Opinion
No. 0-036 / 99-480.
Filed September 13, 2000.
Appeal from the Iowa District Court for Polk County, D. J. STOVALL, Judge.
Penguin Natural Foods, Inc., appeals, and Todd's Ltd. cross-appeals, from the district court's entry of judgment in a contract action. AFFIRMED IN PART; REVERSED IN PART; REMANDED WITH DIRECTIONS.
Mark A. Schadrack of the Law Office of Mark A. Schadrack, Laguna Niguel, California, and David Swinton of Ahlers, Cooney, Dorweiler, Haynie, Smith Allbee, P.C., Des Moines, for appellant.
Jason D. Walke and Matthew D. Gardner of Sullivan Ward, P.C., Des Moines, for appellee.
Considered by STREIT, P.J., and ZIMMER and HECHT, JJ.
Penguin Natural Foods, Inc., appeals from the district court's entry of judgment in favor of Todd's Ltd. in a contract action. Penguin argues the trial court erred by: (1) awarding Penguin no interest and Todd's twenty-four percent interest on the judgment; (2) permitting Todd's to recover the cost of reopening and repackaging defectively packaged grain pouches; (3) granting a directed verdict to Todd's president on the fraud claim; and (4) taxing court costs to Penguin. In its cross-appeal, Todd's contends the trial court erred by: (1) finding Todd's committed fraud by failing to disclose the true price of a machine it sold to Penguin; and (2) awarding damages to Penguin for the cost of moving its products from Todd's to another location. We affirm in part, reverse in part and remand with directions.
The trial court found the following facts: Todd's Ltd. ("Todd's") is an Iowa corporation which sells food-processing equipment and packages food products for other companies. Alan Neidermeier is the sole officer and one of the owners of Todd's. Penguin Natural Foods ("Penguin") is a California corporation and creates and markets various "cook-and-serve" rice and grain products. Scott Nairne is an officer and part owner of Penguin.
Beginning in April of 1994, Todd's and Penguin entered into a business relationship. Penguin, through third-party vendors of its choosing, would supply Todd's food and packaging materials. From May of 1994 until September of 1995, Todd's packaged rice and grain products for Penguin. The individual packaged units generally consisted of a carton, a rice or grain pouch and a seasoning pouch. After packaging was complete, the products were sent to various Penguin customers for retail sale to consumers.
Initially, Todd's packaged the cartons by hand. However, in August of 1994 to automate packing, Neidermeier encouraged Penguin to purchase a cartoning machine for Todd's use known as a Nordale, sold by Frain Industries, Inc. ("Frain") for $42,650. Todd's and Penguin then orally agreed for Todd's to pay for the Nordale through credits issued to Penguin. Penguin would receive a two-and-one-half-cent credit for each carton processed on the Nordale. By the end of the two companies' relationship, Penguin had accumulated credits in the amount of $22,268.79. Penguin bought back the Nordale from Todd's at the end of the business relationship by paying Todd's the amount of the credits.
Unbeknownst to Penguin, Todd's had received a commission from Frain when the Nordale was originally purchased in August of 1994. The commission took the form of a credit worth $7,700 which could be utilized by Todd's to purchase additional machinery from Frain. Todd's either used this equipment in its business or sold it to others. However, Neidermeier sent Penguin an inflated invoice prepared by Frain that included the undisclosed commission in the price of the Nordale. Neidermeier told Nairne the inflated $42,650 was a `great price.' Penguin did not find out about this commission until discovery during the pending action.
During the course of this relationship, Penguin maintained an open account with Todd's. Todd's would bill Penguin by faxing and mailing an invoice any time finished goods were shipped from Todd's facilities in Des Moines, Iowa. Penguin paid all of the invoices in full, except for the last four. Payment was due ten days after Penguin received the invoices. All invoices stated that any amounts not paid in thirty days would accrue finance charges of two percent per month or twenty-four percent per year.
The unpaid invoices are: (1) #417411 with a total due of $3,513.84; (2) #418057 with a total due of $11,897.41; (3) #418058 with a total due of $7,765.72; and (4) #418059 with total due of $11,038.54. In sum the amount owed on the invoices is $34,215.51.
In August of 1995, Penguin became aware of various quality control problems with a shipment from Todd's to one of Penguin's largest customers. Around that same time, Penguin also became concerned Todd's was permitting Penguin's inventory to become infested. Penguin wanted grain pouches flushed with nitrogen to minimize this possibility. By July 1995, the grain bags were being flushed, samples were sent to Penguin, and they were tested by a Texas company, RiceTec. The tests revealed a high level of oxygen in the samples, indicating Todd's was not properly flushing the bags. As a result of Penguin's concerns, Todd's reopened numerous grain pouches and they were ultimately repackaged by RiceTec. Also, a Penguin representative visited Todd's warehouse in late August of 1995 and discovered a shipment of Italian rice had become infested.
Disputes about Todd's services continued and Penguin made a decision to withdraw its business. Penguin's remaining inventory was shipped to Texas and California. There were problems with this inventory: a 500-pound bag of vegetables was spoiled; several boxes of spice and vegetable blends were unusable; materials were crushed; and numerous grain pouches had to be repackaged as a result of leaks and other difficulties. In a letter dated September 17, 1995, Nairne acknowledged receipt of the final invoices from Todd's. However, those invoices were not paid by Penguin.
In October of 1996, Todd's sued Penguin and Nairne to recover the amounts due on the four invoices. Todd's asserted claims of breach of contract, conversion and slander. The slander claim was later dismissed voluntarily by Todd's. Penguin counterclaimed for damages sustained as a result of Todd's failure to properly package some of Penguin's products, Todd's excessive waste during the packaging process, and its nondisclosure of the commission received from Frain in the Nordale purchase. Penguin alleged breach of contract, breach of implied warranty, negligent misrepresentation, fraudulent misrepresentation, negligence, fraud and breach of fiduciary duty. Penguin also filed a third-party petition against Neidermeier, claiming negligent misrepresentation, fraudulent misrepresentation, fraud and breach of fiduciary duty. The case proceeded to a bench trial on August 24, 1998, and ended August 27, 1998.
On November 20, 1998, the trial court issued its findings of fact, conclusions of law and judgment entry. The court concluded Todd's should recover the full amount of the four invoices ($34,215.51), plus a finance charge (pursuant to the language on the invoices) at a rate of twenty-four percent per annum for approximately three years, for a total judgment of $57,552.27. It awarded no damages on the conversion claim. The court found Penguin also sustained damages including the costs of cleaning infested rice, replacing spoiled or infested vegetables, retaining a company to monitor the quality of products shipped from Todd's, and relocating its inventory from Todd's warehouse. The court also found Penguin established fraud by Todd's surrounding the purchase of the Nordale, resulting in Penguin having paid an additional $7,700 as a result of the undisclosed commission. However, the court directed a verdict on the fraud claim against Neidermeier, finding that he did not act in an individual capacity but only as Todd's agent. The total awarded to Penguin was $34,990.17. The court did not award Penguin interest on this amount. The court then offset Penguin's recovery from Todd's judgment. After the offset, judgment was entered against Penguin in the amount of $24,562.10 plus court costs.
Both parties filed motions pursuant to Iowa Rule of Civil Procedure 179(b). In its motion, Penguin argued: the twenty-four percent interest rate was inappropriate; Penguin should have been awarded interest on its claims; Penguin should have prevailed on its fraud claim against Neidermeier; and the evidence sufficiently established the amount of Penguin's loss for spoiled vegetables. The trial court rejected the first three arguments but agreed that Penguin had established the value of the vegetable loss at $2,000. The court modified the judgment in favor of Todd's down to $22,562.10.
Todd's and Penguin now appeal. Penguin argues the trial court erred by: (1) awarding Penguin no interest and Todd's twenty-four percent interest; (2) permitting Todd's to recover the cost of reopening and repackaging defectively packaged grain pouches; (3) granting a directed verdict to Neidermeier on the fraud claim against him individually; and (4) taxing court costs to Penguin. In its cross-appeal, Todd's contends the trial court erred by: (1) finding Todd's committed fraud by failing to disclose the true price of the Nordale; and (2) awarding damages to Penguin for the cost of moving its products from Todd's to another location.
I. Scope of Review .
This breach of contract case was a law action tried to the court. We review for correction of errors of law. Van Oort Construction Co., Inc. v. Nuckoll's Concrete Service, Inc., 599 N.W.2d 684, 689 (Iowa 1999). The court's findings of fact have the effect of a special verdict and are binding on us if supported by substantial evidence. Data Documents, Inc. v. Pottawattamie County, 604 N.W.2d 611, 615 (Iowa 2000) (citations omitted). Evidence is substantial if a reasonable mind could accept it as adequate to reach the same findings. Id. (citation omitted). We view the evidence in a light most favorable to upholding the district court's judgment. Id. (citation omitted). However, we are not bound by the district court's legal conclusions, and we may examine whether the district court's ultimate conclusions were materially affected by improper conclusions of law. Fausel v. JRJ Enterprises, Inc., 603 N.W.2d 612, 617 (Iowa 1999).
II. Penguin's Appeal .
A. Failure to Award Interest to Penguin .
Penguin claims it was entitled to prefiling and prejudgment interest on the damages awarded to it. The district court concluded no interest should be awarded where the party seeking interest is indebted to the other party. The court reasoned that Penguin's indebtedness resulted from its nonpayment of an overdue account — the net result, even after offsetting the damages owed Penguin by Todd's, is that Penguin still owed Todd's money. Therefore, according to the district court, no interest was due on Penguin's damages. We review the trial court's interest award for errors at law. Long v. Jensen, 522 N.W.2d 621, 624 (Iowa 1994).
We agree with the district court. There was never a time when Todd's owed Penguin more than the amounts due on the invoices plus the finance charges. A similar situation arose in Carson v. Roediger, 513 N.W.2d 713 (Iowa 1994). In that case, a general contractor was in default and owed the Roedigers $25,235.16 for costs arising from omissions and deficiencies under the contract to construct the Roedigers' home. Carson, 513 N.W.2d at 717. However, the Roedigers still owed $20,825 on the contract. Id. The Iowa Supreme Court noted that the contractor could not have been awarded interest on the $20,825 due because the Roedigers' debt to him was netted out by his deficiency under the contract. Id. The supreme court cited the general principle that where a person is barred from recovering the principal of a debt, the individual is equally barred from recovering interest on it. Id. The situation is the same here. We affirm the district court's conclusion that Penguin was not entitled to interest on its portion of the judgment.
Penguin cites Carson in support of its argument that Todd's is entitled to no interest at all. Penguin maintains the court should have offset Penguin's damages from Todd's damages before calculating any interest: $34,990.17 (Penguin's damages) minus $34,215.51 (Todd's damages) = $774.66. Penguin asserts that since the result is actually a judgment for Penguin of $774.66, Todd's should receive nothing and certainly not any interest. Penguin makes this argument for the first time on appeal. It was not addressed in the trial court's judgment entry or urged below in Penguin's 179(b) motion, therefore, the trial court never addressed this issue. Issues must ordinarily be presented to and passed upon by the trial court before they can be raised and adjudicated on appeal. H Z Vending v. Iowa Dept. of Inspections and Appeals, 593 N.W.2d 168, 171 (Iowa App. 1999) (citation omitted). When a trial court fails to rule on an issue that has been properly raised, the party that raised the issue must file a motion with the court in order to preserve the issue for appeal. Id. Since the issue was not preserved, we decline to address it.
B. Award of 24% Annual Finance Charge to Todd's .
Todd's invoices provided for a two percent finance charge per month or twenty-four percent per annum on all overdue accounts. The invoices all stated:
3. PAYMENT. All accounts are net 10 days. Finance charges added to accounts 30 days from date of purchase. When an account becomes 30 days past due, no more credit will be extended until the account has been paid, unless specific arrangements have been made. Accounts that are not paid in 30 days will have a FINANCE CHARGE of 2% per month on the unpaid balance or a minimum of 75 ¢ whichever is greater, added to the accounts. This is an ANNUAL PERCENTAGE RATE of 24%. . . .
If Todd's is entitled to interest at all, Penguin claims Todd's should only have been awarded the statutory interest rate of ten percent per year under Iowa Code section 535.3 because there was no express agreement in writing by Penguin to pay a higher finance charge.
Iowa Code section 535.3 (1995) establishes the rate of interest on judgments and decrees. Section 535.3 is inapplicable. The trial court determined, and no party objected to the finding, that the business arrangement between Todd's and Penguin was an open account. Iowa Code section 535.11 governs finance charges on open accounts. See Iowa Code § 535.11(7) (stating finance charge under section 535.11 is in lieu of any interest authorized under section 535.2 or any other provision of law); see also Carson Grain Implement, Inc. v. Dirks, 460 N.W.2d 483, 486 (Iowa App. 1990) (finding section 535.11(7) supersedes section 535.3). Section 535.11 provides:
1. Except where the parties have agreed in writing for the payment of a different finance charge or rate of interest, a creditor may charge a finance charge on the unpaid balances of an account receivable at a rate not exceeding that permitted by subsection 3 or 4 of this section if the creditor gives notice as required by subsection 2 of this section.
2. As a condition of imposing a finance charge under this section, the creditor shall give notice to the debtor as follows: . . .
b. . . . the creditor shall give written notice to the debtor at the time the debt arises. The notice shall be contained on the invoice or bill of sale evidencing the credit transaction, and shall disclose the rate of the finance charge and the date or day of the month before which payment must be received if the finance charge is to be avoided. With respect to open accounts, this notice shall be given at the time credit is initially extended; provided that additional advance notice in writing shall be given to the debtor not less than ninety days prior to any change in the terms of the agreement or of rate of the finance charge or date payment is due. For purposes of this paragraph, notice is given if the invoice or bill of sale is delivered with the goods, whether or not the debtor is present at the time of delivery.
. . .
4. With respect to an open account, the creditor may impose a finance charge not exceeding that permitted by section 537.2202, subsections 2 and 3.
Iowa Code § 535.11 (emphasis added). The statutory maximum finance charge on open accounts, without a written agreement to a different rate, is one point sixty-five (1.65) percent per month. See Iowa Code §§ 535.11(1) and 537.2202(3).
Penguin argues that there must have been a written agreement by it to pay the finance charge and an agent of Penguin must have signed the invoices in order for them to be given effect. We disagree in part with this argument. Section 535.11(1) clearly permits a creditor to impose a finance charge without a written agreement; only notice of imposition of a finance charge is required. However, the creditor cannot charge more then the statutory maximum without a written agreement. See Iowa Code § 535.11(1).
Todd's gave the required notice. Section 535.11(2)(b) provides that notice of the finance charge must be contained on an invoice and must disclose the rate of the finance charge and the date before which payment must be received if the finance charge is to be avoided. The trial court concluded Todd's notice, found on its invoices, met these requirements. Substantial evidence supports this conclusion. The invoices themselves were introduced into evidence and the language regarding the finance charge, quoted above, is clear. See Carson Grain, 460 N.W.2d at 486 (finding creditor complied with notice requirement of section 535.11(2)(b) where notice of finance charge was stamped on each bill and invoice disclosed the monthly rate of interest as well as the fact this charge applied to accounts thirty days past due). We find Todd's complied with the notice requirements of 535.11(2)(b) and was permitted to charge Penguin the statutory maximum finance charge.
The real issue is whether Todd's was permitted to charge two percent per month, a rate in excess of the statutory maximum. For this to occur, there must have been a written agreement, as Penguin contends. In Power Equipment, Inc. v. Tschiggfrie, 460 N.W.2d 861 (Iowa 1990) (interpreting Iowa Code section 535.2(2)(a)(5)), the Iowa Supreme Court suggested the following factors evidence an agreement in writing to an interest rate different from the statutory one: clear language on invoices, the fact most invoices are signed by the debtor, the creditor's pattern of billing in keeping with the invoice language, and the fact the debtor continues to deal with the creditor in the face of that pattern. Tschiggfrie, 460 N.W.2d at 863. The supreme court also said that on the facts before it, it could not find a written agreement to pay a given finance charge — only some of the invoices were signed, the creditor did not always assess the finance charge in accordance with the amount stated on the invoices, and the debtor repeatedly asserted nonliability for finance charges throughout the period of dealing. Id. The supreme court remanded for additional fact-finding but concluded as a matter of law that under the evidence before it, it was not possible to find the existence of a written agreement to pay a specified finance charge on unsigned invoices.
Applying the Tschiggfrie factors to this case, the trial court found the parties had agreed in writing to the higher rate based on the existence of signed invoices and the "pattern of dealings" between the parties. We find no evidence to support the trial court's conclusion there was a written agreement. Contrary to the trial court's finding, the invoices were not signed by an agent of Penguin. We also find little or no evidence of a pattern of dealing, except Todd's invoices always contained the same language regarding the finance charge. Penguin also claims it refused to pay interest the first time Todd's attempted to charge it. There was not substantial evidence to conclude the parties had a written agreement to pay the finance charge of two percent per month. In the absence of such an agreement, Todd's right to impose a finance charge is determined in accordance with section 535.11. See Tschiggfrie, 460 N.W.2d at 864. The statutory maximum is 1.65%. We reverse that part of the judgment awarding Todd's the two-percent finance charge per month.
Recalculating interest at the statutory 1.65% results in a finance charge of $2,029.30 on the first invoice (1.65% of $3,513.84 x 35 months). On the remaining three invoices the finance charge amounts to $17,223.72 (1.65% of $30,701.67 x 34 months). Adding principal to the finance charges yields a total judgment for Todd's of $53,468.53. After offsetting Penguin's award of $32,990.17, we remand for judgment entry in favor of Todd's in the amount of $20,478.36.
C. Directed Verdict for Neidermeier on Fraud Claim .
The trial court concluded Penguin proved fraud based on Todd's misrepresentation of the actual price of the Nordale packaging machine, but entered judgment on the claim only against the corporation. The trial court had granted Neidermeier's motion for directed verdict on the fraud claim against him individually, concluding there was no showing Neidermeier exceeded his authority as Todd's agent during his involvement in the purchase of the Nordale. On appeal, Penguin argues the trial court should have entered judgment on the fraud claim against Neidermeier individually as well.
The trial court's conclusion implies that in order for Neidermeier to be individually liable for fraud, he must be acting outside the scope of his authority as a corporate officer. This was error. As a general rule, corporate officers are individually liable to third parties for their torts, whether they act within or outside the scope of their employment. Haupt v. Miller, 514 N.W.2d 905, 907 (Iowa 1994); Grefe v. Ross, 231 N.W.2d 863, 868 (Iowa 1975). Our supreme court has upheld the imposition of personal liability against corporate officers in cases involving instances of fraud. See, e.g., Freeman v. Bonnes Trucking, Inc., 337 N.W.2d 871, 879 (Iowa 1983) (finding president of corporation was not immune from personal liability for fraud he himself committed merely because he was officer of corporation); Briggs Transp. Co. v. Starr Sales Co., 262 N.W.2d 805, 808-09 (Iowa 1978); Grefe, 231 N.W.2d at 868 (finding trial court did not err in holding corporation's president personally liable for fraud committed in his capacity as a corporate officer). The trial court erred by not holding Neidermeier individually liable. We reverse this portion of the decree and remand for entry of judgment against Neidermeier individually, in addition to the corporation, on Penguin's fraud claim.
D. Costs of Repackaging .
The trial court found numerous grain pouches had to be reopened and repackaged as a result of Todd's negligence in packaging. One of Todd's invoices contains a charge for opening the negligently packaged grain pouches and another charge for the initial defective packaging. The trial court made no specific finding with regard to this specific damage question and Penguin did not raise it in its 179(b) motion. The issue was not preserved and we decline to address it.
E. Court Costs .
Finally, Penguin argues the trial court erred in taxing all of the court costs against it. Penguin relies on Iowa Code section 625.1, which provides that "[c]osts shall be recovered by the successful against the losing party." We review assessments of costs for an abuse of discretion. Long v. Jensen, 522 N.W.2d 621, 624 (Iowa 1994); Lake v. Schaffnit, 406 N.W.2d 437, 442 (Iowa 1987); Gordon v. Pfab, 246 N.W.2d 283, 289 (Iowa 1976).
We conclude the trial court abused its discretion in declining to apportion costs. Penguin invokes section 625.1. However, sections 625.3 and 625.4 govern situations where both parties succeed on some of their claims and fail on others. See McDonald v. Benge, 116 N.W. 602, 138 Iowa 591 (1908) (concluding predecessor to section 625.1 applied to situation where only one party was wholly successful on its claims). Section 625.3 provides: "Where the party is successful as to a part of the party's demand, and fails as to part, . . . the court on rendering judgment may make an equitable apportionment of costs." Section 625.4 states: ". . . where there are several causes of action embraced in the same petition, or several issues, the plaintiff shall recover costs upon the issues determined in the plaintiff's favor, and the defendant upon those determined in the defendant's favor. Both Todd's and Penguin succeeded and failed on some of their claims. Therefore, court costs should have been apportioned. See Melick v. Lyon, 89 N.W. 33 (Iowa 1902) (concluding apportionment of costs was proper where both parties partially succeeded); Gravel v. Clough, 46 N.W. 1092, 81 Iowa 272 (1890) (same). We conclude court costs should be paid one-half by each party.
III. Todd's Cross-Appeal .
In its cross-appeal, Todd's contends the trial court erred by: (1) finding Todd's committed fraud by failing to disclose the true price of the Nordale; and (2) awarding damages to Penguin for the cost of moving its products from Todd's to another location.
A. Fraud .
The trial court found Penguin proved its fraud claim. It concluded Neidermeier (and consequently Todd's) committed fraud when he failed to disclose the commission Todd's received from Frain on the purchase of the Nordale, despite a duty to disclose this information. Todd's does not dispute the underlying fact that Neidermeier did not disclose the commission Todd's received from Frain. Instead, Todd's argues the trial court erred in its conclusion that there was a legal duty to disclose. In particular, Todd's asserts this was an arm's length transaction between parties of equal bargaining power and there was no fiduciary duty requiring disclosure. Todd's contends that every business that adds a commission to a sale should not be required to disclose the wholesale price of the product, the markup and the salesperson's commission or otherwise be liable for fraud. Todd's also challenges the sufficiency of the evidence of damage to Penguin.
We find the trial court correctly concluded Todd's and Neidermeier had a duty to disclose in this context. In so holding, we do not, as Todd's contends, require all businesses to disclose commissions to buyers. The analogy Penguin seeks to make to a traditional sales relationship is a false one. Rather, Todd's was really the purchaser's (Penguin's) agent or at least represented itself in that role to Penguin — Neidermeier claimed he could and did arrange a good deal and convinced Nairne to buy the machine. Todd's was not the true `seller' of the item. The fraud resulted when Todd's did not disclose its commission from the seller or its dual role as the seller's agent. The trial court applied the correct legal principles and found Todd's and Neidermeier had a duty to disclose the commission. See 37 Am.Jur.2d Fraud § 153 (stating in sales, it is fraud to conceal from purchaser the fact that the purchaser's agent has been paid, in addition to the compensation given by the purchaser, a large commission by the seller).
Todd's also asserts there is no evidence Penguin suffered any damage from the alleged fraud. Substantial evidence supports the trial court's conclusion that Penguin was damaged. It essentially financed an interest-free credit to Todd's of $7,700 when it purchased the Nordale and then paid for that credit at the end of the business relationship. We find substantial evidence of damage on Penguin's fraud claim and affirm on this issue.
B. Damage Award for Cost of Moving Inventory .
The trial court awarded Penguin damages in the amount of $17,852 for relocating its inventory from Todd's warehouse. On appeal, Todd's claims these damages were a remote consequence of Todd's negligent packaging and thus are not recoverable. Todd's claims the only damages recoverable in such an instance would be the replacement or correction of the infested product. According to Todd's, Penguin moving its inventory out of Todd's warehouse was a unilateral business decision and Todd's stood ready to complete its services for Penguin.
The trial court concluded Penguin made a business decision to start contracting with a Texas company and end its relationship with Todd's. The court went on to find that the decision to move inventory to Texas was not a part of the decision to begin doing business in Texas. The court noted Penguin could have made the decision to do business in Texas but finish out its inventory with Todd's. The trial court concluded in its ruling on the 179(b) motions that the cost to move inventory was a direct result of Todd's failure to exercise due care in its packaging procedures. We find substantial evidence supports this conclusion. Todd's cites no authority that convinces us to conclude otherwise. This part of Penguin's damage award was proper. We affirm on this issue.
IV. Summary .
With regard to Penguin's appeal, the trial court correctly concluded Penguin was not entitled to prefiling and prejudgment interest on its damage award. We reverse that portion of the trial court decree awarding Todd's a finance charge of two percent per month on the principal due on its invoices. We conclude Todd's is entitled only to the statutory maximum finance charge of one point sixty-five percent per month and remand for entry of judgment in accordance with this opinion. We find the trial court erred by failing to enter judgment on Penguin's fraud claim against Neidermeier individually, in addition to the corporation. We reverse this part of the decree and remand for entry of judgment against Neidermeier on Penguin's fraud claim. Penguin failed to preserve error on its claim Todd's was not entitled to recover charges for reopening cartons it had negligently packaged and for the initial defective packaging. We reverse the trial court's assessment of court costs and determine they should be paid one-half by each party. With regard to Todd's cross-appeal, we find the trial court correctly concluded Todd's and Neidermeier had a duty to disclose the commission in this context. We find substantial evidence Penguin suffered damages resulting from Todd's fraud regarding the commission. Finally, we affirm the damage award to Penguin for the cost of relocating its inventory from Todd's to Texas and California.
Costs of the appeal are taxed one half each to Todd's and Penguin.
AFFIRMED IN PART; REVERSED IN PART; REMANDED WITH DIRECTIONS.