D & G Stout, Inc. v. Bacardi Imports, Inc.
Parties: Stout, Plaintiff, was a liquor distributor. Bacardi, Defendant was a major supplier to Plaintiff.
Facts: Two of Plaintiff's major suppliers pulled out from supplying Plaintiff, the result being that Plaintiff considered selling out to National, another liquor distributor interested in buying Plaintiff out. While Plaintiff and National were negotiating a selling price, Plaintiff kept in contact with Defendant to see if they would continue to supply Plaintiff. When the negotiations were concluded, and lacking only the final decision, Plaintiff received confirmation from Defendant that they would continue to supply Plaintiff. On the same day that Plaintiff turned down offer from National, Defendant decided to stop supplying liquor to Plaintiff. As a result, Plaintiff's other major supplier backed out and several employees left. With no other options, Plaintiff returned to National and negotiated another price, the second one $550,000 lower than the original negotiated price.
Procedural History: District court entered summary judgment for Defendant. Plaintiff appealed.
Issue: "Whether the loss incurred from the price drop was attributable to lost expectations of future profit or resulted from an opportunity forgone in reliance on the promise."
Holding: Defendant's promise was one on which Plaintiff could rely, therefore the promise was enforceable.
Reasons: There is a difference, according to Indiana State law, between reliance damages and expectation damages. An example of expectation damages is: an at-will employee is fired from the job, even though he expected that income. Reliance damages can be money "out-of-pocket" brought to pass as a result of a promise made. Reliance damages could also be opportunity costs that are the result of decisions or actions made because of a promise. Plaintiff's damages were classified by the court as reliance damages because when Defendant pulled out of business with Plaintiff, the bargaining position that Plaintiff held was destroyed. After Defendant's action, Plaintiff had no alternative but to sell, and National knew it, so they were able to bargain for a less expensive price.
Judgment: Reversed and remanded.