Lowell v. U.S. Sav. Bank of America, 88-370

Decision Date08 March 1990
Docket NumberNo. 88-370,88-370
PartiesFrederick W. LOWELL v. The U.S. SAVINGS BANK OF AMERICA, Joseph Fanaras, Charles Mutrie, Jeffrey Breiseth and James Walsh.
CourtNew Hampshire Supreme Court

Hamblett & Kerrigan P.A., Nashua (John P. Griffith & a. on the brief, and orally), for plaintiff.

Merrill & Broderick, Manchester (John T. Broderick, Jr., orally, and Mark W. Dean on the brief), for U.S. Sav. Bank of America.

McLane, Graf, Raulerson & Middleton P.A., Manchester (Bruce W. Felmly on the brief and orally), for Joseph Fanaras.

Brown and LaPoint P.A., Exeter, for defendants Mutrie, Breiseth and Walsh, joining in the briefs of U.S. Sav. Bank of America and Joseph Fanaras.

THAYER, Justice.

Frederick W. Lowell (Lowell or the plaintiff) appealed, and The U.S. Savings Bank of America (the bank) cross-appealed, a decree of the Superior Court (Gray, J.) ruling that the bank breached Lowell's ten-year employment contract by failing to articulate in its termination vote the reason for the plaintiff's dismissal, and that the damages were limited to the amount of Lowell's salary from the date of his wrongful termination until the date when the bank properly terminated his employment. Lowell claims that he was improperly denied the right to a jury trial and that the trial court erred in not awarding as damages the full amount due under the contract for the balance of the contract's term. The bank, on the other hand, alleges that the trial court erred in finding that the bank breached Lowell's employment contract after determining that just cause existed for terminating the plaintiff's employment, and argues that Lowell is not entitled to any damages. For the reasons set forth below, we affirm the trial court's decision to hear the case without a jury and reverse the trial court's ruling on the breach of contract issue, holding that the bank did not breach Lowell's employment contract by failing to include in its internal minutes the reason for discharging the plaintiff.

The record indicates that Lowell was the founder of The U.S. Savings Bank of America, which opened for business in June of 1984. In February of 1984, the stockholders authorized the board of directors (the board) to enter into an employment contract with the plaintiff as president of the bank. On August 13, 1984, Lowell and the bank executed a ten-year employment contract. Unlike other contracts in the banking industry, Lowell's contract did not contain an express "for cause" dismissal clause. However, the contract did provide that Lowell would:

"devote his full time and attention to the Employer's business and [would] employ his best efforts in the performance of his duties [t]hereunder, which shall include such duties as may from time to time be assigned to him by the Board of Directors, subject to the general direction and control of the Board of Directors of the Employer."

The trial court found that Lowell's tenure as both a promoter and president of the bank was marked by a course of "misconduct" in violation of his fiduciary and professional obligations. Specifically, the trial court found that, contrary to his "duty to disclose," Lowell had failed to inform potential investors, and later his employer, that he had been terminated from his three most recent banking positions. Regarding the employment contract, the trial court found that Lowell had wrongly informed the board that his contract was similar to the contracts other banks had with their key officers. Even after the Federal Deposit Insurance Corporation (FDIC) realized that Lowell's contract did not contain an express "for cause" dismissal clause and asked the plaintiff to amend the contract, Lowell failed to do so.

The trial court found that, as an officer, Lowell consistently refused to take advice from the board. The plaintiff's insubordination ranged from the failure to prepare a thorough and timely budget, to the continued employment of several family members over the objections of the board, to the intentional withholding from the board for forty-two days of a highly critical letter from the FDIC addressed to the board requesting a "full report" within forty-five days. The trial court noted that while the letter from the FDIC suggested possible criminal penalties the bank might have been subject to, indicating that the bank's future was in a precarious position, Lowell permitted the letter to "h[a]ng around like an unpaid bill." In addition to the aforementioned acts, the trial court found that Lowell engaged in "the most blatant example of misconduct" when he and his son-in-law, both paid employees of the bank, directed business away from the bank by securing financing from another bank for a customer of U.S. Savings, in an effort to achieve personal gain.

Throughout much of his tenure, Lowell enjoyed the benevolent protection of a majority of the board. As the board became aware of Lowell's misconduct, however, dissension grew among the board members and different factions formed. On December 29, 1986, after a new board of directors had been seated, the board found that Lowell had breached his contract with the bank and voted unanimously to terminate Lowell's employment as president, effective January 2, 1987. The trial court found that the board intentionally chose not to cite specific instances of Lowell's misconduct which supported its vote. Instead, the motion made at the December 29, 1986 board meeting to terminate Lowell's employment merely stated that Lowell "has not and is not executing his office in a satisfactory manner."

As a result of the board's termination of Lowell's employment, Lowell instituted suit by a writ of summons dated July 31, 1987, against the bank and its directors, alleging breach of contract, malicious breach, wrongful discharge, and tortious interference with contractual relations. Lowell failed to request a jury trial when he filed his writ. However, when the defendants' counsel filed their appearance, they preserved the defendants' rights to a trial by jury pursuant to Superior Court Rule 8.

In addition to his contract action, Lowell was involved in seven separate suits against the bank, four of which were still pending at the end of 1987. See, e.g., Palmer v. U.S. Savings Bank of America, 131 N.H. 433, 553 A.2d 781 (1989). In an apparent effort to achieve judicial consistency and economy, Chief Justice Dunfey assigned a single trial judge to hear all of the pending suits. During a hearing on January 28, 1988, at which all of the parties were present, the trial judge offered the defendants the choice of retaining their rights to a jury trial, which would be scheduled for the fall of 1988, or of voluntarily waiving their jury trial rights in exchange for a more timely bench trial. Counsel for the defendants agreed to waive their rights to a jury trial. Then, in the presence of all the parties' attorneys, the court clerk scheduled a bench trial to begin on May 2, 1988.

On February 5, 1988, Lowell filed an objection to the defendants' withdrawal of their request for a jury trial. Lowell argued in his objection that he had relied on the defendants' request for a jury trial and therefore had made no effort to revoke his waiver. He claimed that the withdrawal of a jury request by the defendants required the consent of all parties to be effective, and that he had not given his consent. The trial court apparently did not rule on the plaintiff's objection, and on March 14, 1988, Lowell moved for a voluntary non-suit, without prejudice. The bank filed a motion objecting to the plaintiff's taking a non-suit, and on April 5, 1988, the trial judge held a hearing to discuss, among other things, Lowell's request for a voluntary non-suit. At an earlier hearing, counsel for Lowell had indicated that his client did not intend to drop any claims he had against the defendants, and at the hearing on April 5, he disclosed an additional motivation for seeking a voluntary non-suit. He explained that what he really wanted was to obtain a different judge to hear his case. Lowell's attorney stated:

"I think your Honor has indicated a clear prejudice against Mr. Lowell, and I think to go before you and to place his life and property at your disposal is not a fair thing to ask you to do."

By order dated April 7, 1988, the trial judge indicated that the delays and uncertainties that would result from permitting a voluntary non-suit without prejudice would prevent the defendant bank from obtaining the recapitalization necessary for its continued existence, and would signal...

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