Miller v. CC Meisel Co., Inc.

• Citation: 183 Or.App. 148,51 P.3d 650
• Parties: Thomas C. MILLER, Respondent, v. C.C. MEISEL CO., INC., an Oregon corporation, Appellant. C.C. Meisel Co., Inc., an Oregon corporation, Counterclaim Plaintiff-Appellant, v. Thomas C. Miller, Counterclaim Defendant-Respondent.
• Decision Date: 07 August 2002
• Court: Court of Appeals of Oregon

51 P.3d 650

183 Or.App. 148

Thomas C. MILLER, Respondent, v. C.C. MEISEL CO., INC., an Oregon corporation, Appellant.

C.C. Meisel Co., Inc., an Oregon corporation, Counterclaim Plaintiff-Appellant, v. Thomas C. Miller, Counterclaim Defendant-Respondent.

9905-05439; A109804.

Court of Appeals of Oregon.

Argued and Submitted January 4, 2002.

Decided August 7, 2002.

Barbee B. Lyon, Portland, argued the cause for appellant. With him on the briefs were William F. Martson, Jr., Jeanne M. Chamberlain, and Tonkon Torp LLP.

Jacob Tanzer, Portland, argued the cause and filed the brief for respondent.

Before EDMONDS, Presiding Judge, and ARMSTRONG and KISTLER, Judges.

EDMONDS, P.J.

Plaintiff is the former general manager of defendant, a rock crushing and quarry operating business. He brought this action against defendant after he retired from his employment with defendant claiming among other things, an entitlement to 20 percent of the value that he had "added" to defendant, as allegedly had been promised to him. Defendant denied the existence of such an agreement and brought other defenses against its enforcement, including the affirmative defense of excuse, based on plaintiff's own alleged material breaches of his duties to perform under the employment contract.¹ A jury found that such an agreement existed and awarded plaintiff $1.36 million as compensation under the agreement. Defendant appeals, and we affirm.

We recite only those facts pertinent to our analysis, in the light most favorable to the party in whose favor the jury returned a verdict. Parrott v. Carr Chevrolet, Inc., 331 Or. 537, 542, 17 P.3d 473 (2001). Plaintiff began to work for defendant corporation in 1960. At that time, defendant was owned by parties not involved in this appeal. In 1974, Ray Town and two friends bought defendant for $1.2 million and kept plaintiff in place as its general manager. Plaintiff was also appointed to the board of directors. He was made responsible for managing the day-to-day operations of the business. Plaintiff asserts that in 1974, Town told him that "whatever I could make the business worth above what they had paid for it, 20 percent of that would be mine, that I was to run the business." Plaintiff testified that the phrase, "above what they had paid for it," meant the $1.2 million that had been paid by the purchasers to acquire defendant in 1974.

In 1976, defendant's board members had discussions about how to give plaintiff an interest in the company, including a "phantom stock" idea that was rejected. At that time, they made no further efforts to structure the method by which plaintiff would be compensated for the "added value." In 1981, there was a change in ownership, and Town lost control of defendant temporarily. In 1982, Town regained control of defendant and called plaintiff, telling him, "I ended up with [defendant], Partner." Plaintiff continued to work for defendant and, by all accounts, was a hard-working employee. He was paid a salary and often received bonuses, as did other talented and valued employees of defendant. Plaintiff asked Town repeatedly to record their agreement in writing as to the 20 percent payout, but Town said that they would work it out in the future. The company's accountant, Kopacek, was aware of the existence of a "20 percent agreement" in the three to four years before plaintiff's retirement.

By 1992, Town had transferred his ownership in the company to his children, but he maintained his role as president. Plaintiff asked Town to tell his children about their agreement, and Town called a board meeting in 1992 at which he explained the agreement with plaintiff and told the board members that the agreement was an obligation of the company. Plaintiff testified that Town said to his children that, "the deal was that whatever [plaintiff] could make the company worth, less the $1.2 million times 20 percent, would be what [plaintiff] would get when [he] either retired or the company were sold."

In 1993 and 1994, plaintiff received permission from defendant to build a house at Muhs quarry, on land owned by it. Defendant agreed to pay the costs of construction of the home and to allow plaintiff to live there rent-free. Plaintiff built a house there, charged the cost of construction to defendant, and moved into the Muhs quarry house in 1994. He sold his former house on 28th Street in McMinnville and, as part of the agreement with defendant, deposited $110,000 of the proceeds of the sale of the 28th Street house with defendant. Plaintiff testified that he believed he was entitled to live in the Muhs quarry house until both he and his wife died. Town testified that he believed that plaintiff's right to occupancy depended on his continued employment with defendant.

The record shows that, throughout the period of Town's ownership of defendant, both plaintiff and Town used corporate assets and labor for personal purposes.² For instance, plaintiff charged a country club bill to the corporation, bought some jewelry and gifts for his wife with company money, and took some company property to his home for personal use (a camcorder and telescope, among other things). At one point, plaintiff also used defendant's left-over rock in another business that he personally operated, and he charged the company for the labor involved in moving the rock from defendant's location to the site of the other business. He also charged defendant for some expenses that were arguably for defendant's benefit but that benefitted his own personal business as well. Finally, plaintiff authorized bonuses for other employees of defendant without the express consent of Town.³ Defendant relies on this evidence to support its assertion that plaintiff materially breached his employment agreement with defendant and that defendant therefore should be excused from the performance of the agreement to pay the 20 percent of the added value.

Plaintiff notified Town of his intent to retire in May or June 1996. Plaintiff and Town talked about how to value plaintiff's percentage of added value, and they initially sought to have the corporate accountant perform a valuation of defendant. Plaintiff also solicited bids from interested parties to purchase defendant, and defendant received a bid for $8 million. The shareholders initially contemplated selling defendant to that bidder, but Town decided not to sell. Plaintiff then retired in February 1997, nine months after giving his notice.

After plaintiff's retirement, Town began the process of valuing defendant so as to calculate plaintiff's share. Town instructed his accountant to calculate what defendant's shareholders would have received if Town had accepted the purchase offer, taking into consideration the tax implications of such a sale. Plaintiff disagreed with Town's insistence on treating the tax consequences as part of the valuation of the company and, after further negotiations, the parties were unable to resolve their dispute about the amount of added value. Plaintiff then brought this action. His complaint includes alternative counts for breach of contract and a count for "unpaid compensation."⁴ Defendant answered, denying that there was an enforceable agreement. It also asserted multiple affirmative defenses, including the defense of excuse of performance because of plaintiff's alleged material breaches.

At trial, the parties agreed to submit the breach of contract claim to the jury and to have the trial court decide, after the jury returned its verdict, whether any monies owed under the agreement constituted "wages," within the meaning of ORS chapter 652, in the event that the jury found for plaintiff on the contract claim. The jury found that the agreement existed and awarded plaintiff $1.36 million as 20 percent of the "added value" to defendant. In addition, the court awarded $110,000 to plaintiff, representing the proceeds from the sale of plaintiff's 28th Street home that plaintiff had deposited with defendant. It also awarded $50,000 to defendant on a claim for breach of fiduciary duty owed to it by plaintiff and $23,625 to defendant on a trespass claim, apparently based on evidence that plaintiff had refused to vacate the Muhs quarry house on defendant's land. The court entered the jury verdicts. The court then held, after a separate hearing, that the compensation owed under the agreement constituted "wages" within the meaning of ORS chapter 652, and it issued an order reflecting its ruling. Subsequently, it entered judgment in that amount "on plaintiff's First Claim for Relief, Counts I and II (Breach of Contract, Unpaid Compensation)." The judgment also awarded plaintiff $456,594 in attorney fees under ORS 656.200 on his unpaid compensation claim.

Defendant's first assignment of error asserts that the essential terms of the agreement—that 20 percent of the added value "would be mine"—are too indefinite to be enforced and that the trial court erred in denying its motion for a directed verdict on plaintiff's breach of contract claim on that ground. Defendant argues that the agreement is unenforceable because it does not provide for tax implications, that there are no terms for payment, and that "there was no agreement * * * for the trial court to enforce, only an obligation to negotiate further." It relies on Ford v. Blinn, 50 Or.App. 515, 519, 623 P.2d 1110, rev. den. 290 Or. 853 (1981), for the proposition that "uncertainty in the terms of payment is * * * a defect in an essential provision and renders a contract unenforceable." In response, plaintiff relies on Delmar Crawford, Inc. v. Russell Oil Co., Inc., 106 Or.App. 524, 527-28, 808 P.2d 1021 (1991). In Delmar Crawford, Inc., we said that the "terms of payment are only necessary if the sale is other than for cash. If a contract does not specify payments terms or indicate that term payments are contemplated, it is implied that the sale is for cash." Id. (citation omitted).⁵

Whether the trial court...