Court Opinion

ID: 9627550
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:47:34.00646+00
Date Added: 2024-06-11T15:33:51.303214
License: Public Domain

BAKES, Chief Justice.
Both plaintiff and defendant appeal a trial court’s granting of a partial j.n.o.v. and new trial on the issue of damages for breach of a beer distribution franchise sale agreement. The franchise buyer, plaintiff Bill Jones Distributors, Inc. (Jones), alleged that the franchise seller, defendant Panhandle Distributors, Inc. (Panhandle), breached the written sales contract in several respects. After a seven-day trial, the jury found that Panhandle breached the contract with Jones. In its special verdict the jury awarded compensatory damages of $162,289.24 and punitive damages of $10,700.00. Panhandle moved for judgment notwithstanding the verdict (j.n.o.v.) or, in the alternative, new trial on all issues. The trial court granted j.n.o.v. with respect to the punitive damage award and granted a new trial on the issue of compensatory damages, but not on the issue of liability. Both Panhandle and Jones appealed, raising issues which we have consolidated on appeal for review. Panhandle contends that the trial court erred in denying its motion for new trial on liability, and its j.n.o.v. motion on the compensatory damage issue. Jones argues that the trial court erred by (1) granting Panhandle’s motion for new trial on compensatory damages, and (2) granting Panhandle’s motion for j.n.o.v. on the punitive damages issue.
I
Panhandle and Jones are both beer distributors in northern Idaho. Panhandle is run by Jim Crowley, its chief executive officer; Jones is run by Bill Jones. On November 9, 1978, these two companies entered a written contact for the sale to Jones of Panhandle’s right to distribute Schlitz and Miller Brewing products in Bonner and Boundary Counties. The sale price was $10,000. Prior to entering this agreement, Jones had acted as Panhandle’s sub-distributor of Schlitz and Miller products in Bonner and Boundary Counties, the area covered by the sales contract. At trial the evidence was presented which showed that before taking on Jones as a sub-distributor, Coeur d’Alene-based Panhandle had difficulty distributing Schlitz and Milier products in the two counties. Sandpoint-based Jones, however, successfully sub-distributed these breweries’ products for Panhandle.
The contract contained a “condition precedent” which stated that both Miller and Schlitz brewing companies had to approve in writing the sale of franchise right for their respective products. If either brewery did not approve in writing then the contract would terminate.1 Thus, the “con*752dition precedent” in fact amounted to two conditions precedent, i.e., the consent of two different companies. The contract also stated, “The obligation and responsibility for obtaining the respective consents [are with Panhandle], who agrees to diligently pursue the receipt of the written consents as soon as possible____”
The conditions precedent to the conclusion of the contract never occurred. Schlitz rejected the transfer of the franchise distribution rights from Panhandle to Jones. Miller did not reject the transfer, but did not give its consent to it either. Panhandle then resumed the distribution of Schlitz and Miller products in Bonner and Boundary Counties and returned the $10,-000 sale price to Jones.
Jones sued Panhandle for breach of the sale contract and urged two bases for the alleged breach. First, Jones argued that Panhandle breached the contract by failing to diligently pursue approval of the transfer as required by the contract. Second, Jones argued that Panhandle, through Crowley, actually prevented the fulfillment of the contract’s performance by directly influencing Schlitz’s disapproval and Miller’s nonconsent in order to prevent either of the conditions precedent from occurring. Jones presented some evidence to show that Crowley influenced the breweries to either disapprove the transfer or take no action. For example, regarding the Schlitz consent, a former Schlitz representative, Ray Carolin, testified that Crowley had asked him and his boss, Dale Lippert, to disapprove Jones’s application to become a distributor. With regard to the Miller Brewing consent, there was no testimony offered by Jones to show that Crowley had done anything to dissuade Miller from consenting to the transfer. However, Miller representative Swede Wick did testify that he had heard of Crowley’s intention not to go through with the sale of Panhandle’s distribution rights to Jones and of Crowley’s request to Schlitz representatives to disapprove Jones’s application to Schlitz. However, Wick did not testify that Crowley had made any such request of Miller Brewing to disapprove the transfer and sale, or that Miller’s failure to give its written consent resulted from Crowley’s influence on Miller.
Jones argues on appeal that the evidence demonstrates both that Crowley acted covertly in order to block the giving of the consents, and that Crowley failed to “diligently pursue the receipt of the written consents as soon as reasonably possible,” as required by the contract. For example, Jones points out that during the several months after entering into the contract Crowley sent only one letter to Miller on behalf of Jones. Additionally, Jones produced an expert witness, Paul Pohle, who testified that because of Jones’s proven success as a sub-distributor of Schlitz, Miller and other brewery products in Bonner and Boundary Counties, it was his opinion that both Schlitz and Miller would have approved the transfer but for Crowley’s breach of contract.
For his part, Crowley denied having done anything to influence Schlitz’s disapproval or Miller’s nonconsent and asserted that he did all that he could have done to secure approval for the transfer of distribution rights. Crowley theorized that Schlitz rejected Jones as a distributor due to Jones’s unacceptable performance as a sub-distributor.
The jury returned a verdict in favor of Jones for both compensatory and punitive damages.
II
The first issue we address is Panhandle’s claim that the trial court committed error by improperly refusing to grant Panhandle j.n.o.v. on the issue of liability. In making a motion for j.n.o.v., a defendant admits the truth of all of plaintiff’s evidence and every legitimate inference that could be drawn therefrom in a light most *753favorable to plaintiff. Quick v. Crane, 111 Idaho 759, 727 P.2d 1187 (1986). A trial court may not make its own findings of fact but must construe the evidence in a light most favorable to the non-moving party and determine whether there is sufficient evidence to create an issue of fact. Id. Whether j.n.o.v. should be granted is a question of law, and on such questions, parties are entitled to full review by an appellate court without special deference to the views of the trial court. Id.
We are faced with a unique factual circumstance in this case because the contract essentially creates two conditions precedent to its performance. For Jones to recover from Panhandle on a breach of contract theory, regardless of whether the theory is based on Panhandle’s alleged failure to use due diligence to procure consents or its alleged active prevention of approval, or some combination of the two, Jones must prove that Panhandle’s contractual breach materially contributed to the actual non-occurrence of each of the two conditions precedent. It is not enough for Jones to prove that Panhandle breached its duty with respect to only one condition precedent, even though that condition then would be excused, because final performance of the contract would not occur until both conditions precedent were met. See RESTATEMENT (SECOND) OF CONTRACTS §§ 225, 245 (1979); 5 Williston on Contracts § 677A (1961). Because it is alleged that Panhandle breached each condition precedent in two respects, we must determine whether there is sufficient evidence to support the jury’s finding that Panhandle’s breach caused the non-performance of each condition precedent.
Panhandle argues, citing approving language in the trial court’s memorandum decision in ruling on the j.n.o.v. motion, that it is “undisputed that neither Crowley nor anyone else acting on the behalf of Panhandle ever did anything to dissuade, discourage, or prevent the consent from the Miller Brewing Company.” As such, Panhandle contends, it did not breach the contract in any manner because the contract itself ceased to exist because one of the two conditions precedent, ie., Miller’s approval, never occurred. However, the trial court found that there was sufficient evidence, e.g., the mailing of only one letter to Miller on behalf of Jones, to create an issue of fact for the jury as to whether Panhandle breached its express contractual duty to use diligence in order to “procure consents.” The trial court wrote, “Though Mr. Crowley testified that he did all he was aware of to comply with this ‘obligation,’ the evidence was substantial that he did not.”
We agree with the trial court’s assessment of the evidence on the issue of Panhandle’s lack of due diligence. The trial court properly denied Panhandle’s j.n. o.v. motion on the issue of whether Panhandle breached its express contractual duty to act with due diligence to procure the consents of both Miller and Schlitz.
Ill
Panhandle further asserts that the liability issue should be retried with the compensatory damage issue because it would be too difficult to separate the two and would confuse the jury at the new trial on damages. We recently addressed the question of whether a trial court should grant only a limited retrial on the issue of damages, rather than both liability and damages. In Smallwood v. Dick, 114 Idaho 860, 761 P.2d 1212 (1988), we wrote:
The decision on limiting the new trial [to damages] appropriately rests in the discretion of the trial judge. It is presumed that in passing upon the motion [for new trial on the limited issue of damages] he has weighed the evidence and the possibility of prejudice to the defendant. His decision will not be reversed on appeal unless an abuse of discretion is shown. (Citations omitted.)
Such an abuse is shown when the damages are inadequate, the record discloses that the issue of liability is close, and other circumstances indicate that the ver*754diet was probably the result of prejudice, sympathy, or compromise or that for some other reason the liability issue has not been determined.
114 Idaho at 864, 761 P.2d at 1216; Leipert v. Honold, 39 Cal.2d 462, 247 P.2d 324, 327 (1952).
As discussed below, we conclude that the trial court acted within the bounds of its discretion in granting new trial solely on the issue of compensatory damages because it found the jury’s award so excessive that it could only have been the result of “passion or prejudice.” That leaves only the question of whether the record discloses that the issue of liability was so close that a new trial on both liability and damages should have been granted. Smallwood v. Dick, 114 Idaho 860, 761 P.2d 1212 (1988).
The trial court’s decision denying Panhandle’s motion for new trial on the liability issue was written before the Smallwood decision and therefore understandably it does not refer to whether the liability issue was “close.” However, after reviewing the record and the trial court’s memorandum decision, we conclude that the liability issue was not close, at least with respect to Panhandle’s breach of contract through its failure to diligently pursue the receipt of written consents from the two breweries. We agree with the trial court when it wrote, “Though Mr. Crowley testified that he did all he was aware of to comply with this ‘obligation,’ [to diligently procure consents,] the evidence was substantial that he did not.”
Accordingly, we conclude that the trial court did not abuse its discretion in denying Panhandle’s motion for new trial on the liability issue even though it ordered a new trial on compensatory damages.
IV
We next address the issues raised in Jones’s appeal. In the first issue Jones alleges that the trial court erred in granting new trial on compensatory damages. After the jury rendered its verdict Panhandle made motions for, inter alia, new trial on the issue of compensatory damages pursuant to I.R.C.P. 59(a). After hearing counsels’ arguments, the trial court stated that, “any award of damages made by the Court would have been far less than the award made, and it would have been sufficiently less to convince me that the award of compensatory damages could only be the result of ‘passion or prejudice’ in the language of Rule 59(a)(5).”2 The trial court also concluded that a new trial was warranted pursuant to I.R.C.P. 59(a)(7) because there were errors of law committed in certain erroneous instructions submitted to the jury on the issue of damages.
On a motion for new trial, a trial court has broad discretion and may weigh ‘the evidence and credibility of the witnesses. Quick v. Crane, 111 Idaho 759, 727 P.2d 1187 (1986). Unlike the rule which applies to motions for directed verdict or j.n.o.v., a trial court may set aside the jury’s verdict and grant a new trial pursuant to I.R.C.P. 59(a) even though there is substantial evidence to support the verdict. Id. A trial court is not required to view the evidence in a light most favorable to the non-moving party. Id.
In Quick v. Crane, supra, we reiterated the rule that a trial court must follow when ruling on a motion made pursuant to I.R. C.P. 59(a)(5):
Where a motion for a new trial is premised on inadequate or excessive damages, the trial court must weigh the evidence and then compare the jury’s verdict to what he would have given had there been no jury. If the disparity is so great that it appears to the trial court that the *755award was given under the influence of passion or prejudice, the verdict ought not to stand. It need not be proven that there was in fact passion or prejudice nor is it necessary to point to such in the record. The appearance of such is sufficient. A trial court is not restricted to ruling a verdict inadequate or excessive “as a matter of law.” [Citation omitted.] Additionally, the rule that a verdict will not be set aside when supported by substantial but conflicting evidence has no application to [a] trial court ruling upon a motion for a new trial.
111 Idaho at 768, 727 P.2d at 1196; Dinneen v. Finch, 100 Idaho 620, 625-26, 603 P.2d 575, 580-81 (1979). On appeal, we will not reverse a trial court’s order granting or denying a motion for new trial “unless the court has manifestly abused the wide discretion vested in it.” 111 Idaho at 770, 727 P.2d at 1198. “While we must review the evidence, we are not in a position to ‘weigh’ it as the trial court.” Id.
After reviewing the evidence, we are not convinced that the trial court committed a “manifest abuse of [its] wide discretion” when it found that the jury’s award was excessive and could have only resulted from passion or prejudice, therefore justifying a grant of a new trial on compensatory damages pursuant to I.R. C.P. 59(a)(5). The trial court’s memorandum opinion demonstrates that it properly applied the standards set out in our most recent cases. Dinneen v. Finch, 100 Idaho 620, 603 P.2d 575 (1979); Quick v. Crane, 111 Idaho 759, 727 P.2d 1187 (1986); Sanchez v. Galey, 112 Idaho 609, 733 P.2d 1234 (1987).
The trial court’s order granting Panhandle’s motion for a new trial on compensatory damages is affirmed.
V
Next, we consider the second issue raised by Jones concerning whether the trial court properly granted Panhandle’s j.n.o.v. motion with respect to the jury’s punitive damage award. While punitive damages may be recovered in a contract action, Cheney v. Palos Verdes Investment Corporation, 104 Idaho 897, 665 P.2d 661 (1983), they are “not favored in the law and therefore should be awarded only in the most compelling circumstances. They are to be awarded cautiously and within narrow limits.” 104 Idaho at 905, 665 P.2d at 669. In order to justify submitting a punitive damages issue to the jury, a plaintiff must show that defendant acted in a manner that was “an extreme deviation from reasonable standards of conduct, and that act was performed by the defendant with an understanding of or disregard for its likely consequences.” Id. “The justification for punitive damages must be that the defendant acted with an extremely harmful state of mind, whether that state of mind be termed ‘malice, oppression, fraud or gross negligence’ ... ‘malice, oppression, wantonness’ ... or simply ‘deliberate or willful.’ Id. (Citations omitted.) “While no concrete formula for an award of punitive damages will control, the discretion of the trial judge will continue to be exercised within the[se] general advisory guidelines laid down by this Court in the past.” 104 Idaho at 904, 665 P.2d at 668.
In the event that the trial court concludes, in the exercise of its discretion, that the evidence does not demonstrate that the defendant acted in a manner that was “an extreme deviation from reasonable standards of conduct,” or that the defendant “acted with an extremely harmful state of mind, whether that state of mind be termed ‘malice, oppression, fraud or gross negligence,’ ” then the trial court should not submit the issue of punitive damages to the jury. Cheney v. Palos Verdes Investment Corp., 104 Idaho 897, 665 P.2d 661 (1983); Quedding v. Arisumi Bros., Inc., 66 Haw. 335, 661 P.2d 706, 710 (1983) (“[I]f the evidence presented at trial is insufficient to support a finding that the ‘wrongdoer’ acted wantonly, oppressively, or maliciously, the issue of punitive damages may not be presented to the jury.”); Alyeska Pipeline Service Co. v. O’Kelley, 645 P.2d 767, 774 (Alaska 1982) (“[W]here there is no evidence that gives rise to an inference of actual malice or conduct sufficiently outrageous to be deemed equivalent to actual *756malice, the trial court need not submit the punitive damages issue to the jury.”).
However, the trial court considered it a “better practice” to first submit the question of punitive damages to the jury, reserving until afterward the question of whether or not the evidence submitted by the plaintiff was sufficient to meet the Cheney v. Palos Verdes standard. After the jury awarded Jones $10,700 in punitive damages the trial court rejected the jury’s verdict, stating, “I cannot agree with the verdict of the jury on ... the award of ... punitive damages.” The trial court could find “no substantial evidence to support an award of punitive damages,” stating that it is “undisputed that neither Jim Crowley nor anyone else acting on behalf of Panhandle Distributors, Inc., ever did anything to dissuade, discourage or prevent the consent from the Miller Brewing Company.” Since the consent from both the Schlitz and Miller Brewing Companies was a condition precedent to the contract having viability, the trial court concluded that it didn’t matter if Crowley’s conduct toward the Schlitz Brewing Company was egregious if it was not egregious as to Miller Brewing Company. Accordingly, the trial court concluded that “I find that the motion for judgment notwithstanding the verdict should be granted as to the award of punitive damages.”
Given the unique factors in this case (the dual conditions precedent) we conclude that the trial court did not abuse its discretion when it concluded that, given the lack of egregious conduct on the part of the defendant Panhandle concerning the Miller Brewing Company’s consent, the evidence as a whole precluded the award of punitive damages in this case. Soria v. Sierra Pacific Airlines, Inc., 111 Idaho 594, 726 P.2d 706 (1986). Therefore we affirm the trial court granting of the j.n.o.v. with regard to punitive damages.3
The judgment of the district court is affirmed. No costs or attorney fees on appeal.
JOHNSON, BOYLE and McDEVITT, JJ., concur.

. The following is the condition precedent clause contained in the contract:
CONDITION PRECEDENT: It is further understood and agreed that the consummation of this agreement is conditional upon the written consent to, and approval of, both of the above-named brewing companies; the obligation and responsibility for obtaining the respective consents being solely with the Seller, who agrees to diligently pursue the receipt of the written consents as soon as reasonably possible upon the execution of this agreement. In the event of the failure of either of the above-named brewing companies to give consent to, and approval of, this agreement, this agreement shall be immediately terminated *752and any or all of the consideration paid into the attorney’s trust account as provided shall be immediately refunded to the Buyer in the entirety, in which event the Buyer shall be relieved of the obligation to pay any of the attorney’s fees as hereinafter otherwise provided.

. I.R.C.P. 59(a) provides in pertinent part:
A new trial may be granted to all or any of the parties and on all or part of the .issues in an action for any of the following reasons:
5. Excessive damages or inadequate damages, appearing to have been given under the influence of passion or prejudice.
7. Error in law, occurring at the trial.....

. By affirming the trial court we do not intimate our approval of the trial court’s statement that it is “the better practice [for trial courts] to submit the question [of punitive damages] to the jury in all but the most obvious cases ..and to thereafter overrule the jury’s verdict by a judgment notwithstanding the verdict if the trial court thereafter concludes that the defendant's conduct was not sufficiently egregious to meet the threshold requirements of Cheney v. Palos Verdes Investment Corp., 104 Idaho 897, 665 P.2d 661 (1983). In order to assert a punitive damage claim, a plaintiff must meet a certain threshold by demonstrating that a defendant acted in a manner that was "an extreme deviation from reasonable standards of conduct," or "acted with an extremely harmful state of mind, whether that state of mind be termed 'malice, oppression, fraud or gross negligence----' ’’ Id.; Quedding v. Arisumi Bros., Inc., 66 Haw. 335, 661 P.2d 706 (1983). While ”[t]he decision of whether to submit the question of punitive damages to the trier of fact rests within the discretion of the trial court,” Soria v. Sierra Pacific Airlines, Inc., 111 Idaho 594, 611, 726 P.2d 706, 723 (1986), the failure to exercise that discretion until after the jury has returned its verdict may well interject issues and evidence into the case which at best are unnecessary and confusing, and at worst may well be extremely prejudicial.