M. T. Reed Const. Co. v. Nicholas Acoustics and Specialty Co., 52009

• Decision Date: 20 August 1980
• Docket Number: No. 52009,52009
• Citation: 387 So.2d 98
• Parties: M. T. REED CONSTRUCTION COMPANY and M. T. Reed, Jr. v. NICHOLAS ACOUSTICS AND SPECIALTY COMPANY.
• Court: Mississippi Supreme Court

Page 98

387 So.2d 98

M. T. REED CONSTRUCTION COMPANY and M. T. Reed, Jr. v. NICHOLAS ACOUSTICS AND SPECIALTY COMPANY.

No. 52009.

Supreme Court of Mississippi.

Aug. 20, 1980.

Rehearing Denied Sept. 10, 1980.

Cox & Dunn, Vardaman S. Dunn, Jackson, for appellants.

Young, Scanlon & Sessums, Brad Sessums, Jackson, for appellee.

Before ROBERTSON, P. J., and WALKER and LEE, JJ.

LEE, Justice, for the Court.

This unusual case was filed by Nicholas Acoustics and Specialty Company (Nicholas) in the Circuit Court of the First Judicial District of Hinds County against M. T. Reed Construction Company and M. T. Reed, Jr. (Reed), seeking actual damages for breach of contract and punitive damages in the sum of two hundred fifty thousand dollars ($250,000). The contract phase of the suit was transferred to the Chancery Court of Hinds County, and the punitive damage feature was retained in the circuit court. The pleadings were reformed in chancery court on breach of contract, and the issues were so complex that a master was appointed to take evidence. The chancery court entered judgment for actual damages in favor of Nicholas in the sum of twenty-four thousand one hundred ninety-six dollars ($24,196.00), which judgment was appealed to the Mississippi Supreme Court and affirmed on all issues except prejudgment interest.

The punitive damage aspect of the case was held in abeyance until completion of the suit for actual damages in chancery court. Upon determination of that suit, the punitive part was tried in the circuit court before a jury, resulting in a verdict and judgment in favor of Nicholas for two hundred twenty-five thousand dollars ($225,000) punitive damages.

We do not reach all points raised on this appeal since the question of whether or not the proof was sufficient to make a case for punitive damages and whether or not the lower court should have granted a peremptory instruction are dispositive of the case. We reverse and enter judgment here for the appellant.

The declaration charges (1) fraud, (2) economic coercion, and (3) malicious breach of contract. We are concerned only with the proposition of whether or not there was a malicious breach of contract which amounted to an independent tort. The facts of the case, except the charge of malicious breach, were developed in the chancery court breach of contract trial for actual damages. M. T. Reed Constr. Co. v. Nicholas Acoustics and Specialty Co., 379 So.2d 308 (Miss.1980). The entire record of that case was introduced in evidence on trial of the present case, the facts are fairly stated in the opinion, and we will not fully discuss the facts, except for brief reference.

Reed had the general contract to construct the Mississippi Methodist Rehabilitation Center for a sum in excess of two and one-half million dollars ($2,500,000), and Nicholas was a subcontractor on the ceilings, partitions, and floor installation of the prime contract. A fire broke out in one partition under construction by Nicholas when the building was eighty-five percent (85%) to ninety-five percent (95%) complete, resulting in one hundred forty thousand dollars ($140,000) damage. The owner agreed to pay seventy thousand dollars ($70,000) of the amount and Reed and Nicholas agreed to absorb the balance between themselves. Change Order 3A was issued for that purpose. This suit arose because of the differences in settling the expenses incurred by Reed and Nicholas in repairing the fire damage.

After the suit was filed in the circuit court, Reed moved to transfer the case to the chancery court because of the complexity of same and because of the voluminous records and evidence which would be introduced. No objection was made to the transfer motion.

Both M. T. Reed, Jr. and Don E. Nicholas were highly trained and experienced businessmen. Their negotiations on the contract, and final settlement, were hard and intense. In ascertaining whether there were bona fide differences between them in the final settlement, we set out Reed's testimony as same appears in the abstract:

"The purchase of the vinyl involved about $10,000.00 worth and this figure was included in Reed's charges against 3A work, less the credit of $1,400.00 applicable to the vinyl material. We had vinyl left over. This amounted to 5,000 square feet and is conceded to have been left over and we offered to give Nicholas half of it because we couldn't return it. This offer, I believe was made at the November meeting. If it were later than this, then the offer was made whenever I found out about it. The letters don't mention the vinyl that was left over.

. . . Change Order 3A did not say anything about trucks, equipment and dozers, but this was equipment that was necessary to haul the trash out. Change Order 3A used the words 'actual material and labor costs.' That was the wording on it and I know what the wording was but my interpretation of that would mean the costs directly involved in doing the work. My interpretation of actual material and labor costs would include the trucks and bulldozer rental because that was used in the work. This is by my definition and the way I have seen work done in the construction industry.

. . . There were a whole lot of papers to be looked at and I just didn't look at all of them. I was paying Forby ¹ to do that.

. . . It was my opinion that the package tendered to Nicholas on November 5 was a fair way to arrive at this 3A accounting. This was the only thing outstanding on the Methodist job and I wanted to get it behind me. What I had in mind was a fair accounting on 3A in order to arrive at how much to deduct.

. . . Nicholas said, 'before you start this, you have got to agree to the $10,000.00 for the painting and agree that my invoices...