Robinson v. Highway Management Systems, Inc., 82-1118-CV-W-9-6.
| Decision Date | 26 April 1984 |
| Docket Number | No. 82-1118-CV-W-9-6.,82-1118-CV-W-9-6. |
| Citation | 583 F. Supp. 1558 |
| Parties | George ROBINSON and Carol Robinson, d/b/a Loadpower of Denver, Plaintiffs, v. HIGHWAY MANAGEMENT SYSTEMS, INC., et al., Defendants. |
| Court | U.S. District Court — Western District of Missouri |
Joseph Colussi and Mark Bluhm, Gage & Tucker, Kansas City, Mo., for plaintiffs.
Karl H. Timmerman, Jerry Bryant, Kansas City, Mo., for defendants.
MEMORANDUM AND ORDER DIRECTING ENTRY OF FINAL JUDGMENT
For reasons stated in the court's order of April 19, 1984, and in further oral statements on the record, judgment in favor of plaintiffs and against defendants Highway Management Systems, Inc., Highway Power, Inc., William McMaster, Ali A. Attayi, and Wallace Koenning was entered as of that date. Defendants have defaulted in their obligations under court orders, have not supplied discovery materials, and have made it impossible to try the liability issues on the scheduled trial date. A hearing to assess damages was held on April 23, 1984. Counsel for defendants appeared and crossexamined witnesses, but presented no rebuttal evidence as to damages.
Plaintiffs withdrew their claim for punitive damages, withdrew their jury demand, and the case was heard by the court without objection. Plaintiffs also dismissed without prejudice their claim against defendant Dailey.
Confession of judgment in the amount of $35,000 (the amount of the prayer) was tendered at the beginning of the hearing. Plaintiffs declined to limit their claim to that amount, however, and offered proof of damages in excess of said sum.
Plaintiffs presented two questions, combining issues of fact and law, which the court will rule in favor of defendants. The ruling will be based essentially on an insufficiency of evidence.
First, plaintiffs contend they are entitled to recover for mental distress and suffering caused by their having been fraudulently induced to enter into a franchise-type agreement with Highway Management Systems, Inc., to serve as a Colorado outpost of a supposed nationwide computer-supported business network, engaged in matching loads with available trucks. Neither the computer system nor the nationwide network were as developed or as near completion as plaintiffs were led to believe. Plaintiffs found the franchise to be essentially inoperable.
The most definitive word on emotional distress as an element of damages in a fraud case under Missouri law is the Eighth Circuit rejection of such a claim in Walsh v. Ingersoll-Rand Co., 656 F.2d 367, 370-1 (8th Cir.1981). It is arguable, however, that the Missouri law is liberalizing, under the doctrine of Bass v. Nooney Co., 646 S.W.2d 765, 772-3 (Mo. banc 1983), which judicially repealed the "impact rule" for tort recovery in personal injury claims. Bass requires, however, that a "medically diagnosable" mental trauma occur, of "sufficient severity so as to be medically significant."
The court understands that Judge Stevens extended the Bass rationale to a fraud claim in the celebrated Christine Craft television litigation, and it is certainly arguable that Bass logically supersedes the Walsh restriction. In the present case, however, there was no medical testimony or even a hearsay reporting of medical consultation and diagnosis that complies with Bass. While Mrs. Robinson testified that she had visited an internist, there was no evidence that a "medically significant" mental health problem was discovered, or that the visit had a causal connection with defendants' actions. Although some level of emotional distress may be fairly inferred, no recovery under the Bass rule is authorized under the facts, and, in any event, the monetary value of the distress would doubtless be quite limited. Compare Wells v. Holiday Inns, Inc., 522 F.Supp. 1023 (W.D.Mo.1981) where plaintiff sought recovery for mental distress caused by breach of a contract for hotel reservations.
Plaintiffs' second claim that will be rejected is the "benefit of the bargain" claim for lost profits. Such a claim is an alternative to all other damage claims advanced by plaintiffs. Central Microfilm Service v. Basic/Four Corp., 688 F.2d 1206, 1220 (8th Cir.1982).1 In the present case, there were projections or estimates of future gross income from a successful franchise operation, but no showing what the net income would have been, and no evidence that similar businesses have in fact enjoyed such revenues. Evidence of the profit and loss history of similar businesses (or other evidence of equally persuasive character) is needed to avoid rejection of the claim as speculative. Crues v. KFC Corp., 546 F.Supp. 217, 219 (E.D.Mo. 1982). Lost profit testimony is often currently rejected in Missouri fraud cases where considered "speculative." E.g., Essex v. Getty Oil Co., 661 S.W.2d 544, 552 (Mo.App.1983). The same cautious approach is used in breach of contract cases. Chmieleski v. City Products Corp., 660 S.W.2d 275, 298-9 (Mo.App.1983). Plaintiffs' proof in this case will therefore be rejected as speculative, insofar as plaintiffs project a $14 million cumulative (gross) earnings theory for the years 1983-2005. P.Exh. 31b.
Plaintiffs' claim for expenses and losses in reliance on the defendants' representations is better grounded in demonstrated fact. The court finds the following losses have occurred:
1. Fees paid for a worthless franchise $16,000
2. Loss on residence (costs of
$125,500 less sales price of
$115,000) $10,500
3. Moving expenses $ 3,116
4. "Start-up" costs $ 5,364
5. Lease expense $ 3,200
6. Furniture and equipment, less
resale value $ 2,100
7. Operating loss $ 374
8. Retirement benefit loss $15,3152
Judgment against the named defendants, jointly and severally, in favor of both plaintiffs will be entered in the sum of $55,969.00. SO ORDERED.
There remains the claim of George Robinson for his lost earnings. The appraisal of this claim is the most difficult aspect of the case. Lost future earnings can rarely be computed with much certainty. See Kelly v. Illinois Central Gulf Railroad Company, 552 F.Supp. 399, 402 (W.D.Mo.1982). In personal injury cases there is, however, often a modicum of assurance...
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Medlock v. Farmers State Bank of Texas County, s. 13579
...restriction of willfully or maliciously expressed in Walsh v. Ingersoll-Rand, 656 F.2d 367 (8th Cir.1981). Robinson v. Highway Management Systems, Inc., 583 F.Supp. 1558 (W.D.Mo.1984). In this connection, without acknowledgment of the stated general rule, recovery for emotional distress has......
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Glass Design Imports, Inc. v. Rastal GmbH & Co. KG, 85-0669-CV-W-1-5.
...v. First Commodity Corp., 735 F.2d 281, 285 (8th Cir.1984); Central Microfilm, 688 F.2d at 1220-21; Robinson v. Highway Management Systems, Inc., 583 F.Supp. 1558, 1559 (W.D. Mo.1984). Thus, evidence of the amount of "out-of-pocket" losses is limited to $245,000, the total expenses and loss......