J O Hooker & Sons Inc v. Roberts Cabinet Co Inc ( 1992 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 93-CA-00144-SCT
J. O. HOOKER AND SONS, INC.
v.
ROBERTS CABINET CO., INC.
DATE OF JUDGMENT: 12/16/92
TRIAL JUDGE: HON. JOHN B. TONEY
COURT FROM WHICH APPEALED: RANKIN COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: ANSELM J. MCLAURIN
ATTORNEY FOR APPELLEE: WES W. PETERS
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: AFFIRMED ON CONDITION OF REMITTITU
IF REMITTITUR REFUSED, REVERSED AND
REMANDED FOR NEW TRIAL ON DAMAGE
11/7/96
MOTION FOR REHEARING FILED:
MANDATE ISSUED: 12/2/96
BEFORE PRATHER, P.J., BANKS AND SMITH, JJ.
PRATHER, PRESIDING JUSTICE, FOR THE COURT:
I. INTRODUCTION
¶1. This case calls upon this Court to review the granting of a motion for summary judgment in favor
of a subcontractor against a general contractor who breached a subcontract agreement. This Court
considers the granting of the summary judgment motion to have been well taken, but we order a
remittitur of $1,260 to the amount of $41,610.
II. STATEMENT OF THE FACTS
¶2. In 1991, J.O. Hooker & Sons, Inc. ("Hooker") served as the general contractor for the
renovation of residences owned by the Bessemer Public Housing Authority ("BPHA") in Bessemer,
Alabama. The renovation involved tearing out fixtures, such as cabinets, and Hooker's contract with
the BPHA provided that the BPHA, as the owner of the property, had the option to either keep or
salvage fixtures which needed to be torn out during the renovation process. The contract further
provided that, in the event that the BPHA elected to keep the cabinets, Hooker would be required to
remove the cabinets and move them to a location of the BPHA's choosing. Under said general
contract, the cabinets were to become the property of Hooker and to be removed by him in the event
that the BPHA elected not to keep said cabinets.
¶3. Hooker entered into a subcontract agreement with Roberts Cabinet Co., Inc. ("Roberts"),
pursuant to which Roberts was required to "furnish cabinets, tops, plastic laminates on walls and furr
down materials and fronts for hot water heaters as per plans and specs for the price listed below."
The agreement also provided that "the price includes the cost of tear-out (sic.) old cabinets and
installation of new cabinets."
¶4. As the date when the cabinets would be needed approached, Roberts informed Hooker that he
had underestimated the costs of the job and demanded an additional $23,000, which, Hooker asserts,
he had no choice but to pay given the time constraints which were present. Later, a dispute arose
between Hooker and Roberts as to which party had the duty to dispose of the cabinets as the BPHA
required in the general contract. Roberts asserted that the subcontract did not obligate him to dispose
of the cabinets, but Hooker contends that the "as per specs and plans" language in the subcontract
agreement served to incorporate by reference the general contract and that Roberts thus assumed
Hooker's duties to dispose of the cabinets.
¶5. The parties were unable to resolve their dispute, and on December 13, 1991, Hooker sent
Roberts a fax in which he stated that he had consulted with his lawyer and was considering the
contract null and void. Hooker offered to buy from Roberts the cabinets that Roberts had already
constructed, but the parties were unable to come to an agreement.
III. STATEMENT OF THE CASE
¶6. On December 18, 1991, Roberts Cabinet Co., Inc. filed suit against J.O. Hooker & Sons, Inc.,
alleging that Hooker had wrongfully breached a subcontract agreement with Roberts after Roberts
had already begun performance. On September 16, 1992, the trial court granted summary judgment
in favor of Roberts, finding that Hooker had no legal right to unilaterally terminate the contract in the
present case.
¶7. On December 10, 1992, a trial was held for the sole purpose of determining the amount of
damages suffered by Roberts as a result of Hooker's actions, and a jury determined Robert's damages
to be in the amount of $ 42,870. On January 8, 1993, the trial court denied Hooker's motions for a
new trial or in the alternative a remittitur of the jury's verdict, and Hooker filed a timely appeal.
IV. WHETHER THE LOWER COURT ERRED IN GRANTING SUMMARY
JUDGMENT AGAINST J. O. HOOKER & SONS, INC., ON THE ISSUE OF
LIABILITY.
A. Was there a genuine issue of material fact with regard to whether Hooker or Roberts
had the duty to dispose of the cabinets in question ?
¶8. This Court reviews de novo the record on appeal from a grant of a motion for summary
judgment. In Brown v. Credit Center, Inc. 444 So. 2d 358, 362 (Miss. 1983) this Court interpreted
Rule 56 and the standards that the trial court should use in considering a motion for summary
judgment. This Court explained that:
The trial court must review carefully all of the evidentiary matters before it -- admissions in
pleadings, answers to interrogatories, depositions, affidavits, etc. The evidence must be viewed
in the light most favorable to the party against whom the motion has been made. If in this view
the moving party is entitled to judgment as a matter of law, summary judgment should forthwith
be entered in his favor. Otherwise the motion should be denied. Brown, 444 So. 2d at 362.
Northern Electric Co. v. Phillips, 660 So. 2d 1278, 1281 (Miss. 1995), quoting Brown v. Credit
Center, Inc. 444 So. 2d 358, 362 (Miss. 1983)
¶9. Hooker argues that the trial court was in error in granting Roberts' motion for summary judgment
on the issue of liability, given that disputed issues of fact remained which, Hooker contends, should
have been resolved by the jury rather than the judge. Specifically, Hooker asserts that there was a
disputed issue of fact as to whether Roberts had the duty of carrying away and disposing of the
cabinets which were removed from the dwellings in question.
¶10. Hooker asserts that the contract in question should be interpreted in the context of Article 2 of
the Uniform Commercial Code, Miss. Code Ann. §75-2-101 et seq., given that the transaction
involved was for the sale of goods, namely cabinets. Hooker cites no authority for this proposition,
and Roberts does not address this issue at all, but it is of importance to determine what law should
apply to the contract. There appear to be no Mississippi cases directly on point, but this Court finds
that, although the transaction in this case did involve a sale of goods, the dispute in this case actually
concerns the performance of services and the delegation of duties under a contract.
¶11. A number of states which have considered this issue have concluded, based on an interpretation
of UCC § 2-102, that Article 2 does not apply to construction or service contracts. See Perlmutter v.
Don's Ford, Inc., 409 N.Y.S.2d 628 (1978); Christiansen Bros., Inc. v. State, 586 P.2d 840
(Wash. 1978). The present contract, however, is properly viewed as a mixed transaction of goods
and services, and courts have reached differing conclusions as to whether the UCC should apply to
such mixed transactions.
¶12. In Snyder v. Herbert Greenbaum & Associates, Inc., 380 A.2d 618 (Md. App. 1977), the
Maryland Court of Appeals held that a contract for the installation of carpeting in a large apartment
complex was primarily a contract for sale, rather than installation, of such carpeting and thus was
subject to UCC Article 2. In Freeman v. Shannon Const., Inc., 560 S.W.2d 732 (Tex. Civ. App.
7th Dist. 1977), by contrast, a Texas appellate court held that a contract between a general
contractor and subcontractor, pursuant to which the subcontractor was to complete cement
construction work on an apartment project, was in essence a service contract, even though it did
involve the transfer of goods, and thus the UCC should not apply.
¶13. It is very often the case that a construction contract will involve the furnishing of goods by a
subcontractor, and this Court holds that, in such a mixed transaction, whether or not the contract
should be interpreted under the UCC or our general contract law should depend upon the nature of
the contract and also upon whether the dispute in question primarily concerns the goods furnished or
the services rendered under the contract. The present case clearly does not concern the cabinets
manufactured, but rather the refusal of Roberts to assume duties which Hooker contractually
obligated itself to perform. This Court would not hesitate to apply Article 2 if the present case
involved, for example, a dispute over the quality of the cabinets, but the present case is in actuality a
fairly standard contract dispute involving delegation of duties under a contract and the right to
unilaterally rescind said contract. The fact that goods were furnished in the present contract has no
bearing on the legal analysis involved, given that the dispute in this case clearly concerns the service
aspect of this mixed transaction.
¶14. Hooker's desire to have this contract interpreted under the provisions of the UCC is based on
the fact that Miss. Code Ann. § 75-2-202 (1972), which contains the UCC version of the parol
evidence rule, provides a more permissive approach for the admission of extrinsic evidence than that
found in our general body of law. Specifically, § 75-2-202 does not require that the agreement in
question first be found to be incomplete or ambiguous before evidence of course of dealing and usage
of trade may be considered.
¶15. Under our general, non-UCC, parol evidence rule, by contrast, a document must first be found
to be incomplete or ambiguous before said document may be explained, but not contradicted, by
extrinsic evidence. Busching v. Griffin, 542 So. 2d 860 (Miss. 1989). In Busching, Griffin sold an
option to purchase property for $50,000, and, upon deciding that said price was too low, breached
the option contract, asserting that she thought that the option price was a loan to pay her taxes.
Busching, 542 So. 2d at 861. The trial court accepted Griffin's argument, but this Court reversed,
finding that the contract in question was not ambiguous and thus that Griffin could not introduce
extrinsic evidence to supplement said contract. Id. at 865.
¶16. As in Busching, the subcontract in the present case is clear and unambiguous in that it clearly
provides that Roberts' bid price includes the cost of tearing out and installing new cabinets, but is
completely silent as to any duty on the part of Roberts to dispose of the cabinets. Hooker concedes
that the subcontract with Roberts was silent on this issue, but argues that the "specifications for the
general contract disclosed that this was within the kitchen cabinet portion of the job." Hooker argues
that the general contract between himself and the BPHA was incorporated by reference into the
subcontract with Roberts, given that the subcontract provides in part that:
We agree to furnish cabinets, tops, plastic laminate on walls and furr down materials and fronts
for hot water heaters as per plans and specs for the price listed below. (emphasis added).
Hooker asserts that "[t]he specifications on the kitchen cabinet portion of the job, included in the
Roberts-Hooker contract by reference, provided that the scope of the job included removing all
existing kitchen cabinets and shelves and disposing of them in accordance with local laws and
ordinances." It is true that the subcontract refers to the "plans and specs" of the general contract, but
said language does not in any way indicate an intent by Roberts to assume additional and expensive
duties which were not set forth in the subcontract. The term "as per specs and plans" is better
understood as applying to the "furnish[ing]" of cabinets and not to their "removal."
¶17. The parties cite several cases in support of their respective positions. Roberts cites Perry v.
Newell, 146 F.2d 398 (5th Cir. 1945), which is factually similar to the present case. In Perry, the
subcontract in question similarly incorporated by reference the "plans and specifications" of the
general contract, which general contract included provisions for electrical work on the exterior of
buildings being constructed. Perry, the general contractor, asserted that said incorporation by
reference of the general contract served to obligate Newell as the subcontractor to the performance
of the outside electrical work, given that Newell was responsible for electrical work. The trial court
and the Fifth Circuit found in favor of Newell, but only upon a finding that the subcontract "expressly
limit(ed) the work to be done by him to the wiring inside the buildings referred to in it". Perry, 146
F.2d at 400. The Fifth Circuit stated in Perry:
We reaffirm here ... that while a reference in a subcontract to the provisions, plans, and
specifications of a general contract imports them into the subcontract where not inconsistent
with its terms, it is quite well settled that such a reference is not effective beyond this, and that
if the subcontract contains words of definite limitation (emphasis added) they will be given
effect and the reference limited accordingly. Id.
As noted by Hooker, the subcontract in the present case clearly does not provide such "words of
definite limitation," and the value of Perry as persuasive authority in favor of Roberts' position is
limited.
¶18. Roberts also cites the case of Garrett v. Hart, 250 Miss. 822, 168 So. 2d 497 (1964), but
Garrett is factually dissimilar to the present case, given that, in Garrett, "it was impossible to tell
from the contract and plans and specifications how much of a house `ready for occupancy' was
contemplated." Garrett, 250 Miss. at 836, 168 So.2d at 503. Thus, the plans and specifications in
Garrett did not assist in resolving the main issue in said case, and the case centered largely around
matters which are dissimilar from the present case.
¶19. Hooker cites the case of Roberts v. Robertson, 232 Miss. 796, 100 So. 2d 586 (Miss. 1958), in
which this Court held that:
It is generally held that where a building contract refers to plans and specifications and so
makes them a part of it, the contract is to be construed as to its terms and scope together with
the plans and specifications. Robertson, 232 Miss. at 802, 100 So.2d at 588.
In Robertson, the dispute centered around whether the subcontractor was required under the
subcontract to insulate the pipes, and this Court determined that he did have such a duty based partly
on the incorporation by reference of the plans and specifications of the general contract. As Roberts
notes in his brief, however, Robertson is distinguishable from the present case in that the subcontract
in Robertson clearly provided that the subcontractor would perform "all work" relating to the piping.
Thus, none of the cases cited by either party provide strong authority with regard to the issues in the
present case, and this Court turns instead to an analysis of whether Hooker presented a genuine issue
of material fact as to whether Roberts had a duty to dispose of the cabinets in question.
¶20. In arguing that a fact issue existed, Hooker asserted in his affidavit that:
It is very rare for a subcontractor such as Roberts not to do their own cleanup. The only time
we have ever contracted with a sub-contractor who did not handle their own cleanup was when
the job was within driving distance of our office in Thaxton, Mississippi.
The duty of Hooker to remove the cabinets in the present case, however, arose from specific and
detailed contractual provisions entered into between Hooker and the BPHA. The subcontract
agreement, as noted earlier, expressly provided that the bid price included the "tear-out" and
installation of the cabinets. If Hooker had desired that Roberts be obligated to assume the specific
contractual obligations set forth in the general contract to dispose of the cabinets, then it would have
been a simple matter to include in the subcontract language obligating Roberts to do so.
¶21. It would have been highly advisable for Hooker to have insisted on such language in the
subcontract, regardless of his understandings regarding industry customs. This Court is hesitant to
find that parties have impliedly assumed obligations to perform expensive duties based on vague
assertions of industry custom when the assumption of said duties could easily have been provided for
in the subcontract. This Court is especially reluctant to do so in the present case, given that the duties
involved are not general obligations to remove materials, but rather specific tasks which Hooker
contractually obligated himself to perform.
¶22. On these facts, this Court concludes that, as a matter of law, Roberts did not assume the specific
contractual duties relating to the removal of the cabinets, and that there accordingly exists no genuine
issues of material fact with regard to this issue. The trial judge was therefore correct in granting
summary judgment in favor of Roberts with regard to the issue of liability.
B. Assuming that a material issue of fact does exist with regard to the duty to dispose of
the cabinets, was Hooker nevertheless in error as a matter of law in unilaterally
terminating the contract as a result of Robert's alleged breach thereof ?
¶23. As noted above, this Court concludes that Hooker failed to raise a genuine issue of material fact
regarding the responsibility of Roberts to dispose of the cabinets. Even if this Court had found that
there existed a genuine issue of material fact regarding the duty of disposing of the cabinets, this
Court is faced with the actions of Hooker in unilaterally terminating the contract. In his summary
judgment ruling, the trial judge ruled that:
The Defendant did not have the right to unilaterally rescind or otherwise terminate its contract
with Plaintiff, and that the Plaintiff is entitled to Judgment as to the Liability as a matter of law.
As such, the language of the Chancellor's ruling indicates that he considered Hooker to have had no
right to terminate the contract, and that said consideration motivated the summary judgment ruling
with regard to the issue of liability.
¶24. It is a matter of basic contract law that every breach does not give a party the right to
unilaterally terminate a contract, as long as the breaching party has substantially performed his duties
under the contract. Gulf South Capital Corp. v. Brown, 183 So. 2d 802 (Miss. 1966). If Hooker had
felt that Roberts had breached the contract, then he could have assumed the responsibilities for
removing the cabinets himself and filed suit against Roberts for the $4,000 to $6,000 cost of doing
so. Given the eventual jury verdict of over forty thousand dollars against Hooker, such a decision
may well have been the prudent one for him. Instead, Hooker chose to terminate the contract, and in
doing so, subjected his actions to a rather stringent legal analysis.
¶25. In evaluating Hooker's actions in unilaterally rescinding the contract, it must be determined
whether Roberts materially breached the contract, thus entitling Hooker to legally rescind said
contract. This Court held in UHS-Qualicare v. Gulf Coast Community Hosp., Inc., 525 So. 2d 746,
756 (Miss. 1987), that:
The termination of a contract is an "extreme" remedy that should be "sparsely granted."
[citations omitted]. Termination is permitted only for a material breach. A breach is material
when there "is a failure to perform a substantial part of the contract or one or more of its
essential terms or conditions, or if there is such a breach as substantially defeats its purpose,"
Gulf South Capital Corp. v. Brown, 183 So. 2d 802, 805 (Miss. 1986), or when "the breach of
the contract is such that upon a reasonable construction of the contract, it is shown that the
parties considered the breach as vital to the existence of the contract," Matheney v. McClain,
248 Miss. 842, 849, 161 So. 2d 516, 520 (1964).
¶26. Hooker asserts that his rescission of the contract arose in large part from Roberts' successful
efforts to secure additional monies from Hooker as the date when the cabinets were needed
approached. To wit, Hooker stated in his affidavit that:
Around the middle of October, 1991, as the job was nearing the time when the cabinets would
be needed, Kevin Roberts called and stated that his father had made a mistake on their bid of
about $23,000.00, and that they would be unable to do the job. At this time, we were in a
serious time constraint and were at the mercy of Roberts Cabinet Co., Inc. We felt that we had
no recourse but to go up on the price to be paid for them and we agreed to let them increase
their price even though this was going to cause us to lose money on this portion of the work.
Thus, it is Hooker's assertion that he was concerned with a general course of conduct on the part of
Roberts, which, Hooker asserts, amounted to a coercive attempt to secure additional funds for tasks
which Roberts was already obligated to perform.
¶27. In response to an interrogatory from Roberts, Hooker explained his reason for terminating the
contract thusly:
After we determined that Roberts Cabinet Co. was, in our opinion, only out to increase the
amount of their contract by any means possible and we had already exceeded our allowance for
this portion of the contract, we felt we had no alternative but to trade with someone else.
Hooker may have genuinely felt that Roberts was attempting to "squeeze" additional money from
him, but the fact remains that Hooker could have insisted that the subcontract with Roberts contain
language obligating Roberts to assume the duties of disposing of the cabinets, but he failed to do so.
Further, once it became clear that Roberts would not perform the removal of the cabinets, Hooker
could have, as mentioned earlier, removed the cabinets himself and sued Roberts for the cost of doing
so. Based on these facts, the actions by Roberts did not amount to a material breach of the contract
entitling Hooker to unilaterally rescind the entire contract.
¶28. Accordingly, the summary judgment ruling granted by the trial judge with regard to the issue of
liability is affirmed.
V. WERE THE DAMAGES AWARDED BY THE JURY WERE THE RESULT OF
BIAS, PASSION AND PREJUDICE, AND/OR AGAINST THE WEIGHT OF THE
OVERWHELMING EVIDENCE ?
¶29. Hooker alternatively argues that this Court should grant a substantial remittitur based on the
damages in the jury's verdict being against the overwhelming weight of the evidence. Miss. Code
Ann. § 11-1-55, "Authority to impose condition of additur or remittitur", provides:
The supreme court or any other court of record in a case in which money damages were
awarded may overrule a motion for new trial or affirm on direct or cross appeal, upon condition
of an additur or remittitur, if the court finds that the damages are excessive or inadequate for
the reason that the jury or trier of the facts was influenced by bias, prejudice, or passion, or that
the damages awarded were contrary to the overwhelming weight of the credible evidence. If
such additur or remittitur be not accepted then the court may direct a new trial on damages
only. If the additur or remittitur is accepted and the other party perfects a direct appeal, then the
party accepting the additur or remittitur shall have the right to cross appeal for the purpose of
reversing the action of the court in regard to the additur or remittitur.
¶30. Plaintiff's Exhibit 6 listed the following damages:
$ 5,117.28 Net Loss on Manufactured Cabinets
$ 3,775.04 Countertops
$ 886.25 Laminate
$ 72.38 Travel Expenses
$ 1,760.00 Administrative Time
$ 1,440.00 Storage of Cabinets
$30,000.00 Lost profit on job (lowered)
$43.050.95 Total Damages
¶31. Although Roberts originally requested $51,309.29 in total damages, he was shown on cross-
examination to have overestimated his lost profits, and Roberts accordingly lowered his total
damages requested during closing arguments to $43,050.95. The excessive amount claimed was due
to an accounting error and is not a subject of dispute in this appeal. Hooker does not contest on
appeal the jury's awards with regard to the first four items listed above, namely the net loss on the
manufactured cabinets, as well as the countertops, laminate, and travel expenses. Hooker does,
however, contest the jury's awards relating to the storage and administrative costs, and, especially,
the lost profits. These damages will be considered separately.
A. Storage and Administrative Costs
¶32. With regard to the storage costs for the cabinets, it is clear that Roberts would have incurred
said costs regardless of any breach on the part of Hooker, given that the cabinets were stored in
space which Roberts had already leased. Roberts argues that:
As to the cost of storage, Hooker suggests that Roberts cannot allocate any costs for storage,
because it was storing them in a building that it was paying rent on anyway. However, it was
paying rent for a 30,000 square foot building. As a result of Hooker's breach, it was paying the
same rent but on a reduced square foot building. Roberts only applied the percentage of the
lease which was specifically attributable to the area being used to store Hooker's cabinets.
Therefore, these costs are directly attributable to Hooker's breach.
¶33. Roberts' argument is without merit. Roberts is only entitled to recover damages for expenses in
storing the cabinets that it would not otherwise have incurred absent Hooker's breach. As noted by
Hooker, Roberts was not forced to rent additional space to store the cabinets, but merely utilized
storage facilities that it had already leased. Roberts' rental fees were not raised a single penny by the
storage of the cabinets in question, and it was not forced to rent additional space to store other
materials as a result of a lack of space arising from the storage of the cabinets. Roberts' claim for
recovery in this regard is based solely on the abstract economic value of previously empty storage
space which it filled with the cabinets in question. Allowing Roberts to recover for the cost of storing
the cabinets would place it in a better position than if the contract had been fully performed. Under
these facts, Roberts' claimed damages of $1,440 for storage costs are disallowed in their entirety.
¶34. A somewhat similar analysis may appear to apply with regard to the "administrative time"
damages of $1,760 which were cited by Roberts as having been incurred in paying Kevin Roberts for
his time as general manager. With regard to these damages, Roberts argues that:
Finally, as to the percentage of the general manager's salary allocated as damages, Hooker
suggests that this percentage of the salary which was applicable to time spent on Hooker's
project was not recoverable, because the general manager was paid this salary anyway.
However, Hooker misses the point. The general manager is not the Plaintiff in this action.
Rather, Roberts is the Plaintiff in this action. Paying the general manager a salary to work on a
contract which cannot be performed is the equivalent of paying the general manager a salary for
reading the newspaper. It is wasted money and time that could have been spent on a contract
that it was allowed to perform. Consequently, although the general manager may not have lost
his salary, Roberts lost the benefit from paying its general manager this salary.
As with the expenses relating to storage space, Roberts' expenses in paying Kevin Roberts were
exactly the same as they would have been if Hooker had not breached the contract. Kevin Roberts'
salary, however, is not comparable to the storage costs in an important respect.
¶35. It is clear that the time which Kevin spent working on the Hooker project could, and presumably
would, have been spent productively in other projects. As such, Roberts suffered an economic loss by
having to pay an important employee his salary for working on a contract which would eventually be
canceled. Kevin testified that he spent approximately forty percent of his working hours over a two-
month period on the Hooker project. It is true that Roberts would have paid Kevin regardless of
whether he had spent that time working on the Hooker project. However, the distinction is that,
unless reimbursed for these expenses, the salary paid by Roberts for this time spent will have been
paid for no resulting economic value. Given that Kevin Roberts was a salaried employee of Roberts
who was directly engaged in working on the Hooker project, it can not be disputed that Roberts
suffered expenses related to the contract in question by paying Kevin for his work.
¶36. The issue arises as to whether compensating Roberts for both its lost profits and for the salary of
Kevin Roberts would amount to a double recovery. The answer to this question depends upon
whether Kevin Roberts' salary was included in the $120,000 in expenses which Roberts estimated it
would have incurred in completing the project. If said salary was included in the expenses, then the
recovery would not amount to a double recovery, given that the amount of the salary would have
already served to reduce the amount of profits in the calculation of damages.
¶37. The record does not reveal whether Roberts included an estimate of Kevin Roberts' salary
allocable to the Hooker contract in his determination of his expenses. It is reasonable to assume,
however, that a subcontractor includes in his bid estimate the salaries which he will be required to
pay to all employees who will be directly involved in the project in question. It naturally adds to the
expense of a project if a company is required to utilize the services of managerial personnel who may
be unable to perform other tasks as a result of said project. Roberts suffered expenses by paying
Kevin Roberts his salary without being able to utilize his expertise on other jobs for which they would
be receiving the full amount of contract value. On these facts, it can not be said that the jury's
awarding of these administrative costs was against the overwhelming weight of the evidence.
B. Lost Profits
¶38. The main issue with regard to damages in this appeal concerns the extent of Roberts' lost profits
as a result of the breach by Hooker. In awarding damages for breach of contract, this Court's purpose
is to put the injured party in as good a position as he would have been in but for the breach.
Universal Life Ins. Co. v. Veasley, 610 So. 2d 290, 295 (Miss. 1992). 22 AmJur2d "Damages" §45
notes that:
Contract damages are ordinarily based on the injured party's expectation interest and are
intended to give him the benefit of the bargain by awarding him a sum of money that will, to the
extent possible, put him in as good a position as he would have been in had the contract been
performed.
It is clear that damages awarded by the jury were in the nature of expectation damages, and said
damages included Roberts' lost profit from the deal, along with expenses that Roberts incurred in
manufacturing the cabinets that it was unable to mitigate. The jury's awarding of Roberts' direct
expenses in partially performing the contract in addition to lost profits was entirely proper, given that
failing to do so would under-compensate Roberts by forcing him to pay for said expenses out of his
net profits.
¶39. Of considerable dispute at trial was Robert's claimed profit percentage on the deal with Hooker
of twenty-six percent. Hooker testified that such a percentage was not a "usual and ordinary profit to
be expected in the construction business" and that one would be unable to "win any jobs on public
works with bids including a 26% profit margin." Hooker testified that his usual profit margin was
approximately 4%, although Roberts argued that a manufacturer such as Roberts should expect a
greater profit margin than a general contractor such as Hooker.
¶40. Also in dispute at trial was the evidence regarding the daily manufacturing output of Roberts'
factory and the number of days that the production was curtailed at said factory as a result of the
breach by Hooker. Kevin testified at trial that Roberts' average daily manufacturing output was
between $6,000 and $8,000 in 1991, although he estimated during discovery that such output
amounted to only $6,000. Hooker asserts that, even assuming that the twenty-six percent profit
margin is correct, the $6,000/day output constitutes a gross sales figure, and that Roberts would thus
only expect a profit of approximately $1,500/day from the contract.
¶41. Hooker thus argues that Roberts' lost profits should be measured by the four-day period during
which production at Roberts' factory was shut down. However, the shut-down period at the factory
would be much more relevant with regard to determining the amount of consequential damages
resulting from the breach rather than measuring Roberts' amount of lost profits. The relevant inquiry
is not the amount of profit that Roberts would have been able to make in the four days that the
factory was shut down, but rather the amount of profit it would have been able to make on the deal
as a whole had the contract not been breached by Hooker.
¶42. Roberts' daily manufacturing output would only be relevant in determining the amount of lost
profits on the deal as a whole if it could be shown exactly how many days it would have taken for
Roberts to manufacture the cabinets, and there was no exact proof in this regard at trial. Given the
bid price of over $150,000, however, it is clear that it would have taken Roberts many more than
four days to complete the contract, considering the daily manufacturing output of the factory of only
$6,000/day. Kevin testified that the factory was capable of generating a daily production output
considerably in excess of $6,000/day, but the completion of the contract would have taken weeks
even at an increased rate of production.
¶43. Kevin testified that, in making his bid, he estimated the costs that his company would have
incurred in manufacturing the cabinets to be approximately $120,000, and then factored in his desired
profit margin of twenty-six percent, for a total of an approximately $151,000 total bid. Thus, Kevin
testified that, had the contract been completed, Roberts expected to receive a profit of around thirty
thousand dollars. Bids in construction situations are rarely susceptible of exact proof as to what the
manufacturing costs and profits would have been, and, while the profit margin of twenty-six percent
may appear high, Hooker's sole proof regarding the excessive nature of Roberts' claimed profit
margin was his testimony regarding his own experiences as a general contractor, rather than a
manufacturer/subcontractor.
¶44. This Court thus has only the conflicting testimony of Hooker and Roberts with which to
determine the true profit margin, and, on these, facts, it can not be said that the jury's verdict was
against the overwhelming weight of the evidence. This Court has a rather limited scope of review on
appeal of a denial of a motion for remittitur. This Court noted in Odom v. Roberts, 606 So. 2d 114,
121-22 (Miss. 1992), that:
Where the trial court has denied a remittitur, the defendant may appeal to this court on grounds
(that) the trial court abused its discretion in failing to order the remittitur and, if he can convince
the court on that score, may argue that the damage award be reduced to such amount as would
no longer be contrary to the overwhelming weight of credible evidence. If the defendant should
be successful, to any extent, the plaintiff would then have the option of accepting the remittitur
or going to trial again on the issue of damages only.
¶45. The only damages granted by the jury which this Court considers to be against the
overwhelming weight of the evidence are the damages for the storage of the cabinets. While the
storage costs constitute a rather insignificant portion of the damages, the fact remains that the
awarding of the $1440 in storage costs was clearly erroneous and an abuse of discretion, given that
Hooker suffered no real economic loss as a result of being forced to store the cabinets at his factory.
Having established that a rather minor remittitur is in order, this Court's role is to reduce the damages
to such an amount that the verdict is not in conflict with the overwhelming weight of the evidence.
¶46. Accordingly, this Court grants a remittitur of $1,260.00, which constitutes the difference
between the $42,870.00 sum awarded by the jury and the sum of $41,610.00, which, this Court
concludes, is not against the overwhelming weight of the evidence.
$ 5,117.28 Net Loss on Manufactured Cabinets
$ 3,775.04 Countertops
$ 886.25 Laminate
$ 72.38 Travel Expenses
$ 1,760.00 Administrative Time
$30,000.00 Lost profit on job
= $41,610.00 proper amount of damages
¶47. AFFIRMED ON CONDITION OF REMITTITUR; IF REMITTITUR REFUSED,
REVERSED AND REMANDED FOR A NEW TRIAL ON DAMAGES ONLY.
SULLIVAN, P.J., PITTMAN, BANKS, SMITH AND MILLS, JJ., CONCUR. LEE, C.J.,
AND McRAE, J., CONCUR IN RESULT ONLY. ROBERTS, J., NOT PARTICIPATING.