Kravetz v. Merchants Distributors, Inc.

• Citation: 440 N.E.2d 1278,387 Mass. 457
• Parties: Irene S. KRAVETZ, executrix, 1 v. MERCHANTS DISTRIBUTORS, INC.
• Decision Date: 07 October 1982
• Court: United States State Supreme Judicial Court of Massachusetts

Page 1278

440 N.E.2d 1278

387 Mass. 457

Irene S. KRAVETZ, executrix, ¹ v. MERCHANTS DISTRIBUTORS, INC.

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued Feb. 5, 1982.

Decided Oct. 7, 1982.

Jeffrey S. Stern, Boston (Tina M. Traficanti, Boston, with him), for defendant.

Camille F. Sarrouf, Boston (John B. Flemming, Boston, with him), for plaintiff.

Before HENNESSEY, C.J., and WILKINS, ABRAMS, NOLAN and O'CONNOR, JJ.

O'CONNOR, Justice.

A Superior Court jury returned a verdict for the plaintiff's decedent, Herman Kravetz, in the amount of $82,812 on a count in his complaint alleging breach of an employment agreement. The defendant, Merchants Distributors, Inc. (Merchants), appeals, arguing that the judge erred in denying its motions for a directed verdict and for judgment notwithstanding the verdict. The defendant also claims error with respect to certain evidentiary rulings and jury instructions. We hold that the judge properly denied the motions for a directed verdict and for judgment notwithstanding the verdict, but that certain of the jury instructions were erroneous, requiring a new trial. We do not reach the evidentiary issues.

We summarize the facts the jury could have found. From 1947 until 1973 Herman Kravetz owned and operated Tanner City Tire Inc. (Tanner), in Peabody. In 1973, he negotiated with Max Katz, Merchants' founder and chairman, the sale of Tanner to Merchants. At that time Merchants owned and operated a wholesale and retail tire business, with the main store located in Boston and several branch stores located in the surrounding area.

In August, 1973, Tanner, Merchants, and Kravetz executed an agreement providing the terms of the sale, including an allocation of the purchase price to specified items, and providing for Kravetz's employment by Merchants as branch manager. Paragraph 7, entitled "Employment Contract," and paragraph 8, entitled "Covenant Not to Compete," are set out in the margin. ² Kravetz worked as the manager of the Peabody branch from September 1, 1973, to November 21, 1974, when Katz wrote Kravetz a letter advising him that, based on his performance as manager, he did not meet Merchants' requirements. The letter informed Kravetz that Merchants was "re-defining" his work assignments in order to match his ability to its requirements. He was assigned to a position in the warehouse with responsibility for all warehouse activities. The change in his responsibilities, the letter continued, would not affect his "pre-arranged earnings." On November 22, 1974, Kravetz rejected the reassignment and resigned. He brought this action in August, 1975.

1. Motion for Directed Verdict and Judgment Notwithstanding the Verdict.

Merchants' motions for a directed verdict and for judgment notwithstanding the verdict on the count alleging breach of the employment contract stated as grounds that "the contract of employment was terminable at will, as a matter of law, and (as a separate basis) the undisputed evidence is that the plaintiff voluntarily resigned." See Mass.R.Civ.P. 50(a), (b), 365 Mass. 814 (1974). We consider these grounds separately.

A. The first stated ground was that the contract of employment was terminable at will as a matter of law. We conclude that the jury would have been warranted in finding that the contract of employment was for a definite period of time. Therefore, the motions on this ground were properly denied.

"Whether there is a contract for services for a definite period of time ... depends upon all the attendant conditions surrounding the agreement, as well as upon its terms, when the latter are not specific and clear." Maynard v. Royal Worcester Corset Co., 200 Mass. 1, 4, 85 N.E. 877 (1908). The terms of the agreement here with respect to duration of employment are neither specific nor clear. Therefore, it was proper for the jury to refer not only to the contract language but also to the attendant circumstances, including "the nature of the employment, ... the prior negotiation, [and] the situation of the parties." Mahoney v. Hildreth & Rogers Co., 332 Mass. 496, 498, 125 N.E.2d 788 (1955). Reference in the contract to salary payable at a yearly rate, with distinct provisions concerning salary, commissions, profit sharing and bonuses and a provision for noncompetition for five years, set in the context of the sale of a business that Kravetz had managed for twenty-six years, would support a jury finding that the contract provided for employment for a definite time. Id. at 498-499, 125 N.E.2d 788. Maynard v. Royal Worcester Corset Co., supra 200 Mass. at 4-5, 85 N.E. 877.

Even if this contract were terminable at will, it impliedly contained a covenant of good faith and fair dealing. Maddaloni v. Western Mass. Bus Lines, Inc., 386 Mass. 877, 438 N.E.2d 351 (1982). Gram v. Liberty Mut. Ins. Co., --- Mass. ---, Mass.Adv.Sh. (1981) 2287, 429 N.E.2d 21. Fortune v. National Cash Register Co., 373 Mass. 96, 364 N.E.2d 1251 (1977). Neither motion stated as a ground, as required by Mass.R.Civ.P. 50(a), that there was no evidence of breach of such a covenant. The requirement that a party state each ground relied on is important, and failure to do so was a sufficient reason not to allow the motions. D'Annolfo v. Stoneham Hous. Auth., 375 Mass. 650, 655 n. 5, 378 N.E.2d 971 (1978). Moy v. Jack Madden Ford Sales, Inc., 4 Mass.App. 102, 107-108, 342 N.E.2d 718 (1976).

B. The second ground stated by the defendant was that "the undisputed evidence is that the plaintiff voluntarily resigned." We treat this as an assertion that the evidence would not have warranted a finding that Merchants discharged Kravetz.

The contract provided that Kravetz was to serve as branch manager of Merchants' Peabody store. There was evidence that the branch manager was responsible for directing and assisting the salesmen assigned to the branch and for directing the service department through the service manager. In performing these duties, a branch manager was required to acquaint himself with the major accounts, to initiate new account programs, to review account activity, to verify that all necessary paperwork was completed for new accounts, to supervise collections, and to approve price concessions. There also was evidence that in his "re-defined" role, managing the warehouse, Kravetz would not have had these responsibilities but would have been responsible for keeping inventory records, maintaining "sufficient product" to meet the branch requirements, and for all other warehouse activity, including receiving and shipping, processing of adjustments, maintaining an orderly warehouse area inside and outside the premises, and general housekeeping. There is nothing in the contract that indicates that the parties contemplated a change in the rank or nature of Kravetz's position as a branch manager.

As stated above, the jury would have been warranted in finding a contract of employment for a period of years. The jury would also have been warranted in finding that assignment of Kravetz to the warehouse constituted such a reduction of rank or material change in duties from those called for by the contract that the contract was violated even though there was no reduction in pay or benefits. Miller v. Winshall, 9 Mass.App. 312, --- - ---, Mass.App.Ct.Adv.Sh. (1980) 407, 412-413, 400 N.E.2d 1306. See Annot., 63 A.L.R.3d 539 (1975). The judge correctly denied Merchants' motions for a directed verdict and for judgment notwithstanding the verdict.

2. Jury Instructions.

Although the jury would have been warranted in finding that the contract provided for employment for a period of years, they also would have been warranted in finding that the contract of employment was terminable at will. A covenant of good faith and fair dealing on the part of the employer is implied in such a contract. The burden of proving bad faith or unfair dealing rests with the employee. See Maddaloni, supra 386 Mass. at...