Hammond v. T.J. Litle & Co., Inc., s. 95-1690
| Decision Date | 06 December 1995 |
| Docket Number | 95-1913,Nos. 95-1690,s. 95-1690 |
| Citation | 82 F.3d 1166 |
| Parties | 20 Employee Benefits Cas. 1213 Scott P. HAMMOND, Plaintiff, Appellee, Cross-Appellant, v. T.J. LITLE & COMPANY, INC., Defendant, Appellant, Cross-Appellee. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Appeal from the United States District Court for the District of Massachusetts; Hon. Zachary Karol, U.S. Magistrate Judge.
Anthony M. Feeherry, with whom Paula M. Bagger and Goodwin, Procter & Hoar, Boston, MA, were on brief, for appellant.
Michael J. Liston with whom Glass, Seigle & Liston, Boston, MA, was on brief, for appellee.
Before CYR, Circuit Judge, BOWNES, Senior Circuit Judge, and STAHL, Circuit Judge.
This appeal arises out of a dispute over the compensation terms of an employment contract. Appellee/Cross-Appellant Scott P. Hammond ("Hammond") filed suit after he was discharged by Appellant/Cross-Appellee T.J. Litle & Company, Inc. ("the Company"), alleging that the Company had breached certain terms of his employment contract entitling him to shares of stock in the Company, and the implied covenant of good faith and fair dealing. After a bifurcated trial in which certain issues were decided by the jury and others by the magistrate judge, the Company appeals and Hammond cross-appeals. Finding no error, we affirm.
In the spring of 1986, Thomas J. Litle ("Litle") was starting up the Company and Hammond was about to graduate from the Harvard Business School. On May 4, 1986, Litle orally offered Hammond the position of Vice President of Finance and Administration, with a compensation package including a current annual cash salary of $45,000, the right to purchase a maximum of 100 shares of non-voting founders' stock in the Company at a subscription price of $1.00 per share, and deferred compensation of $10,000 per year to be converted to additional shares of stock at Hammond's option. Hammond accepted the package with the understanding that there would be further negotiation regarding both a vesting schedule for the 100 shares and the repurchase rights the Company would have with respect to vested shares upon termination of his employment.
Hammond began employment with the Company on June 9, 1986. In July of 1986, the Company's outside counsel sent Hammond, at his request, a draft Stock Restriction Agreement and a draft Repurchase Agreement. Hammond then met with Litle to discuss the draft agreements and requested a more favorable vesting schedule for his 100 shares than that reflected in the draft Repurchase Agreement. Litle agreed, approving the change with a handwritten note. According to the vesting schedule thus agreed upon, 16% of the shares would vest on March 31, 1987, 2% would vest each month from April 1, 1987 through February 28, 1990, and 14% would vest on March 31, 1990. Litle and Hammond agreed that the draft agreements were acceptable in all other respects. In August of 1986, outside counsel prepared and sent Hammond execution copies of the agreements. The Repurchase Agreement incorporated the new vesting schedule, and the Stock Restriction Agreement provided that a stockholder whose employment was terminated "for cause" was required to tender his vested shares to the Company for repurchase at fair market value.
In September of 1986, Hammond and Litle met for the purpose of executing the agreements, but Hammond unexpectedly requested a number of substantive changes. Based on his belief that the parties had completed negotiations, Litle rejected Hammond's proposed changes and the agreements were not signed.
In a letter to Hammond dated March 31, 1987, Litle took the position that agreement had not yet been reached regarding Hammond's stock participation. Hammond became upset and refused to report for work until the issue was settled. At a meeting on April 14, 1987, Litle told Hammond that he could acquire a maximum of 66 2/3 shares of stock, that 25% of the shares would vest on each anniversary of Hammond's employment date of June 9, 1986, and that before half of the shares (33 1/3) would begin to vest according to that schedule, Hammond would have to meet certain as yet undefined performance standards. Hammond became angry and refused to accept the changes. In a letter to Hammond dated April 17, 1987, Litle memorialized the same terms, chastised Hammond for his recent behavior, warned him that a recurrence would be deemed a tender of resignation that would probably be accepted, but encouraged him to attempt to redeem himself. The new terms also were confirmed in a letter from General Manager Bruce Alemian ("Alemian") to Hammond dated July 13, 1987. The evidence was in dispute regarding whether Hammond ever accepted the new terms. The Company contended that he did by reporting to work and tendering a check for $66.67. Hammond contended that he continued to insist on 100 shares, and tendered $100 but paid $66.67 because that was all Litle would accept.
At a meeting in December of 1987, Hammond again complained that he believed he was entitled to acquire 100 shares. In an effort to settle matters, Alemian gave Hammond a positive performance review and offered him the 33 1/3 performance shares if he would relinquish his claim to a full 100 shares. Hammond refused and Litle withdrew the offer of the performance shares. On January 27, 1988, Hammond was terminated.
In a Second Amended Complaint, Hammond alleged that the Company had breached that part of his employment contract entitling him to acquire shares of stock in the Company by breaching the implied covenant of good faith and fair dealing, terminating his employment because he refused to accept Litle's unilateral alteration of his contract rights, refusing to issue him the 100 shares due him under the agreement, and refusing to issue him additional shares for deferred compensation.
By agreement of the parties, the trial was bifurcated into a jury phase and a jury-waived phase. Phase I was tried to a jury in June, 1994. The issues for the jury were: (1) whether Hammond and the Company had entered into a contract entitling Hammond to acquire company stock; and (2) if so, how many shares Hammond was entitled to receive upon termination of his employment. Through answers to special questions submitted by the court, the jury found that the parties had entered into a contract and that Hammond was entitled to 48 shares.
Phase II was tried to the court in December, 1994, in order to resolve two remaining issues: (1) whether Hammond had an obligation to offer the 48 shares back to the Company for repurchase; and (2) whether the Company had an obligation to issue 5 additional shares to Hammond in lieu of deferred compensation. On June 7, 1995, the magistrate judge issued a memorandum of decision, answering both questions in the negative.
The Company appeals the jury's determination that Hammond was entitled to 48 shares, and the magistrate judge's determination that Hammond had no obligation to offer the shares back for repurchase. Hammond cross-appeals, challenging the magistrate judge's conclusion that the Company need not issue him shares in lieu of deferred compensation.
The jury, answering special questions submitted by the court, found that Hammond and the Company had entered into an agreement in May of 1986 entitling Hammond to 100 shares of the Company's stock upon his acceptance of the Company's offer of employment; that this contract was last amended in the summer of 1986; and that Hammond was entitled to 48 shares of stock as of the date his employment was terminated. 1
The Company concedes that there was evidentiary support for the jury's determination that a contract for 100 shares was formed in May of 1986 and was last modified by the vesting schedule agreed upon in the summer of 1986, but contends that there was no evidence to support the jury's finding that Hammond was entitled to 48 shares.
The court had instructed the jury that if it found (as it did) that a contract for 100 shares was formed in May of 1986 and that it was last amended in the summer of 1986, then it should determine the number of shares to which Hammond was entitled according to one of three alternatives: First, the jury could award Hammond at least 36 shares, which represented the number of shares that had vested between June of 1986 and January 31, 1988, according to the vesting schedule reflected in the execution copy of the Repurchase Agreement prepared in August of 1986. 2 Second, the jury could award Hammond 100 shares if it found that the contract contained an implied term that Hammond would have a fair opportunity to earn all 100 shares and that the Company had breached that term by firing him without cause. 3 If the jury found that there was such an implied term, but that there was cause for terminating Hammond, then he would be entitled to only 36 shares. 4 Third, the jury could award Hammond some number of shares greater than 36 if it found that he was an at-will employee who could be terminated with or without cause; that the Company terminated him "without cause or in bad faith for the purpose of preventing him from getting his shares;" and that "some additional amount of shares was intended to compensate Mr. Hammond not for further services to be performed after January 31, 1988, but for having accepted employment with the Company back in May or June of 1986 [and] foregoing other possible employment opportunities." 5
The Company contends that the jury must have based its verdict on the third alternative under the instructions since it awarded Hammond neither 36 nor 100 shares, but that there was no evidence that any number of shares was intended to compensate Hammond for accepting employment with the Company and...
To continue reading
Request your trial
-
McKeown v. Woods Hole
...of law under Rule 50(b)), cert. denied, 470 U.S. 1004, 105 S.Ct. 1358, 84 L.Ed.2d 379 (1985); see also Hammond v. T.J. Litle & Company, Inc., 82 F.3d 1166, 1172 (1st Cir. 1996); Velazquez v. Figueroa-Gomez, 996 F.2d 425, 426-427 (1st Cir.), cert. denied, 510 U.S. 993, 114 S.Ct. 553, 126 L.E......
-
Noonan v. Staples, Inc.
...relevant factor is that Staples's termination letter to Noonan told him that he was being fired for cause. See Hammond v. T.J. Litle & Co., 82 F.3d 1166, 1175 (1st Cir.1996) (applying Massachusetts law and remarking that "when an employee may only be terminated for cause, whether the employ......
-
Mass. Eye and Ear Infirmary v. Qlt Phototherap.
...the basic principle that the purpose of a Rule 50 motion to dispose of claims or issues, not legal theories. See Hammond v. T.J. Litle & Co., 82 F.3d 1166, 1172 (1st Cir.1996). This basic norm should have put QLT on notice that in conformity with the general principle, the trial court's Rul......
-
Cambridge Plating Co., Inc. v. Napco, Inc.
...(motion for j.n.o.v.); Pinkham v. Burgess, 933 F.2d 1066, 1070 (1st Cir.1991) (motion for new trial); cf. Hammond v. T.J. Litle & Co., Inc., 82 F.3d 1166, 1171 (1st Cir.1996) ("It is beyond peradventure that in order to challenge the sufficiency of the evidence on appeal, a party must first......