Knauf Fiber Glass, GmbH v. Stein

• Decision Date: 08 June 1993
• Docket Number: No. 03A05-9103-CV-80,03A05-9103-CV-80
• Citation: 615 N.E.2d 115
• Parties: Fed. Carr. Cas. P 83,838 KNAUF FIBER GLASS, GmbH, Appellant, v. Sidney STEIN, Trustee of Ashcraft Trucking, Inc., and Neil Shook, Trustee of Glyn Ashcraft and Carolyn Ashcraft, Appellees.
• Court: Indiana Appellate Court

Page 115

615 N.E.2d 115

Fed. Carr. Cas. P 83,838

KNAUF FIBER GLASS, GmbH, Appellant, v. Sidney STEIN, Trustee of Ashcraft Trucking, Inc., and Neil

Shook, Trustee of Glyn Ashcraft and Carolyn

Ashcraft, Appellees.

No. 03A05-9103-CV-80.

Court of Appeals of Indiana,

Fifth District.

June 8, 1993.

Robert T. Thopy, McNeely, Sanders, Stephenson & Thopy, Shelbyville, Michael R. Fruehwald, Barnes & Thornburg, Indianapolis Robert A. Garelick, Steven M. Crell, S. James Fishman, Mantel, Cohen, Garelick, Reiswerg & Fishman, Indianapolis, Richard S. Eynon, Richard S. Eynon, P.C., Barbara Stevens, Barbara Stevens, P.C., Columbus, for appellees.

Patrick W. Harrison, Beck & Harrison, Columbus, for appellant.

STATEMENT OF THE CASE

RUCKER, Judge.

When Ashcraft Trucking Company and its owner Glyn Ashcraft went bankrupt in 1985, the Trustees in bankruptcy sued Knauf Fiber Glass Corporation. According to the Trustees, Glyn's business and personal bankruptcies were the result of promises Knauf made but did not keep. There were four theories of liability: breach of contract, promissory estoppel, fraud, and constructive fraud. After a lengthy trial, the jury returned a verdict in favor of the Trucking Company Trustee in the amount of $2,027,000.00 and in favor of Glyn Ashcraft's Trustee in the amount of $1,722,000.00. Knauf Fiber Glass now appeals. The following rephrased issues are presented for our review:

1) Did the trial court err in denying Knauf Fiber Glass's motion for judgment on the evidence?

2) Was the evidence sufficient to support a judgment in favor of Glyn Ashcraft's Trustee?

3) Did the trial court err in instructing the jury?

4) Did the trial court err in admitting certain testimony over Knauf Fiber Glass's objection?

5) Were the damage awards excessive?

We affirm in part, reverse in part, and remand.

BACKGROUND

The Ashcraft Trucking Company, located in Shelbyville, Indiana, began operations in 1970. Glyn Ashcraft was at all times its president and sole shareholder. The Company's initial fleet consisted of four or five operating tractors and twelve to fourteen trailers. During its first years in business, Ashcraft Trucking's best customer was CertainTeed, a Shelbyville fiberglass manufacturing plant. Ashcraft Trucking was essentially the only trucking company used by CertainTeed to haul its fiberglass. In early 1978, CertainTeed was sold to Knauf Fiber Glass, (KFG) a corporate entity organized under the laws of Germany and formed for the purpose of operating the fiberglass factory. At that time Theis Knauf was president of KFG.

In 1979, KFG expanded its production, and Theis Knauf asked Glyn Ashcraft if he were interested in hauling additional fiberglass. Glyn expressed interest in the proposition, but informed Theis that Ashcraft Trucking would have to purchase thirty additional tractors in order to participate in the increased business. Glyn indicated it would be difficult to obtain additional financing and he expressed concern that the resulting obligation might eventually force him out of business. Theis agreed to assist in obtaining the necessary financing and told Glyn that if the trucks were acquired and the fiberglass hauled, then KFG would insure that Ashcraft Trucking would not go out of business.

Ashcraft Trucking obtained financing for the new trucks through the White Motor Credit Corporation and was able to do so because a) Glyn executed a personal guaranty, b) KFG prepared a letter indicating it would commit 50% of its outbound loads to Ashcraft Trucking for the year 1979, and c) KFG entered into an escrow agreement with White Motor Credit Corporation which provided, among other things, that if goods were shipped, amounts which became due to Ashcraft Trucking would be paid into an escrow account to be applied to the loan. Ashcraft purchased the new trucks, hauled the additional loads of fiberglass for KFG, and the financial condition of Ashcraft Trucking improved dramatically.

Between 1979 and 1983, Ashcraft Trucking and KFG developed a close and interlocking business relationship. At trial, a witness for KFG described Ashcraft as KFG's "private fleet." Record at 7585. KFG's traffic manager testified that KFG's relationship with Ashcraft Trucking was On April 20, 1983, KFG sent a letter to Ashcraft Trucking notifying it of a new machine KFG was starting up known as the "602 line." There had been several conversations concerning the machine over the previous year. The machine was anticipated to double KFG's shipping volume from 35 to 70 truckloads per day and was expected to perform at full capacity within 30 days. The notice invited Ashcraft Trucking to reply by April 27 and indicated that if Ashcraft Trucking were interested in the additional business then KFG proposed to split the added volume equally between Ashcraft Trucking and another trucking firm. Record at 5007-08. At that time Ashcraft was hauling approximately 330 truckloads per month for KFG, the trucks purchased in 1979 were nearly paid off, and Ashcraft was a highly profitable business.

different than KFG's relationship with any other carrier. Record at 6984-85. A witness for Ashcraft Trucking testified that in all of his years as a consultant in the transportation industry, he had never seen such a close and special relationship between a shipper and a carrier as the one that existed between Ashcraft Trucking and KFG. Record at 5824, 6032.

In response to the notice Glyn Ashcraft sent a letter to KFG on April 26, indicating that in order to handle the increased delivery, Ashcraft Trucking would need an additional 30-35 tractors and 50 trailers. Record at 3234, 3243. This letter was followed up by weekly conversations between Glyn and representatives of KFG discussing the role of Ashcraft Trucking in the increased production due to the 602 line. During these weekly sessions KFG voiced its expectation that production would double with the introduction of the new line. KFG indicated the line had the capacity to produce six million pounds of fiberglass per month. Based on his long experience in the fiberglass industry, Glyn expressed reservations that a machine could produce that much insulation. Record at 3247. He was also greatly concerned over the amount of debt his company would incur if it purchased additional tractors to handle the increased business. Record at 3259.

During the conversations with KFG, Glyn questioned what would happen if Ashcraft Trucking decided not to participate in the additional business and instead continue to haul the current 330 loads per month. Harold Walters, KFG's director of customer services responded, Ashcraft Trucking had no option. Rather, it would probably get nothing because KFG was looking for a primary carrier to make a commitment to handle whatever KFG decided to give them. Record at 3260.

Thereafter, Glyn contacted White Motor Credit Corporation to discuss financing for 45 new tractors at a cost of $2,600,000.00. The terms required by the finance company for the proposed loan were basically the same as those for the 1979 loan. On August 17, 1983, Ashcraft Trucking ordered the tractors, but at that point was not bound to complete the purchase.

On August 26, 1983, KFG began operating the 602 line at the Shelbyville Plant. In mid-September Glyn Ashcraft was given a tour of the plant. He observed the size of the machine, nearly two hundred feet wide and a city block long, the amount of insulation the machine was producing, and the eight to ten people wrapping and bagging insulation as it came off the machine. Glyn was impressed and testified that KFG's director of customer services informed him that the machine was operating at full capacity and everything was sold. Record at 3250-51. On September 15, 1983, representatives of the White Motor Credit Corporation, Ashcraft Trucking Company, and KFG met to discuss the prospects of future business between Ashcraft Trucking and KFG. Representatives of KFG confirmed previous statements about the 602 line's capacity of six million pounds per month and the expected doubling of Ashcraft Trucking business to between 600 and 700 loads per month. Record at 3282. The Credit Company representative requested that KFG send a letter of commitment. KFG complied and sent a letter to Knauf Trucking, dated September 30, 1983. The letter indicated that because of increased production capacity, Ashcraft should conservatively average 100 loads Thereafter, on October 19, 1983, KFG sent a letter to Ashcraft Trucking which read in pertinent part:

per week in 1984 resulting in an annual revenue of 4.5 million dollars. Record at 3289.

Now that we have had a chance to "test the water" with the products produced on the new machine, we are in a position to make a commitment to our primary carriers.

* * * * * *

Knauf Fiber Glass would like Ashcraft Trucking to be in a position to handle an average of 455 loads per month. The seasonable effect could result in a low of 410 and a high of 500.

Our commitment is of course contingent on your company remaining competitive with both rate and service.

* * * * * *

If for any reason you cannot or prefer not to accept the additional volume, please advise us promptly so we can make arrangements with other carriers.

Record at 3295. In November, 1983, White Motor Credit Corporation approved the loan to Ashcraft Trucking in the amount of $2,600,000.00. Glyn Ashcraft signed a personal guaranty, the 1979 escrow agreement was amended to reflect the new obligation, and Ashcraft Trucking purchased 45 new trucks and 50 new trailers.

However, after taking possession of the new tractors and trailers, Ashcraft Trucking's business with KFG did not increase. Rather, it decreased to a little over 200 loads per month. Record at 3363. Glyn Ashcraft was informed by Harold Waters that although KFG had the capacity to increase business to Ashcraft Trucking to 455 loads per month, KFG decided to distribute available loads among three or four...