Massmanian v. B. Bros. Packaging, Inc.

Not for Publication in West's Federal Reporter
Citation Limited Pursuant to 1st Cir. Loc. R. 32.3
United States Court of Appeals
For the First Circuit
No. 03-2469
PETER MASSMANIAN,
Plaintiff, Appellee,
v.
B. BROS. PACKAGING, INC. d/b/a FOX PACKAGING COMPANY,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, Senior U.S. District Judge]
Before
Boudin, Chief Judge,
Selya and Howard, Circuit Judges.
Gael Mahony with whom Paul Killeen, Damon M. Seligson and
Holland & Knight, LLP were on brief, for appellant.
Laura R. Studen with whom Lawrence P. Murray and Burns &
Levinson, LLP were on brief, for appellee.
September 14, 2004
HOWARD, Circuit Judge. B. Bros. Packaging, Inc., d/b/a
Fox Packaging Co. (“Fox”), challenges a $300,000 judgment in favor
of its former employee, Peter Massmanian. After a seven-day trial,
a jury found that Fox, a Minnesota-based manufacturer of windshield
washer fluid, used false promises to lure Massmanian away from a
comfortable job with a Massachusetts competitor. Fox alleges a
failure of proof on critical elements of Massmanian's claim of
deceit and an absence of damages under a theory of mitigation. We
affirm.
In reviewing the district court's denial of Fox's motion
for judgment as a matter of law, we recite the relevant facts in
the light most favorable to the jury verdict. Santos v. Sunrise
Medical, Inc., 351 F.3d 587, 590 (1st Cir. 2003). In 1997, Elliot
Badzin, a co-owner of Fox, recruited Massmanian to oversee Fox's
operations in Minnesota and California. Massmanian testified that
while negotiating his three-year employment contract with Fox,
Badzin discussed the possibility of opening a Massachusetts
manufacturing facility in a few years, and promised that Massmanian
would have an ownership interest in such a venture. Badzin
declined to put his promise in writing, stating that it could
create legal problems because Massmanian had a two-year non-compete
agreement with his former employer in Massachusetts. Massmanian’s
employment contract with Fox contemplated that his severance
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package and bonus would be eliminated “[w]hen and if the parties
agree upon a plan for [Massmanian] to acquire stock” in Fox.
Massmanian worked for Fox a few years, ultimately
overseeing the operations of the Massachusetts facility when it
opened in September 1999. Massmanian repeatedly asked Badzin to
follow through on his promise to make him a partner in the
Massachusetts venture. Massmanian testified that Badzin told him
on numerous occasions that a partnership agreement would be
forthcoming and that Massmanian would have a ten percent share. In
January 2001, frustrated by Badzin’s failure to proffer a
partnership agreement, Massmanian resigned.
In March 2001, Massmanian brought suit in Middlesex
Superior Court, alleging breach of contract and deceit. Fox
removed the case to federal court on the basis of diversity. 28
U.S.C. §§ 1332, 1441. Following a seven-day trial, a jury
concluded that there had been no enforceable contract between
Massmanian and Fox, but that Fox had used intentional or reckless
misrepresentations to induce Massmanian to become an employee. The
jury awarded $300,000 to Massmanian. Fox appealed.
Fox contends that Massmanian failed to prove critical
elements of his claim for deceit. We will not disturb the jury
verdict unless “the facts and inferences point so strongly and
overwhelmingly in favor of the movant that a reasonable jury could
not have reached a verdict against that party.” Santos, 351 F.3d
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at 590. Our review is therefore weighted in favor of the jury’s
verdict.
Fox alleges a dearth of record evidence demonstrating an
intention to mislead. Because the statement at issue here was
promissory in nature, Massmanian bore the burden of proving that at
the time the promise was made, Fox (acting through Badzin) did not
intend to carry it out. See McEvoy Travel Bureau, Inc. v. Norton
Co., 408 Mass. 704, 709 (1990); Barrett Assoc., Inc. v. Aronson,
346 Mass. 150, 152 (1963). A promise made with an intent to follow
through is not actionable in deceit, even if the promise ultimately
goes unfulfilled. See Palmacci v. Umpierrez, 121 F.3d 781, 787
(1st Cir. 1997). Therefore, under Massachusetts law, mere
nonperformance of a promise is not enough to prove a promisor’s
intent to deceive. Galotti v. United States Trust Co., 335 Mass.
496, 501 (1957) (citing Restatement (First) of Torts § 530 cmt. c
(1938)); Zhang v. Massachusetts Institute of Tech., 46 Mass. App.
Ct. 597, 605–06 (1999) (citing Restatement (Second) of Torts § 530
(1977)).
According to Fox, Massmanian’s only evidence of Fox’s
intent to mislead was the fact that he never became a partner in
the Massachusetts venture. We disagree. At trial, Badzin denied
ever promising any equity interest to Massmanian. The jury
apparently rejected this critical testimony when it found that Fox
intentionally or recklessly made representations on which
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Massmanian relied. The jury could have found that Badzin was not
credible; this would have been a relevant consideration where
Badzin’s intention to follow through on his promise was at issue.
On these facts, a reasonable jury could have found that Badzin
never intended to make Massmanian a partner.
Fox also alleges that no reasonable jury could conclude
that Massmanian reasonably relied on the promise of future
partnership. It argues that such reliance would have been
unreasonable because it was contradicted by the plain language of
Massmanian’s employment contract, which eliminated his severance
benefits and bonus “[w]hen and if the parties agree upon a plan for
[Massmanian] to acquire stock” in Fox. This language, Fox
contends, “unambiguously states that the parties had reached no
agreement regarding a stock ownership interest by Massmanian.” We
note the jury’s agreement with this interpretation to the extent
that it rejected Massmanian’s claim for breach of contract. But we
cannot conclude that language like this in an employment contract
forecloses any claim that a future partnership was promised.
Indeed the language suggests that the parties foresaw the
possibility of future partnership, but that there had not yet been
a meeting of the minds on the subject. We find no conflict between
the written employment contract and the oral promise made to
Massmanian that would have rendered his reliance unreasonable. Cf.
Turner v. Johnson & Johnson, 809 F.2d 90, 97 (1st Cir. 1986)
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(rejecting deceit claim where the alleged oral representation was
flatly inconsistent with a contract provision specifically
addressing the particular point at issue).
Fox further argues that any promise it made was too vague
and indefinite to justify reasonable reliance because at the time
Badzin was recruiting Massmanian, Badzin did not specify the size
of the ownership interest Massmanian would receive. Indeed,
Massmanian testified that no particular percentage was promised —
he simply expected that the partnership would be "fair." We think
the promise is comparable to that made in Hurwitz v. Bocian, 41
Mass. App. Ct. 365, 373 (1996), where the defendant claimed that an
"unconfirmed oral promise that [the plaintiff] would some day have
an opportunity to become a 'partner' . . . was not a promise on
which a prudent person could reasonably rely." The Massachusetts
Appeals Court found that although the promise was not made in a
manner that satisfied the statute of frauds, the plaintiff
presented sufficient evidence that a promise in fact had been made.
Id. Fox attempts to distinguish this case on the ground that the
promise in Hurwitz was one of equal partnership, thus the
percentage of the promised share was known. But we think the jury
could have found that Fox promised Massmanian an interest in the
company, and that whether the share ultimately offered was one
percent or ninety-nine percent, Massmanian could have reasonably
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relied on the promise of some interest in agreeing to work for
Fox.1
Fox’s remaining argument is that Massmanian should not
have recovered any damages because after he left his employment
with Fox he secured a job and an equity interest in his new company
worth far more than anything Badzin had ever promised him. Fox
contends that the district court failed properly to instruct the
jury on the issue of mitigation. But Fox did not object to the
jury instructions as given, and we therefore review them only for
plain error. See Estate of Keatinge v. Biddle, 316 F.3d 7, 16 (1st
Cir. 2002). Under this unforgiving standard, the party claiming
error must prove an error that is obvious, that likely affected the
outcome, and that was so fundamental that it threatened the
fairness, integrity or public reputation of the judicial
proceedings. See id. (citing United States v. Olano, 507 U.S. 725,
1
Fox also alleges that promises that Massmanian would receive
a ten percent share in the Massachusetts venture, which allegedly
were made around the time Massmanian's employment contract expired
in 2000, were not actionable because Massmanian did not rely on
them to his detriment. Massmanian had accepted a reduction in
salary at the time — a change he contends was made as part of an
agreement that he would receive a share in the business. Fox argues
that because Massmanian had become an at-will employee, he was not
entitled to any continued employment at all; therefore any decision
to stay based on a promise of partnership could not have been to
his detriment. Although we question whether this issue is
necessary to our affirmance of the judgment on the basis of the
representations made during Massmanian's recruitment, we think a
reasonable jury could have found that these promises induced
Massmanian to stay on at Fox and thereby refrain from exercising
his right to leave the company.
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735-36 (1993)); see also United States v. Colon Osorio, 360 F.3d
48, 52 (1st Cir. 2004).
The instruction proposed by Fox essentially told the jury
that if Massmanian, as a result of his departure from the company,
got a job whose stock incentive plan proved to be very lucrative,
then the damages from the deceitful promise should be automatically
disregarded. Whatever the correct state of the law on the tricky
issue of windfall gains made possible by a prior wrongful act,
telling the jury that the wrongdoer automatically gets the benefit
cannot be right. The refusal to give the requested instruction was
not error at all. See United States v. David, 940 F.2d 722, 738
(1st Cir. 1991). ("It is beyond peradventure that a trial court
may refuse to give a proposed instruction which is incorrect,
misleading, or incomplete in some material respect.")
Affirmed.
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