{ "id": 3553618, "name": "JON L. NORDHEM et al., Plaintiffs-Appellees, v. HARRY'S CAFE, INC., et al., Defendants-Appellants", "name_abbreviation": "Nordhem v. Harry's Cafe, Inc.", "decision_date": "1988-09-16", "docket_number": "No. 85-3591", "first_page": "392", "last_page": "400", "citations": [ { "type": "official", "cite": "175 Ill. App. 3d 392" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "95 Ill. 2d 541", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3111376 ], "pin_cites": [ { "page": "550" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/95/0541-01" ] }, { "cite": "58 Ill. 2d 289", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2953527 ], "opinion_index": 0, "case_paths": [ "/ill-2d/58/0289-01" ] }, { "cite": "51 Ill. 2d 143", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5390255 ], "year": 1980, "opinion_index": 0, "case_paths": [ "/ill-2d/51/0143-01" ] }, { "cite": "413 N.E.2d 1299", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "90 Ill. App. 3d 817", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3158025 ], "weight": 2, "pin_cites": [ { "page": "835" }, { "page": "835" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/90/0817-01" ] }, { "cite": "452 N.E.2d 626", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "116 Ill. App. 3d 933", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3519412 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/116/0933-01" ] } ], "analysis": { "cardinality": 677, "char_count": 16960, "ocr_confidence": 0.756, "pagerank": { "raw": 6.131889592184552e-08, "percentile": 0.38172013117367076 }, "sha256": "af998134ede52117658bcc5ec4943efe8ea86a829720683e24443a54e5281c01", "simhash": "1:e22df221540018f6", "word_count": 2728 }, "last_updated": "2023-07-14T17:24:13.630237+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "JON L. NORDHEM et al., Plaintiffs-Appellees, v. HARRY\u2019S CAFE, INC., et al., Defendants-Appellants." ], "opinions": [ { "text": "JUSTICE PINCHAM\ndelivered the opinion of the court:\nPlaintiffs, Jon Nordhem and William Nordhem, were awarded judgments, by confession, against defendants, Harry\u2019s Cafe, Inc., and its board of directors. Thereafter, an order was entered granting plaintiffs\u2019 motion to confirm the judgments but denying a motion of defendants to open the judgments and for leave to file a proposed counterclaim. On defendants\u2019 appeal therefrom, this court found an abuse of discretion in denying leave to file the counterclaim and remanded with instructions to permit its filing. Nordhem v. Harry\u2019s Cafe, Inc. (1983), 116 Ill. App. 3d 933, 452 N.E.2d 626.\nThe counterclaim subsequently filed alleged, inter alia, that in 1979 plaintiffs opened a booth at a food, beverage and entertainment festival entitled ChicagoFest in the name of Harry\u2019s Cafe without the authority of Harry\u2019s Cafe and that plaintiffs breached their contract with ChicagoFest, because of which Harry\u2019s Cafe was not allowed to participate in ChicagoFest in subsequent years. Following a trial on Harry\u2019s Cafe\u2019s counterclaim the trial court granted judgment to plaintiffs, Jon and William Nordhem. The trial court concluded, however, that William Nordhem breached his fiduciary duty to Harry\u2019s Cafe and assessed damages against the Nordhems in the amount of any net profits earned by the Nordhems at the 1979 ChicagoFest. We affirm.\nThe sole issue raised on appeal is whether the trial court correctly assessed damages. The facts adduced at trial follow.\nPlaintiffs, Jon Nordhem and William Nordhem, were employees and members of the board of directors of the defendant, Harry\u2019s Cafe, a combination restaurant and bar in Chicago. In the fall of 1978 the Nordhems, doing business as a partnership entitled The Nordhem Company, applied to the City of Chicago to participate in the 1979 ChicagoFest.\nDefendant, Thomas DuBois, the president and a member of the board of directors of Harry\u2019s Cafe, testified that at a meeting on August 1, 1979, the board of directors of Harry\u2019s Cafe discussed the possibility of operating a booth at the 1979 ChicagoFest. DuBois testified that plaintiff, William Nordhem, advised the board that there was not sufficient time for Harry\u2019s Cafe to obtain the approval of the City of Chicago to operate a booth at the 1979 ChicagoFest. The Nordhems further advised the board that the Nordhems were going to operate their own booth at the 1979 ChicagoFest. DuBois informed the board that Harry\u2019s Cafe was not to be connected with the Nordhems\u2019 booth at the 1979 ChicagoFest. DuBois testified that in 1980 he applied on behalf of Harry\u2019s Cafe to participate in the 1980 ChicagoFest and was rejected. DuBois conceded that Harry\u2019s Cafe did not apply to participate in ChicagoFest in subsequent years.\nHarry\u2019s Cafe offered the expert opinion of a certified public accountant, Harvey Gorden, to show that Harry\u2019s Cafe would have realized a profit of approximately $73,000 if it had participated in ChicagoFest from 1979 through 1982. Gorden testified that he estimated the costs of operating a booth at ChicagoFest by using factors which were consistent with a \u201cwell-operated restaurant.\u201d Gorden further testified that his opinion was also based on an analysis of a sample of 19 of the 59 vendors who participated in ChicagoFest from 1979 through 1982. On cross-examination, however, Gorden conceded that he did not know what products these 19 vendors sold and that only 5 of the 19 operations he analyzed were comparable to the Nordhems\u2019 operation.\nWilliam Drillias, coordinator of the 1979 ChicagoFest, testified on behalf of the defendants, Harry\u2019s Cafe. Drillias testified that in 1978 he received a letter of intent from the Nordhems to participate in the 1979 ChicagoFest. In the letter of intent the Nordhems claimed to \u201chave been involved in six food and beverage operations in Chicago during the past eight years the latest of which is Harry\u2019s Cafe.\u201d Drillias explained to the trial court that he therefore assumed that he was dealing with Harry\u2019s Cafe. Drillias testified that all applicants to ChicagoFest were asked to include information in their applications about the restaurants with which they were associated and that any applicant not associated with a restaurant would probably be rejected by the ChicagoFest committee. Drillias testified that the Nordhems\u2019 booth was well run and that the only major problem associated with the Nordhems\u2019 participation in the 1979 ChicagoFest was that they refused to use the name of Harry\u2019s Cafe, but instead used the name \u201cWisconsin Bratwurst and Foot Long Hot Dogs\u201d initially and thereafter no name was on the Nordhems\u2019 booth. Drillias stated that he recommended to the 1980 ChicagoFest committee that the Nordhems\u2019 application for the 1980 ChicagoFest be rejected because the Nordhems had not used the name of Harry\u2019s Cafe on their booth in 1979 and because the Nordhems were no longer affiliated with Harry\u2019s Cafe after 1979.\nPlaintiff and counterdefendant Jon Nordhem testified that due to excessive costs the Nordhems lost $1,439 at the 1979 ChicagoFest.\nThe trial court concluded that defendants and counterplaintiffs Harry\u2019s Cafe et al., did not substantiate their allegations that the Nordhems had damaged the name and reputation of Harry\u2019s Cafe by not keeping complete books and records and by not selling the prod-net they agreed to sell at ChicagoFest. The trial court further noted that since Drillias\u2019 only complaint about the Nordhems\u2019 participation in ChicagoFest was that the Nordhems refused to use the name of Harry\u2019s Cafe in connection with their booth, the Nordhems could not be said to have held themselves out to be Harry\u2019s Cafe at the 1979 ChicagoFest as alleged by Harry\u2019s Cafe. The trial court stated that the Nordhems may have traded on the name of Harry\u2019s Cafe in order to gain admission to ChicagoFest, thus confusing the coordinator, Drillias, but the contracts between the Nordhems and ChicagoFest were between The Nordhem Company, not Harry\u2019s Cafe, and the City of Chicago. The trial court concluded also that William Nordhem deceived the board of directors and breached his fiduciary duty to Harry\u2019s Cafe by informing the board that there was insufficient time for Harry\u2019s Cafe to apply for a booth at the 1979 ChicagoFest while knowing that he had already filed an application with the 1979 ChicagoFest Committee for The Nordhem Company. The damages to Harry\u2019s Cafe for such a usurpation of a corporate opportunity, the' court concluded, were the net profits earned by the Nordhems, and thus lost by Harry\u2019s Cafe, at the 1979 ChicagoFest.\nThe court ruled that Harry\u2019s Cafe failed to meet its burden of proving the net profits of the Nordhems. The trial court found the testimony of Harry\u2019s Cafe\u2019s accountant, Gordon, incompetent because Gordon merely estimated the costs of operating a booth at Chicago-Fest, and while the booth at ChicagoFest was tantamount to operating a hot dog stand for 10 days, Gordon testified that he based his projections on his knowledge of the costs of a \u201cwell-operated restaurant.\u201d The court also considered Gordon\u2019s opinion incompetent because Gordon\u2019s projections for the future income of Harry\u2019s Cafe at ChicagoFest were \u201cbased on a totally fallacious premise,\u201d that \u201cmerely because 19 companies [only five of which were at all similar to the Nordhems\u2019] survived ChicagoFest for the years 1979, \u201980, \u201981 and \u201982, that their businesses are comparable to the operation that Harry\u2019s did or would have operated.\u201d\nOn appeal, Harry\u2019s Cafe contends that the testimony of its accountant sufficiently proved the amount of profits Harry\u2019s Cafe lost as a result of William Nordhem\u2019s breach of his fiduciary duty to Harry\u2019s Cafe and the usurpation of a corporate opportunity and that the trial court erred in not assessing the lost profits in accordance with that evidence. We disagree.\nGenerally, a plaintiff must present competent proof of lost profits from which a reasonable basis of computation can be derived. (ABC Trans National Transport, Inc. v. Aeronautics Forwarders, Inc. (1980), 90 Ill. App. 3d 817, 835, 413 N.E.2d 1299.) Harry\u2019s Cafe contends, rightly, that the law requires not absolute certainty as to the amount of loss, but rather that the evidence, with a fair degree of probability, tend to establish a basis for the assessment of damages. (Schatz v. Abbott Laboratories, Inc. (1972), 51 Ill. 2d 143.) The trial court in the instant case, however, was reduced to evaluating the projections of Harry's Cafe in comparison to the actual data of the Nordhems. In a similar circumstance, the court in ABC Trans National Transport, Inc. v. Aeronautics Forwarders, Inc. (1980), 90 Ill. App. 3d 817, 835, stated:\n\u201cPlaintiff\u2019s economic theory provides one viable way of calculating these losses, yet defendants challenged certain underlying assumptions of that calculation. That the court might have accepted plaintiff\u2019s position is certainly a different assertion than that it was compelled to do so. Economic data can be interpreted in different ways for different purposes. As useful as a particular accounting technique may be ***, it cannot be regarded as conclusive proof of legal damages; the judge or jury must be free to draw their own inferences from the evidence presented.\u201d\nThe accountant for Harry\u2019s Cafe gave the trial court an estimate of the profits that Harry\u2019s Cafe lost by not participating in Chicago-Fest from 1979 through 1982. The accountant\u2019s estimate of the costs of operating a booth at ChicagoFest, admittedly using figures for a \u201cwell-operated restaurant,\u201d contrasted sharply with the actual costs incurred by the Nordhems in operating their booth. For example, Gorden estimated that the operation of a booth at ChicagoFest would require 8 to 10 employees who would work 12 hours a day at minimum wage and one manager. Jon Nordhem testified that because of the volume of customers at ChicagoFest, 16 employees were required to operate the Nordhems\u2019 booth and that the employees worked in excess of 16 hours a day. Nordhem further testified that he paid the employees more than the minimum wage because the Nordhems could not afford absenteeism and that minimum wage, in his experience, was not an incentive for employees to attend work every day for a 10-day festival such as ChicagoFest. Another example, for the cost of supplies, Gorden used a restaurant industry average of 5% of total operating costs as opposed to the Nordhems\u2019 actual expenditure of 7% to 8%. Additionally, even though DuBois conceded that Harry\u2019s Cafe did not apply to participate in ChicagoFest after 1980, Gorden gave estimates of lost future profits for 1980 through 1982, and at least one of these estimates, the vendor\u2019s rent expense, Gorden conceded was not based on any investigation. Further, Gorden did not use the actual figures of any of the 19 vendors in his sampling to support his projections. Assuming arguendo that the trial court had accepted as competent Gorden\u2019s projections of the net profits which the Nordhems could or should have earned at Chicago-Fest from 1979 through 1982, Harry\u2019s Cafe nevertheless failed to contradict the testimony of the Nordhems that their operating expenses exceeded their gross receipts and that therefore the Nordhems did not realize any net profits at ChicagoFest but instead suffered a net operating loss.\nHarry\u2019s Cafe contends that William Nordhem\u2019s breach of his fiduciary duty to Harry\u2019s Cafe made it difficult for Harry\u2019s Cafe to calculate its lost profits and that therefore the trial court erred in not allowing evidence of the comparable experience of Marc Malnati, a ChicagoFest vendor from 1979 through 1982, to prove the lost profits of Harry\u2019s Cafe. Malnati was called by Harry\u2019s Cafe to testify about the nonmonetary benefits which inured to ChicagoFest vendors. The trial court ruled that Malnati would have to be qualified as an expert on the nonmonetary benefits which inured to participants in ChicagoFest before offering such testimony. Malnati testified about nonmonetary benefits that he and his restaurant received as a result of participating in ChicagoFest. We agree with the ruling of the trial court that testimony on the nonmonetary benefits which inured to Malnati from his participation in ChicagoFest, alone, was not relevant to the issue of profits lost by Harry\u2019s Cafe and the trial court properly struck this testimony as irrelevant. Moreover, nothing in the trial record supports the allegation of Harry\u2019s Cafe that the Nordhems committed any act which rendered the assessment of the plaintiffs\u2019 lost profits difficult or not ascertainable.\nHarry\u2019s Cafe next contends that the trial court erred in limiting its damages to the Nordhems\u2019 net profits in 1979. On cross-examination of the accountant for Harry\u2019s Cafe, Gorden, counsel for the Nordhems renewed an objection made earlier to the accountant\u2019s projections of food sales and net profits, which projections the accountant admitted were derived from a sampling of 19 former ChicagoFest operations, only five of which were comparable to the Nordhems\u2019 operation at ChicagoFest. Counsel for the Nordhems asked that the accountant\u2019s testimony projecting the food sales be struck. In opposition to the motion to strike, counsel for Harry\u2019s Cafe cited The Vendo Co. v. Stoner (1974), 58 Ill. 2d 289, as authority for its position that it was sufficient that the accountant\u2019s projections showed the extent of Harry\u2019s Cafe\u2019s lost profits damages as a matter of just and reasonable inference, even though the projections were only approximations. Counsel for Harry\u2019s Cafe argued to the trial court, \u201cAgain, I submit that it is most competent testimony and appropriate, and he [Gorden] is rendering his opinion on lost profits.\u201d After citing the Vendo case in the trial court solely in support of the accountant\u2019s projections of lost profits, Harry\u2019s Cafe now contends on appeal that the trial court \u201cplaced an erroneous limitation on Harry\u2019s Cafe\u2019s damages,\u201d and that Harry\u2019s Cafe cited the Vendo case in the trial court in support of a theory of damages based on something other than lost profits. No such alternative theory of damages appears in the trial record, or in the briefs of Harry\u2019s Cafe on appeal for that matter. While Harry\u2019s Cafe might have done well to cite Vendo in the trial court as authority for another theory of damages based on something other than net profits, Harry\u2019s Cafe waived this issue in the trial court and cannot raise it for the first time on appeal. Shell Oil Co. v. Department of Revenue (1983), 95 Ill. 2d 541, 550.\nHarry\u2019s Cafe lastly contends that the trial court erred in concluding that the Nordhems did not hold themselves out at the 1979 ChicagoFest as Harry\u2019s Cafe and therefore also erred in not allowing evidence of profits Harry\u2019s Cafe consequently lost in 1980, 1981 and 1982. We disagree for two reasons. First, Drillias, a witness for Harry\u2019s Cafe and the coordinator of the 1979 ChicagoFest, testified that the only major problem associated with the Nordhems\u2019 operation was that the Nordhems refused to use the name of Harry\u2019s Cafe in connection with their booth. We find no reason to disagree with the trial court\u2019s finding that for this reason, the Nordhems cannot be said to have held themselves out to the public as Harry\u2019s Cafe. Second, the contention that the trial court disallowed evidence of profits which Harry\u2019s Cafe lost by not participating in ChicagoFest in 1980, 1981 and 1982 is totally fallacious. Counsel for Harry\u2019s Cafe asked the accountant, Gorden, whether he had an opinion on whether Harry\u2019s Cafe would have realized a profit if it had participated in ChicagoFest from 1980 through 1982. Gorden opined that Harry\u2019s Cafe would have realized a profit at ChicagoFest in those years. Gorden testified further that his opinion was based on food sales figures of 19 other ChicagoFest vendors, which figures were received from Bernstein and Banks, an accounting firm. During the direct examination of Gorden, plaintiffs\u2019 exhibit No. 26, Bernstein and Banks\u2019 list of 59 ChicagoFest vendors and their gross sales for 1980 through 1982, was admitted into evidence as a basis for Gordon\u2019s projections of profitability by Harry\u2019s Cafe from 1980 through 1982. Gorden then explained in great detail the methodology he used to arrive at his opinion that Harry\u2019s Cafe would have realized a profit at ChicagoFest from 1980 through 1982.\nWe are of the opinion that the trial court properly assessed damages and we therefore affirm.\nAffirmed.\nLORENZ, P.J., and SULLIVAN, J., concur.", "type": "majority", "author": "JUSTICE PINCHAM" } ], "attorneys": [ "Pedersen & Houpt, of Chicago (George L. Plumb and Arthur M. Holtzman, of counsel), for appellants.", "Beeler, Schad & Diamond, P.C., of Chicago (Stephen B. Diamond, of counsel), for appellees." ], "corrections": "", "head_matter": "JON L. NORDHEM et al., Plaintiffs-Appellees, v. HARRY\u2019S CAFE, INC., et al., Defendants-Appellants.\nFirst District (5th Division)\nNo. 85\u20143591\nOpinion filed September 16, 1988.\nRehearing denied November 2, 1988.\nPedersen & Houpt, of Chicago (George L. Plumb and Arthur M. Holtzman, of counsel), for appellants.\nBeeler, Schad & Diamond, P.C., of Chicago (Stephen B. Diamond, of counsel), for appellees." }, "file_name": "0392-01", "first_page_order": 414, "last_page_order": 422 }