1998 -NMCA- 112, Diversey Corp. v. Chem-Source Corp.

Decision Date06 July 1998
Docket NumberNo. 17671,CHEM-SOURCE,17671
Citation125 N.M. 748,965 P.2d 332,1998 NMCA 112
Parties, 1998 -NMCA- 112 DIVERSEY CORPORATION, Plaintiff-Counterdefendant-Appellant, v.CORPORATION and Curtis Hughes, Defendants-Counterplaintiffs-Appellees.
CourtCourt of Appeals of New Mexico

FLORES, Judge.

¶1 Plaintiff-Counterdefendant-Appellant, Diversey Corporation (Diversey), appeals from a judgment entered after a jury awarded Diversey $6,590.20 on a claim for unpaid debt, but also awarded Defendants-Counterplaintiffs-Appellees, Chem-Source Corporation and its owner, Curtis Hughes (collectively, Chem-Source), $128,500 for tortious interference with existing and prospective contractual relations "and/or" $385,500 for violation of the Unfair Practices Act (UPA). See NMSA 1978, §§ 57-12-1 to -22 (1967, as amended through 1995). Although the jury found that Diversey's conduct was willful, Diversey does not appeal this finding or the judge's award of increased damages for willfulness.

¶2 Diversey raises five issues on appeal: (1) whether jury instruction number five was an incorrect statement of the law; (2) whether the court erred in refusing Diversey's requested defamation instructions; (3) whether the court erred in allowing Dr. Parker, the expert for Chem-Source, to testify concerning lost profits without first establishing that Diversey caused the claimed losses; (4) whether the jury's damage verdict was excessive (because the jury relied on a mistaken measure of damages and because the jury failed to reduce the award to present value); and (5) whether the final verdict form, which included "and/or" language, resulted in double recovery. For the following reasons, we affirm on all but one issue. We remand solely to allow the trial court to enter a judgment that reduces the jury's award of future lost profits to present value.


¶3 Evidence and testimony at trial adduced the following information. Some of the facts set out below were disputed by the parties. Chem-Source, a corporation owned by Curtis Hughes (Hughes), distributed commercial cleaning supplies for Rocky Mountain Proclean (Proclean), a manufacturer. Prior to starting Chem-Source, Hughes was a successful distributor of commercial cleaning products for other companies. While distributing Proclean products, Randy Blackburn (Blackburn), a Proclean sales representative, provided sales and servicing assistance to Chem-Source.

¶4 In 1990, Diversey purchased Proclean. At that time, Diversey assumed all of Proclean's contractual rights and obligations, including contract rights and obligations with distributors. Blackburn remained with Diversey until 1992. Once Blackburn left Diversey, Chem-Source no longer received assistance from Diversey regarding sales and servicing its accounts.

¶5 When Diversey acquired Proclean, Hughes believed that Chem-Source would be able to distribute, not only the Proclean line of products, but also the superior Diversey line. However, this never happened. Initially, Mike Downey (Downey), a Diversey district manager, told Blackburn that Chem-Source would be able to distribute the Diversey line of products. However, when Chem-Source actually ordered Diversey products, Diversey took the order but never shipped the products. Later, Downey and Tom Fisher (Fisher), Diversey's sales area supervisor, told Blackburn that if Chem-Source clients wanted Diversey products, they would have to go to another distributor because Hughes was not going to be a distributor for Diversey products. Downey and Fisher also told Blackburn that Chem-Source was not important business for Diversey, and that if Blackburn wanted to receive his commissions, he would have to make sales through distributors other than Hughes because he would not be paid for the Chem-Source sales.

¶6 Even Hughes' orders of non-Diversey products, such as Proclean products, were not being delivered promptly, so that Chem-Source's customer service suffered. In addition, Diversey began charging Chem-Source retail prices rather than distributor prices. As a consequence of this billing problem, Diversey would put Chem-Source's account on hold until the billing problems were resolved. However, while the account was on hold, Diversey would not ship any of Chem-Source's orders. This, in turn, delayed delivery to Chem-Source's clients and limited Chem-Source's opportunity to make new sales or to service existing accounts.

¶7 Diversey required Hughes to reveal confidential information on the types and quantities of products he was distributing, as well as customer lists with sales information. Hughes considered this information confidential and did not want to reveal it to Diversey because the two companies were competing for the same customers. Hughes did eventually turn over the information in order to continue receiving shipments of cleaning products.

¶8 During the same time period Hughes discovered that Chem-Source dispensers and equipment were removed from his client's businesses without his knowledge, that they were replaced with Diversey dispensers and equipment, and that Diversey was "blitzing" his clients. The blitzing caused Chem-Source to lose at least six of its best customers. The blitz involved Diversey representatives going to Chem-Source customers and telling them falsely that they would need to find a new distributor because Chem-Source would no longer be in business. Diversey representatives approached Sharon DiVasto and Steve Armbrecht, two restaurant owners who did business with Chem-Source, and told them that Diversey was going to force Curtis Hughes out of business. In addition, Hughes testified that Diversey told other Chem-Source clients that Chem-Source was going bankrupt. The blitz was an organized and concerted campaign by Diversey representatives to spread misleading information about Chem-Source to its customers in an attempt to convince those customers to use Diversey as their supplier.

¶9 In late 1991 or early 1992, Chem-Source purchased a second business, Dynachem. In some ways, Dynachem was operated as a separate business from Chem-Source. For example, the Dynachem accounts were maintained in a separate accounting system on Chem-Source's computer. Dynachem had its own phone number and separate advertising. In other ways, Dynachem and Chem-Source were operated as one business: both were operated out of the same office, operated with the same assets and capital, and operated under the management of Hughes. Moreover, the two companies filed the same tax returns. Hughes intended to merge the two companies in order to sell the more profitable products, but the problems caused by Diversey prevented this merger.

¶10 In the spring of 1993, Hughes found another supplier and stopped distributing Proclean products for Diversey. Thereafter, Diversey sued Chem-Source for the amount due on its account, and Chem-Source counterclaimed for breach of contract, tortious interference with contractual relations, and violation of the UPA. Diversey appeals the jury's verdict on the tortious interference and UPA claims.

A. Jury Instruction Number Five Was Not in Error

¶11 Diversey argues that jury instruction number five is an incorrect statement of the law because it erroneously defines a simple breach of contract as an unfair trade practice, and because it does not include four elements specifically required by our Supreme Court to prove a violation of the UPA. See Ashlock v. Sunwest Bank, 107 N.M. 100, 101, 753 P.2d 346, 347 (1988), overruled on other grounds by Gonzales v. Surgidev Corp., 120 N.M. 133, 140, 899 P.2d 576, 583 (1995). We uphold the instruction as given because Diversey failed to preserve the errors it now claims plague this instruction, and because the instruction, read as a whole, adequately states the law.

1. Diversey Failed to Preserve Claimed Errors in Jury Instruction Number Five

¶12 Absent fundamental error, or questions involving general public interest or jurisdiction, an appellate court will not review claimed errors unless they were preserved for review. See Rule 12-216 NMRA 1998. The party claiming error must have raised the issue below clearly, see Shelley v. Norris, 73 N.M. 148, 152, 386 P.2d 243, 245 (1963), and have invoked a ruling by the court, see Rule 12-216(A), thereby giving the trial court an opportunity to correct any error, see Garcia v. LaFarge, 119 N.M. 532, 540, 893 P.2d 428, 436 (1995).

¶13 Diversey's first argument is that the instruction as given improperly defines breach of contract as an unfair trade practice. See Stevenson v. Louis Dreyfus Corp., 112 N.M. 97, 99, 811 P.2d 1308, 1310 (1991) (breach of contract without misrepresentation is not necessarily a violation of UPA). Although we acknowledge that Diversey attempted to bring this alleged error to the trial court's attention, we nevertheless hold that Diversey failed to preserve the issue. Diversey first objected to this instruction as it was originally drafted. In specific response to Diversey's objection, the trial court amended the instruction to include "knowingly made misrepresentations of any kind." Diversey did not object further. The following day, however, Diversey again objected to the instruction, stating that "[t]he Unfair Practices Act requires [the breach to] be falsely promised and knowingly failure to deliver." The trial judge responded that the original amendment resolved the problem and that she would give the instruction as amended. At that time, Diversey should have clarified its objection by stating that the instruction, even as amended, was ambiguous. This would have alerted the trial judge that Diversey was not satisfied with the amendment and...

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