Smoot v. B & J Restoration Servs., Inc.

• Decision Date: 16 May 2012
• Docket Number: No. 106,368.,Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4.,106,368.
• Citation: 279 P.3d 805,2012 OK CIV APP 58
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
• Parties: Larry SMOOT; Connie Smoot and C & L Restoration Services, LLC, Plaintiffs/Appellees, v. B & J RESTORATION SERVICES, INC., a/k/a B & J Restoration, Inc.; Hopper Properties, LLC; Brandon Hopper and Julie Hopper, Defendants/Appellants.

279 P.3d 805

2012 OK CIV APP 58

Larry SMOOT; Connie Smoot and C & L Restoration Services, LLC, Plaintiffs/Appellees,

v.B & J RESTORATION SERVICES, INC., a/k/a B & J Restoration, Inc.; Hopper Properties, LLC; Brandon Hopper and Julie Hopper, Defendants/Appellants.

No. 106,368.Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4.

Court of Civil Appeals of Oklahoma,

Division No. 4.

May 16, 2012.

Appeal from the District Court of Tulsa County, Oklahoma; Honorable Rebecca Brett Nightingale, Trial Judge.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED FOR FURTHER PROCEEDINGS.

Jasen R. Corns, Jenks Law, P.L.L.C., Jenks, Oklahoma, for Plaintiffs/Appellees.

Mark D. Lyons, Lyons & Clark, Inc., Tulsa, Oklahoma, for Defendants/Appellants.

JOHN F. FISCHER, Chief Judge.

¶ 1 Defendants, B & J Restoration Services, Inc., and Brandon and Julie Hopper, appeal a judgment entered on a verdict rendered in favor of Plaintiffs, Larry and Connie Smoot and their company C & L Restoration Services, LLC (collectively the Smoots), on the Smoots' breach of contract claim. The Hoppers and B & J also appeal a post-trial order overruling their motion for judgment notwithstanding the verdict. In substance, the Hoppers contend they are not personally liable in this action and all three Defendants challenge the amount of damages awarded to the Smoots. Finally, by an amendment to their petition-in-error, the Defendants also appeal a post-trial judgment awarding the Plaintiffs costs and attorney fees. We affirm the judgment as to the Hoppers' personal liability for breach of the non-compete provisions of the parties' agreements, reverse as to the Hoppers' liability for breach of the remaining provisions of those agreements, reverse as to the amount of damages awarded, and remand for further proceedings to determine the proper amount of damages. As a result, we vacate the amount of attorney fees awarded to the Smoots and remand for determination of the proper amount of fees to be awarded at the conclusion of the proceedings in the district court on the issue of damages.

BACKGROUND

¶ 2 The Hoppers were in the cleaning and restoration business. They owned and operated their business through B & J and a franchise known as ServPro. The corporation owned title to the franchise and the assets associated with the business. B & J conducted business under the trade name ServPro of Central Tulsa County. The Smoots wished to purchase the Hoppers' business and ultimately two contracts were executed documenting the purchase and sale, a Purchase Agreement and an Agreement Not to Compete and Training Agreement (Restrictive Covenant). Subsequent to the transfer of ownership, a dispute developed and the Smoots filed this action. At the conclusion of the trial, the district court sustained the Defendants' motions for a directed verdict as to the Smoots' theories of recovery for rescission, unjust enrichment, detrimental reliance and intentional interference with prospective economic advantage and/or business relations, but submitted the Smoots' fraud and breach of contract theories to the jury. The jury returned a verdict in favor of the Defendants on the fraud theory, but found for the Smoots on their breach of contract theory assessing damages against the Hoppers and B & J in the amount of $260,000 for breach of the Purchase Agreement, and $100,000 for breach of the Restrictive Covenant. The Hoppers and B & J appeal the judgment entered on the verdict and the district court's order denying their motion for judgment notwithstanding the verdict.

STANDARD OF REVIEW

¶ 3 This appeal raises essentially two issues: (1) the Hoppers' personal liability for the judgment, and (2) the appropriate measure of damages. Defendants challenge both the legal correctness of the district court's instructions to the jury and the sufficiency of the evidence supporting the verdict in favor of the Smoots.

In an action at law, a jury verdict is conclusive as to all disputed facts and all conflicting statements, and where there is any competent evidence reasonably tending to support the verdict of the jury, this Court will not disturb the jury's verdict or the trial court's judgment based thereon.

Florafax Int'l, Inc. v. GTE Mkt. Res., Inc., 1997 OK 7, ¶ 3, 933 P.2d 282, 287. “The sufficiency of the evidence to sustain a judgment in an action of legal cognizance” is determined by an appellate court in light of the evidence tending to support it, “together with every reasonable inference deducible therefrom, rejecting all evidence adduced by the adverse party which conflicts with it.” Park v. Sec. Bank and Trust Co., 1973 OK 72, ¶ 21, 512 P.2d 113, 118.

¶ 4 The challenges on appeal were also reurged in Defendants' motion for judgmentnotwithstanding the verdict. “The standard for determining a motion for judgment notwithstanding the verdict (JNOV) is identical to the standard for determining a motion for directed verdict.” First Nat'l Bank in Durant v. Honey Creek Entm't Corp., 2002 OK 11, ¶ 8, 54 P.3d 100, 102. Therefore, the determination of whether the Defendants' motion for judgment notwithstanding the verdict should have been granted depends on the correctness of the district court's disposition of the Defendants' motion for directed verdict. “When a motion for a directed verdict made at the close of all of the evidence should have been granted, the court shall, at the request of the moving party, grant judgment in the moving party's favor....” 12 O.S.2011 § 698. See McInturff v. Oklahoma Natural Gas Transmission Co., 1970 OK 169, ¶ 9, 475 P.2d 160, 162.

A motion for directed verdict ... should not be sustained unless there is an entire absence of proof tending to show a right to recover; and in passing thereon, a trial court must consider as true all of the evidence favorable to the party against whom the motion ... is directed, together with all inferences that reasonably may be drawn therefrom, and must disregard all conflicting evidence favorable to the movant.

Downing v. First Bank in Claremore, 1988 OK 67, ¶ 8, 756 P.2d 1227, 1229. The standard in an appellate court for reviewing the correctness of the district court's ruling on a motion for directed verdict is the same as the standard used by the district court. First Nat'l Bank in Durant, 2002 OK 11, ¶ 8, 54 P.3d at 102;Spradlin v. American Travelers Ins. Co., 1961 OK 223, ¶ 13, 376 P.2d 323, 328. Finally,

Instructions are explanations of the law of a case enabling a jury to better understand its duty and to arrive at a correct conclusion. When reviewing allegedly erroneous jury instructions, this Court must consider the instructions as a whole. We look to whether the instructions reflect the law on the relevant issue, not whether the instructions were perfect.

Bierman v. Aramark Refreshment Servs., Inc., 2008 OK 29, ¶ 22, 198 P.3d 877, 884–85.

ANALYSIS

¶ 5 In their effort to purchase the Hoppers' business, the Smoots contacted Sunbelt Business Brokers. Sunbelt is a national business brokerage firm that the Hoppers hired to sell B & J. The Smoots submitted a series of written offers on printed Sunbelt forms. The offers and negotiations specific to this transaction are reflected on these forms by hand-written additions, modifications and interlineations. These documents are variously signed by one or both of the Smoots and one or both of the Hoppers without indication that any signatory is signing in a representative capacity. Although Sunbelt was paid by B & J and represented the Hoppers throughout the sale, the Sunbelt offer forms state that if the parties did not understand the document, they should consult an attorney because Sunbelt was not authorized to give legal advice. The negotiations resulted in the execution of the Purchase Agreement and Restrictive Covenant concluding the sale. These agreements were drafted by Sunbelt's general counsel. The closing of the sale was also conducted by Sunbelt's general counsel.

¶ 6 The Purchase Agreement recites that it is an agreement between B & J, as the Seller, and Connie and Larry Smoot, as Buyer. A Certificate of Consent authorizes Connie and Larry Smoot to execute the Purchase Agreement on behalf of C & L. The agreed purchase price is $260,000, allocated among six categories, including goodwill, the franchise, business property and a covenant not to compete. The Purchase Agreement recites that the parties had previously entered into a non-binding term sheet concerning the sale that will be replaced by the Purchase Agreement. The Purchase Agreement is signed by Brandon and Julie Hopper as Sellers and by Larry and Connie Smoot as Buyers. At the bottom of each page of the Purchase Agreement is a signature line following: “Seller Initials.” The initials of Brandon and Julie Hopper appear on each line.

¶ 7 At trial, Sunbelt's general counsel testified that she prepared the Purchase Agreement and handled the closing. The general counsel testified that she mistakenly omitted B & J's corporate designation in the signature block at the end of the document, and the designation of Brandon Hopper as president and Julie Hopper as secretary of that corporation on their respective signature lines. The Purchase Agreement contains a provision reciting that it is the entire agreement between the parties and that all prior “negotiations and understandings” are merged into the Purchase Agreement. The Restrictive Covenant, executed approximately forty-five days after the Purchase Agreement was signed, identifies C & L as the Buyer and B & J as the Seller. The Restrictive Covenant is signed by Connie L. Smoot as managing member for C & L and Brandon Hopper as president of B & J. There are no other signatories to the Restrictive Covenant. The Restrictive Covenant recites that it is further consideration for the assets being purchased by the Smoots as specified in the Purchase Agreement.¹ The Restrictive Covenant states that each party has contributed...