Smoot v. B & J Restoration Services, Inc.
279 P.3d 805
Okla. Civ. App.2012Background
- Two contracts documented the sale: Purchase Agreement (assets/franchise) and a Restrictive Covenant (not to compete) between B & J (seller) and Smoots (buyer/C & L).
- Sunbelt Business Brokers coordinated negotiations; signatures on documents show Hoppers signing individually without clearly stated representative capacities.
- Trial court directed verdicts on rescission/unjust enrichment/detrimental reliance/intentional interference; jury found for Smoots on breach of contract with damages of $260,000 (Purchase) and $100,000 (Restrictive Covenant).
- Court held Hoppers personally liable only for breach of non-compete provisions; liability for other contract provisions and for role as shareholders/officers disputed.
- On appeal, majority affirmed as to Hoppers’ personal liability for non-compete provisions but reversed for other provisions; remanded to determine proper damages and apportionment.
- Attorney fees awarded to Smoots vacated; remand to district court to determine proper fee amount after damages proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Hoppers personally liable for breach of contracts? | Smoots contend Hoppers signed in corporate capacities, but personally breached non-compete terms. | Hoppers argue they are not personally liable on contracts, only corporate entity liability applies. | Hoppers personally liable only for non-compete breaches; not liable for other contract provisions. |
| What is the proper damages measure for breach of the two contracts? | Smoots seek full purchase-price-based recovery plus related damages under each contract. | Hoppers argue multiple measures apply; potential double recovery not allowed; need proper method. | Remand for proper damages calculation with correct method; avoid double recovery and apportion damages between B & J and Hoppers. |
| Is the liquidated damages clause in the Restrictive Covenant enforceable? | Liquidated damages should be enforceable as specified. | Enforceability contested; court should determine on remand. | Remand to determine enforceability; if unenforceable, instruct proper measurement of damages. |
| Should judgment NOV have been granted as to personal liability? | Sustain liability against Hoppers for certain contractual breaches. | JNOV appropriate where personal liability unsupported by agency/authority evidence. | JNOV appropriate for personal liability (except non-compete); remand for damages only. |
| What about attorney fees and costs on appeal? | Fees appropriately awarded to Smoots. | Fees improperly calculated against individuals. | Attorney fee judgment affirmed in part; amount vacated and remanded to determine proper fees after damages. |
Key Cases Cited
- Florafax Int'l, Inc. v. GTE Mkt. Res., Inc., 1997 OK 7 (OK 1997) (sufficiency of evidence standard for jury verdicts)
- Park v. Sec. Bank and Trust Co., 512 P.2d 113 (OK 1973) (appellate review of evidence in contract cases)
- First Nat'l Bank in Durant v. Honey Creek Entm't Corp., 54 P.3d 100 (OK 2002) (directed verdict and JNOV standard alignment)
- Downing v. First Bank in Claremore, 756 P.2d 1227 (OK 1988) (directed verdict standard; evidence credibility)
- Bierman v. Aramark Refreshment Servs., Inc., 198 P.3d 877 (OK 2008) (jury instruction review; complete instructions required)
- Smicklas v. Spitz, 846 P.2d 362 (OK 1992) (instruction completeness and potential prejudice)
- Tate v. Browning-Ferris Inc., 833 P.2d 1218 (OK 1992) (single damages recovery rule for multiple contracts)
- Carter v. Schuster, 227 P.3d 149 (OK 2009) (agency/authority principles for personal liability in contracts)