Famiglietta v. Ivie-Miller Enterprises, Inc.

1998 NMCA 155, 966 P.2d 777, 126 N.M. 69
CourtNew Mexico Court of Appeals
DecidedAugust 19, 1998
Docket17922
StatusPublished
Cited by22 cases

This text of 1998 NMCA 155 (Famiglietta v. Ivie-Miller Enterprises, Inc.) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Famiglietta v. Ivie-Miller Enterprises, Inc., 1998 NMCA 155, 966 P.2d 777, 126 N.M. 69 (N.M. Ct. App. 1998).

Opinion

OPINION

FLORES, Judge.

{1} This case involves the sale of a tortilla chip distributorship business. Michael and Frances Famiglietta (Sellers) entered into an agreement to sell the distributorship to Ivie-Miller Enterprises, Inc. (Buyer). Sellers filed a complaint against Buyer alleging that Buyer breached the contract by failing to pay installment payments due under the contract and promissory note that was executed at the time the business was purchased. Buyer answered and counterclaimed, arguing that Sellers were not entitled to recover under the contract because Michael Famiglietta (Famiglietta) breached the contract first. In addition, Buyer argued that Sellers were also liable for additional damages under alternate theories of breach of contract, negligent misrepresentation, fraudulent inducement, and prima facie tort. The trial court ruled that although Famiglietta breached the contract, the breach was not material. Therefore, the trial court ruled that Buyer was liable for the remaining balance due under the contract and promissory note. Buyer appeals the trial court’s ruling. Sellers also cross-appeal, arguing that the trial court should have awarded them attorney fees. For the reasons that follow, we affirm in part, reverse in part, and remand.

FACTUAL BACKGROUND

{2} On January 29, 1993, the parties entered into a contract for the sale of a Mi Ranchito Mexican Food Products distributorship for $50,000 plus interest. Buyer agreed to pay Sellers an initial payment of $10,000 and the remaining $40,000 plus interest by three subsequent installment payments. The contract also provided that the agreement was contingent upon Famiglietta’s obligation to remain with the distributorship for a period of five years in the capacity of sales. About eighteen months after the parties entered into the contract, Famiglietta left the distributorship.

{3} Buyer’s president, Bob Meek, testified that during his initial discussions concerning the purchase of the distributorship he told Famiglietta that he would only consider purchasing the business if Famiglietta remained with the business because Famiglietta had been in the business for many years, was good at the job, and knew the market. Mr. Meek also testified that it was important for Famiglietta to remain with the distributorship because he knew the store personnel, was an aggressive salesman, and was able to maintain display space in the stores.

{4} Famiglietta testified that he was aware of his obligation to stay with the distributorship for five years. He also acknowledged that he did- not fulfill his five-year obligation even though Buyer wanted him to remain with the business because of his experience and contacts in the business. Famiglietta also recognized that at the time the parties entered into the contract his agreement to remain with the distributorship for five years was a material part of the contract.

{5} Famiglietta testified that he was contemplating opening his own bagel shop. He also testified that his relationship with Mr. Meek was good and he could just orally inform Buyer that he was leaving. Famiglietta first told Buyer that he was leaving the distributorship in June of 1994. Famiglietta testified that Mr. Meek said he understood, but' was concerned about other employees taking over Famiglietta’s routes.

{6} Mr. Meek testified at trial that he did not agree to release Famiglietta from his five-year obligation and he informed Famiglietta that Famiglietta would be breaking the contract if he left. Mr. Meek further testified that from the time Famiglietta informed him of his desire to leave until he finally left on June 24, 1994, that Mr. Meek informed Famiglietta at least three times that Famiglietta would be breaking the contract by leaving the business. On the day that Famiglietta left, Mr. Meek testified that he told Famiglietta he would probably be hearing from Buyer’s attorney. Famiglietta claimed, however, that Mr. Meek voiced no objections to Famiglietta’s departure during their conversations in June of 1994. Famiglietta contended that if Buyer had objected he would have remained with the distributorship.

{7} Less than six months later in December of 1994, Buyer’s attorney sent a letter to Famiglietta informing him that his departure from the business was a breach of the contract and that the contract should be rescinded. Buyer’s letter also offered to return the business to Famiglietta within 60 days. Famiglietta acknowledged receiving the letter but elected not to return to the business. Famiglietta also maintained that the December letter was the first time he was informed of Buyer’s objections to Famiglietta’s departure from the business.

{8} Mr. Meek testified at trial that Famiglietta’s absence from the distributorship caused a substantial decrease in business. In particular, Mr. Meek maintained that in Famiglietta’s absence the distributorship’s volume of business decreased and the distributorship suffered $10,000 in lost profits. Mr. Meek also claimed that the value of the distributorship dropped in value from $50,000 to $29,000. However, Mr. Meek also acknowledged that the distributorship realized • a profit during the time that it was owned by Buyer. Mr. Meek also conceded on cross-examination that much of the loss of sales after Buyer purchased the distributorship was the result of individual corporate retailers’ decisions to reduce or terminate the Mi Ranchito product line and that those decisions were not related to Famiglietta’s departure from the distributorship. There was also evidence showing that declining sales were already occurring during the time that Famiglietta was working for the distributorship.

{9} Because Buyer refused to pay any of the remaining installment payments due under the contract and promissory note, Sellers ultimately filed suit against Buyer to recover the remaining amounts due. Buyer answered, asserting several affirmative defenses and counterclaims. While the ease was pending in the district court, Buyer attempted to sell the Ivie-Miller corporate assets, including the Mi Ranchito distributorship, to a third party. Although Sellers sought injunctive relief from the district court to stop the sale, ultimately Buyer was allowed to sell all of its corporate assets. At the hearing to resolve Sellers’ request for injunctive relief, Mr. Meek indicated that the distributorship was valued at $29,000. However, at the time of trial, Mr. Meek testified that no value was attached to the distributorship when it was sold with the rest of the corporate assets. In any event, the trial court stated at trial that it would not consider the effect of the sale of the business in reaching its decision because Famiglietta did not present any evidence on the point.

{10} After trial, the trial court ruled that although Famiglietta breached the contract by leaving the business before his five-year obligation expired, the breach was not material. The trial court’s findings also focused on the fact that Buyer did not suffer any direct damage as a result of Famiglietta’s breach. Therefore, the trial court ruled that Buyer was liable for the remaining amounts due under the contract and promissory note. The trial court also ruled that the parties were responsible for their own attorney fees.

DISCUSSION

I. Buyer’s Right to Rescind the Contract

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Cite This Page — Counsel Stack

Bluebook (online)
1998 NMCA 155, 966 P.2d 777, 126 N.M. 69, Counsel Stack Legal Research, https://law.counselstack.com/opinion/famiglietta-v-ivie-miller-enterprises-inc-nmctapp-1998.