Sunnyland Farms, Inc. v. Central New Mexico Electrical Cooperative, Inc.
New Mexico Supreme Court
301 P.3d 387 (2013)
Central New Mexico Electrical Cooperative (CNMEC) (defendant) shut off Sunnyland Farms's (plaintiff) electricity for nonpayment, and the next day a fire caused by Sunnyland's own employees' negligence broke out and destroyed the facility, since the water pumps needed for firefighting couldn't run without power. Sunnyland sued in both contract and tort, claiming CNMEC's shutoff without proper notice caused the fire's destructive spread, and the trial court awarded over $21 million in consequential damages based on expert testimony about lost profits, reduced by 80 percent on the tort claim for Sunnyland's own negligence; the court of appeals reversed on damages, and Sunnyland appealed.
Whether, in a contract action, a defendant is liable for consequential damages that were not objectively foreseeable as a probable result of the defendant's breach when the contract was made.