A real estate developer entered into a development agreement with a local agency to develop a parcel of land. The local agency breached the development agreement, causing the developer to lose profits. The developer sought to recover his lost profits which were corroborated by the town manager’s estimate of the value of the project, a fellow investor’s estimate of the potential profits and the opinion of an expert real estate appraiser in like-type projects. The local agency claimed the developer’s lost profits were not recoverable since the amount of the lost future profits on resale of the project was speculative and conjectural. A California court of appeals held a real estate developer who loses profits, which are fully predictive and based on sufficient facts and critical analysis, due to the breach of a development agreement by a local agency recovers his lost profits since the developer established through expert testimony the amount of profits lost. [Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes (2010) 191 CA4th 435]
Editor’s note — He who has the most believable appraiser wins.
