The Tenth Circuit reversed a jury verdict for more than $5 million in a breach of contract action for failure to deliver securities in connection with a stock sharing agreement between several tenured professors for work done for a third party economic consulting company. The alleged breach concerned a letter agreement between the parties whereby the plaintiffs would assist the defendant in reaching his billable hours targets for the company in exchange for a share of the stock awarded to the defendant by the company for his work.After disposing of the defendant’s challenges to the jury’s findings as to liability, the Tenth Circuit reversed the jury’s damages verdict on grounds of improper jury instructions as to the appropriate measure of damages.

Over the period between when the agreement by its terms expired and the date of trial, the value of the disputed shares fluctuated substantially. The District Court, however, gave no instruction to the jury as to the date on which the stock was to be valued for purposes of calculating damages.

Reversing the jury’s verdict, the Tenth Circuit found that the District Court’s failure to instruct the jury as to the date of valuation constituted reversible error. Specifically, the court held that Utah law provides for multiple measures of damages, however each requires a finding as to the date of breach. In the same vein, the court held that the value of the shares on the date the defendant actually sold them was “legally irrelevant” under any cognizable measure of damages. As such, the court remanded the case to the District Court for a determination as to the appropriate measure of damages, this time “by reference to the date of breach.” (Kearl v. Rausser, 2008 WL 4228381 (10th Cir. Sept. 17, 2008))