Burke v. American Network, Inc.

• Decision Date: 22 February 1989
• Docket Number: No. A8503-01914,A8503-01914
• Citation: 95 Or.App. 274,768 P.2d 924
• Parties: Ronald BURKE, Respondent--Cross-Appellant, v. AMERICAN NETWORK, INC., an Oregon corporation, Appellant--Cross-Respondent. ; CA A44780.
• Court: Oregon Court of Appeals

Page 924

768 P.2d 924

95 Or.App. 274

Ronald BURKE, Respondent--Cross-Appellant, v. AMERICAN NETWORK, INC., an Oregon corporation Appellant--Cross-Respondent.

No. A8503-01914; CA A44780.

Court of Appeals of Oregon.

Argued and Submitted Nov. 23, 1988.

Decided Feb. 22, 1989.

Colleen O'Shea Clarke, Portland, argued the cause for appellant--cross-respondent. With her on the briefs were Richard M. Botteri and Weiss, DesCamp & Botteri, Portland.

Joseph C. Arellano, Portland, argued the cause for respondent--cross-appellant. With him on the briefs was Kennedy, King & Zimmer, Portland.

Before WARREN, P.J., and NEWMAN and DEITS, JJ.

WARREN, Presiding Judge.

Plaintiff was employed by defendant from April, 1982, through the first week of January, 1985. In 1982, defendant was a start-up company in the communications industry, and Eric Randolph was the founder, controlling shareholder and chairman of the board. Randolph hired plaintiff to head defendant's sales staff, and plaintiff became vice president of marketing in June, 1983. Thereafter, Pacific Telecom acquired controlling ownership of defendant, and in April, 1984, it installed its own management team. Plaintiff was demoted to Oregon general manager. He was demoted again in September to the position of area manager, and in the first week of January, 1985, Pacific Telecom terminated his employment.

Plaintiff then brought this action under Oregon's wage claim statutes. ORS 652.110 et seq. His first claim was for unpaid commissions, and three claims alleged that defendant had promised him an opportunity to acquire stock. Both plaintiff and Randolph testified that Randolph had promised plaintiff an "ownership" opportunity in American Network at the time that plaintiff went to work. That promise was not performed, however, before Pacific Telecom took over the ownership of the corporation.

In March, 1984, plaintiff learned that Pacific Telecom was preparing a formal agreement to provide stock options to key employes and that he was not on the list of employes who would be eligible for the option. Plaintiff discussed the matter with Randolph, who told him that he would try to obtain the option for plaintiff. In April, 1984, plaintiff and Randolph signed a document called "American Network, Inc. Incentive Stock Option Agreement." The agreement was a plan under which plaintiff could purchase up to 30,000 shares at $1 a share. However, the option could not be exercised in the first year, and only 20 percent of the option could be exercised in any subsequent year. Defendant's president refused to sign the document, and the board of directors denied Randolph's request to issue a stock option to plaintiff.

The jury awarded plaintiff $7,220.58 on his claim for commissions and $56,250 for the stock option. Defendant makes three separate arguments that the evidence is insufficient to support the jury's award of damages. We do not address those arguments. Defendant makes them under assignments of error that the trial court erred in denying its motion for judgment notwithstanding the verdict and alternative motion for a new trial. Denials of those motions made on the grounds of insufficient evidence are not reviewable. Turman v. Central Billing Bureau, 279 Or. 443, 451, 568 P.2d 1382 (1977); Meyers v. Oasis Sanitarium, Inc., 224 Or. 414, 418, 356 P.2d 159 (1960). Because defendant's only challenge to the award on plaintiff's claim for commissions was on this ground, we affirm that part of the judgment. ¹

Defendant also assigns error to the trial court's giving plaintiff's instruction and refusing to give its proposed instructions on the measure of damages for the stock. A litigant is entitled to instructions on his theory of the case, if the instructions correctly state the law and are based on the pleadings and proof. Denton v. Arnstein, 197 Or. 28, 46, 250 P.2d 407 (1952). Neither plaintiff's nor defendant's instructions met those requirements.

Plaintiff brought his stock claim on three alternative theories. He alleged (1) that he and defendant had a verbal contract promising him an "equity position of one percent of defendant's stock"; (2) that defendant had promised him 22,000 shares of its stock; and (3), based on the written stock option agreement, that defendant had promised plaintiff a stock option for 30,000 shares at the price of one dollar a share.

Plaintiff's instruction, which was given, stated:

"In regard to the measure of damages, I instruct you that, in determining the amount of damages for Plaintiff's claims of entitlement to stock in the Defendant corporation, if any, you are instructed that Plaintiff's damages would represent the difference between the price at which the option could have been exercised and the market price of the stock on the date of Plaintiff's termination."

Defendant excepted, because the instruction was incorrect if the jury found that the terms of the proposed written option plan controlled. ² Plaintiff's instruction was correct only insofar as it related to the theory of the case that the written option agreement could not be considered to be part of the final agreement of the parties. Although plaintiff may have relied primarily on that theory at trial, the instruction ignores his pleading, which put the meaning of the written agreement in issue, and the evidence, which included the written agreement and testimony regarding the nature of the stock which would be available under it. Because the instruction was incorrect if the writing were found actually to be the parties' agreement and because it was not expressly limited to apply only under the other theories, it was an incorrect statement of the law.

Plaintiff argues that there was no error, because the case was brought under the Oregon wage claim statutes. He contends that case law establishes that a benefit such as a stock option comes within the statutory definition of "wages," and wages are immediately due and payable upon termination. ORS 652.140; see Kantor v. Boise Cascade Corp., 75 Or.App. 698, 708 P.2d 356 (1985), rev. den. 300 Or. 506, 713 P.2d 1058 (1986); Wyss v. Inskeep, 73 Or.App. 661, 699 P.2d 1161, rev. den. 300 Or. 64, 707 P.2d 582 (1985); Putman v. Dept. of Justice, 58 Or.App. 111, 647 P.2d 949 (1982). However, we do not agree with plaintiff's contention that, because compensation is immediately payable, it follows that the value of compensation in the form of stock cannot take into account factors that would operate in the future but affect the present value of the stock.

In Walker v. American Optical Corp., 265 Or. 327, 509 P.2d 439 (1973), a sales bonus plan required payment of a bonus only if the salesperson was on the payroll at the time of distribution. Although the plaintiff became eligible for a bonus, he voluntarily quit several months before the distribution, and the Supreme Court concluded that the employer was not obligated to pay the bonus. In State ex rel. Roberts v. Duco-Lam, Inc., 72 Or.App. 473...