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REPROSYSTEM, B.V. v. SCM CORP.

September 13, 1982

REPROSYSTEM, B.V. and N. NORMAN MULLER, Plaintiffs,
v.
SCM CORPORATION, Defendant


Sweet, D.J.


The opinion of the court was delivered by: SWEET

SWEET, D.J.

A post trial hearing was conducted on June 2, 22 and July 1, 1982 at which evidence was presented with respect to the calculation of damages to be awarded by way of judgment in favor of plaintiffs Reprosystem B, B.V. ("Reprosystem") and N. Norman Muller ("Muller") against defendant SCM Corporation ("SCM"). Judgment will be entered in accordance with this memorandum opinion on notice within ten (10) days of the date hereof.

 Prior Proceedings

 On June 30, 1981 an opinion was filed which determined the liability issues raised in Reprosystem's action against SCM arising out of SCM's failure to transfer its European copier assets to Reprosystem. Certain issues as to the calculation of damages remained outstanding and a further opinion was issued on September 15, 1981 on that subject. The effect of taxes on the damages calculation became a principal issue, since the judgment to be entered sought to award Reprosystem the profit which SCM had garnered by its conduct, held to be a breach of its duty. The difficulty, of course, arose because the transaction upon which Reprosystem sued did not in fact take place, and the tax effect on the theoretical transaction became more difficult to determine. Reprosystem sought recovery for pre-tax profits, while SCM urged that the post tax profits constituted the proper measure of damages under the June opinion.

 The September 15, 1981 memorandum opinion sought to deal with the issue by stating:

 
Thus, borrowing the traditional unjust enrichment analysis, it would be inappropriate for SCM to have to disgorge to plaintiffs a sum representing taxes paid on the profits while this court has held SCM unjustly retained. This deduction for taxes will be allowed.

 As subsequent events have established, "taxes paid" became as difficult to determine as a consequence of the change in circumstances and the difference between tax treatment in the United States and Europe as the original liability issues had been.

 Discovery was conducted, a hearing was held and on March 31, the court issued yet another memorandum opinion on the subject of damages and taxes, concluding that a factual hearing would be required to establish the amount of German and French taxes paid attributable to the period as well as the effect of certain currency transactions. Reprosystem's claim that SCM should also pay over a judgment tax was rejected. More discovery took place, and a final hearing was held on June 2, 22 and July 1, 1982 as recounted above.

 By and large the amount of gross profits for the period in question have been determined. These amounts will be affected by the treatment to be accorded the following items.

 
(1) the $25,107 attributable to income of the Chur.
 
(2) The $191,000 adjustment to the profits of its French subsidiary for the period from August 25 to August 31, 1976 ("the French adjustment").
 
(3) The $171,000 interest accrued to the German subsidiary as a result of the intercompany loan to the Canadian subsidiary ("the Canadian transaction").
 
(4) Foreign currency adjustments.
 
(5) The $55,000 attributable by SCM to a corporate assessment ("the SCM ...

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