Burke v. Bevona

• Decision Date: 18 January 1989
• Docket Number: D,AFL-CI,1324,B-32,Nos. 1197,S,s. 1197
• Parties: 111 Lab.Cas. P 11,195 William H. BURKE, Plaintiff-Appellee, Cross-Appellant, v. Gus BEVONA, as President of Local 32ervice Employees International Union,efendant-Appellant, Cross-Appellee. ockets 88-7124, 88-7136.
• Court: U.S. Court of Appeals — Second Circuit

Page 532

866 F.2d 532

111 Lab.Cas. P 11,195

William H. BURKE, Plaintiff-Appellee, Cross-Appellant, v. Gus BEVONA, as President of Local 32B-32J, Service Employees International Union, AFL-CIO, Defendant-Appellant Cross-Appellee.

Nos. 1197, 1324, Dockets 88-7124, 88-7136.

United States Court of Appeals Second Circuit.

Argued June 6, 1988.

Decided Jan. 18, 1989.

Barry H. Garfinkel, New York City (Skadden, Arps, Slate, Meagher & Flom, Peggy L. Kerr and Eric Friedberg, New York City, of counsel), for defendant-appellant-cross-appellee.

Jeffrey Craig Miller, New York City (Miller and Korzenik, New York City, of counsel), for plaintiff-appellee-cross-appellant.

Before VAN GRAAFEILAND, MINER and MAHONEY, Circuit Judges.

VAN GRAAFEILAND, Circuit Judge:

Local 32B-32J, Service Employees International Union, AFL-CIO (hereinafter "Local 32B"), appeals from a $420,904.54 judgment of the United States District Court The pertinent facts may be summarized briefly. In 1981, while Burke was the elected Secretary-Treasurer of Local 307 of Service Employees International (hereinafter "Local 307"), a proposal was made to merge Local 307 into the much stronger and larger Local 32B. Gus Bevona, the elected President of Local 32B, and John Sweeney, the elected President of Service Employees International, met with officers of Local 307 seeking to secure their support for the merger. Burke contends with some inconsistency that, during this solicitation of support, Bevona orally promised him that he would have a job with Local 32B "for as long as you live", "for as long as you want, until you retire", "until I retire", and that Sweeney orally indicated that he stood behind Bevona's commitment. The merger was effected in March 1982, and Burke was employed as a business agent by Local 32B until August 17, 1983, when he was discharged following a confrontation with Bevona. On February 21, 1985 this suit was instituted against Bevona and Sweeney under the following caption:

for the Eastern District of New York in favor of William H. Burke. The judgment followed two jury trials before Judge Restani of the Court of International Trade, sitting by designation. Burke cross-appeals from orders of Judge Restani which preceded and followed the jury verdict on the first trial and also seeks reversal of a pre-trial, partial summary judgment order of then District Judge Platt.

WILLIAM H. BURKE,

Plaintiff

--against--

GUS BEVONA, Individually, as President of Local 32B-32J Service Employees International Union, AFL-CIO, as Vice President of the Service Employees International Union, AFL-CIO, and as Trustee of the Local 307 Pension Trust Fund; and JOHN J. SWEENEY, individually, as President of the Service Employees International Union, AFL-CIO, and as Trustee of the Service Employees International Union AFL-CIO, Affiliates Officers and Employees Pension Plan,

Defendants.

In his "First Claim", Burke accused Bevona and Sweeney of fraudulent misrepresentations. His "Second Claim" was for breach of an alleged employment contract. His "Third Claim" and "Fourth Claim" alleged breach of fiduciary and statutory duties arising out of a delay in remitting the proceeds of two annuity insurance policies. The "Fifth Claim" alleged that defendants' conduct constituted a prima facie tort; this Claim is not pressed on appeal.

On November 4, 1985 Judge Platt granted partial summary judgment dismissing all of Burke's Claims except the First. Although Judge Platt's order did not so state, it is undisputed that he dismissed the Second Claim because he believed that the alleged contract of employment did not satisfy the requirements of New York's statute of frauds. ¹ Shortly thereafter, a divided panel of this Court handed down its decision in Ohanian v. Avis Rent A Car System, Inc., 779 F.2d 101 (2d Cir.1985), which dealt specifically with the New York statute. Despite Judge Platt's expressed disagreement with Ohanian, a feeling shared by Judge Restani, Judge Platt held that Ohanian required reinstatement of the Second Claim. The case then went to trial before Judge Restani.

Judge Restani dismissed the breach of contract claim against Sweeney and Service Employees International during the trial. Thereafter, because of inadvertent error on the part of both court and counsel, the case was submitted to the jury as if Bevona and Sweeney were being sued personally and not as officers of their respective unions. The jury found both defendants liable on the fraud claim and Bevona alone liable on the breach of contract claim. Burke was awarded $684,005 in compensatory damages and $1 million in punitive damages. Judge Restani upheld the finding of contract For the reasons hereafter assigned, we affirm those portions of Judge Platt's order and revised order which denied defendants' motion to dismiss the First and Second Claims. We reverse that portion which granted defendants' motion to dismiss the Third and Fourth Claims. We affirm that portion of Judge Restani's order which vacated the first jury award for fraud and punitive damages and dismissed that part of plaintiff's action. We also affirm that portion of the order which vacated the breach-of-contract damage award on the first trial but vacate that part which ordered a retrial on the issue of damages alone. We vacate the jury's award in the second trial and remand to the district court for further proceedings relative to plaintiff's Second, Third and Fourth Claims consistent with this opinion.

liability but granted judgment N.O.V. on the fraud claim, because, she said, Burke had failed to prove fraudulent intent. She also held that the proof did not warrant an award of punitive damages and that a new trial should be had against Bevona alone, limited to the issue of breach-of-contract damages. Judge Restani subsequently ordered that the award in the second trial would be against Bevona, as President of Local 32B. The second trial resulted in a jury award of $386,000 plus interest, and a judgment in the amount of $420,904.54.

THE CONTRACT CLAIM

In Ohanian v. Avis Rent A Car System, Inc., supra, 779 F.2d 101, the panel majority stated in dictum that the statute of frauds is an "anachronism today" and that the "reasons that prompted its passage no longer exist." Id. at 106. ² We do not believe this dictum correctly states the thinking of the Legislature of the State of New York. New York's comprehensive statute of frauds is section 5-701 of New York's General Obligations Law. This statute, which basically is a combination of several prior scattered statutes, was enacted in 1963 upon the recommendation of the New York Law Revision Commission, an organization whose legal acumen in the field of statutory reform is well recognized. The New York courts do not treat section 5-701 as an anachronism. ³ Moreover, although That statute is an amazing product. In it de Leon might have found his secret of perpetual youth. After two centuries and a half the statute stands, in essence better adapted to our needs than when it first was passed.

the Ohanian panel majority was not the first to describe the statute of frauds as an anachronism, that reaction to the statute is not universal. See, e.g., former Professor Llewellyn's article entitled What Price Contract?--An Essay in Perspective, 40 Yale L.J. 704 (1931), in which, referring to the statute of frauds, he said:

Id. at 747.

The instant case is an excellent illustration of the need for a statute of frauds. The scenario, as created by Burke's attorney, pitted an allegedly weak but honest plaintiff against an allegedly powerful and unscrupulous union. So intent was the attorney in following this script that he told the jury in summation:

Back in 1982, things weren't great for Unions in general. You take a look at who the Labor Union leaders are so often in this Country, and perhaps you know why.

Since we are reversing on other grounds, we need not decide whether the trial judge's instructions which followed defense attorney's objection cured what otherwise might have been reversible error. We mention the incident only to illustrate the tenor of plaintiff's arguments and proof.

The principal complaints concerning the statute of frauds are directed not so much to its existence, as to the inconsistencies in its interpretation. For example, as a general proposition, a contract expressly made terminable upon the death of one of the parties may not fall within the strictures of section 5-701(a)(1) of the General Obligations Law, since the death conceivably might occur within one year. See Kent v. Kent, 62 N.Y. 560, 564 (1875); Suslak v. I. Rokeach & Sons, Inc., 269 A.D. 779, 780, 55 N.Y.S.2d 78 (1945), aff'd, 295 N.Y. 799, 66 N.E.2d 581 (1946); Harvey v. J.P. Morgan & Co., 166 Misc. 455, 462, 2 N.Y.S.2d 520 (1937). However, New York courts do not look kindly upon oral contracts for lifetime employment. "The kind of servitude envisaged by such lifetime employment ... is not alone abhorrent to law and a claim thereon wholly barred, but it enjoys in addition universal condemnation upon every standard of behavior." Supplee v. Hallanan, 14 Misc.2d 658, 659, 179 N.Y.S.2d 725 (1958), aff'd mem., 8 A.D.2d 708, 185 N.Y.S.2d 747 (1959); see Savodnik v. Korvettes, Inc., 488 F.Supp. 822, 824 (E.D.N.Y.1980).

In the instant case, no one questioned Bevona's right to hire and fire. However, there is a substantial question, whether Bevona had the right to make a binding oral contract for lifetime employment. ⁴ In Heaman v. E.N. Rowell Co., 261 N.Y. 229, 231, 185 N.E. 83 (1933), Chief Judge Pound, writing for the New York Court of Appeals, said:

Alleged contracts of life employment are, however, so unusual as to have been, with rare exceptions, condemned by the courts as unreasonable and unauthorized. The president or other executive officer of a corporation has no authority as such to make a contract that one should remain in the corporate employ for life even under a general power "to...