Bower v. Jones

• Citation: 978 F.2d 1004
• Decision Date: 04 November 1992
• Docket Number: No. 90-3417,90-3417
• Parties: Eric Steven BOWER, Plaintiff-Appellant, v. E. Michael JONES, Ruth Jones, and Ultramontane Associates, Incorporated, an Indiana not-for-profit corporation, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1004

978 F.2d 1004

Eric Steven BOWER, Plaintiff-Appellant, v. E. Michael JONES, Ruth Jones, and Ultramontane Associates Incorporated, an Indiana not-for-profit corporation, Defendants-Appellees.

No. 90-3417.

United States Court of Appeals Seventh Circuit.

Argued Sept. 23, 1991.

Decided Nov. 4, 1992.

Paul E. Kralovec, Chicago, Ill., and Jennifer C. Neubauer (argued), Winnetka, Ill., for plaintiff-appellant.

Thomas A. Appel (argued), Appel & Appel, Lansing, Ill., for defendants-appellees.

Before COFFEY and FLAUM, Circuit Judges, and ENGEL, Senior Circuit Judge. ^*

COFFEY, Circuit Judge.

Eric Steven Bower sued Ultramontane Associates (Ultramontane), its president, E. Michael Jones, and its business manager, Ruth Jones, for breach of an employment contract, breach of an oral agreement to put that contract into writing, fraud, and promissory estoppel. The district court granted summary judgment for the defendants on the breach of the oral agreement, fraud, and promissory estoppel claims, and dismissed the claim for breach of an employment contract on statute-of-frauds grounds. The court thereafter denied Bower's motion to amend his second amended complaint to add a modified breach-of-employment-contract claim and a claim for equitable estoppel. Bower appeals each of these rulings. We affirm in part, reverse in part, and remand.

I. BACKGROUND

In May of 1988 E. Michael Jones contacted Bower about joining his firm as the Publisher for Fidelity, a magazine produced by Ultramontane. Bower, who was employed at the time but looking for a new job, accepted the offer after negotiating with Jones over an incentive program, as well as the usual terms of employment, including salary, expenses, and vacation time. Bower asked Jones to memorialize the oral agreement in a written contract, which he agreed to do. Later that month Jones displayed to Bower a draft agreement containing the terms they had discussed. However, when Bower began work on June 1, 1988, the final written contract was not ready. During the next few weeks Bower repeatedly asked for the written contract, but Jones, though assuring him that a contract was forthcoming, said that one would not be ready for a while because his attorney was on vacation and needed more time to work on it.

Accepting this explanation, Bower stayed at Ultramontane, letting another job offer (with a higher salary but without an incentive program) lapse. Much of Bower's time at Ultramontane was devoted to preparing a grant proposal to publish a book about the University of Notre Dame. ¹ He finished a draft of the grant proposal on July 18, 1988 and submitted it to Jones. The two of them discussed the draft proposal the next day, including Bower's plan for an oral presentation to the Domino's Foundation, which offered grants for such projects. Two days later Jones discharged Bower, giving him no other reason than that "things just weren't working out." This occurred even though Jones had advised Bower that his written contract would be ready that very same week.

Bower thereafter filed a complaint against Ultramontane, Michael Jones, and Ruth Jones, claiming that they had committed fraud in luring him to the company with false promises of a guaranteed one-year term of employment and a written contract, just so they could take advantage of his writing skills and professional contacts in order that they might obtain the grant, and thereafter discharge him before he received his agreed-upon share of the grant proceeds. He further alleged a breach of contract as to the promised one year of employment.

The court dismissed the contract count, finding that the employment contract was unenforceable because it was oral and could not be performed within a year of its making, and thus failed to satisfy Illinois' version of the statute of frauds. Ill.Rev.Stat. ch. 59, § 1. Bower filed a second amended complaint, reiterating the fraud charge and adding counts based on breach of the oral agreement to put the employment contract into writing and promissory estoppel. The court granted summary judgment to the defendants on all three claims, relying primarily on one case, Sinclair v. Sullivan Chevrolet Co., 31 Ill.2d 507, 202 N.E.2d 516 (1964). As to the fraud claim, the court found that, in essence, Bower was actually making a claim of equitable estoppel, asking it to estop the defendants from pleading the statute of frauds because they had also committed fraud in not reducing the oral agreement to a written contract of employment. The court further refused to estop the defendants from pleading the statute of frauds, holding that Bower failed to present evidence sufficient to raise an issue as to the defendants' fraudulent intent in not reducing the agreement to writing, and that Sinclair barred the use of equitable estoppel to preclude a statute-of-frauds defense. The court applied Sinclair to the claim for breach of the alleged oral contract by failing to reduce the agreement to writing, finding that Sinclair implied that agreements to put into writing an agreement that falls within the statute of frauds must themselves satisfy the statute of frauds. Id., at 518-19. Since the oral agreement failed to satisfy the statute, it could not be enforced. Finally, the court relied on Sinclair in holding that promissory estoppel, like equitable estoppel, could not be used to bar a statute of frauds defense.

Reacting to this decision, Bower sought leave to amend his second amended complaint by adding two new counts. The first, Count VIII, was for breach of the employment contract. The contract alleged herein is different from that alleged in Bower's first amended complaint, which the court had dismissed. It has fewer terms and conditions of employment, and Bower apparently believed that the contract in Count VIII could satisfy the statute of frauds, even though the more elaborate contract alleged in his first complaint had not done so. The second addition, Count IX, was for equitable estoppel. Bower argued that this should apply to prevent the use of the statute of frauds as a bar to his breach of contract claim, even though the court had expressed its opinion of equitable estoppel in rejecting his fraud claim. The court refused to allow the addition of either claim, saying Bower's request was "denied on the basis of prior rulings in this action."

II. ISSUES

Bower raises three claims on appeal. Initially, he contends that the district court abused its discretion in refusing his request to amend his second amended complaint. Second, he alleges error in the court's grant of summary judgment on the fraud, breach of oral contract, and promissory estoppel claims of his second amended complaint. Third, he asserts that the court should not have dismissed the breach-of-written-contract claim contained in his first amended complaint.

III. DISCUSSION

A. Denial of Leave to Amend the Second Amended Complaint

In his proposed amendment to his second amended complaint, Bower sought to remedy the defects that had caused the court to dismiss his initial breach-of-written-contract claim. That claim, set forth in Count III of his first amended complaint, alleged a contract guaranteeing Bower one year of employment, a $29,000 salary, a share of the revenues from advertising, subscriptions, and grants, and reimbursement for expenses. He had argued that this contract satisfied the statute of frauds because the defendants had admitted these contract terms in their answer to his complaint. Poulos v. Reda, 165 Ill.App.3d 793, 117 Ill.Dec. 465, 471, 520 N.E.2d 816, 822 (1987) ("A pleading, such as an answer" may be used to satisfy the statute of frauds). Actually, the defendants admitted only to promising the $29,000 salary, reimbursement of expenses, and to provide health insurance for Bower and his family. Since the defendants, in their answer, had not admitted to the contract terms that Bower alleged, the court found that the contract sued upon failed to satisfy the statute of frauds. See 2 A. Corbin, Corbin on Contracts, § 319, at 152 ("Of course, an admission in the answer that an oral contract was made, but asserting that its terms were different from those alleged by the plaintiff, is not an admission of the contract sued on.")

To remedy this defect in his pleading, Bower attempted to add Count VIII to his second amended complaint, alleging a contract with fewer terms. This time he claimed that the defendants had promised to reduce the contract to writing, giving him a one-year term of employment, a $29,000 annual salary, and health insurance. Since the defendants had admitted the salary and insurance terms, Bower had a much better chance of establishing that the contract satisfied the statute of frauds. Nevertheless, the court refused to let him add this count, giving no other reason than its "prior rulings." Presumably, the court was referring to its dismissal of the original contract claim under the statute of frauds. Bower challenges the court's decision, arguing that he should have been allowed to add Count VIII to his second amended complaint.

When a party seeks to amend a complaint after the defendant has answered, the district court has discretion in deciding whether or not to allow the amendment, and we review its decision for an abuse of that discretion. J.D. Marshall Int'l, Inc. v. Redstart, Inc., 935 F.2d 815, 819 (7th Cir.1991); Fed.R.Civ.P. 15(a). Although Rule 15 states that leave to amend shall be "freely given," it may be denied where there is undue delay, bad faith, dilatory motive, a repeated failure to cure deficiencies, undue prejudice to the opponent, or where the amendment would be futile. Foman v. Davis, 371 U.S. 178, 183, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). The district court did not mention any of these grounds by name, but the parties focus on futility, undue delay and prejudice, and the repeated failure to cure deficiencies. Accordingly, we direct our attention to these...