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ARTHUR K. LOVETT, D/B/A DIXIE DANDY v. E. L. GARNER

JULY 29, 1987

ARTHUR K. LOVETT, D/B/A DIXIE DANDY
v.
E. L. GARNER, INC.



BEFORE HAWKINS, P.J., ROBERTSON AND ANDERSON, JJ.

ROBERTSON, JUSTICE, FOR THE COURT:

I.

This is a breach of contract action. Each party - a convenience store retailer and its gasoline supplier - has charged the other with breach. Respecting familiar limitations upon our scope of review, we decline to disturb the lower court's decision that the retailer was the breaching party.

 Damages are another matter. The supplier adequately proved damages for abandonment and removal of its equipment from the retailer's premises. The evidence of loss of future profits, however, was too speculative. We affirm in part and reverse in part and render.

 II.

 A.

 Arthur K. Lovett lives in Richton, which is in Perry County, Mississippi, where he has what is commonly known as a convenience store, operating under the trade name of Dixie Dandy. Lovett is assisted in this business by his son, Samuel M. Lovett. Arthur K. Lovett was the Defendant below and is the Appellant here. Lovett's contract for the purchase of gasoline for resale to the public is the subject matter of this civil action.

 E. L. Garner, Inc. is a Mississippi corporation having its principal place of business in Batesville, Mississippi. Garner was the Plaintiff below and is the Appellee here. Garner is a jobber and wholesaler of petroleum products. President and chief executive officer of the Garner corporation is Lee Garner.

 On January 5, 1983, Lovett and E. L. Garner, Inc. entered into a written contract entitled "Commission Marketing Contract." Under this contract Garner agreed to install certain gasoline dispensing equipment upon Lovett's premises in Richton and agreed to supply gasoline to Lovett which Lovett in turn was to sell at retail to the public "at prices established by Garner." Under the contract Garner would pay to Lovett one-half of the net profits on all gasoline Lovett sold to the public, provided that Lovett would be guaranteed a minimum profit of four cents per gallon sold. The contract called for a five year term.

 Principally at issue are two contemporaneous verbal agreements. First, notwithstanding the control which the written contract gave Garner of the pricing of the gasoline, Lovett argues that Garner agreed verbally that he would set gasoline prices so that Lovett would be "competitive" with retail gas stations in the nearby towns of Runnelstown and Petal. Garner denies any such agreement. Instead, Garner, acknowledging that the subject was discussed, said that he would keep Lovett as low as any independent in Richton and that "we would stay as close as we could to those other areas."

 The issue arises in the context of Lovett's claim that Petal and Runnelstown are a part of the Richton market area. Lovett reasons that many residents of Richton, a small town of some 1,200 people, work in Hattiesburg and that on the way to and from work they pass through Runnelstown and Petal, and that if gasoline is two cents lower in Runnelstown or Petal, Richton residents will purchase their gas there and not in Richton. By the map, Richton lies on Highway 42 some twenty-six miles east of Hattiesburg. Petal is some four miles east of Hattiesburg also on Highway 42. Runnelstown is fifteen miles east of Hattiesburg, also on Highway 42. McNally, Road Atlas 52 (1981).

 The second verbal agreement concerns Lovett's prior supplier, Clark Oil Company. Lovett contends that, as a condition precedent to his contract with Garner becoming effective, Garner had agreed to take care of any outstanding indebtedness or claims Clark may assert arising out of Lovett's termination of his relationship with Clark. Garner does not dispute this agreement. Indeed, the record reflects that Garner has stated at all times that it would settle with Clark, and if unable to do so, would indemnify and hold harmless Lovett and his corporation "from any judgment and litigation expenses related to Clark Oil Company's claim." Although considerable settlement negotiations have taken place, it appears that the Clark matter remains open, and that

 Garner remains firm in his acknowledgment of his indemnity obligation.

 As fate would have it, the Lovett-Garner relationship was neither prosperous nor tranquil. Garner made Lovett wholly competitive with other Richton independent gasoline stations but Lovett's retail prices to the public remained several cents higher than those available in Runnelstown and Petal for comparable types of gasoline. Lovett's unhappiness was exacerbated by his awareness that Garner controlled stations in Runnelstown and Petal. Specifically, Lovett's price for regular gasoline was 104.9 cents per gallon, while Garner-controlled stations in Hattiesburg were selling regular gas at 102.9 and 103.9 cents per gallon. Garner's Runnelstown stations were selling regular gas at 102.9 cents per gallon. The prices at which Lovett was able to sell unleaded gasoline were also higher than prices at which other stations in the trade area were selling unleaded regular.

 In any event, on March 8, 1983, just over two months after the contract was signed, Lovett gave notice that he considered Garner had breached his contract by failing to supply gasoline at competitive prices. Lovett maintained that he was losing money because he was not able to compete with Runnelstown and Petal. Personally and through counsel the parties attempted to resolve their differences over the next five or six months until finally in early September of 1983 Lovett declared the contract terminated once and for all and began buying his gasoline from another supplier.

 B.

 Several weeks later, E. L. Garner commenced this civil action by filing its complaint in the Chancery Court of Perry County, Mississippi, naming Lovett as the sole Defendant. Garner charged Lovett with breach of the January 5, 1983, contract and sought damages for the cost of removal of equipment, losses as a result of abandonment of contract, loss of anticipated revenues, and attorneys fees.

 Lovett answered and counterclaimed, alleging that Garner, not Lovett, had breached the contract, and praying substantial damages of and from Garner.

 The matter was called for trial in Chancery Court on May 9, 1984, at the conclusion of which the matter was taken under advisement, and on March 28, 1985, the Chancery Court rendered its final judgment wherein it found that Garner "had made a substantial performance of said contract and agreement" but that Lovett had "materially breached the . . . [contract] by

 refusing to accept delivery of gasoline from . . . [Garner]." The Court further found that, as a consequence of Lovett's breach, Garner had suffered damages in the amount of $50,826.66 computed as follows:

 (a) Loss of anticipated revenue - $38,615.16;

 (b) Loss as a result of abandonment - ...


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