Manor Investment Co v. F. Woolworth Co.

• Decision Date: 24 August 1984
• Citation: 159 Cal.App.3d 586,206 Cal.Rptr. 37
• Court: California Court of Appeals Court of Appeals
• Parties: MANOR INVESTMENT CO., INC., et al., Plaintiffs, Appellants and Cross-Respondents, v. F.W. WOOLWORTH, INC., et al., Defendants, Respondents and Cross-Appellants. A010517.

Page 37

206 Cal.Rptr. 37

159 Cal.App.3d 586

MANOR INVESTMENT CO., INC., et al., Plaintiffs, Appellants and Cross-Respondents, v. F.W. WOOLWORTH, INC., et al., Defendants, Respondents and Cross-Appellants.

A010517.

Court of Appeal, First District, Division 2, California.

Aug. 24, 1984.

Certified for Partial Publication.

Hearing Denied Oct. 31, 1984.

William C. Bigarani, pro se.

Ropers, Majeski, Kohn, Bentley, Wagner & Kane, Redwood City, for defendants, respondents and cross-appellants.

KLINE, Presiding Justice.

Manor Investment Co., Inc., Lynn Conley and Paul Conley (hereinafter referred to collectively as "appellants") appeal from an order granting a new trial after a jury awarded them $140,000 compensatory and $60,000 punitive damages on their cause of action for "conspiracy to interfere with business relationship." ¹ F.W. Woolworth Corp. (Woolworth) and William LeFevre (LeFevre) (hereinafter referred to collectively as "respondents") cross appeal from: 1) the judgments entered against them, and 2) an order denying their motion for judgment notwithstanding the verdict. We modify the order granting a new trial, and as so modified, affirm the orders appealed from.

FACTS

Appellants Paul Conley and Lynn Conley (hereinafter referred to collectively as "the Conleys") are brothers who are the sole shareholders of Manor Investment Co., In. (Manor). Manor is in the business of operating "storefront" check cashing facilities.

In July of 1970, the Conleys (who were then doing business as Handy Check Cashers Company) entered into a license agreement with Woolworth for the purpose of operating a check cashing facility at the Woolworth store located on Market Street in San Francisco. A second substantially similar license agreement was executed by the Conleys and Woolworth in July of 1973. The second agreement provided for a sizable increase in the rent payable to Woolworth. In both agreements the rent to be paid Woolworth was by a flat monthly rent plus a fixed percentage of the monthly receipts from the check cashing facility.

R.W. Nugent was the manager of the Market Street Woolworth store at the time the Conleys entered into the original lease agreement in 1970 and the new agreement in 1973. Respondent LeFevre became manager of the Market Street store in February of 1975.

The instant controversy arises out of Woolworths' termination of the 1973 license agreement in the latter part of 1976. Woolworth purported to terminate the license under article 3 of that agreement which provides: "The original term of the license hereby granted shall commence July 1, 1973 and shall expire on the last day In the year before the agreement was terminated the following events took place: In September of 1975 plaintiffs opened a second check cashing facility near the Woolworth store at 86 Ellis Street. Paul Conley testified that the new facility was opened with Mr. LeFevre's "permission." LeFevre testified that in response to the Conley's request for permission, he advised them that he had no control over their business activities outside the store provided such activities did not interfere with the business at the Woolworth check cashing facility. Shortly after the Ellis Street facility opened the patronage of the Woolworth facility declined. The rent paid to Woolworth for the check cashing facility also began to decline, as the gross receipts of that facility declined. The monthly rent paid to Woolworth decreased from $1980 in August of 1975 to $949 in April of 1976.

                of December, 1973 but the licensed term shall be automatically extended from year to year thereafter;  provided, however, that either party may terminate the licensed term on any date by giving to the other party, not less than sixty (60) days before such date of termination, notice of its election to do so."   An identical provision (except for dates) was contained in article 3 of the 1970 agreement
                

LeFevre testified he had a conversation with the Conleys in March of 1976, in which he informed them of his "extreme dissatisfaction" with the decline in rent paid for the check cashing booth. The Conleys, on the other hand, maintained that in March LeFevre informed them that he was not dissatisfied with the income being derived from the check cashing booth.

In April of 1976, defendant William Bigarani (Bigarani) approached LeFevre about taking over the Woolworth check cashing booth. LeFevre told Bigarani to submit a proposal, which he did through a letter sent by his attorney on April 6, 1976. On July 16, 1976, Bigarani and Woolworth executed a license for the Woolworth check cashing business to commence October 1, 1976.

On July 28, 1976, Woolworth informed the Conleys by letter of its intent to terminate the license agreement as of September 30, 1976, pursuant to the 60-day termination provision in article 3 of the license agreement.

Following the termination of the agreement, appellants filed a complaint alleging 10 causes of action against Woolworth, LeFevre, and Bigarani. At trial, seven of the original causes of action were either nonsuited or dismissed on appellants' own motion, and the case went to the jury on three causes of action only: 1) breach of contract against Woolworth only; 2) "interference with business relationship" against Bigarani only; and 3) "conspiracy to interfere with business relationship" against Woolworth, Bigarani, and LeFevre. The jury returned verdicts in favor of the defendants on the causes of action for breach of contract and interference against defendant Bigarani only. However, the jury found in favor of appellants on the cause of action for "conspiracy to interfere with business relations," and awarded appellants $200,000 in compensatory and punitive damages.

Subsequently, respondents filed a motion for judgment notwithstanding the verdict and for new trial. The trial court denied the motion for judgment notwithstanding the verdict, but granted the motion for new trial as to the cause of action for conspiracy to interfere with business relationship on the grounds that the damages awarded ($200,000) were grossly excessive.

On appeal, appellants' primary contention is that the judge abused his discretion in ordering a new trial on the grounds that the damages awarded were grossly excessive.

In their cross appeal, respondents argue that they are entitled to have judgment entered in their favor because the jury verdict vindicating Bigarani on the cause of action for interference with business relationship against him only is inconsistent with the jury verdict finding all defendants liable for conspiracy to interfere with a business relationship. We conclude that

the jury verdicts are inconsistent, and that both causes of action for interference with business relationship must be retried.

DISCUSSION

I.

We deal first with the issue raised in respondents' cross appeal, because it is dispositive of the primary issue raised by appellants.

As earlier described, the jury returned three separate verdicts. The jury found in favor of Woolworth and against appellants on the cause of action for breach of contract. The jury found in favor of Bigarani and against appellants on the cause of action against Bigarani only for "interference with business relationship." Finally, on the cause of action for "conspiracy to interfere with business relationship" the jury found in favor of appellants and against all three respondents (Woolworth, LeFevre and Bigarani). After the verdicts were rendered, respondents filed a motion for judgment notwithstanding the verdict and a motion for new trial. Although the trial judge granted respondents' motion for a new trial on the grounds that the damages were excessive as a matter of law, he denied their motion for judgment notwithstanding the verdict. In their motion for judgment notwithstanding the verdict, respondents argued that the defense verdicts on the causes of action for breach of contract and interference (as to Bigarani only) compelled a defense verdict on the final cause of action for conspiracy to interfere with a business relationship. ²

In rejecting this argument the trial court wrote:

"As to the cause of action for conspiracy to interfere with a business relationship, the Court does have some problems.

"Mr. Bigarani had contacted an employee of Manor before the license was terminated and asked her if she had access to Manor's books and asked her to look at the books and advise if Manor was holding out funds and also if a certain sum was too much to pay and further asked her to come to work for him at an increased salary if he took the business over. She reported this to her employer Manor at once.

"The Court has trouble with the concept that since the jury found that there was no interference with a business relationship, there could be a verdict for Plaintiff on the cause of action for conspiracy to interfere with a business relationship.

"The Court does see how logically this premise could be sustained, but it also appears somewhat illogical.

"Obviously, a person cannot be liable for, or interfere with his own business relationship, but can he conspire with another for the other person to interfere with the business relationship between him and a third person? This is a different problem.

"After a careful reading of what appear to be the leading cases, the Court concludes that it appears from said cases that a person can be liable for conspiring to interfere with a business relationship such as in the case before the Court."

We disagree with the above analysis and find that, under the circumstances of this case, the defense verdicts are inconsistent with the plaintiffs' verdict on the cause of action for "conspiracy to interfere with a business relationship."

Before addressing the substantive issue, we note that there is considerable semantic confusion in this case and the case law generally with respect to torts involving an interference by a third party with a...