Acme Cigarette Services, Inc. v. Gallegos

• Decision Date: 28 March 1978
• Docket Number: No. 3086,3086
• Parties: ACME CIGARETTE SERVICES, INC., a New Mexico Corporation, Plaintiff-Appellee, v. Oliver GALLEGOS, d/b/a Oliver's Bar and Bill Estes, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

Page 885

577 P.2d 885

91 N.M. 577

ACME CIGARETTE SERVICES, INC., a New Mexico Corporation, Plaintiff-Appellee, v. Oliver GALLEGOS, d/b/a Oliver's Bar and Bill Estes,

Defendant-Appellant.

No. 3086.

Court of Appeals of New Mexico.

March 28, 1978.

Zenon F. Myszkowski, Marchiondo & Berry, P. A., Albuquerque, for defendant-appellant.

Charles N. Glass, Threet, Threet, Glass & King, Albuquerque, for plaintiff-appellee.

OPINION

SUTIN, Judge.

Plaintiff, Acme, and defendant, Estes, are competitors in the vending machine business. Acme sued Estes for damages because Estes induced one of Acme's contractual customers, Gallegos, to terminate a concession lease with Acme. Thereafter, Estes installed his own vending machines in Gallegos' property. From a judgment for Acme, Estes appeals. We affirm.

On May 17, 1974, Acme and Oliver Gallegos, d/b/a Oliver's Bar, executed an exclusive three-year concession lease for vending machines that Acme installed in Gallegos' bar. Sometime prior to May 9, 1975, Estes and Gallegos discussed the replacement of Acme's vending machines with those of Estes, and a question concerning the validity of the contract between Acme and Gallegos arose. Gallegos then gave his concession lease to Estes who employed a lawyer to determine its validity. The lawyer, selected and paid by Estes, advised Estes that the Gallegos' concession lease was unenforceable. Estes then advised Gallegos that he did not have to keep his agreement with Acme.

Gallegos notified Acme on May 9, 1975 that he was terminating the lease concession and demanded Acme's equipment be removed from his property. Acme complied. Estes then paid Gallegos $1,000.00 and installed his vending machines in Gallegos' property.

Acme sued Gallegos for breach of contract and, in an amended complaint, plaintiff joined Estes, seeking damages from Estes for wrongfully inducing Gallegos to breach his agreement with Acme.

The trial court dismissed Gallegos and held that Acme's only remedy against Gallegos was specific performance. However, the court awarded Acme damages against Estes for tortious conduct in the sum of $8,204.29. These damages were calculated from Acme's proof of lost profits less depreciation, taxes, maintenance, labor, mitigation of damages. The trial court also took into account Acme's losses from the voluntary removal by Acme of a second cigarette vending machine.

Estes raises three points on appeal: (1) The trial court abused its discretion by awarding Acme damages without substantial evidence to support the award; (2) The contract was void for lack of mutuality; and (3) Estes did not intentionally induce a breach of contract.

A. Lawyers should read and comply with Rule 9(m) on "Statement of Proceedings."

Before answer is made to Estes' claims, we admonish lawyers once again to read and comply with Rules Governing Appeals. This is a chronic illness. If it continues, this Court may refrain from deciding issues raised on appeal.

Rule 9(m) of the Rules Governing Appeals (§ 21-12-9(m), N.M.S.A.1953 (Repl.Vol. 4, 1975 Supp.)) governs "Statement of Proceedings." It reads in pertinent part:

The statement of proceedings shall contain the following:

(1) A brief summary of such portions of the pleadings and rulings of the court thereon as are necessary to an understanding of the issues material to the review. . . .

(2) If the trial court has made findings of facts, a concise, chronological summary of such findings as are material to the review with appropriate references to the transcript. . . .

Defendant's statement of proceedings does not refer to pleadings nor does it contain a concise, chronological summary of the findings material to review. Not only does it contain evidence and argument, but also, it challenges the failure of the trial court to make findings submitted as well as conclusions of law made by the trial court. Caution and criticism in this regard have been stated by the appellate court. See, cases collected in the concurring opinion of Trujillo v. Beaty (Ct.App.) No. 3050, 91 N.M. 533, 577 P.2d 431, decided February 21, 1978. The proper place for matters extraneous to the "Statement of Proceedings" is in the "argument." B. The trial court did not abuse its discretion in awarding damages.

Estes claims the trial court abused its discretion in two respects:

(1) By relying entirely on Acme's Exhibit 2 for proof of damages, and

(2) By entering judgment for Acme when Acme failed to prove an attempt to mitigate damages.

" An abuse of discretion is said to occur when the court exceeds the bounds of reason, all the circumstances before it being considered." Independent Steel & Wire Co. v. New Mexico Cent. R. Co., 25 N.M. 160, 165-166, 178 P. 842, 844 (1918). To reverse a trial court, there must be a clear abuse of discretion. Dunham-Bush, Inc. v. Palkovic, 84 N.M. 547, 505 P.2d 1223 (1973). Neither of these circumstances exist in the instant case.

First, Acme's Exhibit 2 was a computer print-out which depicted both the past and projected profits on each machine installed on Gallegos' property. The trial court found:

12. After allowing for depreciation, taxes, maintenance, labor, and mitigation of damages and disallowing any recovery for losses from the removal of a second cigarette vending machine, Acme established lost profits from the machines at the Gallegos location for the remainder of the contract period in the sum of $8,000.00 (sic) ($8,204.29).

Not only did the trial court rely on Exhibit 2 but the court also heard Acme's zone manager's testimony regarding the computation shown on Exhibit 2. The manager stated that the total projected lost profits, less commission, merchandise and taxes would be $17,980.82, the amount shown on Exhibit 2. This amount was based partially on what the actual profit on each machine had been prior to Gallegos' breach and partially on how well vending machines had been doing at this location. He also testified as to the average of what other comparable businesses in the area were doing and what new businesses would do. The trial court then reduced the above amount by $9,776.53, of which $1,776.53 was the projected loss on one cigarette vending machine deemed by the court not to have been covered by Gallegos' contract. The court deducted the remaining $8,000.00 for wages, salary, depreciation, and any mitigation that might have resulted had a restraining order been sought against Gallegos. At the close of the case, the court stated that the loss of $8,204.29 was predicated on all the testimony and all of the figures involved.

It is well settled that where a legal right to damages exists for breach of contract, and the plaintiff seeks to recover loss of business profits, the fact that the profits may not be computed with exact mathematical certainty does not deny a plaintiff the right to submit the issue of damages to the fact finder. J. R. Watkins Co. v. Eaker, 56 N.M. 385, 244 P.2d 540 (1952).

Estes, in his dispute over the amount of gross profits lost, relies solely on his analysis of plaintiff's Exhibit 2. This argument cannot defeat the trial court's finding. Its decision was based upon all the plaintiff's evidence. Because there was substantial evidence to support the trial court's finding the court did not abuse its discretion in arriving at the amount of the net profit lost by Acme.

Second, Estes contends that the trial court abused its discretion by entering judgment for Acme when Acme failed to prove that it attempted to mitigate damages. Estes argues that Acme did not seek an injunction against Gallegos to prevent him from operating Estes' vending machines, nor did Acme offer evidence showing whether the machines removed were subsequently leased to others or whether they remained in storage.

Mitigation of damages is an affirmative defense which the defendant must plead (Section 21-1-1(8)(c), N.M.S.A.1953 (Repl.Vol. 4)), and the burden of proof is on defendant to minimize the damages. State ex rel. Freeman v. Sierra County Board of Education, 49 N.M. 54, 157 P.2d 234 (1945). Estes neither pled mitigation as an affirmative defense nor introduced any evidence to support the defense. Estes did argue this matter before the court but argument alone does not create an issue on appeal. After argument was made, Estes presented his case. "To preserve a question for review it must appear that a ruling or decision by the trial court was fairly invoked . . . ." Section 21-12-11, N.M.S.A.1953 (Repl.Vol. 4, 1975 Supp.) The burden is on defendant to seek a ruling. Batchelor v. Charley, 74 N.M. 717, 398 P.2d 49 (1965); Entertainment Corporation of America v. Halberg, 69 N.M. 104, 364 P.2d 358 (1961). No ruling or decision was obtained from the trial court. Estes failed to preserve the question of mitigation of damages for review.

The trial court did not abuse its discretion.

C. The Gallegos contract was not void due to lack of mutuality of obligation.

The Gallegos' Exclusive Concession Lease contained this clause:

1. That this Lease is an EXCLUSIVE CONCESSION LEASE giving and granting to the LESSEE (plaintiff) the right, privilege and option of installing and operating all legal coin operated electrical phonographs, amusement devices, and cigarette machines, on the above described premises as the LESSEE (plaintiff) may from time to time determine to be required to best fill the needs and requirements for such machines at the above described premises. (Emphasis added.)

Estes argues that the agreement does not require Acme to place even one machine in the premises; that the lease does not obligate Acme in any manner. Therefore, due to lack of mutuality of obligation the contract was void. Estes is correct in his interpretation of the contract but he is wrong in his conclusion.

What is meant by "mutuality of obligation?" "The term 'Mutuality of obligation' is merely another way of saying that there must be a valid consideration." Keith v. City of Cave Springs, 233 Ark. 363, ...