No Harm, No Foul

The Court of Appeals in Ohio’s Eighth Appellate District recently offered a clear reminder that it’s not enough to be able to demonstrate fraud or other wrongful conduct in order to recover at trial. No matter how egregious the conduct, a plaintiff can’t recover unless it can show that it has been damaged – and damaged in a way that doesn’t require speculation or inferences to determine the amount.

In a lawsuit by several shareholders of a defunct closely-held corporation against another shareholder and his attorney for fraud and conspiracy, the plaintiffs sought recovery of an indeterminate amount of damages related to the loss of value of their shares and other damages, but did not offer any basis for analyzing or calculating the lost value or the other categories. Nevertheless, the trial court allowed the jury to consider the claims, and jury awarded a significant amount of damages. On appeal, the court of appeals from the Eighth Appellate District reversed in MADFAN, Inc. v. Makris, 2016-Ohio-7395, finding that the trial court should have directed a verdict in favor of the defendants because the plaintiffs did not provide the jury with “a reasonable guide to computing an itemized value” of the damages and the “jury was left to speculate.” The court noted that although there was some evidence of the lost value of the shares, the information was incomplete, so that the jury could only have reached a conclusion by stacking an inference on top of another inference.

While the decision does not break new ground, it’s a vivid demonstration that a key element of any successful claim is to show damage – and a reliable method to calculate that damage.
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