City of Whittier v. Whittier Fuel & Marine Corp.
| Decision Date | 10 March 1978 |
| Docket Number | No. 3315,3315 |
| Citation | 577 P.2d 216 |
| Parties | CITY OF WHITTIER, a Municipal Corporation, Appellant, v. WHITTIER FUEL AND MARINE CORPORATION, an Alaskan Corporation, Appellee. |
| Court | Alaska Supreme Court |
Ben J. Esch, Dickson, Evans, Esch & Papas, Anchorage, for appellant.
Carney W. Mimms, III, Paul J. Nangle & Associates, Anchorage, for appellee.
Before BOOCHEVER, C. J., and RABINOWITZ, CONNOR and BURKE, JJ.
This is a civil appeal from a judgment entered against the City of Whittier for breach of contract. The following issues are presented: (1) did the superior court err in denying the City of Whittier's motions for directed verdict, judgment notwithstanding the verdict and new trial because the damages were unforeseeable or uncertain; (2) did the superior court err in denying a new trial because the verdicts were inconsistent; (3) did the superior court err in giving certain jury instructions because the instructions implied that damages were, in fact, sustained and (4) did the superior court err in granting pre-judgment interest? We find error as to some of the damages awarded and the granting of pre-judgment interest.
On September 13, 1973, John P. Lynch and appellant, City of Whittier (the "City," hereinafter), entered into an agreement by which the City leased to Lynch a fuel float and access ramp located in the boat harbor at Whittier, Alaska, "for the purpose of selling petroleum products to the users of the said boat harbor." In addition, the agreement provided that the City would lease to Lynch a fuel truck at a monthly rental of $25.00. The term of the lease of the vehicle, fuel float and ramp was five years. Lynch further agreed to pay the City $.01 rental for each gallon of fuel sold. 1
Shortly after the agreement was operative, the lease was assigned by Lynch to appellee, Whittier Fuel & Marine Corporation 2 ("Whittier Fuel," hereinafter).
During the winter of 1973-74, Whittier Fuel delivered heating fuel to customers in Whittier, using the leased fuel truck. Lynch testified that approximately 370,000 gallons of fuel were delivered between October 1973 and May 1974. 3 Net profit for Whittier Fuel was estimated at $.07 a gallon. This testimony was uncontroverted.
On July 17, 1974, an employee of the City took possession of the fuel truck leased to Whittier Fuel. A replacement fuel truck was located by Whittier Fuel with some difficulty, due to the demand for equipment in Alaska which was generated by the construction of the Trans-Alaska Pipeline. 4
Lynch testified that the replacement truck was inferior to the leased truck in several aspects most notably, the leased truck had three fuel compartments, while the replacement truck had one compartment. Thus, it was necessary to pump all fuel out of the replacement truck before fuel of a different type could be carried, whereas three types of fuel could be transported in the leased truck. 5
Whittier Fuel was the only commercial fuel dealer in Whittier when the leased truck was seized in July of 1974. By June 3, 1975, when this action was filed in superior court, Whittier Fuel, the City, Begich Towers and Sportsman's Inn were operating their own fuel trucks. 6
At trial, the City did not contest the issue of breach. Whittier Fuel sought to recover damages for the cost of replacing the leased truck and for loss of net profits. 7
The City moved for a directed verdict on the ground that the damages were speculative. The motion was denied, but jury instructions were modified due to the City's motion. The City took exception to Instructions 13 and 16. Special verdict forms were presented to the jury which returned an award of $68,650.00 for loss of net profits. The special verdict for costs incurred in replacing the fuel truck was returned blank and unsigned.
The City then moved for judgment notwithstanding the verdict or a new trial on the grounds that the damages were beyond the contemplation of the parties when the contract was made and that the damages were speculative. The motion was denied, and judgment was entered including interest of $8,485.14. This appeal followed.
It is the City's contention that it was not within the contemplation of the parties at the time of the making of the contract that Whittier Fuel would use the leased fuel truck to make deliveries in Whittier, as opposed to merely "shuttling" fuel from incoming railroad tank cars to storage tanks at the fuel float. The City argues that the evidence was insufficient to show that the parties contemplated a broader use of the fuel truck and that, therefore, damages for loss of deliveries were unforeseeable. Thus, the City asserts that its motions for directed verdict, judgment notwithstanding the verdict and new trial were improperly denied.
The standard of review regarding denial of motions for a directed verdict and judgment notwithstanding the verdict is as follows:
It is well established that the proper role of this court, on review of motions for directed verdict or for judgment notwithstanding the verdict, is not to weigh conflicting evidence or judge the credibility of the witnesses, but is rather to determine whether the evidence, when viewed in the light most favorable to the non-moving party, is such that reasonable men could not differ in their judgment. 8
The test is objective; and, if there is room for diversity of opinion among reasonable people, the question is one for the jury. 9 Further, all favorable inferences are to be accorded the non-moving party. 10
We thus must examine the evidence presented at trial to determine if the jury's finding of foreseeability, implicit in its verdict, is supported by the evidence when viewed in the light most favorable to Whittier Fuel.
Prior to the lease agreement, Lynch had operated the City-owned fuel truck to make deliveries in Whittier. Although the boating season was over by September, the lease agreement provided that an attendant had to be on call at the float at least eight hours daily from October 1 to May 11. A reasonable purpose for requiring that the float be open even when the boating season was not would be to assure that Whittier Fuel would be available for fuel deliveries to the town. Whittier Fuel was the only commercial fuel dealer in Whittier, and hauling fuel could be implied in the lease agreement. Lynch testified that he had permission from the City to make deliveries with the leased truck. There was testimony that a majority of the Council wanted Whittier Fuel to deliver heating fuel, and that the City never objected to such deliveries. 11
It is, of course, well established that damages for breach of contract must be foreseeable. This principle was originally formulated by the English Court of Exchequer in Hadley v. Baxendale, 12 and it is the applicable rule in Alaska: The general rule is that damages for breach of contract are limited to such losses as were in the contemplation of the parties at the time the contract was made. 13
The City is correct as to the applicable law. In Skagway City School Board v. Davis, 543 P.2d 218 (Alaska 1975), a wrongfully-discharged superintendent sought damages in contract for injury to reputation, in addition to loss of salary. We found that damages for loss of reputation could not be "reasonably presumed to have been within the contemplation of the parties when they entered the contract." Id. at 225. We stated that mere knowledge of possible harm flowing from a breach would not be sufficient to impose liability. Id. at 226. Rather:
The knowledge must be brought home to the party sought to be charged, under such circumstances that he must know that the person he contracts with reasonably believes that he accepts the contract with the special condition attached to it. 14
We reaffirmed this rule in Arctic Contractors, Inc. v. State, 564 P.2d 30, 44-45 (Alaska 1977).
The crux of the City's argument on appeal is that, where damages are claimed for circumstances not appearing on the face of the contract, a "tacit agreement" must be shown to have existed between the parties that the contract contemplate the additional circumstances and possible damages resulting therefrom. The City argues that there was insufficient evidence that such a "tacit agreement" existed at the time of contract. 15 We do not agree.
From the evidence presented, we conclude that a jury could find that the City knew that Whittier Fuel reasonably believed that the fuel truck would be used for deliveries at the time the contract was made. 16 Thus, there was no error in denying a directed verdict or judgment notwithstanding the verdict on the issue of foreseeability.
The foregoing discussion largely disposes of the City's claim that the superior court erred in failing to grant a new trial due to insufficient evidence of foreseeability. The matter of granting or refusing a new trial rests in the sound discretion of the trial judge. 17
In reviewing a ruling on a motion for a new trial, the court will not interfere with the trial judge's discretion "except in the most exceptional circumstances and to prevent a miscarriage of justice." 18 If there is an "evidentiary basis" for the jury's decision, the denial of a new trial must be affirmed. 19 Conversely, where "evidence to support the verdict (is) completely lacking or (is) so slight and unconvincing as to make the verdict plainly unreasonable and unjust," a reversal of a denial of a new trial is proper. 20
We find an evidentiary basis for foreseeability and hold that the trial court did not abuse its discretion in denying the motions to the extent that they were based on that contention.
The City also contends that the superior court erred in denying its motions for directed verdict, judgment notwithstanding the verdict and new trial because the damages were not proven with certainty.
The goal of damage awards for breach of contract is...
To continue reading
Request your trial
-
Helpin v. Trustees of Univ. of Pa.
...expansion of the method that does not appear warranted by precedent or the facts of this case. See City of Whittier v. Whittier Fuel & Marine Corp., 577 P.2d 216, 226 (Alaska 1978) (refusing to extend Beaulieu to contract cases involving lost future profits), overruled in part on other grou......
-
Carlton v. H. C. Price Co.
...with precisely this disparity. 470 P.2d at 274.3 We note, finally, that appellants cannot rely on City of Whittier v. Whittier Fuel and Marine Corp., 577 P.2d 216 (Alaska 1978). Although the Supreme Court of Alaska, in City of Whittier, refused to award prejudgment interest on the loss of f......
-
Veys v. Applequist
...[jurors] could not differ in their judgment." Hahn v. Russ, 611 P.2d 66, 67 (Alaska 1980), quoting City of Whittier v. Whittier Fuel & Marine Corp., 577 P.2d 216, 220 (Alaska 1978), overruled on other grounds by Native Alaskan Rec. & Pest Control v. United Bank Alaska, 685 P.2d 1211 (Alaska......
-
Charles R. Combs Trucking, Inc. v. International Harvester Co., 82-LW-3142
... ... City of Whittier ... v. Whittier Fuel and Marina ... Leichtamer ... v. American Motors Corp. (1981), 67 Ohio St. 2d 456, 424 ... ...