AAA Uniform & Linen Supply v. Barefoot, Inc.

• Decision Date: 16 May 2000
• Citation: 17 S.W.3d 627
• Court: Missouri Court of Appeals
• Parties: (Mo.App. W.D. 2000) AAA Uniform and Linen Supply, Inc., Appellant, v. Barefoot, Inc., d/b/a Snake "N' Rooter of Kansas City, Respondent. WD57092 0

17 S.W.3d 627 (Mo.App. W.D. 2000)

AAA Uniform and Linen Supply, Inc., Appellant, v. Barefoot, Inc., d/b/a Snake "N' Rooter of Kansas City, Respondent.

WD57092

Missouri Court of Appeals Western District

05/16/2000

Appeal From: Circuit Court of Jackson County, Hon. Peggy Stevens McGraw

Counsel for Appellant: Alan B. Gallas

Counsel for Respondent: Anthony A. Stein

Opinion Summary: In the breach of contract action, the trial court misapplied the law when it determined that the parties had rescinded that contract by mutual consent. The letters exchanged between the parties failed to manifest their intent to abandon contract rights. Consequently, no mutual rescission of contract resulted. Further, the trial court exceeded its power because neither party's pleadings or evidence raised the issue of mutual rescission.

The judgment is reversed and the case is remanded for further proceedings.

Thomas H. Newton, Judge

AAA Uniform and Linen Supply, Inc. (AAA Uniform) sued Barefoot, Inc., d/b/a Snake 'N' Rooter of Kansas City (Barefoot) for balances due on its account and for breach of contract. After a court trial, AAA Uniform received judgment for $1,533.37 on the account action; Barefoot prevailed on the breach of contract action. AAA Uniform appeals the trial court's ruling that the contract had been rescinded by mutual consent. We reverse the judgment and remand the case for further proceedings.

I. Background and Procedural History

For years, Paul Heilman of AAA Uniform and Jeff Barefoot of Barefoot, were colleagues in the garment rental industry. When Mr. Barefoot acquired the drain cleaning and plumbing company in 1994, he contracted with Mr. Heilman for AAA Uniform to supply uniforms, towels, and mats.

In 1994 and 1996, AAA Uniform and Barefoot entered into written service rental agreements for three-year terms. Under the agreements, AAA Uniform provided Barefoot with weekly services by delivering clean uniforms, towels, and mats. The agreements provided for cash on delivery, but allowed for approval of a ledger account. Through special arrangements of the parties, Mr. Barefoot paid flat amounts each month and paid the additional amounts due at the end of the year. The flat monthly payments increased from $400 in 1994, to $600 in 1995, and to $700 in 1996.

Business relations between AAA Uniform and Barefoot eventually became strained. AAA Uniform responded to Barefoot's increased needs for uniforms, but the flat monthly payments left balances due at the end of the month. On numerous occasions, Mr. Heilman wrote Mr. Barefoot asking that the flat payments be increased. In early October 1997, Mr. Barefoot telephoned Mr. Heilman with complaints about the quality of the uniforms and the services. During that conversation, Mr. Heilman became angry and proposed picking up the rental merchandise from Barefoot if Mr. Barefoot did not like the services.

The business relationship between AAA Uniform and Barefoot ended after the exchange of letters. In AAA Uniform's certified letter dated October 9, 1997, Mr. Heilman acknowledged receipt of $1,400 from Barefoot, but noted a remaining past due balance of $1,092.76. The letter demanded payment of the balance due by October 21, 1997 to continue business with AAA Uniform, and specified that Barefoot's account would become cash on delivery on October 23, 1997 unless the balance due were paid in full. The letter concluded with a reference to Paragraph 4 of the 1996 rental service agreement. That provision allowed AAA Uniform to terminate the contract for any payment ten days overdue and to hold the customer liable for breach of contract. In Barefoot's responsive letter dated October 20, 1997, Mr. Barefoot reiterated his complaints about the services and notified Mr. Heilman that he could go ahead and discontinue the services as he had threatened. The letter noted that the rental merchandise was awaiting pick-up. AAA Uniform collected its merchandise and stored it in a warehouse. Barefoot engaged a new supplier for its uniforms.

In the action for breach of contract, AAA Uniform sought damages based on provisions of the 1996 rental service agreement. Paragraph 3 provided for liquidated damages by requiring the customer who cancelled the contract before its expiration to purchase of the rental inventory at thirty percent below the retail price and to pay lost profits of fifteen percent of the average weekly rental volume for the remaining weeks of the agreement. At the two-day court trial, Barefoot presented defenses of anticipatory repudiation, modification of the contract, lack of fair dealing, and unreasonable liquidated damages. After taking the case under advisement, the trial court concluded that a mutual rescission of the contract had occurred, and denied AAA Uniform's action for breach of contract. In the judgment, the trial court found that AAA Uniform's October 9th letter constituted an offer to rescind the contract, and that Barefoot's October 20th letter accepted that offer. The trial court then concluded that AAA Uniform was not entitled to liquidated damages for breach of contract. AAA Uniform appeals.

II. Standard of Review

Appellate review in this court-tried case is governed by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976): the trial court's judgment will be sustained by the appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Of significance here is the proviso in Murphy v. Carron that can indicate a reversal when the trial court misapplies the law. In this situation, the appellate court independently evaluates the...