Refrigeration Industries, Inc. v. Nemmers, WD47860

• Decision Date: 26 July 1994
• Docket Number: No. WD47860,WD47860
• Citation: 880 S.W.2d 912
• Parties: REFRIGERATION INDUSTRIES, INC., Respondent, v. Tom A. NEMMERS, Appellant.
• Court: Missouri Court of Appeals

Page 912

880 S.W.2d 912

REFRIGERATION INDUSTRIES, INC., Respondent, v.Tom A. NEMMERS, Appellant.

No. WD47860.

Missouri Court of Appeals Western District.

July 26, 1994.

Kirk R. Presley, Kansas City, for appellant.

Ronald C. Spradley, Kansas City, for respondent.

Before ULRICH, P.J., and BRECKENRIDGE and SPINDEN, JJ.

BRECKENRIDGE, Judge.

Tom Nemmers appeals the judgment entered on a jury verdict in favor of Refrigeration Industries and the order overruling his motion for judgment notwithstanding the verdict(judgment n.o.v.), or in the alternative, for a new trial.Mr. Nemmers claims that Refrigeration Industries failed to make a submissible case of fraud, misrepresentation and breach of contract.The judgment is affirmed.

In the fall of 1989, Refrigeration Industries, through its president and sole shareholder, Kent Spence, entered into discussions with Mr. Nemmers about the possibility of Mr. Nemmers joining Refrigeration Industries as an equipment salesman.Refrigeration Industries is engaged in the business of selling and servicing refrigeration and related types of equipment to various businesses including restaurants and convenience stores.Mr. Spence was interested in hiring Mr. Nemmers because he would be capable of bringing with him from his current employer, Smith St. John, a large customer base which would assist Refrigeration Industries in expanding the equipment sales portion of its business.Smith St. John sells restaurant and other food service equipment, including the types of equipment sold by Refrigeration Industries.

On December 15, 1989, Mr. Spence met with Mr. Nemmers to discuss the possibility of Mr. Nemmers' employment with Refrigeration Industries.During this meeting, Mr. Spence asked Mr. Nemmers whether he was subject to a covenant not to compete at Smith St. John which would prevent him from bringing with him any customers that he had worked with at the company.Mr. Nemmers told Mr. Spence that he was not subject to such a covenant and indicated that he had a strong customer base that he would be able to bring with him to Refrigeration Industries.Refrigeration Industries was especially interested in three major customers with whom Mr. Nemmers had worked--Perkins Restaurants, Chi-Chi's Restaurants, and Rally's Hamburgers.Mr. Nemmers told Mr. Spence that "they were on the cutting edge of developing their stores and he was the key person involved with that at Smith St. John."

Mr. Nemmers was originally to begin work at Refrigeration Industries on February 12, 1990.However, on February 2, 1990, Mr. Nemmers contacted Mr. Spence and informed him that Smith St. John had offered to raise his salary if he would stay with the company.Mr. Nemmers told Mr. Spence that if he wished to hire him, he would need his salary increased to $75,000 per year as well as an "up front" opportunity to purchase stock in Refrigeration Industries.Mr. Spence agreed to raise Mr. Nemmers' starting salary but told him that he would need to discuss the stock purchase request with the company's counsel.Mr. Nemmers' starting date was moved to February 26, 1990.

On February 13, 1990, Mr. Nemmers' supervisors at Smith St. John asked him to sign a covenant not to compete which would specifically prohibit him from soliciting business from or contacting Perkins, Chi-Chi's and Rally's without the prior consent of Smith St. John.Mr. Nemmers agreed and signed the noncompetition agreement.He never notified Mr. Spence that he had executed the noncompetition agreement with Smith St. John.Mr. Spence later testified that had he known about the subsequent noncompetition agreement, "it would have changed the deal [and] may have completely killed the deal" between himself and Mr. Nemmers.Mr. Nemmers began working for Refrigeration Industries on February 26, 1990.He also signed a finalized noncompetition agreement on that day in favor of Refrigeration Industries.A stock purchase agreement was executed on March 22, 1990.

Mr. Nemmers was employed with Refrigeration Industries until November 15, 1990, when he voluntarily quit after a dispute over a service matter.In January 1991, Mr. Nemmers resumed his employment with Smith St. John.After his return to Smith St. John, Mr. Nemmers continued to sell restaurant equipment and supplies to various customers, including some of the companies that had been customers of Refrigeration Industries.On January 18, 1991, Refrigeration Industries brought suit against Mr. Nemmers seeking injunctive relief to enforce its covenant not to compete.Mr. Nemmers filed counterclaims alleging fraud, negligent misrepresentation, tortious interference with a business relationship, breach of fiduciary duty and wrongful discharge.¹

A jury trial was held on February 8, 1993.The jury returned a verdict in favor of Refrigeration Industries for breach of contract and fraudulent misrepresentation, awarding damages in the amount of $25,680 on the breach of contract count and $16,875 in actual damages and $12,500 in punitive damages on the fraudulent misrepresentation count.The jury found against Mr. Nemmers on his counterclaim.He subsequently filed a motion for judgment n.o.v., or in the alternative, motion for new trial.On May 19, 1993, the trial court entered its judgment granting a permanent injunction in favor of Refrigeration Industries and overruling Mr. Nemmers' motion for judgment n.o.v.This appeal followed.

Mr. Nemmers presents six points on appeal.In his first point, he contends the trial court erred in overruling his motions for directed verdict and for judgment n.o.v. because Refrigeration Industries failed to make a submissible case of fraudulent misrepresentation.

In reviewing the submissibility of a case, this court views the evidence in the light most favorable to the verdict.Clayton Center Assoc. v. W.R. Grace & Co., 861 S.W.2d 686, 689(Mo.App.1993)."[The]plaintiffs are entitled to the benefit of all favorable inferences that may be reasonably drawn from the evidence."Id.This court disregards the defendant's evidence except to the extent that it supports the plaintiff's case.Id.

In order to make a submissible case for fraudulent misrepresentation, the plaintiff must prove there was (1) a representation; (2) the representation was false; (3) the representation was material; (4) the speaker knew the representation was false, or he was ignorant of its truth or falsity; (5) the speaker intended his representation to be acted upon by the hearer in a manner reasonably contemplated; (6) the hearer was ignorant of the falsity of the representation; (7) the hearer relied on the truth of the representation; (8) the hearer had a right to rely on the speaker's truthfulness; and (9) there was incurred by the hearer consequent and proximately caused injury.Heberer v. Shell Oil Co., 744 S.W.2d 441, 443(Mo. banc 1988).

In this case, Refrigeration Industries submitted the following verdict-directing instruction:

INSTRUCTIONNO. 11

First, Tom Nemmers represented to Refrigeration Industries that he would be able to bring business from Perkins Restaurants, Chi-Chi's Restaurants and Rally's Hamburgers with him to Refrigeration Industries and that he had not signed a non-compete agreement with Smith St. John, intending that Refrigeration Industries rely upon such representations in asking Tom Nemmers to join Refrigeration Industries.

Second, Tom Nemmers then executed a non-compete agreement with Smith St. John precluding him from directly or indirectly soliciting or attempting to solicit business from or engaging in any contact with Perkins, Chi-Chi's and Rally's without Smith St. John's prior written consent.

Third, Tom Nemmers failed to disclose the existence of the non-compete agreement to Refrigeration Industries, and

Fourth, the representations were therefore false, and

Fifth, Tom Nemmers knew that they were false, and

Sixth, the representations were material to the decision of Refrigeration Industries to ask Tom Nemmers to join Refrigeration Industries, and

Seventh, Refrigeration Industries relied on the representations in asking Tom Nemmers to join Refrigeration Industries, and in so relying was using ordinary care, ² and

Eighth, as a direct result of such representations Refrigeration Industries was damaged.

Mr. Nemmers challenges the submissibility of the fraudulent misrepresentation claim on five grounds, designated as subpoints (A) through (E).In subpoint (A), Mr. Nemmers claims that Refrigeration Industries failed to present evidence that the representations submitted in InstructionNo. 11 were false statements.The record shows that on December 15, 1989, Mr. Nemmers told Mr. Spence that he did not have a noncompete agreement with Smith St. John.Mr. Nemmers also indicated that he would be able to bring Perkins, Chi-Chi's and Rally's business with him because he did not have a noncompete agreement with Smith St. John.Although these statements were true on December 15, 1989, they became false on February 13, 1990, when Mr. Nemmers executed a noncompete agreement with Smith St. John.Despite the fact that the Smith St. John agreement was signed before negotiations with Refrigeration Industries were finalized and before Mr. Nemmers had begun working for Refrigeration Industries, Mr Nemmers never mentioned its existence to Mr. Spence at any time prior to or during his employment with Refrigeration Industries.We find this evidence sufficient to establish that Mr. Nemmers' representations, albeit initially true, subsequently became false and that Mr. Nemmers failed to disclose the change of circumstances to Mr. Spence.

Under subpoint (B), Mr. Nemmers claims that Refrigeration Industries failed to prove that it relied on his representations.At trial, Mr. Spence testified that it was very important that Mr. Nemmers not be subject to a covenant not to compete with Smith St. John so that he would be able to bring with him to Refrigeration Industries a strong...