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Espresso America Inc. v. Kelley''s Personal Communications

February 18, 1997

ESPRESSO AMERICA, INC., RESPONDENT,
v.
KELLEY'S PERSONAL COMMUNICATIONS, KELLEY'S TELEPHONE ANSWERING SERVICE, DOES I THROUGH X, APPELLANT.



Appeal from Superior Court of Snohomish County. Docket No: 93-2-03014-1. Date filed: 05/05/95. Judge signing: Hon. Larry E. McKeeman.

Authored by Ann L. Ellington. Concurring: William W. Baker, Mary K. Becker.

The opinion of the court was delivered by: Ellington

ELLINGTON, J. -- Dale Morris hired Kelley's Personal Communications to answer the thousands of calls his business, Espresso America, expected to receive in response to his appearance on a television program seen in 57 million homes. Kelley's representatives assured Morris that Kelley's could handle the job. But when Espresso America in fact received thousands of calls in a matter of hours, Kelley's was unable to keep up, and failed to answer over 67,000 calls within two weeks of the broadcast. We affirm the trial court's Conclusion that Kelley's breached an enforceable contract. The agreement was sufficiently definite, the parties objectively manifested their expectation that Kelley's would answer a high volume of calls around the time of the broadcast, and the parties were not mutually mistaken about the contract's material terms. Lost profits were properly awarded because their loss was foreseeable, they were based upon the best evidence available, and the fact and amount of the loss were not based upon speculation. The trial court's decision is therefore affirmed.

I. FACTS

Dale Morris and his sister, Jinda DeMarco, ran a business called Espresso America, which created and marketed videos and manuals about how to start an espresso business. The company also sold espresso-making equipment, coffee, and related supplies, and conducted seminars to train people to operate espresso businesses.

In February 1993, Morris was to appear on the 700 Club, a television show reportedly seen in 57 million homes. Morris and DeMarco expected a large response to the program, so they sought an answering service to take orders and messages over the phone. They met with Kelley's representatives, Lisa Keller and Joy Collier, in Seattle and told them that Espresso America expected thousands of calls. Morris expressed concern about Kelley's ability to handle that many calls, but Keller and Collier gave no indication they were concerned. Rather, Morris and DeMarco were told that Kelley's Lynnwood office would take their account.

Morris and DeMarco again expressed their concern to Kelley's representatives in Lynnwood about Kelley's ability to handle thousands of calls contemporaneous with the broadcast. DeMarco asked what Kelley's would do if its phone lines were flooded with calls, and was told Kelley's would hire more operators and add more phone lines. Believing that Kelley's could handle Espresso America's needs, Morris signed a fee agreement.

On the 22nd, Morris was interviewed on the 700 Club by Pat Robertson, the nationally-known star of the show, and calls began coming in very rapidly. When the 700 Club became swamped with complaints from callers who could not get through, it asked Espresso America to add more lines.

DeMarco told Kelley's about the problem, but Kelley's told her there were no other operators available and that Kelley's would have to reduce Espresso America's lines, rather than add more, in order to accommodate Kelley's regular customers. Kelley's employees confirmed to Donald Nelson, Espresso America's lawyer, that Kelley's intended to place Espresso America on a "three-trunk line," which would result in fewer, rather than more, of Espresso America's calls being answered, but would alleviate problems for Kelley's other customers.

A couple of weeks after the broadcast, Espresso America received a summary of calls made to its 800 number. On the day of the 700 Club interview, 945 calls were completed, but 23,201 were incomplete. The next day, after Espresso America was switched to a dedicated three-trunk line, 620 calls were completed, but 31,328 were incomplete. A similar pattern continued for the rest of the week, with far more calls missed than answered.

Espresso America sued Kelley's and some of its employees for breach of contract, negligent failure to perform, fraud and misrepresentation, and violation of the Consumer Protection Act, and asked for damages, including lost profits and punitive damages. The case was tried without a jury.

Lisa Keller acknowledged at trial that Kelley's Seattle office decided not to take the Espresso America account after the first meeting with Morris and DeMarco because they did not know how long the calls would take, or how many calls there would actually be. This was not communicated to Espresso America, however. Keller said she told Rosalind Hotchkiss of Kelley's Lynnwood office that Kelley's had decided not to accept the account, but Hotchkiss took the file and said she would take over from there.

Joy Collier confirmed that Morris expressed his concern about whether Kelley's could handle all the calls. She explained that she understood that the volume expected was significant and that the calls would come at the time of the broadcast, but she said that Kelley's customers usually overestimated the number of calls they would receive. She did not tell Morris and DeMarco, however, that she did not believe they would receive the number of calls they were expecting.

The trial court dismissed Espresso America's claims against the individual defendants, and dismissed the CPA, fraud and misrepresentation, and negligence claims, but ruled in favor of Espresso America on its claim that Kelley's breached the contract, and awarded damages that included Espresso America's lost profits. This appeal followed.

II. STANDARDS OF REVIEW

Kelley's assigns error to several of the trial court's findings of fact and Conclusions of law. An appellate court reviewing challenged findings determines whether the findings are supported by substantial evidence. Xieng v. Peoples Nat'l Bank, 120 Wash. 2d 512, 523, 844 P.2d 389 (1993). If so, the court then determines whether the findings support the Conclusions of law. Organization To Preserve Agricultural Lands v. Adams Cy., 128 Wash. 2d 869, 882, 913 P.2d 793 (1996); Young v. Dept. of Labor and Industries, 81 Wash. App. 123, 128, 913 P.2d 402, review denied, 130 Wash. 2d 1009, 928 P.2d 414 (1996).

Because Kelley's did not discuss several assignments of error and failed to cite the record in support of some of its arguments, Espresso America argues that portions of Kelley's opening brief should be stricken. The gist of Kelley's arguments is apparent, however, and we do not strike the brief. We conclude that the findings to which Kelley's ...


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