Adams v. Lindblad Travel, Inc., 448
| Decision Date | 08 March 1984 |
| Docket Number | No. 448,D,448 |
| Citation | 730 F.2d 89 |
| Parties | Bruce ADAMS, Individually and d/b/a Southwest Safaris, Plaintiff-Appellant, v. LINDBLAD TRAVEL, INC., Special Expeditions, Inc., Defendants-Appellees, and Sven-Olof Lindblad, Defendant. ocket 83-7606. |
| Court | U.S. Court of Appeals — Second Circuit |
Roger C. Adams, New York City, for plaintiff-appellant.
Robert S. Cohen, New York City (Leonard W. Diamond, Lans, Feinberg & Cohen, New York City, of counsel), for defendants-appellees.
Before MESKILL, CARDAMONE and PIERCE, Circuit Judges.
In this breach of contract case plaintiff obtained a jury verdict for $7,650 in damages against defendants in the United States District Court for the Southern District of New York (Metzner, J.). Plaintiff has appealed claiming principally that the trial court's charge on the issue of damages incorrectly limited the amount he was entitled to recover.
Bruce Adams, d/b/a Southwest Safaris, is in the business of designing and conducting adventure tours. A comfortable chartered bus is not part of this tour package. For those who subscribe to Adams' tours of the Four Corners region--where the states of Colorado, New Mexico, Arizona and Utah meet--travel is by more imaginative means. Taking groups of five or less, Adams utilizes a helicopter, horse, jeep and river raft to show his clients America's Southwest. Defendant Lindblad Travel, Inc. is a prominent wholesaler of adventure tours, and its subsidiary, defendant Special Expeditions, Inc., promotes such tours within the United States. Since its beginnings in 1979, Special Expeditions has been managed by its president, defendant Sven Olof Lindblad.
Defendants sought out Adams in 1978 with a proposal for a joint business venture. According to the terms and conditions of an agreement reached in the fall of 1979, the parties were to develop a number of air tour programs for the Four Corners region to be conducted in 1980 and 1981. These programs, known as Special Expeditions' American Wing Safari, featured Adams as tour operator. Defendants, meanwhile, were to promote, market and sell the tours and pay Adams a set price per planeload of passengers (which in 1980 was $5,700 for "lodge" trips and $4,030 for "camping" trips). The specific itineraries, dates and prices of all tours would be mutually agreed upon by the parties in advance of sale, and it was agreed that the identity of Bruce Adams as founder of Southwest Safaris would be mentioned in all advertising and marketing materials.
During 1980 the American Wing Safari program ran smoothly. Defendants did in fact market and sell several five-passenger safaris, four of which actually departed. At the outset of negotiations for 1981, defendants expressed their dissatisfaction with the four-to-five passenger format. They insisted that each tour be increased to 20 passengers to make the venture more profitable. By letter to Adams of December 29, 1980 defendants proposed an itinerary for September 16, 1981, which required Adams to accommodate 20 passengers in groups of five passengers each. Adams rejected it. He asserted that safety considerations related to hazardous flying conditions at the South Rim Airport on the edge of the Grand Canyon resulting from its high altitude (thin air) and dangerous turbulence precluded an itinerary that required tightly scheduled landings with a fully loaded aircraft, i.e., the itinerary proposed by defendants. It soon became clear that the parties were nearing an impasse.
During the last week of January 1981 defendants sold their version of the September 16 itinerary to Eli International, Inc., a branch of the Yale University Alumni Association. The sale took place without Adams' prior knowledge or consent and violated the parties' earlier agreement that Adams and Lindblad mutually agree on itineraries, dates and prices in advance of sale. By letter dated January 30, 1981 defendants informed Adams that they had sold the September 16 itinerary, exactly as presented in their December 29 letter. On February 6 Adams telephoned Special Expeditions demanding an explanation. Since Sven Lindblad was out of the country, his executive secretary, Pamela Fingleton, spoke to Adams. She acknowledged the need for a quick resolution of the parties' differences and assured Adams that Lindblad would return his call.
Because of their need to assure an itinerary for Eli International, defendants had already begun to search for another tour operator. On February 4, 1981 Ms. Fingleton wrote to Patrick Conley, President of Wild & Scenic Inc., and requested details as to that company's ability to conduct tours of the Four Corners. Negotiations with Wild & Scenic continued through March 4 when Lindblad offered Conley the American Wing Safari tour, identical to the proposed September 16 itinerary he was still discussing with Adams. Meanwhile, defendants continued to take advantage of Adams' expertise and reputation. Specifically, they mailed out more than 11,000 newsletters on March 2, 1981 promoting the American Wing Safari, emphasizing that Adams, with extensive knowledge of the Southwest and a 10-year perfect flying safety record, would be conducting the aerial tours. In addition, and contrary to the original agreement, the newsletters failed to mention that Adams founded Southwest Safaris.
Because of defendants' sale of the September 16 itinerary without his knowledge and their insistence that he fly that itinerary with 20 passengers, Adams terminated the business relationship on March 5, 1981. As a result, he found himself in difficulties with respect to the 1981 season. Having relied entirely on defendants' agreement to promote his business, Adams was faced with the prospect of putting together a marketing campaign at the last minute. Consequently, from 1980 to 1981 the number of passengers he carried dropped drastically--from 134 to 57. Meanwhile, defendants continued blithely to appropriate the information and itineraries obtained by them from Adams and through Wild & Scenic conducted their own aerial tours of the Southwest. The proof at trial showed that during the summer of 1981 defendants carried 34 passengers they otherwise would have referred to Adams.
From this background the present litigation ensued in district court. Adams made a number of claims, including, breach of contract, misappropriation of business information, unjust enrichment and breach of fiduciary duty. The district court judge dismissed the fiduciary breach claim at trial as well as all claims against Sven Lindblad individually. It also ruled that the evidence produced was insufficient to support Adams' claim in quantum meruit. The trial court submitted the breach of contract and misappropriation of business information causes of action to the jury. In response to special interrogatories, the jury found that defendants breached their contract with Adams, but did not misappropriate business information. Accordingly, it awarded Adams $7,650 as damages for breach of contract. This amount was the top limit imposed by the court's charge. On appeal Adams argues that the district court erred by: limiting contract damages to $7,650; refusing to allow an award of pre-judgment interest; refusing to charge the jury on his claim in quantum meruit; and holding as a matter of law that he could not collect damages on an agency theory. We find merit only as to the first two contentions and remand this case to the district court for reconsideration solely on the issue of damages. In all other respects the judgment is affirmed.
Since defendants do not dispute the jury finding that defendants had breached the contract they had with Adams, liability is not an issue on appeal. With respect to damages, Adams claims that the district court's charge placing a ceiling of $7,650 on his contractual recovery was erroneous. The way in which the district court arrived at this figure was to make the following calculations:
(1) $57,000 Adams' actual 1981 gross revenues (57 passengers
carried by Adams at $1,000 each)
(2) k 32,060 Adams' lost revenues (8 planeloads at $4,060 each
-------------- --mathematical error should be $32,480)
(3) 89,060 Adams' projected gross revenues but for the breach
(4) - 24,000 Average fixed costs
--------------
(5) 65,060
(6) - 44,530 Variable costs (one-half of gross revenues)
--------------
(7) $20,530 divided by 91 * passengers = $225 net profit/
per passenger
x34 passengers
----
$7650 Lost Profits
* (91 passengers are the 57 Adams actually carried in 1981 plus the 34
referredd to Wild & Scenic by defendants.)
In essence, the district court was attempting to determine how much Adams would have profited from handling the eight additional planeloads (or 34 customers) referred by defendants to Wild & Scenic in 1981.
Adams challenges the court's figures on several grounds. First, he argues that the district court should have instructed the jury to award Adams the difference between his profits in 1979--the year prior to his agreement with defendants--and his losses in 1981. Second, he claims that the formula used by the court was flawed because it mistakenly took into account Adams' fixed costs. Finally, he asserts that...
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