Briner Elec. Co. v. Sachs Elec. Co., 45704

• Decision Date: 25 September 1984
• Docket Number: No. 45704,45704
• Citation: Briner Elec. Co. v. Sachs Elec. Co., 680 S.W.2d 737 (Mo. App. 1984)
• Parties: BRINER ELECTRIC COMPANY, Plaintiff-Respondent, v. SACHS ELECTRIC COMPANY, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 737

680 S.W.2d 737

BRINER ELECTRIC COMPANY, Plaintiff-Respondent, v. SACHS ELECTRIC COMPANY, Defendant-Appellant.

No. 45704.

Missouri Court of Appeals,

Eastern District,

Division Two.

Sept. 25, 1984.

Motion for Rehearing and/or Transfer to

Supreme Court Denied

Oct. 30, 1984.

Application to Transfer Denied

Dec. 18, 1984.

Robert S. Allen, Michael A. Vitale, Lewis, Rice, Tucker, Allen & Chubb, St. Louis, for defendant-appellant.

Lashly, Caruthers, Baer & Hamel, Rexford H. Caruthers, Barry & Bresnahan, James T. Barry, Jr., Linda M. Dougherty, St. Louis, for plaintiff-respondent.

SIMON, Judge.

Sachs Electric Company (Sachs) appeals from a judgment entered in favor of Briner Electric Company (Briner) on a jury verdict in the Circuit Court of the County of St. Louis. The claim is founded on tortious interference with a business expectancy and the jury awarded Briner actual damages of $213,000 and punitive damages of $405,000.

On appeal, Sachs contends the trial court erred in (1) failing to grant Sachs' motions for a directed verdict and judgment notwithstanding the verdict for the reason that Briner failed to make a submissible case in that it did not prove the necessary elements for tortious interference with a business expectancy; (2) excluding relevant and material testimony and exhibits; (3) submitting a verdict director not requiring the jury to find that Sachs had knowledge of Briner's expectancy; (4) failing to grant Sachs' motions for a directed verdict and judgment notwithstanding the verdict in that the evidence was insufficient to support actual damages; (5) submitting instruction for punitive damages for the reason that, as a matter of law, Briner was not entitled to punitive damages in that Briner failed to prove actual damages, actual malice and a knowing commission of a wrongful act; (6) instructing the jury as to punitive damages before instructing as to actual damages in that this order of instructions gave undue prominence to the punitive damage issue; and (7) failing to grant Sachs' motion for a new trial or, in the alternative, a remittitur for the reason that the awards of actual and punitive damages are arbitrary, excessive and unsupported by the evidence. We reverse.

Reviewing the submissibility of Briner's claim, we view the evidence in a light most favorable to Briner, giving it the benefit of all reasonable inferences deducible from the evidence. Francisco v. Kansas City Star Company, 629 S.W.2d 524, 530 (Mo.App.1981). Further, Briner must produce substantial evidence supporting each element of its cause of action, all inferences of essential facts must be based on substantial evidence and liability cannot be based upon speculation, conjecture or guesswork. Tri-Continental Leasing Co. v. Neidhardt, 540 S.W.2d 210, 211 (Mo.App.1976). With these principles in mind, we set out the facts necessary to a determination of the submissibility of Briner's claim.

During the latter part of 1976 and early part of 1977, Barnes Hospital decided to construct its New West Pavilion and selected four general contractors from whom it would accept bids for the project. The general contractors were limited to the sub-contractors chosen by Barnes. Sachs and Briner were two of the six electrical sub-contractors selected by Barnes.

On May 16, 1977, Wischmeyer, the architectural firm in charge of the project, issued to the general contractors invitations to submit bids for the construction to Mr. Frank, the president of Barnes. The bidding deadline for the general contractors was originally 2:00 p.m. on June 28, 1977, but was changed to 2:00 p.m. on July 8, 1977. Included with the invitations was a specification containing a detailed procedure concerning the submission of bids. Applicable to prime sub-contractors, such as Briner and Sachs, was the requirement that they submit the bid to the general contractors and a copy of the bid to Barnes by 10:00 a.m. on July 7, 1977. No modifications, withdrawals or cancellations were allowed after this time. Further, combination bids were prohibited by any prime sub-contractor who did not normally engage in the categories of work included in a combination bid. ¹ Any modification in this procedure, to be effective, was to be issued by the architect in writing to all concerned parties no later than four days before bids were due.

Proceeding according to the specification, Briner submitted an electrical bid of $5,242,250. Sachs' electrical bid submitted to McCarthy on July 7, 1977, was $5,480,000. ² Briner's electrical bid was the lowest submitted by the electrical prime sub-contractors. ³ McCarthy Bros., the general contractor ultimately awarded the job by Barnes, testified that but for the combination bid submitted subsequently by Sachs, Briner would have been awarded the electrical sub-contracting work.

On July 6, Mr. Krause, an employee of Sachs, called Frank to obtain permission to submit a combined bid. Krause contacted Frank despite the fact that Krause knew the specifications instructed that all questions should be directed to the architects. Krause was also aware that Barnes had assigned internal responsibility for the project to another employee. During the call Krause represented to Frank that substantial savings could be achieved by Barnes if it allowed the bid. At that time, however, no combination bid actually had been prepared, nor was Krause sure of exactly how much, if anything, could be saved. Frank, whose son worked for Sachs at the time, gave his tentative approval for the bid. After checking with the architect, Frank called Sachs and gave his complete assent to the combined bid.

Late in the afternoon of July 7, 1977, Krause called McCarthy to inform them Sachs intended to submit another bid, a combination bid. Krause informed McCarthy that this had been cleared through Barnes. That night, Sachs met with Niehaus Interiors, Inc. and Environmental Interiors, Inc., drywall and ceiling work sub-contractors, to discuss the possibility of submitting a combination bid. The three firms eventually agreed on a combination bid which was submitted to McCarthy on the morning of July 8, 1977. The amount of the bid was lower than the total of the firms' three separate bids. This was possible due to a belief that costs could be reduced by combining. A comparison of the separate bids and the combination bid is as follows:

               Separate Bid  Combination Bid  Reduction
                               ------------  ---------------  ---------
                Sachs           $5,339,636     $5,153,542     $186,093
                Niehaus         $2,298,485     $2,133,958     $164,527
                Environmental   $  399,500     $  374,950     $ 24,550
                               ------------  ---------------  ---------
                                $8,037,620     $7,662,450     $375,170
                

The reason given by Sachs for submitting a combination bid was that it believed that Guarantee Electric, another electrical sub-contractor involved in the bidding, intended to submit a combination bid. Sachs felt it had been denied the contract on another project because of a combination bid filed by Guarantee. It appears that Sachs did not meet the requirements set forth in the specifications for combination bids in that it was not normally engaged in drywall and ceiling work. On the other hand, Guarantee apparently was normally engaged in such work.

Sachs learned that Briner had been the low electrical bid in the early afternoon of July 8, 1977 after a meeting it had with Tarlton Construction, one of the general contractors. The meeting concerned submission of Sachs' combination bid to Tarlton. This appears to be the only instance evidencing Sachs' knowledge that Briner had submitted a bid and was the low electrical bidder.

McCarthy received Sachs' bid on July 8, 1977. On that day, McCarthy assembled its bid to Barnes based on the sub-contracting bids it had received. In arriving at its bid to Barnes, McCarthy compared the lowest bids of electrical, drywall, and ceiling work with Sachs' total combined bid. Since Sachs' combined bid for the three types of work was less than the total of the lowest three separate bids, which included Briner's electrical bid, Sachs' combined bid was chosen. Subsequently, McCarthy was selected by Barnes as the general contractor and Sachs was thereby awarded the electrical work.

The verdict director on which the cause was submitted is a modification of MAI 23.11 and reads as follows:

Your verdict must be for plaintiff if you believe:

First, a business expectancy existed between plaintiff and McCarthy Bros. Construction Company which was terminated by McCarthy Bros. Construction Company, and

Second, defendant caused McCarthy Bros. Construction Company to terminate the business expectancy of plaintiff, and

Third, defendant did so intentionally and without justification or excuse, and

Fourth, plaintiff was thereby damaged.

The jury found for Briner and awarded actual damages of $213,000 and punitive damages of $405,000. At trial, Briner claimed, as actual damages, its lost profits of $618,000. This amount is the difference between the bid amount ($5,242,250) and the costs assigned to the work by Briner ($4,624,250). Briner supported this contended amount by introducing its financial statements into evidence and testimony of its certified public accountant.

The elements required for tortious interference with a valid business expectancy are: (1) the existence of a valid business expectancy; (2) knowledge of the expectancy by Sachs; (3) intentional interference by Sachs which induces breach of the expectancy; (4) absence of justification; and (5) damages. Francisco v. Kansas City Star Company, 629 S.W.2d 524, 530 (Mo.App.1981).

We find that Briner failed to prove the fourth element and therefore failed to present a submissible case. Sachs' conduct was justified competition. Since our resolution of this point is dispositive, we do not decide whether any of the other elements were proved.

The question of...