Mirzaie v. Smith Cogeneration, Inc.
| Decision Date | 21 April 1998 |
| Docket Number | No. 1,No. 88202,88202,1 |
| Citation | 1998 OK CIV APP 123,962 P.2d 678 |
| Parties | Reza MIRZAIE, an individual, Plaintiff/Appellee/ Counter-Appellant, v. SMITH COGENERATION, INC., an Oklahoma corporation; Smith Cogeneration Management, Inc., a British Virgin Islands corporation; Smith Cogeneracion Dominicana, Inc., a Turks and Caicos corporation; and Donald M. Smith, an individual, Defendants/Appellants/Counter-Appellees. Court of Civil Appeals of Oklahoma, Division |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Appeal from the District Court of Oklahoma County; Eugene H. Matthews, Judge.
AFFIRMED.
Kenneth N. McKinney, Debra B. Cannon, McKinney, Stringer & Webster, P.C., Oklahoma City, and Cheryl A. Vaught, Vaught & Conner, P.L.L.C., Oklahoma City, for Plaintiff/Appellee/Counter-Appellant.
R. Brown Wallace, Andrews, Davis, Legg, Bixler, Milsten & Price, Oklahoma City, and Richard L. Brusca, Skadden, Arps, Slate, Meagher & Flom, L.L.P., Washington, D.C., for Defendants/Appellants/Counter-Appellees.
¶1 There are two questions of law presented for review: (1) when an employment contract contains a minimum percentage for a bonus, but no maximum, may a jury determine a bonus higher than the minimum based on what it determines to be the reasonable worth of the employee's services; and (2) did the trial court properly find, as a matter of law, that evidence presented was insufficient to sustain a cause of action for the tort of intentional infliction of emotional distress (outrage). We answer both questions in the affirmative.
¶2 Reza Mirzaie (Mirzaie) was hired by Don Smith (Smith) in 1984 to provide financial and other expertise to assist Smith Cogeneration, Inc. (Smithco) in developing cogeneration projects. Cogeneration produces electricity and a useful by-product, such as steam or heat. Mirzaie was the vice-president of Finance for Smithco and, from 1988 through 1994, was senior vice-president. In 1988, Mirzaie and Smithco entered into a written employment contract, effective September 9, 1987 (the 1987 Contract). The 1987 Contract included the following provision:
If Mirzaie remains a full-time employee of the corporation or any other entity of which Smith owns a majority interest ("Entity") at the time construction of any other cogeneration facility of the corporation is commenced, Mirzaie "shall be entitled to receive at least two percent (2%) of the net profits, as hereafter defined, which the corporation or any such entity actually receives from the operations of any and all such facilities." (Emphasis added.) 1
¶3 In 1990, Mirzaie and Smith, through his lawyer, were negotiating a new employment contract for Mirzaie, but the negotiations did not result in a new contract. In 1993, Smithco reached an agreement for building a new power plant in the Dominican Republic (Smith Cogeneracion Dominicana, Inc.). In early December 1993, Mirzaie made a written demand for execution of his proposed contract, which Smith did not answer. On December 10, 1993, Mirzaie sued alleging breach of contract and later amended his petition to include intentional infliction of emotional distress. 2 In March 1994, the employment relationship ended, either by firing or resignation. Hard feelings between the parties were evident.
¶4 The jury returned a verdict in favor of Mirzaie on the breach of contract claim regarding the Dominican Republic project and, by way of special interrogatory, found him to be entitled to 9% of Smithco's net cash flow from that operation "either as a result of the 1987 contract or of the 1987 agreement as modified." 3
¶5 Smithco contends that when a contract guarantees a minimum bonus, but no maximum, the discretion of how much more than the minimum to pay, if any, lies solely with the employer. The worth of the employee's services in this kind of contract is not a relevant factor. Mirzaie, on the other hand, argues that the jury was authorized, pursuant to 15 O.S.1991 § 112, to determine the amount of the bonus. Section 112 states:
When a contract does not determine the amount of the consideration, nor the method by which it is to be ascertained, or when it leaves the amount thereof to the discretion of an interested party, the consideration must be as much money as the object of the contract is reasonably worth.
¶6 Smithco's position is that for § 112 to apply, discretion as to the amount must be complete, which, because Smithco had guaranteed a minimum of 2%, is not present here.
¶7 Section 112 has not been the subject of substantial interpretation. In Sac City Canning Co. v. Griffin Grocery Co., 99 Okl. 99, 225 P. 702 (1924), the contract set a price of $1.30 per dozen cans of corn. However, the contract included the seller's guarantee against a price decline. The Oklahoma Supreme Court held that for the guarantee to mean anything, the seller was obligated to sell the corn at what it was reasonably worth, using the predecessor of § 112. Thus, the contract set a maximum price but not a minimum. The reasonable worth of the corn was found to be the market price of similar corn, based on evidence submitted by the defendant.
¶8 Another case, not specifically citing § 112 or a predecessor, held that where a commodity was sold and no price fixed in the contract, the law fixed the price at the reasonable or market value at time of delivery. Wilkins v. Jackson, 100 Okl. 143, 227 P. 882, 884 (1924).
¶9 In Braden Winch Co. v. Surface Equipment Co., 196 Okl. 444, 165 P.2d 640 (1945), plaintiff had requested defendant to perform certain machining services. No price was set by the parties because of the contingencies involved. At trial, the parties had widely diverging evidence of the value of the services performed. The Supreme Court cited § 112 as the applicable statute and said:
The determination of the value of the services performed in this case was a question of fact for the jury, and it was proper for the jury to consider the question in view of the exigencies involved, and not to be guided entirely by what would be customary under ordinary conditions.
¶10 The defendant argued that the court should have directed a verdict in plaintiff's favor in the amount defendant tendered into court. Defendant argued that the amount tendered was the customary price charged in that community by others performing similar work.
¶11 The Supreme Court held that for a directed verdict to be proper, the evidence would have to show conclusively that the plaintiff agreed to do the work for 48 cents per unit, or that plaintiff had agreed to take the order at the customary price and that 48 cents was the undisputed customary price. The evidence failed on this count because the defendant testified that it was impossible to get a shop (such as plaintiff's) "pinned down on a rate." Thus, the jury was allowed to consider a broad range of factors in establishing the worth of the services, not just the customary rate.
¶12 In the instant case, the contract of the parties obligated the employer to pay a bonus, and set a minimum but no maximum. Based upon the language of the statute, and the cases discussed above, we hold that § 112 is applicable to the facts presented. And, because there was conflicting evidence regarding the value of the services, the issue of the amount of the bonus was for the jury.
¶13 This is not a case of an employee being dissatisfied with a voluntary employer paid bonus. If the bonus is not part of the parties' employment contract, then there is no obligation to pay any amount. Whether to pay the bonus and the amount to pay is totally discretionary with the employer. However, when the employment contract obligates the employer to pay a bonus, and the amount thereof is left open as to amount or method of determining the amount, then § 112 applies. If the parties do not agree on the amount, it is not within the discretion of the employer to refuse to pay any bonus, or, as in this case, claim the bonus is limited to the minimum specified in the contract. The employee may sue to have the bonus determined by a jury under § 112. If the parties to the employment contract wish to avoid this result, they may set an amount, agree on a formula to determine the amount, or make it a truly voluntary payment to be determined by the employer. According to § 112, it is only when the amount of consideration is unspecified in the contract, or left to the discretion of an interested party, that the statute applies. The 1987 Contract squarely falls within the parameters of § 112.
¶14 Smithco cites Cain's Coffee Co. v. McNutt, 308 P.2d 651 (Okla.1957) for the proposition that an employee cannot sue to recover a discretionary bonus. However, in Cain's Coffee, the issue was whether an employee fired in October 1955 was entitled to receive a Christmas 1955 bonus. The Supreme Court found that the undisputed evidence was that only employees working in December of the year received Christmas bonuses. As a result, the plaintiff's verdict was reversed.
¶15 Two courts outside Oklahoma have reached similar conclusions. In Nave v. Taugher, 49 Cal.App. 308, 193 P. 508 (1920), the court applied a substantially similar statute in a proceeding to recover for legal services. The amount had been left to the discretion of the client. The client offered $200 which the attorney refused. The court said
When a contract does not determine the amount of the consideration, but leaves it to the discretion of an interested party, the consideration must be reasonable. It was therefore incumbent upon the defendant to pay to [the attorney] so much money as his services, which were the object of the contract, were reasonably worth.
193 P. at 510. Likewise, the court held that the amount was a jury question. Id.
¶16 In Fruth v. Gaston, 187 S.W.2d 581 (Tex.Civ.App.1945), the employee was promised additional compensation between 3 and 5%...
To continue reading
Request your trial
-
Hibben v. Oklahoma ex rel. Dep't of Veterans Affairs, Case No. 16-cv-111-TLW
...made lewd remarks about plaintiff and embarrassed plaintiff by discussing her faults while with coworkers); and Mirzaie v. Smith Cogeneration, Inc., 962 P.2d 678 (Okla. 1998) (Employer, among other things, loudly berated plaintiff in workplace and made derogatory sexual comments about plain......
-
Campbell v. Wal-Mart Stores, Inc.
...to determine the outrageousness of a defendant's conduct and the severity of a plaintiff's distress. See Mirzaie v. Smith Cogeneration, Inc., 962 P.2d 678 (Okla.Civ.App.1998). For a defendant's conduct to rise to the level of extreme and outrageous, a plaintiff must prove that a recitation ......
-
Miner v. Mid-America Door Co.
...making lewd remarks about the plaintiff and embarrassing her by discussing her faults with co-workers; and Mirzaie v. Smith Cogeneration, Inc., 1998 OK CIV APP 123, 962 P.2d 678, involving conduct that included an employer calling the plaintiff in the middle of the night and browbeating him......
-
Cohlmia v. Ardent Health Services, LLC, No. 05 CV 384 P.
...Ltd,, 887 F.2d 1371, 1379 (10th Cir.1989). Oklahoma courts have set a high bar for "outrage," see, e.g., Mirzaie v. Smith Cogeneration, Inc., 962 P.2d 678 (Okla.Civ. App.1998), which, given the circumstances of this case, even at their most dire, the Court finds Plaintiffs would not be able......