Phillips v. Verax Corp.

Citation138 N.H. 240,637 A.2d 906
Decision Date03 March 1994
Docket NumberNo. 92-355,92-355
PartiesPhilip G. PHILLIPS v. VERAX CORPORATION and another.
CourtNew Hampshire Supreme Court

Brooks, McNally, Whittington, Platto & Vitt, Hanover (W.E. Whittington IV and Douglas S. Moore on the brief, and Mr. Whittington orally), for plaintiff.

Sulloway & Hollis, Concord (Edward M. Kaplan and another on the brief, and Mr. Kaplan orally), for defendants.

THAYER, Justice.

The defendants, Peter L. Christie, Robert C. Dean, Jr., and Verax Corporation, appeal a jury verdict in this contract and tort action arising out of their employment relationship with the plaintiff, Philip G. Phillips. The plaintiff cross-appeals the trial court's entry of judgment. We affirm.

Following a trial in the Superior Court (Smith, J.), the jury returned verdicts for the plaintiff totalling $534,600, which the trial court subsequently entered at $200,000. The defendants appeal, alleging the following: (1) the trial court erred in denying defendant Verax Corporation's motion for summary judgment because (a) defendants Dean and Christie lacked authority to act on behalf of Verax corporation, (b) the plaintiff presented no evidence that the parties actually had an employment agreement, and (c) the statute of frauds and a lack of detrimental reliance or consideration barred recovery on the alleged contract; (2) the court erred in denying the defendants' motion for judgment notwithstanding the verdict because the plaintiff did not rely to his detriment on the defendants' allegedly fraudulent misrepresentations and offered no proof of reliance damages; and (3) the court abused its discretion by barring the testimony of a defense witness unless he submitted to a discovery deposition twenty-four hours before testifying. The plaintiff cross-appeals the trial court's entry of judgment for $200,000, rather than for the $534,600 sum total of the jury's awards, arguing that each award was separate and supported by independent evidence.

The relevant facts are as follows. Defendant Verax Corporation (Verax) was formed in 1979 and, during the time span relevant to this case, it patented a pharmaceutical manufacturing process. As this process had not yet been commercialized, Verax frequently sought infusions of capital to support its operations. In early 1986, Verax's management conducted negotiations with a private venture capital group for a substantial capital investment in exchange for the issuance of sufficient shares to give the new investors majority control of Verax. On April 30, 1986, this $5.4 million transaction was finalized and closed. Throughout the relevant time period, defendant Dean served as chairman of the board of Verax, and defendant Christie was president.

The plaintiff joined Verax in 1983, rising through the scientific ranks to become head of the science department and a member of the senior management team. According to the plaintiff, defendants Dean and Christie made a variety of agreements with the plaintiff, in essence committing to negotiate on the plaintiff's behalf with the venture capital group in order to provide a substantial equity package for the plaintiff as part of the anticipated deal. In March 1986, however, the plaintiff learned from defendant Christie that he had not been fully included in the equity participation deal. After the April 30th closing, the plaintiff informed defendant Dean that he had retained counsel to assist him in obtaining a fair equity package. The plaintiff left Verax in May 1986 under disputed circumstances that are not relevant to the issues before us in this appeal.

The plaintiff then initiated this action, originally alleging breach of contract and misrepresentation against defendant Verax, later amending his complaint to include counts of misrepresentation against all three defendants, breach of fiduciary duty against defendants Dean and Christie, and promissory estoppel against defendant Verax. Defendant Verax sought summary judgment on both counts of the original complaint. The Superior Court (Morrill, J.) denied the motion in September 1989.

Prior to trial, the plaintiff moved in limine to bar the testimony of a potential witness for Verax, Sheridan Snyder, to which the defendants objected. In his final pretrial order, the Trial Judge (Smith, J.) granted the motion. The defendants immediately moved for reconsideration. On reconsideration, the trial court ruled that Snyder could testify so long as he appeared for a deposition at least twenty-four hours in advance of his trial testimony. The court agreed to suspend the trial for those twenty-four hours to allow the deposition to be transcribed. The defendants were unable to produce Snyder for a deposition, and Snyder was not permitted to testify.

In November 1991, the jury returned verdicts of $200,000 on the misrepresentation count against Dean, $80,000 on the breach of contract claim against Verax, $84,866 on the promissory estoppel count against Verax, and $84,866 and $84,868 against Christie and Dean respectively on the breach of fiduciary duty count. The defendants moved for a judgment notwithstanding the verdict. The trial court denied this motion and entered judgment for the plaintiff in the amount of $200,000. The defendants then brought this appeal, and the plaintiff cross-appealed.

I. Summary Judgment

We first consider whether the trial court improperly denied defendant Verax's motion for summary judgment on the plaintiff's contract claim against it. "[T]he trial court must grant summary judgment when it finds no genuine issue of material fact, after considering the affidavits and other evidence presented in a light most favorable to the non-moving party, ... and when the moving party is entitled to judgment as a matter of law." Heaton v. Boulders Properties, Inc., 132 N.H. 330, 335, 566 A.2d 1127, 1130 (1989) (citations omitted). The party opposing summary judgment must put forth contradictory evidence under oath, "sufficient ... to indicate that a genuine issue of fact exists so that the party should have an opportunity to prove the fact at trial. All reasonable doubts should be resolved against the movant." Dolan v. Maple Leaf Health Care Center, Inc., 119 N.H. 424, 425, 402 A.2d 196, 197 (1979).

A. Apparent Authority

The defendants first contend that the plaintiff could not prove that Verax manifested an intention to enter into a contract to grant him an equity interest in the company because there was no proof that Dean and Christie had actual or apparent authority to enter into such a contract on Verax's behalf. Because the plaintiff did not allege that Dean or Christie had actual authority to enter into the contract on behalf of Verax, we will limit our inquiry to the trial judge's determination that a genuine issue of fact existed as to apparent authority.

The defendants rely on our decision in Daniel Webster Council, Inc., Boy Scouts of America v. St. James Association, Inc., 129 N.H. 681, 533 A.2d 329 (1987), to prove that Dean and Christie lacked apparent authority. In Daniel Webster Council, we held that a corporate officer has apparent authority when "the corporation itself so acted as to indicate to a third party that [the corporation's agent] was vested with the authority to enter into a contract on the [corporation's] behalf." Id. at 683, 533 A.2d at 330. We also held that apparent authority exists if the agent's conduct conforms with the general custom of agents "in that line of business." Id.

The defendants in the instant case assert that it was corporate practice for Dean and Christie to seek the approval of their board of directors for any actions that they proposed Verax to take, and therefore, no reasonable person could possibly have believed that the defendants had apparent authority to enter into a binding equity participation agreement on behalf of the corporation. The plaintiff counters that Verax was typical of close corporations in that its corporate officers, Dean and Christie, often made corporate decisions informally, seeking board approval only to "rubber stamp" their actions. We have held that "[a] requirement that there be a formal tender of consideration for stock may be unduly technical.... This is especially true in the context of a close corporation, where the coalescence of ownership and management tends to result in informality of procedures." Bielinski v. Miller, 118 N.H. 26, 29, 382 A.2d 357, 359 (1978) (citations omitted). We therefore agree with the trial court that the plaintiff's allegations raised a triable issue of fact. Based solely on these allegations, a reasonable person could indeed infer that Dean and Christie had apparent authority to contract on behalf of Verax. Thus, the denial of summary judgment on this issue was proper.

B. Specificity of Contract Terms

We next address the defendants' contention that summary judgment should have been granted because the terms of the alleged promises made to the plaintiff were not sufficient to support a finding that a contract was formed. An " 'offer must be so definite as to its material terms or require such definite terms in the acceptance that the promises and performances to be rendered by each party are reasonably certain.' " Chasan v. Village District of Eastman, 128 N.H. 807, 815, 523 A.2d 16, 21 (1986) (quoting Restatement of Contracts § 32 (1932)). The defendants assert that the plaintiff's own evidence offered in opposition to the summary judgment motion reveals "only extremely imprecise statements" about the alleged equity participation deal. We find this argument unpersuasive. The plaintiff, in opposing the summary judgment motion, asserted at least four examples of specific promises made to him either by defendant Dean or Christie, or both. These promises related to the number of shares the plaintiff would receive and to the distribution of those shares among the senior managers. The defendants' reliance on our decision in Sawin v....

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