Standard Fittings Co. v. South Central Bell Telephone Co.

471 So. 2d 1144, 1985 La. App. LEXIS 8974
CourtLouisiana Court of Appeal
DecidedJune 26, 1985
DocketNo. 84-553
StatusPublished

This text of 471 So. 2d 1144 (Standard Fittings Co. v. South Central Bell Telephone Co.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Standard Fittings Co. v. South Central Bell Telephone Co., 471 So. 2d 1144, 1985 La. App. LEXIS 8974 (La. Ct. App. 1985).

Opinion

YELVERTON, Judge.

South Central Bell Telephone Company, the appellee, wrongfully suspended its telephone services to Standard Fittings Company, appellant, for four days in 1969, causing a loss of net business revenue which the trial court found amounted to $1,320. From a judgment in its favor for this amount, Standard Fittings Company appeals, urging the award was inadequate. We affirm.

Standard, a manufacturer and distributor of forged steel pipe fittings, in 1969 had a factory in Opelousas, Louisiana, having relocated from Massachusetts the previous year. On January 20, 1969, Southern Bell disconnected the plaintiff’s phones due to nonpayment of the bills. Before the disconnection, representatives from Southern Bell had been notified that plaintiff had filed Chapter XI bankruptcy proceedings. The Bankruptcy Court on January 16,1969, had issued an order enjoining anyone from disconnecting any utilities including telephone services. The telephone company did not fully reconnect the phone service until January 24, 1969. When Southern Bell reconnected the plaintiff’s phone service, plaintiff did not receive its old numbers, but instead received new numbers. When customers attempted to call the old numbers, the telephone operators would not refer the customers to the new numbers, but would tell them only that the phones had been disconnected. Several witnesses testified that operators informed them that the plaintiff had gone out of business.

The sole issue raised on appeal is the adequacy of the award of $1,320 for the resulting business loss. In its reasons for judgment the trial court found that plaintiff suffered a net revenue loss in 1969, and that defendant’s wrongful conduct in disconnecting the phone service was a cause in fact of part of that loss, but only a relatively small part of it. The loss caused by defendant’s conduct was, in the trial court’s words:

“an additional $1,320, in net revenues in 1969 (Vioth of $13,200 loss in net income which Mr. Stout determined was not reflected by the previous trend in income or loss).”

In the process of explaining our reasons for affirming the adequacy of this award, we will discuss the testimony of the various witnesses, including that of Mr. Stout, whose analysis the trial court obviously believed was the most reliable.

Standard’s president, Irvin Davlin, testified on its behalf that prior to the phones being disconnected the company was not [1146]*1146having difficulty in making sale arrangements and agreements with its customers. After the phones were cut off Standard was no longer recognized as a steady, reliable source of products. After the reconnection Standard contacted its customers by telephone and by letters to notify them of its new numbers. However, incoming orders continued to drop and stayed at a lower level. This situation prompted him to lower Standard’s prices on goods by an average of 15 percent lower than their former prices before the disconnection, in an attempt to secure a more competitive place in the market. However, sales continued to be at a lower level. In 1969 Standard began to suffer from a serious cash flow problem due to the drop in sales. The company lowered its inventory to develop more cash flow. This resulted in delays in shipment to its customers. Mr. Davlin admitted that there were delays in shipments also in 1968, but said that these delays were caused by the problems in relocating the plant from Massachusetts to Louisiana. Mr. Davlin testified that the Chapter XI proceedings had nothing to do with the drop in sales, and that his company suffered a $610,326 loss in profits as a result of the phones being shut off.

John O’Donnell, the administrative assistant to Mr. Davlin and the company financial analyst, testified that Standard’s average monthly sales during the 16 month period prior to the disconnection was $211,-000. Using the conservative figure of $200,000 a month average to formulate the anticipated sales volume for 1969, and then subtracting the actual sales revenue made in 1969 from this figure, he calculated that Standard suffered a $531,593.37 loss in sales during 1969. Then subtracting the cost of manufacturing expenses, material, and administrative and selling costs, he testified that Standard suffered a $250,327 loss in sales profits as a result of lost sales. He also stated that Standard suffered a $359,999 loss as a result of lowering its price on products by an average of 15 percent in 1969. Accordingly, he estimated Standard’s total loss during 1969 was $610,326. He also stated that a Chapter XI proceeding would have an effect on the cash flow and the people who purchase a product.

John Domingue, Standard’s comptroller, said that prior to 1969, Standard was able to adequately fill orders and to buy raw material. The company suffered a decline in funds after the phones were disconnected. The company completed its relocation to Louisiana in the summer of 1968.

Another Standard employee, Malcolm Marcus, who was ⅛ charge of inventory, raw materials, and quality control, stated that at times the company suffered from lack of supplies and raw materials due to a lack of cash flow in both 1968 and 1969. In 1968 the company had some trouble filling big orders due to lack of materials, breakdown of machinery, and the absence of operators. He stated these problems continued in 1969.

A former Standard sales representative, John Connell, testified that when the phones were disconnected numerous customers contacted him and wanted to know if Standard was out of business. At the time he could not give the customers a referral number, and he was unable to place their orders. He felt this gave the company a bad image and he spent a lot of time answering questions and explaining the situation to customers.

Southern Bell called a number of witnesses to show that the damages suffered by Standard as a result of the phones being disconnected were minimal.

Shelton Courville, a former administrative assistant to Mr. Davlin, Standard’s president, testified the company was having problems purchasing materials, producing goods, and maintaining quality control before filing Chapter XI proceedings in January 1969. The disconnecting of the phones did affect sales a little, but Standard did not lose any major contracts which were a major portion of its business. After the phones were reconnected Standard notified its customers it was still in business. He had no knowledge of Standard losing any customers as a result of the phones [1147]*1147being disconnected. Sales did drop during the time the phones were disconnected; however, this lasted only until the phones were reconnected and the customers contacted. He estimated that only 10 percent of the sales drop was attributable to the phones being disconnected. Mostly only small orders were done by phone. He opined that the bankruptcy proceeding hurt the business because the customers no longer felt Standard was a dependable supplier. The drop in volume of sales after the Chapter XI proceedings was a result of the poor quality of product and the inability of Standard to supply products to the customers. The disconnection of the phones had no effect on this aspect of the business. The volume of sales was also dropping before the bankruptcy proceedings due to poor quality and inability to service accounts and obtain raw materials.

Ramona Wyble, another former Standard employee in the sales department, testified that Standard was having quality control problems and non-availability of finished products in 1968.

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Bluebook (online)
471 So. 2d 1144, 1985 La. App. LEXIS 8974, Counsel Stack Legal Research, https://law.counselstack.com/opinion/standard-fittings-co-v-south-central-bell-telephone-co-lactapp-1985.