General Auto Parts Co., Inc. v. Genuine Parts Co.

Citation979 P.2d 1207,132 Idaho 849
Decision Date17 June 1999
Docket NumberNo. 24437,24437
PartiesGENERAL AUTO PARTS CO., INC., an Idaho corporation, Plaintiff-Appellant--Cross Respondent, v. GENUINE PARTS COMPANY, a Georgia corporation, Defendant-Respondent--Cross Appellant. Boise, March 1999 Term
CourtUnited States State Supreme Court of Idaho

Law Offices of Comstock & Bush and Peter J. Boyd, Boise, for appellant. John A. Bush argued.

Hawley, Troxell, Ennis & Hawley, Boise, and Alston & Bird, LLP, Atlanta, Georgia, for respondent. Eugene A. Ritti argued.

SCHROEDER, Justice.

General Auto Parts, Inc. (General) brought this action asserting that Genuine Parts Company (GPC) breached an oral contract wherein GPC allegedly promised the current owner of General, Frank Workland, the exclusive right to sell NAPA automotive parts in Boise. Following trial, the jury returned a verdict in favor of General and against GPC in the amount of $100,000. General appealed the trial court's decision denying General's motion to amend its complaint to include a claim for punitive damages and limiting General's measure of damages to lost profits. GPC cross appealed the trial court's decision denying GPC's motion for a directed verdict on General's breach of contract claim. The Court affirms the decisions of the district court.

I. BACKGROUND AND PRIOR PROCEEDINGS

GPC owns and operates a nationwide network of distribution centers which sell NAPA auto parts. Frank Workland was the manager of a GPC store located in Spokane, Washington, in 1973. Roger Fitzgerald Frank Workland testified that Fitzgerald promised him that he would have the exclusive right to operate NAPA stores in Boise "as long as there was a Workland running General Auto." Frank Workland agreed to purchase the Boise operation and secured partners to effectuate the purchase. His brother, Jim Workland (an attorney and one of the partners in the purchase of General), drafted the sales agreement and related documents. Jim Workland wanted to put an exclusive distributorship provision in the written agreement, but Fitzgerald asked him not to, stating that GPC could not enter into an exclusive distribution agreement due to a problem GPC had with the Federal Trade Commission (FTC). The Workland brothers did not investigate this statement, nor did they continue to press for a written exclusive distributorship agreement. They did ask for some assurance at which time Fitzgerald reassured them that a written exclusive agreement was not necessary and that Frank Workland would be "our man in Boise." The final contract documents, which implemented the purchase agreement between GPC and the Worklands, do not contain a provision for an exclusive distributorship.

(Fitzgerald), who was the general manager of the Spokane NAPA Distribution Center at that time, offered Frank Workland the opportunity to purchase two NAPA auto parts stores in Boise. The Boise stores were owned by General, which in turn was jointly owned by GPC and the manager of the Boise stores, Dennis Rigas.

Unbeknownst to the Worklands at the time, Fitzgerald's reference to a problem with the FTC related to a federal consent decree entered into between GPC and other NAPA members. The consent decree was the result of federal litigation and enjoined the parties involved from engaging in certain practices, including dividing territories among NAPA members and entering into agreements that determined the number, location and arrangements of jobbers. An independent NAPA store owner is referred to as a "jobber." NAPA stores can be owned either independently, jointly by GPC and another person, or by GPC alone.

Frank Workland and his wife, Paula Workland, bought the General shares owned by Jim Workland and another partner in 1978, becoming the sole shareholders of General. General continued to operate the two stores in Boise until 1988, when it closed its Overland Road store due to poor sales.

In 1990, GPC urged General to expand its business by either increasing inventory in its one remaining store or opening a new store. GPC helped General apply for business loans, but the two banks General approached denied the loan applications. General did not apply for any other loans or take other steps to increase its business.

In January 1991, GPC informed Frank Workland that it would begin selling NAPA auto parts to his competitor, Cal's Service Parts Company of Boise, Inc. (Cal's), which operated six auto parts stores in Boise. In January 1993, GPC purchased Cal's and began to operate the six stores as an internal division of GPC. Three of these six stores are located within two miles of General's sole location.

General filed suit against GPC, NAPA and Cal's in 1994, asserting seven causes of action: three claims under state antitrust laws, one claim under both the Fair Trade Act and the Consumer Protection Act, and claims for breach of contract and breach of the implied covenant of good faith and fair dealing. General later moved to voluntarily dismiss NAPA and stipulated to the entry of a summary judgment as to all claims against Cal's. GPC moved for summary judgment. The district court dismissed all of General's five statutory causes of action, but denied GPC's summary judgment on General's breach of contract claims.

On September 13, 1996, prior to trial on the breach of contract claims, General moved to amend its complaint to include a claim for punitive damages. No hearing was held on the motion due to the parties' stipulation to vacate the initial trial date of September 24, 1996, and reschedule trial for May 20, 1997. Thereafter, GPC moved to reconsider the district court's denial of its motion for summary judgment regarding General's breach of contract claims. The district court denied the motion.

On March 4, 1997, General filed a second motion for leave to amend its complaint to include a claim for punitive damages. GPC raised a procedural objection to the motion, arguing that it had not been timely filed pursuant to the original scheduling order entered on November 21, 1995. The district court denied both General's second motion to amend and General's subsequent motion to reconsider.

After both parties rested at trial, GPC moved for a directed verdict on General's breach of contract claim and the claim for breach of the implied covenant of good faith and fair dealing. The district court denied GPC's motion with respect to the breach of contract claim, concluding that there was sufficient evidence to send the case to the jury. The district court granted GPC's motion for a directed verdict with respect to the breach of the implied covenant claim on the basis that General had failed to demonstrate damages separate from the breach of contract claim.

The jury returned a special verdict in General's favor, finding that there was a contract, that GPC breached the contract, and that General sustained damages in the amount of $100,000 as a result of the breach. The district court entered judgment based upon the special verdict and subsequently entered a judgment on the dismissed statutory claims and claim for breach of the implied covenant.

General moved for a new trial on the issue of damages and, in the alternative, sought injunctive relief. The district court denied General's motion in its entirety and entered a supplemental judgment awarding costs and attorney fees to General. General appealed and GPC cross appealed.

II.

THE TRIAL COURT DID NOT ERR IN DENYING GENERAL'S MOTION TO AMEND ITS COMPLAINT TO INCLUDE A CLAIM FOR PUNITIVE DAMAGES.

The district court denied General's motion for leave to amend its complaint to include a claim for punitive damages because: (1) the motion was untimely pursuant to the scheduling order, and (2) General had failed to establish a reasonable likelihood of proving the necessary facts at trial to support an award of punitive damages. Although the district court stated a procedural basis for denying the motion to amend, it also decided the merits of the motion. This Court agrees with the district court's substantive ground for denying General's motion and will not address the district court's procedural ground.

A. Standard of Review

As long as there is sufficient evidence to support the district court's decision not to allow the jury to consider punitive damages, this Court will give deference to that decision. Fitzgerald v. Walker, 121 Idaho 589, 593, 826 P.2d 1301, 1305 (1992). "Courts have much greater latitude where the decision is not to instruct on the issue [of punitive damages], in light of the law's natural tendency to disfavor punitive damages." Id. The question before this Court is whether the failure to instruct on punitive damages was so contrary to the facts of the case as to amount to an abuse of discretion under the deferential standard. Id.

B. The District Court's Refusal To Instruct On Punitive Damages Was Not An Abuse Of Discretion.

Section 6-1604 of the Idaho Code (I.C.) provides that to receive an award of punitive damages, "the claimant must prove, by a preponderance of the evidence, oppressive, fraudulent, wanton, malicious or outrageous conduct by the party against whom the claim for punitive damages is asserted." I.C. § 6-1604(1). "[W]hile punitive damages may be recovered in a contract action, they are not favored in the law and therefore should be awarded only in the most compelling circumstances; they should be awarded cautiously and within narrow limits." Cuddy Mountain Concrete, Inc. v. Citadel Constr., Inc., 121 Idaho 220, 227, 824 P.2d 151, 158 (Ct.App.1992) (citing Jones v. Panhandle Distrib., Inc., 117 Idaho 750, 792 P.2d 315 (1990)). The plaintiff must show that the defendant acted in a manner that was "an extreme deviation from reasonable standards of conduct, and that the act was performed by the defendant with an understanding of or disregard for its likely consequences." The justification for punitive damages must be that the defendant acted with an extremely harmful state of mind, whether that be termed...

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