Jacobs Mfg. Co. v. Sam Brown Co.

• Decision Date: 08 January 1992
• Docket Number: No. 84-0887-CV-W-9.,84-0887-CV-W-9.
• Citation: 792 F. Supp. 1520
• Parties: The JACOBS MANUFACTURING COMPANY, Plaintiff, v. SAM BROWN COMPANY, v. CHICAGO PNEUMATIC TOOL COMPANY, Thomas Latimer and Donald B. Sandstrom, Defendants.
• Court: U.S. District Court — Western District of Missouri

792 F. Supp. 1520

The JACOBS MANUFACTURING COMPANY, Plaintiff, v. SAM BROWN COMPANY, v. CHICAGO PNEUMATIC TOOL COMPANY, Thomas Latimer and Donald B. Sandstrom, Defendants.

No. 84-0887-CV-W-9.

United States District Court, W.D. Missouri, W.D.

January 8, 1992.

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Gary L. Whittier, Shook, Hardy & Bacon, Kansas City, Mo., for plaintiff.

Loeb H. Granoff, Armstrong, Teasdale, Schlafly, Davis & Dicus, Terry L. Tyrrell, Morrison & Hecker, Kansas City, Mo., for defendant.

AMENDED ORDER GRANTING PLAINTIFF'S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT AND GRANTING, IN THE ALTERNATIVE, PLAINTIFF'S MOTION FOR A NEW TRIAL ON DEFENDANT'S COUNTERCLAIM FOR FRAUD AND NEGLIGENT MISREPRESENTATION

BARTLETT, District Judge.

                                     TABLE OF CONTENTS
                I. MOTION FOR DIRECTED VERDICT AND JUDGMENT NOTWITHSTANDING
                    THE VERDICT
                   A. Standard of Review
                   B. Fraudulent Misrepresentation Claim
                      1. Elements of Claim for Fraudulent Misrepresentation
                      2. None of the Representations Should Have Been Submitted to the Jury
                   C. Negligent Misrepresentation Claim
                      1. Elements of Claim for Negligent Misrepresentation
                      2. The Third Representation Should Not Have Been Submitted to the Jury
                   D. Jury Award For Lost Future Profits
                      1. Loss of Future Profits is a Proper Measure of Damages
                      2. Evidence of Lost Future Profits Was Not Speculative
                      3. Loss of Future Profits Was Not Directly Caused By Any Misrepresentation
                      4. Brown Did Not Waive Claim for Lost Future Profits
                   E. Brown Did Not Waive Claim for Southern Region Losses
                   F. Jury Award for Punitive Damages
                      1. Due Process
                         a. Missouri Standard Defining Conduct Subject To Punitive Damages Is
                              Not Unconstitutionally Vague
                         b. Instruction 15 Did Not Inform the Jury of Missouri's Standards for
                              Determining the Amount of Punitive Damages
                         c. Because of the Defect in Instruction 15, the Instructions Did Not
                              Provide a Sufficient Constraint on the Exercise of the Jury's Discretion
                         d. Under the Standard of Review Required by Due Process, the Punitive
                              Damage Award Must Be Vacated for Lack of Evidentiary Basis
                      2. Equal Protection
                         a. Missouri Standards for the Assessment of Punitive Damages Do Not
                              Violate the Equal Protection Clause
                   G. Conclusion
                

                II. MOTION FOR NEW TRIAL
                    A. Standard of Review
                    B. Punitive Damages Verdict Lacked Evidentiary Basis
                    C. Verdict was Erroneously Inconsistent
                    D. Jury's Findings as to Brinkerhoff and Kennedy Lacked Evidentiary Basis
                    E. Brown Did Not Waive Claim For Southern Region Losses
                    F. Conclusion
                III. ORDER
                

Background

Beginning on August 20, 1990, evidence was presented to the jury on plaintiff Jacobs Manufacturing Company's claim for an unpaid account and on defendant Sam Brown Company's counterclaims for fraud and negligent misrepresentation. After a directed verdict was entered on plaintiff's claim, the jury returned verdicts for actual and punitive damages in favor of Brown on its counterclaims. Thereafter, Jacobs requested that the jury's verdicts be set aside and that judgment be rendered in its favor in accordance with its Motions for Directed Verdict. In addition, Jacobs moved for judgment notwithstanding the verdict pursuant to Rule 50(b), Federal Rules of Civil Procedure, and for a new trial pursuant to Rule 59, Federal Rules of Civil Procedure.

For the reasons stated in this opinion, Jacobs' Motions for a Directed Verdict and for Judgment Notwithstanding the Verdict will be granted. In the alternative, Jacobs' Motion for New Trial will be granted.

I. MOTION FOR DIRECTED VERDICT AND JUDGMENT NOTWITHSTANDING THE VERDICT

A. Standard of Review

The standard for a directed verdict is the same as the standard for judgment notwithstanding the verdict. City of Omaha Employees Betterment Ass'n v. City of Omaha, 883 F.2d 650, 651 (8th Cir.1989).

Judgment may be entered in favor of the moving party if there is but one reasonable conclusion about the proper result. Compton v. United States, 377 F.2d 408, 411 (8th Cir.1967). Motions for directed verdict and for judgment notwithstanding the verdict challenge the sufficiency of the evidence to support the jury's verdict. Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 61 S.Ct. 189, 194, 85 L.Ed. 147 (1940). In deciding whether to grant a motion for directed verdict or for judgment notwithstanding the verdict, I must consider the evidence in the light most favorable to the non-moving party, assume that all conflicts in the evidence were resolved by the jury in favor of the non-moving party, assume, as proved, all facts which the non-moving party's evidence tends to prove and give the non-moving party the benefit of all reasonable inferences. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S.Ct. 1404, 1409, 8 L.Ed.2d 777 (1962); Farner v. Paccar, Inc., 562 F.2d 518, 522 (8th Cir.1977). The court may not consider the credibility of the witnesses or the weight of the evidence. McKnelly v. Sperry Corp., 642 F.2d 1101, 1105 (8th Cir.1981). A motion for directed verdict or for judgment notwithstanding the verdict should be granted only if the evidence, together with all reasonable inferences to be drawn therefrom, viewed in the light most favorable to the non-moving party, would not allow a reasonable jury to find in favor of the non-moving party. Tribble v. Westinghouse Elec. Corp., 669 F.2d 1193, 1195-96 (8th Cir.1982), cert. denied, 460 U.S. 1080, 103 S.Ct. 1767, 76 L.Ed.2d 342 (1983).

B. Fraudulent Misrepresentation Claim

Brown contends that Jacobs made three misrepresentations: 1) that Jacobs was not considering any plans to change its existing method of distributing the Jake Brake; 2) that Jacobs had no plans to change its existing method of distributing the Jake Brake; and 3) that if Brown continued to be a Jake Brake distributor during bad economic times, its distributorship would continue during good economic times.

Jacobs argues that these representations were never made. In the alternative, Jacobs argues that if they were made, they are not actionable because they were not false when made and representations of future intent must be false when made in order to be actionable.¹

1. Elements of Claim for Fraudulent Misrepresentation

In order to prevail on its claim for fraudulent misrepresentation, Brown was required to establish: 1) a representation; 2) its falsity; 3) its materiality; 4) the speaker's knowledge of the falsity or ignorance of truth; 5) plaintiff's intent that the representation be acted upon; 6) defendant's ignorance of the falsity of the representation; 7) defendant's reliance on the truth of the representation; 8) defendant's right to rely on the representation; and 9) defendant's consequent and proximate injury. Clark v. Olson, 726 S.W.2d 718, 719 (Mo. banc 1987). Failure to establish any single element is fatal to the entire claim. Powers v. Shore, 248 S.W.2d 1, 5 (Mo. banc 1952). Fraud may never be presumed; therefore, fraud cannot be proved by facts and circumstances which are equally consistent with honesty and good faith. Macon-Atlanta State Bank v. Gall, 666 S.W.2d 934, 941 (Mo.App.1984).

To establish fraud where a statement of future intent is involved, it must be shown that the speaker at the time of the utterance actually intended to perform inconsistently with his words. Dillard v. Earnhart, 457 S.W.2d 666, 670 (Mo. banc 1970); Craft v. Metromedia, Inc., 766 F.2d 1205, 1219 (8th Cir.1985), cert. denied, 475 U.S. 1058, 106 S.Ct. 1285, 89 L.Ed.2d 592 (1986). Absent a present intent to perform inconsistently with the representation, there is no misrepresentation of fact or of state of mind but only breach of a promise or failure to perform. Craft, 766 F.2d at 1219. Mere failure to perform is insufficient to establish fraud. Brennaman v. Andes & Roberts Bros. Const. Co., 506 S.W.2d 462, 465 (Mo.App.1973).

2. None of the Representations Should Have Been Submitted to the Jury

The first two representations relied upon by Brown as the basis for its fraudulent misrepresentation claim are: 1) Jacobs represented that it was not considering any plans to change its existing method of distributing the Jake Brake, and 2) after July 1981, Jacobs represented that it had no plans to change its existing method of distributing the Jake Brake. Both of these representations are of present fact, not future intent.

With regard to the first representation, there was evidence, including reasonable inferences from the evidence, from which the jury could have concluded reasonably that 1) Jacobs represented it was not considering any plans to change its existing method of distributing the Jake Brake; and 2) Jacobs was considering plans to change its existing method of distributing the Jake Brake at the time the representations were made.

With regard to the second representation, there was no evidence from which the jury could reasonably conclude that Jacobs actually had plans to change its method of distributing the Jake Brake when it represented that it had no plans to change its method of distributing the Jake Brake. The evidence that Jacobs was considering changing its method of distribution would not permit a reasonable jury to conclude that Jacobs had, therefore, decided to change its method of distribution. Brown failed to present evidence from which a reasonable jury could conclude that the second representation was false. Therefore, the second representation should not have been submitted to the jury.

The third representation relied upon by Brown is that after July 1981, Jacobs represented that if Brown continued to be a Jake Brake distributor during bad economic times, its distributorship would continue during good economic times.

This is a representation of future intent. There was no evidence presented by...