Title: Mannington Wood Floors, Inc. v. Port Epes Transp., Inc.

State: alabama

Issuer: Alabama Supreme Court

Document:

669 So. 2d 817 (1995)
MANNINGTON WOOD FLOORS, INC.
v.
PORT EPES TRANSPORT, INC.
1930436.

Supreme Court of Alabama.
August 11, 1995.
Rehearing Denied October 27, 1995.
*818 Richard F. Ogle and Paul A. Liles of Schoel, Ogle, Benton and Centeno, Birmingham, for Appellant.
K. Scott Stapp of Phelps, Jenkins, Gibson & Fowler, Tuscaloosa, John A. Owens of Owens & Carver, Tuscaloosa, and J.L. Chestnut, Jr. of Chestnut, Sanders, Sanders & Pettaway, Selma, for Appellee.
COOK, Justice.
Mannington Wood Floors, Inc. ("Mannington"), appeals a judgment entered on a jury verdict in favor of Port Epes Transport, Inc. ("PET"), in PET's action against Mannington alleging breach of contract and fraud. We affirm.
PET's dispute with Mannington, a corporation producing wood products at a mill in Port Epes, Alabama, arose out of the following facts. In August 1991, Tom Tartt, a Mannington official in charge of output scheduling and product transportation, solicited bids for the trucking of wood chips to Purdue Hill, Alabama. Preston Minus, the owner and operator of L.S.E., a sole trucking proprietorship, submitted bids to Mannington for the transportation of chips. Minus's letter of submission sought, among other things, "100% of movement."[1]
On October 22, 1991, Tartt telephoned Minus to tell him that Mannington had accepted Minus's bid for the transportation of its wood *819 chips. In addition to the discussion regarding the hauling of wood chips, that telephone conversation included discussions regarding Minus's hauling of bark (see note 1) to various points of delivery in Alabama, including Demopolis, Selma, Pine Hill, and Pennington, and to one point in Mississippi. The parties tentatively agreed on prices Minus quoted for hauling bark to those points.
Subsequently, Minus met with at least three Mannington officials, including Tartt; "Raz" Carter, Mannington's Alabama operations general manager; and "Buddy" Frizzell. At this meeting, Mannington and Minus executed an instrument purporting to be a "chip hauling contract." The instrument, which was drafted by Mannington, provided in pertinent part:
(Emphasis added.) The effective date of the agreement was January 22, 1992.
*820 During the time of the discussions leading to the execution of the agreement, Tartt and Carter told Minus that Mannington would eventually open a market for its chips in Japan and would then ship some or all of its chips by barge, rather than by L.S.E.'s trucks. However, Minus was told that the barging would not begin until the period of approximately January to April 1993.
Before the effective date of the contract, Minus and one other person, formed a corporationPort Epes Transport, Inc. ("PET") for the purpose of hauling Mannington's wood products. With Mannington's permission, L.S.E. assigned the contract to PET. In order to perform its responsibilities under the contract, PET, with Mannington's knowledge and acquiescence, purchased additional equipment, incurring expenses in the amount of $500,000. PET began hauling chips and bark on January 22, 1992.
In March 1992, Tartt telephoned Minus and told him that the Japanese market had materialized faster than Mannington had anticipated, that shipments to Japan were imminent, and, consequently, that Mannington would immediately be barging its chips to Mobile for export. Thereafter, Mannington shipped virtually all its chips by barge. Although Mannington continued to transport bark by PET's trucks, it is undisputed that from January 22, 1992, to January 22, 1993, Mannington barged 447,000 tons of chips to Mobile. When Minus complained to Mannington's officials about the reduction in the volume of chips available for transportation, Frizzell and Carter told him that "there would always be the bark" to haul.
Moreover, in September 1992, Percy Zeigler, Jr., Mannington's chief financial officer in charge of Alabama operations, began complaining about the amount PET was receiving for hauling bark, and pressed Minus to renegotiate the prices. On September 28, 1992, a meetingattended by Carter, Zeigler, Minus, and the other PET shareholder was convened to discuss the matter. At that meeting, or as a result of that meeting, PET agreed to a reduction in the bark-haulage rates in exchange for an extended expiration date on his exclusive contract to haul the bark. In effect, PET agreed to lower its prices for hauling bark in exchange for a "second," or, renegotiated, contract, the duration of which was from October 1, 1992, to September 30, 1993. The agreement reflecting the renegotiated prices was memorialized in a letter from Minus addressed to Carter and dated September 29, 1992. Carter subsequently signed this agreement. On October 1, 1992, PET began hauling bark under the renegotiated contract.
Two months later, that is, in December 1992, Tartt telephoned Minus and told him that Mannington was preparing to barge about 70% of its bark. Minus warned Tartt of "serious problems" if it began barging bark. Nevertheless, Mannington almost immediately began barging bark to Mobile.
On March 19, 1993, PET and L.S.E. filed a four-count complaint against Mannington and Zeigler. Count One alleged that Mannington had breached the "first" contract. Count Two alleged that Mannington had breached the "second" contract.
Counts Three and Four alleged fraud in the inducement of both contracts. More specifically, Count Three contained the following allegations:
Count Four contained the following allegations:
All four counts were eventually submitted to a jury, accompanied by instructions requiring it to focus on the following claims:
The parties agreed that L.S.E. could not recover damages for breach of contract, because it had assigned the contract to PET before the breach, and, similarly, that its fraud claim was limited to the representations made in connection with the "initial" contract. They agreed, moreover, that PET could not recover damages for fraud arising out of representations made in connection with the initial contract, because PET had not come into existence at the time those representations were made.
The jury returned its verdict in the following form:
(Emphasis added.) The jury also returned uncompleted and unsigned a form that would have evidenced a finding in favor of "the plaintiff, L.S.E., and against the Defendant, Mannington ... for fraud in the first contract." (Emphasis added.) Thus, the jury found for PET for (1) breach of the first contract; or (2) breach of the second contract, or (3) breach of both contracts; and for (4) fraud in connection with representations about the second contract. It found against PET on its fraud claim against Zeigler in connection with his representations regarding the second contract, and it found against L.S.E. on its fraud claim against Mannington based on representations regarding the first contract. The trial court entered a judgment on this verdict. Mannington appeals.
Mannington makes two primary contentions. First, it contends that PET failed to prove damages for breach of contract with sufficient certainty, and, consequently, that the verdict on that claim was based on pure speculation. Second, it argues that its liability for fraud as to the second contract must have been based on the doctrine of respondeat *822 superior, specifically, that it must have been based on Zeigler's representations to PET; thus, because the jury exonerated Zeigler, Mannington argues that the verdict against it was inconsistent. We disagree with these contentions.
Mannington vigorously contends that the rule applicable here is the one governing the burden of proof borne by previously unestablished businesses to show the loss of anticipated profits. See, e.g., Kirkland & Co. of Anniston, P.C. v. A & M Food Serv., Inc., 579 So. 2d 1278, 1285 (Ala.1991) ("In Alabama, anticipated profits of an unestablished business may be recovered if such damages are proved with `reasonable certainty' "). Mannington, however, overlooks the fact that damages were computed in this case based, not on the anticipations of an unestablished business, but on prices set forth in the contracts. Moreover, both of these contracts were negotiated by Preston Minus, who was the sole owner and proprietor of L.S.E., a well-established trucking company, and who also was a 50% owner of PET, which was organized specifically to deal with Mannington.
The only substantive differences between the first and second contracts were the effective dates and the prices for hauling bark; these points were never in serious contentioneither at trial or on appeal. In both contracts, PET had "the exclusive right to haul all loads generated" by Mannington. (Emphasis added.) It is undisputed that Mannington barged 447,000 tons of chips to Mobile within the effective dates of the contracts, thus depriving PET of the right to haul those chips.
The $2 million compensatory damages award can be "reproduced" by using computations based on rates set forth in the contracts. For example, 447,000 tons barged, divided by 22 tons, the minimum load per truck required by the contract, equals 20,318 truck loads that could have been hauled by PET. That number of loads at $210 per load, the haulage rate to Pine Hill in the second contract, equals $4,266,780. Minus testified that his expected profit margin was 47%. This percentage rate, applied to $4,266,780, equals $2,005,386.60.
Moreover, the evidence clearly and convincingly supported a finding that Mannington had breached both contracts. Again, the evidence indisputably demonstrated that Mannington had barged 447,000 tons of chips to Mobile during the period from January 22, 1992, to January 22, 1993. Because the second contract took effect on October 1, 1992, a portion of the 447,000 tons was barged to Mobile during the effective date of the second contract. Thus, a substantial portion of the 447,000 haulage was referable to the second contract, just as a portion was referable to the first. It was further undisputed that during the effective dates of the second contract Mannington barged a substantial amount of bark, which was also subject to the exclusivity provisions of the contracts.
In computing damages for breach of contract, a jury need not achieve "mathematical precision." United Bonding Ins. Co. v. W.S. Newell, Inc., 285 Ala. 371, 380, 232 So. 2d 616, 624 (1969). Indeed, "`the uncertainty which prevents a recovery is uncertainty as to the fact of the damage and not as to its amount.'" Id. Thus, a "`plaintiff will not be denied a substantial recovery if he has produced the best evidence available and it is sufficient to afford a reasonable basis for estimating his loss." Id.
Moreover, Mannington's use of the phrase "lost profits" is ambiguous and misleading. In reality, PET is merely seeking its "expectancy interest," that is, the "benefit of its bargain." This Court recently addressed some of the aspects of the term "lost profits." Med Plus Properties v. Colcock Constr. Group, Inc., 628 So. 2d 370 (Ala.1993). In that case, the Court stated:
628 So. 2d  at 375-77 (emphasis added) (footnotes omitted).
It appears that PET was not seeking "consequential" loss-of-profit damages, but was merely seeking to recover the amount it should have received for shipping wood by-products under the terms of the contract, minus the cost of shipping expenses. In invoking the "reasonable certainty" rule, Mannington is seeking to inject into this case an unnecessarily rigorous standard of proof. The evidence in this case afforded the jury a reasonable basis for its award of contract damages.
Mannington also contends that the $1,000,000 punitive damages award on PET's fraud claim cannot be sustained, because, it insists, if its liability arises out of Zeigler's representations in the negotiations of the second contract, that is, if its liability is grounded on the doctrine of respondeat superior, then the jury's exoneration of Zeigler would, as a matter of law, exonerate Mannington. PET, however, contends that Zeigler was not the only source of misrepresentation. It argues, the record contains evidence of affirmative misrepresentations by other Mannington officials having general or special agency authority to bind the corporation in the contract negotiations.
We agree with PET. For example, when Minus complained about losing the opportunity to haul chips, Frizzell and Carter told him that "there would always be the bark" to haul. R.T. at 58. The evidence clearly suggests that, at least while Mannington was negotiating for lower bark-hauling rates, it did not intend to honor its bark commitments as Minus understood them to be. Indeed, by the time negotiations regarding bark transportation concluded, Mannington's officials were necessarily aware that Minus interpreted the contract as prohibiting the barging of bark. A finding of promissory fraud based on representations of officials *824 other than Zeigler would have been supported by clear and convincing evidence.
In short, we are unpersuaded by Mannington's arguments for reversal. The judgment is affirmed.
AFFIRMED.
ALMON, SHORES, INGRAM, and BUTTS, JJ., concur.
HOUSTON, J., concurs as to the contract claim and dissents as to the fraud claim.
MADDOX, J., recused.
HOUSTON, Justice (concurring as to the contract claim and dissenting as to the fraud claim).
The jury's fraud verdict had to be based on Count IV of the complaint. Count III (the only other fraud claim alleged) involved only a claim by the plaintiff L.S.E., and no verdict was returned against Mannington on that count.
Count IV, in pertinent part, reads as follows:
(Emphasis added.)
Rule 9(b), Ala.R.Civ.P., provides, in pertinent part:
The trial court gave the jury the following instruction, to which no one objected and as to which no one asked for clarification:
Zeigler and Mannington were defendants under Count IV. The jury returned the following verdicts:
*825 Reviewing the record, including the pleadings and the above-referenced charge on the doctrine of respondeat superior, I do not think that Rule 15(b), A.R.Civ.P., comes into play. There is nothing to show that the parties expressly or impliedly consented to anything other than the representation of Zeigler, as set out in Count IV, being the representation on which Count IV was tried. Count III was also a fraud count; it involved representations concerning the first contract and the hauling of chips and bark thereunder. The jury did not find against Mannington on this fraud count. To support a $1,000,000 punitive damages award, a finding of fraud must be based on evidence of a misrepresentation as solid as a rock, not on shifting sands of conjecture.
Larry Terry Contractors, Inc. v. Bogle, 404 So. 2d 613, 614 (Ala.1981), quoting Louisville & N.R. v. Maddox, 236 Ala. 594, 600, 183 So. 849, 853 (1938). See also Roden v. Wright, 646 So. 2d 605, 611 (Ala.1994).
I would reverse the judgment for Port Epes Transport, Inc., against Mannington on the fraud count and remand for a new trial on that count.
[1]  Mannington's operations produce wood by-products, including wood chips and bark. Its process yields approximately 15 tons of bark for every 100 tons of wood chips. In other words, for every 100 tons of chips produced, the quantity of chips and bark would equal 115 tons.