King v. Driscoll

• Court: United States State Supreme Judicial Court of Massachusetts
• Writing for the Court: Before WILKINS; O'CONNOR
• Citation: 673 N.E.2d 859,424 Mass. 1
• Decision Date: 12 December 1996
• Parties: , 12 IER Cases 660 William F. KING v. Robert F. DRISCOLL & others. 1

Page 859

673 N.E.2d 859 424 Mass. 1, 12 IER Cases 660 William F. KING
v.
Robert F. DRISCOLL & others. ¹ Supreme Judicial Court of Massachusetts,
Middlesex. Argued Dec. 6, 1995.
Decided Dec. 12, 1996.

[424 Mass. 2] Morris M. Goldings (John F. Aylmer, Jr., with him), Boston, for plaintiff.

Richard L. Neumeier, Boston, for Robert F. Driscoll & others.

Before WILKINS, C.J., and O'CONNOR, GREANEY and FRIED, JJ.

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O'CONNOR, Justice.

This case is here on appeal for the second time. See King v. Driscoll, 418 Mass. 576, 638 N.E.2d 488 (1994) (King I ). King's complaint contains four counts. Count I is directed solely at the defendant F.S. Payne Co. (Payne) and sets forth two theories of liability. King alleges that he, as employee, and Payne, as employer, were parties to a terminable at-will employment contract. One theory is that the contract as a matter of law included a covenant of good faith and fair dealing which Payne breached by terminating King's employment. The other theory is that Payne's termination of King's employment violated public policy and for that reason King is entitled to damages from Payne. In count II, King claims that the defendants Robert F. Driscoll and Albert Marchant, as well as two other individuals who are not parties to this appeal, intentionally interfered with King's employment contract, thereby making them liable to him. Count III states that Driscoll, Marchant, and a third person who is not a party to this appeal, violated the duty of utmost good faith and loyalty they owed to King as their fellow shareholder in a close corporation. Finally, King alleges in count IV that Payne is liable to him because the corporation discharged him in violation of its by-laws.

The case was tried jury waived in the Superior Court. A full statement of facts may be found in King I, supra at 577-580, 638 N.E.2d 488. We recite those of the judge's findings that are most relevant to the issues presented by this appeal. At all relevant times Payne was a closely held Massachusetts corporation. Payne's upper-level management positions were occupied by individuals who owned relatively large amounts of stock in that corporation until August, 1990, when all Payne's stock was sold to Northern Elevator of Toronto. Beginning in 1954, Payne employees who purchased Payne stock were required to enter into a "buy-back" agreement that allowed Payne to repurchase the stock of such an employee at the end of his or her employment. King's employment with Payne began in [424 Mass. 3] 1958 and continued until his termination in November, 1987, at which time he was vice-president of the manufacturing division. King was a Payne shareholder when his employment was terminated. His employment was terminated because of his participation in a derivative shareholder suit.

The judge concluded that King was entitled to recover from Payne on count I on the two theories expressed therein, breach of the covenant of good faith and fair dealing and violation of public policy. With respect to count II, the judge found Driscoll and another defendant, Michael Martin, who is not involved in this appeal, liable for intentional interference with King's contract of employment. The judge concluded as to count III that Driscoll and Marchant violated the duty of utmost good faith and loyalty they owed to King as their fellow shareholder in a close corporation and thus were liable to him. The judge determined that King was not entitled to recovery under count IV.

The judge concluded that King was "entitled to both contract and tort damages under count I of the complaint against Payne; tort damages under count II which claims interference with a contractual relationship by Driscoll, Marchant and Martin; and tort and contract damages under count III which claims damages for breach of the implied covenant of good faith and [loyalty] against Driscoll and Marchant." Pursuant to the judge's order, a final judgment entered "[a]s to Counts I, II and III of the complaint ... in behalf of the plaintiff William F. King against the defendants F.S. Payne Co., Robert F. Driscoll, Albert Marchant and Michael Martin, jointly and severally." The final judgment set forth in detail the items taken into account by the judge in assessing damages, including the specific amount of money assigned to each item. The items included back pay, the monetary value of a company automobile perquisite, fringe benefits, the lost benefit of a company retirement plan, and King's loss of stock profits that he would have realized from the sale of Payne stock to Northern Elevator of Toronto in August, 1990. The total assessment of damages against Payne, Driscoll, Marchant, and Martin "jointly and severally" as to counts I, II, and III was $528,800.89 plus interest and, in addition, attorney's fees and costs in the sum

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of $133,485.81. The judge also assessed damages against Driscoll alone as to counts II and III in the sum of $23,516.64 plus interest. The [424 Mass. 4] judge found that Driscoll had realized a benefit of that amount from his wrongdoing. Additional damages in the sum of $2,936.28 were assessed against Martin under count II for the same reason.

The defendants appealed, as did King with respect to the judge's decision adverse to him on count IV. We dealt with those appeals in King I, supra. We held that the judge had erred in finding for King on count I based on King's violation of public policy theory. Id. at 581-585, 638 N.E.2d 488. With respect to King's other theory asserted in count I, however, the claim of breach of the covenant of good faith and fair dealing implied in terminable at-will employment contracts, we said, "The judge's conclusions on each part of count I ... were independent of each other. The defendants thoroughly argued on appeal their position as to the first part of count I, the public policy exception, but they did not argue the second part, the breach of the covenant described in Fortune [v. National Cash Register Co., 373 Mass. 96, 101, 364 N.E.2d 1251 (1977) ]. Thus, the issue of the breach of the covenant of good faith and fair dealing is not before us. Mass.R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975). Our conclusion regarding the first part of count I does not affect the judge's finding on the second part.... On remand, the judge should recalculate damages, if any, attributable to the breach of the...