DIVISION III

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

WENDELL L. GRIFFEN, JUDGE

CA01-1423

September 4, 2002

SHONDA BROWN, SHENIA BIGGS AN APPEAL FROM GREENE

GLEDIA THOMAS, KATRENA COUNTY CIRCUIT COURT

FREEMAN, and UNIQUE DESIGN [E99-559]

WHOLESALE, INC.

APPELLANTS

V. HON. DAVID BURNETT, JUDGE

RUALLAM ENTERPRISES, INC. REVERSED AND JUDGMENT

d/b/a LAM CONTAINERS ENTERED ON DIRECT APPEAL;

APPELLEE AFFIRMED IN PART AND REVERSED

IN PART ON CROSS-APPEAL

This is a second appeal arising from a suit filed by appellee, Ruallam Enterprises, Incorporated, doing business as Lam Containers (Lam), against appellants, Shonda Brown, Shenia Biggs, Gledia Thomas, Katrena Freeman, and Unique Design Wholesale, Incorporated (Unique), requesting relief under the Arkansas Trade Secrets Act, specifically seeking an injunction, damages and attorney's fees. See Brown v. Ruallam Enters., Inc., 73 Ark. App. 296, 44 S.W.3d 740 (2001). Appellants in this appeal were the appellants in the first appeal. In the first appeal, we reversed and remanded the case for the trial court to reconsider and recalculate the damages awarded to appellee based on the greater of the net profits lost by appellee or the net profits by which appellants were unjustly enriched. Id. On remand, Lam was awarded a judgment for $101,344.39. The trial court renewed its prior award of $10,000 to Lam for its attorney's fees, but declined to award fees for the work onthe first appeal or thereafter.1 The trial court granted a set-off for the costs awarded to appellants on the first appeal. The trial court granted a further set-off for the attorney's fees awarded other former employees of Unique in a companion case. Both parties appeal the amount of damages awarded. Lam also raises issues concerning the set-offs and the failure to award additional attorney's fees. On direct appeal, we reverse and render judgment in favor of appellee in the sum of $22,549. On cross-appeal, we affirm in part and reverse in part.

As an equity case, we review the instant case de novo. Our courts have been precise in stating what de novo review entails:

Equity cases are tried de novo on appeal upon the record made in the chancery court, and the rule that this court disposes of them and resolves the issues on that record is well established; the fact that the chancellor based his decision upon an erroneous conclusion does not preclude this court's reviewing the entire case de novo. An appeal in a chancery case opens the whole case for review. All of the issues raised in the court below are before the appellate court for decision and trial de novo on appeal in equity cases involves determination of fact questions as well as legal issues. The appellate court reviews both law and fact and, acting as judges of both law and fact as if no decision had been made in the trial court, sifts the evidence to determine what the finding of the chancellor should have been and renders a decree upon the record made in the trial court. The appellate court may always enter such judgment as the chancery court should have entered upon the undisputed facts in the record.

Conagra, Inc. v. Tyson Foods, Inc., 342 Ark. 672, 677, 30 S.W.3d 725, 728-29 (2000); Ferguson v. Green, 266 Ark. 556, 563-64, 587 S.W.2d 18, 23 (1979) (citations omitted).

In its sole point, Unique argues, as it did on the first appeal, that the chancellor erred in awarding damages because appellee failed to prove damages in any amount, and, in the alternative, that if any damages were owing to appellee, the amount was miscalculated and should be reduced to $24,219.55, or should be recalculated based on sales occurring after the customer lists were taken. Lam cross-appeals the calculation of damages, asking that this court raise the damages award to $456,624, the amount, according to Lam, by which appellants were unjustly enriched. Alternatively, Lam argues that if this court declines to award the amount of damages it deems appropriate, the court should allow the judgment to stand.

On remand, the parties did not introduce any new proof on damages. Instead, the parties relied on expert testimony from certified public accountants given at trial in support of their respective positions as to their profit margins, or lack thereof. Unique claimed that Lam had not suffered damages at all, and Lam asserted that it had lost profits in the amount of $313,564, calculated from the difference in gross profits between 1998 and 1999. The trial judge recognized the unsatisfactory nature of the proof before him on remand. At the second hearing on remand, he said that he could not find evidence that showed what net profits were gained by Unique or lost by Lam as a result of the use of the customer lists by Unique. A party seeking damages has the burden of proving his claim, and if no proof is presented to the trial court that enables it to fix damages in dollars and cents, the trial court cannot award damages. Milligan v. General Oil Co., 293 Ark. 401, 738 S.W.2d 404 (1987);Winkle v. Grand Nat'l Bank, 267 Ark. 123, 601 S.W.2d 559 (1980); McCorkle v. Valley Forge Ins. Co., 11 Ark. App. 41, 665 S.W.2d 898 (1984).

At trial, Shenia Biggs, one of the appellants, testified that Unique had gross sales of $278,385.65 and that Unique's profit margin was between seven and twelve percent. Lam's expert, Sydney Goldstein, a certified public accountant, testified that he took Unique's sales figures ($278,386), subtracted freight ($36,190) and commission expenses ($16,703), and arrived at a sales figure of $225,493. He then applied Lam's average gross margin for the past four years of 44.5%, to arrive at a gross margin loss of $101,472 because of sales made by Unique. Goldstein testified that he did not consider rent, utilities, or the cost of marketing, because to do so would be calculating net income. Goldstein also calculated Lam's gross margin loss at $313,564, based on the difference in 1998 sales and 1999 sales ($704,638) multiplied by the 44.5% gross margin. Finally, Goldstein stated he did not provide any testimony about Lam's loss of net profits.

Unique's expert, Steve Orr, also a certified public accountant, testified that he did not know Unique's gross profit margin, but that Lam's gross profit margin was 42% and the industry average was 40%. He also testified that this resulted in a net profit margin of seven percent, which was consistent with Unique's net profit margin and the national studies.

The trial judge recognized that Lam's expert did not calculate net profits, as ordered by this court. The original judgment calculated the amount of Unique's net profits as $24,219.55, which was arrived at by taking Unique's gross sales ($278,385.65) minus freight costs ($36,190.14), multiplied by a ten-percent net profit multiplier. The trial judge statedthat he thought that this court ordered him to award this amount. This figure was conceded by appellants to be a net profit calculation at oral argument. The trial judge specifically rejected the $313,564 figure argued by Lam as the appropriate amount of damages on the first appeal because that was not net profit. The trial judge found neither expert's testimony to be satisfactory in allowing him to calculate damages based on net profits.

"Net profits" has been defined as "[t]otal sales revenues less the costs of the goods sold and all additional expenses." Black's Law Dictionary 1227 (7th ed. 1990) (emphasis added). See also Plastics Research & Dev. Corp. v. Norman, 243 Ark. 780, 422 S.W.2d 121 (1967); Sumlin v. Woodson, 211 Ark. 214, 199 S.W.2d 936 (1947); Gordon v. Indusco Mgmt. Corp., 164 Conn. 262, 320 A.2d 811 (1973). We cannot accept the calculations provided by Lam's expert, Goldstein, because they are admittedly and plainly not net profit figures. Lam's attorney argued on remand that there should be no deduction for Unique's overhead expenses and also that there should be no consideration of year-end net profits in determining damages. However, these statements do not comport with our mandate on the first appeal, nor are they consistent with the generally accepted definition of net profits.

This court, in the exercise of its discretion on de novo review, is urged by counsel for Unique to enter judgment for Lam in the sum of $24,219.55 for the damages based upon Unique's sales, as originally calculated by the trial court, if it awards any damages. However, the trial court did not include the commission expenses, telephone expenses, or salary costs for Unique's employees. There is no evidence in the record regarding the telephone and salary expenses. However, when we subtract the commission expenses, we obtain a correctnet-profit figure of $22,549. Judgment will be entered in favor of Lam in that amount on direct appeal.

Lam's second issue on cross-appeal is whether the trial court erred in denying attorney's fees to Lam for work on the first appeal and thereafter. In the judgment on remand, the trial judge reinstated the $10,000 in fees originally awarded Lam. Lam now argues that the trial judge erred in not awarding additional fees for work done on the first appeal as well as in the trial court on remand. Lam further argues that the trial judge abused his discretion by not setting forth all of the factors that go into a decision to grant attorney's fees. A trial court is not required to award attorney's fees and, because of the trial judge's intimate acquaintance with the trial proceedings and the quality of service rendered by the prevailing party's counsel, appellate courts usually recognize the superior perspective of the trial judge in determining whether to award attorney's fees. Jones v. Abraham, 341 Ark. 66, 15 S.W.3d 310 (2000); Chrisco v. Sun Indus. Inc., 304 Ark. 227, 800 S.W.2d 717 (1990). The decision to award attorney's fees and the amount to award are discretionary determinations that will be reversed only if the appellant can demonstrate that the trial court abused its discretion. Nelson v. River Valley Bank & Trust, 334 Ark. 172, 971 S.W.2d 777 (1998); Burns v. Burns, 312 Ark. 61, 847 S.W.2d 23 (1993). A grant of attorney's fees is an issue within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. Chrisco, supra.

Arkansas Code Annotated section 4-75-607 (Repl. 2001) provides that the court may award reasonable fees to the prevailing party if certain findings are made. The operativeword in this statute is "may." The word "may" is usually employed as implying permissive or discretional, rather than mandatory, action or conduct and is construed in a permissive sense unless necessary to give effect to an intent to which it is used. Jones, supra; Chrisco, supra. Here, the trial judge actually exercised his discretion because Lam was awarded a fee, $10,000. The trial judge could have concluded that because Unique succeeded in obtaining a reversal and remand for recalculation of damages on the first appeal and because there was no additional testimony taken on remand, no further fees should be awarded. Further, as shown in the judgment on remand, the fees have been paid. The trial judge could have considered that, because the fees were paid during the course of the litigation, Lam would not need further fees to enable it to conclude the matter. We find that the trial judge did not abuse his discretion by refusing to award additional attorney's fees on remand. Of course, the trial court had no authority to award attorney's fees to Lam for the first appeal because that decision was for our court. Thus, we affirm on this point.

In its third point on cross-appeal, Lam argues that the trial judge erred in granting priority for a judgment lien over the attorney's lien filed by Lam's counsel. Our opinion on the first appeal was delivered on April 25, 2001. On August 9, 2001, Lam's counsel filed a notice of attorney's lien with the trial court. The judgment entered on remand granted set-offs for Unique's costs on the appeal and the attorney fees awarded to other employees of Unique in a companion case, but did not specify that the set-offs had priority over counsel's attorney lien. Prior to entry of the judgment on remand, counsel for Lam did argue that his attorney lien had priority; however, the trial judge did not rule on the issue. Therefore, weare precluded from considering this question. A ruling by the trial court on a challenged issue is a prerequisite to our review of that issue. Even questions raised at the trial level, if left unresolved, are waived and may not be relied upon on appeal. Kralicek v. Chaffey, 67 Ark. App. 273, 998 S.W.2d 765 (1999).

For its final point on cross-appeal, Lam argues that it was error for the trial court to grant appellants a set-off for attorney's fees awarded other former employees of Unique in a companion case. Lam filed another suit, number E 2000-272, in the Greene County Chancery Court against Margie Carr, Krystal Davis Easton, and Marla McCord seeking the same relief as in the present case. Carr and Eaton were awarded their attorney's fees in the amount of $2,500, and that award remained unsatisfied at the time the second judgment was entered in the present case.2 Because the fees remained unpaid, the trial judge set the fees off against the judgment awarded Lam in the present case. This was error.

In JAG Consulting v. Eubanks, 77 Ark. App. 232, 72 S.W.3d 549 (2002), this court reversed a judgment based on a jury verdict in part because the trial court had allowed the appellee's wife, a non-party, to testify as to the value of certain tools of hers that were alleged to have been converted by the appellant. The appellee also argued to the jury in closing arguments that he should be allowed to recover for his wife's property. In reversing, this court held that because Ms. Eubanks was not a party, it was error for the trial court to allow her to testify as to the value of her separate property and to recover damages for that loss. In the case at bar, the trial court was without authority in awarding a set-off in the present casefor attorney's fees awarded to non-parties in a companion case. JAG Consulting, supra. The other parties in the companion case have various other remedies available to them to collect the fees awarded them without resorting to a set-off in the present case.

Reversed and judgment entered for Lam in the amount of $22,549 on direct appeal; affirmed in part and reversed in part on cross-appeal.

Pittman and Roaf, JJ., agree.

1 The fees awarded have been paid by appellants, as stated in the judgment on remand.

2 The judgment on remand in the present case specifically mentions this order from the companion case in awarding the set-off.