Lone Star Steel Co. v. Wahl

• Decision Date: 18 May 1982
• Docket Number: No. 8947,8947
• Citation: 636 S.W.2d 217
• Parties: LONE STAR STEEL COMPANY, Appellant, v. B. D. WAHL, Appellee.
• Court: Texas Court of Appeals

Page 217

636 S.W.2d 217

LONE STAR STEEL COMPANY, Appellant, v. B. D. WAHL, Appellee.

No. 8947.

Court of Appeals of Texas, Texarkana.

May 18, 1982.

Robert E. Burns, Larry Hallman, Catherine A. Gerhauser, Burford & Ryburn, Dallas, for appellant.

Michael V. Abcarian, Johnson, Bromberg, Leeds & Riggs, Michael P. Carnes, Dallas, for appellee.

HUTCHINSON, Justice.

Appellee, B. D. Wahl, brought this suit against appellant, Lone Star Steel Company, for damages alleged to have been sustained by the breach of a written employment contract, tortious termination from employment and tortious interference with prospective economic advantage. Trial was to a jury and judgment was entered awarding Wahl the total sum of $168,600.00.

Appellant, Lone Star Steel Company (hereafter Lone Star), is a manufacturer of steel pipe, primarily pipe for use by the oil industry, through various production methods. One method was tube extrusion by forcing the material under pressure out through a hole-much like toothpaste forced out of its tube.

Lone Star had acquired a new extrusion press in Germany and put it in operation in late 1975 or early 1976 and was experiencing production problems with both the quantity and quality of the pipe produced. The quality problems were problems with concentricity (producing pipe of uniform thickness) and surface defects.

Lone Star sought out technical experts in the field of extrusion to assist with its problems. In February of 1977, Cliff Steely, Corporate Director of Personnel for Lone Star, contacted Wahl in St. Joseph, Michigan, after he had been highly recommended as an expert in extrusion technology. At Lone Star's request, Wahl visited the Lone Star plant on three occasions, once in 1977 and twice in May of 1978. On June 26, 1978, Wahl and Lone Star entered into the written contract which is the subject of this suit.

The final written employment contract had undergone two previous drafts. The second draft contained a patent clause which provided:

"This agreement shall not confer upon consultant any rights to copyrights, patents, licensing royalties from third parties, or partnership with the Company with respect to technology or other inventions developed as a consequence of this agreement."

This clause was unacceptable to Wahl and was stricken from the draft during the contract negotiations.

By the June 26, 1978, contract Wahl was employed as a consultant and was to provide "professional services relating to the start-up and debugging of Lone Star's Extrusion Mill equipment, the training of its operating and maintenance staffs, and the production of quality tubing." He was to receive $400.00 per day plus $200.00 "travel time" for each one-way trip to and from his home to Lone Star. Lone Star agreed to employ him for a minimum of twelve days each month from July 1978 through June 30, 1979.

While Wahl was at Lone Star he observed the operation of the extrusion mill, inspected and evaluated the condition of the equipment and examined the produced pipe. He also prepared written reports on what was causing defects in the pipe as well as "teaching manuals" on extrusion for management and supervisory personnel.

On or about August 18, 1978, while at his motel, Wahl thought of a method for improving the concentricity of pipe produced by extrusion. He set forth his idea in writing in a "Record of Invention," the first step toward acquiring a patent, and made drawings illustrating the idea. He gave a copy of the Record of Invention to Mr. Steely and asked him to witness his signature on the document. Mr. Steely refused to do so but told Wahl he would look into it. Wahl left some copies with Steely who later discussed them with the manager of the extrusion mill and the chief executive officer of Lone Star. An amendment for the employment contract was prepared which contained a patent and invention clause to operate retroactively from the date of the original contract. This amendment provided, among other things:

"... Consultant will treat as for Lone Star's sole benefit, and fully and promptly disclose and assign to Lone Star without additional compensation, all ideas, discoveries, inventions and improvements, patentable or not, which during the term thereof are made, conceived or reduced to practice by Consultant, alone or with others during or after usual working hours, either on or off the job, and which are related to Lone Star's business or interest or which result from work assigned to Consultant by Lone Star."

This amendment was presented to Wahl for his approval in early September of 1978. Wahl refused to sign the amendment and was told by Mr. Steely to leave the plant. Mr. Steely also told the security force not to allow Wahl back into the plant.

Wahl testified that, from September 5, 1978, through the end of June 1979, he made himself "available" to work for Lone Star for at least twelve days each month. He did not set aside twelve specific days at the beginning of each month but made no effort to gain employment for those days and spent them at his home writing letters, working on his house and reading. He merely held himself open to return to work should Lone Star request it, even though he knew that he could not work there since he refused to sign the amendment and was not to render further services under the contract.

Lone Star's request for submission of special issues regarding whether or not it had good cause to terminate the contract of employment were by the court refused and it is here contended that the trial court, on its own motion, improperly instructed a verdict that no good cause existed for the termination of the contract. Such a contention is inaccurate and misleading in that the trial court did not instruct a verdict against Lone Star on its defense of good cause. It merely refused to submit the requested issues in this regard, apparently upon the ground that the evidence in that regard did not present an independent theory of defense. This Court will avoid labeling this as an instructed verdict situation and will seek to determine if the trial court erred in its refusal to submit the requested "good cause" issues.

Good cause is essentially an employer's only defense in a breach of contract action when the employee has been employed for a definite period of time. Hoffrichter v. Brookhaven Country Club Corp., 448 S.W.2d 843 (Tex.Civ.App.-Dallas 1969, writ ref'd n. r. e.); Fairbanks, Morse and Co. v. Carsey, 109 S.W.2d 985 (Tex.Civ.App.-Dallas 1937, writ dism'd); 38 Tex.Jur.2d Master and Servant § 12 (1962). Lone Star asserts that it had good cause to discharge Wahl because his refusal to sign the contract amendment constituted a serious breach of an implied obligation of his employment contract and was a serious breach of loyalty to his employer. In support of these assertions, the cases of North v. Atlas Brick Co., 281 S.W. 608 (Tex.Civ.App.-El Paso), modified, 288 S.W. 146 (Tex.Com.App.1926, holding approved); Standard Parts Co. v. Peck, 264 U.S. 52, 44 S.Ct. 239, 68 L.Ed. 560, 561 (1924); and Solomons v. United States, 137 U.S. 342, 11 S.Ct. 88, 34 L.Ed. 667 (1890), are stressed.

Pertaining to the existence of a "shop right", the case of North v. Atlas Brick Co., supra, remains the law in Texas. However, the asserted "shop right" issue was not legally involved in this case. Throughout the negotiations between the parties for the entering of an employment contract the issue of patent rights was specifically discussed and the patent clause proposed by Lone Star was stricken from the draft of the contract upon the refusal of Wahl to agree to it. The contract negotiations and the open discussions during the negotiations of Wahl's determination to retain his patent rights, prevents the existence of a "shop right" as found and approved in the North case. In a written contract an additional provision will be implied only when it is necessary to effectuate the intention of the parties. Danciger Oil & Refining Co. of Texas v. Powell, 137 Tex. 484, 154 S.W.2d 632 (1941); Weil v. Ann Lewis Shops, 281 S.W.2d 651 (Tex.Civ.App.-San Antonio 1955, writ ref'd).

Wahl, by a reply point, states that Lone Star waived its right to assert its points of error numbered 4 through 24 by its failure to have the trial court rule upon its objections to...