Byrd v. Bentley

• Decision Date: 23 August 2002
• Citation: 850 So.2d 232
• Parties: Wood BYRD, and Bacadam, Inc. v. Mark BENTLEY.
• Court: Alabama Supreme Court

850 So.2d 232

Wood BYRD, and Bacadam, Inc. v. Mark BENTLEY.

1010528.

Supreme Court of Alabama.

August 23, 2002.

Rehearing Denied November 8, 2002.

Robert Hayes of Hayes & Swinford, Birmingham; and Sterling L. DeRamus, Birmingham, for appellants.

Charles A. Dauphin of Baxley, Dillard, Dauphin & McKnight, Birmingham, for appellee.

HARWOOD, Justice.

Wood Byrd, and Bacadam, Inc. (hereinafter jointly referred to as "the defendants"), appeal from the trial court's judgment on a $1,350,000 jury verdict in favor of Mark Bentley. We affirm.

On March 9, 1999, Bentley sued the defendants seeking to recover damages on claims of fraud and breach of contract. Bentley, who had been employed as manager of Bacadam, which was owned by Byrd, alleged that an oral contract of employment existed between him and the defendants in which he was to receive an 8 percent commission from his sales¹ and a 30 percent ownership interest in Bacadam in the event that he met certain goals in increasing Bacadam's business. He also asserted that the parties had agreed that, in order to expand Bacadam's business, he would receive a 50 percent ownership interest in any company he located for Bacadam to purchase, and that he had arranged for the purchase by Bacadam of another company, Reach Advertising. Bentley further alleged that Byrd sold all the assets of Bacadam and purchased Reach Advertising, but that Bentley never received an ownership interest in Bacadam or Reach Advertising.

On December 30, 1999, the defendants filed an answer denying Bentley's claims and asserting counterclaims alleging breach of contract, fraud, and violations of the Alabama Trade Secrets Act, § 8-27-1 et seq., Ala.Code 1975, based upon their allegations that Bentley had not devoted his full attention to Bacadam as agreed and that he had engaged in business in competition with Bacadam. After the completion of discovery, a jury trial began on August 6, 2001. On August 7, 2001, at the close of Bentley's case-in-chief, the defendants filed a motion for a judgment as a matter of law, with a supporting memorandum. The trial court took the defendants' motion under advisement and allowed the defendants to present their case. At the close of the defendants' case, Bentley filed a motion for a judgment as a matter of law in regard to the defendants' counterclaims; the trial court granted that motion. The defendants also renewed their motion for a judgment as a matter of law, and the trial court denied it as to Bentley's breach-of-contract claim but reserved ruling on it as to Bentley's fraud claim. Following Bentley's presentation of rebuttal testimony, he voluntarily dismissed his fraud claim. Thus, the only claim presented to the jury was Bentley's breach-of-contract claim. On August 9, 2001, the jury returned the following verdict:

"We, the jury, find in favor of Plaintiff, Mark Bentley, and against the Defendants, Wood Byrd and Bacadam, Inc., and assess the Plaintiff's damages at One Million Three Hundred Fifty Thousand dollars ($1,350,000.00)."

On that same day, the trial court entered a judgment on the jury's verdict.

On September 5, 2001, the defendants renewed their motion for a judgment as a matter of law, and also filed, in the alternative, a motion for a new trial; Bentley filed a response in opposition on September 24, 2001. On September 28, 2001, the defendants filed a memorandum in support of their postjudgment motion; Bentley filed a supplemental response on October 10, 2001. On October 22, 2001, the trial court entered an order that stated, in pertinent part:

"THIS CAUSE was heard on the Defendants['] Motion for Judgment [as a matter of law] and/or Motion for New Trial. On August 9, 2001, the jury in this cause returned a verdict in favor of [Bentley] and against the Defendant[s] in the sum of One Million Three Hundred Fifty Thousand and 00/100 Dollars ($1,350,000.00). The evidence submitted by [Bentley] is that the parties entered into an agreement whereby [Bentley] would leave his job in Huntsville and manage Bacadam, Inc., which was owned by [Byrd]. The consideration for [Bentley's] employment would be a salary and in addition the transfer of a thirty (30%) percent interest in the company conditioned upon [Bentley's] meeting certain financial and growth goals. [Bentley's] evidence was that although he met those goals, the Defendant refused to transfer a thirty (30%) percent interest in the company to [Bentley] and, in fact, sold the company to another corporation for the approximate sum of Six Million Dollars ($6,000,000.00), without the knowledge or consent of [Bentley]. [Byrd] emphatically denies that he ever agreed to transfer an interest in Bacadam, Inc., to [Bentley] and further, that such an agreement for the transfer of stock would be unenforceable under the Statute of Frauds because it is undisputed that the alleged agreement was never reduced to writing. At the conclusion of [Bentley's] evidence and at [the] conclusion of all of the evidence, the Defendant[s] made an appropriate motion for a judgment as a matter of law which motion was overruled.

"Although disputed, there was sufficient evidence which, if believed by the jury, would support a judgment in the amount of the verdict. The evidence offered by [Bentley] that he fully performed his part of the agreement in that he met the financial and growth goals that would entitle him to a transfer of a thirty (30%) percent interest in Bacadam, Inc., was apparently believed by the jury and reflected in its verdict. [Bentley's] full performance of the oral agreement with the Defendant[s] took the contract out of the Statute of Frauds and was, accordingly, enforceable. Ingram v. Omelet Shoppe, Inc., 388 So.2d 190 (Ala.1980). The Defendant[s] also argue that an employment contract which was not reduced to writing is unenforceable and further, that the alleged contract was a sale of securities which was also unenforceable as being in violation of the Statute of Frauds. The Court has not been directed to an Alabama case specifically on this point[;] however, other jurisdictions have addressed similar issues. In Hiller v. Franklin Mint, Inc., 485 F.2d 48 [(3d Cir.1973)], the [United States Court of Appeals for the Third Circuit] held that the transfers of securities pursuant to an employment contract did not constitute `sales of securities' within the purview of the Pennsylvania Statute of Frauds dealing with the sale of securities. The Supreme Court of Pennsylvania held, in a case factually similar to the instant case, that an oral contract for an employee to quit his job and work for a new employer in exchange for an annual salary plus ten (10%) percent of its stock was not a sale of securities and was enforceable. In Jones v. Cecil Sand & Gravel, Inc., 627 A.2d 60 [(1993)], the Court of Special Appeals of Maryland found that the Statute of Frauds requiring contracts for sale of securities to be in writing did not apply to oral employment contracts agreeing to exchange of stock for services. Where the only consideration for the stock was acceptance of employment, an oral contract is not prohibited by the section of the Statute of Frauds providing that a contract for sale of securities is not enforceable unless there is some writing signed by [the] party against whom enforcement is sought. Bowers Steel, Inc. v. DeBrooke, 557 S.W.2d 369 [(Tex.Civ.App.1977)]. Finally, the Court of Appeal[s] of Georgia held that the Statute of Frauds requirement that there be a writing before a contract was enforceable did not apply to an alleged arrangement under which employer was to transfer corporate stock to employee in consideration for services rendered. Thompson v. Kohl, 453 S.E.2d 485 [(1994)].

"In this case there was substantial evidence presented from which the Jury could conclude that there was an employment contract between [Bentley] and the Defendant[s] for which the consideration was the exchange or transfer of stock in Bacadam, Inc.

"Accordingly, the Defendants' Motion for Judgment [as a matter of law] and/or Motion for New Trial is OVERRULED."

On November 28, 2001, the defendants filed a notice of appeal.

The record shows that at trial, Bentley testified that the agreement between him and the defendants was that, in exchange for his increasing Bacadam's profits, he would receive a 30 percent ownership interest in the company, the value of which was to be determined as of the date he began work for Bacadam and was to be paid for by the increased profits he generated. He further testified that when he began work, Bacadam was receiving monthly revenues of $35,000-$36,000 and that Byrd set a goal for Bentley to increase that amount to $70,000 per month. Bentley stated that the $70,000 goal was reached, and in some months even surpassed.

Bentley's testimony regarding his employment agreement with the defendants was supported by the testimony of Dwight Jennings. Jennings was Bentley's former employer and an acquaintance of Byrd's. Jennings testified that Byrd had telephoned him in an effort to find someone to hire as manager of Bacadam. Jennings recommended Bentley and arranged a meeting between them, but told Byrd that Bentley would most likely require an ownership interest as part of his compensation for employment. Jennings further testified as follows:

"Q. After the meeting took place, did you have a conversation with Wood Byrd—

"A. Yes.

"Q.—about how the meeting went. And if you would tell us what he said in this conversation.

"A. He was very impressed with Mark [Bentley]. He was very happy that he had had the conversation with Mark. He said that he thought they either had a deal or could work out a deal; that Mark had wanted 50 percent ownership in the company, but he thought that they could work it out somewhere in the range of 30 percent; that he was going to pay Mark a salary; if Mark got the job done, he would pay him a bonus, and that bonus would go towards helping him buy some

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