Wilson v. Waggener
| Decision Date | 11 February 1988 |
| Docket Number | No. 87-4396,87-4396 |
| Citation | 837 F.2d 220 |
| Parties | 24 Fed. R. Evid. Serv. 724 Damon K. WILSON, Plaintiff-Appellant, v. A.A. WAGGENER, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Anthony D. Moroux, Charles M. Ponder, III, Domengeaux & Wright, Lafayette, La., for plaintiff-appellant.
L. Lane Roy, Roy & Hattan, Lafayette, La., for defendant-appellee.
Appeal from the United States District Court for the Western District of Louisiana.
Before THORNBERRY, GEE, and POLITZ, Circuit Judges.
Appellant Damon K. Wilson filed this diversity action against A.A. Waggener in the United States District Court for the Western District of Louisiana. Wilson alleged that Waggener had failed to make a $100,000 payment pursuant to the terms of a stock purchase agreement. Following a trial, the district court held that Wilson was barred from collecting the $100,000 because Wilson did not meet the good faith requirement imposed by Louisiana law. Wilson now challenges the district court's finding of bad faith as clearly erroneous. We affirm the district court.
In 1967, A.A. Waggener was one of the initial incorporators of an oil field tool rental company called Petroleum Equipment Tools Company, Inc. (PETCO). In 1976, Waggener became president of PETCO. He hired Damon Wilson to be the company's purchasing agent. D.W. Harrell also worked for PETCO.
In March 1981, Waggener left PETCO to form his own oil tool rental company, Waggener Rental Tools, Inc., which would directly compete with PETCO. Waggener testified that he began setting up the new company while still working for PETCO. When Waggener left PETCO, he took Wilson and Harrell with him to run the new company. As part of Wilson's compensation, he acquired 5% of Oil Service Tools, Inc., the holding company of Waggener Rental Tools, in exchange for a $3,350 promissory note. Wilson also was paid a monthly salary for his work. Harrell had a similar salary and stock plan.
In May 1981 and again in January 1982, Waggener underwent surgery for the removal of a brain tumor. Because Waggener was incapacitated, Wilson and Harrell ran the company. Waggener Rental Tools lost money every year. As a result, sometime in December 1982 Waggener began efforts to sell Waggener Rental Tools.
In January 1983, Waggener entered into a written contract with Wilson. The entire contract, which was in the form of a letter signed by Waggener, was as follows:
Dear Damon [Wilson]:
If we sell Waggener Rental Tools Company on or before June 30, 1983 for $4,000,000.00 or more I will buy your Oil Service Tools, Inc. stock for $150,000.00. If Waggener Rental Tools is sold for less than $4,000,000.00, I will buy your Oil Service Tools, Inc. stock for $100,000.00.
After June 30, 1983 we will talk about a new offer depending on how much cash I have put into Waggener Rental Tools Co. and/or depending on how much the debt has increased during that time frame.
Waggener entered into an identical contract with Harrell. The trial court found that this transaction was structured as a stock purchase "to provide more favorable tax treatment to Damon Wilson than simply a bonus to him would have accomplished in the event the company was sold."
In April 1983, Harrell left the business in an effort to reduce overhead. The court found that
[u]pon his departure, pursuant to the January 1983 letter agreement, and because D.W. Harrell had been a loyal employee but was now being forced of [sic] his job due to financial problems, Waggener offered to give Harrell $50,000.00 less the amount of two promissory notes aggregating $7,999.90. Waggener further proposed to pay Harrell the remaining $50,000.00 if [Waggener Rental Tools] was sold before January 1, 1984.
Waggener then took the company off the market, but in mid-January 1984 notified Wilson that the company was again for sale.
On July 28, 1983, Wilson's contract was renewed, to expire on January 1, 1984. On January 30, 1984, the contract was again renewed, to expire on January 1, 1985. Finally, at the request of Wilson, on September 5, 1984, Waggener executed a contract with identical terms, except that the agreement had no expiration date.
Three weeks after this last contract, on September 21, 1984, Wilson notified Waggener that he was leaving Waggener Rental Tools. On September 26, 1984, Wilson left the business. The trial court found that on or about September 26, 1984, Wilson incorporated his own business, Subrental Tools, Inc., which would compete with Waggener Rental Tools. Subrental Tools officially opened on October 1, 1984.
Waggener sold all of the operating assets of Waggener Rental Tools to PETCO in January 1985 for $2,000,000. After this sale, Waggener Rental Tools engaged in no business (because of a noncompetition clause in the asset-sale agreement) other than passive investment. Because of the sale of assets, Wilson sued Waggener, claiming that pursuant to the agreement Waggener owed him $100,000.
The trial court ruled for Waggener. Although the trial court found the sale of assets to be a sale of the company as contemplated in the contract, the court found that Wilson could not recover because he violated Article 1759 of the Louisiana Civil Code, which imposes a requirement of good faith into all Louisiana contracts. The trial court found that Wilson's and Harrell's contracts were predicated upon their continued employment at Waggener Rental Tools. The court noted that each contract expired by its terms if the business was not sold, and that when Harrell left the business, Waggener was not obligated to pay anything but nonetheless made a gratuitous payment. The court also found that when Wilson convinced Waggener to enter into the contract without an expiration date, Wilson had already determined to stop working for Waggener Rental Tools but did not mention this to Waggener because he knew that with such a disclosure Waggener would not make the new contract. Thus, the court found that Wilson acted in bad faith and could not recover under the contract. Wilson appealed.
Before trial, Wilson made a motion in limine asking that any evidence relating to any duty he might have had to remain in the employment of Waggener Rental Tools be excluded. Wilson argued that such evidence would violate Louisiana's parol evidence rule because it would allow the court to insert an additional term requiring his continued employment into the unambiguous contract. La.Civ.Code Ann. art. 1848; White v. Rimmer & Garrett, Inc., 340 So.2d 283, 285-86 (La.1976) (). The trial court denied Wilson's motion.
In order to preserve the admission of evidence as error for appellate review, an objection must be made at trial. Fed.R.Evid. 103(a)(1). A motion in limine is insufficient to meet this requirement. A party whose motion in limine is overruled must renew his objection when the evidence is about to be...
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