Filed January 18, 2000.
Appeal from the District Court, Becker County, File No. C4980610.
Marshall H. Tanick, (for appellant)
Craig A. Goudy, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
Appellant D.J. Meyer, Inc, d/b/a Country Furniture entered into an oral exclusivity contract with respondent Thomas Traxler, a sales representative for the Barcalounger Company. Appellant was given the exclusive right to sell Barcalounger chairs in the Fargo-Moorhead area so long as it did a "good job" in handling the product. Respondent then allowed Zimmerman, a furniture store based in Bismarck, North Dakota, to sell Barcaloungers in Fargo, thereby breaching its exclusivity contract with appellant. Appellant sued respondent in district court. Appellant challenges the trial court's decision: (1) granting its request for injunction but failing to enter a judgment as to the negligent misrepresentation claim; (2) denying damages; and (3) denying costs and disbursements. Because the trial court did not err in failing to: (1) make findings and enter a judgment as to the negligent misrepresentation claim; (2) award damages; and (3) grant costs and disbursements to appellant as the prevailing party, we affirm in part. Because there was no evidence in the record to support the trial court's conclusion that the exclusivity agreement could be terminated upon proper notice, we reverse in part.
Appellant argues that the trial court erred in failing to issue a judgment or findings regarding its negligent misrepresentation claim, even though the claim was fully litigated at trial. The rules of civil procedure require the trial court in a bench trial to make findings of fact and conclusions of law. Minn.R.Civ.P. 52.01. However, where the record is reasonably clear and the facts are not seriously disputed, the judgment of the trial court can be upheld in the absence of trial court findings. Roberson v. Roberson, 296 Minn. 476, 478, 206 N.W.2d 347, 348 (1973).
A person liable for negligent misrepresentation is described as:
[o]ne who, in the course of his business, profession or employment, or in a transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Bonhiver v. Graff, 311 Minn. 111, 122, 248 N.W.2d 291, 298 (1976) (citation omitted). Persons making representations are negligent when they have not discovered or communicated certain information that ordinary persons in their position would have discovered or communicated. Florenzano v. Olson, 387 N.W.2d 168, 174 (Minn. 1986); Safeco Ins. Co. of Am. v. Dain Bosworth Inc., 531 N.W.2d 867, 870 (Minn.App. 1995), review denied (Minn. July 20, 1995).
Here, the evidence in the record indicates that respondent never misrepresented the fact that there was an exclusivity agreement between him and appellant. Respondent told appellant's personnel and owner that appellant had the exclusive right to sell Barcalounger products in the Fargo-Moorhead area as long as it performed adequately and did a "good job" in terms of stocking the product, advertising and promoting. Later, the trial court concluded that an exclusivity contract did exist between the parties and respondent breached it. There was no evidence that respondent supplied information to appellant that was false. The mere fact that respondent breached his contract and allowed another distributor to sell Barcalounger recliners does not indicate that respondent's representations were false, thereby giving rise to a negligent misrepresentation claim . See, e.g., Wild v. Rarig, 302 Minn. 419, 442, 234 N.W.2d 775, 790 (1975), (finding that "[a] malicious or bad-faith motive in breaching a contract does not convert a contract action into a tort action "); McNeill Assocs. v. ITT Life Ins. Corp., 446 N.W.2d 181, 185 (Minn.App. 1989), review denied (Minn. Dec. 1, 1989) (recognizing that "[a] bad-faith breach of contract does not become a tort"). Because there was no false statement made to appellants, there was no negligent misrepresentation as a matter of law.
Appellant claims that the trial court erred in failing to award any damages to appellant even though it concluded that respondent breached its exclusivity contract with appellant. The trial court denied damages, finding that appellant had failed to prove that: (1) its past declining sales of Baraloungers were due to Zimmerman's sale of Barcaloungers pursuant to its agreement with respondent; and (2) future damages are reasonably certain to occur. The trial court concluded that the damages claimed were remote, conjectural and speculative. Damages that are conjectural or speculative cannot be recovered. Busch v. Busch Constr., Inc. 262 N.W.2d 377, 399 (Minn. 1977). The court's failure to award any damages for the breach of contract on the grounds that the damages claimed are remote, conjectural and speculative in nature is a factual determination that should be reviewed under the clearly erroneous standard. Minn.R.Civ.P. 52.01.
A. Past Lost Profits
The trial court found that appellant failed to prove that its declining sales of Barcaloungers were due to Zimmerman's sale of Barcaloungers pursuant to its agreement with respondent. A party seeking lost profits from a breach of contract must prove that such damages are reasonably certain to have occurred and that the breach caused the loss. See Polaris Indus. v. Plastics, Inc., 299 N.W.2d 414, 419 (Minn. 1980) (holding that plaintiff failed to prove it lost profits as a result of the defective tank).
The record indicates that appellant suffered lost profits after Zimmerman's began selling Barcaloungers pursuant to its agreement with respondent. However, there is insufficient evidence in the record to support an award of past lost profits. The evidence shows that once Zimmerman's began selling Barcaloungers, appellant reduced its advertising of Barcalounger recliners by about 75%. Even though appellant claims its reduction in advertising was an attempt to mitigate damages, it could have been a factor in the decline in sales and appellant failed to provide any evidence suggesting otherwise. Most importantly, short of its own decline in sales, appellant failed to provide evidence making a direct correlation between appellant's decline in profits and Zimmerman's sale of Barcaloungers. While appellant alleges losses in the amount of $37,823 for Barcalounger chairs and $104,505 for all other recliners during the first ten months in 1998, Zimmerman's total 1998 retail sales in 1998 were only $25,000. The fact that appellant's lost profits exceeded Zimmerman's sales provides evidence that respondent's breach was not the sole reason why appellant experienced lost profits. Because there is no evidence in the record indicating that the decline in the profits of Barcaloungers was caused specifically by respondent's breach, and not other factors, the trial court's decision was not clearly erroneous and we affirm.
B. Future Lost Profits
Appellant further argues that over the next five years it will incur lost profits in the amount of $166,404 from the sale of Barcalounger chairs and $459,869 from the sale of all other recliners. "Because future damages such as this are impossible to prove with absolute certainty, the rule is that recovery may be had if future damage is reasonably certain to occur." Kwapien v. Starr, 400 N.W.2d 179, 183 (Minn.App. 1987) (citation omitted). "Absolute certainty is not required ." Sports Page Inc. v. First Union Mgmt., Inc., 438 N.W.2d 428, 433 (Minn.App. 1989) (citation omitted).
Appellant contends that it is entitled to future damages because even though Zimmerman's has stopped selling Barcalounger furniture, there is no guarantee that respondent will not breach the contract again. Appellant notes that respondent has admitted that it would not hesitate to allow Zimmerman's to sell Barcaloungers, if it decides to do so again, and would not hesitate to work with another distributor. Thus, appellant suggests that the threat of further breach of the exclusivity contract, which is more likely given that respondent already breached it once and is now threatening to do so again, will naturally make appellant hesitant to promote Barcaloungers. Appellant is speculating about what respondent may do based on its past actions. Because there is no evidence in the record to indicate that it is reasonably certain that respondent will breach again, we affirm the trial court's decision denying future damages.
Appellant argues that while the trial court correctly concluded that an exclusivity arrangement existed between respondent and appellant for the sale of Barcalounger chairs so long as appellant did a "good job" in handling the product, it erred in concluding that the contract could be canceled upon "proper notice." The construction and effect of an unambiguous contract are questions of law and reviewable de novo. Empire State Bank v. Devereaux, 402 N.W.2d 584, 587 (Minn.App. 1987).
Respondent claims that this was a contract with no definite duration and therefore, was "terminable by either party at will upon reasonable notice." Hayes v. Northwood Panelboard Co., 415 N.W.2d 687, 691 (Minn.App. 1987) (citation omitted), review denied (Minn. Jan. 28, 1988). Appellant argues that because under the exclusivity contract respondent could allow others to sell Barcaloungers if and only if appellant failed to do a "good job," the contract had a condition concerning its duration and therefore, was not at will. See Pine River State Bank v. Mettille, 333 N.W.2d 622, 627 (Minn. 1983) (stating that an at-will contract is one that has no terms or conditions regarding its duration).
This court need not address these arguments to analyze this issue. The exclusivity contract was based upon respondent's oral representations to appellant. While the contract provided that once appellant ceased doing a "good job" respondent could allow others to sell Barcaloungers, there was no evidence in the record as to what type of notice was required to terminate the contract. Because the trial court had no evidentiary support for its conclusion that the contract could be canceled upon proper notice, it erred in so concluding and we reverse.
Appellant also argues that the trial court erred in not granting it costs and disbursements even though it was the prevailing party. Minn. Stat. § 549.02, subd. 1 (1998) provides:
In actions commenced in the district court, costs shall be allowed as follows:
To plaintiff: (1) Upon a judgment in the plaintiff's favor of $100 or more in an action for the recovery of money only, $200. (2) In all other actions, * * *, except as otherwise specially provided, $200.
Minn. Stat. § 549.04 (1998) states that "[i]n every action in a district court, the prevailing party * * * shall be allowed reasonable disbursements paid or incurred * * * ." The trial court does not have the power to deny costs and disbursements to the prevailing party. Quade Sons Refrigeration, Inc. v. Minnesota Mining Mfg., Co., 510 N.W.2d 256, 260 (Minn.App. 1994), review denied (Minn. Mar. 15, 1994). "The prevailing party in any action is one in whose favor the decision or verdict is rendered and judgment entered." Borchert v. Maloney, 581 N.W.2d 838, 840 (Minn. 1998). The fact that appellant was not successful in both claims should not hinder its ability to receive damages because the prevailing party need not win on all issues. See Lipinski v. Gould, 173 Minn. 559, 564, 218 N.W. 730, 730 (1928) (ruling that where main issues were decided in favor of defendant, but complaint was sustained, refusal to tax costs in favor of plaintiff was error and plaintiff should be allowed disbursements but no statutory costs). While the trial court cannot deny costs and disbursements to the prevailing party, it has the discretion to determine who the prevailing party is. Benigni v. County of St. Louis, 585 N.W.2d 51, 54-55 (Minn. 1998). This determination will not be reversed absent an abuse of discretion. Id.
Appellant asked the trial court for an injunction and money damages. Because trial court found that there was an exclusivity contract between appellant and respondent, which was breached by respondent, it granted the requested injunction, but denied costs and disbursement. Here, the trial court decided not to grant either party costs or disbursements. Under Benigni, the trial court has the discretion to decide whether appellant or respondent is the "prevailing" party. In a situation such as this, where both parties "prevailed" on certain issues, the trial court should properly rely on its discretion to determine the prevailing party. Given the case law, the facts before us, and the breadth of the trial court's discretion, we cannot say the trial court abused its discretion in determining that neither appellant nor respondent was the "prevailing" party.