanding that INN itself would not operate the Channel. Instead, INN would invest in a yet-to-be-formed operating entity. INN's shareholders, if they chose, could increase their personal stakes in the Channel by making additional cash investments in the separate operating entity. The agreement said nothing about the percentage of profits that INN, or any other equity investor, would receive from the Channel's operation.

Although the Shareholders' Agreement provided for a two-member board of directors (one chosen by Schonfeld, the other by the Hilliards), no board members were formally designated. It appears, however, that Schonfeld assumed the three roles of director, President and CEO of INN. Russ Hilliard acted as the other director. Les Hilliard apparently played no role in INN, other than investor.

The final piece of the puzzle fell into place on March 4, 1994, when the BBC granted INN a 20 year exclusive license to distribute its news and information programming in a 24-hour format, commencing not later than February 1995 (the "March Supply Agreement"). The agreement provided for INN's assignment of the benefits and privileges of the agreement to the yet-to-be-formed operating entity upon written consent of the BBC, whose consent would not be unreasonably withheld. The BBC retained its right, however, to withhold consent to any delegation of INN's duties under the contract.

As INN's first step to implement the March Supply Agreement, and based on assumptions and figures provided by the Hilliards and Schonfeld, Daniels prepared a revised business plan for INN (the "INN Business Plan"). Schonfeld and Russ Hilliard used this revised plan to attract investors.

Soon after the execution of the March Supply Agreement, Cox Cable Communications ("Cox"), one of the largest cable operators in the United States, entered the picture. Cox wanted to launch two BBC channels in the United States - one with news and the other with entertainment programming. However, because of INN's exclusive programming rights, Cox would be unable to operate the news channel. Accordingly, Cox offered to purchase INN's contract rights for $1.7 million cash ($700,000 at closing and $100,000/year for ten years thereafter), plus a 5% equity interest in both of Cox's proposed BBC channels.

Finding Cox's offer reasonable, INN entered into a letter agreement with Cox on June 2, 1994 accepting the proposed terms of sale (the "Cox Agreement"). Under the Cox Agreement, Cox retained the right to buy out INN's 5% interest in the BBC channels in their tenth year of operations. The price that Cox agreed to pay for that interest was 20% of the tenth-year gross revenues of both channels. The parties agreed to enter into certain "definitive" agreements (i.e., a Shareholders' Agreement, Buy-Out Agreement and consulting agreement for Schonfeld) once they received final approval from the BBC.

In light of the Cox negotiations, INN and the BBC agreed to temporarily suspend the March Supply Agreement. This, in turn, required a postponement in the Channel's launch date for several months.

Although the BBC had approved all financial aspects of the Cox deal, in August 1994, the BBC, on behalf of Cox, requested an extension of time to work out certain editorial issues concerning the proposed entertainment channel. Having decided to pursue the profits from the Channel themselves rather than selling out to Cox, the Hilliards denied this request. Schonfeld reluctantly agreed to abort the Cox deal.

In October 1994, the FCC promulgated a new rule allowing cable operators to charge an increased per-channel monthly rate for up to six new channels as of January 1, 1995. To take advantage of this window of opportunity, INN asked the BBC to accelerate the launch date of the Channel.

INN and the BBC signed an "Interim Agreement," effective December 14, 1994, in which the BBC agreed to provide provisional programming as early as possible, and to develop an "Americanized" programming format to become available to INN no later than December 31, 1995 under a revised 20 year supply agreement (the "December Supply Agreement"). In consideration for the interim programming feed, INN agreed to pay the BBC approximately $20 million in installments beginning January 3, 1995. The BBC retained the right to terminate the Interim Agreement if, by January 31, 1995, INN had failed to get letters indicating an intent to carry the Channel from cable systems with an aggregate of at least 500,000 subscribers. The December Supply Agreement also: (1) capped INN's initial capital contribution to the operating entity at 15%; and (2) gave the BBC a non-dilutable 20% equity interest in the operating entity.

According to three witnesses - Richard Blumenthal (INN's attorney), Schonfeld and Mark Young (a representative of the BBC) - Russ Hilliard repeatedly promised orally that he and his brother would personally fund the Interim Agreement. These promises were allegedly made to induce Schonfeld and the BBC to abandon the March Supply Agreement and enter into the Interim and December Supply Agreements despite the fact that INN did not yet have the cash available to make the necessary payments to the BBC. Schonfeld and Blumenthal testified in depositions that the Hilliards said they planned to invest up to $20 million in the operating entity as financing for the BBC payments. However, there is no oral or written agreement memorializing the precise amount promised, or defining the liabilities and remedies of the parties in the event of the Hilliards' failure to fund.

By mid-January 1995, the Hilliards had provided none of the promised funding and INN was in default under the Interim Agreement. In February 1995, the parties met in New York to discuss the situation. Russ Hilliard did not deny that he and his brother had promised to fund the Interim Agreement. He claimed, however, that funding had been withheld because INN was having difficulty obtaining cable operator support. Rather than suing the Hilliards and INN for breach of contract, the BBC offered a chivalrous solution: in exchange for the dissolution of both the Interim and December Supply Agreements, the BBC agreed to release the Hilliards and INN from any and all claims arising out of their breach of the oral agreement and Interim Supply Agreement.

Schonfeld alleges that the Hilliards never really intended to fund the Interim Agreement themselves. He claims that, all along, they had been unsuccessfully attempting to get the money from William Bresnan, the CEO of Bresnan Communications (which is 80% owned by TCI Cable). Russ Hilliard has admitted in deposition testimony that: (1) the funds he had promised were supposed to come from Bresnan or TCI, not from himself and his brother; and (2) he knew the BBC would never have signed the Interim Agreement had it known the truth (i.e., would never have agreed to make the Interim Agreement contingent on funding from Bresnan or TCI).

In April 1995, Schonfeld commenced this diversity action in the United States District Court for the Southern District of New York (Mukasey, J.). Schonfeld alleged derivative claims on behalf of INN for: (1) fraud; (2) breach of contract; (3) promissory estoppel; (4) breach of the fiduciary duties of loyalty and care; and (5) mismanagement and waste of corporate assets. He also advanced personal claims for: (1) breach of contract; (2) promissory estoppel; and (3) breach of the fiduciary duties of loyalty and care.

In a nutshell, Schonfeld alleged that the Hilliards induced him and INN to abandon the March Supply Agreement and enter into the Interim and December Supply Agreements by falsely representing their intention to personally fund the Interim Agreement. He alleged that the Hilliards' breach of this oral agreement to fund led directly to INN's breach of the Interim Agreement and subsequent loss of the December Supply Agreement.

The damages requested by Schonfeld fall under three distinct categories: (1) lost profits that INN would have received had the Channel been successfully launched; or (2) in the alternative, the market value of the lost supply agreements ("lost asset" damages); and (3) punitive damages (solely in connection with his fraud and breach of fiduciary duty claims).

After discovery, the Hilliards moved for summary judgment arguing that, under governing New York law, Schonfeld could not establish lost profits or lost asset damages, and was not entitled to punitive damages. The Hilliards also contended that the oral promise to fund the Interim Agreement was unenforceable because it was too indefinite and not in writing.

To establish lost profit damages, Schonfeld relied on: (1) INN's Business Plan; (2) the revenues projected by Cox in connection with its own proposed BBC news channel; (3) the BBC's, the Hilliards' and Schonfeld's "belief" that the proposed operating entity would be profitable; and (4) the reports and deposition testimony of two damage experts - Donald Curtis and William Grimes.

Donald Curtis, a certified public accountant at Deloitte & Touche LLP, testified that damages from lost profits were between $112 to $269 million. Curtis based these figures on the revenue and expense projections contained in the INN Business Plan. William Grimes, a cable industry executive, testified to the assured success of the Channel by comparing it to other cable channels such as CNN and The Learning Channel. The defendants moved to preclude the testimony of these experts for failure to meet the scientific reliability standards set forth in Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993), and its progeny.

With respect to lost asset damages, Schonfeld relied entirely on the purchase price contained in the Cox Agreement to establish the market value of the March and December Supply Agreements. Calculating a present value for the portion of the purchase offer that comprised a 5% equity interest in the Cox channels, and adding this amount to the cash portion of the offer, Curtis concluded that the total purchase price agreed to in the Cox Agreement was $17.13 million.

Relying on Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261, 493 N.E.2d 234, 235, 502 N.Y.S.2d 131, 132 (1986) ("Kenford I"), the district court held that Schonfeld could not prove, with reasonable certainty, the existence or amount of damages for lost profits. With respect to Curtis's expert testimony, the district court noted that "the technique used probably would not survive a Daubert inquiry." The court, however, declined to exclude the evidence under Daubert because it had already held that Schonfeld failed to establish a foundation for the existence of damages for lost profits.

Finding Schonfeld's claims for lost asset damages to be nothing more than a "back door" attempt to recover lost profits, and again relying on Kenford I, the district court held that Schonfeld could not establish lost asset damages with reasonable certainty because the value of the supply agreements also depended on their ability to generate profits. In addition, the district court held that Schonfeld had failed to establish that the supply agreements were "recoverable assets." All expert testimony proffered to establish their market value was, therefore, excluded as irrelevant.

Finally, the court ruled that, as a matter of law, Schonfeld was not entitled to punitive damages.

Accordingly, the district court granted summary judgment dismissing all claims, with the exception of the fraud claim (which the court limited to out-of-pocket damages of $15,000). The ground for the sweeping dismissal was that Schonfeld had failed to demonstrate any damages. The defendants' arguments concerning the enforceability of the alleged oral contract were not addressed. See Schonfeld v. Hilliard, 62 F. Supp. 2d 1062 (S.D.N.Y. 1999).

Plaintiff, Schonfeld, now appeals, arguing that the district court erred by: (1) excluding the expert testimony offered to support his claim for lost asset damages; (2) dismissing all claims (other than fraud) for failure to establish the existence of, or entitlement to, the damages sought; and (3) limiting his recovery under the fraud claim to $15,000.

For the reasons set forth below, we affirm in part, reverse in part, vacate and remand.

We review a district court's grant of summary judgment de novo, drawing all inferences and resolving all ambiguities in favor of the non-movant. See Parker v. Columbia Pictures Indus., 204 F.3d 326, 332 (2d Cir. 2000). Summary judgment is proper only if the admissible evidence establishes that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c).

The issues before us on appeal are whether Schonfeld adduced sufficient evidence to establish the existence of damages for lost profits or lost assets, and his entitlement to punitive damages.

Schonfeld argues that the district court erred by dismissing his damage claims for lost profits. We agree with the district court.

In an action for breach of contract, a plaintiff is entitled to recover lost profits only if he can establish both the existence and amount of such damages with reasonable certainty. See Kenford I, 67 N.Y.2d at 261, 493 N.E.2d at 235, 502 N.Y.S.2d at 132. "[T]he damages may not be merely speculative, possible or imaginary." Id. Although lost profits need not be proven with "mathematical precision," they must be "capable of measurement based upon known reliable factors without undue speculation." Ashland Mgt. Inc. v. Janien, 82 N.Y.2d 395, 403, 624 N.E.2d 1007, 1010, 604 N.Y.S.2d 912, 915 (1993). Therefore, evidence of lost profits from a new business venture receives greater scrutiny because there is no track record upon which to base an estimate. See Kenford I, 67 N.Y.2d at 261, 493 N.E.2d at 235, 502 N.Y.S.2d at 132. Projections of future profits based upon "a multitude of assumptions" that require "speculation and conjecture" and few known factors do not provide the requisite certainty. Id., 67 N.Y.2d at 262, 493 N.E.2d at 236, 502 N.Y.S.2d at 133.

The plaintiff faces an additional hurdle: he must prove that lost profit damages were within the contemplation of the parties when the contract was made. See Ashland Mgt., 82 N.Y.2d at 403, 624 N.E.2d at 1010, 604 N.Y.S.2d at 915. "The party breaching the contract is liable for those risks foreseen or which should have been foreseen at the time the contract was made." Id. Where the contract is silent on the subject, the court must take a "common sense" approach, and determine what the parties intended by considering "the nature, purpose and particular circumstances of the contract known by the parties . . . as well as what liability the defendant fairly may be supposed to have assumed consciously." Kenford Co. v. County of Erie, 73 N.Y.2d 312, 319, 537 N.E.2d 176, 179, 540 N.Y.S.2d 1, 4 (1989) ("Kenford II") (internal quotation marks and citation omitted); accord Ashland Mgt., 82 N.Y.2d at 404, 624 N.E.2d at 1011, 604 N.Y.S.2d at 916.

The district court found Schonfeld's lost profit claims "highly analogous" to those raised in Kenford I. We do too. In Kenford I, Erie County had entered into a contract with the Kenford Company, Inc. and Dome Stadium, Inc. ("DSI") for the construction and operation of a domed stadium. 67 N.Y.2d at 260, 493 N.E.2d at 234, 502 N.Y.S.2d at 131. In exchange for the donation of the land, the contract provided that the County would begin construction within 12 months of the contract date and that, upon its completion, the County would enter into a 20-year management agreement with DSI. See id., 67 N.Y.2d at 260, 493 N.E.2d at 234-35, 502 N.Y.S.2d at 131-32. DSI sued the County for breach of contract when construction was not timely commenced, seeking lost profits that it would have received under the management agreement. See id., 67 N.Y.2d at 260, 493 N.E.2d at 234, 502 N.Y.S.2d at 131. The Court of Appeals held that DSI could not recover lost profits because their existence could not be proven with sufficient certainty. See id., 67 N.Y.2d at 262-63, 493 N.E.2d at 236, 502 N.Y.S.2d at 133.

Here, the district court concluded that the Channel was a new entertainment venture similar to the proposed stadium in Kenford I. The operating entity's profits, the court noted, "were purely hypothetical, stemming from the sale of untested programming to a hypothetical subscriber base, sold to advertisers at a hypothetical price and supported by hypothetical investors and carriers." Schonfeld, 62 F. Supp. 2d at 1079. After reviewing the seemingly endless list of assumptions upon which Schonfeld's expert relied in determining lost profits, the court held that Schonfeld could establish neither the existence nor the amount of lost profits with reasonable certainty. The court also concluded that lost profits were not within the contemplation of the parties. We fully agree with the district court's analysis.

A. The Channel's Status as a "New Business"

To evade the Kenford I analysis, Schonfeld argues that the district court should not have characterized the Channel as a "new business." He emphasizes that he and the Hilliard brothers were experienced cable channel operators and BBC news programming has been distributed around the world for many years. Accordingly, he claims that the Channel is more analogous to the introduction in Ashland of a new but tested investment strategy by an existing financial management corporation with an extensive customer base. This argument is unpersuasive.

It is undisputed that the Channel's operating entity never saw the light of day. Had the entity been created, it would have introduced first an existing product, BBC international news programming, and then a new product, the "Americanized" version, into a new market, the United States. In addition, the Channel had no established customer base. The Hilliards had only 66,000 subscribers and Russ Hilliard testified that they were having trouble finding the 500,000 subscribers necessary to preclude the BBC from terminating the March Supply Agreement. Finally, the Hilliards, Schonfeld and the BBC had never jointly operated a cable channel, so there is no historic record of operations from which lost profits could be projected. Therefore, the district court correctly determined that the Channel would have been a new business.

Schonfeld contends that the existence of lost profits was sufficiently established by the evidence that Cox, Schonfeld, the Hilliards and the BBC all believed that profits from the Channel were reasonably certain. However, "[t]he entrepreneur's 'cheerful prognostications' are not enough." 1 Dobbs Law of Remedies § 3.4. Further, Cox's profit projections for the international news channel were based on Cox's own existing cable operations. INN and the non-existent operating entity had no such established operations. Indeed, Schonfeld's expert, Curtis, admitted that if Cox's projected costs replaced those in INN's Business Plan, the Channel would be doomed as "a lost venture."

In addition, the district court properly held that Curtis's projections based on INN's Business Plan are legally insufficient. These projections presume that: (1) an operating entity would have been formed and operated for 20 years; (2) an estimated $44 million in pre launch financing would have been raised; (3) the hypothetical sub scriber levels would have been reached; (4) carriage agreements would have been entered; (5) advertisers would have been found at the assumed rates; (6) all projected expenses would have proved correct; (7) marketing costs would have remained constant and expenditures would have been sufficient to attract and maintain subscriber interest; and (8) the type and amount of equity interest held by each investor, including INN, would have been determined in the manner alleged by Schonfeld. Curtis was unaware that some cable owners are paid to carry a channel and admitted that, if the Channel's operating entity had to pay for carriage, it would not survive.

Subject as they are to the changing whims and artistic tastes of the general public, claims for profits lost in unsuccessful entertainment ventures have received a chilly reception in the New York courts. See Kenford I, 67 N.Y.2d at 262 63, 493 N.E.2d at 236, 502 N.Y.S.2d at 133; Melvin Simensky, Determining Damages for Breach of Entertainment Agreements, 8 Ent. and Sports Law. 1, 12-13 (1990) (collecting cases). Curtis believes he adjusted his profit figures to take such factors into account by providing for a 25% variance on the projected cash flows of the operating entity. In his deposition, he stated that he chose the 25% variance based on his experience with the cable industry. However, Curtis failed to establish that this variance would adequately account for any inaccuracies in the revenue and expense assumptions discussed above as well as any changes in consumer demand for British-style news reporting.

Indeed, Curtis failed to account for the effects of any general market risks on the Channel's probability of success. These risks include: (1) the entry of competitors; (2) technological developments; (3) regulatory changes; or (4) general market movements. As the district court correctly noted, "[f]ailure to control for adverse market conditions allows the false inference that plaintiff's venture was an assured success." Schonfeld, 62 F. Supp. 2d at 1074. Therefore, the court properly held that Schonfeld failed to establish a foundation for the existence of lost profits.1

In addition, Grimes's testimony regarding likely profits based on his comparisons to existing cable channels was properly rejected. It rested on a foundation of sand. Schonfeld failed to establish the high degree of correlation between INN or the non-existent operating entity and the proffered firms (in terms of, inter alia, investors, management and cost structures) upon which the probative quality of this evidence depends. See, e.g., S & K Sales Co. v. Nike, Inc., 816 F.2d 843, 852 (2d Cir. 1987) (evidence concerning parent corporation admissible with respect to subsidiary); 3 Dobbs Law of Remedies at § 13.4(3) (profits of another entity are relevant if "plaintiff's business bears a close comparison" to the proposed business, "the products or services involved are standardized," and the profits "do not depend heavily on local or personal management skills").

Schonfeld contends that the district court ignored the "wrongdoer rule" which Schonfeld believes required that the burden of uncertainty as to the amount of damages be shifted to the Hilliards. The "wrongdoer rule," however, is not that broad. It provides that, "when the existence of damage is certain, and the only uncertainty is as to its amount, . . . the burden of uncertainty as to the amount of damage is upon the wrongdoer." Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918, 926 (2d Cir. 1977) (emphasis supplied). The rule does not apply here for the simple reason that the existence of lost profit damages cannot be established with the requisite certainty. See id.

Finally, Schonfeld maintains that he adduced sufficient evidence to establish that liability for lost profits was within the parties' contemplation at the time the Hilliards promised to fund the Interim Agreement. He contends that this case is similar to Travellers Int'l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570 (2d Cir. 1994) where we upheld an award of lost profits when TWA breached its duty of good faith and fair dealing under a joint venture agreement with Travellers to market Travellers' getaway packages. We disagree.

In Travellers, the plaintiff was seeking to recover profits that would have been realized under the very contract that the defendant was accused of breaching. Further, we noted that TWA had "near exclusive control" over the marketing of the getaway packages and, therefore, the profitability of the business. Id., 41 F.3d at 1578. Thus, when it renewed its contract with Travellers, it "fairly may be supposed to have assumed consciously that lost profits damages would be an appropriate remedy" or at least "to have warranted Travellers reasonably to suppose that TWA had assumed such liability." Id. (internal quotation marks and citation omitted).

Our case is distinguishable in several respects. Schonfeld is not seeking profits that would have accrued under the alleged oral agreement to fund, or even under the Interim Agreement. Rather, Schonfeld wants to recover lost profits that INN or a non-existent operating entity might have received from the operation of the Channel. Further, the profitability of the Channel was highly uncertain when the Hilliards promised to fund the Interim Agreement. Nor did they exercise "near exclusive control" over the profitability of the venture. In light of "the nature, purpose and particular circumstances of the contract known by the parties," by orally promising to provide up to $20 million to fund the Interim Agreement, the Hilliards cannot "be supposed to have assumed" liability for approximately $269 million in lost profits that might have been garnered in the future by a non-existent operating entity. Kenford II, 73 N.Y.2d at 319, 537 N.E.2d at 179, 540 N.Y.S.2d at 4.

* * *

For all the foregoing reasons, we affirm the district court's grant of summary judgment dismissing all claims insofar as they seek damages for lost profits.

A. Distinction Between Damages for the Market Value of a Lost Income-Producing Asset and Lost Profits that Could Have Been Derived Therefrom

Schonfeld faults the district court for: (1) failing to distinguish his claims for the market value of the lost supply agreements from his request for lost profits; and (2) dismissing his lost asset claims. Schonfeld is correct.

In an action for breach of contract, a plaintiff may seek two distinct categories of damages: (1) "general" or "market" damages; and (2) "special" or "consequential" damages. See 3 Dan B. Dobbs, Dobbs Law of Remedies § 12.2(3) (1993). A plaintiff is seeking general damages when he tries to recover "the value of the very performance promised." Id. General damages are sometimes called "market" damages because, when the promised performance is the delivery of goods, such damages are measured by the difference between the contract price and the market value of the goods at the time of the breach. See id. at § 12.4.

"Special" or "consequential" damages, on the other hand, seek to compensate a plaintiff for additional losses (other than the value of the promised performance) that are incurred as a result of the defendant's breach. See id. at § 12.2(3). The type of consequential damages most often sought is lost operating profits of a business. See id. However, lost profits are not the only kind of consequential damages. A defendant's breach of contract may also cause a plaintiff to lose an asset that was in its possession prior to the breach. See id. at §§ 12.4(1) and 12.4(4). In some instances, the asset lost is an income-producing asset, the fair market value of which may be based, in whole or in part, on a buyer's projections of what income he could derive from the asset in the future. See Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 496 (2d Cir. 1995); Sharma v. Skaarup Ship Mgt. Corp., 916 F.2d 820, 825-26 (2d Cir. 1990). Damages seeking to recover the market value for a lost income-producing asset have sometimes been referred to as "hybrid" damages. See 3 Dobbs Law of Remedies at § 12.2(3).

Although lost profits and "hybrid" lost asset damages are both consequential, rather than general, in nature, courts have universally recognized that they are separate and distinct categories of damages. See Indu Craft, 47 F.3d at 496; ESPN, Inc. v. Office of the Comm'r of Baseball, 76 F. Supp. 2d 416, 420 n.3 (S.D.N.Y. 1999) (recognizing distinction but rejecting market value theory on ground that it was not introduced until six days before trial).

When the defendant's conduct results in the loss of an income-producing asset with an ascertainable market value, the most accurate and immediate measure of damages is the market value of the asset at the time of breach - not the lost profits that the asset could have produced in the future. See Sharma,