Postal Instant Press, Inc. v. Sealy

Facts

In 1979 P entered into a 20-year franchise agreement with Ds. P agreed to provide its trademark and certain services in exchange for royalty fees of 6 percent of gross revenues and advertising fees of 1 percent of gross. Ds were to pay these fees monthly. P was entitled to 'terminate this Agreement after a material breach, and thereafter bring such action … and to recover such damages, including but not limited to the benefit of its bargain hereunder….' One of these 'material breaches' is any failure to make a monthly royalty or advertising fee within 10 days after notice it is unpaid. After 13 years, Ds failed to timely make several of their monthly royalty and advertising fee payments. On January 22, 1992, P declared the overdue payments for past royalties constituted a material breach and sent Ds a termination letter. On February 28, 1992, P filed a breach of contract action seeking $77,300 in unpaid past royalties along with interest, attorney fees, and costs. P also sought 'future royalties and payments for the remaining unfulfilled term of the Franchise Agreement in the principal amount of at least $495,699.' The court awarded P a total of $432,510.35 plus prejudgment interest, attorney fees, and expenses and costs. The court measured the expectation damage award according to unpaid royalty and advertising fund contributions from the date of termination through the remainder of the contract term, a period of seven and one-half years. P deducted its incremental costs of performance and discounted the amount to present value or $301,334. Ds do not dispute the portion of the judgment representing damages for past royalty and advertising fees they owe and thus those damages are not a part of this appeal. Ds appealed the award of unpaid future royalty and advertising fees for the remaining term of the franchise agreement, a period of almost eight years.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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