Fellion v. DarlingFellion v. Darling
Victor Fellion et al., Appellants, v Michael B. Darling et al., Respondents. [789 NYS2d 541]—
Spain, J. Appeal from a judgment of the Supreme Court (Demarest, J.), entered June 5, 2003 in St. Lawrence County, which granted defendants’ motion for a directed verdict at the close of plaintiffs case.
Defendants Michael B. Darling, Norma F. Darling, Jeffrey L. Darling and Barbara Darling were the sole officers, directors and shareholders of two cоrporations, defendant Econo Fuels, Inc. and plaintiff Trans Fuel Express, Inc. Econo Fuels was in the business of providing retail delivery of home heating fuel, as well as some wholesale distribution of gasoline and kerosene to gas stations, which included hauling in large quantities the petroleum products it needed for distribution in its own wholesale/retail business. Trans Fuеl was primarily involved in hauling liquid petroleum products for Econo Fuels and other businesses for wholesale and retail distribution. On September 8, 1995, defendants sold Trans Fuel to plaintiffs Victor Fellion and James Vaincourt.
During the first year following its transfer, Trans Fuel was not operating profitably and, claiming harm due to defendants’ allegedly improper hauling activities, plaintiffs commenced this action. Thе complaint contained eight causes of action seeking rescission as well as damages for breach of contract, intentional interference with a contractual relationship, fraud, conversion, punitive damages, conspiracy and promissory estoppel. A bench trial ensued. At the close of the plaintiffs’ casе, Supreme Court granted defendants’ motion for judgment as a matter of law (see
“[A] court may grant a motion for a directed verdict where, based on the evidence presented, there is no rational process by which [the trier of fact] could find for the nonmoving party” (Clemente v Impastato, 274 AD2d 771, 773 [2000]). In applying this standard, however, plaintiffs “must be afforded the benefit of ‘every infеrence which may properly be drawn from the facts presented, and the facts must be considered in a light most favorable to [plaintiffs]‘” (Calafiore v Kiley, 303 AD2d 816, 817 [2003], quoting Szczerbiak v Pilat, 90 NY2d 553, 556 [1997]).
Because it is relevant to the viability of most of plaintiffs’ claims on appeal, we address first the issue of whether plaintiffs made a prima facie case for breach of contract.1 Plaintiffs allegе that defendants breached the transportation agreement by failing to maximize fuel transportation contracts with Trans Fuel and, instead, hauling their own product on the purportedly
more lucrative Canadian runs, and by continuing to use
Further, Supreme Court properly found that although defendants improperly continued to use the Trans Fuel name, identification numbers and access cards to obtain and haul their own product, plaintiffs failed to demonstrate any resultant damages from such conduct. No evidence exists that plaintiffs experienced financial losses by virtue of any misuse by defendants of the Trans Fuel corporate identity. Plaintiffs’ proof on damages centers around their allegation that they would have profited from hauling on the Cаnadian routes for Econo Fuels, but, as we have held, they failed to demonstrate any legal right to that business. “Th[is] failure to prove damages is . . . fatal to plaintiff[s‘] breach of contract cause of action” (Cramer v Spada, 203 AD2d 739, 741 [1994], lv denied 84 NY2d 809 [1994], cert denied 514 US 1055 [1995] [citation omitted]; see New Horizons Amusement Enters. v Zullo, 301 AD2d 825, 827 [2003]).
Plaintiffs’ cause of action sounding in fraud was also properly dismissed. To establish fraud, plaintiffs had to demonstrate that they justifiably relied on a material misrepresentation knowingly made by defendants and, as a result, suffered some injury (see Held v Kaufman, 91 NY2d 425, 431 [1998]; DonDero v Gardner, 267 AD2d 830, 831 [1999]). In their brief, plaintiffs contend that Michael Darling reprеsented that defendants had turned over all of their access cards to Trans Fuel. But, again, there is no proof that this caused plaintiffs any damage and,
In support of their claim for rescission, plaintiffs contend on appeal that Econo Fuels’ continued participation in the hauling business harmed Trans Fuel‘s business and, thus, the transportation agreement lacked adequate consideration. Notably, “the adequacy of considerаtion is not a proper subject for judicial scrutiny absent a claim of fraud or misrepresentation (Morey v Sings, 174 AD2d 870, 872 [1991]; see Su Mei, Inc. v Kudo, 302 AD2d 740, 742 [2003]). Having rejected plaintiffs’ claims of misrepresentation and fraud as unsupported, as well as finding no merit in the argument that, by hauling its own petroleum product Econo Fuels encroached upon the scope of the transportation agrеement, we conclude that plaintiffs’ rescission claim was also properly dismissed.
Our conclusion that the agreements between the parties did not mandate that Econo Fuels relinquish its authority to haul petroleum products for its own distribution also undermines plaintiffs’ claim for conversion. Even assuming Econo Fuels improperly used access cаrds bearing the Trans Fuel name to obtain its own product, insufficient evidence exists that Econo Fuels engaged in the “unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner‘s rights” (Vigilant Ins. Co. of Am. v Housing Auth. of City of El Paso, Tex., 87 NY2d 36, 44 [1995], quoting Employers’ Fire Ins. Co. v Cotten, 245 NY 102, 105 [1927]). Significantly, plaintiffs failed to present evidence demonstrating how Econo Fuels’ subsequent participation in the hauling market interfered with their contractual rights or property interests.
Finally, in light of our determination that plaintiffs failed to demonstrate a breach of contract or a knowing misrepresentation, we also find the evidence does not establish “facts sufficient to demonstrate that defendants’ cоnduct rose to the level of high moral culpability which must be reached to support a claim for punitive damages” (Gizzi v Hall, 300 AD2d 879, 882 [2002], quoting RKB Enters. v Ernst & Young, 182 AD2d 971, 973 [1992]).