Jarrett v. Epperly, 88-5762

• Decision Date: 12 April 1990
• Docket Number: No. 88-5762,88-5762
• Citation: 896 F.2d 1013
• Parties: Kenneth JARRETT, Plaintiff-Appellee, v. Harrison EPPERLY and Epperly Inc., f/k/a United Brake Systems, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1013

896 F.2d 1013

Kenneth JARRETT, Plaintiff-Appellee, v. Harrison EPPERLY and Epperly Inc., f/k/a United Brake

Systems, Inc., Defendants-Appellants.

No. 88-5762.

United States Court of Appeals, Sixth Circuit.

Argued July 31, 1989.

Decided Feb. 23, 1990.

Rehearing and Rehearing En Banc Denied April 12, 1990.

Alan Mark Turk (argued), Prince & Turk, Nashville, Tenn., George W. Hopper, Hopper & Associates, Indianapolis, Ind., for plaintiff-appellee.

Mark Dyer, Peter H. Curry, Boult, Cummings, Conners & Berry, Nashville, Tenn., Gene R. Leeuw, Dean T. Barnhard (argued), Klineman, Rose, Wolf & Wallack, Indianapolis, Ind., for defendant-appellant.

Before WELLFORD and NELSON, Circuit Judges; and TAYLOR, District Judge. ^*

ANNA DIGGS TAYLOR, District Judge.

This Tennessee breach of contract and fraud case is before us on Defendant's appeal of a general jury verdict in Plaintiff's favor, awarding compensatory damages in the amount of Seven Hundred Thousand Seven Hundred Dollars ($700,700.00) and punitive damages of One Hundred Twelve Thousand Dollars ($112,000.00). Defendants assert several claims of error on appeal, none of which have merit.

I. FACTS AND PROCEEDINGS BELOW

Defendant-Appellant Harrison Epperly approached Plaintiff-Appellee Kenneth Jarrett in April, 1976 and asked Jarrett to come to work for him. Epperly, who operated a brake shop in Indianapolis, Indiana, sought to open a second shop in Nashville, Tennessee, in the name of United Brake Systems Corporation, of which he, his spouse and his father were the sole shareholders. He was the president and controlled the day-to-day operations of the corporation. At the time Epperly approached Jarrett, Jarrett was happily employed as a salesman of truck leases with Transport Pool of Nashville, at a salary of $9,000.00 per annum, as well as commissions and an expense account.

Epperly asked Jarrett to set up, open and manage a Nashville branch of United Brake, and offered him $9,100 per annum with commissions, an expense account and the use of an automobile. When Jarrett advised that he was happy with his present position, Epperly made the further offer that, if the Nashville branch were not profitable after six months, it would be closed and Jarrett would be given an additional six months of severance pay. Epperly finally offered to make Jarrett a forty-nine percent owner of the branch if he would take the job and continuously manage it for ten years.

Jarrett accepted this offer, basing his acceptance in large part upon the promise of eventual ownership. He opened the Nashville branch in the spring of 1976. The agreement between the parties was never put into writing. Both parties later testified that their relationship had been "like father and son."

In an effort to induce others to open and manage still more branches, Epperly made the same promise to several; the promise of eventual forty-nine percent ownership in their branch. In addition, he told several of his employees, over the years, that he had such an oral agreement with Jarrett and, over the course of the next ten years, he continually reassured Jarrett that he would become a forty-nine percent owner when his ten year anniversary arrived.

During his decade with United, Jarrett was offered other positions and business opportunities elsewhere, all of which he refused, because of this opportunity to become a part owner of United's Nashville branch. Also during this period, the company grew from two to twenty-three branches, with Jarrett assisting in the opening and management of several new branches. Indeed, Jarrett's responsibilities increased greatly over the decade.

On or about the tenth anniversary of his employment, Jarrett approached Epperly, requesting performance of the oral promise. Epperly acknowledged the promise and informed Jarrett that he would, by the end of 1986, receive evidence of his forty-nine percent interest in the Nashville operation.

Unfortunately, on December 30, 1986, Epperly sold the assets of United, including all of the assets of the Nashville operation, to Echlin, Inc., for about Eleven Million One Hundred Twenty Eight Thousand Eight Hundred Forty Two Dollars ($11,128,842.00).

Even after the sale, Jarrett again approached Epperly who, in January, 1987, promised Jarrett that he would receive that portion of the sales price corresponding to his forty-nine percent interest in the Nashville operation. No such payment was ever made. In fact, when another employee asked Epperly about his promise to Jarrett, Epperly replied "Forty-nine percent of what? Of nothing?"

Jarrett filed suit in the United States District Court for the Middle District of Tennessee seeking, in his first complaint, damages for breach of an oral employment contract and for promissory fraud. Shortly before trial, Defendant moved for summary judgment, and the magistrate recommended partial summary judgment for Defendant. The trial judge refused, however, to rule on the summary judgment motion at that time. Moreover, at the final pre-trial conference, the parties were unable to agree on a pre-trial order, due to Jarrett's request that it include claims for fraud and deceit, constructive fraud and fraudulent concealment, which he asserted would be proven at trial. He also submitted an amended complaint which included these new theories. The district court chose to take the matter under advisement pending the close of the evidence at trial.

After a six day trial, the court charged the jury as to breach of contract, fraud, fraudulent concealment and promissory fraud, and refused Defendants' request that the jury be given special interrogatories. In addition, after trial the court denied Defendants' motion for summary judgment. This appeal followed.

II. DENIAL OF APPELLANTS' MOTION FOR SUMMARY JUDGMENT

Appellants challenge the trial court's denial of their motion for summary judgment. In so doing, they rely upon the magistrate's report, which recommended partial summary judgment in their favor. Any issue as to the magistrate's report however, is mooted here by the district court's de novo determination that genuine issues of fact existed, precluding summary judgment and requiring trial. United States v. Raddatz, 447 U.S. 667, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980); Mathews v. Weber, 423 U.S. 261, 96 S.Ct. 549, 46 L.Ed.2d 483 (1976).

Whether a denial of a motion for summary judgment is appealable following a jury verdict adverse to the movant appears to be an issue of first impression in this circuit. The better rule appears to have been recently adopted by the Ninth and Federal Circuits and is that such a denial is "not properly reviewable on an appeal from the final judgment entered after trial." Locricchio v. Legal Services Corp., 833 F.2d 1352 (9th Cir.1987); Glaros v. H.H. Robertson Co., 797 F.2d 1564 (Fed.Cir.1986), cert. dismissed, 479 U.S. 1072, 107 S.Ct. 1262, 94 L.Ed.2d 124 (1987); Senza-Gel Corp. v. Seiffhart, 803 F.2d 661 (Fed.Cir.1986). We agree with the Ninth and Federal Circuits and here hold that where summary judgment is denied and the movant subsequently loses after a full trial on the merits, the denial of summary judgment may not be appealed. ¹

III. STANDARD OF REVIEW OF JURY VERDICTS

In Gold v. National Savings Bank of City of Albany, 641 F.2d 430, 434 (6th Cir.1981), this Court acknowledged that it is bound by state law with regard to sufficiency of the evidence in diversity cases:

In Tennessee, the rule of law with respect to appellate review of the sufficiency of evidence is that all the evidence for the prevailing party must be taken as true. Moreover, all reasonable inferences favorable to the prevailing party must be made and all countervailing evidence must be disregarded. However, it is also clear that under Tennessee law there must be substantial and material evidence from which the jury could have based a verdict for the prevailing side. [Citations omitted].

In this case, we find that as to all jury issues raised by Defendants, the jury had substantial and material evidence on which to base its verdict for Jarrett.

IV. STATUTE OF FRAUDS

Defendants contend that the Statute of Frauds barred enforcement of the oral agreement between these parties because real estate was "embedded" in the agreement and because the promises were incapable of performance within one year.

The Tennessee Statute of Frauds, Tenn.Code Ann. Sec. 29-2-101 states:

Writing required for action--No action shall be brought:

(4) Upon any contract for the sale of lands, tenements, or hereditaments, or the making of any lease thereof for a longer term than one (1) year; or,

(5) Upon any agreement or contract which is not to be performed within the space of one (1) year from the making thereof;

unless the promise or agreement, upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person by him thereunto lawfully authorized.

We reject Defendants' argument that the above provisions bar Plaintiff's claims. The Nashville branch of United did not own real estate in 1976, when Epperly made the promise of forty-nine percent ownership to Jarrett. Therefore, the contract, when made, did not concern real estate and thus was not within the Statute of Frauds. There is no evidence, in fact, that real estate ever became embedded in the contract, which was for 49% of the ownership of an establishment putatively incorporated by Epperly.

Plaintiff Jarrett's complaint does not allege that there was ever a contract for the sale of real estate. What the plaintiff is suing on, rather, is a contract for 49% of an operating business consistently identified in the pleadings as the "Nashville operation." It was understood that the Nashville operation included real estate, to be sure, along with inventory, equipment, accounts receivable and goodwill, but there was no understanding that the defendant corporation...