STADIUM STUFF, INC.; S.D. FABRICS, INC.; AND SHARON DURHAM v. HUNTER MANUFACTURING GROUP, INC.
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RENDERED:
AUGUST 25, 2000; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-000351-MR
STADIUM STUFF, INC.;
S.D. FABRICS, INC.; AND
SHARON DURHAM
APPELLANTS
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE REBECCA M. OVERSTREET, JUDGE
ACTION NO. 96-CI-02569
v.
HUNTER MANUFACTURING GROUP, INC.
APPELLEE
OPINION
AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
** ** ** ** **
BEFORE:
BARBER, JOHNSON, AND SCHRODER, JUDGES.
SCHRODER, JUDGE:
S.D. Fabrics, d/b/a Stadium Stuff, and its
president, Sharon Durham, individually, appeal the judgment
entered by the Fayette Circuit Court following a jury verdict
awarding damages and attorney fees to Hunter Manufacturing Group,
Inc. (Hunter) on breach of contract claims.
Having reviewed the
record and applicable law, we affirm in part, reverse in part,
and remand.
Appellant, S.D. Fabrics, d/b/a Stadium Stuff (Stadium
Stuff), is an Atlanta, Georgia, entity in the business of selling
sports memorabilia and collection pieces.
In anticipation of the
1996 Summer Olympics being held in Atlanta, Stadium Stuff’s
president/owner, Sharon Durham (Durham), viewed an opportunity
for Stadium Stuff to expand its ordinary sales volume during the
period of time in which the Olympic games took place.
To this
end, Durham entered into a $2 million dollar contract with
Hunter, a corporation doing business in Lexington, Kentucky.
This contract called for Hunter to produce various specially
manufactured merchandise,1 the specifics of which had been
negotiated by Durham, and to ship quantities of that merchandise
in ten (10) separate $200,000 allotments.
However, since Stadium
Stuff did not have sufficient credit to secure the $2 million
order, Hunter required Durham to execute a personal guarantee
assuring payment on the account.
The contract further required
the purchase price of each allotment to be wire-transferred to
Hunter’s Lexington bank, prior to shipment.
However, when Hunter was ready, willing and able to
ship the first allotment, Stadium Stuff repudiated the contract
and refused to accept the specially manufactured goods by virtue
of failing to make the requisite wire-transfer.
Thereafter, in effort to mitigate its damages, Hunter,
on July 25, 1996, entered into a consignment agreement with
Stadium Stuff.
The terms of this agreement called for Hunter to
be permitted to sell its merchandise, including that specially
manufactured for Stadium Stuff, through seven (7) Stadium Stuff
1
The goods produced by Hunter were to bear the Olympic logo
and other similar Olympic legends.
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outlet stores in downtown Atlanta.
In exchange, Stadium Stuff
was allocated a credit for Hunter merchandise already in its
Atlanta warehouse (prior inventory on an outstanding account),
and would receive twenty-percent (20%) of the total sales
realized by Hunter.
This twenty-percent (20%) would then be
applied to an outstanding account balance due Hunter from Stadium
Stuff.
However, the consignment agreement failed in all
respects.
On August 1, 1996, Hunter filed its complaint against
appellants alleging, inter alia, a claim for damages arising from
the breach of a $2 million contract.2
Thereafter, Hunter filed
an amended complaint claiming further damages on the breach of a
July 25, 1996, consignment agreement.
A jury trial was held
which resulted in the court entering a December 3, 1998, trial
verdict and judgment awarding Hunter: (1) $40,011.50 for Stadium
Stuff’s breach of the consignment agreement; (2) $112,979.50 for
breach of the $2 million contract, plus interest at a rate of 18%
per annum from July 31, 1996, until satisfied; (3) $112,979.50
for Durham’s breach of the $2 million contract, plus interest at
18% per annum from July 31, 1996 until satisfied; and (4) an
award of $36,000 against Durham for Hunter’s attorney fees.
Appellant’s subsequent CR 59.01 motion was denied, and this
appeal followed.
2
Count I of Hunter’s complaint, addressing Stadium Stuff’s
outstanding balance on other inventories, was resolved through
summary judgment prior to trial and, as such, is not a subject of
this appeal.
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Before this Court, appellants raise three (3)
allegations of error: (1) that the trial verdict and judgment
permit double recovery for the same injury; (2) that the judgment
against Durham awarding $36,000 to Hunter for attorney fees is
against the evidence presented at trial; and (3) that the proof
presented at trial evidenced that Hunter’s damages, if any, were
an unliquidated sum whereby disallowing a rate of 18% per annum
for either pre-judgment or post-judgment interest.
The gist of appellants’ first argument remains that the
jury instructions were flawed in that they failed to instruct the
jury on joint and several liability, whereby leading a confused
jury panel to award a double recovery on the $2 million contract
claim.
Appellants further argue that the onus was upon the trial
court to recognize the jury’s confusion respecting the issue of
joint and several liability by virtue of two inquiries submitted
to the court during the jury’s deliberations.3
As a preliminary matter, we believe the jury’s verdict
was fully supported by the evidence presented at trial.
Hunter
presented testimony evidencing $225,959 in damages arising from
the breach of the $2 million contract.
Clearly the jury “split”
the difference in assessing its award, that is 50% liability upon
the corporate defendants and 50% liability upon Durham,
individually.
3
We note that appellants have interjected an issue
regarding the propriety and requirements of “piercing the
corporate veil” into the “double recovery” discussion. However,
since this argument was never raised before the lower court, we
are without authority or inclination to address it now. Kesler
v. Shehan, Ky., 934 S.W.2d 254, 256-57 (1996).
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Moreover, review of the record reveals that appellants
neither tendered nor requested a joint and several liability
instruction.
Rather, appellants objected to the use of the term
“order” in the instructions addressing the $2 million contract.
At no time, including that in which the court apprised the
attorneys of the jury’s inquiries, did appellants request a joint
and several liability instruction.
As such, the issue is not
properly before this Court for consideration and we decline to
address it in any further detail.
Regional Jail Auth. v.
Tackett, Ky., 770 S.W.2d 225, 228 (1989).
Secondly, Durham, individually, asserts that the
judgment against her for $36,000 in attorney fees was unsupported
by the evidence at trial.
Although the only proof regarding
attorney fees was presented before the lower court in the form of
testimony from James Smith, Hunter’s chief financial officer, we
are constrained to reverse the court’s affirmation of the jury
verdict on this point as we believe the award is contrary to law.
The jury was presented numerous interrogatories and
instructions.
In sum, the jury was first asked to determine the
liability of the corporate defendants under the consignment
agreement and then again under the $2 million contract.
In
answering these interrogatories, the jury awarded the amount set
forth, supra.
Secondly, the jury was asked to ascertain whether
they believed that Durham, as a result of her execution of the
personal guaranty, “personally guaranteed” either the consignment
agreement or the $2 million contract.
To this particular set of
interrogatories, the jury responded “no.”
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However, when asked
whether Durham had signed the $2 million contract in her personal
capacity or as a corporate representative, the jury determined
that Durham acted independently of the corporate entities.
As a
result of this resolution, the jury assessed 50% of Hunter’s
damages for breach of this contract solely to Durham, i.e.
$112,979.50.
The jury further assigned Hunter’s purported
$36,000 in attorney fees solely to Durham.
In order to assess such fees, authority must be derived
either by statute or a written instrument.
Investors Heritage
Life Ins. Co. v. Farmers Bank, Ky. App., 749 S.W.2d 688, 690
(1987).
In this case, however, the only provisions for attorney
fees were contained in the credit application and the personal
guarantee executed by Durham.
Clearly, the terms and conditions
of the credit application remain applicable strictly to the
corporate entities as it was executed on behalf of the
corporations by Eleanor Beavers, comptroller.
Likewise, the
provision permitting the payment of attorney fees contained in
the personal guarantee is inapplicable, in that the jury
concluded that document was not executed by Durham in her
individual capacity.
As such, the record is devoid of any
writing creating a personal liability upon Durham for the payment
of Hunter’s attorney fees.
Appellants’ final argument is resolved similarly to the
above-discussed issues.
That is whether or not the court
correctly assigned an 18% interest rate upon the various
judgments.
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With regard to the corporate entities’ assignment of
damages, as previously discussed, the monetary damages sustained
by Hunter as a result of the breach of both contracts was a
liquidated sum.
Therefore, by virtue of the credit application
executed on behalf of the corporations which contained a 1.5%
monthly interest assessment on all outstanding sums due, the
court’s allocation of 18% per annum interest rate from July 31,
1996, was proper.
KRS 360.010;4 KRS 360.040.5
However, the jury determined that Durham did not
execute the personal guarantee in her “personal” capacity, but,
presumably, as a representative in her capacity as corporate
president.
As such, there is no writing under which Durham,
individually, had agreed to pay a higher interest rate than those
set forth in KRS 360.010 and KRS 360.040.
Accordingly, Durham
should have been assigned a pre-judgment interest rate as to the
4
KRS 360.010(1), provides, inter alia:
The legal rate of interest is eight percent
(8%) per annum, but any party or parties may
agree, in writing, for the payment of
interest in excess of that rate . . . .
5
KRS 360.040 provides, in pertinent part:
A judgment shall bear twelve percent (12%)
interest compounded annually from its date.
A judgment may be for the principal and
accrued interest; but if rendered for
accruing interest on a written obligation, it
shall bear interest in accordance with the
instrument reporting such accruals, whether
higher or lower than twelve percent (12%).
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$112,979.50 judgment of no greater than eight percent (8%), and a
post-judgment interest rate not in excess of twelve (12%).
In accordance with the foregoing discussion, the
judgment and order of the Fayette Circuit Court is affirmed in
part, reversed in part, and remanded for entry of an order in
conformity with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE:
Cecil F. Dunn
Lexington, Kentucky
Elizabeth Lee Thompson
Daniel E. Danford
Lexington, Kentucky
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