Townsend v. Daniel-Mann, s. 98-1313

• Decision Date: 15 November 1999
• Docket Number: Nos. 98-1313,98-1337,s. 98-1313
• Citation: 196 F.3d 1140
• Parties: Page 1140 196 F.3d 1140 (10th Cir. 1999) DANIEL T. TOWNSEND, Plaintiff - Appellee and Cross- Appellant, v. DANIEL, MANN, JOHNSON & MENDENHALL, a California corporation, Defendant - Appellant and Cross-Appellee. UNITED STATES COURT OF APPEALS TENTH CIRCUIT
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1140

196 F.3d 1140 (10th Cir. 1999)

DANIEL T. TOWNSEND, Plaintiff - Appellee and Cross- Appellant v DANIEL, MANN, JOHNSON & MENDENHALL, a California corporation, Defendant - Appellant and Cross-Appellee.

Nos. 98-1313, 98-1337

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

Novenber 15, 1999

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OFCOLORADO. D.C. No. 97-Z-604

[Copyrighted Material Omitted] Blain D. Myhre (Juli E. Lapin, Theresa L. Corrada, with him on the briefs), Isaacson, Rosenbaum, Woods & Levy, P.C., Denver, Colorado, for Plaintiff-Appellee and Cross-Appellant.

Andrew M. Low (Janet A. Savage, Kenzo S. Kawanabe, with him on the briefs), Davis, Graham & Stubbs, L.L.P., Denver, Colorado, for Defendant-Appellant and Cross-Appellee.

Before SEYMOUR, Chief Judge, PORFILIO, and KELLY, Circuit Judges.

KELLY, Circuit Judge.

Defendant-Appellant and Cross-Appellee, Daniel, Mann, Johnson & Mendenhall ("DMJM"), appeals from a judgment on a jury verdict in favor of Plaintiff-Appellee and Cross-Appellant, Daniel Townsend ("Townsend"), on a breach of contract claim. DMJM argues that the district court erred in denying: (1) DMJM's motion for judgment as a matter of law based upon insufficient evidence of contract formation between DMJM and Townsend; and (2) DMJM's motion for remittitur. Townsend cross-appeals, contending that the trial court erred when it (1) denied front pay damages and refused to allow the jury to consider evidence of such damages; (2) refused to instruct the jury that it could award emotional distress damages for the breach of contract; (3) denied Townsend's motion to amend his complaint to add a claim of misrepresentation; and (4) awarded sanctions against Townsend for failing to supplement his responses to discovery questions when further information became available. Our jurisdiction in this diversity action arises under 28 U.S.C. § 1291 and we affirm on all issues except the imposition of sanctions.

Background

Daniel Townsend began working for DMJM, an architectural and engineering firm, in 1986. He was promoted to vice-president of the firm in 1989, a position he held until his termination in 1996. In 1992, Townsend was diagnosed with a terminal illness, chronic myeloid leukemia. Initially, Townsend did not disclose his illness, but later told two co-workers about it. According to Townsend, as word of his illness spread, he noticed a marked decrease in his autonomy and responsibilities. He testified that DMJM management began to pressure him to quit and apply for disability benefits. Dissatisfied with his options under standard DMJM disability policies, Townsend sought to negotiate an agreement that would allow him to go on disability, thereby reducing company overhead, while maintaining his insurance benefits until his death or age 65. Whether an agreement was reached between the parties, and its terms, is controverted.

Mr. Townsend testified that his primary intent in going on disability was to maintain his benefits until he died or turned 65. To this end, he told DMJM's president that he wanted to propose an alternate employment arrangement, and the president told him to work with William Cavanagh ("Cavanagh"), another vice-president and the company's chief financial officer. After discussing his situation with members of the company's benefits department, the human resources department, and other DMJM employees, Townsend came up with a plan. Townsend testified that his understanding of the plan was that it would enable him to: (1) go on short-term disability for 90 days; (2) return to work after that time and then go on long-term disability during which time he would work eight hours per week at one-fifth of his previous salary; and (3) remain employed by DMJM until his death or age 65, whichever came first. This plan would be an exception to DMJM's usual policy that an employee generally must work a minimum of 30 hours per week to retain health and life insurance benefits.

On August 8, 1994, Townsend had a conference call with Cavanagh, Dolly Kelly (the Denver office manager), Linda Neilson (manager of human resources), and Gil Butler (another DMJM vice-president). The content of the call is disputed, with Townsend testifying that an agreement was reached with respect to all aspects of his plan, including duration of employment, and others testifying that duration was not specifically discussed.

The next day, Townsend sent a memo to Cavanagh confirming his understanding of the agreement. The memo included the all-important proviso that the arrangement "would be in effect until my death or retirement whichever occurs first." Cavanagh responded by memo that he was in "conceptual agreement as to a likely course of events," but stated that he "would delete [the section on employment until death or retirement] in its entirety because . . . it implies a guarantee of future employment and benefits, something DMJM is not authorized to do under any circumstances for any employee."

Townsend testified that he viewed the statement concerning duration as contrary to the purpose of the negotiated agreement duration was integral. He regarded the statement as Cavanagh's opinion, rather than company policy, so he called Gerald Seelman ("Seelman") to discuss it. Seelman was the corporate vice-president (the second highest position in the company), and a personal friend. According to Townsend, he told Seelman of his concerns about Cavanagh's statement without the duration term there was no agreement and he would not go on disability. According to Townsend, Seelman told Townsend to go on disability and not worry about the memo because "we have the agreement we talked about" and added "If you can't trust your friends, who can you trust?"

Based on these assurances, Townsend voluntarily relinquished his full-time position and shortly thereafter went on short-term disability. After 90 days of short-term disability, he returned to work for one day and went on long-term disability as scheduled. As part of his agreement, Townsend was to work eight hours per week at home while on long-term disability. At first, Townsend reviewed company documents, but the flow of work slowed and eventually stopped. Townsend testified that he continued to ask for work. Regardless, it is not disputed that DMJM stopped sending work, though Townsend continued to bill his time and DMJM continued to pay him.

In August 1996, Seelman told Townsend he did not know whether Townsend could be kept on the payroll much longer. Townsend then reminded Seelman of the prior agreement, and Seelman said he would look into it. On September 28, 1996, Townsend received Seelman's letter terminating Townsend retroactively to August 30, 1996. Townsend tried to contact Seelman, but Seelman would not return his calls. Townsend brought this action against DMJM based upon breach of contract, promissory estoppel and the ADA. The jury awarded him damages of $303,787.00 on the breach of contract claim, while finding for DMJM on the other claims.

Discussion

A. Contract Formation

DMJM first argues that it was entitled to judgment as a matter of law because the evidence will not support contract formation. Appellate review is de novo. See Greene v. Safeway Stores Inc., 98 F.3d 554, 557 (10th Cir. 1996). Judgment as a matter of law is appropriate "only if the evidence points but one way and is susceptible to no reasonable inferences supporting the party opposing the motion." Vining v. Enterprise Fin. Group, Inc., 148 F.3d 1206, 1213 (10th Cir. 1998) (citation omitted). In reviewing, "we may not weigh the evidence, pass on the credibility of witnesses, or substitute our judgment for that of the jury." Wolfgang v. Mid-America Motorsports, Inc., 111 F.3d 1515, 1522 (10th Cir. 1997). Additionally, the evidence and its inferences are construed in favor of the non-movant. See Kinser v. Gehl Co., 184 F.3d 1259, 1267 (10th Cir. 1999). Given these standards, the district court properly denied DMJM's motion for judgment as a matter of law.

DMJM makes four arguments on this issue. First, no offer and acceptance occurred because Townsend's first offer was rejected, and it was not renewed when Townsend spoke to Seelman. Second, even if the offer was renewed, Seelman's response was too vague to constitute an acceptance. Third, even if Seelman did accept the offer, Seelman was without authority to bind the company. Fourth, even assuming contract formation, it would be void for lack of consideration. For the reasons discussed below, each argument is rejected.

1. Offer and acceptance

Under Colorado law, "when the existence of a contract is in issue, and the evidence is conflicting or admits of more than one inference, it is for the jury to decide whether a contract in fact exists." I.M.A., Inc. v. Rocky Mountain Airways, Inc., 713 P.2d 882, 887 (Colo. 1986). This is just such a case. DMJM's sufficiency of the evidence argument discounts testimony by Townsend and other witnesses, that if believed, could establish the basis for a contract.

DMJM contends that Townsend's initial offer, contained in the memo sent to Cavanagh on August 9, 1994, was rejected by Cavanagh's memo the following day. According to DMJM, Cavanagh's reply, rejecting one part (the duration) of the offer, constitutes a rejection of the whole offer. Generally, under the common law, rejection of one term of an offer constitutes a rejection of the entire offer. See Nucla Sanitation Dist. v. Rippy, 344 P.2d 976, 979 (Colo. 1959). However, this principle does not end the inquiry in this case.

The jury could have believed that the agreement was reached during the conference call on August 8, 1994. Townsend's testimony of an agreement reached on that day was corroborated by Dolly Kelly, DMJM's Denver office manager. She testified that Townsend's August 9, 1994 memo to Cavanagh, which she typed, "comported with her understanding of the agreement that had been reached." She...