United States Court of Appeals

FOR THE EIGHTH CIRCUIT

 

No. 97-3979

 

Mann Brothers Logging, Inc. *

*

Appellee, *

* Appeal from the United States

v. * District Court for the

* Western District of Arkansas.

Potlatch Corporation, *

*

Appellant. *

 

Submitted: May 13, 1998

 Filed: July 9, 1998

 

Before BOWMAN, Chief Judge, HEANEY and HANSEN, Circuit Judges.

 

HEANEY, Circuit Judge.

Potlatch Corporation (Potlatch) appeals from a jury verdict awarding Mann

Brothers Logging, Inc. (Mann Brothers) $240,000 for breach of an oral contract.

Potlatch challenges the district court’s jury instructions concerning the elements of

contract formation and whether the contract could be for a reasonable duration; the

sufficiency of the evidence as it relates to whether there was an oral contract; and the

jury’s damage award. We affirm.
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I.

At trial the parties presented the following evidence: On October 1, 1991,

Potlatch’s woodlands manager for Arkansas, Dr. Bill Pope, decided to hire Mann

Brothers as an independent logging contractor. According to Pope, Potlatch was

interested in developing long-term relationships with its independent contractors.

Because Mann Brothers was a relatively small operation, Pope recognized that Mann

Brothers would have to make additional hires and purchase more equipment in order to

supply Potlatch with the logging services it required. On October 21, 1991, Mann

Brothers signed a written contract with Potlatch providing that Mann Brothers would

provide logging services to Potlatch until December 31, 1991. According to Pope, the

purpose of the short-term contract was to establish a formal relationship with Mann

Brothers and to outline Mann Brothers’ job responsibilities, including cutting, skidding

and hauling logs. The contract also covered indemnification issues. According to Pope,

the parties did not intend for the written contract to dictate the ultimate length of Mann

Brothers’ work. Rather, the primary purpose of the written contract was to ensure that

Mann Brothers complied with insurance requirements. 

In February 1992, Pope and Mark Mann (Mann), one of Mann Brothers’

partners, discussed Mann Brothers future relationship with Potlatch. Pope assured

Mann that if Mann Brothers invested in equipment, Potlatch and Mann Brothers would

have a long-term relationship. In turn, Mann Brothers assured Potlatch that it would be

available full-time and year-round. Shortly after Mann and Pope met, Mann Brothers

purchased equipment, including an additional loader. 

Throughout 1992 and 1993, Pope repeatedly assured Mann Brothers that its

equipment purchases were justified and reconfirmed that Potlatch would provide years

of work for Mann Brothers. Mann Brothers continued to assure Potlatch that it would

be available full-time and year-round. During the same period, Pope informed

Potlatch’s independent contractors, including Mann Brothers, that there would continue
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to be increased production and an increased need for logs. In response, Mann Brothers

bought an additional skidder in the spring of 1993 to increase its production. 

Potlatch opened a new logging mill in January 1994. After Potlatch again assured

Mann Brothers that there was sufficient work in the future, Mann Brothers purchased

more logging equipment. In May 1994, Potlatch informed Mann Brothers that it needed

to purchase an additional dozer to enhance production. After a tour of the new Potlatch

logging mill in September 1994, Mann Brothers purchased a loader in order to

maximize production. Mann testified that, when Pope confirmed that there would be

years of work for Mann Brothers, he assumed Pope meant at least 4 or 5 years based

on the amount and cost of the equipment Pope suggested Mann Brothers purchase. 

Pope left Potlatch in June 1994. On December 9, 1994, Potlatch terminated

Mann Brothers, effective December 31, 1994. Pope stated that if he had stayed at

Potlatch, he would have honored the oral agreement he believed Potlatch had with

Mann Brothers. Pope also testified that it was customary in the timber industry to make

oral contracts and to memorialize such agreements with a hand shake. Pope

acknowledged that the fact Potlatch terminated its relationship with Mann Brothers in

the winter made it extremely difficult for Mann Brothers to find work.

Mann Brothers was forced to sell its logging equipment from which the proceeds

were applied to its outstanding bank debt. In addition, Mann Brothers’ certified public

accountant, Ricky Mercer, testified that Mann Brothers had lost profits of $389,140 for

the relevant time period, although the lost profits were off-set by other income earned

by Mann Brothers after Mann Brothers was terminated. Following the trial, the jury

returned a verdict in favor of Mann Brothers on its breach of contract claim and

awarded damages of $240,000. Potlatch now appeals.
 In Crain Industries, Inc. v. Cass, 810 S.W.2d 910 (Ark. 1991), the Arkansas

Supreme Court reviewed trial court instructions to determine whether a jury had been

properly charged as to the elements and formation of a contract under Arkansas law.

Id. at 915. In Crain, the court approved a jury instruction that said “manifestation of

mutual assent to the terms and conditions of the contract” must be demonstrated. Id.

at 915-16. 

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II.

 Potlatch challenges certain jury instructions, the sufficiency of the evidence as

to whether there was an oral contract, and the jury’s damage award. Potlatch first

argues that the district court erred by failing to instruct the jury on the elements and

formation of a contract. We review jury instructions for an abuse of discretion. Klisch

v. MeritCare Med. Group, 134 F.3d 1356, 1358 (8th Cir. 1998). “When reviewing jury

instructions, this court’s review is limited to whether the instructions, viewed on the

whole, fairly and adequately represent the evidence and applicable law in light of the

issues presented to the jury in a particular case.” Id. (citation omitted)

In this case, the district court instructed the jury that there “must be an offer by

one side that is accepted and agreed to by the other.” (Appellant’s App. at 493.) The

district court’s jury instruction is consistent with the instruction approved of in Crain

Industries, Inc. v. Cass, 810 S.W.2d 910, 915-16 (Ark. 1991). Crain counsels that a 1

proper contract instruction communicates an “objective theory” of contract law. Id. at

916 (citation omitted). We believe that the district court provided an “objective theory”

of contract law under Arkansas law and did not abuse use its discretion. Having

reviewed the jury instructions, on the whole, we conclude that they fairly and accurately

represent the evidence and applicable Arkansas law in light of the issues presented to

the jury.

Potlatch next argues that the district court erred when it provided the following

jury instruction:
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Where a contract contains no express agreement as to how long it

will last, a reasonable duration may be implied by the nature of the

contract or from the surrounding circumstances. The law does say not

specifically how long would be reasonable. That’s for you to decide.

When a contract fixes no time for its duration, and none can be implied by

the nature of the contract and surrounding circumstances, the contract may

be terminated at the will of either party.

(Appellant’s App. at 495.) Specifically, Potlatch argues that the district court erred by

instructing the jury that it could infer a reasonable duration to the oral contract. Potlatch

cites several cases holding that a contract of indefinite duration may be terminated at

will. See, e.g., Union Nat’l Bank v. Federal Nat’l Mortgage Ass’n, 860 F.2d 847, 853

(8th Cir. 1988) (holding that traditional commercial contract provided for termination

at will under Arkansas law); Gary Braswell & Assocs. v. Piedmont Indust., Inc., 773

F.2d 987, 989 (8th Cir. 1985) (under Arkansas law, only a contract of an indefinite

duration may be terminated at will); Griffin v. Erickson, 642 S.W.2d 308, 310 (Ark.

1982) (holding that an employment contract of an indefinite duration is terminable at

will); Delony v. Rucker, 302 S.W.2d 287, 290 (Ark. 1957) (holding that a contract of

an indefinite duration is terminable at will).

Although Mann Brothers agrees with the district court’s instruction that contracts

of an indefinite duration are terminable at will, it cites Jefferson Smurfit Corp. v.

Hopkins, 894 S.W.2d 951 (Ark. App. 1995), for the proposition that where there is an

issue of fact as to whether an oral agreement contains a reasonable duration, it is

inappropriate for the court to find as a matter of law that a contract is terminable at will.

Id. at 952. We agree. Thus, when it is unclear from the record that a contract is for an

indefinite duration, “[w]hether justification exists for termination of the contract under

the facts and circumstances of a particular case is usually a question of fact.” Joshua

v. McBride, 716 S.W.2d 215, 218 (Ark. App. 1986) (citation omitted). See also Gary

Braswell, 773 F.2d at 989 (holding that where an oral contract was removed from the

statute of frauds by clear and convincing evidence, under Arkansas law, the defendant
6

could not “terminate the contract at its will. Only a contract of indefinite duration may

be so terminated”) (citing Griffin v. Erickson, 642 S.W.2d 308, 310 (Ark. 1982)). 

In this case, Potlatch made several representations to Mann Brothers that it

wanted to enter into a long-term relationship and promised that there were years of work

available. Based on Potlatch’s representations, Mann Brothers believed 4 or 5 years of

work was available and it made several equipment purchases so that it would be

available to Potlatch full-time and year-round. Unlike the traditional at-will employment

relationship, the record in this case reveals that there was a fact issue as to how long

Potlatch and Mann Brothers would continue a working relationship. Therefore, we hold

that the district court did not abuse its discretion in offering the challenged jury

instruction. 

 Potlatch next argues that, based on the evidence presented at trial, the district

court erred by denying Potlatch’s motion for judgment as a matter of law (JAML) as to

whether Potlatch and Mann Brothers entered into an oral agreement. We review de

novo a denial of a JAML motion based on the sufficiency of the evidence, applying the

same standard as the district court. Triton Corp. v. Hardrives, Inc., 85 F.3d 343, 345

(8th Cir. 1996) (citation omitted). Under this standard, we resolve all conflicts in favor

of Mann Brothers and will reverse only if no reasonable jury could have found for Mann

Brothers. Id. We do not evaluate, consider or weigh the credibility of the evidence and

we will not set aside a jury’s verdict lightly. Id. (citation omitted).

 Under the Arkansas statute of frauds, contracts that are not to be performed

within one year from the contract’s making must be in writing in order to be

enforceable. Ark. Code Ann. § 4-59-101(a)(6). “[T]o take an oral contract out of the

statute of frauds, both the making of the oral contract and its performance must be

proven by clear and convincing evidence.” Dolphin v. Wilson, 942 S.W.2d 815, 818

(Ark. 1997).
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Pope testified that it was common in the logging industry for business to be done

with a hand shake and he did not believe that he needed to memorialize his

conversations with Mann Brothers in a written contract. He also testified that he

honored his word and had intended to enter into a long-term agreement with Mann

Brothers by promising years of work. Mann Brothers also intended to enter into a longterm relationship with Potlatch and had agreed to be available year-round and on a fulltime basis. Moreover, based on Pope’s representations, Mann Brothers made

significant equipment purchases that would enable Mann Brothers to perform the years

of work expected by Potlatch. Based on the level and cost of the equipment purchases,

Mann Brothers believed that at least 4 or 5 years of work was expected by Potlatch.

In our view, sufficient evidence supports the jury’s finding of an oral contract and

sufficient performance to take it out of the statute of frauds. 

Finally, Potlatch challenges the jury award of $240,000 in lost profits to Mann

Brothers. Having carefully reviewed the record and the parties’ submissions, we

conclude that there is no reason to disturb the jury’s damage award.

III.

For the reasons stated above, we affirm.

A true copy.

Attest.

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.