Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-01730/USCOURTS-ca10-88-01730-0/pdf.json

Parties Involved:
Hilton Hotels Corporation
Appellant
Hotelerama Associates, Ltd.
Appellant
Rainbow Travel Service, Inc.
Appellee

Document Text:

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PUBLISH 

FILED 

United State Court of Appeals 

Tenth Circui: 

FEB 16 1990 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

ROBERT L. HOECKER 

Clerk 

RAINBOW TRAVEL SERVICE, INC., 

Plaintiff-Appellee/ 

Cross-Appellant, 

v. 

HILTON HOTELS CORPORATION and 

HOTELERAMA ASSOCIATES, LTD., 

Defendants-Appellants/ 

Cross-Appellees. 

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Nos. 88-1730 

88-1731 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. NO. CIV-86-2525-R) 

Richard M. Klinge (Lu Ann Stout with him on the briefs) of 

Holloway, Dobson, Hudson & Bachman, Oklahoma City, Oklahoma, for 

Plaintiff-Appellee/Cross-Appellant. 

John N. Hermes (Joseph Walters with him on the briefs) of McAfee 

& Taft, Oklahoma City, Oklahoma, for Defendants-Appellants/CrossAppellees. 

Before TACHA and BRORBY, Circuit Judges, and BROWN,* District 

Judge. 

BROWN, District Judge. 

* Honorable Wesley E. Brown, United States District Senior Judge 

for the District of Kansas, sitting by designation. 

Appellate Case: 88-1730 Document: 01019964406 Date Filed: 02/16/1990 Page: 1 
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' 1., .. 

In the district court, plaintiff Rainbow Travel Service 

("Rainbow") won a jury verdict against the defendants for breach 

of contract and fraud. The defendants-appellants argue that the 

district court should have dismissed the action for lack of 

personal jurisdiction. Additionally, appellants contend that the 

court committed numerous errors in the admission of evidence and 

in the instructions to the jury. In a cross-appeal, Rainbow argues 

that it should be awarded prejudgment interest on the damage award. 

For the reasons set forth herein we affirm the judgment of the 

district court with the exception of the award of damages for 

breach of contract. 

I. Facts. 

The Fontainebleau Hilton is a deluxe resort hotel in Miami 

Beach, Florida. The hotel is operated by the defendant Hilton 

Hotels, Inc. ("Hilton"), a Delaware corporation, on behalf of the 

hotel's owner, defendant Hotelerama Associates, Ltd., a Florida 

limited partnership. Plaintiff Rainbow is a travel agency with its 

principal place of business in Oklahoma City, Oklahoma. 

There are two Hilton hotel franchises operating in Oklahoma 

City, Oklahoma. The franchisor of these hotels is Hilton Inns, 

Inc., which is a wholly owned subsidiary of the defendant Hilton 

Hotels Corporation. Reservations can be made at any Hilton hotel 

through these franchises. Also, Hilton maintains an "800 number" 

in Oklahoma for taking reservations. 

In recent years, the Fontainebleau Hilton has advertised in 

many travel publications, including the Official Hotel and Resort 

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Guide, the Hotel and Travel Index, the Travel Agent's Hotel Sales 

Guide, and the Directory of Incentive Travel International. These 

publications are distributed throughout Oklahoma and other states. 

The Fontainebleau advertises in these publications in order to 

solicit the business of travel agents. 

In the spring of 1986, Rainbow began organizing several tour 

packages for Oklahoma football fans who wanted to attend a 

University of Oklahoma versus University of Miami football game. 

The game was scheduled for September 26, 1986, in Miami, Florida. 

Rainbow initially contacted the Fontainebleau concerning the 

possibility of reserving hotel rooms for Rainbow's groups. After 

telephone calls and correspondence between the parties, the 

Fontainebleau sent Rainbow two contracts which called for the hotel 

to reserve one hundred and five rooms for Rainbow on the weekend 

of September 27, 1986. The second of these contracts, which is at 

issue in this case, provided that forty-five rooms were to be 

reserved for Rainbow on September 26, 1986. Rainbow executed the 

agreements and returned them to the Fontainebleau. In June of 

1986, the Fontainebleau confirmed Rainbow's reservation by mail and 

requested prepayment for one night for Rainbow's groups. In 

response, Rainbow sent a partial payment of over $6,000.00. The 

Fontainebleau sent another confirmation in August and requested the 

remainder of the first night's payment. Rainbow then sent a final 

customer list and the remainder of the requested payment. The 

payments were made by checks drawn on Rainbow's account in 

Oklahoma. 

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•' . 

Rainbow's president, A.J. Musgrove, went to Miami on 

September 24, 1986, to make sure that all arrangements had been 

made for his groups' stay at the Fontainebleau. One group from 

Rainbow arrived on September 25 and was accommodated as planned. 

Musgrove met with the hotel's tour representative, Livia Cohen, on 

September 24, twice on September 25, and again on the morning of 

September 26. Ms. Cohen assured Mr. Musgrove that everything was 

fine and that all of the reserved rooms would be available. When 

the Rainbow group arrived at the hotel on the afternoon of 

September 26, however, they were told by Hilton representatives 

that no rooms were available at the Fontainebleau. Hilton made 

arrangements for the group to stay at the Seacoast Towers, a 

hotel/apartment complex located about ten blocks away from the 

Fontainebleau. Rainbow subsequently filed this action in the U. s. 

District Court for the Western District of Oklahoma, alleging 

breach of contract and fraud. 

II. Personal Jurisdiction. 

Appellants first challenge the district court's assertion of 

in personam jurisdiction. The appellants argue that they did not 

have sufficient contacts with Oklahoma to support an Oklahoma 

court's exercise of jurisdiction over them. The relevant facts on 

this issue, as previously set forth, are not in dispute. 

The Oklahoma long arm statute provides: 11 A court of this 

state may exercise jurisdiction on any basis consistent with the 

cons ti tut ion of this state and the Cons ti tut ion of the United 

States." Okla.Stat.Tit. 12, § 2004 F (1984). The standards 

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required by due process for the exercise of personal jurisdiction 

over nonresident defendants are well settled and will not be 

repeated in full here. (See Rambo v. American Southern Insurance 

Company, 839 F.2d 1415 (10th Cir. 1988) for a comprehensive 

discussion of due process standards.) In sum, where the person 

over whom jurisdiction is asserted has established certain "minimum 

contacts" with the forum such that requiring him to defend his 

interests in the forum would not offend "traditional notions of 

fair play and substantial justice," International Shoe Co. v. 

Washington, 326 U.S. 310, 316, 66 s.ct. 154, 90 L.Ed. 95 (1945), 

and where he has "purposely avail[ed) [himself] of the privilege 

of conducting activities within the forum state, thus invoking the 

benefits and protections of its laws," Hanson v. Denckla, 357 U.S. 

235, 253, 78 s.ct. 1228, 2 L.Ed.2d 1283 (1958), jurisdiction will 

be upheld. 

The application of these standards to contracts made between 

citizens of different states is not without difficulty. The 

supreme Court recently stated: 

[W)e note a continued division among lower 

courts respecting whether and to what extent 

a contract can constitute a "contact" for 

purposes of due process analysis. If the 

question is whether an individual's contract 

with an out-of-state party alone can 

automatically establish sufficient minimum 

contacts in the other party's home forum, we 

believe the answer clearly is that it cannot. 

The Court long ago rejected the notion that 

personal jurisdiction might turn on 

"mechanical" tests . . . or on "conceptualistic 

... theories of the place of contracting or 

of performance Instead, we have 

emphasized the need for a "highly realistic" 

approach that recognizes that a "contract" is 

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"ordinarily but an intermediate step serving 

to tie up prior business negotiations with 

future consequences which themselves are the 

real object of the business transaction ... 

It is these factors -- prior negotiations and 

contemplated future consequences, along with 

the terms of the contract and the parties ' 

actual course of dealing that must be 

evaluated in determining whether the defendant 

purposely established minimum contacts with 

the forum. 

Burger King Corporation v. Rudzewicz, 471 U.S. 462, 478-79, 105 

s.ct. 2174, 85 L.Ed.2d 528 (1985) [citations omitted]. 

Applying these principles to the facts before us, we find that 

the assertion of personal jurisdiction over the defendants in 

Oklahoma does not offend due process. The Fontainebleau apparently 

advertises in Oklahoma and throughout much of the United States and 

directs their solicitations at travel agents in particular. When 

the hotel was contacted by Rainbow Travel Service, the hotel 

entered into negotiations with the plaintiff in Oklahoma and came 

to an agreement regarding the reservation of hotel rooms. The 

hotel sent contracts to the plaintiff in Oklahoma for execution. 

Their agreement was subsequently confirmed by letters sent to the 

plaintiff. Significantly, the Fontainebleau required the plaintiff 

to partially perform the contract in Oklahoma by demanding advance 

payments for the rooms. These payments were substantial, totaling 

slightly more than $10,000.00. These contacts with the state of 

Oklahoma cannot be considered "random" or "fortuitous." Cf. WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 s.ct. 559, 62 

L. Ed. 2 d 4 9 0 ( 19 8 0) . Although the defendants clearly were not 

physically present in the state of Oklahoma, their activities were 

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purposefully directed at an Oklahoma resident. See Burger King, 

supra at 476 ("Although territorial presence frequently will 

enhance a potential defendant's affiliation with a State and will 

reinforce the reasonable foreseeability of suit there, it is an 

inescapable fact of modern commercial life that a substantial 

amount of business is transacted solely by mail and wire 

communications across state lines, thus obviating the need for 

physical presence within a State in which business is conducted.") 

See also Sinatra v. National Enquirer. Inc., 854 F.2d 1191, 1195 

(9th Cir. 1988); Decker Coal Co. v. Commonwealth Edison Co., 805 

F.2d 834 (9th Cir. 1986) (The solicitation of business in the forum 

state that results in business being transacted or contract 

negotiations will probably be considered purposeful availment.) 

When Hilton's course of conduct is viewed as a whole, it can fairly 

be said that the defendant "purposely avail [ ed] itself of the 

privilege of conducting activities within the forum State." Hanson 

v. Denckla, supra. The agreement between the parties in this case 

was the specific type of business transaction that the defendants 

knowingly solicited. Cf. Rambo v. American Southern Insurance Co. , 

839 F.2d 1415, 1420 (10th Cir. 1988) (Purposeful availment analysis 

turns upon whether the defendant's contacts are attributable to his 

own actions or solely to the actions of the plaintiff.) See also 

id. at 1421 n. 8 (The "substantial connection" with the state in 

McGee v. International Life Insurance Co., 355 U.S. 220, 78 s.ct. 

199, 2 L.Ed.2d 223 (1957) was the insurance company's purposeful 

acts soliciting business in the forum state). Hilton's activities 

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.. in this case included the solicitation of business in Oklahoma, 

negotiations carried out with the plaintiff in Oklahoma, and 

sending contracts to Oklahoma for execution. Moreover, it is clear 

that Hilton expected the contract to be partially performed in 

Oklahoma to the extent that payment from Rainbow in Oklahoma was 

anticipated by the parties. See Halstead Hospital. Inc. v. 

Northern Bank Note Company. 680 F.2d 1307, 1309 (10th Cir. 1982). 

It was certainly foreseeable that a breach of this agreement would 

cause damage to the plaintiff in Oklahoma, cf. Burger King 

Corporation v. Rudzewicz, 471 U.S. 462, 480, 105 s.ct. 2174, 85 

L.Ed.2d 528 (1985), and, given their substantial contact with the 

plaintiff in Oklahoma, the defendants could have reasonably 

anticipated being called to account in Oklahoma for a breach of the 

agreement. 1 Cf. Continental American Corp. v. Camera Controls 

Corp., 692 F.2d 1309 (10th Cir. 1982) (Contract with Kansas resident 

that required the defendant to make partial payment to the 

plaintiff in Kansas subjected defendant to jurisdiction in Kansas. ) 

1 Our determination that jurisdiction is proper is based on 

"specific" rather than "general" jurisdiction. See Burger King v. 

Rudzewicz, 471 U.S. 462, 473 n.15. Appellee Rainbow has pointed 

out that two Hilton Hotel franchises are operating in Oklahoma City 

and asks the court to find general jurisdiction based on this fact. 

We have not considered this fact in our determination, however, 

because the record before us does not demonstrate that the conduct 

of the franchisor, Hilton Inns, Inc., is properly attributable to 

its owner, appellant Hilton Hotels Corporation. See Southmark 

Corp. v. Life Investors, Inc.. 851 F.2d 763, 773 (5th Cir. 

1988) (Where a wholly owned subsidiary is operated as a distinct 

corporation, its contacts with the forum cannot be imputed to the 

parent). The record is silent as to the functional relationship 

between these two corporations. Although the record shows that 

reservations for the Fontainebleau can be made through these Hilton 

franchises, this fact by itself is insufficient to support general 

jurisdiction over the defendants. 

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·' . 

We also find that the assertion of personal jurisdiction over 

the defendants comports with "fair play and substantial justice." 

International Shoe Co. v. Washington, 326 U.S. 310, 66 s.ct. 154, 

9 0 L. Ed . 9 5 ( 19 4 5 ) . We cannot conclude that it was unfair to 

require the defendants to defend this suit in Oklahoma. See McGee 

v. International Life Insurance Co., supra ("[M]odern 

transportation and communication have made it much less burdensome 

for a party sued to defend himself in a State where he engages in 

economic activity.") It is somewhat disingenuous for the 

defendants to derive economic benefits from business dealings in 

the state of Oklahoma--dealings directed at a resident of the 

state--while disclaiming any connection with the forum state. 

Additionally, as the activities surrounding the agreement between 

the parties grew more substantial, culminating in a significant 

payment from the plaintiff in Oklahoma, Oklahoma's interest in 

providing a forum for its resident to enforce the agreement grew 

proportionately. Cf. Burger King, 471 U.S. at 482-83 ("We cannot 

conclude that Florida had no 'legitimate interest in holding 

(petitioner] answerable on a claim related to' the contacts he had 

established in that State.") In sum, the assertion of jurisdiction 

over the defendants did not violate the Due Process Clause. 

Appellants argue that the formation of a contract with an outof-state party, by itself, is not sufficient to support 

jurisdiction in the other party's home forum. (citing Burger King 

v. Rudzewicz, 471 U.S. 462, 105 s.ct. 2174, 85 L.Ed.2d 528 (1985)). 

Similarly, appellants argue that "random use of interstate commerce 

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•,'. 

to negotiate and close a particular deal" is, by itself, 

insufficient. We agree. The instant case, however, does not 

present such a situation. We do not find jurisdiction based simply 

on the fact that the defendants formed a contract with an Oklahoma 

resident. Rather, the defendants' course of conduct taken as a 

whole--including the solicitation of this type of business in 

Oklahoma and the negotiation, execution, and partial performance 

of the contract in Oklahoma--demonstrates a purposeful and 

substantial connection with the state of Oklahoma. See Cancun 

Adventure Tours v. Underwater Designer Co., 862 F.2d 1044, 1046 

( 4th Cir. 1988) (Jurisdiction in Virginia upheld where the defendant 

advertised in Virginia, negotiated and undertook contractual 

obligations with a Virginia resident, mailed purchase orders to 

Virginia, accepted payment from Virginia and continued to deal with 

the plaintiff over the telephone and through the mails). See also 

Burger King. 471 U.S. at 475 n.18. (So long as it creates a 

substantial connection with the forum, even a single act can 

support jurisdiction.) 

III. Sufficiency of the Evidence. 

Appellants next argue that the evidence was not sufficient to 

support an award of damages for injury to goodwill or to support 

a finding of fraud. Our review of these issues is limited to 

inquiring whether the record contains substantial evidence to 

support the jury's verdict, viewing the evidence in the light most 

favorable to the prevailing party. Kitchens v. Bryan County 

National Bank, 825 F.2d 248, 251 (10th Cir. 1987). 

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A. Damage to Good Will. 

The jury found that Rainbow had sustained $37,500.00 in 

damages to its good will. Rainbow's primary witness on this issue 

was its president, A.J. Musgrove, who testified that he was 

familiar with the value of Rainbow's good will from his history 

with the company and from reviewing Rainbow's financial statements. 

Mr. Musgrove estimated that the incident at the Fontainebleau 

damaged Rainbow's good will in the amount of $250,000.00. His 

opinion was based in part on his observation that when customers 

are dissatisfied they tell others about it, meaning that a bad 

incident such as this one has a "rippling effect" on a business' 

reputation. He indicated that this is particularly true for a 

travel agency because it relies heavily on its reputation in the 

community. Additionally, Rainbow presented the testimony of 

witnesses who had traveled to Miami on the Rainbow tour. These 

witnesses stated that they were dissatisfied with Rainbow because 

of the hotel incident and stated they probably would not choose 

Rainbow again as a travel agent. 

Viewing this evidence in the light most favorable to the 

plaintiff, we find that there was substantial evidence reasonably 

tending to support the jury's verdict. Mr. Musgrove had extensive 

experience in the travel business and a foundation was properly 

laid for his testimony relating to the value of Rainbow's good 

w i 11. Indeed, appellants did not object to Mr. Musgrove ' s 

testimony and conceded that he was qualified to express an opinion 

on the issue of good will. Appellants argue nonetheless that the 

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amount of damages to good will was so uncertain as to be 

speculative. The rule in Oklahoma, however, is that the 

prohibition against recovery of damages because the loss is 

uncertain or too speculative in nature applies to the fact of 

damages, not to the amount. Martin v. Griffin Television, Inc., 

549 P. 2d 85, 92 (Okla. 1976). "Where it is made to appear that 

some loss has been suffered, it is proper to let the jury determine 

what the loss is from the best evidence the nature of the case 

admits." Hardesty v. Andro Corporation-Webster Division, 555 P.2d 

1030 (Okla. 1976). Given the nature of good will, which is an 

intangible asset dependant upon a business' reputation, it was 

proper for the district court in this case to submit the question 

of damages to good will to the jury. See Westric Battery Co. v. 

Standard Electric Co .• Inc., 522 F.2d 986, 987 n.2 (10th Cir. 

1975) ("The amount cannot and hence need not be proven with absolute 

certainty.") . See also Kestenbaum v. Falstaff Brewing Company, 514 

F.2d 690, 698 (5th Cir. 1975), cert.denied, 424 U.S. 943 ("The 

wrongdoer may not complain of inexactness where his actions 

preclude precise computation to the extent of the injury.") 

B. Fraud 

Appellants next argue that the evidence was insufficient to 

support the jury's verdict on fraud. Under Oklahoma law, fraud 

consists of a false material representation made as a positive 

assertion which is known either to be false, or is made recklessly 

without knowledge of the truth, with the intention that it be acted 

upon by a party to his or her detriment. Tice v. Tice, 672 P.2d 

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1168, 1171 (Okla. 1983). As the jury was instructed, fraud must 

be shown by clear and convincing evidence. Id. Rainbow argued in 

the district court that a Hilton agent's assurances that rooms 

would be available amounted to fraud because the representations 

were made recklessly without knowledge of the truth. Most of the 

evidence at trial centered on whether Hilton knew or should have 

known there would be a shortage of rooms at the Fontainebleau on 

September 26, 1986. Interpreting the evidence in the light most 

favorable to the plaintiff, we find there was sufficient evidence 

to raise a question of fact for the jury on the issue of fraud. 

Rainbow presented evidence that Hilton accepted reservations 

for more rooms than were available on September 26, 1986. Hilton 

admitted that its policy was to book the Fontainebleau up to one 

hundred and fifteen per cent of its capacity, but argued that it 

did so based on a historic fifteen per cent "no-show" rate for 

guests with reservations. Hilton insisted that this policy allowed 

the hotel to honor almost all of its reservations. Although Hilton 

showed that an exceedingly high percentage of reservations were in 

fact honored over the course of the year, Rainbow presented 

evidence showing that on fifty per cent of those occasions when the 

hotel was operating at capacity the hotel had to dishonor 

reservations. Additionally, Rainbow presented evidence tending to 

show that Hilton was aware of a substantial likelihood that 

Rainbow's reservation might be dishonored. Rainbow showed that 

Hilton knew at least one month in advance that a large number of 

rooms would be closed for maintenance during September of 1986. 

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Rainbow also argued that departure figures from the Fontainebleau 

showed that the hotel knew that a substantial number of people 

would stay over past their announced departure date. Additionally, 

Rainbow showed that on the date in question Hilton gave a block of 

rooms to a group from the University of Oklahoma even though the 

group had not reserved the rooms. Despite these factors, and 

pursuant to Hilton policy, Rainbow was not informed of the practice 

of overbooking and was not told there was a possibility that 

"guaranteed" reservations might be dishonored. 

assured Rainbow that the rooms would be available. 

Instead, Hilton 

Hilton argued strenuously in the district court that the 

overbooking situation was due to factors beyond its control, such 

as guests extending their stay at the Fontainebleau and rooms being 

out of order for repairs. These explanations may have sounded 

rather hollow to the jury, however, in light of a portion of the 

Fontainebleau's policy manual which read: 

Overboard 

We never tell a guest we "overbooked." 

If an overboard situation arises, it is due to 

the fact that something occurred that the hotel 

could not prevent. 

Examples: 

1. Scheduled departures do not vacate their 

rooms. 

2. Engineering problems with a room (pipe 

bursted, thus water leaks, air conditioning, 

heating out of commission, broken glass, etc.) 

Always remain calm and as pleasant as possible. 

(Plaintiff's Exhibit 25-2). 

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Hilton also argued that its agent could not have known about 

the lack of rooms without performing a series of complicated 

calculations. If this proposition is true, however, it serves as 

some support for the allegation that Hilton made positive 

assertions about the availability of rooms without knowledge of the 

truth. 

In addition to the foregoing, the record contains much 

circumstantial evidence showing that Hilton had knowledge of a 

likelihood of dishonoring reservations at the time in question. 

The Fontainebleau was extremely busy during the week of Rainbow's 

visit. On September 22 and 23 for instance, the hotel was 

completely sold out and the Fontainebleau had to dishonor 

reservations. Although there were some vacant rooms on September 

24 and 25, the number of vacancies was very few. (Pl.Ex. 65). 

Also, the "no-show" rate for reservations was much less during this 

period than the fifteen per cent annual average used by Hilton. 

Although Hilton's agent indicated to Mr. Musgrove on the morning 

of September 26 that his rooms would be available, the Night Clerk 

Summary for September 25 indicated that the hotel would be short 

of rooms even if fifteen per cent of the reservations for the 26th 

failed to show. 

Some of the testimony at trial raised questions about the 

candor of Hilton's explanation concerning its treatment of 

Rainbow's reservations. Hilton said that it only became aware of 

a shortage of rooms after Mr. Musgrove had gone to the airport to 

pick up his group, yet when the group arrived back at the hotel 

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they had already been assigned specific rooms at the Seacoast 

Towers. 2 Hilton explained that the shortage of rooms was caused by 

guests not checking out on the 26th, but the decision to move 

Rainbow was made well before checkout time on that date. Moreover, 

Hilton's representative testified at trial that all requests for 

extended stays on the 26th were refused by the hotel. Finally, 

members of Rainbow's group testified that several groups that 

arrived at the Fontainebleau after Rainbow had been bumped were 

given rooms at the Fontainebleau. 

Clearly, the evidence in the record before us may be 

interpreted in more than one way._ Yet, as we noted at the outset, 

our inquiry is limited to whether the record contains substantial 

evidence to support the jury's verdict. We stated in Kitchens v. 

Bryan County National Bank, 825 F.2d 248 (10th Cir. 1987): 

The jury ... has the exclusive function of 

appraising credibility, determining the weight 

to be given to the testimony, drawing 

inferences from the facts established, 

resolving conflicts in the evidence, and 

reaching ultimate conclusions of fact. Id. We, 

the appellate court, do not try to secondguess the jury, nor is it our function to infer 

material facts or to make controlling 

inferences which the jury has not 

inferred or made and which, if done, would in 

effect constitute trial de novo. 

Id. at 251 (citing Rasmussen Drilling v. Kerr-McGee Nuclear Corp., 

571 F.2d 1144 (10th Cir. 1978), cert.denied, 439 U.S. 862.) 

2 There was some testimony at trial that indicated common 

ownership of the Fontainebleau and the Seacoast Towers. The jury 

was entitled to weigh this fact against Hilton's assertion that it 

would never intentionally overbook the hotel because to do so would 

cause the Fontainebleau to lose money by paying for rooms at 

another hotel. 

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Bearing these standards in mind, we find substantial evidence in 

the record that Hilton was aware of having overbooked the hotel to 

such an extent as to create a substantial likelihood that Rainbow's 

reservation would be dishonored. Cf. Marriott Corporation v. 

American Academy of Psychotherapists. Inc., 277 S.E.2d 785 (Ga.App. 

1981). Despite this, Hilton repeatedly told Rainbow that its rooms 

would be available and did not tell Rainbow that the group might 

be "bumped." Based on this and all of the evidence in the record 

before us, we find that a reasonable juror could find by clear and 

convincing evidence that Hilton recklessly made statements without 

knowledge of their truth, that Hilton did so with the intention 

that plaintiff rely on them, and that plaintiff relied on the 

statements to its detriment. See Tice v. Tice, 672 P.2d 1168, 1171 

(Okla. 1983) ( "When fraud is properly alleged by one party and 

denied by the other party, the existence or nonexistence of fraud 

becomes a question of fact.") See also Federal Deposit Insurance 

Corp. v. Palermo, 815 F.2d 1329, 1335 (10th Cir. 1987). 

IV. Objections to Evidence. 

Appellants contend that the district court erred by allowing 

certain letters and testimony into evidence during the course of 

the trial. In reviewing the evidentiary rulings of a trial court, 

we may not reverse in the absence of an abuse of discretion. 

United States v. Alexander, 849 F.2d 1293, 1301 (10th Cir. 1988). 

We find no abuse of discretion in the trial court's rulings. 

Appellants objected to the admission into evidence of letters 

from some of Rainbow's dissatisfied customers. On appeal, Hilton 

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... .. 

argues that the letters were irrelevant and unfairly prejudicial. 

The letters were clearly relevant to the issue of good will, 

however, as Rainbow was entitled to present evidence of damage to 

its reputation. Furthermore, we see no basis for concluding that 

the prejudicial effect of the letters substantially outweighed 

their probative value. See Fed.R.Evid. 403. The admission of the 

letters was therefore not an abuse of discretion. 

Appellants also argue that the court erred by allowing one of 

plaintiff's witnesses to testify as to statements made by a bus 

driver in Miami. The driver was apparently employed by the 

Fontainebleau to drive a shuttle bus back and forth between the 

Seacoast Towers and the Fontainebleau Hilton. 3 The driver told 

Rainbow's customers that his job was to transport guests who had 

been bumped from the Fontainebleau and to try to keep them happy. 

Rainbow's customers concluded from their conversations with the 

driver that being bumped from the Fontainebleau was quite common. 

Hilton objected to this testimony on the grounds that a bus driver 

was not qualified to make statements concerning the Fontainebleau's 

reservation practices. The district court ruled that the testimony 

was admissible under Fed.R.Evid. 801(d) (2) (D) because it was a 

statement by a party's agent concerning a matter within the scope 

of his agency. We find no abuse of discretion in this ruling. The 

3 Appellants argue on appeal that there was no foundation that 

the bus driver was in fact employed by Hilton. A reading of the 

transcript discloses that Hilton did not raise this objection in 

the district court. (Rec.Vol.V Pp. 303-306). At any rate, there 

is sufficient evidence in the record to support the trial court's 

determination that the driver was an agent of Hilton. (Rec. Pp. 

84, 95, 441, 563 and Pl.Ex. 97). 

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• .. , 

driver's statements were all related to the scope of his employment 

with the hotel. 

V. Damages For Breach of Contract. 

Appellants contend that the jury's award of $5,493.10 for 

breach of contract was not supported by the evidence. We have 

examined the record in detail and we agree with appellant that this 

figure is not supported by the record. There was little evidence 

presented as to damages from the breach of the contract. Rainbow 

did not seek damages for lost profits from the Miami trip. Indeed, 

the evidence was that the travel agency realized its expected 

profit from the trip. Rainbow only suffered out of pocket expenses 

of $796.00 from the breach. 4 Aside from these expenses, however, 

Rainbow sought to recover $8,740.00, which was the amount paid by 

Rainbow's clients to Rainbow for the Miami trip (excluding 

airfare). A.J. Musgrove testified that he would like to repay his 

customers since they did not get the rooms that Rainbow promised 

they would get. Hilton argued that this was an improper attempt 

to recover on behalf of Rainbow's clients. Rainbow's response was 

to argue that this was a necessary expense to help repair Rainbow's 

good will. 

We agree that under the evidence in this case it was improper 

to allow Rainbow to recover an amount to pay back to its customers. 

Clearly, Rainbow had no right to recover on behalf of its clients. 

4 These expenses consisted of a payment of $768.00 to one of 

Rainbow's clients and a miscellaneous payment of $28. 00. The 

client demanded a refund in Miami upon finding out that the group 

would not be accommodated at the Fontainebleau. 

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Thus, the amounts paid by Rainbow's customers were only relevant 

insofar as Rainbow's good will was concerned. Awarding Rainbow both 

the full extent of injury to its good will, however, and the means 

to repair that damage amounts to a double recovery. Mr. Musgrove's 

opinion that Rainbow had suffered damage to its good will did not 

take into account the effect of giving refunds to its customers for 

the Miami trip. In fact, Rainbow's argument that its good will had 

been injured relied heavily on the fact that its customers had not 

been paid back. Yet, under the instructions on the fraud count, 

the jury was told that if it found fraud it should fully compensate 

Rainbow for any loss of good will arising from Hilton's conduct. 

The jury did so, awarding $37,500.00 in damages attributable to 

loss of good will. Rainbow cannot have it both ways. It cannot 

recover the full extent of damage to its good will while seeking 

additional money that it claims is necessary to repair the injury 

to good will. In view of this fact, there is simply no evidence 

to support the jury's award of $5,493.10 for breach of contract. 5 

Under the instructions given to the jury in this case, the 

defendants were entitled to a setoff of $5,892.90 on any damages 

arising from a breach of the parties' agreement. This setoff was 

due to the fact that Hilton refunded a portion of Rainbow's initial 

5 The genesis of the $5,493.10 figure is difficult to 

ascertain. The jury was instructed to deduct the sum of $5,892.90 

from any damages it found on the contract claim because Hilton had 

refunded that amount to Rainbow. Thus, the jury must have found 

total damages for breach of contract of $11,386.00. This figure 

finds no support in the record. As previously mentioned, the only 

item sought for the breach of contract (aside from the $796.00 out 

of pocket expense) was the sum of $8,740.00 paid by Rainbow's 

customers. (Rec. Pp. 490-94; 503-03). 

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.. . . . 

payment for the hotel rooms. Accordingly, we must off set the 

amount of $5,892.90 against the $796.00 loss claimed by Rainbow. 

When this is done, it is apparent that Rainbow is not entitled to 

recover any damages from Hilton for the breach of contract. 6 

VI. Other Issues Raised by Appellants. 

We have considered the other issues raised by appellants and 

we find them to be without merit. 

VII. Cross-Appeal. 

In a cross-appeal, Rainbow argues that the trial court erred 

by denying Rainbow's claim for prejudgment interest on the damages 

attributable to fraud. Rainbow bases its argument on 12 Okla. 

Stat. § 727(A) (2), which provides in pertinent part: 

When a verdict for damages by reason of 

personal injuries or injuries to personal 

rights including, but not limited to, injury 

resulting from bodily restraint, personal 

insult, defamation, invasion of privacy, injury 

to personal relations or detriment due to an 

act or omission of another is accepted by the 

trial court, the court in rendering judgment 

shall add interest on said verdict at a rate 

prescribed pursuant to Section B of this 

section from the date the suit was commenced 

to the date of the verdict .... 

We need not address Rainbow's argument that the statute may 

be applied where the injured "person" is a corporation because we 

find that the statute does not apply to the type of damages 

suffered in this case. Clearly, the statute only allows 

prejudgment interest where the damages arise by reason of "personal 

injuries or injury to personal rights." In this case, the damages 

6 Hilton does not seek to recover the excess of the refund 

over the damages suffered by Rainbow. 

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arose because of injury to a business asset: good will. 

Sisney v. Smalley. 690 P.2d 1048, 1050 (Okla. 1984) (Section 727 

does not apply to damage to property) and Timmons v. Royal Globe 

Insurance Co., 713 P.2d 589, 590 (Okla. 1985) (Damages awarded for 

embarrassment and mental suffering were deemed to be "damages by 

reason of personal injuries.") Because the damages here arise out 

of an injury to property, Rainbow may not recover prejudgment 

interest. Sisney, supra. 

VI. Conclusion. 

The judgment is AFFIRMED in all respects except as to the 

damages for breach of contract; on that issue we REVERSE the 

judgment as unsupported by the evidence. 

IT IS SO ORDERED. 

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