Suciu v. AMFAC Distributing Corp., 2

• Court: Court of Appeals of Arizona
• Writing for the Court: HOWARD
• Citation: 138 Ariz. 514,675 P.2d 1333
• Parties: Viorel N. SUCIU and Betty Louise Suciu, husband and wife, Plaintiffs/Appellees/Cross-Appellants, v. AMFAC DISTRIBUTING CORPORATION, a California corporation, Defendant/Appellant/Cross-Appellee. 4676.
• Docket Number: No. 2,CA-CIV,2
• Decision Date: 13 September 1983

Page 1333

675 P.2d 1333

138 Ariz. 514

Viorel N. SUCIU and Betty Louise Suciu, husband and wife, Plaintiffs/Appellees/Cross-Appellants, v. AMFAC DISTRIBUTING CORPORATION, a California corporation, Defendant/Appellant/Cross-Appellee.

No. 2 CA-CIV 4676.

Court of Appeals of Arizona,

Division 2.

Sept. 13, 1983.

Rehearing Denied Nov. 9, 1983.

Review Denied Jan. 24, 1984.

Molloy, Jones, Donahue, Trachta, Childers & Mallamo, P.C. by Gary F. Howard, Tucson, for plaintiffs/appellees/cross-appellants

Allen, McClennen & Fels, P.C. by Robert H. Allen, Phoenix, for defendant/appellant/cross-appellee.

OPINION

HOWARD, Chief Judge.

This is an appeal from a jury verdict awarding appellees $17,260 for breach of an employment contract.

Appellant presents the following issues for review:

"1. Whether the evidence as to the alleged employment contract should have been barred by the parol evidence rule.

2. Even if receipt of parol evidence was proper, whether the alleged contract was void by reason of the uncertainty of its terms in that there was no meeting of the minds as to the nature and character of the services to be performed and as to the services were to be full-time or part-time.

3. Even if there was a contract for a definite length of time whether plaintiffs suffered any damages because Mr. Suciu earned more from other employment than AMFAC had agreed to pay him.

4. Even if plaintiffs did suffer damages, whether they are barred from recovering any damages because of Mr. Suciu's failure and refusal to make any attempt to mitigate his damages.

5. Whether a new trial should be granted on the ground that the jury verdict must have been the result of passion and prejudice because, in its 30 minutes of deliberation, the jury could not have considered the evidence and the court's instructions as to mitigation of damages."

Appellees have cross-appealed contending the trial court erred in refusing to allow them prejudgment interest and attorney's fees.

The evidence, in the light most favorable to sustaining the jury's verdict, discloses that Central Pipe & Supply Company (Central Pipe) was a corporation wholly owned by Robert Bergman. It got into serious financial difficulties and in January 1979 Bergman, at the suggestion of his bankers, hired 62-year-old Viorel (Vic) Suciu, who had 15 to 20 years of experience "fixing" financially troubled companies, to manage the financial affairs of the corporation. In exchange for his help, Suciu was promised a salary of $40,000 per year, a car, group health and life insurance, and was given 30 per cent of the corporate stock.

It took Suciu about three months to get the company to a break-even point. AMFAC Distributing Corporation (AMFAC), a large conglomerate, had been looking for likely acquisitions and had previously been contacted by Bergman. On May 16, 1979, Bergman and Suciu met with Harry Porter and Frank Torres, vice presidents of AMFAC, and John Richardson, the president of AMFAC, to discuss the possibility of AMFAC acquiring some or all of Central Pipe's assets and on May 23, 1979, an acquisition team consisting of Torres and Porter met with Bergman and Suciu. The negotiations led to an oral agreement whereby AMFAC would take over certain assets and liabilities of Central Pipe for a stated price, leaving Central Pipe, in essence, an empty corporate shell, it being the intent of Bergman and Suciu to use the empty shell and the money received from AMFAC to acquire other businesses.

After a closing schedule was agreed upon, Torres and Porter agreed that AMFAC would keep Suciu as an employee until the end of the year for the transition of the business from Central Pipe to AMFAC. The AMFAC acquisition team also told both Bergman and Suciu that when AMFAC made an acquisition it did not make it with the idea of moving one of their people into the branch but rather what they wanted was local management, with the local flavor and the local "guy" that knew the business to run it autonomously just as though it were his own.

After making the verbal agreements to purchase Central Pipe's assets and to employ Suciu, Torres and Porter flew to Phoenix to close the purchase of a Phoenix plumbing supply operation owned by one Bert Lewin. Torres and Porter never mentioned to Bergman and Suciu that when AMFAC purchased Central Pipe's assets, Lewin would be their boss.

The final documents for the acquisition were drafted by the attorneys for Central Pipe and for AMFAC and were signed on the same day by AMFAC and by Bergman. Torres was present in Tucson as was Lewin, both attending a banquet given by the AMFAC acquisition team for the Central Pipe employees to welcome them to AMFAC. When the banquet was over, Torres left and told Lewin to fire Suciu immediately. Lewin did not get around to firing Suciu until Monday, June 25, 1979, when he told Suciu he was fired and had half an hour to get his desk cleaned up and leave the premises. Suciu protested that he had an agreement to stay on but left anyway.

For the next few months Suciu tried to find the same kind of employment opportunity that he had been involved in for the last 15 to 20 years, in other words, to find a business to "bail out." At the end of 1979, Central Pipe acquired Kasper-Hall Steel, using the money it had acquired from AMFAC. With the acquisition of Kasper-Hall completed, Central Pipe was able to distribute some of the excess cash to Bergman and Suciu as "salary" for the second half of 1979.

AMFAC filed a motion in limine asking the court to preclude the introduction of any testimony concerning the oral contract to keep Suciu as an employee until the end of 1979. It contends that the trial court erred in denying its motion in limine and allowing the introduction and use of such evidence because it violated the parol evidence rule. We do not agree.

Paragraph 12.5 of the agreement between appellant and Central Pipe stated:

"The agreement constitutes and contains the entire agreement of the parties and supersedes any and all prior negotiations, correspondence, understandings and agreements between the parties respecting the subject matter hereof."

Appellant points to this integration clause and to the testimony by Suciu as showing that the written agreement represented the entire agreement and cannot be varied by parol evidence. Suciu testified that he would not have recommended the acquisition if AMFAC had not agreed to keep him on until the end of the year and that Bergman depended on his advice. Appellant's argument is unpersuasive.

The integration clause has no effect on Suciu. He was not a party to the agreement. He was merely a minority shareholder and the transaction was a corporate sale of assets. An analogous situation arose in the case of Lee v. Joseph E. Seagram & Sons, Inc., 552 F.2d 447 (2nd Cir.1977). There a person named Harold Lee and his sons owned 50 per cent of a liquor distributorship. They sold the business to Seagram and claimed that after the sale Seagram broke an oral agreement that it would give Harold Lee's sons another distributorship. The court stated that the over-arching question was whether, in the context of the particular setting, the oral agreement was one which the parties would ordinarily be expected to embody in the writing. In holding that it was not, the court stated:

"Here, there are several reasons why it would not be expected that the oral agreement to give Harold Lee's sons another distributorship would be integrated into the sales contract. In the usual case, there is an identity of parties in both the claimed integrated instrument and in the oral agreement asserted. Here, although it would have been physically possible to insert a provision dealing with only the shareholders of a 50% interest, the transaction itself was a corporate sale of assets. Collateral agreements which survive the closing of a corporate deal, such as employment agreements for particular shareholders of the seller or consulting agreements, are often set forth in separate agreements. See Gem Corrugated Box Corp. v. National Kraft Container Corp., supra, 427 F.2d at 503 ('it is ... plain that the parties ordinarily would not embody the stock purchase agreement in a writing concerned only with box materials purchase terms'). It was expectable that such an agreement as one to obtain a new distributorship for certain persons, some of whom were not even parties to the contract, would not necessarily be integrated into an instrument for the sale of corporate assets. As with an oral condition precedent to the legal effectiveness of an otherwise integrated written contract, which is not barred by the parol evidence rule if it is not directly contradictory of its terms, Hicks v. Bush, 10 N.Y.2d 488, 225 N.Y.S.2d 34, 180 N.E.2d 425 (1962); cf. 3 Corbin on Contracts Sec. 589, 'it is certainly not improbable that parties contracting in these circumstances would make the asserted oral agreement ....' [citation omitted.]" 552 F.2d at 452.

The court also observed that it did not see any contradiction of the terms of the sale since the written agreement dealt with the sale of corporate assets and the oral agreement with the relocation of the lease. Since the oral agreement did not vary or contradict the contract the court found another reason for affirming the district court's admission of the oral agreement into evidence....