Oxford Furniture Companies, Inc. v. Drexel Heritage Furnishings, Inc.
| Decision Date | 14 January 1993 |
| Docket Number | No. 91-7586,91-7586 |
| Citation | 984 F.2d 1118 |
| Parties | OXFORD FURNITURE COMPANIES, INC., a corporation, Plaintiff-Counter-Defendant-Appellee, v. DREXEL HERITAGE FURNISHINGS, INC., a corporation, and Masco Corporation, a corporation, Defendants-Counterclaim-Plaintiffs-Appellants, Trimas Corporations, Inc., etc., et al., Defendants-Counterclaim-Plaintiffs. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Frank E. Lankford, Jr., Huie, Fernambuco & Stewart, Birmingham, AL, Hubert Humphrey, Brooks, Pierce, McLendon, Humphrey & Leonard, Greensboro, NC, for appellant.
James R. Pratt, III, James P. Rea, Hogan, Smith, Alspaugh, Samples & Pratt, PC, Birmingham, AL, for appellee.
Appeal from the United States District Court for the Northern District of Alabama.
Before BIRCH, Circuit Judge, JOHNSON, Senior Circuit Judge, and THOMAS *, Senior District Judge.
A jury found defendants-appellants Drexel Heritage Furnishings, Inc. ("Drexel") and Masco Corp. ("Masco") liable to Oxford Furniture Companies, Inc. ("Oxford") for over $1.7 million in compensatory and punitive damages. Drexel and Masco advocate reversal on several grounds. We AFFIRM in part and VACATE in part.
Oxford owned and operated several furniture retail stores in Birmingham, Alabama. Lanier Chew was the owner of Oxford, and Gary Kitchen was its chief financial officer. One of Oxford's competitors, Birmingham Wholesale Furniture Company ("Birmingham Wholesale"), was owned by Tommy McLeod. Drexel is a furniture manufacturing company and a wholly owned subsidiary of Masco.
For several years prior to 1989, Birmingham Wholesale was a dealer of Drexel furniture in Birmingham. During the 1980's Drexel began opening retail "showcase" stores devoted exclusively to Drexel furniture. In the fall of 1988, Drexel and Oxford initiated discussions concerning the opening of a Drexel showcase store at one of Oxford's locations. This was the second time Drexel and Oxford had discussed the opening of a showcase store by Oxford. The first discussions in 1985-86 had terminated because Drexel was unwilling to terminate Birmingham Wholesale as its dealer and grant Oxford the exclusive Birmingham market for Drexel furniture. During the second round of discussions, Chew informed Drexel that he would open a showcase store only if Oxford was granted exclusivity in the Birmingham market. These discussions led to a January 4, 1989, meeting between Oxford and Drexel. Oxford was represented at the meeting by Chew and Kitchen. Drexel was represented by Tom Skipper, vice president of sales, Doug Lybrook, southeastern sales manager, and Max McClain, Birmingham sales representative.
Oxford contends that at this meeting Oxford and Drexel entered into a contract with the following terms: Oxford would open a showcase store at one of its five stores; Oxford would display a smaller gallery of Drexel furniture in a section of another store; Drexel would provide a favorable financing package to Oxford on the Drexel furniture; Oxford would be the exclusive Drexel dealer in Birmingham; the showcase store and gallery would premiere in September, 1991; and the contract was to exist as long as Oxford performed. Drexel contends that no contract was formed at this meeting.
Commencing in February, 1989, McLeod, the owner of Birmingham Wholesale, communicated his displeasure to Drexel concerning Drexel's discussions with Oxford. McLeod's dissatisfaction increased during the spring and was expressed to Drexel through correspondence and telephone conversations. At an April, 1989, furniture market show, Skipper, acting for Drexel, informed McLeod of Drexel's intent to open a showcase store with Oxford and to terminate McLeod as a Drexel dealer. At that meeting McLeod was informed that Birmingham Wholesale could purchase Drexel furniture to fill out existing Drexel lines, but as of September 1, 1989, Birmingham Wholesale would no longer be permitted to purchase new Drexel furniture.
Later at the furniture market, Oxford's Chew and Kitchen met with Drexel. At this encounter Drexel was represented by Skipper and Ernie Dehnert, Drexel's senior vice president. Skipper advised Chew that McLeod had been terminated and that Birmingham Wholesale would not be allowed to purchase Drexel furniture after September 1, 1989. Drexel contends that the result of this meeting was a contract between Oxford and Drexel similar in terms to the alleged January contract advanced by Oxford subject, however, to the satisfaction of two important conditions; first, McLeod had to be terminated as a Drexel dealer and, second, Oxford's credit worthiness had to be demonstrated to Drexel.
Following the April meeting, Oxford began preparing its stores for the Drexel displays. The preparation was aided by a Drexel designer who was sent to Birmingham to help Oxford. Oxford also eliminated a number of furniture lines that it carried from other manufacturers to accommodate the Drexel furniture.
In May, 1989, Drexel's parent company, Masco, became involved in the dispute between McLeod and Drexel. Fred Copeland, an officer of Masco and president of Masco's division containing its furniture manufacturing subsidiaries, including Drexel, met with McLeod in an attempt to mollify McLeod who was threatening litigation and other disruptions to Drexel's business. Following the meeting, Copeland contacted Drexel's Dehnert, questioned the advisability of the decision to terminate McLeod, and suggested that Dehnert reconsider Drexel's decision.
On June 19, 1989, Dehnert informed Oxford that Drexel had decided to rescind its termination of McLeod as a Drexel dealer, but that Drexel was willing to continue the deal with Oxford without the exclusivity arrangement. Oxford refused and canceled its plans to sell Drexel furniture. Oxford then set about to renew the lines it had abandoned in order to address the furniture supply shortfall it faced.
In 1989, Oxford incurred a large loss. Following the loss in 1989, Oxford sold two of its stores and began to liquidate another. The attempt to generate cash was unsuccessful and by 1991 all of Oxford's stores were closed.
In May, 1990, Oxford filed suit against Drexel and Masco. Oxford sought recovery claiming that (1) Drexel breached the contract between Oxford and Drexel, (2) Drexel fraudulently suppressed McLeod's objections to contract, and (3) Masco tortiously interfered with the contract. Oxford sought compensatory and punitive damages on all counts.
After a full presentation by both parties, the district court granted Oxford's motion for a directed verdict against Drexel on the breach of contract claim. The district denied Drexel's and Masco's motions for directed verdicts on the fraudulent suppression and tortious interference claims. The jury deliberated on those two claims and found that Drexel had committed fraud and that Masco had tortiously interfered with the contract between Oxford and Drexel. The jury awarded compensatory damages of $1,473,000 for each of the three claims. Each award was included in the other awards resulting in a total compensatory damage recovery of $1,473,000. The jury also found Masco liable for punitive damages of $250,000 for its tortious interference. The district court entered judgment against Drexel and Masco for $1,723,000. The district court denied Drexel's and Masco's motions for judgment notwithstanding the verdict or, in the alternative, a new trial.
On appeal, Drexel and Masco argue that the district court erred in granting Oxford's motion for a directed verdict on the contract claim, denying Drexel's and Masco's motions for directed verdicts on the fraudulent suppression and tortious interference claim, and submitting the punitive damage claim against Masco to the jury. They also contend that the evidence was not sufficient to support the jury's verdict awarding $1,473,000 in compensatory damages and that the closing argument of Oxford's counsel was improper.
Drexel complains that the district court should not have granted the directed verdict on the breach of contract claim because the terms of the contract were in dispute. Drexel submits that there was conflicting evidence as to the date of the formation of the putative contract, and the conditions precedent to the contract. Further, Drexel argues that the duration of the contract was indefinite, and under the UCC the contract was therefore terminable at will by either party subject only to reasonable notice. See Ala.Code § 7-2-309(2), (3) (1984).
We review the grant or denial of a motion for a directed verdict under the same standard used by the district court. MacPherson v. University of Montevallo, 922 F.2d 766, 770 (11th Cir.1991). All evidence and all reasonable inferences must be considered in the light most favorable to the nonmoving party. Id. The district court properly grants a directed verdict only if the facts and inferences are so strong that the court believes that reasonable persons in the exercise of impartial judgment could not arrive at a contrary verdict. Id. If, however, the evidence allows reasonable persons to reach different conclusions, the district court should deny a directed verdict. Id.
Five persons were present at the January 4, 1989, meeting between Oxford and Drexel. They were Oxford's Kitchen and Chew and Drexel's Skipper, Lybrook, and McClain. Kitchen, Chew, and McClain all testified that at this meeting Oxford and Drexel reached an agreement. The relevant terms of the contract were that by the fall of 1989, Oxford would be the exclusive Drexel dealer in Birmingham, Drexel would provide Oxford with a favorable financing package, and Oxford would open a showcase store and a gallery of Drexel furniture. The contract was to exist as long as Oxford performed.
Skipper disputed that a contract was formed at the January meeting. Ins...
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