Bourke v. Western Business Products, Inc.

• Decision Date: 03 August 2005
• Docket Number: No. 98,333. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3.,98,333. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3.
• Parties: Terence T. BOURKE and Nicholas Patterson, Plaintiffs/Appellees, v. WESTERN BUSINESS PRODUCTS, INC., an Oklahoma corporation; Omar Ingram, Special Administrator of the Estate of Lester Scarbrough, Deceased; and Jack L. Roberts, Jr., Defendants/Appellants.
• Court: Oklahoma Supreme Court

120 P.3d 876

2005 OK CIV APP 48

Terence T. BOURKE and Nicholas Patterson, Plaintiffs/Appellees, v. WESTERN BUSINESS PRODUCTS, INC., an Oklahoma corporation; Omar Ingram, Special Administrator of the Estate of Lester Scarbrough, Deceased; and Jack L. Roberts, Jr., Defendants/Appellants.

No. 98,333. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3.

Court of Civil Appeals of Oklahoma, Division No. 3.

August 3, 2005.

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Appeal from the District Court of Tulsa County, Oklahoma; Honorable Gregory K. Frizzell, Judge.

AFFIRMED IN PART AND REVERSED IN PART.

Donald E. Herrold, Jack N. Herrold, David H. Herrold, Herrold, Herrold & Co., P.C., Tulsa, OK, for Appellants Western Business Products, Inc., and Omar Ingram, Special Administrator of the Estate of Lester Scarbrough, Deceased.

David A. Tracy, Naylor, Williams & Tracy, Inc., Tulsa, OK, for Appellant Jack L. Roberts, Jr.

Robert P. Skeith, Riggs, Abney, Neal, Turpen, Orbison & Lewis, Tulsa, OK, and David Bryant, Diamond, McCarthy, Taylor, Finley, Bryant & Lee, L.L.P., Dallas, Texas, for Appellees.

Opinion by LARRY JOPLIN, Presiding Judge.

¶ 1 Defendants/Appellants Western Business Products, Inc., an Oklahoma corporation (WBP), Omar Ingram, Special Administrator of the Estate of Lester Scarbrough, Deceased (Scarbrough), and Jack L. Roberts, Jr. (Roberts, or collectively, Defendants), seek review of the trial court's orders denying their motions for new trial/judgment non obstante verdicto/remittitur after entry of a judgment on a jury's verdict for Plaintiffs/Appellees Terence T. Bourke and Nicholas Patterson (individually, by name, or collectively, Plaintiffs), on Plaintiffs' claims to recover damages for alleged anticipatory repudiation, fraud, and breach of an implied employment contract. In this appeal, Defendants complain the trial court erred in improperly instructing the jury and submitting Plaintiffs' claims to the jury for determination.

¶ 2 WBP was organized as an Oklahoma corporation in 1981 to sell and service office equipment. Scarbrough and Roberts acquired all shares of WBP stock in 1983. Scarbrough owned fifty-one percent (51%) of the stock, and Roberts owned forty-nine percent (49%). In 1995, WBP hired Bourke as sales manager and Patterson as a salesperson.

¶ 3 In 1999, with Western's sales on the rise,¹ Scarbrough, Roberts, WBP, Bourke and Patterson executed a "Stock Purchase Agreement" (SPA) by which Scarbrough agreed to sell, and Roberts, Bourke and Patterson agreed to buy, all Scarbrough's WBP stock "[i]n the event of [his] death, retirement or should he become disabled."² Particularly, the SPA specified that, contingent on their continued employment with WBP at the time of a triggering event,³ Roberts was obligated to purchase 240 shares, Bourke, 1,200 shares, and Patterson, 600 shares.⁴ The SPA also specified the manner of the valuation of the stock, and payment of the purchase price in 120 monthly installments to be deducted from their respective salaries.

¶ 4 In October 2000, Scarbrough announced his intent to retire and offered Bourke six months salary if he would "move-on." Bourke declined, but offered to buy all of Scarbrough's WBP stock. Scarbrough told Bourke that he would not sell all of his stock to him, but that Bourke could buy both his and Robert's stock for one lump sum payable immediately to become the sole owner, subject to a first-right-of-refusal by Roberts.

¶ 5 At that time, Roberts began investigating sources to finance purchase of the WBP stock. When it appeared that Roberts may have obtained the necessary financing, Plaintiffs demanded that Scarbrough sell them his stock according to the terms of the SPA, but Scarbrough refused, stating that he could tear up the agreement anytime he wanted.

¶ 6 Plaintiffs then commenced the instant action, seeking actual and punitive damages under the theories of anticipatory repudiation and fraud. Scarbrough fired Plaintiffs. Plaintiffs amended their Petition, adding a claim for breach of an implied employment agreement created by the SPA.⁵ Scarbrough and WBP denied liability under the SPA, arguing that (1) because Scarbrough had not yet died, retired or become disabled, Plaintiffs had no rights under the SPA, and suit was premature; and (2) the doctrine of anticipatory repudiation did not apply to the SPA, a unilateral contract. Roberts contended that he had no duty under the SPA to sell stock to Plaintiffs, so he could not be held liable for any breach of the SPA due to failure to sell stock to them. All the Defendants denied any fraudulent acts, and WBP denied the existence of any implied employment agreement under the SPA.

¶ 7 At trial, Plaintiffs adduced testimony argued to show that Scarbrough always intended to sell all his stock to Roberts, and never intended to honor the SPA, i.e., that he used the SPA only to induce the continued hard work of Bourke and Patterson with no intent to perform. Plaintiffs also adduced evidence that Scarbrough would be paid $1.3 million in cash if he sold to Roberts, but less than $1 million in installments if he sold to Plaintiffs. Plaintiffs further presented evidence that Scarbrough was in ill health, that he had announced his retirement in October 2000, and that since, he had not devoted any substantial time to the management and operation of Western. Plaintiffs further argued that the SPA, specifying their payment for the stock in 120 monthly installments, created a implied contract of employment. At the conclusion of Plaintiffs' case, Defendants interposed a demurrer to the evidence, which the trial court overruled.

¶ 8 Defendants presented evidence that Scarbrough had not retired or become disabled as to trigger the buy/sell provisions of the SPA, and that prior to commencement of suit, Scarbrough "retracted" the alleged "repudiation" of the SPA. Defendants also presented evidence that Roberts' quest for financing was discussed at weekly sales meetings with all parties present; but, that Roberts never applied for or obtained financing for the purchase of Scarbrough's stock; and Roberts testified that, even if he had purchased Scarbrough's stock, he had intended to honor the SPA and sell the designated shares to Plaintiffs. At the conclusion of Defendants' evidence, Defendants moved for directed verdict, which the trial court denied.

¶ 9 The trial court then instructed the jury on fraud, anticipatory repudiation and breach of implied employment contract. Upon consideration of the evidence, the jury returned verdicts for Plaintiffs, and the trial court entered judgment accordingly.⁶ Defendants then filed motions for new trial, judgment notwithstanding the verdicts, and remittitur, which the trial court denied.

I. Anticipatory Repudiation

¶ 10 In three propositions, Scarbrough and WBP contend the doctrine of anticipatory repudiation does not apply in this case because the SPA was a unilateral executory contract, and the obligation to sell did not arise until his death, disability or retirement. So, says Scarbrough, because the evidence clearly did not show his death, disability or retirement as to trigger his obligation to sell, Plaintiffs could not recover under the theory of anticipatory repudiation. Roberts agrees, and asserts that he had no individual obligation to sell stock under the SPA.

¶ 11 "`A contract is unilateral when one party who makes a promise has received a consideration other than a promise to make the contract binding[,] [and] [a] unilateral contract is . . . defined as one in which there is a promise on one side only, the consideration therefor being an Act[;] . . . After the act upon which the promise is based is performed, a valid contract comes into existence.'" Edwards v. Petross, 1963 OK 114, ¶ 0(1), 381 P.2d 1008, 1009. See also, Langdon v. Saga Corp., 1976 OK CIV APP 65, ¶ 6, 569 P.2d 524, 527.⁷ A bilateral contract embodies the mutual and interdependent obligations between the parties, and the parties' exchange of promises of performance constitutes good and valid consideration to support the formation of an enforceable contract. See, e.g., Tucker v. Zachary, 1954 OK 105, ¶¶ 0(3), 23, 269 P.2d 773, 777.⁸ A contract is "executory" when one party promises to perform at some time in the future. See, e.g., Galbreath Gas Co. v. Lindsey, 1916 OK 802, ¶ 0(1), 161 P. 826.⁹

¶ 12 The doctrine of anticipatory repudiation applies to a bilateral, executory contract, and a party who makes a distinct, unequivocal, and absolute declaration of an intent not to perform may be held liable for breach of the contract. See, e.g., Bushey v. Dale, 1937 OK 716, ¶¶ 0(3), 7, 75 P.2d 193, 196. So, where a party to a bilateral contract repudiates the contractual obligation to perform a required act in the future, the other party to the contract may treat the contract as then breached and immediately pursue a remedy for breach of the contract. Teeter v. Mid-West Enterprise Co., 1935 OK 1174, ¶ 5, 52 P.2d 810, 812; Consolidated Pipe Line Co. v. British AMOCO, 1933 OK 221, ¶ 27, 21 P.2d 762, 768.

¶ 13 The doctrine of anticipatory repudiation may not apply to a unilateral contract. A unilateral offer, dependent upon fulfillment of a condition precedent, becomes binding once the condition precedent is fulfilled. See, e.g., Worms v. Burgess, 1980 OK CIV APP 1, ¶ 13, 620 P.2d 455, 458. So, where the obligations of a unilateral contract depend upon the occurrence of some future event, the unilateral contract cannot be enforced unless or until the future event in fact occurs. See, Rollins v. Rayhill, 1948 OK 83, ¶ § 14-16, 200 Okla. 192, 191 P.2d 934, 937-938; Sam P. McCullough, Inc. v. Doggett, 1936 OK 131, ¶ 0(4), 54 P.2d 184; Franklin v. Parks, 1920 OK 106, ¶ 0(1), (4), (6), (7), 188 P. 334.

¶ 14 However, a unilateral contract may ripen into an enforceable bilateral contract upon partial performance. A...