Phipps v. Skyview Farms, Inc.

Decision Date19 May 2000
Docket NumberNo. S-99-358.,S-99-358.
Citation610 N.W.2d 723,259 Neb. 492
PartiesLarry K. PHIPPS, appellee and cross-appellant, v. SKYVIEW FARMS, INC., a Nebraska corporation, appellant and cross-appellee.
CourtNebraska Supreme Court

Steve Windrum, Gothenburg, for appellant.

Katherine R. Hall and, on brief, Frankie J. Moore, of McCarthy, Gale, Moore & Hall, North Platte, for appellee.

HENDRY, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

HENDRY, C.J.

I. INTRODUCTION

Larry K. Phipps brought a breach of contract action against Skyview Farms, Inc. (Skyview), claiming that Skyview breached the terms of a truck/trailer lease agreement. Skyview counterclaimed, asserting that Phipps breached the agreement, resulting in damages to Skyview. The district court for Dawson County found that Skyview breached the agreement, dismissed the counterclaim, and entered a judgment in favor of Phipps in the amount of $8,070.08. Skyview now appeals. We moved this case to our docket pursuant to our power to regulate the caseloads of this court and the Nebraska Court of Appeals. See Neb.Rev.Stat. § 24-1106(3) (Reissue 1995).

II. FACTUAL BACKGROUND

Skyview, a corporation based in Gothenburg, Nebraska, is in the business of running semi-trucks throughout the United States and Canada. W. Alan Rickertsen is the owner of Skyview. Phipps owns a tractor and trailer combination (truck) which he uses for hauling commodities over the road. On February 4, 1997, Phipps entered into a truck/trailer lease agreement (agreement) with Skyview. Under the terms of the agreement, Skyview would dispatch loads of freight to Phipps for transportation, and Phipps would furnish his truck for delivering the loads. The agreement was for a term commencing upon the signing of the agreement, which occurred on February 4, and ending on December 31.

The agreement provided that Phipps would be paid "by the load," with Skyview deducting a percentage from the gross receipts as a brokerage fee and compensation for its services. Phipps was required to make an initial escrow deposit of $500 from which amount Skyview could withdraw to satisfy certain liabilities for which Skyview was entitled to reimbursement. Phipps was obligated to conduct a "`clean operation,'" including "check calls, on time loading, on time delivery, no adverse safety reports, deliveries at correct destinations, all items required under safety procedure, no exceptions noted on delivery receipts and no discourteousness at loading or unloading points."

Phipps was provided with an "Owner/Operator Handbook" (handbook), further detailing the parties' obligations and procedures to be followed. The provisions of the handbook were incorporated into the agreement. The handbook required drivers to keep legal "log books," which are logs detailing times when the driver is sleeping, driving, off duty, or making fuel stops.

On June 20, 1997, Skyview terminated the agreement with Phipps over the telephone after an accident which had occurred on June 19 while Phipps was unloading his truck at a jobsite in Maryland. Rickertsen also sent Phipps a letter dated June 20, 1997, confirming the earlier telephone conversation terminating the agreement due to Phipps' "gross misconduct and safety violations," and effective upon the unloading of Phipps' truck at the Maryland jobsite.

On July 23, 1997, Rickertsen sent a letter to Phipps informing Phipps that Skyview was unable to settle Phipps' account because Phipps had failed to return license plates, permits, and decals that were the property of Skyview. Phipps disputed the amounts deducted from moneys owed to him by Skyview as stated on Skyview's "Statement of Account" for Phipps, including charges for license plates and permits, "Cost for Missed Load," "Early Termination Service Charge," and "Loss of Escrow Deposit." Phipps did not inform Skyview by certified mail of the dispute regarding these settlement computations within 60 days, although such notice was required under the terms of the agreement. Phipps refused to return the license plates, permits, and decals until the dispute regarding these charges was settled.

This dispute led Phipps to file a lawsuit against Skyview on January 7, 1998, claiming that Skyview breached the agreement by its unilateral termination of the agreement on June 20, 1997. Skyview filed an answer, claiming that Skyview properly terminated the agreement pursuant to its terms allowing for termination upon a material breach by Phipps. Skyview also filed a counterclaim for breach of contract based on the June 19, 1997, accident and other alleged breaches by Phipps.

Prior to trial, Phipps filed a motion in limine requesting that the court limit Skyview's introduction of certain evidence, including Occupational Safety and Health Administration (OSHA) documents, a report from the Maryland State Patrol, and any testimony from Rickertsen regarding alleged hearsay statements he received, all concerning the June 19, 1997, accident. The trial court granted the motion. Phipps' objections to this evidence at trial were sustained.

At trial, Phipps testified that on June 19, 1997, he was delivering a sand-like substance to a liquid nitrogen plant in Maryland. The product Phipps was delivering had been purchased by a company called Chemrock. When Phipps arrived at 7:30 a.m., Chemrock representatives told him that they were not ready to receive the load. Phipps did not recall being advised as to a specific unloading time, although Skyview's internal documentation indicates an unloading time of 2 p.m.

Phipps testified that he called Rickertsen and reported that he was angry because his truck was not going to be unloaded. Rickertsen informed Phipps that this was a "demurrage load," meaning Phipps would be paid by the hour while waiting to be unloaded. Chemrock representatives then informed Phipps that they would start unloading and instructed Phipps to unload into a pneumatic tanker. Two Chemrock employees positioned conveyor belts under Phipps' truck and onto the tanker. When Phipps opened one of the storage compartments on his trailer by opening the gate on the underside of the compartment, a large amount of product fell onto the conveyor belt, causing the conveyor belt to stop. While Phipps was trying to get the conveyor running again by pulling on the conveyor's pulley system, his hand became entangled with a belt, causing him to sever the ends of two fingers on his left hand. Before being taken to the hospital, Phipps called Rickertsen and informed him of the accident.

Phipps was able to leave the hospital on the evening of June 19, 1997. The next day, June 20, Phipps called Rickertsen. During this telephone call, Rickertsen informed Phipps the agreement was terminated, effective upon the unloading of the truck. Phipps did not pick up the next load assigned to him, which was 50 miles away from the Maryland jobsite.

On June 21, 1997, Phipps began his return trip from Maryland to his home in Colorado. This was a "deadhead" trip, which means running without a load. On the advice of doctors, Phipps took time off to allow his fingers to heal before beginning to drive again. Three weeks after the agreement with Skyview was terminated, Phipps entered into another truck lease arrangement with GM Trucking.

Rickertsen testified about the events of June 19 and 20, 1997, including the telephone call from Phipps informing Rickertsen of the accident.

Rickertsen claimed he had previously informed Phipps over the telephone of the 2 p.m. unloading time. Rickertsen further testified that later on the morning of the accident he was contacted by both the Maryland State Patrol and the Maryland division of OSHA regarding Phipps' accident, but no action was taken against Skyview by the state patrol or OSHA.

Rickertsen also testified about several incidents which Skyview claimed constituted breaches of the agreement by Phipps, including impatient behavior during telephone calls made to Rickertsen, arriving too early at the Maryland jobsite, carrying a firearm in his truck on one occasion, and instances of failing to properly fill out various types of paperwork, including the logbooks covering the period from June 16 to 23, 1997. Skyview did not receive Phipps' logbook covering this time period until some time after the agreement was terminated. Rickertsen testified that Skyview was unable to find a driver to replace Phipps.

Phipps claimed damages of $12,302.79, consisting of $6,345.08 pursuant to the outstanding settlement sheets for work Phipps performed under the agreement; $1,725 for the cost of the deadhead return trip; and $4,232.71 in lost income for the 3-week period during which he was unemployed after Skyview terminated the agreement. On its counterclaim, Skyview claimed damages in the amount of $2,500 for Phipps' failure to return license plates and decals, and lost profits in the amount of $9,277.08 as a result of being unable to find a replacement driver.

The trial court found that Skyview breached the agreement by unilaterally terminating the agreement on June 20, 1997. The court specifically found that the reasons Rickertsen gave at trial for terminating the agreement were "pretextual" and found that many of the reasons given for terminating the agreement were not known to Skyview at the time the agreement was terminated. The court also found that Phipps substantially performed his obligations and that none of the alleged violations constituted a material breach. The court noted that Phipps' progress reports up to the time of the June 19 accident were generally positive and satisfactory. The court found that Phipps had proved the damages claimed for amounts due on the settlement sheets and the cost of the deadhead trip, but not for the lost income. The court awarded $8,070.08 in damages and dismissed Skyview's counterclaim.

Skyview made a motion for new trial, which was overruled. This appeal followed.

III. ASSIGNMENTS OF ERROR

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