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Down East Energy Corp. v. RMR, Inc., et a l.
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 1997 ME 148
Docket: Cum-96-787
Argued: June 11, 1997
Decided: July 11, 1997
PANEL: WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, and RUDMAN, JJ.
DOWN EAST ENERGY CORPORATION
v.
RMR, INC. and CHRISTY'S MARKET, INC.
CLIFFORD, J.
[¶1] Down East Energy Corporation (Down East) appeals from the
judgment entered in the Superior Court (Cumberland County, Bradford, J.)
in favor of RMR, Inc. and Christy's Market, Inc. (RMR).{1} Down East
contends that the court erred by awarding damages to RMR, by failing to
award Down East possession of the Brunswick gas station, and by awarding
RMR attorney fees. We affirm the judgment.
[¶2] This dispute previously has been before us. Down East Energy
Corp. v. RMR, Inc., 677 A.2d 1070 (Me. 1996). Down East, a company
engaged in marketing gasoline to retail dealers, purchased some gasoline
stations, including a Mobil station in Brunswick. RMR, the owner of 7-
Eleven franchises, entered into an agreement with Down East for the lease
of the Mobil station for a period of twenty years with two ten-year renewal
options. The parties also entered into a gasoline agreement, for a period of
time coextensive with the lease, pursuant to which Down East would sell to
RMR petroleum products at the "Mobil Dealer Tankwagon" (MDTW) price
plus a portion of RMR's profit from gasoline sales.
[¶3] RMR improved the property and constructed a convenience
store which it subsequently operated as a 7-Eleven along with the Mobil
station. The gasoline market became more competitive, however, and sales
of gasoline decreased at the Mobil station. In October of 1984, the parties
agreed to cease operating the station as a Mobil station and instead decided
to operate it as an unbranded station. The parties subsequently agreed that
Down East would supply gasoline to the station at "spot market" price. The
"spot market" price is "the lowest bulk price for gasoline available on a
given day at the South Portland terminal as a result of calls made to available
suppliers." Id. at 1072 n. 4. Without notifying RMR, however, Down East
later reverted to the MDTW price for gasoline. In July of 1991, after
discovering Down East's reversion and after unsuccessfully attempting to
persuade Down East to comply with the modified price terms, RMR stopped
selling gasoline at the leased premises.
[¶4] Down East filed suit against RMR alleging, in part, that it was
entitled to possession of the leased premises by reason of RMR's breach of
the lease agreement (Count I) and that it was entitled to damages for lost
profits plus attorney fees and costs for breach of the gasoline agreement.
(Count II). RMR counterclaimed seeking, inter alia, damages in the amount
of the payments made to Down East in excess of the spot market price as
well as attorney fees and costs. At the conclusion of the trial, before the first
appeal, the court determined that the contract was partially integrated and
that the parties had agreed that gasoline would be sold for the duration of
the lease. Despite finding that the parties agreed to modify the pricing
terms of the original agreement to the "spot market" price, the trial court
determined that RMR breached the agreement when it ceased selling
gasoline despite Down East's unilateral reversion to MDTW prices.
Accordingly, the court entered a judgment awarding Down East damages of
$34,498.47, for loss of business income resulting from RMR's cessation of
gasoline sales, and possession of the premises. The trial court also ruled
against RMR on its counterclaim because RMR had failed to prove that it lost
profits on gasoline sales.
[¶5] We vacated the judgment, concluding that Down East had
materially breached the gasoline agreement by charging the MDTW price
and that the breach entitled RMR to regard the transaction at an end. Id. at
1073. We also held that the trial court erred by using a loss-of-profits
analysis to find that RMR had failed to meet its burden of establishing its
damages on its counterclaim and noted that the "purpose of compensatory
damages in a contract case is to put the victim of a breach in the same
position it would have occupied had there been no breach." Id. (citation
omitted). On remand, RMR filed a motion for the entry of a judgment on
Down East's complaint and its counterclaim. Without receiving any
additional evidence, the court relied on the previous testimony of Paul
Garrett and the exhibit{2} dealing with RMR's damages that Garrett used in
the earlier trial and concluded that RMR was entitled to damages totaling
$218,709.98, as well as possession of the premises. The court also
concluded that RMR was entitled to attorney fees in the amount of
$48,515.00. This appeal by Down East followed.
I.
[¶6] Contending that the trial court erred by awarding damages,
Down East argues that the presumptions on which Garrett relied are
unwarranted by the evidence, namely, that Down East could have obtained
and sold gasoline to RMR for the same price that other suppliers were
selling spot market gasoline to RMR at other stations. Down East also
argues that the exhibit calculated damages for the wrong time period
because the court already had found that the breach occurred in 1988
instead of 1986.
[¶7] The assessment of damages is within the sole province of the fact
finder, Glidden v. Belden, 684 A.2d 1306, 1320 (Me. 1996), and a damage
award will be disturbed only "if there is no competent evidence in the
record supporting [it.]" Id. (citation omitted). M.R. Civ. P. 52(a). RMR had
the burden on remand in this case to prove its damages, Dairy Farm Leasing
Co., Inc. v. Hartley, 395 A.2d 1135, 1138 (Me. 1978), and the "well settled
law [is] that damages are not recoverable when uncertain, contingent, or
speculative. . . . They must not rest wholly on surmise or conjecture."
Michaud v. Steckino, 390 A.2d 524, 530 (Me. 1978). We have made clear,
however, that reasonableness, not mathematical certainty, is the criteria for
determining whether damages were awarded appropriately.
Damages are not fatally uncertain for the reason that the amount
of the loss sustained is incapable of exact proof by mathematical
demonstration. The triers of facts are allowed to act upon
probable and inferential as well as direct and positive proof. They
are permitted to make the most intelligible and probable estimate
which the nature of the case will permit, given all the facts and
circumstances having relevancy to show the probable amount of
damages suffered. A monetary award based on a judgmental
approximation is proper, provided the evidence establishes facts
from which the amount of damages may be determined to a
probability.
Merrill Trust Co. v. State, 417 A.2d 435, 440-41 (Me. 1980).{3} Thus,
circumstantial evidence approximating damages can be sufficient in a case
such as the one presently before us.
[¶8] The calculation of damages through the use of RMR's exhibit was
a proper approximation based on circumstantial evidence of the price that
was available to Down East. The very nature of "spot market" pricing
renders impossible the discovery of exactly the price for which Down East
could have bought gasoline at the terminal every day for six years. Although
Garrett was cross-examined regarding the assumptions he used to prepare
the exhibit, the court was free to accept the testimony and the exhibit as
credible evidence of damages. Moreover, Down East failed to introduce any
evidence to contradict the conclusion drawn by Garrett through the use of
the exhibit. The court made an "intelligible and probable estimate" of the
damages. The evidence permits its conclusions, and they are not clearly
erroneous.{4}
II.
[¶9] Down East contends that it is entitled to possession of the
premises because RMR has failed to perform the contract by failing to
purchase gasoline from Down East. RMR argues that it did not have an
obligation to purchase gasoline at the higher, MDTW price, and that it has
otherwise complied with the terms of the lease by paying rental and
maintaining the premises.
[¶10] The lease agreement by its terms incorporated the gasoline
agreement and made it a material part of the lease. When Down East
breached the gasoline agreement, therefore, its conduct also breached the
lease. When one party breaches a contract, the nonbreaching party may,
depending on the circumstances, either treat the breach as partial or total.
"A total breach of contract is a non-performance of duty that is so material
and important as to justify the injured party in regarding the whole
transaction as at an end . . . If [the] breach is not sufficiently material and
important for this, the breach is called a partial breach." Arthur Linton
Corbin, 4 Corbin on Contracts § 946 at 809-10 (1951). If a party elects to
treat the breach as partial, however, it must still perform its obligations in
order for it to avoid also breaching the contract. Id. at 811. ("A partial
breach by one party [,however,] does not justify the other party's subsequent
failure to perform. . . ."). In this case, RMR ceased buying gasoline at the
convenience store but complied with the lease in all other respects.
[¶11] We disagree with Down East's contention. RMR did not breach
the lease because it had no obligation to buy gasoline from Down East at the
MDTW price. The agreement required the "spot market" price to be used.
RMR's obligation was to buy gasoline at the spot market price, and Down
East has not shown that RMR would not purchase gasoline from Down East if
Down East offered the correct price to RMR. Because RMR has otherwise
complied with the terms of the lease/gasoline agreement, it has treated the
breach of Down East as partial and has elected to continue performance with
the remainder of the contract, namely, the lease of the premises.{5} Because
Down East has failed to prove that RMR breached the lease, RMR is entitled
to possession of the premises as the lessee pursuant to the terms of the
lease.
III.
[¶12] Down East also challenges the award of attorney fees to RMR.
Paragraph 18 of the contract provides that if suit is brought to "enforce any
covenant of this Lease or for the breach of any covenant or condition herein
contained, the parties hereto agree that the losing party shall pay to the
prevailing party a reasonable attorney's fee, which shall be fixed by the
Court, and Court costs." Because we conclude that damages were correctly
awarded against Down East, and RMR is also entitled to remain in
possession of the premises, the court correctly concluded that RMR was
entitled to attorney fees.
The entry is:
Judgment affirmed.
Attorneys for Plaintiff:
John M. R. Paterson, Esq. (orally)
Glenn Israel, Esq.
BERNSTEIN, SHUR, SAWYER & NELSON
P. O. Box 9729
Portland, Maine 04104-5029
Attorneys for Defendants:
Mark G. Furey, Esq. (orally)
Edward S. Driscoll, Esq.
THOMPSON, McNABOE, ASHLEY & BULL
P. O. Box 447
Portland, Maine 04112-0447
FOOTNOTES******************************** {1} RMR has since sold its franchises
to Christy's Market Inc., which Down East named as a party defendant in
this action. {2} Garrett, RMR's expert, testified that he prepared an exhibit
that compared the price that RMR paid for gasoline from Down East between
1986 and 1991 with "spot market" prices that it paid at its other
locations from other suppliers for the same time period. Garrett concluded,
based on this exhibit, that the damages totaled $218,709.98. Down East cross-
examined Garrett to expose the assumptions on which he relied to construct
his exhibit. Garrett admitted that the MDTW price can sometimes be lower
than the "spot market" price and that he was unaware of the substance
of contracts that Down East had with suppliers that might affect which company
they bought gas from, and at what price, on any given day. Down East, however,
did not introduce any independent evidence concerning the "spot market"
price available to it between 1986 and 1991. {3} See also Currier v. Cyr,
570 A.2d 1205, 1210 (Me. 1990) ("an award must be supported by some
evidence of the value of property damaged or expenses incurred"); Doane
v. Pine State Volkswagen, Inc., 377 A.2d 481, 485 (Me. 1977) ("the
amount of damages may be established by approximation as long as the jury
can reach a specific conclusion"); McDougal v. Hunt, 146 Me. 10, 14,
76 A.2d 857, 860 (1950) (amount of damages must be established to reasonable
"as distinguished from mathematical, certainty by the exercise of sound
judgment."). {4} Down East's contention that the damages were calculated
for the incorrect time period is also unavailing. Although the trial court
in its original opinion and this Court during the first appeal made statements
about when the breach occurred, in neither decision was the actual date
of Down East's breach relevant. On remand, the trial court accepted an exhibit
that calculated damages from 1986, and Down East's contention that the breach
occurred in 1988 is inconsistent with the court's present award of damages
based on an exhibit spanning back to 1986. Given these circumstances, the
trial court, on remand, implicitly found that the breach occurred in 1986.
Moreover, Down East requested no further findings of fact. Because evidence
in the record demonstrated that a fact finder could have concluded that
the breach occurred in 1986, that finding is not clearly erroneous. {5}
In the event that Down East offers gasoline at the "spot market"
price to RMR, and RMR refuses to purchase gasoline, Down East could then
argue that RMR had breached the agreement existing between the parties.
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