SAN JOSE – The Court of Appeal of the state of California, 6th Appellate District, affirmed a Santa Clara County Superior Court's judgment on March 14 after the defendants in the case challenged a $213,500 award.
Defendants KAXT LLC and Warren Trumbly appealed a judgment in favor of plaintiff Diya TV Inc., challenging a $213,500 damages award to the plaintiff for lost advertising revenues. The defendants "argue that the lost revenues are special damages that were not pleaded with particularity and that the award is not supported by substantial evidence or proven with reasonable certainty," the opinion states
According to the background portion of the opinion, Ravi and Nalani Kapur invested $300,000 into Trumbly's new company KAXT LLC to finance a digital conversion, buy them an ownership interest, and reserve the free use of channel 1.3. Soon after, Ravi Kapur founded Diya TV to provide content for South Asian viewers. When Trumbly decided to sell KAXT LLC, their business relationship "soured," the opinion states. The Kapurs attempted arbitration to assert majority ownership and prevent the sale of KAXT but ultimately failed.
This most-recent judgment by the Court of Appeal follows Trumbly's appeal of the trial court's $213,500 judgment after Diya TV filed a complaint against KAXT over allegations of breach of contract, promissory estoppel and unjust enrichment/quasi contract. The Court of Appeal found KAXT’s two claims to lack merit.
The opinion states that the Kapurs invested in KAXT’s digital conversion for a 42 percent stake in the company. In 2013, Diya hired Emerging Networks to generate advertising revenue on channel 1.3 and soon after secured $213,500 in financial commitments. Since “general damages are often characterized as those that flow directly and necessarily from a breach of contract, or that are a natural result of a breach,” according to Lewis Jorge Construction Management Inc. v. Pomona Unified School Dist. (2004) as cited in the court opinion, the court determined that KAXT’s unjust removal of Diya TV from the station’s programming proves it the de facto gatekeeper from which that revenue flowed.
KAXT’s argument that Diya TV did not support its claim of $213,500 in lost advertising revenue with sufficient evidence was also found lacking. In reviewing the trial case, the media plan Diya TV submitted to the court demonstrated agreed on commitments by partners and was substantial evidence the company lost out on revenue totaling $213,500 through the end of 2013.
"A plaintiff is not required to show a profitable business in order to recover damages for lost revenue," the court concluded. It added: "If that were the rule, a breaching party would never be accountable for harm to a business operating at a loss. Even if Diya had been operating at a loss, that loss would have been smaller had Diya received advertising income under the media plan. The evidence establishes with reasonable certainty that Diya lost $213,500 in advertising revenue for 2013."