Dickinson v. Auto Center Mfg. Co.

• Decision Date: 28 February 1983
• Docket Number: No. 82-2051,82-2051
• Citation: 733 F.2d 1092
• Parties: George B. DICKINSON, Plaintiff-Appellee, v. AUTO CENTER MANUFACTURING COMPANY and John W. McLeod, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1092

733 F.2d 1092

George B. DICKINSON, Plaintiff-Appellee, v. AUTO CENTER MANUFACTURING COMPANY and John W. McLeod,

Defendants-Appellants.

No. 82-2051.

United States Court of Appeals, Fifth Circuit.

Feb. 28, 1983.

Norman J. Riedmueller, Don Fogel, Houston, Tex., Joe T. Caruso, Cocoa Beach, Fla., for defendants-appellants.

Jack W. Hayden, Houston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before WISDOM, REAVLEY and TATE, Circuit Judges.

TATE, Circuit Judge:

The defendants, Auto Center Manufacturing Company (Auto Center) and the corporation president, McLeod, appeal from the granting of a motion for summary judgment in favor of the plaintiff, Dickinson, a discharged employee, and awarding him damages for the purported breach of an oral employment contract. After two prior appeals to this court, Auto Center and McLeod now attempt to raise the following defenses and objections to the judgment: (1) applicability of the Texas or Florida statute of frauds to bar enforcement of the oral contract, (2) lack of authority on the part of McLeod to contract for, and bind Auto Center to, the terms of the employment contract, (3) insufficient evidence to support a finding of individual liability on the part of the corporation president, McLeod, and (4) failure of consideration to support the contract. Finding (a) that issues (1) and (2), were decided adversely to Auto Center on a prior appeal and may not be re-examined because of the "law of the case" principle, and (b) that the district court erred in granting summary judgment for Dickinson in the resolution of issues (3) and (4), we reverse the district court's denial of a directed verdict as to issue (3), and we vacate the judgment of the district court as to issue (4) and remand.

Factual Background

The events leading up to this contract dispute have been thoroughly examined in two earlier opinions by this court, 594 F.2d 523 (5th Cir.1979) (Dickinson I ), and 639 F.2d 250 (5th Cir.1981) (Dickinson II ). Briefly, Dickinson moved from Texas to Florida in reliance on an alleged oral employment agreement entered into with Auto Center president McLeod in May of 1972. ¹ Dickinson was allegedly promised $60,000 a year as salary and a 25% stock interest in Auto Center, the stock to be issued at a later date. In March of 1973 after having worked for Auto Center for nine months without the stock being issued, a second oral agreement was allegedly reached in which Dickinson was to be issued immediately the 25% stock interest in the company. Several months later, Dickinson was fired without ever having received the stock. Because of actions by this court on the earlier appeals, only the enforceability of this second March 1973 unwritten agreement (to issue stock immediately) is the subject of review on this appeal.

Procedural History:

The procedural history of this case is more complicated.

Dickinson I:

In the first trial in the district court, a directed verdict was granted at the close of Dickinson's case in favor of the defendants, Auto Center and McLeod. In reviewing the two agreements, both of which were at issue at that time, the district court found that Dickinson's enforcement of the earlier May 1972 agreement was barred by the Florida statute of frauds, and that enforcement of the March 1973 agreement was not barred by the Florida statute of frauds, but was not a binding contract because the agreement had not been reduced to writing as per the parties' intent.

On the appeal to this court (Dickinson I ), we reversed the directed verdict and held that Dickinson had "sufficiently proved that a contract existed" pursuant to the second oral agreement in March of 1973, 594 F.2d at 528, that the parties' intent did not require that it be reduced to writing, id. at 529, and that "Dickinson also sufficiently established that defendants breached" the agreement. Id. We therefore remanded the case to the district court "for a new trial on the issue of defendants' liability for breaching the March 27, 1973, oral agreement." Id. at 530. We also specifically held that enforcement of that agreement was not barred by the Texas statute of frauds. Id. at 528.

Dickinson II:

On the remand, a jury trial was held with regard to the defendants' liability for breach of the March 1973 oral contract. In response to special interrogatories, the jury found that the terms of the contract were that 25% of the stock in Auto Center would be transferred immediately to Dickinson in exchange for $25,000 (which amount would be paid to Dickinson as a bonus by Auto Center). However, the jury found that Dickinson neither obligated himself ("other than to continue his existing employment") nor gave up anything of value as consideration for the $25,000 that would be paid to him. The district court therefore found the contract lacking in consideration and entered judgment ordering that Dickinson take nothing. ² Pertinently to the present (Dickinson III ) appeal, the district court overruled a motion for directed verdict urged by the defendant McLeod (the president of Auto Center) directed to the complete absence of evidence to support individual liability of this corporate officer for this corporate debt. R., vol. 10, p. 578.

On the second appeal to this court (Dickinson II ), we again reversed the district court's judgment. We specifically affirmed the jury findings as to the existence and terms of the contract, and also as to the amount of damages occasioned by its breach. 639 F.2d at 253-54. We reversed, however, finding that under Florida law, the instructions to the jury on the issue of consideration for the March 1973 contract were "wholly deficient in substance as well as in form," Id. at 253-54 & note 6. We noted that under Florida law, Dickinson's continued employment after March, 1973, or his continued guarantee of the debts of the corporation after that date, if credited, could constitute sufficient consideration for the contract. Id. at 253. We therefore reversed the district court's judgment and remanded "limited to" the issue as to "the existence or nonexistence of consideration under Florida law." Id. at 254. In doing so, we emphasized that a full trial might not be necessary and that summary judgment, directed verdict, or judgment n.o.v. might be appropriate. 639 F.2d at 254.

The Present Appeal (Dickinson III):

On the second remand to the district court, on submission of cross motions for summary judgment (in which Dickinson introduced no affidavits or additional documentary proof), the district judge granted summary judgment for Dickinson awarding him $694,666.00 with interest and costs. The district court denied Auto Center's motion.

For the first time since this controversy arose, the defendants McLeod and Auto Center were held liable by a substantial monied judgment against them. The present appeal is the first in which they appear as appellants. The two prior appeals (Dickinson I and II ) were taken by the plaintiff Dickinson from take-nothing judgments. The defendants did not file cross appeals from these two earlier judgments, both of which were of course completely in their favor.

I. Dickinson I and Dickinson II: "Law of the Case" and What They Decided.

This is the third appeal arising from this litigation. With regard to the issues raised by this latest appeal, it is first necessary to examine what issues were expressly or by implication decided on the two prior appeals. Under the "law of the case" principle, a prior decision of this court (in the absence of exceptional circumstances not here present) will be followed without re-examination, both on the remand to the district court and on subsequent appeals to this court. Doe v. Marshall, 694 F.2d 1038 (5th Cir.1983); Morrow v. Dillard, 580 F.2d 1284, 1290 (5th Cir.1978). ³

A. Statute of Frauds

Auto Center and McLeod first argue that enforcement of the oral agreement of March 1973 is barred by the Texas, or alternatively the Florida, statute of frauds provision providing that a contract for the sale of securities is not enforceable if not in writing or so confirmed. ⁴

In Dickinson I, this court expressly held that the Texas provision "does not apply to an oral employment contract in which stock is to be transferred as a condition for the acceptance of employment." 594 F.2d at 527 n. 7. While this was particularly stated with reference to the earlier May 1972 oral agreement (not the subsequent March 1973 one here at issue), the same reasoning was implied in the court's holding that the oral agreement of March 27, 1983, although governed "by Florida substantive law", 594 F.2d at 528, was valid, and in the court's remanding "for a new trial on the issue of the defendants' liability for breaching the March 27, 1983 oral agreement." 594 F.2d at 530.

Our remand in Dickinson I also necessarily carried with it the rejection of Auto Center's alternative claim that the Florida statute of fraud provision barred enforcement of this March 1973 oral agreement. Although the defendants had not expressly pleaded the Florida statute, in their pre-trial order they broadened their defense to include both the Texas and Florida statutes of fraud. R.I., p. 138. Under these circumstances, the opposing party was on fair notice of the issue, and it was before the court. Allied Chemical Corporation v. Mackay, 695 F.2d 854, 855 (5th Cir.1983).

Pertinently, in the judgment that was the subject of the appeal in Dickinson I, the district court held that the Florida (rather than the Texas) statute of frauds applied (a holding we reversed in Dickinson I ) and that, although the May 1972 contract was barred from enforcement by the Florida statute of frauds, the "modified" oral contract of March 27, 1973 (where the plaintiff was to receive stock immediately) was outside the Florida statute here at issue. R.I., pp. 155-157, esp. 157. The district court then held that,...