Association Research and Development Corp. v. CNA Financial Corp.

• Decision Date: 06 May 1983
• Docket Number: Docket No. 52971
• Citation: 333 N.W.2d 206,123 Mich.App. 162
• Parties: ASSOCIATION RESEARCH AND DEVELOPMENT CORPORATION a/k/a ARDCO, a Delaware corporation, Plaintiff-Appellant and Counter Defendant-Appellant, v. CNA FINANCIAL CORPORATION, an Illinois corporation, Continental Casualty Company and Continental Assurance Company, Defendants-Appellees and Counter Plaintiffs-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 206

333 N.W.2d 206

123 Mich.App. 162

ASSOCIATION RESEARCH AND DEVELOPMENT CORPORATION a/k/a ARDCO, a Delaware corporation, Plaintiff-Appellant and Counter Defendant-Appellant, v. CNA FINANCIAL CORPORATION, an Illinois corporation Continental Casualty Company and Continental Assurance Company, Defendants-Appellees and Counter Plaintiffs-Appellees.

Docket No. 52971.

Court of Appeals of Michigan.

Submitted June 3, 1982.

Decided Feb. 9, 1983.

Released for Publication May 6, 1983.

Alexander Ritchie and Nederlander, Dodge & McCauley, P.C. by Patrick B. McCauley and Gary L. Visscher, Detroit, for plaintiff-appellant.

Denenberg, Tuffley, Thorpe, Bocan & Patrick by James A. Thorpe, Southfield, for defendants-appellees CNA Financial Corp., Continental Cas. Co. and Continental Assur. Co.

Dykhouse & Wise by Robert A. Marsac, Detroit, for defendant-appellee Peck Agency, Inc.

Before BRONSON, P.J., and MAHER and WARSHAWSKY, ^* JJ.

PER CURIAM.

Plaintiff Association Research and Development Corporation (ARDCO) appeals a judgment in its favor against CNA Financial Corporation, Continental Casualty Company and Continental Assurance Company (CNA), Peck Agency, Inc. and Peck Associates, Inc.

This lawsuit grows out of a business relationship between plaintiff and defendants beginning in the fall of 1971. In September, 1971, Florists Transworld Delivery Association (FTD) contacted Mr. Glenn Friedt for assistance in locating a new carrier for FTD's insurance program. Subsequently, Mr. Friedt brought Mr. Robert Reed into the project and together they formed ARDCO to service the FTD account. Mr. Reed then sought the help of Mr. Francis Peck, a principal of Peck Agency, Inc., a Detroit insurance agency. In early 1972, FTD, on the recommendation of plaintiff and Peck Agency, agreed to take on CNA as its carrier. Thereafter, the four companies maintained an ongoing business relationship for the purpose of administering the FTD account.

Over the next three years, relations soured between plaintiff, Peck Agency and CNA and in April, 1975, plaintiff brought this lawsuit. Plaintiff alleged four counts against Peck Agency and CNA: (I) breach of contract; (II) assumpsit, or implied contract; (III) intentional interference with an advantageous business relationship and (IV) business slander. During the trial, plaintiff discovered that in 1973 Mr. Peck left Peck Agency and began operating a new agency, Peck Associates, Inc. Upon plaintiff's motion, the trial court permitted amending the complaint to include Peck Associates as a defendant in all claims against Peck Agency. At this time, plaintiff also dropped Count IV.

At the close of plaintiff's proofs, the trial court granted several of the defendants' motions for directed verdicts. It granted a motion for directed verdict for the Peck defendants on Count III and for CNA on Counts I and II. The court also dismissed all counts against Peck Agency, ruling that the proper defendant was Peck Associates. Plaintiff then withdrew Count II against Peck Associates. Consequently, the only issues to go to the jury were Count I, breach of contract, against Peck Associates and Count III, intentional interference with an advantageous business relationship, against CNA.

The jury returned a verdict for plaintiff. It awarded $80,000 on Count I plus one-half court costs, attorney fees and costs and $2.00 on Count III plus one-half court costs, attorney fees and costs. Upon plaintiff's motion to enter judgment on the jury verdict or grant a new trial, the trial court ruled that the verdict should stand except for the award of attorney fees and costs. The judgment was entered accordingly.

Plaintiff raises four claims of error which we consider in order.

I

Plaintiff argues, first, that the trial court erred in deleting from the final judgment the jury's award of attorney fees and costs. The award of attorney fees and costs was indeed beyond the power of the jury. In general, an award of attorney fees is prohibited unless specifically authorized by statute. City of Centerline v. 37th District Court Judges, 74 Mich.App. 97, 103, 253 N.W.2d 669 (1977), aff'd 403 Mich. 595, 271 N.W.2d 526 (1978). The rule fails to apply only in unusual circumstances such as where the opposing party has committed unlawful acts. Fleischer v. Buccilli, 13 Mich.App. 135, 163 N.W.2d 637 (1968). No special circumstances existed in this case; therefore, the jury award of attorney fees and costs was improper.

The more important question, however, is the appropriate judicial response to this improper verdict. The court has several options: (1) delete the award of attorney fees and costs from the judgment; (2) instruct the jury that the award is not permitted by law and return them for further deliberations; or (3) order a new trial. We conclude that only the latter two options were available to the trial court in this case and that it erred in deleting the award from the final judgment.

The proper remedy for a defective verdict depends on the kind of defect present. Where a verdict is defective because it contains mere surplusage the court may remedy the problem by deleting the surplusage from the final judgment. Robertson & Wilson Scale & Supply Co. v. Richman, 212 Mich. 334, 180 N.W. 470 (1920); Rawson v. McElvaine, 49 Mich. 194, 13 N.W. 513 (1882). Even if the defect is not due to the presence of surplusage, the court may still alter the verdict itself so long as the court can ascertain the intent of the jury and the court's final judgment implements that intent. Naccarato v. Grob, 384 Mich. 248, 180 N.W.2d 788 (1970); Rabior v. Kelley, 194 Mich. 107, 116-117, 160 N.W. 392 (1916). In other situations, however, such as where the verdict is inconsistent, Harrington v. Velat, 395 Mich. 359, 235 N.W.2d 357 (1975); Farm Bureau Mutual Ins. Co. v. Sears, Roebuck & Co., 99 Mich.App. 763, 298 N.W.2d 634 (1980), or contains a remedy not authorized by law, McCormick v. Hawkins, 169 Mich. 641, 135 N.W. 1066 (1912); Rathbone v. Detroit United Railway, 187 Mich. 586, 154 N.W. 143 (1915), the trial court must either reinstruct the jury or order a new trial.

The trial court apparently believed that the award of attorney fees was surplusage and could be disregarded in entering the judgment. If the jury intended the award to compensate plaintiff only for its legal costs, the award would indeed be surplusage. However, the jury may have intended that the award ensure that plaintiff would have received the full amount of its compensatory damages, undiminished by legal costs. It is reasonable to suppose that, if the jury had been informed that it could not award attorney fees, it would have increased plaintiff's compensatory damages. For this reason, we do not believe the award of attorney fees and costs was surplusage. Nor do we find that the jury's intent was ascertainable. It is equally reasonable to assume that the jury, correctly informed, would have stuck to its original damage award in the conviction that that was all plaintiff deserved. The trial court, therefore, did not have the authority to delete the attorney fees and costs in the final judgment as either surplusage or consistent with the jury's ascertainable intent. The correct response was either to reinstruct the jury or order a new trial. The only available appellate remedy is to reverse the judgment and order a new trial. We adopt this remedy.

Because the other issues raised by appellant may arise at the new trial we shall address each issue in turn.

II

Plaintiff argues that the trial court erred in granting a directed verdict on the issue of the Peck defendants' tortious interference with plaintiff's business relationship with FTD. On appeal from the grant of a defendant's motion for a directed verdict, the question is whether plaintiff's proofs, viewed in a light most favorable to plaintiff, are sufficient on each element of the claim to justify submitting it to the jury. Patelczyk v. Olson, 95 Mich.App. 281, 289 N.W.2d 910 (1980). The elements of the tort of interference with an advantageous business relationship are (1) a valid business relationship (2) known to the defendant who (3) engaged in intentional conduct (4) causing the termination of that relationship resulting in (5) damages. Northern Plumbing & Heating, Inc. v. Henderson Brothers, Inc., 83 Mich.App. 84, 93, 268 N.W.2d 296 (1978), lv. den. 405 Mich. 845 (1979). In the instant case, the question is whether plaintiff produced evidence that the Peck defendants intentionally interfered with plaintiff's relationship with FTD sufficient to withstand a directed verdict.

Plaintiff points primarily to two pieces of evidence. First, on April 24, 1972, Mr. Peck wrote a letter to FTD stating that "regarding promotional material, CNA cannot, of course, go ahead with this until FTD executes a joint 3-year 'agent of record letter' directly to the Peck Agency, Inc. and ARDCO, as has been thoroughly discussed by all concerned and agreed upon prior to closing". Other testimony indicated, however, that neither ARDCO nor FTD had agreed to the joint agent of record letter and that as of the spring of 1972 no request for an agent of record letter had been made on behalf of Peck Agency.

Second, in June, 1972, FTD requested that ARDCO assume certain administrative duties then performed by FTD. ARDCO agreed and Continental found the arrangement satisfactory. Mr. Peck, however, objected strenuously to the transfer. As a result, FTD, Peck Agency and ARDCO negotiated an alternative method of handling the duties, embarrassing ARDCO.

Viewed in a light most favorable to plaintiff, this evidence would have justified a jury's finding that Peck Agency had intentionally interfered with plaintiff's business relationship with FTD. The trial court erred in granting defendant Peck Agency's motion for a directed verdict. ¹ These events, however, occurred well before Peck Associates was created in 1973. The evidence as to these...