Case Name: Marjorie B. PRICE, Plaintiff-Appellee, v. HIGHLAND COMMUNITY BANK and George R. Brokemond, Defendants-Appellants
Court: United States Court of Appeals for the Seventh Circuit
Jurisdiction: United States
Decision Date: 1991-05-03
Citations: 932 F.2d 601
Docket Number: No. 89-3518
Parties: Marjorie B. PRICE, Plaintiff-Appellee, v. HIGHLAND COMMUNITY BANK and George R. Brokemond, Defendants-Appellants.
Judges: Before CUMMINGS, MANION and KANNE, Circuit Judges.
Reporter: Federal Reporter 2d Series
Volume: 932
Pages: 601–609

Head Matter:
Marjorie B. PRICE, Plaintiff-Appellee, v. HIGHLAND COMMUNITY BANK and George R. Brokemond, Defendants-Appellants.
No. 89-3518.
United States Court of Appeals, Seventh Circuit.
Argued Nov. 8, 1990.
Decided May 3, 1991.
Robert S. Minetz, Tom H. Luetkemeyer, James E. McParkland, Hinshaw & Culbertson, Chicago, Ill., for plaintiff-appellee.
Lawrence M. Cohen, Barbara B. Levine, Cary Schwimmer, Jeffrey S. Goldman, Sara F. Mintz, Fox & Grove, Chicago, Ill., for defendants-appellants.
Before CUMMINGS, MANION and KANNE, Circuit Judges.

Opinion:
CUMMINGS, Circuit Judge.
In June 1987 plaintiff Marjorie Price sued Highland Community Bank and its president, George R. Brokemond, in the Circuit Court of Cook County, Illinois, but the suit was thereafter removed by defendants to the federal district court on the ground that federal rights under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., were involved. Count I alleged breach of contract and Count II alleged fraud. Plaintiff dropped her ERISA claim, but the district court retained jurisdiction over the case on the ground that an exception to the general relinquishment of jurisdiction rule of United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), was warranted here because the suit was properly removed by defendants, with the plaintiff subsequently deciding to abandon her federal claim. This ruling has not been con tested since both sides were eager to have the case tried in federal court.
Plaintiff was formerly an assistant vice president of Highland Community Bank ("Highland") in Chicago. She sued Highland and its president Brokemond on the ground that Highland, through Broke-mond, promised that she would benefit from an incentive compensation program as a supplement to her base salary. She accepted the offer to work for Highland in reliance on that promise, but defendants failed to pay her any incentive compensation. She claimed that Highland and Brokemond breached their contract with her and also committed fraud.
Both breach of contract and fraud claims were tried before a jury which returned a verdict in plaintiffs favor on both counts and awarded her $25,000 in compensatory damages for the fraud and breach of contract and $150,000 in punitive damages for the fraud. The trial judge denied defendants' motions for a new trial and for judgment notwithstanding the verdict but did grant them a remittitur reducing the judgment to $25,000 in compensatory damages plus $30,000 in punitive damages against each defendant, for a total of $85,000. 722 F.Supp. 454. Price accepted the remittitur.
Appended to this opinion are the two letters to plaintiff from Brokemond on which she relies. According to Price, the first letter, dated February 11, 1984, prompted her to accept the position at Highland. She worked there from March 1, 1984, until her departure in November 1986 for a new position at the Drexel National Bank. In his letter, Brokemond promised Price an incentive program "structured to pay you some percentage of the income over and above the base requirement of $7-$12,000 per month" in return for Price's obtaining deposits which would generate $7,000-$12,000 in income coming from monthly deposits of $40,000-$50,000. In the second letter, dated August 13, 1984, Brokemond wrote that plaintiff was to be an assistant vice president earning a base salary of $30,000 and'that "the incentive program outlined in my letter dated February 11, 1984 goes into effect immediately." Plaintiff accepted in writing the terms and conditions outlined in the August 13 letter.
According to the evidence, before joining Highland plaintiff was employed at the Continental Bank in Chicago with a salary of $37,200. She agreed to a starting salary of $25,000 at Highland because she believed that the incentive compensation program would supplement her income. Before accepting employment at Highland, plaintiff attended a meeting in Broke-mond's office where he promised to send her a letter concerning the incentive compensation program. That is the February 11 letter discussed above. Five months after Price became an officer of Highland, Brokemond sent her the August 13 letter, also discussed above, stating that the incentive compensation program would go into effect immediately.
Brokemond admitted that he sent the August 13 letter to induce plaintiff to stay at Highland even though he admitted that as of that date he had not agreed to an incentive compensation program for her. Nevertheless, at subsequent meetings, Brokemond discussed the incentive compensation program with plaintiff and other Highland officials, saying that he would finalize that program. In her testimony, Linda Hurley, another Highland vice president, ascribed similar statements to Broke-mond. As noted, the jury agreed with plaintiff's version of the facts and therefore found in her favor.
Breach of contract
Brokemond's letters of February 11 and August 13, 1984, promised an incentive compensation program to plaintiff, and he orally promised plaintiff that he was finalizing the incentive compensation program although he apparently did not intend to do so. Brokemond testified at trial that he never agreed to an incentive compensation program for plaintiff. He breached similar promises to Linda Hurley and Keith Brown, another marketing representative of Highland. The jury considered all of the facts and circumstances concerning the two letters and concluded that Brokemond explicitly promised her the benefit of the in centive compensation program. Western Industries, Inc. v. Newcor Canada, Ltd., 739 F.2d 1198, 1205 (7th Cir.1984); La Salle Nat'l Bank v. General Mills Restaurant Group, Inc., 854 F.2d 1050, 1052 (7th Cir.1988).
As the trial judge noted, it was reasonable for the jury to conclude that there was a breach of contract in this case in view of Brokemond's oral promises to plaintiff and his letters of February 11 and August 13. In the opinion below, he added:
The jury could reasonably have found that Price was the "procuring cause" of any business that she had a significant influence in bringing into or retaining for the bank, even though it was from an existing customer.
District Court Decision at 9. Thus there was ample evidence to support the breach of contract count.
Fraud
Plaintiffs theory of fraud was that the defendants never intended to implement the incentive compensation program and that defendants used the program to induce her to work for Highland. Whereas the letters of February 11 and August 13 promised to implement that program, other evidence convinced the jury that the defendants had no intention of doing so. For instance, Brokemond testified that he never intended to commit himself to establish the promised incentive compensation program. That was sufficient evidence for the jury to find fraud. Since the deliberate misrepresentations by Brokemond persuaded plaintiff to work for Highland, the jury was entitled to infer that fraud induced her to accept Highland's offer. Given that her current employment at another bank pays Price an annual salary of $45,000 and that she previously earned $37,200 annually at the Continental Bank, plaintiff plainly expected greater compensation from Highland than her $30,000 base salary. The separate elements for actionable fraud have been shown in satisfaction of the requirements set forth in Brudnicki v. General Electric Co., 535 F.Supp. 84, 88 (N.D.Ill.1982), on which defendants rely (Reply Br. 8-9). There the district court permitted the plaintiff to preserve a fraud claim, because it read Illinois law to permit such a claim where a false representation to perform a future act is the "deliberate device" used to induce the plaintiff to enter an agreement to his detriment.
Instructions
The defendants cannot rightly fault jury instruction 10 stating that there would be an enforceable obligation if defendants' policies or statements contained "a promise clear enough that an employee would reasonably believe that an offer had been made." This was taken from Duldulao v. St. Mary of Nazareth Hospital Center, 115 Ill.2d 482, 490, 106 Ill.Dec. 8, 505 N.E.2d 314 (1987). Here the two letters and oral statements of Brokemond warranted the instruction.
Likewise instruction 20 was not erroneous as to proving fraud in that it used a preponderance of the evidence standard for compensatory damages. The fraud instruction told the jury that plaintiff had the burden of proving fraud by clear and convincing evidence. Therefore the jury was not misled.
T)n.m.n.np.s
Highland asserts that the jury award of $25,000 in compensatory damages was excessive. The compensatory damages awarded plaintiff for her two years and eight months employment amounted to $9,375 per year or $25,000. However, plaintiff produced evidence of $40,000 in damages, less than her present earnings at the Drexel National Bank and only slightly more than her earnings at the Continental Bank. As the trial judge put it in his opinion:
Since the incentive program was never fully specified or implemented, there was an inescapable but permissible element of speculation involved in estimating what incentive compensation she would have earned but for the defendants' misconduct.
District Court Decision at 12. As plaintiff observes, the evidence supported the jury's award of damages because the jury, when it arrived at a figure, had the client assignment list of the defendant bank, evidence of the work performed by Price with regard to each of the assigned clients, the 1985 new business analysis showing the increase in each business category attributable to the plaintiff, and the actual production figures for all of Price's accounts (Br. 39-40). In these circumstances we are unwilling to upset the $25,000 compensatory damages award.
As to the $30,000 punitive damages each defendant must pay under the remittitur, Brokemond complains that he should not be liable for this amount because his seemingly modest financial status was not adduced. Defendants state that Brokemond does not earn even a fraction of the bank's $800,000 net income (Reply Br. 18). However, in the case of a defendant of seemingly modest means, a plaintiff "may obtain an award for such [punitive] damages without introducing evidence of the defendant's monetary resources." Wilson v. Colston, 120 Ill.App.3d 150, 153, 75 Ill.Dec. 600, 457 N.E.2d 1042 (5th Dist.1983). As to the financial status of the bank, the record shows that the punitive damages awarded against it is only a small part of its 1988 profits. The amount awarded against each defendant was easily justified by the blatant fraud committed. Consequently, the amount of $30,000 specified in the remittitur, which consisted of a year's Highland salary to plaintiff as damages from each defendant for fraud, was well within bounds.
While defendants submit that the award of punitive damages violates the Fifth and Fourteenth Amendments, the Supreme Court recently answered this argument, upholding the constitutionality of punitive damages except in limited circumstances inapplicable here. Pacific Mutual Life Ins. Co. v. Haslip, — U.S. -, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991). Defendants have been unable to show that the $30,000 imposed against each under the remittitur caused them any undue hardship.
Judgment affirmed.
APPENDIX
. Highland's assets and net income were shown to be $80 million and $800,000 respectively in 1988.