As a lawyer, we have an unreasonable belief that the breach of contract case will often rise and fall on the plain language of the agreement. When the agreement says, “You agree that I have a right to do this,” rarely do you see a successful case challenging a decision to exercise that right. But court engraft language on franchise agreements or imply duties which are not expressed within the contracts. The results are that the outcomes are very unexpected.
In the case of Mercedes-Benz USA v. Carduco, 2016 Tex. App. LEXIS 3254 (Tex. App. Mar. 31, 2016), a jury found a franchisor and its employees liable for fraud in the inducement and found employees liable for negligence misrepresentation. The fact misrepresented was that a purchaser of an automobile franchise could relocate to a particular site, and the nondisclosure is that another prospective purchaser was interested in the same target site. The damages were remarkable with the jury awarding benefit of the bargain damages of over $15.3 million, out of pocket damages of $6 million and punitive damages of $115 million. The punitive damages were subsequently remitted to $600,000, (Sept. 25). That reduction of damages, however, is cold comfort for the defense lawyers who question how such a result is possible on these facts.
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