Boyd v. Oscar Fisher Co.

• Decision Date: 10 May 1989
• Docket Number: No. H002678,H002678
• Citation: 210 Cal.App.3d 368,258 Cal.Rptr. 473
• Court: California Court of Appeals Court of Appeals
• Parties: , 9 UCC Rep.Serv.2d 69 Benton BOYD, Jr., Plaintiff and Appellant, v. OSCAR FISHER COMPANY, INC. Defendant and Respondent.

Page 473

258 Cal.Rptr. 473

210 Cal.App.3d 368, 9 UCC Rep.Serv.2d 69

Benton BOYD, Jr., Plaintiff and Appellant, v. OSCAR FISHER COMPANY, INC. Defendant and Respondent.

No. H002678.

Court of Appeal, Sixth District, California.

May 10, 1989.

Certified for Partial Publication ^*.

Marc G. Hynes, Sunnyvale, for plaintiff and appellant.

David E. Newhouse, San Jose, for defendant and respondent.

AGLIANO, Presiding Justice.

1. Introduction

Plaintiff Benton Boyd, Jr., doing business as Boyd's Photographic Processing Equipment Sales ("dealer") appeals from a postjudgment order awarding defendant Oscar Fisher Company, Inc. ("manufacturer") attorney fees of $38,730, prejudgment interest of 7 percent from the delinquent date of a number of invoices amounting to $8,652.89, and costs amounting to $17,876.65. Dealer brought this action alleging manufacturer had unjustifiably terminated an exclusive dealership agreement. Manufacturer cross-complained based on unpaid invoices. The jury awarded manufacturer $31,803.46 and gave dealer credit of $10,103.75 for labor and parts, yielding a total judgment for manufacturer of $21,699.71.

Dealer asserts the following alternative claims of error in the awards of fees, interest, and costs. Attorney fees are improper because manufacturer did not prevail on a contract, the contract did not provide for attorney fees, the terms of the contract limited recovery of attorney fees, and the fee award is unreasonable. Prejudgment interest is unwarranted because manufacturer's claims were unliquidated and the trial court used the wrong method of computing interest. Fees for an arbitrator and expert witnesses are unauthorized because their basis, Code of Civil Procedure section 1141.21, is inapplicable. Witness fees were improperly awarded to manufacturer's agents. We conclude below none of these contentions is persuasive and affirm the order as modified.

2. Trial evidence

There is no issue of the sufficiency of the evidence to support the judgment, but a review is important to understanding the nature of the litigation and the basis for the subsequent award of fees, interest, and costs. "[W]e resolve factual conflicts and draw inferences in support of the verdict." (Palmer v. Ted Stevens Honda, Inc. (1987) 193 Cal.App.3d 530, 536, 238 Cal.Rptr. 363.)

Dealer and manufacturer entered into a written agreement dated August 12, 1976, when dealer left manufacturer's employ in Newburgh, New York to relocate in the San Francisco, California area. In five years with manufacturer, dealer had gone from sales into management.

Oscar Fisher Company manufactures stainless steel photographic processing equipment including the Miniscomat, among other things. The Miniscomat, patented in 1969, develops images by pulling resin-coated paper over rolling drums which distribute chemical solutions over one side of the paper. The end result is a printed page. The Miniscomat is useful in photographic typesetting, an industry which grew rapidly in the late 1970's as "cold" type began to replace "hot" type printing. The Miniscomat was originally produced for use with a Merganthaler Linotype machine, but is also compatible with newer photo typesetting machines.

In the August 1976 agreement, manufacturer granted dealer, as "distributor," an "exclusive franchise" to sell manufacturer's photographic processing equipment in an area with a 200-mile radius centered on San Francisco. Dealer was to receive a commission of 25 percent of the product's list price upon the customer's payment. In exchange, dealer promised, among other things, "Not to purchase, sell, distribute or deal in products which are in competition with the products prepared by" manufacturer. The agreement was in effect for five years, until the end of 1981.

In 1977, dealer sold a Miniscomat which he then used as a demonstration model for other potential customers. Dealer sold about 18 Miniscomats in 1978. Out of 60 Miniscomats manufacturer sold nationwide in 1979, dealer sold 27. Out of 56 Miniscomats manufacturer sold nationwide in 1980, dealer sold 30. Out of 56 Miniscomats manufacturer sold nationwide in 1981, dealer sold 44. Manufacturer had about 25 other distributors nationwide. Dealer also sold paper and chemical supplies not made by manufacturer but needed to operate Miniscomats.

Dealer and manufacturer entered into a second written agreement ("dealership agreement") dated February 23, 1982, based on their earlier agreement. Manufacturer granted dealer "an exclusive Dealership to sell and service the Graphic Arts products of" manufacturer in the state of California. The main graphic arts product of manufacturer was the Miniscomat. Dealer was given a discount of 25 percent from list price on "all purchases made by the Dealer" and a credit limit of $35,000. In exchange, dealer promised, among other things, "Not to purchase, sell, distribute or deal in products which are in competition with the products of" manufacturer. Dealer also promised, "All invoices issued to the Dealer from [manufacturer] shall be paid within the terms of payment established by [manufacturer]. For the purpose of this agreement the terms of payment of all invoices shall be 1% 10 Net 45 calendar days." This meant if dealer paid within 10 days, he would get an additional 1 percent discount off the invoice.

Dealer requested that he be billed by manufacturer, rather than collecting his commission after manufacturer was paid. Manufacturer's standard invoice provided for payment within 30 days or imposition of a 1 1/2 percent per month service charge. The dealership agreement extended the time for payment to 45 days to accommodate dealer. Dealer was aware manufacturer's standard invoice also provided: "If referral to a collection agency or an attorney becomes necessary as a result of non-payments cost of collection proceedings including reasonable attorneys fees shall be added to the amount due." Dealer received such invoices when he ordered Miniscomats from manufacturer.

Out of 61 Miniscomats sold by manufacturer nationwide in 1982, dealer sold 53. In early 1982, dealer also began selling a Mohr processor, the Mohrpro 14, which processes resin-coated paper and also film. (As appears below, manufacturer perceived this to be a competitive product.) Dealer's first Mohrpro sale was in April 1982. Over approximately the next fourteen months, dealer sold eight more Mohrs. Out of 44 Miniscomats manufacturer sold nationwide in 1983, dealer sold 20 during the first 9 months.

Dealer did not always pay manufacturer within 45 days of an invoice. He was in constant telephone contact with Robin Horner, manufacturer's sales manager, or Gary Gogerty, manufacturer's assistant sales manager. Dealer sometimes told manufacturer before it shipped a Miniscomat he would be unable to pay in 45 days. On one occasion, dealer sold 22 pieces of equipment at a national graphic arts convention. On other occasions, customers were unsatisfied and would not pay until a Miniscomat was operating properly. Manufacturer frequently complained about late payments. There was no evidence manufacturer ever insisted on receiving interest on dealer's late payments. Complicating their accounting was a substantial amount of credits due dealer for parts returned to manufacturer. Ordinarily, dealer told manufacturer to which invoice a payment or credit related.

Once in December 1982, when Horner was due to visit from New York, dealer told an employee, Michael Keen, to disassemble a Mohrpro 14 and put it in a dark room at dealer's warehouse.

In February 1983, manufacturer sent a letter to dealer detailing his outstanding account. Manufacturer reviewed dealer's account at the end of its fiscal year on May 31, 1983. In order to bring dealer's account current, manufacturer told dealer to pay for two machines in order to receive one. Dealer did so in June and early July.

In August 1983, dealer advised two potential customers either a Mohrpro 14 or a Miniscomat would suit them.

Dealer's selling of the Mohr processor came to manufacturer's attention in early August when dealer sought reimbursement for advertising in a trade journal. One of the ads identified dealer as selling "two processors that stand above all the rest," namely "the Oscar Fisher Miniscomat RC Processor" for $6,800 and "the Mohrpro 14 RC Processor" for $4,950. Manufacturer's first response in a letter dated August 10, 1983, was to disallow dealer's claim for reimbursement "now that [dealer] is marketing products that are in direct competition of [sic ] those manufactured by" manufacturer.

On September 23, 1983, manufacturer sent dealer a letter terminating his exclusive dealership due to "dealing in products which are in competition with the products of" manufacturer and "[f]ailure to stay within credit terms as established in Paragraph 2" of the dealership agreement.

On October 17, 1983, dealer sent manufacturer three invoices claiming a total due of $10,103.75, representing 283 hours of labor spent installing a Process-all made by manufacturer at one site, 176 hours of labor spent installing a Miniscomat at another site, and $350 for 7 circuit breakers replaced by dealer. Dealer could not attribute these circuit breakers to any particular machines or invoices of manufacturer.

In March 1984 in response to request for admission number 19, dealer admitted owing manufacturer $31,803.87 on unpaid invoices.

There was a conflict in testimony by dealer, dealer's employee, and others experienced in the graphic arts field about whether the Mohrpro 14 was in competition with the Miniscomat.

3. Procedural history

Dealer commenced this action with a complaint filed October 17, 1983, alleging manufacturer breached the dealership agreement by repudiating it and also breached an oral agreement of July 1980 to reimburse dealer for advertising and convention expenses. Dealer also alleged manufacturer was intentionally interfering with dealer's contracts and...