Lindsey v. Jewels by Park Lane Inc.

• Citation: 205 F.3d 1087
• Decision Date: 16 December 1999
• Docket Number: No. 99-2398,99-2398
• Parties: (8th Cir. 2000) HERB LINDSEY; RITA LINDSEY, APPELLANTS, v. JEWELS BY PARK LANE, INC., APPELLEE. Submitted:
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 1087

205 F.3d 1087 (8th Cir. 2000)

HERB LINDSEY; RITA LINDSEY, APPELLANTS, v. JEWELS BY PARK LANE, INC., APPELLEE.

No. 99-2398

United States Court of Appeals for the Eighth Circuit

Submitted: December 16, 1999

Decided: March 08, 2000

Appeal from the United States District Court for the Western District of Missouri.

Before Beam, Heaney, Hansen, Circuit Judges.

Heaney, Circuit Judge.

Herb and Rita Lindsey (the Lindseys) brought suit against Jewels by Park Lane, Inc. (Park Lane) in the district court, claiming that Park Lane breached its oral contract to indemnify them against liability and pay their attorneys fees in an unrelated suit. In the alternative, the Lindseys claimed Park Lane fraudulently misrepresented that it would indemnify them and pay their attorney's fees. The district court, on Park Lane's motion, granted summary judgment with respect to the contract claim. On its own motion, the district court granted summary judgment on the fraudulent misrepresentation claim. The Lindseys appeal both rulings. We reverse the district court and remand for proceedings consistent with this opinion.

I.

We recite the facts in the light most favorable to the Lindseys. Defendant Park Lane sells jewelry through independent contractors who host sale parties offering Park Lane's wares. Under Park Lane's compensation scheme, these independent contractors receive a commission on sales of Park Lane products. Additionally, an independent contractor could recruit others to become part of their sales team, and would receive a cut of their team members' commissions.

The Lindseys were involved in a similar program with Park Lane's primary competitor, Princess House, Inc. (Princess House). Princess House and Park Lane had previously entered into a consent decree regulating Park Lane's method of recruiting independent contractors. After over fifteen years of service for Princess House, the Lindseys decided to affiliate with Park Lane in 1990, bringing members of their sales team with them. Princess House subsequently brought suit against Park Lane and the Lindseys, alleging violations of the consent decree.

After receiving word of the lawsuit, the Lindseys contacted Park Lane by telephone. Along with the Lindseys, the following individuals were present on the line: Arthur Levin, president of Park Lane; Shirley and Scott Levin, both officers of Park Lane; and Jon Leader and Ed Woods, attorneys with Browne & Woods, the law firm representing Park Lane. The Lindseys expressed their concern about the lawsuit, particularly about paying for the suit. Herb Lindsey spoke with Scott Levin, who told him not worry about the lawsuit. According to Herb Lindsey, when pressed further, Levin stated:

Well, you don't have to worry about anything. You're a member of the Park Lane family.

. . . . .

We're going to defend you, whether it costs $7,000 or a million and seven thousand dollars. It's just a harassment suit.

. . . . .

We'll indemnify you; we even might file a counterclaim for you.

(Herb Lindsey Dep. of June 1, 1998, Vol. I at 118 (internal quotations omitted).)

Herb Lindsey further testified that Scott Levin told him that the Lindseys "would need to help prove that he did nothing wrong and so we were going to have to help each other in the times to come and they were going to pay our expenses." (Id. at 121.)

At some point during this telephone meeting, Herb Lindsey handed the telephone to Rita Lindsey. Shirley Levin assured her that the Lindseys were a part of the Park Lane family, and that their expenses would be paid for by Park Lane. Shirley Levin also echoed Scott Levin's sentiments about possibly filing a counterclaim on behalf of the Lindseys. Further, according to Rita Lindsey, Shirley Levin "indicated to me on early calls that she needed my help in regard to their lawsuit. That was the agreement, that I would help her out and she would help me out." (Rita Lindsey Dep. of Aug. 4, 1998, at 162.)

Both of the attorneys present at the initial telephone conference provided deposition testimony. Ed Woods, a partner with the firm Browne & Woods, was involved in representing both the Lindseys and Park Lane in their suits with Princess House. According to Woods' recollection, Arthur Levin had on several occasions told the Lindseys that their litigation expenses would be paid for by Park Lane. In his past experience with Park Lane, this would include attorneys fees and any judgment entered against the Lindseys. Woods further testified:

Well, I do recall language in which Don and Art [Levin] said - but primarily Art said, "We'll take care of everything. Don't worry about it. We'll take care of everything. Your job is to cooperate with the attorneys," meaning, at that point, give information to Jon [Leader] and I, that we need it in order to defend the lawsuit, being the Princess House Park Lane suit, and "get your group together so that they can generate the sales that justify us paying you the money that we're agreeing to pay you."

(Ed Woods Dep. of Apr. 14, 1999, at 18-19.)

In response to further questioning about what type of assistance Park Lane expected of the Lindseys, Woods testified that

Art [Levin] and Scott [Levin] -- Shirley [Levin] to some extent -- but Art and Scott expressed to the Lindseys their desire that the Lindseys assemble information relating to all the people in their group that had come over to Park Lane that they either preinterview witnesses or make it possible for us to interview witnesses, that they continue to hold their party plan meetings and continue to generate sales, that they provide us with sign-up lists.

Everything we conceivably needed really rested with the Lindseys because we were talking that the lawsuit involved a contention of Park Lane had recruited the Lindseys and the Lindseys' group in a manner that was allegedly violative of the consent decree.

. . . . .

And Park Lane made it clear that they expected the Lindseys to do that. Park Lane didn't have the relationship with the Lindseys' people that would have permitted Park Lane to do it; so they had to rely on the Lindseys to assist us in preparing the defense.

(Id. at 27-28.)

Jon Leader, an attorney in Woods' firm, testified that at the initial meeting regarding the Princess House litigation it was agreed that "Park Lane would pay the Lindseys' litigation expenses, fees and costs, and also a judgment that was entered, and also provide assistance for the Lindseys and a Cross-Complaint, if they were going to file one against Princess House." (Jon Leader Dep. of Apr. 13, 1999, at 29.) Subsequent to this meeting, the issue of attorney's fees and indemnity was often discussed, and Park Lane representatives assured that Park Lane would pay the Lindseys' expenses. Leader recalled one such conversation as follows:

[I]t was will - "We will" - I don't know that the word "indemnify" was used; although it may have been. But, "We will pay your legal expenses." "You," meaning Park Lane, "will pay the Lindseys' legal expenses. Park Lane will take care of you. We'll pay a judgment if one is rendered against you."

(Id. at 37.)

Leader testified in his deposition that he couldn't remember the precise words Park Lane used to assure the Lindseys that Park Lane would pay for the lawsuit, but that phrases used by Park Lane included "We'll pay the judgment;" "If Princess House wins, we'll take care of you;" and "You don't have to worry about it. No money will ever come out of your pocket." (Id. at 239.) He was certain that the agreement was one in which Park Lane would pay all expenses including the judgment as they became due, rather than one in which the Lindseys would have to pay the expenses themselves and be reimbursed by Park Lane.

There is evidence in the record that the Lindseys followed through on their obligation to assist in Park Lane's defense. Over an eight month period, the Lindseys collected over one hundred affidavits on behalf of Park Lane. The Lindseys also persuaded six or seven of Rita Lindsey's associates to testify on Park Lane's behalf in a Boston trial. According to Rita Lindsey, "it became, 'Go out and gather witnesses for our case; we need your help in that. Remember, we're paying for your defense.'" (Rita Lindsey Dep. of Aug. 4, 1998, at 184.)

Initially, Park Lane paid the Lindseys' attorney's fees as it had promised. In the Princess House litigation, Park Lane was found to have violated the consent decree. They subsequently stopped paying the Lindseys' litigation costs. Judgment was later entered against the Lindseys, and Park Lane refused to pay the judgment.

II.

With respect to the contract claim, the district court concluded that there was no contract created by the course of dealings between the Lindseys and Park Lane. It based its decision on two grounds: (1) that there was no mutual agreement on the contract's essential terms; and (2) even if there was an agreement the Lindseys had provided no consideration. The district court based its finding of no mutual agreement on what it considered a lack of detail in the discussions between Park Lane and the Lindseys.

In concluding that the Lindseys provided no consideration to Park Lane in exchange for Park Lane's promise to pay the judgment and attorneys fees, the district court focused on the timing of the Lindseys' promise to assist Park Lane in its suit. Upon reviewing the evidence, the court stated that "[t]here is absolutely no testimony that [Park Lane] initially told [the Lindseys] it would pay for [the Lindseys'] defense and indemnify them only if [the Lindseys] promised to do something in exchange." Lindsey v. Jewels by Park Lane, Inc., No. 97-1501-CV-W-2, at 20 (W.D. Mo. May 10, 1999) (Order Granting Summ. J.).

The court went on to hold that even if there was a binding contract as to the judgment, it was one for indemnity against loss rather than indemnity against liability. We cannot agree that summary judgment in favor of Park Lane was...