Carrigg v. Blue, 0319

• Decision Date: 19 June 1984
• Docket Number: No. 0319,0319
• Court: South Carolina Court of Appeals
• Parties: Wallace O. CARRIGG, Sr., Respondent, v. P.D. BLUE and Gulf Oil Corporation, Appellants. . Heard

Page 787

323 S.E.2d 787

283 S.C. 494

Wallace O. CARRIGG, Sr., Respondent, v. P.D. BLUE and Gulf Oil Corporation, Appellants.

No. 0319.

Court of Appeals of South Carolina.

Heard June 19, 1984.

Decided Nov. 16, 1984.

John P. Linton, Sinkler, Gibbs & Simons, Charleston, and Keith E. Parks, Houston, Tex., for appellants.

S. Jahue Moore, West Columbia, and Morris D. Rosen and Richard S. Rosen, Rosen, Oberman & Rosen, Charleston, for respondent.

BELL, Judge:

Wallace Carrigg brought this action for fraud against Gulf Oil Corporation and Paul Blue, a Gulf retail marketer responsible for dealer operated station franchises in Charleston, South Carolina. Carrigg alleged Blue made fraudulent representations and fraudulently concealed material information for the purpose of inducing Carrigg to enter into a one year service station lease and franchise agreement with Gulf. The trial resulted in a verdict in favor of Carrigg for $250,000 actual damages and $1,500,000 punitive damages against both defendants. The circuit judge granted a defense motion for a new trial nisi, requiring Carrigg to remit $150,000 of the actual damages and $250,000 of the punitive damages. Carrigg agreed to the remission and judgment was entered in his favor for $1,350,000. Gulf and Blue appeal. As we find no evidence to support the damages awarded, we reverse and remand for a new trial.

Carrigg grounds his suit on certain conversations held with Blue in April and May of 1979 regarding the lease of a Gulf owned service station in North Charleston. As a result of these conversations, Carrigg entered a written lease of the premises and signed a standard form trial franchise agreement with Gulf. Under the franchise agreement Gulf agreed to supply and Carrigg to purchase petroleum products for retail sale at the station. Both contracts were for a term of one year. Carrigg alleges Blue orally guaranteed Gulf would renew the lease, at Carrigg's option, for two or three years beyond the initial term.

At the time Carrigg leased the station, Gulf considered it a candidate for "divestiture." Divestiture meant permanently closing the station and selling it. Evidence adduced at trial revealed Gulf's finance department in Atlanta, Georgia, had recommended the station for divestiture prior to the time Carrigg executed the lease. This information was not disclosed to Carrigg. Less than a month after the lease was signed, Blue also recommended divestiture of Carrigg's station. In February, 1980 Gulf formally advised Carrigg it did not intend to renew the lease. At the end of the term Carrigg vacated the premises.

Carrigg claims Gulf's conduct constituted actionable fraud at common law. When the evidence and the inferences to be drawn from it are considered in the light most favorable to Carrigg, there are sufficient facts from which a jury could find in Carrigg's favor on the question of liability. However, the proof of damages was not adequate to support either the jury's verdict of $250,000 or the circuit judge's award of $100,000 in actual damages.

Since the jury found he was induced to enter a contract by fraud, Carrigg had the election of disaffirming the contract and recovering the consideration he paid Gulf plus any incidental damages which were foreseeable and were incurred in reliance on the fraudulent misrepresentation. Baeza v. Robert E. Lee Chrysler, Plymouth, Dodge, Inc., 279 S.C. 468, 309 S.E.2d 763 (S.C.App.1983). Carrigg elected to be returned to the status quo ante. In the words of his attorney, he wanted to be "put ... back into the position he would have been in, if all of this hadn't happened."

In his complaint, Carrigg pleaded the following elements of actual damage: expenditure of money to purchase equipment and inventory for the station; expenditure of money to rent and maintain the station; expenditure of money to run the station; expenditure of time and effort to start and build the business; expenses incurred in mortgaging his home to raise money to invest in the station. ¹

Carrigg's evidence established the following reliance damages. He spent $8900 to purchase equipment and inventory from Gulf. These purchases were required in order to obtain the lease. In addition he paid $300 a month rent in June, July, August, and September and $600 a month rent in October, November, December, and January, for a total of $3600 in rent paid. Thus, the consideration paid to Gulf for the lease totalled $12,500. In addition, Carrigg testified he invested $3000 of the mortgage proceeds in running the station. He also spent $700 on equipment purchased from another dealer and $500 on hand tools. The inventory on hand when Carrigg ceased operations in January was valued at $3679. It is not clear from the record whether the additional equipment, tools, and inventory were purchased from the $3000 mortgage proceeds nor is it clear whether the inventory on hand in January replaced or was in addition to the original inventory Carrigg purchased with the station lease. Assuming no double counting is involved in adding these expenditures together, Carrigg incurred incidental expenditures totalling $7879 in reliance on Gulf's representations. Therefore, his total out of pocket expenditures were $20,379.

Carrigg testified he and his wife operated the station until January without taking a salary. He estimated they worked sixteen hours a day during the initial period of operation. However, Carrigg admits he hurt his back in September and did not work full time at the station after that. No evidence was introduced as to the total number of hours Carrigg and his wife worked at the station nor was there proof of the fair market value of...