Abercrombie & Fitch Stores, Inc. v. Penn Square Mall Ltd. P'ship

• Decision Date: 10 August 2018
• Docket Number: Case No. 116,008
• Citation: 425 P.3d 757
• Parties: ABERCROMBIE & FITCH STORES, INC., Plaintiff/Appellee, v. PENN SQUARE MALL LIMITED PARTNERSHIP, Defendant/Appellant, and John Does 1-10, Defendants.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

425 P.3d 757

ABERCROMBIE & FITCH STORES, INC., Plaintiff/Appellee,

v. PENN SQUARE MALL LIMITED PARTNERSHIP, Defendant/Appellant,andJohn Does 1-10, Defendants.

Case No. 116,008

Court of Civil Appeals of Oklahoma, Division No. 4.

Decided: August 10, 2018

Mandate Issued: September 5, 2018

Mark T. Steele, Scott F. Lehman, LATHAM, WAGNER, STEELE & LEHMAN, P.C., Tulsa, Oklahoma, for Plaintiff/Appellee

Thomas G. Wolfe, Catherine L. Campbell, Clayton D. Ketter, PHILLIPS MURRAH P.C., Oklahoma City, Oklahoma, for Defendant/Appellant

OPINION BY DEBORAH B. BARNES, PRESIDING JUDGE:

¶ 1 This case arises from a water leak in a roof drain line running above the ceiling of leased premises in a shopping mall. Abercrombie & Fitch Stores, Inc., the occupant of the leased premises, filed suit against Penn Square Mall Limited Partnership alleging Penn Square "had a contractual duty to maintain the mall's plumbing lines in good order, condition, and repair," and that Penn Square breached this duty. Abercrombie asserted theories of breach of contract and negligence against Penn Square, asserted that as a result of the water leak it "incurred substantial damages in cleanup, repair, lost merchandise, lost profits, and interruption to its business," and sought damages in excess of $300,000.¹

¶ 2 Following a jury trial, the jury found in Abercrombie's favor, though it also found Abercrombie to be contributorily negligent. The trial court's order memorializing the decision of the jury states:

After hearing the evidence and due deliberation, the jury returned with a unanimous verdict as follows:

1. Contribution negligence as to [Abercrombie] 40% and [Penn Square] 60%. Damages set in the sum of $243,000. The Court [therefore reduces] the damages by 40% of [Abercrombie's] contributory negligence and [finds] [Abercrombie's] damages to be $145,800.

2. Breach of contract in favor of [Abercrombie]. Damages set in the sum of $0.00.

The order concludes by stating that "judgment in all respects is awarded and entered in favor of [Abercrombie] as to its claim for negligence in the amount of $145,800, [and] its claim for breach of contract in the amount of $0.00[.]"

¶ 3 Penn Square appeals. In particular, Penn Square challenges the trial court's denial of its motion for directed verdict, and Penn Square also asserts on appeal that the trial court erred in its approval of certain jury instructions.

STANDARD OF REVIEW

¶ 4 In determining whether a trial court erred in denying a motion for directed verdict, "[w]e consider as true all evidence favorable to the non-moving party together with all inferences that may be reasonably drawn therefrom, and we disregard all conflicting evidence favorable to the moving party"; such a motion "should not be granted unless there is an entire absence of proof on a material issue." First Nat. Bank in Durant v. Honey Creek Entm't Corp. , 2002 OK 11, ¶ 8, 54 P.3d 100 (citation omitted).

¶ 5 "When reviewing jury instructions, we look at whether the probability arose that the jurors were misled and reached a different conclusion due to an error in the instruction given." CNA Ins. Co. v. Krueger, Inc., of Tulsa , 1997 OK 142, ¶ 14, 949 P.2d 676 (citation omitted).

In reviewing the propriety of given instructions, the instructions are to be viewed in whole rather than separately. And, where it appears that instructions taken as a whole do not establish that the jury was misled or that complaining parties' rights were prejudiced, the verdict will not be set aside. Instructions are sufficient when, considered as a whole, they present the law that is applicable to the issues.

Id. ¶ 15 (citation omitted).

ANALYSIS

I. A duty derived from a contractual relationship may properly form the basis of a negligence theory.

¶ 6 Penn Square asserts that the elements of duty and breach of duty in a negligence action² cannot be founded upon a duty derived from a contractual relationship. For example, Penn Square asserts that "to maintain a claim for negligence, a claimant must establish the breach of a duty that exists at common law" and that is "independent of the breach of contract." Penn Square asserts that if the duty in question would not exist apart from a contract or contractual relationship, then the only available theory is breach of contract. In this regard, Penn Square states that "Abercrombie utterly failed to introduce any evidence that Penn Square breached a duty independent of the breach of contract," and further states that

Abercrombie repeatedly makes reference [in its Answer Brief] to the contractual duty to keep plumbing lines in good order, condition, and repair — a duty that arises solely out of the Lease. If Penn Square failed to keep the lines in good order and repair, Abercrombie's only remedy would be under a breach of contract action.

Penn Square summarizes its argument as follows: "While Abercrombie's assertion that Penn Square failed to comply with the contractual obligation to keep the [water] lines in good order and repair may give rise to a claim for breach of contract, the breach of that contractual duty does not give rise to a tort claim."

¶ 7 However, the Oklahoma Supreme Court has explained that "[a]ccompanying every contract is a common-law duty to perform it with care, skill, reasonable experience and faithfulness the thing agreed to be done, and a negligent failure to observe any of these conditions is a tort, as well as a breach of contract ." Keel v. Titan Const. Corp. , 1981 OK 148, ¶ 14, 639 P.2d 1228 (emphasis added) (footnote omitted). In Finnell v. Seismic , 2003 OK 35, 67 P.3d 339, the Oklahoma Supreme Court similarly explained:

Oklahoma law has long recognized that an action for breach of contract and an action in tort may arise from the same set of facts. ... [I]nherent in every contract [is] a common-law duty to perform its obligations with care, skill, reasonable experience and faithfulness. A person injured by the substandard performance of a duty derived from a contractual relationship may rely on a breach-of-contract or tort theory, or both [.]³

Id . ¶ 13 (emphasis added) (footnotes omitted). See also Gaasch v. St. Paul Fire & Marine Ins. Co. , 2018 OK 12, ¶ 18, 412 P.3d 1151 ("An action for breach of contract and an action in tort may arise from the same set of facts and a person injured by the substandard performance of a duty derived from a contractual relationship may rely on a breach of contract or tort theory, or both." (citing, inter alia, Finnell ) ).⁴ Pursuant to the reasoning in Finnell and Keel , we reject Penn Square's argument that the duty derived from the parties' contractual relationship could not form the basis of Abercrombie's negligence theory.⁵

¶ 8 Moreover, the parties' contract expressly provides that claims for negligence are not waived. The contract provides that the parties "shall not be liable for, and the other party waives, all claims for damage to person and property sustained by the other party ... resulting from any accident or occurrence in or upon the demised premises or any part of the Shopping Center, except for the willful acts, negligence or default under this lease of a party or its agents and employees, and except for a party's failure to make repairs ...." (Emphasis added.)

¶ 9 Consequently, we conclude the trial court did not err in denying this portion of Penn Square's motion for directed verdict, and we conclude the trial court did not err in providing the jury with a negligence instruction.

II. The provision in the parties' contract excluding certain damages does not apply to damages ex delicto and, even if it did, no error occurred.

¶ 10 Penn Square points out that the parties' contract contains the following language: "In no event shall either party be liable for indirect or consequential damages."Cf. Black's Law Dictionary (10th ed. 2014) (Defining consequential damages as "[l]osses that do not flow directly and immediately from an injurious act but that result indirectly from the act. — Also termed indirect damages ."). Penn Square asserts that all of the damages claimed by Abercrombie were consequential damages and that only the costs required "to stop the leak are considered direct damages[.]" Penn Square asserts Abercrombie should therefore not have been awarded any damages.

¶ 11 Indeed, it appears Penn Square may have been successful in this regard because the jury awarded zero damages to Abercrombie for breach of contract. However, the jury did award damages for negligence, and we disagree with Penn Square to the extent it is arguing the limitation on damages contained in the parties' contract applies to the award of damages for negligence.

A breach of contract is a material failure of performance of a duty arising under or imposed by agreement. Although torts may be committed by parties to a contract, a tort is a violation of a duty imposed by law independent of contract. If the contract is merely the inducement which creates the occasion for the tort, the tort, not the contract, is the basis of the action. A common law duty to perform with care, skill, reasonable expediency, and faithfulness accompanies every contract. Negligent failure to observe any of these conditions will give rise to an action ex delicto as well as an action ex contractu.

Lewis v. Farmers Ins. Co. , 1983 OK 100, ¶ 5, 681 P.2d 67 (citing Okla. Nat. Gas Co. v. Pack , 1939 OK 475, 186 Okla. 330, 97 P.2d 768 ).⁶ As in the present case, "there may be a duty imposed by law, by reason of the relation of the parties," and "although the relation was created by contract," there remains "a broad distinction between causes of action arising ex contractu and ex delicto[.]" Pack , ¶ 11 (citation omitted). With regard to the latter, "damages may be recovered for all injuries of which the breach was the proximate cause." Id . ¶ 17 (citations omitted).

¶ 12 Nevertheless, contractual provisions may, under certain circumstances, restrict tort recovery. Indeed, in Oklahoma, parties may contract to...