Mayo v. Schooner Capital Corp.

Decision Date04 May 1987
Docket NumberNo. 86-2128,86-2128
Citation825 F.2d 566
Parties, 2 Indiv.Empl.Rts.Cas. 663 Kenneth E. MAYO, Plaintiff, Appellee, v. SCHOONER CAPITAL CORP., et al., Defendants, Appellants. . Heard
CourtU.S. Court of Appeals — First Circuit

Robert M. Buchanan with whom Sullivan & Worcester, Boston, Mass., was on brief, for defendants, appellants.

Henry F. Spaloss for plaintiff, appellee; Arthur O. Gormley, III and Gormley & Kaklamanos, P.C., Nashua, N.H., on brief.

Before COFFIN, ALDRICH and SELYA, Circuit Judges.

COFFIN, Circuit Judge.

In this diversity case, defendants Schooner Capital Corporation ("Schooner") and its president, Vincent Ryan ("Ryan"), appeal a jury verdict of $154,000 in favor of plaintiff-appellee Kenneth E. Mayo ("Mayo") for breach of an oral employment contract. Schooner and Ryan contend that the court erred in denying their motion for judgment notwithstanding the verdict and their motion for a new trial. We find that none of their arguments has merit and therefore affirm the judgment of the district court.

I. Factual Setting.

The following facts were adduced at trial. Plaintiff Mayo is a mechanical engineer with considerable experience in the field of hydroelectric power. In January 1980, he met with defendant Ryan and his associate, A. Gail Staker, to discuss potential participation in the formation of a new corporation for the ownership and development of hydroelectric energy facilities and related activities. (App.187). Mayo testified that Ryan, through his venture capital company, Schooner, sought to fund a study of potential hydroelectric sites in which the new corporation, to be known as Continental Hydro Corporation ("Continental"), could acquire an interest. Mayo described that Ryan, for investment purposes, needed to get a "quick fix" on the largest possible number of hydroelectric sites that could be put into negotiation for acquisition. (App.204).

On January 24, 1980, according to Mayo, Ryan offered him a three month deal to serve as an engineering consultant at an annual rate of $30,000 plus expenses. (App.186). In addition, Mayo asserts that Ryan--on behalf of himself, Schooner, and Continental--offered him between ten and fifteen percent of the equity in Continental once it was formed. (App.188, 222). Mayo contends that Ryan's offer included a promise to pay Mayo a commission of $20,000 per megawatt of potential installed capacity of all hydroelectric sites identified by Mayo that were acquirable within three years and that these funds could later be applied to Mayo's purchase of stock in Continental. (App.188). Mayo contends that he accepted this offer and performed the duties required of him by the contract. He explained that the $30,000 annual rate was the bare minimum he could accept for the three month start-up period and that, in essence, he was contributing "sweat equity" in the new venture for which he expected to be compensated at a much higher level in the future. (App.222). At trial, Mayo surrendered his claim to an equity share in Continental, allegedly due to the speculative nature of his damages in that regard, and instead pressed his "straightforward" claim for his commissions based on the potential capacity of the sites he identified for Schooner. (App.248). In his own words: "$20,000 a megawatt of installed capacity potential for acquirable sites; that's the deal." (App. at 299).

Ryan characterized his dealings with Mayo in a very different manner. He claims to have orally offered Mayo either payments for three months at an annual rate of $30,000 plus expenses or a commission of $20,000 per megawatt of installed capacity for all sites actually brought on line. (App.262). Ryan testified that Mayo accepted the former offer and rejected the latter, preferring to be paid in salary rather than on a commission basis. (App.262). According to Ryan, therefore, he never entered an oral contract that included a promise to compensate Mayo with an equity share in the new corporation or a commission of $20,000 per megawatt of installed capacity at all acquirable sites.

The parties agree that Mayo served as Ryan's engineering consultant for a three month period and that Schooner compensated him at an annual rate of $30,000 plus expenses. During this period, Mayo estimated that he completed 50 to 75 or more site evaluations and composed detailed reports on those sites he deemed to be desirable for acquisition by Continental. (App.208-09). The list of desirable hydroelectric sites, according to Mayo, contained 21 proposed acquisitions totalling 40.1 megawatts of potential installed capacity. (App. 211-14). Mayo asserted that a diligent effort by Continental could have resulted in the acquisition of all of these sites within a three year period. (App.213). This list of "acquirable sites" forms the basis for Mayo's claim of contract damages in the amount of $802,000 (40.1 megawatts 2a $20,000 per megawatt). Mayo testified, however, that as far as he knew, Continental and its affiliates actually acquired only three sites--Spaulding Fiber (2.4 megawatts), Greg Falls (2.5 megawatts), and the Suncook Project (2.8 megawatts)--totalling 7.7 megawatts of potential installed capacity within the three years following his study. (App.211, 301). The testimony regarding the sites actually acquired was undisputed and the jury apparently awarded Mayo damages at the rate of $20,000 per megawatt ($154,000) only for the three "actually acquired" sites.

After serving three months as a consulting engineer, Mayo continued his association with Ryan and Staker even though he was no longer employed by Schooner or Continental. First, he attempted to negotiate a 25% equity position in Continental, but was unsuccessful in this regard. (App.265). Eventually, Staker recommended making Mayo president of a company called Water Power Development Corporation ("Water Power") that was one of Continental's state affiliates. Pursuant to the deal that was struck, Mayo became president and his wife became a substantial shareholder in Water Power. (App.264). Mayo retained his position as president of Water Power until July 22, 1981, when, according to a court order, he was removed from office pursuant to a vote of the corporation's stockholders. (App.440-41). The shareholders' vote was apparently engineered by Ryan through the exercise of warrants that permitted Schooner to obtain a controlling interest in Water Power. (App.279). Water Power, which was one of the original defendants in this action, brought and won a counterclaim for misappropriation of funds in the amount of $18,000 in the district court. This portion of the court's judgment has not been appealed.

Defendants offer three arguments aimed at overturning the jury's verdict in favor of Mayo. First, they contend that Mayo failed to prove the existence of an oral contract. Second, they argue that the oral contract implicitly found by the jury is too vague and speculative to be enforceable. Third, they claim that the contract implicitly found by the jury is unenforceable due to the statute of frauds. We treat each of these contentions in turn.

II. Does The Evidence Support The Existence Of A Contract?

The jury found that Mayo was entitled to recover $154,000 for breach of his employment contract. Defendants, however, do not believe that the evidence introduced at trial is sufficient to justify such an award and contend that the district court should have granted their motion for judgment n.o.v. or, in the alternative, their motion for a new trial.

Before considering these arguments, we briefly describe the standards of review to be employed in this case. As to the district court's denial of plaintiff's motion for judgment notwithstanding the verdict, the standard of review is the same as for a denial of a motion for directed verdict: "we must examine the evidence in the light most favorable to the plaintiff and determine whether there are facts and inferences reasonably drawn from those facts which lead to but one conclusion--that there is a total failure of evidence to prove plaintiff's case." Fact Concerts, Inc. v. City of Newport, 626 F.2d 1060, 1064 (1st Cir.1980), vacated on other grounds, 453 U.S. 247, 101 S.Ct. 2748, 69 L.Ed.2d 616 (1981). With regard to the court's denial of defendants' new trial motion, we will reverse only if defendants can "show that the verdict was 'so clearly against the weight of the evidence as to constitute a manifest miscarriage of justice.' " Jordan v. United States Lines, Inc., 738 F.2d 48, 49 (1st Cir.1984) (quoting Lakin v. Daniel Marr & Son Co., 732 F.2d 233, 237 (1st Cir.1984)).

A. Motion for Judgment Notwithstanding the Verdict.

Defendants begin by challenging the district court's denial of their motion for judgment n.o.v. on the ground that the jury's verdict was not supported by the evidence. They correctly note that the only evidence of the oral contract claimed by Mayo is his own trial testimony. Mayo offered no corroborating witnesses, nor did he introduce any documentary evidence in support of his claim. These facts alone, however, do not require the entry of judgment n.o.v. so long as Mayo's testimony and the inferences that can reasonably be drawn from it support the jury's conclusion.

To support their contention that the verdict is unsupported by the evidence, defendants cite glaring discrepancies between Mayo's redrafted complaint and his testimony at trial. Mayo's complaint first alleges that he would be entitled to at least a ten percent equity share in Continental "as well as" a commission of $20,000 per megawatt capacity "on all dams he identified or analyzed which were subsequently acquired by the yet unnamed, unformed company or its assigns within a period of three (3) years." Redrafted Complaint p 9 (emphasis supplied). The very next paragraph of the complaint states the terms of the contract differently, alleging that Mayo would receive a...

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