What is the test for determining whether a trial court erred in awarding after tax net operating profits as the equivalent of fair rental value?

California, United States of America


The following excerpt is from Superior Motels, Inc. v. Rinn Motor Hotels, Inc., 195 Cal.App.3d 1032, 241 Cal.Rptr. 487 (Cal. App. 1987):

This court recently had occasion to state: "A trial court's equity powers are formidable ... but must be exercised pursuant to the principle that equity follows the law." (Johnson v. Tago, Inc., supra, 188 Cal.App.3d 507 at p. 518, 233 Cal.Rptr. 503.) The heart of defendants' remaining contentions is that the trial court's award of "after tax net operating profits" exceeded the legally permissible recovery in several respects. Specifically, they urge that the trial court erred in (1) awarding net profits as the equivalent of the property's fair rental value; (2) enhancing the award with prejudgment interest; and, (3) extending the award of net profits beyond entry of the judgment until the date possession was surrendered. Each of these claims is well taken.

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