DocketNumber： 86-9, 86-10
Judges： Thomas, Brown, Cardine, Urbigkit, MacY
Filed Date： 10/21/1986
Status： Precedential
Modified Date： 11/13/2024
These two cases have their origins in the same contract. We will first consider the facts relating to the dispute between plaintiffs Texas West Oil and Gas Corporation (Texas West) and Bob Johnson and defendant Oil Patch Sales and Rentals of Wyoming, Inc. (Oil Patch).
Texas West is in the business of exploring for, developing, and producing oil and gas. On June 1, 1981, Texas West agreed to purchase a drilling rig from Oil Patch. The contract provided for a $500,000 payment on the day of execution and four monthly payments of $750,000. The contract also stated that the price to be paid for the drilling rig was approximately $5.1 million with “exact figures to be made definite and certain by agreement of the parties, or if unable to be agreed upon, by arbitration, and is to be based upon actual costs of Seller as well as time involved in construction.” Finally, the contract provided that it was anticipated that the rig would be completed in October 1981.
Although Texas West paid the $3.5 million required by the contract, Oil Patch could not deliver the rig as the parties had anticipated because of problems with the delivery of the rig’s drawworks to Oil Patch. After the parties had discussed the problems with the drawworks, Oil Patch sent Texas West a letter on February 19, 1982, in which Oil Patch requested that Texas West select substitute drawworks, pay the additional cost for these substitute drawworks, and advance the balance of the contract. At the same time, Oil Patch offered the alternative of delivering the rig without the drawworks in exchange for the balance of the contract price less the cost of the drawworks. Texas West responded by stating that the delivery date of “ ‘during the first two weeks of October, 1981’ ” was crucial and that Oil Patch had failed to fulfill the contract. In addition, Texas West stated that the $5.1 million figure was only an approximation; that Oil Patch had not shown expenditures of nearly that amount; and that the contract price could be less than $5.1 million.
Texas West filed a complaint against Oil Patch in October 1982 asserting that Oil Patch had breached the contract by failing to complete and deliver the rig. The complaint sought possession of the rig as well as damages allegedly caused by the breach. Oil Patch answered and asserted that it was impossible to complete the rig with the drawworks originally set out in the contract and that Texas West had refused to specify substitute drawworks which it would accept and had repudiated the contract. Oil Patch counterclaimed for the balance of the purchase price — i.e., $5.1 million — less any setoffs and sought incidental damages it claimed to have suffered from Texas West’s repudiation.
After Oil Patch requested that the issue of the purchase price be submitted to arbitration, the parties entered into a stipulation in which they agreed to submit all legal and factual issues in the dispute to an arbitration panel. After a hearing in April 1984, the arbitration panel concluded that the contract price was $5.1 million with a provision in case of any overrun of costs beyond that amount. Because the rig was not completed, the panel awarded Oil Patch the contract price of $5.1 million minus the cost of completing the rig, which the panel found to be $1,133,000, and the down payment of $3.5 million.
Texas West moved in district court to vacate or modify the arbitration award, while Oil Patch asked for an order confirming the award. The district court determined that the award should not be set aside or modified (except for the $100,000
We are also presented with the dispute which, although connected with the contract between Oil Patch and Texas West, now involves as parties D.N. Fitzgerald and Texas West. Fitzgerald was not named in the original complaint filed by Texas West against Oil Patch, but he intervened because he claimed to hold a security interest in the inventory of Oil Patch, which included the rig Texas West sought to possess. After Fitzgerald intervened, Texas West amended its complaint joining Fitzgerald and others as defendants. In its amended complaint, Texas West alleged that Fitzgerald intentionally interfered with the contract between Oil Patch and itself, which caused Texas West to suffer damages.
Fitzgerald had been an original incorpo-rator and vice president of Oil Patch. As such he agreed to guarantee the corporation’s loans from First Interstate Bank of Casper, N.A. (Bank). Although he resigned as a director of Oil Patch in March 1981, the Bank did not release Fitzgerald from his guaranty of $500,000. In fact, in April 1982 Fitzgerald increased the guaranty to $1.1 million. This guaranty became important because Oil Patch borrowed approximately $1.1 million from the Bank as it worked on completing the rig for Texas West. In addition to Fitzgerald’s guaranty, in March 1982, the Bank also acquired a security interest in all of Oil Patch’s inventory and accounts receivable, which included the rig. By September 1982, the loans had become past due, and the Bank asked Fitzgerald to honor his guaranty. Fitzgerald did so and received the note and security interest previously held by the Bank.
Texas West asserts that Fitzgerald induced the Bank to take the lien on the rig. Then Fitzgerald assumed control over the disposition of the rig, requiring that additional money be paid under the contract between Oil Patch and Texas West in order to protect himself from liability on the guaranty. These actions induced Oil Patch to breach the contract by requiring more than the contract price before it would deliver the rig. These actions also form the basis for Texas West’s claim against Fitzgerald.
Texas West’s claim against Fitzgerald was tried before a jury which found that Fitzgerald had interfered with the contract between Oil Patch and Texas West. The jury also found that as a result Texas West suffered damages of $4 million. Fitzgerald moved for a judgment notwithstanding the verdict (JNOV) or alternatively for a new trial or remittitur. The trial court denied the motion for JNOV but granted the motion for a new trial unless Texas West consented to a remittitur of $3,431,675. Texas West has appealed from this order, and Fitzgerald has taken a cross-appeal from the portion of the order denying his motion for JNOV.
ARBITRATION AWARD
The order of the district court affirming the arbitration award is affirmed.
The motion of Texas West merely stated that the arbitration award should be vacated or modified for any and all reasons allowed or contemplated by law.
According to the brief of Texas West filed in the district court in support of its motion, Texas West contended that the award should be set aside because it is a manifest mistake of law to award full profit on a contract which the seller failed to perform. In the alternative, Texas West contended that the award should be modified (1) to reduce the award by $226,000, which it claims is the ratio of profit for the portion of the rig not completed; (2) to reduce the award to reflect the $100,000 arithmetic error; (3) to strike the requirement for the payment of interest and attorney’s fees; and (4) to require Oil Patch to convey title to the incompleted oil rig to Texas West upon receiving payment of any unpaid balance owed by it.
In its brief in opposition to the motion of Texas West, Oil Patch contended that the
“An application to the court for an order shall be by motion which, unless made during a hearing or trial, shall be made in writing, [and] shall state with particularity the grounds therefor * * (Emphasis added.)
Oil Patch further contends in its brief that Texas West has failed to show any clear and convincing reason why the award should be vacated on any of the grounds enumerated in § l-36-114(a), W.S.1977, which provides that the court shall vacate an arbitration award where:
“(i) The award was procured by corruption, fraud or other undue means;
“(ii) There was evident partiality by an arbitrator appointed as a neutral, corruption of any of the arbitrators or misconduct prejudicing the rights of any party; “(iii) The arbitrators exceeded their powers;
“(iv) The arbitrators refused to postpone the hearing upon sufficient cause being shown, refused to hear evidence material to the controversy or otherwise conducted the hearing as to prejudice substantially the rights of a party; or “(v) There was no arbitration agreement, the issue was not adversely determined by a court as provided by law and the applicant did not participate in the arbitration hearing without raising the objection. The fact that the relief was such that it could not or would not be granted by a court of law or equity is not a ground for vacating or refusing to confirm the award.”
Although the court’s order contained a statement recognizing that Texas West’s motion did not specify the grounds for vacation or modification, it appears from the judge’s decision letter that the motion was not denied for such reason and that the order is based on counsels’ arguments tracking their briefs.
Texas West presents the following issues relating to the arbitration award for review before this Court:
“Did the District Court err in refusing to vacate the arbitration award as a manifest injustice where the buyer under a contract for sale is forced to pay full profit on a contract to a defaulting seller, who has refused to complete and deliver the contract goods under the terms of the contract?
“Did the [District [Cjourt err in confirming the arbitration award of interest at 2% above the First Interstate Bank of Casper, N.A., prime rate on an unliqui-dated sum for a period which began to run two (2) years prior to the arbitration award?
“Did the District Court err in not vacating the award of interest as being in excess of the arbitration panel’s authority?”
Oil Patch has addressed the issues of Texas West by restating them as follows:
“Did the Trial Court err in refusing to vacate the arbitration award as a manifest injustice?
“Did the District Court err in confirming the arbitration award of interest?
“Did the District Court err in not vacating the award of interest as being in excess of the arbitration panel’s authority?”
The second and third issues were not presented to the district court for disposition by trial brief or otherwise. It is, therefore, not appropriate for this Court to now determine whether or not the arbitration award should be vacated for those specific reasons. Dennis v. Dennis, Wyo., 675 P.2d 265 (1984).
In dealing with the first issue of Texas West, Oil Patch continues to contend that the only time an arbitration award can be vacated is when an applicant pleads and proves one of the grounds set out in § l-36-114(a). We do not agree. The statute merely states that the court must vacate the award if any of the grounds stated therein exists. The statute does not pro
“was obtained by fraud, corruption, behavior beyond the bounds of natural justice, excess of authority, or a manifest mistake of fact or law appearing upon the face of the award * * Riverton Valley Electric Association v. Pacific Power and Light Company, Wyo., 391 P.2d 489, 500 (1964).
We have also stated that arbitration is a method of voluntary settlement of disputes embedded in the public policy of Wyoming and is favored by this Court, that this Court is reluctant to disturb arbitrators’ just solutions to controversies, and that before we will upset a district court decision upholding an arbitration award, the applicant must have discharged its proof burden with clear and convincing evidence. Northern Supply Company v. Town of Greybull, Wyo., 560 P.2d 1172 (1977).
We have examined the arbitration panel’s award, and we are unable to find that Oil Patch realized any profit much less a profit of $226,000. To arrive at this amount we must find, as Texas West contends, that the $3.5 million it advanced equals the actual costs expended by Oil Patch to get the oil rig in the stage of construction in which it existed when the dispute arose. We are unable to do this any more than we could find that Oil Patch expended $1 million or $4 million. It may be that Oil Patch anticipated that it would make a profit when the rig was completed, but Texas West has wholly failed to draw our attention to any document or testimony which was before the arbitration panel indicating that Oil Patch did so. The contention of Texas West is based on an unwarranted assumption. For this reason we hold that Texas West has failed to sustain its burden and that the district court, therefore, did not err in entering judgment affirming the arbitration award.
CONTRACT INTERFERENCE
Texas West alleged that Fitzgerald intentionally interfered with the contract between Oil Patch and itself. This action was tried before a jury which returned a $4 million verdict in favor of Texas West. On appeal Fitzgerald presents the following issues:
“THE COURT ERRED IN NOT GRANTING A JUDGMENT NOTWITHSTANDING THE VERDICT IN THAT THERE WAS NO EVIDENCE FROM WHICH A JURY COULD FIND:
“A. That D.N. Fitzgerald interfered with the contract between Texas West Oil and Gas [Corporation and Oil Patch Sales and Rentals of Wyoming, Inc.; or
“B. The amount of any damages sustained as a result of any interference.
“THE COURT ERRED IN NOT GRANTING A JUDGMENT NOTWITHSTANDING THE VERDICT IN THAT THE INTERVENOR PRESENTED [A] DEFENSE WHICH ENTITLED HIM TO JUDGMENT AS A MATTER OF LAW.”
Texas West also presents the following issue relating to damages for contract interference:
“Did the District Court err in applying an incorrect legal standard in determining that the jury verdict against the in-tervenor, D.N. Fitzgerald, was excessive and shocked the conscience of the Court?”
In order to establish the claim of tortious interference with a contract, the plaintiff must prove the following elements: (1) the existence of the contract; (2) the defendant’s knowledge of the contract; (3) intentional interference with the plaintiff’s contract without justification; and (4) resulting damages. Basin Electric Power Cooperative-Missouri Basin Power Project v. Howton, Wyo., 603 P.2d 402 (1979).
When making a determination of whether or not a trial court should have directed a verdict, this Court considers the evidence favorable to the party against whom the motion is directed and gives that
There being no question that a contract existed and that Fitzgerald had knowledge of it, we have carefully examined the record on appeal to determine whether Fitzgerald unjustifiably interfered with the contract and, if so, whether Texas West suffered damages as a result.
The evidence favorable to Texas West concerning Fitzgerald’s unjustifiable interference shows that even after problems developed with the delivery of the drawworks, the relationship between Texas West and Oil Patch was amicable. On February 19, 1982, however, Gordon Gibson of Oil Patch sent a letter to Texas West offering it the alternative of either paying the $1.6 million balance of the $5.1 million purchase price, less the cost of the drawworks, or paying the cost of the new drawworks, along with advancing the balance of the purchase price for the completed rig. Gibson testified that this was the first time the question of additional money was discussed between Texas West and Oil Patch. This additional money, according to Gibson, was to be applied toward the $508,000 which Oil Patch owed to the Bank on an unsecured loan guaranteed by Fitzgerald.
On February 11, 1982, John A. Milliken, the Bank’s loan officer, contacted Fitzgerald concerning Oil Patch’s obligations to the Bank and Fitzgerald’s guaranty. Fitzgerald asked the Bank to take a lien on the inventory (including the rig) and accounts receivable of Oil Patch. The Bank took the security, and during the month of April 1982, Fitzgerald increased his liability on the guaranty to $1.1 million. This new guaranty was given even though the Bank made no commitment to loan Oil Patch additional money or extend the time for any existing loans.
In the meantime, Texas West was attempting to finalize an agreement with a third party for a joint venture to finish the rig and put it to work. L.N. Dunnavant, president of Texas West, testified that on June 19, 1982, Gibson denied the existence of any lien on the rig which would prevent Texas West from taking the rig. Thereafter, Gibson admitted that a lien existed and that the matter was out of his hands. Dunnavant then attempted to speak with the person “ ‘who [was] calling the shots,’ ” and, as a result of a conversation he had with Tom Harries, one of the principals of Oil Patch, he contacted Fitzgerald who told him that in order to take the rig Texas West would have to pay the Bank the $508,000 and that there was no negotiation on that point.
We find from this evidence and the inferences that may be drawn therefrom that Fitzgerald intentionally and without justification interfered with the contract between Oil Patch and Texas West.
Having found that there was sufficient evidence presented to the jury to find that Fitzgerald unjustifiably interfered with the contract between Oil Patch and Texas West, we must now determine whether or not there was sufficient evidence presented to the jury to find that such actions damaged Texas West.
There was evidence presented to the jury that the market value of the rig without the drawworks was approximately $3.2 million during the times of the interference and that the rig would have been worth at least $4 million if Oil Patch had completed the rig with the drawworks. It is possible that the jury used this measure of damage when it returned its verdict of $4 million.
Texas West contends that it lost the rig as a result of Fitzgerald’s interference, and its damages, therefore, should be the market value of the rig.
The cases upon which Texas West relies concern market value as a measure of damage for the loss or destruction of personal property. Rocky Mountain Packing Co. v. Branney, Wyo., 393 P.2d 131 (1964); Rogers v. Hansen, Wyo., 361 P.2d 676 (1961). We are unable to conclude or infer from the evidence presented to the jury that Texas West lost the rig. The inference is that Fitzgerald interfered with the delivery of the rig to Texas West.
We have previously held that the measure of damages for intentional interference is the amount which will compensate for all of the detriment proximately caused by the breach of duty. Martin v. Wing, Wyo., 667 P.2d 1159 (1983).
Omer Bishop testified that he had access to a drawworks through one of his companies and that he and Dunnavant, on behalf of Texas West, attempted to negotiate a deal to complete the rig and put it to work. Bishop further testified that he was “dead serious” about the venture but, according to the testimony of Dunnavant, the deal was killed when Fitzgerald refused to allow the rig to be delivered before payment was made to release the lien on the rig.
The jury could have properly found that Fitzgerald’s interference was the proximate cause of Texas West and Bishop not getting together to complete and put the rig to work and that Texas West was damaged thereby. The jury could also have found, as Texas West contends, that Fitzgerald’s interference was the proximate cause of the nondelivery of the rig and that Texas West’s damage equaled the investment value of the rig.
Although the extent and the amount of damages which may have resulted from Fitzgerald’s interference are difficult to ascertain, we find that there was sufficient evidence presented to the jury for it to find that Texas West was damaged.
Fitzgerald’s defense is that “the taking of a Security Agreement for consideration is, as a matter of law, not interference of any contractual rights” and that he, therefore, should have been entitled to a directed verdict. It was the Bank which took the security agreement. Fitzgerald was the guarantor. We do not find as a matter of law that Fitzgerald’s position as a guarantor entitled him to induce Oil Patch to withhold delivery of the rig until Texas West made sufficient additional payments to protect him from liability on his guaranty.
We, therefore, hold that Fitzgerald’s defense is untenable and that the court did not err in refusing to grant a judgment for Fitzgerald notwithstanding the verdict.
REMITTITUR — NEW TRIAL
Texas West presents the following issues relating to a remittitur or new trial:
“Did the District Court abuse it’s [sic] discretion in ordering a remittitur or new trial?
“Did the District Court abuse it’s [sic] discretion in not ordering a new trial as to damages only, when the District Court expressly found that there was sufficient evidence to support the jury verdict finding liability against the intervenor D.N. Fitzgerald for interference with the Plaintiff’s contract?”
The power to order a new trial for excessive damages is committed to the sound discretion of the trial court. Cody v. Atkins, Wyo., 658 P.2d 59 (1983). The trial court also has authority to order a complete new trial or one limited to damages when the verdict is excessive. 11 Wright & Miller, Federal Practice and Procedure: Civil § 2815 (1973); Smith v. Blair, Wyo., 521 P.2d 581 (1974). The standard for appellate review of a trial judge’s order granting a new trial for an excessive damage verdict is whether the trial court abused its discretion. Taylor v. Washington Terminal Company, 409 F.2d 145 (D.C.Cir.), cert. denied 396 U.S. 835, 90 S.Ct. 93, 24 L.Ed.2d 85 (1969).
Texas West’s contention that the court abused its discretion in ordering a remit-titur or a new trial because it did not apply the market value as a standard of measuring damages is untenable. As we previously stated, this measure of damages is not applicable when the interference merely causes a delay in the delivery of personal property.
We find that it would be unfair to compel Texas West to risk another trial on all of the issues solely because the trial court found damages to be excessive. To do so when, as in this case, the issues of liability and damages can be separated without creating confusion, inconvenience, or prejudice to Fitzgerald is an abuse of the trial court’s discretion. Texas West should not be penalized for not consenting to a remittitur.
Although Rule 59(a), W.R.C.P., pertains to the authority of trial courts to remand for retrial on all or part of the issues, this Court possesses equivalent authority to order a partial new trial. Wheatland Irrigation District v. McGuire, Wyo., 562 P.2d 287 (1977).
The order confirming the arbitration award is affirmed, and the case is remanded for a new trial on the issue of damages only.
. This results in an award of $467,000. The arbitration panel miscalculated and stated that the award would be for $567,000. Neither party disputes that the panel meant $467,000.
. Motion for directed verdict, motion for judgment notwithstanding the verdict, and the court’s finding in its order and judgment.