Case Title: Staheli v. Kauffman

Citation: 122 Ariz. 380, 595 P.2d 172

Docket Number: 

State: arizona

Court: Arizona Supreme Court

Date: 1979-05-10T00:00:00Z

Document:
122 Ariz. 380 (1979) 595 P.2d 172 Paul STAHELI and Julie Staheli, husband and wife, Appellants, v. Herbert KAUFFMAN and Carolyn Kauffman, husband and wife, Appellees. No. 13945. Supreme Court of Arizona, In Division. May 10, 1979. *381 Norling, Rolle, King & Oeser by Kenneth Skiff, Thinnes & Rawles by Thomas A. Thinnes, Thomas V. Rawles, Phoenix, for appellants. Favour & Quail by John M. Favour, Prescott, for appellees. STRUCKMEYER, Vice Chief Justice. This is an appeal by Paul and Julie Staheli from an order of the Superior Court granting appellees' motion for judgment notwithstanding the verdict. Judgment of the Superior Court affirmed. This suit was brought by Paul Staheli and his wife Julie in two counts; first, for breach of contract, and, second, for fraud. After trial in the Superior Court of Maricopa County, a verdict was directed against the Stahelis on the first count and the count of fraud was submitted to the jury. The jury returned a verdict of $2,000.00 actual damages and $30,000.00 punitive damages against appellees. The trial court being of the opinion that it had erroneously submitted the question of fraud to the jury, granted the Kauffman motion for judgment notwithstanding the verdict, ruling that the facts as presented in the case were not such as to permit reliance by the plaintiffs and therefore the evidence was not sufficient to support an action for fraud. The evidence taken most strongly in favor of sustaining the jury's verdict, In re Stitt's Estate, 93 Ariz. 302, 380 P.2d 601 (1963), establishes the following. In July, 1973, Herbert Kauffman, a professor at San Francisco State University in California, called Julie Staheli in Los Angeles to ask whether her husband, Paul, would accept employment as the manager of Kauffman's cattle ranch located near Cordes Junction, Arizona. Paul Staheli was working on a motion picture set as a designer when Kauffman telephoned. He had helped Kauffman during a liquidation sale of cattle earlier in the year, and had indicated to Kauffman that he was interested in a change for himself and his family. Julie told Kauffman to call back when Paul had finished his present job. About a month later, Kauffman called again and repeated his offer. Paul told Kauffman he was interested in managing the ranch, but that he did not want to work merely for wages. He said he wanted to acquire a partnership interest in the ranch. Kauffman replied that he would talk the situation over with his wife and call back. When Kauffman telephoned a third time, Paul testified that they agreed there was to be "some sort of a partnership arrangement" and: Paul arrived at Millbrae, California a week after the last phone call. He testified: Appellants moved to Arizona in late August and Paul commenced his employment as ranch manager. When Kauffman arrived from California a few days later, the partnership arrangement was discussed, and according to Paul: On September 3, 1973, immediately after his return to California, Kauffman sent a letter to the Stahelis in which he wrote: It was therefore made clear at this point to appellants that appellees did not consider their discussions concerning a partnership had resulted in a definite, firm agreement. *383 Later, the Stahelis and Kauffman engaged in further discussions. They talked about alternate plans; for example, the possibility of compensating appellants with a percentage of the calf crop. In December there was a meeting in the Phoenix office of Western Farm Management, where Kauffman and Paul Staheli sought advice on a partnership agreement. At that time Paul Staheli inquired whether a trust account had been set up for him. Kauffman told him that it had not and that it had become necessary to put up part of the ranch for sale in order to raise cash to continue the operation. Subsequently, a number of prospective purchasers were shown around the ranch by Paul. In the first week in June, the parties had a meeting at which Kauffman told Paul that he was unable and unwilling to carry out any plan to give the Stahelis a partnership interest in the ranch. He also told Paul not to "count on" employment after September. In considering whether the evidence taken in its strongest light establishes actionable fraud, the plaintiffs must show a concurrence of nine elements, which are: In order that a representation constitute actionable fraud, it must relate to either a past or existing fact. It cannot be predicated on unfulfilled promises, expressions of intention or statements concerning future events unless such were made with the present intention not to perform. Waddell v. White, 56 Ariz. 420, 428, 108 P.2d 565 (1940); Law v. Sidney, 47 Ariz. 1, 5, 53 P.2d 64 (1936). "Were the general rule otherwise, every breach of contract could be made the basis of an action in tort for fraud." Lloyd v. Smith, 150 Va. 132, 145, 142 S.E. 363, 365 (1928). Arizona's Court of Appeals has pointed out: Appellants' position is that once Kauffman made an unconditional promise to work out a partnership agreement, the failure to reach mutually agreeable terms is not a bar to a claim of fraud. But we think appellants did not have the right to rely on the appellees' promise to work out a partnership because such a promise is not sufficiently definitive to determine what was being promised. Appellants rely on Ahmed v. Collins, 23 Ariz. App. 54, 530 P.2d 900 (1975). There, Collins, a quadriplegic, contacted Ortho Comfort Stores and inquired about an orthopedic bed. Ortho's salesman, Pauk, promised Collins that if she made a down payment on the bed of $366.00, she would receive the bed in two weeks and credit financing on the balance. She never received the bed, nor was she given credit financing. She brought the suit for fraud, and the jury found in her favor. On appeal, the court held: In the case at bar, Paul testified that from the beginning the parties agreed that "we would work out a limited partnership." The promise by appellees of a partnership was clearly conditional on finding an arrangement satisfactory to both. The Kauffman promise was not definitive and obviously dependent for its future vitality on further negotiations. It is not the kind of a promise which a promisee has the right to rely on in a claim of fraud. We said in Trollope v. Koerner, 106 Ariz. 10, 19, 470 P.2d 91, 100 (1970): Judgment affirmed. HAYS and HOLOHAN, JJ., concur. [1] The trial court directed a verdict against the Stahelis on the first count of their complaint for damages for breach of contract on the grounds that the agreement was void as it was not in writing and hence within the statute of frauds. The lower court's action in this respect has not been assigned as error on appeal.