Airgo, Inc. v. Horizon Cargo Transport, Inc.

• Decision Date: 11 October 1983
• Docket Number: No. 8208,8208
• Citation: 66 Haw. 590,670 P.2d 1277
• Parties: AIRGO, INC., Plaintiff-Appellant, Cross-Appellee, v. HORIZON CARGO TRANSPORT, INC., and A.D. Shipley, Defendants-Appellees, Cross-Appellants.
• Court: Hawaii Supreme Court

Page 1277

670 P.2d 1277

66 Haw. 590

AIRGO, INC., Plaintiff-Appellant, Cross-Appellee, v. HORIZON CARGO TRANSPORT, INC., and A.D. Shipley Defendants-Appellees, Cross-Appellants.

No. 8208.

Supreme Court of Hawai'i.

Oct. 11, 1983.

Syllabus by the Court

1. Damage awards cannot be based on mere speculation, conjecture or surmise.

2. Doctrine of election of remedies is a rule of judicial administration or procedure and is not a rule of substantive law.

3. The rule that a plaintiff may not proceed on inconsistent claims for relief has no application in view of Rules 8(e)(2) and 18(a), Hawaii Rules of Civil Procedure, which provide for liberal joinder of even inconsistent claims.

4. A contract is ambiguous when the terms of the contract are reasonably susceptible to more than one meaning.

5. When the parties choose the law of a particular state to govern their contractual relationship and the chosen law has some nexus with the parties or the contract, that law will generally be applied.

6. Failure to comply with the requirements of Rule 3(b) of the Rules of the Supreme Court, concerning the format and content of opening briefs can result in dismissal of the appeal.

7. Questions not raised or properly raised in the trial court will be deemed waived on appeal.

Paul E. DiBianco, Honolulu, on briefs for Horizon Cargo and Shipley.

Felix A. Maciszewski, Honolulu, on briefs for Airgo, Inc.

Before LUM, C.J., and NAKAMURA, PADGETT, HAYASHI and WAKATSUKI, JJ.

PER CURIAM.

This is an appeal and cross-appeal in a contract case. Plaintiff-appellant/cross-appellee Airgo, Inc. (Airgo) sued defendants-appellees/cross-appellants Horizon Cargo Transport, Inc. (Horizon Cargo) and A.D. Shipley (Shipley) for breach of contract and Horizon Cargo counterclaimed. We affirm in part and reverse and remand in part.

Horizon Cargo conducted an interisland air freight service in Hawaii. Shipley is the president and general manager of Horizon Cargo. Horizon Cargo was created in August 1977 as the operating arm of Horizon Air Services, Ltd. (Horizon Air), a bankrupt corporation which had filed for reorganization under Chapter XI of the Bankruptcy Act. Horizon Cargo was formed to carry on the business of Horizon Air pursuant to a plan to repay creditors. Airgo is a Texas freight transport company. In February 1978, Horizon Cargo and Airgo entered into a sixty-day service agreement whereby Airgo agreed to provide, operate and maintain a DC-3 cargo plane for Horizon Cargo's use in its freight operations in Hawaii. In return, Horizon Cargo was to pay Airgo for services rendered. Shipley personally guaranteed certain obligations owed by Horizon Cargo to Airgo under this contract.

After this first service agreement was signed, Horizon Cargo contracted with a Japanese tour company called King Skyliner to conduct passenger flights on sightseeing tours of the islands. On March 31, 1978, a second service agreement was signed by Horizon Cargo and Airgo to accommodate the expansion of Horizon Cargo's business into the area of passenger flights. This contract provided for a six-month relationship which involved the use of a DC-3 passenger aircraft in addition to the DC-3 cargo aircraft. This second agreement was also guaranteed by Shipley. Both this agreement and the February agreement provided for interpretation of the contract in accordance with the laws of the State of Texas.

On July 14, 1978, Airgo terminated the contract alleging that Horizon Cargo had failed to pay for services rendered in accordance with the contract. Airgo filed a complaint in the First Circuit Court against Horizon Cargo and Shipley on July 26, 1978 for money owed under the March 31st agreement. Horizon Cargo alone counterclaimed alleging breach of contract and interference with contractual relations. On July 28, 1978, Horizon Cargo obtained a federal court injunction ¹ ordering Airgo to continue its operation under the service agreement and ordering Horizon Cargo to make payments to Airgo. Airgo performed under the contract until September 8, 1978, when the federal court order was lifted.

The jury, by special verdict, found Horizon Cargo and Shipley liable to Airgo for $67,438.54. On the counterclaim, the jury did not find any interference with the contract, but did award Horizon Cargo $32,500 for breach of contract. The trial court further awarded attorneys' fees and prejudgment interest to both parties.

This case is a complex one with numerous issues raised on appeal. We turn first to the appeal of plaintiff-appellant Airgo, Inc.

I.

Airgo's first contention is that the trial court erred in denying its motions for directed verdict and for judgment notwithstanding the verdict on the counterclaim. Airgo contends that there was insufficient evidence as a matter of law to support a finding of breach of contract on the counterclaim. More specifically, Airgo claims that Horizon Cargo's evidence was insufficient to furnish a basis for measuring its damages.

Upon a review of the record, we find that there was substantial testimony at trial concerning Airgo's failure properly to operate and maintain the aircraft pursuant to the service agreement. There was also testimony concerning loss of business revenue (including the loss of a Horizon Cargo contract) that resulted from the failure to properly operate and maintain the aircraft. Katsuyaki Kobayashi, for example, the general manager of King Skyliner, testified that the tours which were the subject of the Horizon Cargo/King Skyliner contract were often delayed or cancelled because of problems with the passenger plane. Kobayashi stated that because of these problems, King Skyliner stopped making payments under the contract to Horizon Cargo in July. The contract provided for a three-year relationship and was worth a guaranteed $32,500 a month.

The jury could have concluded on the evidence that the appellants' breaches with regard to operation and maintenance of the aircraft caused the loss of the King Skyliner contract. The damage award thus was not based on mere speculation, conjecture or surmise since the revenue loss for one month from that contract and the amount of the verdict were the same. There was thus sufficient evidence from which the jury could have, with reasonable certainty, reached its verdict on the counterclaim. Compare, Uyemura v. Wick, 57 Haw. 102, 551 P.2d 171 (1976); Ferreira v. Honolulu Star-Bulletin, 44 Haw. 567, 356 P.2d 651 (1960); Ailetcher v. Beneficial Finance Co., 2 Haw.App. 301, 632 P.2d 1071 (1981). The law of Texas is no different. Supply and Equipment Co., Inc. v. Phillips, 490 S.W.2d 913 (Tex.Civ.App.1972); Ezon v. Faulkner Construction Co., 422 S.W.2d 568 (Tex.Civ.App.1967); Atomic Fuel Extraction Corp. v. Slick's Estate, 386 S.W.2d 180 (Tex.Civ.App.1964); Jordan v. Cartwright, 347 S.W.2d 799 (Tex.Civ.App.1961).

Airgo also claims that its motions for directed verdict and for judgment notwithstanding the verdict should have been granted because the counterclaim for breach of contract was barred by Horizon Cargo's prior election of an equitable remedy. Airgo's contention is that because Horizon Cargo obtained injunctive relief to compel the performance of the contract, it is now precluded from asserting an action for damages for breach of the same contract.

We find that the doctrine of election of remedies is no bar in the circumstances of this case. To begin with, as has been said: "The doctrine is not a rule of substantive law but rather is a technical rule of procedure or judicial administration." 25 AM.JUR.2d, Election of Remedies § 1 at 647 (1966). Hawaii procedural law therefore governs this point. Under our liberalized rules of pleading and procedure a party may state "as many separate claims or defenses as he has regardless of consistency and whether based on legal or on equitable grounds or on both." Rule 8(e)(2), HRCP. Rule 18(a), HRCP, provides that a party may join "as many claims, legal or equitable, as he has against an opposing party." These rules allow liberal joinder even of inconsistent claims. The injunction to compel performance of the contract clearly did not bar a claim for damages because of breaches of it.

II.

Airgo contends that Instruction No. 5 was erroneously given to the jury. Instruction No. 5 provided:

In connection with the contracts entered into between the Plaintiff and the Defendants, whether the parties to the contracts gave them a particular construction is to be regarded by you in giving effect to the provisions of the contracts. The subsequent acts of the parties, showing the construction that they themselves have put upon the agreement, are to be considered by you for the purpose of assisting you in arriving at a determination of what the arrangement was between the parties.

Airgo claims that the service agreements were unambiguous on their face and that therefore any interpretation of the contracts must be based upon the language in the contracts, without resort to extrinsic evidence. A contract is ambiguous when the terms of the contract are reasonably susceptible to more than one...