Opinion ID: 2429378
Heading Depth: 1
Heading Rank: 2

Heading: Counts II and IIIThe Fraud Claim

Text: In late 1981 Shakey's decided to experiment with a new blend of cheese. The blend initially prepared by the defendant for Shakey's consisted of 80% mozzarella, 10% cheddar, and 10% provolone. The experimental blend was composed of 60% mozzarella, 20% imitation mozzarella cheese substitute, [4] 10% cheddar and 10% provolone. Shakey's instructed the defendant not to make any change in the labeling. The assigned reason was that it wanted reactions uninfluenced by knowledge that a change had been made. There was testimony that the experimental cheese was to be sold only to Shakey's owned pizzerias and to such of its franchisees as chose to participate in the experiment, but there is no evidence that any franchisee was actually notified or offered participation. The experimental cheese was cheaper to produce than the regular blend, and the defendant undertook to rebate approximately ten cents per pound to Shakey's in addition to the two cent per pound rebate initially agreed upon. Shortly after the experiment was undertaken the plaintiff ceased to be a franchisee of Shakey's, although he continued to use the Shakey's name in connection with his pizzeria until January 13, 1984. He wanted to purchase Shakey's cheese blend from defendant to use in his individual business, and received permission to do so from Shakey's district manager, Loren Johnson. Johnson ordered the cheese for him after he ceased to be a franchisee. The plaintiff had dealt with Rose Armstrong, defendant's associate product manager of cheese, who testified that an agent of Shakey's had confirmed his authority to purchase Shakey's labeled cheese blend after he ceased to be a Shakey's franchisee. He was on a C.O.D. basis, and was required to give a check for each shipment. In June of that year the defendant delivered three separate 500 pound shipments of the experimental blend to the plaintiff. These appeared on a tabulation furnished in August of 1982 to Shakey's, described as sales to Shakey's-Springfield, and 12.75 cents per pound was rebated to Shakey's. The plaintiff was not aware that he was receiving what his counsel referred to as the fake cheese because the label had not been changed. He testified that customers had complained that his pizza was not so good as it had been. The theory of Counts II and III was fraud and deceit. The verdict directing instruction (MAI 23.05) reads as follows: Your verdict must be for plaintiff if you believe: First, defendant represented to plaintiff that the cheese was Shakey's 80-10-10 blend intending that plaintiff rely upon such representations in purchasing the cheese, and Second, the representations were false, and Third, defendant knew that they were false, and Fourth, the representations were material to the purchase by plaintiff of the cheese, and Fifth, plaintiff relied on the representations in making the purchases, and Sixth, as a direct result of such representations, the plaintiff was damaged. The jury returned a verdict for $161.25 actual damages on Count II, the total amount claimed in argument, and for $750,000 punitive damages on Count III. Inasmuch as we conclude that the evidence does not support a recovery on a theory of fraud and deceit there is no need to discuss the propriety or correctness of the punitive damage submission or the amount of the verdict. There is no substantial evidence of any false representation of fact. The plaintiff points to the failure to change the label, but there is no evidence of what the label actually said as to the ingredients or proportions. Nor is there testimony that any oral representation was made to the plaintiff in connection with his purchases. The plaintiff cites Williams v. Miller Pontiac Company, 409 S.W.2d 275 (Mo. App.1966) for the proposition that a misrepresentation may be made without an express statement. That case involved the rollback of an odometer. It is clearly distinguishable. The odometer is designed to give accurate information about how far an automobile has traveled, and no reason for turning it back other than to deceive potential buyers can be imagined. Insofar as the present record shows, the only purpose of the label was to identify the product as one specified by Shakey's. The plaintiff's proof is also insufficient to demonstrate that the defendant made any representation for the purpose of inducing reliance by this plaintiff. The blend was changed at the instance of Shakey's, and the label was left the same for Shakey's expressed purposes and at Shakey's explicit direction. There is no evidence that the defendant sought the plaintiff as a customer after he ceased to be a Shakey's franchisee, or that it was trying to market the experimental blend except to the Shakey's organization. The plaintiff, rather, wanted to continue his use of Shakey's specified and labeled cheese blend. His testimony that he would not have made the purchase if he had realized that he would get the experimental cheese is not sufficient to make a case of fraud. He must show that the defendant purposely sought to deceive him. See Restatement (Second) of Torts § 531 comment b, illustration 1 (1977). Plaintiff's counsel argues that, under the evidence, the jury could have found that there was bad blood between the plaintiff and the defendant on account of the transactions which gave rise to Count I and that this circumstance supplied a motive for the defendant to palm the experimental blend off on him. This argument is pure speculation. Nor can a profit motive be attributed to the defendant. It paid the customary rebate to Shakey's for the experimental cheese delivered to the defendant. The plaintiff argues that the delivery of the wrong cheese on three separate occasions is probative of a purposeful act, and inconsistent with Armstrong's statement that there was a warehouse mistake. In the absence of evidence as to how any one of these orders was communicated to defendant, or how directions were issued to the warehouse, the evidence of a triple error does not provide substantial support for a finding of intent to deceive. The plaintiff also points to the sign in his establishment advising patrons that he used real cheese. There is no evidence that any representative of the defendant having responsibility for the plaintiff's purchases knew about the sign. We are not called upon to, and do not, express any conclusion as to the propriety of the transaction between Shakey's and the defendant concerning the experimental cheese or its labeling. Even if we raise a collegial eyebrow, the circumstances are material only insofar as they relate to the plaintiff's claim, which is the modern equivalent of the common law action on the case for fraud and deceit. That action consists of numerous and detailed elements. [5] It is often said that fraud is never presumed but must always be proved, and that difficulty of proof does not dispense with its necessity. [6] Each distinct element must be established by substantial evidence. The plaintiff cites Williams v. Miller Pontiac Co., 409 S.W.2d 275, 277-78 (Mo. App.1966) for the proposition that practitioners of fraud do not usually operate in the open, and that fraud cases must often be established by circumstantial evidence. We of course are obliged to take the plaintiff's evidence as true, to give the plaintiff the benefit of all reasonable inferences, and to disregard testimony adduced by the defendant except insofar as it aids the plaintiff's case. We conclude that, tested by these standards, the plaintiff still has failed to establish that there was a misrepresentation of fact, and that the defendant sought to induce the plaintiff to rely on any representation it made. We do not have to decide whether the plaintiff could have employed any other legal theory to recover his actual damages for delivery of the wrong cheese. He chose the theory of fraud and deceit and made no alternate submission. There is no need to give him a further opportunity to recover the very modest amount of actual damages he claims. It is better to bring the litigation to an end. The judgment as to Count I is affirmed. The judgment as to Counts II and III is reversed. The case is remanded for entry of a revised judgment in compliance with this opinion. BILLINGS, C.J., and DONNELLY, WELLIVER, ROBERTSON and HIGGINS, JJ., concur. RENDLEN, J., concurs in result.