Court Opinion

ID: 9482468
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:51:32.059865+00
Date Added: 2024-06-11T17:49:01.231062
License: Public Domain

MINER, Circuit Judge,
dissenting in part:
I agree with all except Part II of Judge Walker’s thoughtful and comprehensive opinion for the Court. I disagree as to Part II because it seems to me that the portion of the judgment entered in favor of Suburban in the sum of $105,378 should remain undisturbed as a proper award of consequential damages by the jury.
Vermont law permits the recovery of special or consequential damages. Albright v. Fish, 138 Vt. 585, 422 A.2d 250, 254 (1980); see also Norton & Lamphere Constr. Co. v. Blow & Cote, Inc., 123 Vt. 130, 183 A.2d 230, 236 (1962). “[C]ausation, certainty and foreseeability” must be demonstrated to warrant the recovery of such damages. Albright, 422 A.2d at 254; cf. Norton, 183 A.2d at 236. As the Vermont courts have put it, consequential damages will be awarded for losses that must “reasonably be supposed to have been in [the parties’] contemplation at the time [they] contracted with [each other].” Norton, 183 A.2d at 236; see also In re Estate of Sawyer, 151 Vt. 287, 559 A.2d 687, 692 (1989); Berlin Dev. Corp. v. Vermont Structural Steel Corp., 127 Vt. 367, 250 A.2d 189, 192 (1968).
The issue, therefore, is whether it was foreseeable to the parties at the time of contracting that Proctor, by purchasing equipment from another source and thereby breaching the agreements, would cause Suburban to suffer the loss of customers. I think that the answer is “yes.” It certainly was within the reasonable contemplation of the parties that Suburban would terminate the agreements upon the breach of a material condition — the exclusivity provision — found in both the Investment Dealer Agreement and the Exchange Cylinder Agreement. The parties further contemplated the consequences of termination, namely the potential loss of customers by Suburban. Evidence that they did so is found in the agreements themselves:
First, both agreements made it clear that all customers were Suburban customers, and the Dealer Agreement required Proctor to notify thé customers of that fact. Moreover, all customer records were to be surrendered upon termination. Second, each contract contained a non-compete clause. The Cylinder Agreement prohibited the establishment of an LP-Gas distribution business within a 50-mile radius of Rutland for a period of one year after termination, and the Dealer Agreement prohibited the establishment of an LP-Gas distribution business within a 50-mile radius of Rutland for a period of three years after termination. To say that the parties did not consider the possibility that Proctor would make off with Suburban’s customers upon contract termination is to ignore the bargain of the parties. Although Suburban sought to protect itself from the loss of business and Proctor understood that concern and agreed to perform accordingly, *79090% of Suburban s customers in fact were lured away by Proctor.
Despite the foregoing, and despite the fact that Proctor breached the contract by purchasing equipment from another source and also violated the non-compete clause, the panel majority observes that “Proctor’s violation of the exclusivity clause need not have led to Suburban’s customer flight and probably would not have done so if Suburban had not exercised its discretion to terminate the agreements_” Op. at 785. The implication here is that Suburban somehow is at fault in exercising its right to terminate for cause and by reason thereof should not be entitled to appropriate consequential damages. It is not clear why this should be so.
The panel majority also observes that “Suburban’s 1988 customer loss ‘consequences’ were, at best, only remotely caused by Proctor’s breach of the exclusivity clause.” Id. I do not see why the exclusivity clause should be emphasized. It does not make any difference which of the material provisions of the contract is violated. A breach of contract is a breach of contract. More importantly, it does not seem to me that causation was “remote” here or that “the chain connecting Proctor’s breach and Suburban’s customer loss is simply too attenuated to satisfy the causation element of consequential damages.” Id. My view is that there was causation, albeit indirect, in the sequence of breach, termination and loss of customers and consequent loss of profits. It was the loss of profits that Suburban would have made on the departed customers for a period of one year that the jury properly awarded. To say that the damages found by the jury were intended as compensation on the tor-tious interference claim that was rejected by the jury, see Id. at 786, is to conclude that the verdict was inconsistent. There is no basis for us to make such a determination.
The venerable rule of Hadley v. Baxendale, 9 Exch. 341, 156 Eng.Rep. 145 (1854), known to generations of law students, may live on in Vermont law, Albright, 422 A.2d at 254, but it is inapposite here. While the carrier in Hadley had no inkling of the consequence of his failure to transport the broken millshaft, Proctor knew full well that it would make every effort to find another supplier and garner the Suburban customers when it caused the agreements to be terminated by virtue of its own substantial breach. The loss of customers was a circumstance of special concern to Suburban. Indeed, in view of the competition in the industry and Suburban’s lack of market power, a fact we recognize in Part VI of this opinion, it had to be of paramount importance. Where, as here, “[the] special circumstance is brought to the attention of the other party, damages normally flowing from a breach of the contract in view of such special circumstances are said to be within the contemplation of the parties.” Christensen v. Slawter, 173 Cal.App.2d 325, 343 P.2d 341, 346 (1959). Accordingly, I am of the opinion that the consequential damages awarded by the jury were justified in this case and disagree with my colleagues to the extent that they hold otherwise.