Harriman v. UNITED DOMINION INDUSTRIES

• Decision Date: 02 February 2005
• Docket Number: No. 23142, No. 23143.
• Citation: 693 N.W.2d 44,2005 SD 18
• Parties: John Carl HARRIMAN a/k/a Jack Harriman, Plaintiff and Appellant, v. UNITED DOMINION INDUSTRIES, INC.; United Dominion Industries, Limited; United Dominion Holdings, Inc.; Feterl Mfg. Co.; Core Industries, Inc. and SPX, Defendants and Appellees.
• Court: South Dakota Supreme Court

693 N.W.2d 44

2005 SD 18

John Carl HARRIMAN a/k/a Jack Harriman, Plaintiff and Appellant, v. UNITED DOMINION INDUSTRIES, INC.; United Dominion Industries, Limited; United Dominion Holdings, Inc.; Feterl Mfg. Co.; Core Industries, Inc. and SPX, Defendants and Appellees.

Nos. 23142, 23143.

Supreme Court of South Dakota.

Considered on Briefs November 15, 2004.

Decided February 2, 2005.

Rehearing Denied March 8, 2005.

Michael E. Unke, Salem, South Dakota, Attorney for plaintiff and appellant.

Michael L. Luce, Cheryle Wiedmeier Gering of Davenport, Evans, Hurwitz and Smith, Sioux Falls, South Dakota, Attorneys for defendants and appellees.

GILBERTSON, Chief Justice.

[¶ 1.] John Carl Harriman entered into an oral agreement to sell service bodies for Feterl Manufacturing. The duration of the contract was never discussed by the parties. United Dominion Industries, Inc. (UDI) purchased Feterl Manufacturing and sought to reduce Harriman's commission structure. Dissatisfied with UDI's final commission proposal, Harriman resigned and brought suit alleging a joint venture between the parties, the wrongful termination of a permanent employment contract, fraud and deceit. At a jury trial on the matter, Harriman prevailed on his claim of wrongful termination of a permanent employment contract and was awarded past and future damages. The verdict was reversed on UDI's motion for judgment notwithstanding the verdict. The trial court held the agreement between Harriman and Feterl Manufacturing was within the statute of frauds, and Harriman's claim failed for lack of a writing containing essential terms and signed by Feterl Manufacturing. Affirmed.

FACTS AND PROCEDURE

[¶ 2.] In 1988, John Carl Harriman (Harriman) began negotiating with United Dominion Industries, Inc.'s (UDI) predecessor, Feterl Manufacturing Company (Feterl Manufacturing), to produce and sell a line of service bodies.¹ Harriman proposed Feterl Manufacturing would manufacture the service bodies based on detailed line drawings, plans and photos of two models provided by Harriman. Harriman would be responsible for product development and all sales, and would be compensated on a commission basis. After several meetings, Feterl Manufacturing and Harriman entered into an oral agreement on August 10, 1988 and at that time Harriman filled out an employment application.

[¶ 3.] The terms of the agreement between Harriman and Feterl Manufacturing were never fully developed or reduced to writing. The oral agreement called for Harriman to be paid commissions on the difference between the price each unit was sold for and the net sales price.² Harriman began work on August 22, 1988. From August 22, 1988, until 1997, Harriman was the sales representative for service bodies. He also contributed ideas and expertise in designing several new service body models. He also participated in Feterl Manufacturing's health, dental and retirement plans, and was listed as an employee for Internal Revenue Service purposes.

[¶ 4.] The duration of the employment agreement was never discussed by the parties. Several documents in Feterl Manufacturing's possession, including W-2 statements and accounting department records, detailed some of the terms of the agreement including how the commission rate was structured. However, none of the documents contained any reference to the duration of the employment agreement.

[¶ 5.] In July of 1997 a series of corporate changes began in which Feterl Manufacturing was sold first to UDI, then a merger between UDI and SPX was executed, and finally the company was acquired by Feterl Acquisition Corporation n/k/a Feterl Manufacturing Corporation. At each successive sale, Harriman's commission structure was altered. The final alteration of the commission structure occurred in December 1999, and resulted in Harriman resigning from Feterl Manufacturing in February 2000.

[¶ 6.] On February 18, 2000, Harriman filed suit against UDI.³ In his complaint, Harriman alleged a joint venture between the parties, the wrongful termination of a permanent employment contract, fraud and deceit. In its answer UDI contended Harriman was an employee-at-will subject to discharge at any time, and that Harriman's claim was barred by the statute of frauds.

[¶ 7.] On May 21, 2001, UDI moved for summary judgment based on Harriman's status as an employee-at-will who was terminable at any time, and that the statute of frauds barred recovery. UDI's motion was denied by the trial court. It its opinion letter, the court noted that the denial was necessary as factual disputes relating to whether or not the employment agreement fell under the statute of frauds needed to be fully developed and determined at trial.

[¶ 8.] Harriman moved for summary judgment on the issues of (1) whether there was an initial contract between Feterl Manufacturing and Harriman separate and apart from any employer/employee relationship and (2) fraud and breach of contract. The trial court, the Honorable Boyd L. McMurchie presiding, granted the motion for summary judgment on the issue of the separate contract. Judge McMurchie denied the motion as to the claim of fraud and breach of contract.

[¶ 9.] Trial on the matter commenced August 18, 2003, before the Honorable David R. Gienapp. The trial court instructed the jury that Harriman had to prove that the contract entered into by the parties was either an agreement to enter into a permanent employment contract, or an agreement to enter into a joint venture. To prove a joint venture, the trial court instructed the jury that Harriman had to establish all six of the following:

The Plaintiff has the burden of proving each of the elements of a joint venture which are:

1) an intent to enter into a joint venture,

2) an agreement, express or implied, among members of a group,

3) a common purpose to be carried out by the group,

4) a joint pecuniary interest in that purpose,

5) an equal right to a voice in the direction and control of the group, and

6) a right to share in the profit and a duty to share in the losses.

If the Plaintiff fails to prove one or more of these elements, your verdict must be for the Defendants on the joint venture claim.

On the issue of a joint venture, the jury found five of the six elements were present, but not the fifth element of "an equal right to a voice in the direction and control of the group." Therefore the jury found no joint venture existed. The jury returned a verdict for Harriman against UDI on the issue of breach of a permanent employment contract, and awarded past damages of $586,359.43 and future damages of $121,240. UDI moved for directed verdict, which was denied.

[¶ 10.] UDI filed a motion for judgment notwithstanding the verdict (j.n.o.v.) contending the contract claim was barred by the statute of frauds. In its memorandum opinion, the trial court noted the issue was raised by UDI's pre-trial motion for summary judgment, but genuine issues of material fact were in dispute prior to trial that required denying UDI's motion at that time. The trial court noted that there was no dispute between the parties that the original agreement between Harriman and Feterl Manufacturing was to enter into an oral contract. The trial court determined there was insufficient evidence presented at trial to support the jury's verdict that the contract was for lifetime or permanent employment. Instead, the evidence indicated the contract was tied to other contingencies that extended the period of the contract beyond one year. The trial court concluded that the contract fell within the statute of frauds. Due to the absence of a writing signed by UDI or its predecessors denoting the duration of the contract, Harriman's claim was barred by the statute of frauds. UDI's motion for j.n.o.v. was granted.

[¶ 11.] Harriman appealed two issues:

1. Whether the trial court erred when it granted UDI's motion for judgment notwithstanding the verdict on UDI's assertion that the statute of frauds, SDCL 53-8-2(1), bars Harriman's contract claim.

2. Whether the trial court erred when it instructed the jury that all six elements of a joint venture must exist in order for Harriman to prevail on that issue.

By notice of review, UDI appealed the following:

3. Whether UDI was the employer of Harriman;

4. Whether Harriman was an employee-at-will;

5. Whether Harriman is estopped from claiming he was an employee; and

6. Whether Harriman proved all of the elements of a contract.

STANDARD OF REVIEW

[¶ 12.] This Court's standard of review on motion for judgment notwithstanding the verdict (j.n.o.v.) is well settled. Bridge v. Karl's Inc., 538 N.W.2d 521, 523 (S.D.1995) (citation omitted). "We review the testimony and evidence in a light most favorable to the verdict or the nonmoving party, `then without weighing the evidence [we] must decide if there is evidence which would have supported or did support a verdict [.] '" Gilkyson v. Wheelchair Exp., Inc., 1998 SD 45, ¶ 7, 579 N.W.2d 1, 3 (citing Bland v. Davison County, 1997 SD 92, ¶ 26, 566 N.W.2d 452, 460 (quoting Sabag v. Continental, 374 N.W.2d 349, 355 (S.D.1985))). We review the trial court's ruling on j.n.o.v. by the abuse of discretion standard. Id. (citation omitted). "The trial court's decisions and rulings on such motions are presumed correct and this Court will not seek reasons to reverse." Veeder v. Kennedy, 1999 SD 23, ¶ 25, 589 N.W.2d 610, 617 (quoting Border States Paving, Inc., v. S.D. Dep't of Transp., 1998 SD 21, ¶ 10, 574 N.W.2d 898, 901) (citations omitted).

[¶ 13.] "We review jury instructions as a whole, and error is not reversible unless prejudicial." Burhenn v. Dennis Supply Co., 2004 SD 91, ¶ 11, 685 N.W.2d 778, 782 (citing Buxcel v. First Fidelity Bank, 1999 SD 126, ¶ 13, 601 N.W.2d 593, 596). The party contending error has the burden of demonstrating the instruction given was in error and that the error was prejudicial. Knudson v. Hess, 1996 SD 137, ¶ 6, 556 N.W.2d 73, 75 (citing ...