WALLACE AUTO SUPPLY, INC. d/b/a GREENFIELD TRUE VALUE, Plaintiff-Appellee/Cross Appellant,
KENT SINN and JULIANN SINN, Defendants-Appellants/Cross Appellees. KENT SINN and JULIANN SINN, Plaintiffs-Appellants/Cross Appellees
WALLACE AUTO SUPPLY, INC. d/b/a GREENFIELD TRUE VALUE, Defendants-Appellee/Cross Appellant
from the Iowa District Court for Adair County, John D. Lloyd,
parties in a combined action for breach of contract and
declaratory judgment appeal and cross-appeal the district
L. Fisher of Fisher, Fisher & Groetken, P.C., Adair, for
Kent and Juliann Sinn.
Matthew J. Hemphill of Bergkamp, Hemphill & McClure,
P.C., Adel, for appellee.
by Vogel, P.J., and Potterfield and Bower, JJ.
underlying proceedings are based on the purchase agreement
entered into by Kent and Juliann Sinn and Wallace Auto
Supply, Inc. whereby Wallace Auto would purchase the
Sinns's Greenfield True Value store for $1 million. As
part of the purchase agreement, the Sinns were to leave $618,
000 worth of certain inventory in the store. Additionally,
the agreement included a non-compete provision that prevented
the Sinns from "directly or indirectly" competing
"within a ten mile radius of Greenfield, Iowa" for
three years after the closing date.
the parties entered into the agreement, the Sinns filed a
petition for declaratory judgment in June 2014, seeking to
have the district court interpret the non-compete provision.
In October 2015, Wallace Auto filed a petition at law,
alleging the Sinns had breached the contract by violating the
non-compete agreement and by leaving approximately $96, 000
less inventory in the store than the purchase agreement
required. The two actions were later consolidated.
a bench trial, the district court granted declaratory relief
interpreting the non-compete agreement in favor of the Sinns.
On Wallace Auto's breach-of-contract claim, the court
found the Sinns had breached the contract by removing more
inventory from Greenfield True Value than the purchase
agreement allowed, but the court reduced the damages Wallace
Auto requested by 30%.
Sinns appealed and Wallace Auto cross-appealed.
appeal, the Sinns maintain there was no reasonable basis from
the evidentiary record from which the court could properly
infer or approximate the damages awarded and the award of
damages unjustly enriched Wallace Auto. In the alternative,
the Sinns argue that if Wallace Auto is entitled to any
damages, it should be only nominal damages for the
Sinns's breach of contract. The Sinns request reasonable
appellate attorney fees based on the language of the
agreement. The Sinns failed to appear for oral argument.
cross-appeal, Wallace Auto asks us to affirm the district
court's ruling the Sinns breached the contract by failing
to have $618, 000 of inventory in the store and asks us to
reverse the court's ruling reducing the amount of damages
requested by 30%. Wallace Auto also challenges the district
court's ruling determining the Sinns did not breach the
non-compete provision of the contract. Wallace Auto also
requests reasonable appellate attorney fees.
Background Facts and Proceedings.
Sinns owned and operated the Greenfield True Value store from
1997 until 2014, when Wallace Auto purchased and took
possession of the store. The purchase agreement provided that
Wallace Auto would pay the Sinns $1 million total, with $618,
000 being allocated to inventory; $305, 000 for the real
estate; $76, 500 for "all other assets" (fixtures
and other non-merchandise in the store); and $500 for the
agreement further specified the $618, 000 in inventory would
not include "vehicles, new lawnmowers, new mower parts,
major appliances, automotive parts, trailers, and rental
equipment ('the inventory')." Because the Sinns
usually kept more than $618, 000 inventory in the store, it
was agreed they would remove any excess and place it in their
True Value store in Creston.
non-compete clause stated:
For the consideration set forth above, to be paid at closing,
Seller and Kent Sinn and Juliann Sinn in their individual
capacities, shall not directly or indirectly engage in, and
shall have no Interest In any business, firm, person,
partnership, or corporation, whether as an employee, officer,
director, agent, security holder, creditor, consultant or
otherwise, that engages In the sale of any types of items
sold True Value stores within a ten (10) mile radius of
Greenfield, Iowa at any time within three (3) years
immediately following the closing date.
closing of the sale took place on February 7, 2014. Per the
agreement, the Sinns had an additional thirty days "to
remove the excepted items from the premises."
testified that as his employees removed items from the
Greenfield store, they scanned them at the register as if
they were being purchased in order to remove them from the
store's inventory (and transfer them to the Creston
store's inventory). A number of employees helped remove
the negotiations, the parties discussed that the inventory in
the store may include obsolete, unsellable items. As a
result, they agreed that the nuts, bolts, and fasteners
located in the Greenfield store would not be inventoried but
would be transferred to Wallace Auto outside of the inventory
to offset the obsolete items.
the Sinns misunderstood the agreement, and, as a result, they
removed approximately $32, 000 more in inventory than
necessary to get the store to $618, 000. Kent realized the
mistake while his employees were still removing items from
the store-during the thirty days after closing-and he
testified that he then told them to stop. According to Kent,
at the time they ceased removing items, there was still a
number of excluded items in the store.
began returning items to Wallace Auto from the Creston True
Value store as Wallace Auto requested them. As the
relationship between the parties began to sour, the Sinns
chose to pay Wallace Auto the balance of the outstanding $32,
000 and cut ties.
the same period, Wallace Auto continued to use the
Sinns's inventory system for the Greenfield
store. The Sinns had used one software inventory
system for both their Greenfield and Creston stores. The two
stores' inventories were kept separately, so the person
using the program had to enter information identifying which
store was involved in the order or sale. Before Wallace Auto
had their own system installed, some sales and orders were
completed in the Greenfield store that ultimately showed up
in the records of the Creston store. Kent testified that once it
became clear the errors were being made, the workers at the
Greenfield True Value were told and the errors that had been
made were corrected.
year following the sale, a dispute arose over the
interpretation of the non-compete provision in the contract.
The Sinns filed a petition for declaratory judgment. In it,
they advised the court the specific disputes were over the
following: whether the Sinns could sell retail products,
mowers, appliances, hardware, etc. to individuals who bought
items in their True Value store in Creston but who live
within the ten-mile radius of Wallace Auto's Greenfield
True Value; whether the Sinns could deliver items purchased
in their Creston store to individuals who lived within the
ten-mile radius of the Greenfield store; and whether the
Sinns could operate their company vehicles advertising the
Creston True Value store within the ten-mile radius. In its
response, Wallace Auto agreed with the Sinns's list of
disputes and added others, including whether the Sinns
could-in the ten-mile radius-advertise in newspapers;
"pick up or ...