Porter v. Oba, Inc.

• Citation: 180 Or. App. 207,42 P.3d 931
• Parties: Bruce G. PORTER, Appellant, v. OBA, INC., an Oregon corporation, dba Oba Restaurant, dba Oba Restaurante y Refresqueria de Lujo; and Steven McLain, Respondents.
• Decision Date: 20 March 2002
• Court: Oregon Court of Appeals

42 P.3d 931

180 Or. App. 207

Bruce G. PORTER, Appellant, v. OBA, INC., an Oregon corporation, dba Oba Restaurant, dba Oba Restaurante y Refresqueria de Lujo; and Steven McLain, Respondents.

9902-01426; A109420

Court of Appeals of Oregon.

Argued and Submitted May 8, 2001.

Decided March 20, 2002.

Kevin Keaney, Portland, argued the cause and filed the briefs for appellant.

Scott Shorr, Portland, argued the cause for respondents. With him on the brief were Robert A. Shlachter and Stoll Stoll Berne Lokting & Shlachter P.C.

Before EDMONDS, Presiding Judge, and DEITS, Chief Judge, and ARMSTRONG, Judge.

DEITS, C.J.

Defendants, Oba, Inc. (Oba) and Steven McLain, moved for summary judgment on plaintiff's claims for breach of contract and intentional interference with economic relations. The trial court granted their motion, and plaintiff appeals from the resulting judgment. Viewing the facts and all reasonable inferences that may be drawn from them in favor of plaintiff, the nonmoving party, summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. ORCP 47 C.¹ Based on that standard of review, we affirm in part and reverse in part.

Plaintiff and McLain, an officer, board member and majority shareholder of Oba, completed the ground work for Oba Restaurant, which opened in November 1997. Before the restaurant opened, the parties negotiated for plaintiff to serve as general manager. On June 15, 1997, plaintiff sent a letter to McLain that stated, in part:

"This letter serves as a written commitment to you as regards my employment with, and partnership in Oba[,] Inc. * * *

"* * * I commit to serve in the capacity of General Manager of Oba, for an unspecified period of time—as long as I am needed—starting June 23, 1997. I will serve in that capacity until such time as I am able to benefit the company by moving to another location, or a new capacity. I commit to being open to the knowledge you provide, making use of the tools that you give me, and striving for excellence in all aspects of my job. I will set an example through leadership, and at all times represent the company in a manner that reflects the culture you have successfully created. I commit to the values we share. I commit to the growth of our company.

"For these commitments, I will receive my annual salary, a bonus package as yet to be determined, Health Insurance coverage to be determined, and a 10% share of the business. My percentage ownership will not become active until June 22, 1998, one full year of employment. My ownership offer may be rescinded prior to that date, at the Board[']s sole discretion. * * *

"This letter in no way seeks to bind either party in any way, it just seems right to put this in writing for you, both to insure your confidence in my commitments, and to insure that my expectations are well founded and clear."

McLain responded with a letter that was dated June 30, 1997. That letter stated, in part: "An option for ownership (10% of stock) after the first 18 months of employment at Oba[,] Inc. (stock options to be determined)."² Plaintiff began work as an employee of Oba in the summer of 1997. McLain terminated plaintiff's employment on November 12, 1998.

In plaintiff's claim for breach of contract, he alleges that "[d]efendant Oba breached the contract by terminating plaintiff's employment or by refusing to grant plaintiff his ownership interest." In his claim for intentional interference with economic relations, he alleges that "[d]efendant McLain terminated plaintiff's employment to deprive plaintiff of his ownership interest in defendant Oba" and "acted, not to benefit defendant Oba, but solely for his own benefit or to injure plaintiff." The trial court granted defendants' summary judgment motion on the breach of contract claim

"on the ground that the contract is not one for employment but rather one setting out certain agreed terms during an at-will employment relationship. The contract is unambiguous as to whether it constituted an employment agreement which varied from the at-will employment relationship; therefore[,] the court has not considered parol evidence on this issue. The other terms of the contract do not survive the termination of employment and therefore are not enforceable."

The trial court also granted defendants' motion on the intentional interference with economic relations claim, stating that "there is no enforceable contractual term which has been breached and thus no illegal interference has occurred and * * * defendant McLain was acting within the scope of his employment as an officer and director of the corporation."

In plaintiff's first assignment of error, he argues that the trial court erred by failing to consider extrinsic evidence when determining whether the contract was ambiguous. According to plaintiff, consideration of that evidence is required by case law and ORS 42.220, which provides that, "[i]n construing an instrument, the circumstances under which it was made, including the situation of the subject and of the parties, may be shown so that the judge is placed in the position of those whose language the judge is interpreting." Consequently, plaintiff argues that the trial court erred by determining that the contract was unambiguous and that no breach of that contract had occurred. Defendants counter that the trial court properly granted summary judgment on plaintiff's breach of contract claim because, "[e]ven if the court had looked at evidence outside that memorandum, plaintiff presented no evidence of an employment contract for eighteen months or any other period."

In OTECC v. Co-Gen, 168 Or.App. 466, 474-75, 7 P.3d 594 (2000), rev. den. 332 Or. 137, 27 P.3d 1043 (2001), we described the general principles of contract interpretation:

"In the absence of an ambiguity, the trial court in the first instance, and this court on appeal, determines the meaning of a contract as a matter of law. See Eagle Industries, Inc. v. Thompson, 321 Or. 398, 405, 900 P.2d 475 (1995)

. A contract provision is legally ambiguous if it has no definite significance or if it is capable of more than one reasonable and sensible construction in the context of the agreement as a whole. See Heinzel v. Backstrom, 310 Or. 89, 96, 794 P.2d 775 (1990); Quality Contractors, Inc. v. Jacobsen, 139 Or.App. 366, 370, 911 P.2d 1268,

rev. den. 323 Or. 691, 920 P.2d 550 (1996). In deciding whether an ambiguity exists, the court is not limited to mere text and context but may consider parol and other evidence. Abercrombie v. Hayden Corp., 320 Or. 279, 292, 883 P.2d 845 (1994). Likewise, if the contract is ambiguous, the trier of fact may consider other evidence of the parties' intentions and construe the language of the agreement accordingly. Anderson v. Divito, 138 Or.App. 272, 277-78, 908 P.2d 315 (1995). * * * Our review otherwise is for legal correctness, which means that we determine, as though in the first instance, how the contract should be construed. Stevens v. Foren, 154 Or.App. 52, 57, 959 P.2d 1008,

rev. den. 327 Or. 554, 971 P.2d 410 (1998)."

We begin by examining the text of the disputed provision in the context of the entire agreement. Yogman v. Parrott, 325 Or. 358, 361, 937 P.2d 1019 (1997); OTECC, 168 Or.App. at 477, 7 P.3d 594. The June 30 contract provision, "[a]n option for ownership (10% of stock) after the first 18 months of employment at Oba[,] Inc. (stock options to be determined)," is unambiguous. It provides for an option for stock ownership after the first 18 months of employment. Furthermore, there is nothing in the text of the provision or in the agreement as a whole that indicates a commitment to employ plaintiff for a definite term of 18 months. Thus, we agree with the trial court that the provision is unambiguous based on the text in the context of the entire agreement.

Plaintiff argues, however, that the trial court cannot rely solely on the text and context and should have considered evidence of the circumstances under which the contract was made. Specifically, plaintiff argues that the contract reflects a series of negotiations and that,

"[i]n exchange for later vesting (18 months or December 1998), McLain gave up the right to terminate employment for the first 18 months or to revoke the ownership interest. [Plaintiff] gained a definite vesting date, but had to settle for vesting six months later than was contemplated in the earlier agreement."

We will assume, without deciding, that the trial court was required to consider the circumstances under which the contract was made and that evidence of such circumstances includes evidence of the parties' negotiations. However, while there is evidence in this record about the parties' negotiations concerning plaintiff's ownership interest, there is no evidence in the record concerning negotiations for a definite term of employment. Thus, even if the trial court had considered the evidence in the record of the circumstances under which the contract was made, there is no evidence from which to conclude that the contract is ambiguous. Consequently, the trial court did not err in granting defendants' summary judgment motion on plaintiff's breach of contract claim.

In plaintiff's second assignment of error, he argues that the trial court erred in granting defendants' summary judgment motion concerning plaintiff's claim for intentional interference with economic relations. As the Supreme Court explained in McGanty v. Staudenraus, 321 Or. 532, 535, 901 P.2d 841 (1995),

"[t]o state a claim for intentional interference with economic relations, a plaintiff must allege each of the following elements: (1) the existence of a professional or business relationship (which could include, e.g., a contract or a prospective economic advantage), (2) intentional interference with that relationship, (3) by a third party, (4) accomplished through improper means or for an improper

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