Opinion ID: 2736961
Heading Depth: 1
Heading Rank: 2

Heading: Substantial Evidence of Material Breach

Text: Appellant makes two substantial-evidence arguments on appeal. For the first point on appeal, Appellant argues that the circuit court erred in denying its motions for directed verdict and JNOV motion because substantial evidence did not support the jury’s finding on the breach-of-contract counterclaim. Specifically, Appellant contends that substantial evidence does not support the allegation of its inability to deliver the Bodily software that constituted a material breach; that Appellee failed to complete installation of the software in a timely manner; and that Appellee’s failure to obtain an insurance policy for Appellant’s benefit excused Appellant’s performance. Alternatively, Appellee requests on appeal that this court reverse and remand for a new trial because the jury’s verdict was clearly against the preponderance of the evidence. Appellee responds that the circuit court properly denied Appellant’s motion for directed verdict and JNOV motion, as substantial evidence supported its breach-of-contract claim. Specifically, Appellee asserts that the jury found substantial evidence of three different breaches by Appellant as follows: (1) Appellant’s failure to deliver Bodily’s software and source code as required by the parties’ contract, which predated any alleged breaches by Appellee; (2) Appellant’s failure to act in good faith in its performance of the parties’ contract, which, Appellee claims, thwarted its ability to perform; and (3) wrongful termination of the 7 Cite as 2014 Ark. 385 contract by Appellant. Appellee further asserts that any of these breaches excused its future obligation to perform as a matter of law. For the second point on appeal, Appellant argues that the jury’s finding that it breached the contract is not supported by substantial evidence. Appellant asserts that, as a matter of law, three separate provisions of the contract entitled it to terminate the contract without repercussion. Specifically, Appellant contends that substantial evidence conclusively showed that (1) Appellee failed to correct an error that prevented productive use of the software, per section 5.6 of the contract; (2) Appellee’s software failed to meet Appellant’s business requirements, as required by section 16.2 of the contract; and (3) Appellee materially breached the agreement and failed to cure the breach within the thirty days prescribed by section 16.4 of the contract. Appellee responds that substantial evidence supported the jury’s verdict because, as a matter of law, Appellant did not comply with the contract’s required procedures for termination. Appellee also argues that substantial evidence was presented at trial that Appellant did not give Appellee proper notice or a chance to cure the alleged software deficiency found in March 2011. Appellee maintains that Appellant was not entitled to effect any termination under these three provisions, nor did Appellant comply with the contract’s required procedures for termination. We discuss Appellant’s two breach-of-contract arguments in tandem. Our standard of review for a denial of a directed-verdict motion is well settled: 8 Cite as 2014 Ark. 385 [I]n reviewing the denial of a motion for [a directed verdict], we will reverse only if there is no substantial evidence to support the jury’s verdict, and the moving party is entitled to judgment as a matter of law. Substantial evidence is that which goes beyond suspicion or conjecture and is sufficient to compel a conclusion one way or the other. It is not our place to try issues of fact; we simply review the record for substantial evidence to support the jury’s verdict. In determining whether there is substantial evidence, we view the evidence and all reasonable inferences arising therefrom in the light most favorable to the party on whose behalf judgment was entered. A motion for directed verdict should be denied when there is conflict in the evidence, or when the evidence is such that fair-minded people might reach different conclusions. Carter v. Cline, 2011 Ark. 474, at 10, 385 S.W.3d 745, 752 (quoting Carr v. Nance, 2010 Ark. 497, at 15–16, 370 S.W.3d 826, 836). The same standard holds true for a motion for JNOV. Id. A circuit court may enter a JNOV only if there is no substantial evidence to support the verdict and the moving party is entitled to judgment as a matter of law. Id. We do not try issues of fact but examine the record to determine whether there is substantial evidence to support the jury’s verdict. Boellner v. Clinical Study Ctrs., LLC, 2011 Ark. 83, 378 S.W.3d 745. When testing the sufficiency of the evidence on appellate review, we need only consider the testimony of appellees and evidence that is most favorable to appellees. Wal-Mart Stores, Inc. v. Dolph, 308 Ark. 439, 825 S.W.2d 810 (1992). We defer to the jury’s resolution of the issue unless we can say there is no reasonable probability to support the Appellee’s version. Wheeler Motor Co. v. Roth, 315 Ark. 318, 867 S.W.2d 446 (1993). We will not overturn a jury verdict unless it is clearly the result of passion or prejudice. Duggar v. Arrow Coach Lines, Inc., 288 Ark. 522, 707 S.W.2d 316 (1986). Upon appellate review we consider the evidence in the light most favorable to the verdict and if 9 Cite as 2014 Ark. 385 supported by substantial evidence, we will affirm. Petrus Chrysler-Plymouth v. Davis, 283 Ark. 172, 671 S.W.2d 749 (1984). On a breach-of-contract claim, when performance of a duty under a contract is contemplated, any nonperformance of that duty is a breach. Zufari v. Architecture Plus, 323 Ark. 411, 914 S.W.2d 756 (1996). As a general rule, the failure of one party to perform his contractual obligations releases the other party from his obligations. Stocker v. Hall, 269 Ark. 468, 602 S.W.2d 662 (1980). However, a relatively minor failure of performance on the part of one party does not justify the other in seeking to escape any responsibility under the terms of the contract; for one party’s obligation to perform to be discharged, the other party’s breach must be material. Boellner, 2011 Ark. 83, 378 S.W.3d 745. We now turn to Appellant’s first breach-of-contract argument concerning its failure to deliver Bodily’s software and source code, as required by section 2.4 of the parties’ contract. Appellant claims that Appellee materially breached this provision of the contract by failing to deliver Appellee’s software in a timely manner and that Appellee’s inability to obtain a copy of the Bodily software delayed its obligation to complete the installation of the system. Section 2.4 of the parties’ contract states that Appellant would provide a copy of the Bodily software and source code to Appellee “to enable Real Forms to convert the ARA Realtor Forms for prior years into the Real Forms Contract Management Software.” According to the testimony of Matt Hudson and Bryan Ruggeri, Matt Hudson’s former business partner, the Bodily software and source code were essential because they would have provided quick access to the 2010 forms in a Microsoft Word format, and those forms could 10 Cite as 2014 Ark. 385 have easily been converted into the new system. Because the Bodily software and code were not accessible, Appellee was forced to use converted PDF documents, instead of the original Microsoft Word format, and for that reason, the project was delayed. Additionally, the Bodily source code would have allowed Appellee to capture the data in the old system without having to write a new program for importing the data from the 2009 and 2010 databases into the 2011 software system. Hudson testified that, for these reasons, Appellee took time away from its software development to its revision of the forms. Hudson testified to the “painstaking” aspects of this project because of Appellant’s failure to provide the Bodily software and source code. He testified, “Our expectation was . . . . [y]ou would just basically make the changes in Word and then print it in PDF. However, that was not allowable. We got – they were in Word but it was a mess. Forty-four forms of junk.” Hudson testified that, because the forms were not properly formatted, he spent much time importing the 2009 and 2010 data into the newly developed software. Ruggeri also testified that he spent from four to eight extra weeks modifying and converting the forms because they were not Microsoft Word documents. Hudson also explained that the initial incorrect data import caused by the lack of the Bodily software contributed to the security issue experienced by the realtors. Based on this testimony, the jury could have found substantial evidence that Appellant’s failure to deliver Bodily’s software and source code was a material breach. We have stated that a jury determines the credibility of the witnesses and the weight and value of their evidence, and it may believe or disbelieve the testimony of any one or all 11 Cite as 2014 Ark. 385 of the witnesses, though such evidence is uncontradicted and unimpeached. Dover v. Stephenson Oil Co., Inc., 354 Ark. 695, 128 S.W.3d 805 (2003). As such, the jury determined the credibility of the parties’ witnesses and gave weight to these witnesses’ testimony. Viewing this evidence in the light most favorable to Appellee, we hold that substantial evidence supports the jury’s verdict that Appellant materially breached its contract with Appellee by failing to deliver Bodily’s software and source code as required by the parties’ contract. Thus, we affirm the jury’s verdict on these grounds. Further, we recognize that the jury returned a verdict for Appellee on Appellant’s breach-of-contract counterclaim on a general verdict form without specifying which particular breach occurred. With regard to general verdict forms, we stated in Hyden v. Highcouch, Inc., 353 Ark. 609, 110 S.W.3d 760 (2003), as follows: If the jury’s verdict is rendered on a general verdict form, it is an indivisible entity or, in other words, a finding upon the whole case. Tyson Foods, Inc. v. Davis, 347 Ark. 566, 66 S.W.3d 568 (2002). Where a general jury verdict is used, this court will not speculate on what the jury found. Primm v. U.S Fidelity Guaranty Ins. Corp., 324 Ark. 409, 922 S.W.2d 319 (1996). When special interrogatories concerning liability or damages are not requested, this court is left in the position of not knowing the basis for the jury’s verdict, and this court will not question nor theorize about the jury’s findings. Esry v. Carden, 328 Ark. 153, 942 S.W.2d 846 (1997). Id. at 615, 110 S.W.3d at 764. Therefore, because substantial evidence supported the jury’s breach-of-contract verdict in this instance, we decline to reach Appellant’s remaining breachof-contract arguments. See Boellner, 2011 Ark. 83, 378 S.W.3d 745. 12 Cite as 2014 Ark. 385