Utah Foam Products, Inc. v. Polytec, Inc.

• Decision Date: 21 June 1991
• Citation: 584 So.2d 1345
• Parties: UTAH FOAM PRODUCTS, INC. v. POLYTEC, INC., and Phil Cashion. 89-767.
• Court: Alabama Supreme Court

Page 1345

584 So.2d 1345

UTAH FOAM PRODUCTS, INC. v. POLYTEC, INC., and Phil Cashion.

89-767.

Supreme Court of Alabama.

June 21, 1991.

Rehearing Denied Aug. 23, 1991.

Steven G. Johnson of Richards, Bird & Kump, Salt Lake City, Utah, for appellant.

James L. Shores, Jr., Fairhope, for appellees.

ADAMS, Justice.

Utah Foam Products, Inc. (hereinafter "Utah Foam") appeals from a judgment entered on a jury verdict assessing damages in favor of Polytec, Inc., and Phil Cashion in the amount of $30,731 on their claims of unjust enrichment, and a total of $375,000 on their claims of tortious interference with a business relationship and misrepresentation. We affirm as to the award based on the claims of tortious interference with a business relationship and misrepresentation; but as to the claim of unjust enrichment we reverse the award and render a judgment for the defendants.

This is the fourth appeal to this Court in this case. The factual and procedural background of this case is well set out in this Court's prior opinions, Polytec, Inc. v. Utah Foam Products, Inc., 439 So.2d 683 (Ala.1983), Polytec, Inc. v. Utah Foam Products, Inc., 477 So.2d 295 (Ala.1985), and Polytec, Inc. v. Utah Foam Products, Inc., 540 So.2d 700 (Ala.1989), and need not be repeated entirely here. The record in the present appeal reveals the following facts relevant to this appeal:

Several buildings located at the Brookley Industrial Complex, owned by the City of Mobile and leased to Teledyne, were damaged by Hurricane Frederic in September 1979. Teledyne elected to assume full responsibility for the repair of the damaged buildings. These repairs included substantial roofing work. Teledyne hired J.O. Lockridge General Contractors (hereinafter "Lockridge") as construction manager to oversee the repair project. Part of Lockridge's work entailed the preparation of scope of work projections for the development of bids and estimates for the cost of the repairs to Teledyne's buildings. Lockridge would present proposals and receive bids for the various repair projects and submit the bids to Teledyne for approval. Teledyne would then make the final decision on any given project.

In October 1979, Phil Cashion formed Polytec, Inc., in which he and his wife were shareholders. Cashion was interested in installing roofs consisting of urethane foam covered with Miracote. Cashion began to communicate with Utah Foam concerning the material it manufactured that was used to make urethane foam. In February 1980, Polytec ordered equipment and materials from Utah Foam. These materials were delivered to Polytec in Birmingham, and from March 23 through March 25, 1980, Gerald Chadbourne, a representative of Utah Foam, stayed in Birmingham in order to train Cashion and other Polytec employees in the method of applying urethane foam to roofs. At the same time, Taylor, a sales representative for Polytec, contacted Michael Guarino, the chief architect for the City of Mobile, in an effort to sell Miracote as a floor and wall covering for use by the city. As a result of this contact, Guarino requested that Polytec give a presentation to his staff concerning Miracote. The presentation took place on March 19, 1980. Lockridge, along with several Teledyne representatives, also attended this presentation. After the presentation, a Teledyne representative, John Binford, inquired into the use of foam for a roofing system and asked Polytech to provide some additional information. Teledyne had previous experience with foam roofing systems, one having been installed at its Muskegon, Michigan, plant.

Taylor later met with Binford and submitted a proposal on behalf of Polytec to install a foam roof on one of Teledyne's buildings. In order to provide Teledyne with more information on the use of foam roofing systems, specifically roofs where foam and Miracote had been installed, Taylor made arrangements for Binford to examine the Western Iron Works plant in Birmingham, where Polytec was installing such a roof. Around April 1, 1980, Binford and Taylor flew to Birmingham to examine the roofing system being installed by Polytec. Binford was also referred to Tim Kearns. Binford visited Mr. Kearns in Oklahoma, where Binford was shown some sidewall applications of Miracote. After returning from Oklahoma, Binford asked Taylor to prepare a proposal on one of the Teledyne buildings.

Binford later inquired of Taylor as to whether there was anyone who could assist Polytec in the Teledyne project, since there was apparently some concern on the part of Binford as to Polytec's application expertise and equipment. Binford also requested that Polytec submit a qualification summary, which was required by Teledyne of all prospective vendors. The summary consisted of resumes of the firm's principals, the length of the company's existence, financial data, bonding capabilities, insurance, and other like information necessary to evaluate the stability and ability of the company to handle the job. Apparently, Polytec never submitted this qualification summary. Binford also asked Taylor to get an expert on foam roofing systems to make a presentation to Teledyne. Taylor contacted Gerald Chadbourne, a representative of Utah Foam.

A meeting was held at Teledyne's offices on April 21, 1980. In attendance were a number of Teledyne representatives, including the vice president, Gene Engler; Binford; and Lockridge. During the meeting it was revealed that Utah Foam had not applied the Miracote as a coating of the urethane foam and that the warranty on the Miracote was not the same when diathon was applied as the coating over the urethane. Polytec distributed only Miracote; it did not distribute diathon. Cashion made known Polytec's intention to submit a bid to repair the Teledyne roofs using the urethane/Miracote system, which was later submitted.

Teledyne claims that after this meeting it had doubts about the urethane/Miracote system's ability to handle building stress and to alleviate water problems. Teledyne says that it considered turning to more conventional, "built-up" roofing systems unless some other system could be found that would handle the problems of stress and water. After the meeting, Engler asked Binford to have Chadbourne return alone the next day to meet and discuss alternatives available to Teledyne using the urethane foam with some other coating.

After the meeting, Chadbourne contacted Bruce Wilson, the vice president of Utah Foam, and informed him that it appeared that Teledyne was going to install a conventional, built-up roof, but that there was still "a ray of hope" that it would use the foam with diathon, a rubber coating sold by Utah Foam.

Prior to the meeting scheduled between Chadbourne and Teledyne, Chadbourne met with representatives from Polytec to discuss Polytec's proposed contract for the repair of one of Teledyne's roofs. The meeting with Chadbourne and the Teledyne representatives took place on April 22, 1980. Teledyne asked Chadbourne if he could supply a foam roofing system that would meet Teledyne's needs. He proposed, subject to approval by Utah Foam, applying urethane foam and diathon, as well as training Teledyne people to apply it. Chadbourne was eventually hired by Lockridge at $200 per day to train applicators of the foam and diathon, which was purchased by Teledyne through Lockridge. The applicators hired by Teledyne were paid, at Teledyne's request, through Lockridge's account, for which Lockridge was fully reimbursed.

Sometime in August or September 1980, Teledyne and Lockridge discontinued their practice of employing Chadbourne to train the applicators and paying the applicators through Lockridge's account and contracted with Monolithic Engineering to handle the job. Monolithic was owned by Chadbourne, whose relationship with Utah Foam had ended in September 1980.

After the roofing work had begun, Guarino inspected the work. Following his inspection sometime in June 1980, he invited Binford and John O. Lockridge, Jr., to his home. Sometime in July 1980, Chadbourne applied a urethane roof to Guarino's residence. The bill for that roof, totalling $1,460, was paid by Guarino 9 months later. This was 16 days after a third-party action had been filed against him in this litigation.

Utah Foam originally sued Polytec and Phil Cashion on Polytec's account due for the purchase of equipment and materials used in Polytec's roofing job in Birmingham. Polytec filed a permissive counterclaim, adding counterdefendants, alleging that Utah Foam, along with others, had wrongfully deprived Polytec of business. A summary judgment was entered in favor of Utah Foam on its suit against Polytec for accounts due and the court granted Utah Foam's motion to dismiss Polytech and Cashion's counterclaim. Polytec filed an amended counterclaim, of which the trial court dismissed two counts. Polytec's appeal from that dismissal was addressed in the first appeal to this Court. Polytec, Inc. v. Utah Foam Products, Inc., 439 So.2d 683 (Ala.1983). Upon remand, the trial court entered a summary judgment in favor of various counterdefendants on various claims. That judgment was reversed by this Court in Polytec, Inc. v. Utah Foam Products, Inc., 477 So.2d 295 (Ala.1985).

The amended counterclaim named Utah Foam, J.O. Lockridge General Contractors, Binford, and Guarino as defendants. Polytec's amended complaint contained three counts, numbered 3 through 5. Count 3 was against Utah Foam only and alleged that Utah Foam had been unjustly enriched based on the efforts of Cashion and Polytec to secure the contract for the roofing job with Teledyne. Count 4 alleged that all named defendants, acting in concert, had interfered with Polytec and Cashion's roofing business. Count 5 alleged that all named defendants, acting in concert, had misrepresented to Polytec and Cashion that if they presented information on urethane foam roofs to Teledyne, and Teledyne decided to reroof its buildings...