Coffee Butler Service, Inc. v. Sacha

• Decision Date: 18 March 1993
• Docket Number: No. A92A1993,A92A1993
• Citation: 208 Ga.App. 4,430 S.E.2d 149
• Parties: COFFEE BUTLER SERVICE, INC. v. SACHA.
• Court: Georgia Court of Appeals

Page 149

430 S.E.2d 149

208 Ga.App. 4

COFFEE BUTLER SERVICE, INC. v. SACHA.

No. A92A1993.

Court of Appeals of Georgia.

March 18, 1993.

Whicker, Gandy & Rice, L. Spencer Gandy, Jr., Atlanta, for appellant.

Mozley, Finlayson & Loggins, C. David Hailey, Eric T. Johnson, Atlanta, for appellee.

ANDREWS, Judge.

The basic facts of this case are set out in its previous appellate appearance. Coffee Butler Svc. v. Sacha, 258 Ga. 192, 366 S.E.2d 672 (1988). They will be supplemented only as needed.

After remand pursuant to that opinion (issued April 7, 1988), Coffee Butler twice amended its claims. The trial court then granted summary judgment to Sacha on Coffee Butler's claims of fraud in the inducement of the contracts and for lost profits allegedly suffered by Coffee Butler as a result of Sacha's breach of the employment contract ¹ (Counts I and II of the Second Amended Complaint). Coffee Butler appeals.

1. The fraud count alleged, in pertinent part, that Sacha, "[a]t the time the parties were negotiating the agreements, ... represented to plaintiffs that he would (1) convey all assets of Early Bird; (2) use his best efforts and all of his energy to convert former clients of Early Bird to clients of Coffee Butler and solicit new accounts for Coffee Butler in the area Early Bird had serviced; (3) devote and use his expertise and knowledge to benefit Coffee Butler; and (4) not compete directly or indirectly with Coffee Butler--all of which he did not intend to perform ... to induce plaintiffs into entering the ... agreements."

" 'The tort of fraud has five elements: a false representation by a defendant, scienter, intention to induce the plaintiff to act or refrain from acting, justifiable reliance by plaintiff, and damage to plaintiff. (Cit.) For an action for fraud to survive a motion for summary judgment, there must be some evidence from which a jury could find each element of the tort.' Crawford v. Williams, 258 Ga. 806 (375 S.E.2d 223) (1989). 'Where there is no evidence (of) scienter, that is, that the false statement was knowingly made with false design, there can be no recovery....' Day v. Randolph, 159 Ga.App. 474, 475 (283 S.E.2d 687) (1981)." McCrimmon v. Tandy Corp., 202 Ga.App. 233, 234(1), 414 S.E.2d 15 (1991).

While the ten-volume record is replete with references to disputes as to the amount of effort expended by Sacha to fulfill the terms of the employment agreement and further the interests of Coffee Butler after the merger, it is devoid of any evidence that, in 1984, when the agreements were negotiated and entered into, he made any fraudulent statements or that he did not intend at that time to carry out the terms of the agreements.

There is evidence that there were six accounts which Sacha did not include in the list of Early Bird accounts merged with Coffee Butler, for which six accounts he maintained no written records and which six accounts paid him directly in cash, which cash he did not report as income. There is no evidence, however, that Coffee Butler was aware of these six accounts before the merger and, therefore, no evidence of any detrimental reliance by it. Further, there is evidence that it was Sacha's intention to attempt to convert these small accounts to Coffee Butler.

"On motion for summary judgment, [defendant Sacha] demonstrated the absence of evidence of fraud, thereby casting upon [Coffee Butler] the burden of presenting specific evidence giving rise to a genuine issue of triable fact. [Cits.]" McCrimmon, supra at 234-235, 414 S.E.2d 15. Demarest v. Moore, 201 Ga.App. 90, 92(1), 410 S.E.2d 191 (1991). That burden has not been met.

Further, any oral representations were subsumed by the written agreements constituting the terms of the merger. Campbell v. C. & S. Nat. Bank, 202 Ga.App. 639, 640(1), 415 S.E.2d 193 (1992).

2. Regarding the claim for lost profits as a result of Sacha's breach of his employment contract, the allegation was that "Coffee Butler has suffered additional damage to its business, on-going operations and profits expected to flow from the agreement with Sacha by Sacha's failure to render the services called for under said agreement in an amount not less than $500,000."

After this amendment was added to the complaint in February 1990, additional discovery was engaged in, resulting in Coffee Butler's response to an interrogatory as to the nature of the claim that "[t]he base amount of damages is calculated by the means set out in the attached Exhibits for the period November 1984 through August 1985. Plaintiffs also assert that they are entitled to damages computed upon the above basis for the period extending through November 1985. The cumulative total of the base amount computed through the above period represents continuing losses suffered each succeeding year. These continuing damages are claimed for a period of five years."

The exhibits consisted of a listing of 248 former Early Bird accounts which were "lost" after the merger, due to Sacha's failure to render services agreed upon. Of these accounts, it was shown that 140 left for reasons having nothing to do with Sacha, including office relocations or mergers; bankruptcies; construction sites closed at completion of the project; the loss of two law firms which had represented Sacha in the merger and litigation; and 28 accounts which Coffee Butler determined to "pull" because of the low volume of coffee being consumed. As for the remainder, there was no evidence that any account left because of any action taken or not taken by Sacha. In support of his motion, Sacha submitted his own affidavit which stated that he had reviewed the list of "lost accounts" and that he "took no action to the detriment of Coffee Butler which would in any way have caused any of these accounts to discontinue doing business with Coffee Butler either before or after the merger. Specifically, I did not advise any of those accounts to cease doing business with Coffee Butler, and I did not tell any of those accounts anything negative about Coffee Butler's services or products. I made every effort possible under the directions and criteria given to me by Coffee Butler to maintain every account which Coffee Butler advised it wanted to be maintained."

Additionally, the affidavit of Took, a former Early Bird routeman who continued with Coffee Butler as a customer service representative, was submitted. Took went through each account and gave his analysis of the reason for the account leaving. Parts of his analysis were based on statements made to him by employees of the companies which stopped the Coffee Butler Service. While Coffee Butler made a motion to strike this affidavit on the ground it contained inadmissible hearsay, the court did not rule on it before entering the summary judgment and we therefore assume it was implicitly denied. The statements of an agent of one company, made in the course of his employment, to the agent of another, received in the course of his employment, regarding the business of the two is admissible pursuant to OCGA §§ 24-3-33 and 10-6-6...