Par Indust Inc v. Target Container Co

IN THE SUPREME COURT OF MISSISSIPPI
NO. 96-CA-00568-SCT
PAR INDUSTRIES, INC. d/b/a FLEXIBLE FLYER
COMPANY
v.
TARGET CONTAINER COMPANY, AN ALABAMA
CORPORATION, AND JACK KELLERMAN
DATE OF JUDGMENT: 12/22/95
TRIAL JUDGE: HON. LEE J. HOWARD
COURT FROM WHICH APPEALED: CLAY COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: HAL H. H. McCLANAHAN
ATTORNEYS FOR APPELLEES: THOMAS WICKER
JOHN G. PARKER
MELINDA L. MOSELEY
DENNIS W. VOGE
NATURE OF THE CASE: CIVIL - TORTS (OTHER THAN PERSONAL
INJURY AND PROPERTY DAMAGE)
DISPOSITION: AFFIRMED - 2/12/98
MOTION FOR REHEARING FILED:
MANDATE ISSUED: 3/31/98
BEFORE SULLIVAN, P.J., MILLS AND BANKS, JJ.
SULLIVAN, PRESIDING JUSTICE, FOR THE COURT:
¶1. This appeal arises from the December 22, 1995, judgment by the Circuit Court of Clay County in
favor of the appellees, Target Container Co, Jack Kellerman, and Bobby Oswalt. Par Industries d/b/a
Flexible Flyer filed suit on November 14, 1991, alleging tortious interference with contractual
business relations against Target Container Co. and Jack Kellerman. The answer filed by Target
counterclaimed for the outstanding balance of $201,469.48 on the open account of Flexible Flyer,
late charges, accrued interest and attorney fees.
¶2. All claims were tried by agreement of the parties before the Honorable Lee J. Howard sitting
without a jury on October 9-12, 1995. On December 22, 1995, the circuit court entered judgment in
favor of Target and Kellerman on Flexible Flyer's claims. The court also found in favor of Target on
its counterclaim on open account against Flexible Flyer in the amount of $201,469.48, plus interest at
the rate of 8 % per annum from October 6, 1992.
¶3. On January 5, 1996, Flexible Flyer filed a motion for a new trial, which was denied by order dated
May 14, 1996. Target then filed a motion for attorney fees pursuant to Miss. Code Ann. § 11-53-81
(Supp. 1997). The circuit court awarded Target attorneys' fees of one-third of the amount collected
on open account, or $67,156.49 by order dated May 17, 1996. Flexible Flyer filed this appeal on May
24, 1996.
STATEMENT OF THE LAW
I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN NOT FINDING FOR AND
AWARDING JUDGMENT TO PAR AND AWARDING JUDGMENT TO TARGET.
II. THE JUDGMENT OF THE TRIAL COURT IS CONTRARY TO THE
OVERWHELMING WEIGHT OF THE EVIDENCE AND FACTS AS TO (A)
INTERFERENCE WITH CONTRACT AND (B) INTERFERENCE WITH THE BUSINESS
RELATIONSHIP BETWEEN FLEXIBLE FLYER AND ITS EMPLOYED OSWALT.
i. standard of review
¶4. "A circuit court judge sitting without a jury is accorded the same deference with regard to his
findings as a chancellor," and his findings are safe on appeal where they are supported by substantial,
credible, and reasonable evidence. Puckett v. Stuckey, 633 So. 2d 978, 982 (Miss. 1993); Sweet
Home Water & Sewer Ass'n v. Lexington Estates, Ltd., 613 So. 2d 864, 864, 872 (Miss. 1993);
Allied Steel Corp. v. Cooper, 607 So. 2d 113, 119 (Miss. 1992). Where the trial court failed to make
any specific findings of fact, this Court will assume that the issue was decided consistent with the
judgment and these findings will not be disturbed on appeal unless manifestly wrong or clearly
erroneous. Sweet Home Water & Sewer Ass'n, 613 So. 2d at 872; Omnibank of Mantee v. United
Southern Bank, 607 So. 2d 76, 82 (Miss. 1992). The reviewing court must examine the entire
record and must accept, "that evidence which supports or reasonably tends to support the findings of
fact made below, together with all reasonable inferences which may be drawn therefrom and which
favor the lower court's findings of fact." Cotton v. McConnell, 435 So. 2d 683, 685 (Miss. 1983)
(quoting Culbreath v. Johnson, 427 So. 2d 705, 707-708 (Miss. 1983)). That there may be other
evidence to the contrary is irrelevant. Id. at 686.
¶5. In contrast, this Court reviews errors of law de novo. Cummings v. Berdman, 681 So. 2d 97,
100 (Miss. 1996); Ford v. Holly Springs School Dist., 665 So. 2d 840, 843 (Miss. 1995);Cooper v.
Crabb, 587 So. 2d 236, 239 (Miss. 1991). "Notwithstanding our respect for and deference to the trial
judge, on matters of law it is our job to get it right. That the trial judge may have come close is not
good enough. " Cooper, 587 So. 2d at 239 (quoting UHS-Qualicare, Inc. v. Gulf Coast
Community Hospital, Inc., 525 So. 2d 746, 754 (Miss. 1987)). If an erroneous legal standard was
applied to the facts, this Court will apply a de novo standard of review of the chancellor's findings
and will not hesitate to reverse. Mississippi State Dept. of Human Services v. Barnett, 633 So. 2d
430, 434 (Miss. 1993).
¶6. Flexible Flyer argues that the proper standard of review is de novo for two reasons. First, it
asserts that because the circuit court failed to make its own findings of fact and conclusions of law
then this Court must use heightened scrutiny. In support of this contention it cites to Brooks v.
Brooks, 652 So. 2d 1113 (Miss. 1995). This reliance is misplaced. The Brooks trial court adopted
verbatim the findings of fact and conclusions of law submitted to the court by one of the parties. The
Brooks Court stated that when this is done, "the deference normally afforded a chancellor's findings
of fact is lessened." Brooks, 652 So. 2d at 1118. This rule is inapplicable to the present case because
in the case at bar, neither party submitted any proposed findings of fact or conclusions of law to the
circuit court.
¶7. The second reason Flexible Flyer gives to support its argument that a de novo standard of review
is appropriate in this case is its assertion that the trial court applied an erroneous legal standard. In
order to determine if this assertion is correct this Court must first determine what the legal elements
are for each of the two claims asserted, tortious interference with contract and interference with
business relations, that the judge apparently found had not been satisfied.
ii. tortious interference with contract
¶8. When a person causes another to breach a contract with some third person, the tort is one of
interference with performance of a contract. The four elements for this tort are: "(1) that the acts
were intentional and willful; (2) that they were calculated to cause damage to the plaintiffs in their
lawful business; (3) that they were done with the unlawful purpose of causing damage and loss,
without right or justifiable cause on the part of the defendant (which constitutes malice); and (4) that
actual damage and loss resulted." Cenac v. Murry, 609 So. 2d 1257, 1268-69 (Miss. 1992) (citing
Liston v. Home Ins. Co., 659 F. Supp. 276, 281 (S.D.Miss. 1986)). The plaintiff must prove that an
enforceable obligation existed between the plaintiff and another party. Merchants & Planters Bank
of Raymond v. Williamson, 691 So. 2d 398, 407 (Miss. 1997). In addition, the plaintiff must prove
that the contract would have been performed but for the alleged interference.
¶9. Flexible Flyer contends that the trial court applied an incorrect legal standard as it relates to the
element of intent. It argues that the Liston case held that the plaintiff does not have to prove specific
intent to show wilful and intentional action as required in the third element. It contends that the
defendant's subjective intent of not meaning to harm Flexible Flyer is not a defense and consequently,
the court erred in not finding that the actions of Target, whether intentional or not, caused damage to
Flexible Flyer. The Liston Court is instructive as it pertains to the element of intent when it states:
The element of willfulness and calculation does not require a showing on the part of the plaintiff
that defendant had a specific intent to deprive plaintiff of contractual rights. Rather, the
requisite intent is inferred when defendant knows of the existence of a contract and does a
wrongful act without legal or social justification that he is certain or substantially certain
will result in interference with the contract.
Liston v. Home Ins. Co., 659 F. Supp. 276, 281 (S.D. Miss. 1986) (emphasis added). Target and
Kellerman have never argued that Flexible Flyer must show a specific intent to deprive it of
contractual rights in order to establish the elements of willfulness and calculation. There is no
evidence in the record that the trial court was under an erroneous belief that it had to find specific
intent in order for Flexible Flyer to prevail and the court was aware of the applicable law when it
rendered its decision. Therefore, this Court will apply an erroneous standard of review instead of a de
novo review.
iii. tortious interference with business relations
¶10. As differentiated from interference with contract, the tortious interference with business
relations occurs when a person unlawfully diverts prospective customers away from one's business,
and this tort is sometimes referred to as "malicious injury to business." Cenac, 609 So. 2d at 1268-
69. The Court in Cenac explained that:
[A] cause of action exists [for tortious interference with business relations] where one engages
in some act with a malicious intent to interfere and injure the business of another, and injury
does in fact result. . . Therefore, the essential elements of this tort are somewhat different from
tortious interference with contract. The remedy for the tort is damages, and the plaintiff must
also show (1) a loss, and (2) that defendant's conduct caused the loss. Prosser & Keeton, The
Law of Torts, § 130, 141 (5th ed. Supp. 1988).
Cenac, 609 So. 2d at 1271 (emphasis in original). According to Cenac, this Court intended there be
different elements for interference with business relations and interference with contract, but in a later
case this Court set out the same four elements for interference with a business relationship that apply
to the separate tort of interference with contract. MBF Corp. v. Century Business
Communications, Inc., 663 So. 2d 595, 598 (Miss. 1995); See also Nichols v. Tri-State Brick and
Tile Co., Inc., 608 So. 2d 324, 328 (Miss. 1992) (identical elements applicable to tort of interference
with prospective business advantage and tort of interference with contract). Even applying the two
requirements of a malicious intent to interfere and injure the business of another, and a resulting
injury, the same legal standard with reference to the element of intent is applicable to either claim for
tortious interference with contract or with business relations. Therefore, this Court must review the
facts and determine if findings of fact by the trial court that were necessary to support the judgment
are clearly erroneous and against the overwhelming weight of the evidence.
iv. factual analysis
¶11. The Circuit Court necessarily found that neither Target nor Kellerman committed any acts that
rose to the level of tortious interference. It expressly found that Flexible Flyer failed to meet its
burden of proving each element by the preponderance of the evidence. The relationship between
Oswalt and Kellerman and the loans themselves are basically undisputed but the inferences drawn
from those facts are in much dispute. The record shows that Par Industries d/b/a Flexible Flyer
manufactured gym sets, hobby horses, and sleds for mass retailers at its Clay County plant.
Corrugated material was one of the primary components in its toys. Bobby Oswalt was employed as
a purchasing agent for Par Industries pursuant to an oral at-will employment contract from 1985, to
his termination in February, 1991. Target's Birmingham production plant sold boxes to Flexible Flyer
primarily for its gym sets and hobby horses from 1985 to 1991 and was considered to be one of
Target's largest accounts. Jack Kellerman was a sales representative for Target, and until January
1990, a twenty percent shareholder of Target. After Target was purchased by Pratt Industries on
January 29, 1990, Kellerman's sole responsibility was to handle the Flexible Flyer account until his
retirement in December of 1991.
¶12. On April 6, 1987, Oswalt's wife, Terry, now Mrs. Brewer, and Kellerman formed OK
Construction Co. by a partnership agreement in order to build houses. Kellerman provided the
financing for the business, and continued to provide personal loans to Bobby Oswalt until 1990,
although there is some question as to whether Kellerman continued to be a partner in the business
after 1988, when the first home was completed and sold. Kellerman took advances against his income
from Target between 1988 and 1990 and may have used some of this money to make the loans to
Bobby Oswalt. These basic facts are undisputed. However each party presented its interpretation at
trial of what this relationship and the transactions that transpired between the two men were intended
to mean.
¶13. Terry testified that the partnership had nothing to do with Kellerman and Oswalt's professional
relationship as seller and purchaser. At all times, Kellerman and Oswalt considered their construction
business venture to be entirely separate from, and to have no influence on, their business relationship
as a sales representative for Target and purchasing agent for Flexible Flyer. At no time has Flexible
Flyer or Target had any policy, written or oral, prohibiting their employees from engaging in
unrelated business activities with each other. When Oswalt filed for bankruptcy in August of 1992, he
listed all the advances as debts totaling $46,900 which were eventually discharged. Kellerman wrote
this off as bad debts totaling $48,292 on his 1990 tax return. Target argues that the evidence shows
at best poor business judgement on the part of Kellerman to make loans without protecting his
interests and continue making loans when previous loans had not been repaid. Target argues that
neither it nor Kellerman's actions were calculated or had the purpose of causing damage and loss to
Flexible Flyer and that no actual damages resulted or had been proved at trial.
¶14. In contrast, Flexible Flyer argues that the actions of the selling agent Kellerman, an officer and
director and employee of defendant Target, were intended to influence Par's buying decision through
Bobby Oswalt to purchase Target's goods over a four-year period at a substantially higher cost than
was available from other suppliers providing similar services for the same product. Flexible Flyer
argues that its contract with Oswalt as its purchasing agent would have been performed but for the
actions of Target and Kellerman. "In order for a cause of action to exist for interference with a
contract it must be proved that the contract in question would have been performed 'but for' the
wrongful interference of the defendant, and that the interference complained of was wrongful."
Johnson v. Warnaco, Inc. 426 F. Supp. 44, 47 (S.D. Miss. 1976). Flexible Flyer contends that at all
times there were other vendors providing identical products at lower prices with the same service
such as spotting of trailers, extended credit terms and quick, turn-around service as Target provided.
However, this point was hotly contested at trial. Flexible Flyer asserts that the evidence demonstrates
that Kellerman and Target's actions were wrongful and both defendants were substantially certain
these actions would result in interference with the employment contract between Flexible Flyer and
Oswalt. Liston, 659 F. Supp. at 281. Flexible Flyer cites to Guastella v. Wardell, 198 So. 2d 227
(Miss. 1967) to support its contention that Target cannot escape liability because it did not intend for
the end result to happen. "People are presumed to contemplate the natural consequences of their
actions." Id. at 229. However, it was in much dispute that Target or Kellerman knew or should have
known that the separate business relationship between Kellerman and Oswalt would have any effect
on Flexible Flyer's business.
¶15. After hearing all the evidence, the trial court determined that Kellerman had not committed any
"wrongful acts". When considering all the facts, it is reasonable to conclude that Kellerman loaned
money to Oswalt and OK Construction in part as a business investment that failed and because
Kellerman wanted to help out his close friend. Although it is difficult to tell what each loan was used
for by OK Construction, and the testimony of Oswalt and Terry was evasive as to how the money
was spent, all the money was paid by check, deposited into an OK Construction account and there
were 14 sets of land transactions in connection to several homes that were built and sold from 1987
to 1991, the relevant time period that Kellerman and Oswalt had this separate business relationship.
The first set of loans in 1987 for the first house built by OK Construction was repaid in full and
Kellerman reported the income from this house on his 1988 tax return. These facts could support the
conclusion of the trial court that these loans were independent and were not made with the purpose
of harming Flexible Flyer in any way and the intent, whether it be specific or not, was not proven by
the preponderance of the evidence.
v. damages in relation to both causes of action
¶16. The trial court could have found the element of damages was not proven by a preponderance of
the evidence. Flexible Flyer has the burden of proof to show the financial loss it suffered which was
caused by Target and Kellerman. Cenac, 609 So. 2d at 1271. Flexible Flyer cites to Johnston v.
Safeco Ins. Co. of America, 727 F.2d 548 (5th Cir. 1984) and R & S Development, Inc. v. Wilson,
534 So. 2d 1008 (Miss. 1988) for the proposition that defendants cannot escape liability because of
lack of a scientifically precise measure of damages. "'[A] reasonable basis for computation and the
best evidence which is obtainable under the circumstances of the case, and which will enable the trier
to arrive at a fair approximate estimate of loss is sufficient proof. '" MBF Corp., 663 So. 2d at 599
(quoting Koehring Co. V. Hyde Construction Co., 254 Miss. 214, 251, 178 So. 2d 838, 853 (1965)).
While this is true, a damage award cannot be based on mere speculation. Cenac, 609 So. 2d at 1271-
72. As far as the issue of damages, the methodology used to compute these damages is questionable.
The calculations were all done internally by Flexible Flyer, no adjustments were made for quantities
ordered, seasons in which the goods were ordered, or differences in "set-up" charges and no market
studies were conducted. Flexible Flyer chose the lowest comparable price for a calendar year and
even admitted to an error of double skewing. Flexible Flyer even compared prices from vendors who
shipped to another plant. Based on the internal calculations, Flexible Flyer contends the total
overcharge, including interest at 9% is $460,467.47. Given the suspect nature of how Flexible Flyer
tried to prove its damages, it is certainly reasonable for the trial court to conclude that Flexible Flyer
has not met its burden of proof as to any damages that resulted from Kellerman's and Oswalt's
separate business relationship. Therefore, this Court finds that the judgment of the lower court was
not clearly erroneous or against the overwhelming weight of the evidence.
III. WHETHER THE TRIAL COURT ERRED IN REFUSING TO ALLOW APPELLANT
TO AMEND THE PLEADINGS TO CONFORM TO THE PROOF TO ADD THE THEORY
OF COMMERCIAL BRIBERY.
¶17. This Court has stated that "'[m]otions for leave to amend are left to the sound discretion of the
trial court. This Court reviews such determinations under an abuse of discretion standard and unless
convinced that the trial judge abused his discretion, we are without authority to reverse.'" Church v.
Massey, 697 So. 2d 407, 413 (Miss. 1997) (quoting McCarty v. Kellum, 667 So. 2d 1277(Miss.
1995)). This Court has consistently held that leave to amend is left to the sound discretion of the trial
judge. Bourn v. Tomlinson Interest, Inc., 456 So. 2d 747, 749 (Miss. 1984)("authority to reverse
only where we are convinced that the trial judge abused his discretion"); McDonald v. Holmes, 595
So. 2d 434 (Miss. 1992); Hester v. Bandy, 627 So. 2d 833 (Miss. 1993); Simmons v. Thompson
Machinery of Mississippi, Inc., 631 So. 2d 798 (Miss. 1994). However, the court is to be liberal in
allowing a party to amend when justice so requires. Broadhead v. Terpening, 611 So. 2d 949, 953
(Miss. 1992); Red Enterprises, Inc. v. Peashooter, Inc., 455 So. 2d 793, 796 (Miss. 1984). The
procedure for amending the pleadings to conform to the proof is governed by Mississippi Rules of
Civil Procedure 15(b). This rule states in part:
When issues not raised by the pleadings are tried by expressed or implied consent of the parties,
they shall be treated in all respects as if they had been raised in the pleadings. Such amendment
of the pleadings as may be necessary to cause them to conform to the evidence and to raise
these issues may be made upon motion of any party at any time, even after judgment; but failure
so to amend does not affect the result of the trial on these issues. . . . The court is to be liberal
in granting permission to amend when justice so requires.
Miss. R.Civ. P. 15(b).
¶18. Flexible Flyer argues that the issue of commercial bribery had long been recognized in this suit
although it had not been specifically pled, and since there was no surprise the denial of its motion to
amend was an abuse of discretion. In support of this argument it cites to several cases that have
allowed a pleading to be amended based on advance notice to the defendants. See Carmichael v.
Agur Realty Co., Inc., 574 So. 2d 603 (Miss. 1990) (allowing the enlargement of claims at trial to
include claims of a partnership or joint venture when the defendants noted the new theory but did not
object); Independent Life & Accident Ins. Co. v. Peavy, 528 So. 2d 1112, 1116-17 (Miss. 1988)
(pleadings sufficiently gave notice to defendant of claims advanced at trial and "[t]he court should be
liberal in granting permission to amend when justice so requires"); Broadhead, 611 So. 2d at 953
(defendants were on notice of exact relief being sought and were on notice to defend against claim
based on easement by necessity and there was no objection to plaintiff's motion to amend); Norris v.
Norris, 498 So. 2d 809, 812 (Miss. 1986) (finding the pleadings to be adequate but nevertheless the
issue of undue influence was tried by implied consent since there was no objection made by the
defendants). Flexible Flyer particularly relies on Presswood v. Cook, 658 So. 2d 859 (Miss. 1995) to
show that the trial court abused its discretion in denying its motion to amend. In Presswood, the
Court ruled that the defendant had impliedly consented to the introduction of a negligence theory by
the plaintiff, when the plaintiff implicitly amended her complaint by introducing the negligence issue
in her motion opposing summary judgment. Id. at 861.
¶19. Flexible Flyer contends that Target's motion for summary judgment specifically developed this
issue just like the plaintiff in Presswood. However, when looking at the motion it states that "Flex
Flyer contends that Target and Kellerman, and Mr. Oswalt engaged in a "kick-back" scheme whereby
Mr. Oswalt personally would receive payments from Mr. Kellerman, as Target's agent, in return for
his purchases of corrugated supplies on behalf of Flex Flyer from Target." This language does not
give any indication that Target understood that Flexible Flyer was asserting a cause of action for
commercial bribery since these same alleged facts support the claim of tortious interference with
contract and business relations. Likewise, Flexible Flyer's characterization of the actions of Target
and Kellerman as a "bastardized form of bribery" in its motion for summary judgment is not sufficient
to give notice that it was asserting a new cause of action for commercial bribery. This is especially
true when the claim supposedly long recognized was based on a criminal statute that has never been
asserted in a civil state law claim in Mississippi.
¶20. Flexible Flyer argues that Target never objected to any of the evidence being introduced at trial
that showed each element of the crime of commercial bribery, and therefore this Court should find
that the issue was tried by implied consent. In order to determine that an issue was tried by implied
consent both parties must be able to detect that a new issue was being litigated. McCarty v. Kellum,
667 So. 2d 1277, 1283-84 (Miss. 1995) (affirming the denial of plaintiff's motion to amend since the
issue of the use of forceps where there was CPD was not tried by implied consent, despite the
defense's failure to object, because the evidence was also supportive of the pleadings asserted in the
original complaint); See also Shipley v. Ferguson, 638 So. 2d 1295 (Miss. 1994) (reversing award of
a tax exemption to the father when the mother was not alerted that this issue not raised in the
pleadings was being litigated). In Setser v. Piazza, the action was an effort to reduce child support
payments and the issue of the child's emancipation was not raised in the pleadings. Setser v. Piazza,
644 So. 2d 1211 (Miss. 1994). This Court held the issue of emancipation was not tried by implied
consent. By way of explanation this Court stated, "[w]here the questions asked or the evidence
presented at trial are relevant to the issues actually raised in the pleadings, trial by implied consent
will not be found." Id. at 1217. Just as McCarty, Setser, and Shipley, all of the evidence Flexible
Flyer presented at trial was relevant to the claims actually raised in the pleadings (tortious
interference with contract and with business relations). Consequently, there was no reason for Target
and Kellerman to be alerted that a new, unpled theory of "commercial bribery" was being litigated at
trial. In addition there is ample reason for the judge to deny the motion based on a lack of due
diligence on the part of Flexible Flyer and prejudice to Target if the motion had been granted.
¶21. Although leave to amend should be freely granted when justice requires, there are limits. If there
is no prejudice to the defendant then it may be reversible error to deny a motion to amend. Red
Enterprises, Inc., 455 So. 2d at 795-96. But the comment to Rule 15 (b) states, "[i]n practice, an
amendment should be denied only if the amendment would cause actual prejudice to the opposite
party. 6 Wright & Miller, Federal Practice and Procedure, Civil § 1484 (1971)." Miss. R. Civ. P.
15(b) cmt. This Court also explained:
Freedom to grant leave to amend when justice so requires, as provided by the [Mississippi
Rules of Civil Procedure], diminishes as the litigation progresses.
Since prejudice to the opposing party is the key factor governing the court's discretion in
granting leave to amend a pleading, the court will ordinarily refuse to grant such permission
where the motion comes so late and in such circumstances that the right of the adverse party
will necessarily be prejudicially affected.
61A Am.Jur.2d Pleadings § 315 (1981) (emphasis added). It appears to this Court that the
timing of the motion to amend the pleadings [offered at the conclusion of trial] was desperately
late and potentially prejudicial to the Defendant.
McCarty, 667 So. 2d at 1284-85 (emphasis original). Likewise, in Hester v. Bandy, this Court
reversed the grant of plaintiff's motion to amend by explaining, " . . .amendment should not occur
when to do so would prejudice the defendant. Allowing the entire theory of liability to change at the
conclusion of a three-day trial seriously prejudiced [the defendant]. . . . Clairvoyance by the defense
would have been required to anticipate any contention beyond [what was pled]." Hester, 627 So. 2d
at 839.
¶22. Target argues they would have been prejudiced if the trial court had allowed the motion to
amend at the end of Flexible Flyer's presentation of its case and on the last day of a four-day trial. It
asserts that because some of the key witnesses were outside the scope of the circuit court's subpoena
power and therefore unavailable for trial, Target and Kellerman did not have the opportunity to
examine these witnesses on issues pertinent to a claim of commercial bribery at their depositions.
Target argues that Flexible Flyer had full knowledge of all the facts necessary to plead a cause of
action for commercial bribery well in advance of trial. This Court has addressed the lack of diligence
when it stated:
An application to amend should be prompt and not the result of an inexcusable want of
diligence. Osborne v. Vince, 240 Miss. 807, 129 So. 2d 345 (1961). Moreover, amendments
which are permitted in the latter stages of litigation may deny the important policy favoring
finality of judgments and the expeditious termination of litigation. Thus, liberality in permitting
amendments is not allowed to encourage delay, laches and negligence. Griffith, Mississippi
Chancery Practice § 392 (2d ed. 1950).
William Iselin & Co., Inc. v. Delta Auction & Real Estate Co., 433 So. 2d 911,913 (Miss. 1983).
¶23. In denying the motion to amend the complaint to conform the pleadings to the proof, the trial
court stated, "[t]hat would substantially change the allegations contained in this lawsuit at a time
when discovery has been already completed and over--and the trial has proceeded. That motion is
overruled. I don't care to hear argument on that one." From this statement one can deduce that the
judge believed that Flexible Flyer lacked due diligence in amending the complaint and Target and
Kellerman would be adversely prejudiced if the motion to amend was granted at such a late date.
Good faith and reasonable diligence is expected by all parties. This Court finds the trial court's denial
was not an abuse of discretion. Accordingly, this Court affirms the trial court as to this assignment of
error.
IV. WHETHER THE APPELLEE IS ENTITLED TO ATTORNEY FEES AND IF SO WAS
THE AWARD UNREASONABLE?
¶24. The circuit court awarded Target attorney fees on its counterclaim in the amount of $67,156.49
for the collection of an open account debt pursuant to Miss. Code Ann. § 11-53-81. The relevant
statute states in pertinent part:
When any person fails to pay an open account within thirty (30) days after receipt of written
demand therefor correctly setting forth the amount owed and an itemized statement of the
account in support thereof, that person shall be liable for reasonable attorney's fees to be set
by the judge for the prosecution and collection of such claim when judgment on the claim is
rendered in favor of the plaintiff.
Miss. Code Ann. § 11-53-81 (Supp. 1997) (emphasis added). There is no dispute between the parties
that the counter claim was for an open account.
¶25. Like the case of S & W Const. and Materials Co., Inc. v. Dravo Basic Materials Co., Inc. 813
F. Supp. 1214, 1226 (S.D. Miss. 1992), the only defense Flexible Flyer asserts is that it is entitled to
setoff of the open account based upon its claims against Target. The district court held that since the
defendant prevailed on the plaintiff's claims then the defendant is entitled to judgment on its
counterclaim. S & W Const. Co., 813 F. Supp. at 1226. Since judgment was rendered in favor of
Target on its counterclaim for a debt on an open account after a demand for payment was made prior
to filing its counterclaim, Target is the prevailing party and attorney fees were properly awarded.
¶26. In aiding the court in determining what a reasonable fee should be the legislature has provided:
In any action in which the court is authorized to award reasonable attorneys' fees, the court
shall not require the party seeking such fees to put on proof as to the reasonableness of the
amount sought, but shall make the award based on the information already before it and the
court's own opinion based on experience and observation; provided however, a party may, in its
discretion, place before the court other evidence as to the reasonableness of the amount of the
award, and the court may consider such evidence in making the award.
Miss. Code Ann. § 9-1-41 (1991). In consideration of the language of this statute, this Court stated,
"[t]he standard for review of the award of attorneys' fees is abuse of discretion, and such awards
must be supported by credible evidence." Regency Nissan, Inc. v. Jenkins, 678 So. 2d 95, 103
(Miss. 1995) (citing Young v. Huron Smith Oil Co., 564 So. 2d 36, 40 (Miss. 1990)).
¶27. Par argues that Target must provide a basis for the court in determining what a reasonable fee
should be. The judge addressed this argument at the closing of the trial when he stated, "[u]nder old
case law I think maybe Mr. McClanahan may have stated the case correctly in Mississippi, but the
statute changed that insofar as the establishment of attorney fees and prejudgment interest on open
account collections in the state." However, this Court has considered the issue of the reasonableness
of attorney fees after section 9-1-41 became effective and this Court requires the award to be based
on credible evidence. Regency Nissan, Inc., 678 So. 2d at 103.
¶28. Par cites to Doe v. Doe, 644 So. 2d 1199 (Miss. 1994) and McKee v. McKee, 418 So. 2d 764
(Miss. 1982) in support of its claim that the attorney fees awarded were unreasonable. These cases
are not controlling in reference to the award of attorney fees in an open account case. However, Par
does cite to DynaSteel Corp. v. Aztec Industries, Inc., 611 So. 2d 977 (Miss. 1992) which is
relevant to this discussion. In DynaSteel , this Court established a presumption "that an award of one-
third the amount of the indebtedness in collection matters is reasonable." DynaSteel Corp., 611 So.
2d at 987. But this presumption is rebuttable. Id. at 986. Par misreads DynaSteel as requiring proof
of the eight enumerated factors that have a bearing on the reasonableness of an attorney fee. This
Court does not require proof of each of these factors, instead this Court stated, "[u]nder the
circumstances of any given case, the judiciousness of adhering to this presumption may be impacted
by the common factors for determining the reasonableness of an attorneys' fee award . . . ." Id. at 986
(emphasis added). This does not mean these factors are not relevant, just that proof of them is not
required before a court awards attorney fees. This Court does not leave the reasonableness of an
award for attorneys' fees to the arbitrary discretion of the trial court. This Court in Cox v. Howard,
Weil, Labouisse, Friedrichs, Inc., reversed an award of attorney fees pursuant to Miss. Code Ann. §
11-53-81 because they were "in excess of any reasonable calculation." Cox v. Howard Weil,
Labouisse, Friedrichs, Inc., 619 So. 2d 908, 915 (Miss. 1993). In Cox , the trial court granted $69,
222.56 in attorney fees for the collection of an open account balance totaling $54,000.00. Id. This
Court remanded the case for further review by the trial court below and directed the trial court's
attention to the DynaSteel case for guidance. Id.
¶29. In the case sub judice the lower court specifically found that an award of one-third of the
amount collected was appropriate since Target had to defend against Flexible Flyer's claim in order to
collect the amount owed. Target presented testimony from attorney Pogue, an experienced trial
attorney in Mississippi, who stated that 25% of the amount collected is a reasonable attorneys' fee in
Mississippi for collection of an open account if suit is not filed and that 33 1/3% is appropriate if suit
is filed. We find that the attorneys' fee award in this case was not an abuse of discretion and was
reasonable in light of the time consumed in this case, the amount involved and the results obtained.
CONCLUSION
¶30. Based on the evidence, this Court finds the trial court's judgment as it relates to the claims
asserted by Par was not contrary to the overwhelming weight of the evidence. Target's counterclaim
is enforceable as a matter of law and the court's award of attorney fees to Target in the amount of
one-third of the amount collected on the open account was not an abuse of discretion. Finally, the
denial of Flexible Flyer's motion to amend the complaint to conform to the proof on the last day of a
four day trial was proper due to the lack of diligence on the part of Flexible Flyer and the prejudice
that could result if the motion to amend had been granted. Consequently, the judgment of the Circuit
Court should be affirmed in all respects.
¶31. AFFIRMED.
PRATHER, C.J., PITTMAN, P. J., BANKS, ROBERTS, SMITH, MILLS AND WALLER,
JJ., CONCUR. McRAE, J., CONCURS IN RESULT ONLY.