First Data Resources, Inc. v. Omaha Steaks Intern., Inc., 43347

• Decision Date: 02 July 1981
• Docket Number: No. 43347,43347
• Citation: 307 N.W.2d 790,209 Neb. 327
• Court: Nebraska Supreme Court
• Parties: FIRST DATA RESOURCES, INC., a Delaware Corporation, Appellee, v. OMAHA STEAKS INTERNATIONAL, INC., a Nebraska Corporation, Appellant.

Page 790

307 N.W.2d 790

209 Neb. 327

FIRST DATA RESOURCES, INC., a Delaware Corporation, Appellee, v. OMAHA STEAKS INTERNATIONAL, INC., a Nebraska Corporation, Appellant.

No. 43347.

Supreme Court of Nebraska.

July 2, 1981.

Syllabus by the Court

1. Contracts: Consideration. While executory and before a breach, the terms of a written contract may be changed by a subsequent parol agreement; and such subsequent agreement requires no new consideration.

2. Contracts. In order for an agreement to be voidable by reason of economic duress, it must not only have been obtained by means of pressure brought to bear, but the resulting agreement must be unjust, unconscionable, or illegal.

3. Pleadings. An answer to a petition which fails to allege an essential element of a claimed defense of economic duress or business coercion is subject to a demurrer.

4. Contracts. A party cannot maintain an action on a contract without a prior substantial compliance on its part.

5. Contracts: Negligence. A right to recover on a contract does not obtain when the party seeking to recover has performed its obligations in a negligent manner.

6. Contracts: Substantial Performance. A party to whom performance is owed should receive at least approximately what it bargained for.

7. Contracts: Substantial Performance: Words and Phrases. "Substantial performance" is a relative term and whether it exists or not is a question to be determined in each case with reference to the existing facts and circumstances.

8. Pleadings: Evidence. If an answer properly pleads a defense, it is error to prohibit a defendant from offering evidence in support thereof.

9. Prejudgment Interest. Where the amount of a claim is liquidated, compensation in the form of prejudgment interest is allowed as a matter of right.

10. Prejudgment Interest. A claim is liquidated if the evidence furnishes data which, if believed, makes it possible to compute the amount with exactness, without reliance upon opinion or discretion.

Warren S. Zweiback and Thomas F. Flaherty of Zweiback, Brady & Kasher, P. C., Omaha, for appellant.

Frank F. Pospishil and Harvey B. Cooper of Abrahams, Kaslow & Cassman, Omaha, for appellee.

Heard before KRIVOSHA, C. J., and BOSLAUGH, McCOWN, CLINTON, BRODKEY, WHITE, and HASTINGS, JJ.

HASTINGS, Justice.

The plaintiff, First Data Resources, Inc. (FDR), is a computer data processing organization which furnished computer services to Omaha Steaks International, Inc. (OSI), an organization which sold and shipped gourmet meats to various customers. FDR brought this action in the District Court for Douglas County to recover for its services claimed to have been rendered under the terms of a written contract as amended. OSI in its answer claimed the invalidity of the contract amendment by reason of economic duress. It also alleged the failure of the plaintiff to perform required services and deliver necessary materials in a careful, diligent, and workmanlike manner, and counterclaimed for damages claimed to have resulted from such breach of contract. At the close of the plaintiff's case, and before the defendant had offered any evidence, FDR demurred ore tenus and moved to direct a verdict in its favor. After OSI, with leave of the court, dismissed its counterclaim, the trial court sustained both the demurrer and the motion and entered judgment in favor of FDR for $82,913.75, including $7,146.21 in prejudgment interest. This action OSI assigns as error on appeal. We reverse and remand.

On December 19, 1975, the parties entered into a written agreement whereby FDR agreed to furnish certain services and materials to OSI for which the latter was to pay the sum of $1.24 per "receiver" entered into the OSI processing system. Also, OSI was to pay certain charges for what the contract referred to as "Additional Services." The term of the agreement was for a period of 1 year from and after February 1, 1976, "after which period this Agreement shall remain in effect until terminated by either First Data or OSI upon ninety days prior written notice." On April 18, 1977, FDR wrote a letter to OSI advising that the pricing of FDR's services was unsatisfactory "and in accordance with the terms of our existing data processing Agreement, please consider this our notice to terminate our Agreement effective July 31, 1977." The letter went on to state that FDR wanted to continue offering services to OSI, but only if it could make a reasonable profit on such transactions. Therefore, FDR stated, if the business relationship was to stay in existence, a new agreement would have to be executed which would be effective August 1, 1977. FDR sent an additional letter dated April 28, 1977, in which a new rate of $1.92 per receiver was suggested.

By letter dated May 19, 1977, from OSI to FDR, OSI stated that it accepted the offer of $1.92 "under extreme economic duress." The letter went on to say: "First Data Resources management knows very well that Omaha Steaks International cannot arrange for replacement of this service under such short notice.... Therefore, we reluctantly accept your offer of 18 May 1977 according to the terms of your letter of 18 May (sic) 1977." A "First Amendment to Agreement for Data Processing Services," containing the new terms, was executed by the parties on June 8, 1977, to be effective August 1, 1977. At OSI's request, this agreement was terminated and OSI ceased giving FDR any of its regular data processing business in January of 1978, although there were some winddown services that continued for several months.

In its amended petition FDR alleged the execution of the two agreements previously mentioned, and claimed performance on its part in accordance with the amended agreement, a request for payment of services rendered to OSI until the date of termination, and a refusal on the part of OSI to make payment in accordance with the invoices submitted. By its second amended answer and counterclaim, OSI admitted the execution of the agreements. However, it claimed that it executed the "First Amendment to Agreement ... for the sole reason that Plaintiff would not live up to its obligation under the agreement dated December 19, 1975, in that Plaintiff knew by reason of the Plaintiff's intimate association with the Defendant that the Defendant could not replace the Plaintiff's services within the time during which the Plaintiff threatened to cease rendering such services and the Plaintiff further knew that without Plaintiff's services, Defendant could not conduct its business, but Plaintiff nevertheless threatened to terminate its services and thereby forced Defendant to execute the ... Agreement ... such that the ... Agreement is not binding on Defendant." OSI further alleged that such actions on the part of FDR in obtaining the execution of such agreement constituted the use of economic duress by FDR. OSI then claimed that FDR failed to perform its part of the agreement in a workmanlike manner in that it negligently and carelessly caused erroneous worksheets and shipping instructions and duplicate shipping labels to be issued to OSI, resulting in duplicate orders being filled by OSI at a cost to OSI of $28,000 and loss of OSI employees' time of $4,500. Finally, OSI incorporated all of the allegations of its answer into what it called a counterclaim and requested damages in the amount of $32,500.

In sustaining the demurrer ore tenus and the motion for a directed verdict, the trial court reasoned that once the defendant dismissed its counterclaim based upon FDR's alleged negligent performance of the terms of the agreement, OSI had abandoned that defense, leaving only the defense of economic coercion. In examining the defendant's amended answer the court decided as a matter of law that the factual allegations, including admissions of fact contained therein, did not fit our requirements to plead a case of economic duress or coercion. Therefore, because the plaintiff had made out a prima facie case and the defendant was left without any affirmative defense, the trial court reasoned that FDR was entitled to...