Opinion ID: 2224393
Heading Depth: 1
Heading Rank: 8

Heading: denial of offset

Text: As noted earlier, with regard to the second assignment of error, Emelco urges that the trial judge erred in assessing Kozlik's damages by failing to offset Kozlik's posttermination earnings against the amount otherwise due under the contract because the termination without cause damages language is not applicable, and if it is applicable, it imposes an unenforceable penalty. Applicability of Language. In essence, Emelco contends that the concept of stipulated damages does not apply to employment contracts. It is true, as Emelco argues, that, ordinarily, the measure of damages in a suit for breach of an employment contract for personal services is the amount of salary agreed upon for the period involved, less the amount which the servant earned, or with reasonable diligence might have earned, from other employment. Stiles v. Skylark Meats, Inc., 231 Neb. 863, 867, 438 N.W.2d 494, 498 (1989). It is equally true, however, that parties to a contract may override the application of the judicial remedy for breach of a contract by stipulating, in advance, to the sum to be paid in the event of a breach. See, U.S.D. No. 315 v. DeWerff, 6 Kan.App.2d 77, 626 P.2d 1206 (1981); American Institute of Marketing Sys., Inc. v. Keith, 82 N.M. 699, 487 P.2d 127 (1971). This court has consistently upheld the right of contracting parties to privately bargain for the amount of damages to be paid in the event of a breach of contract, provided the stipulated sum is reasonable in light of the circumstances. Crowley v. McCoy, 234 Neb. 88, 449 N.W.2d 221 (1989); Bando v. Cole, 197 Neb. 722, 250 N.W.2d 651 (1977); Growney v. C M H Real Estate Co., 195 Neb. 398, 238 N.W.2d 240 (1976). Nonetheless, Emelco argues that the provision requiring it to pay Kozlik his regular salary upon a termination without cause should be interpreted as a partial statement of the legal measure of damages for breach of an employment contract, rather than as an expression of intent by the parties to wholly replace the legal measure with a remedy of the parties' own devising and that, therefore, the trial judge should have applied the general legal remedy for breach with an offset of Kozlik's subsequent earnings. However, the relevant contract language is plain and unambiguous. It clearly specifies what Kozlik's damages were to be in the event that his employment was terminated without cause; nowhere does the contract suggest that those damages were to be reduced by the amount of his posttermination earnings. A court is not free to speculate about terms absent from a written contract; where the parties have clearly expressed an intent to accomplish a particular result, it is not the province of a court to rewrite a contract to reflect the court's view of a fair bargain. Wurst v. Blue River Bank, 235 Neb. 197, 454 N.W.2d 665 (1990). More specifically, a court is not free to rewrite a contract so as to provide terms contrary to those which are expressed. See Kansas-Nebraska Nat. Gas. Co. v. Swanson Bros., 215 Neb. 398, 338 N.W.2d 774 (1983). The subject language is a bargained-for contractual provision, which is as applicable to employment contracts as to other contracts. Although in retrospect Helget may be dissatisfied with the bargain he made, it is not for this court to rewrite the contract he executed. Enforceability of Language. As we have concluded that the concept of stipulated damages is applicable to employment contracts, the next question is whether the amount stipulated constitutes liquidated damages and is thus enforceable, or whether it imposes a penalty and is thus unenforceable. Emelco contends that a stipulated damages provision in an employment contract which fails to provide for an offset of posttermination earnings is unreasonable and is therefore an unenforceable penalty. In Growney, 195 Neb. at 401, 238 N.W.2d at 242-43, we held: The question of whether a stipulated sum is for a penalty or for liquidated damages is answered by the application of one or more aspects of the following rule: a stipulated sum is for liquidated damages only (1) where the damages which the parties might reasonably anticipate are difficult to ascertain because of their indefiniteness or uncertainty and (2) where the amount stipulated is either a reasonable estimate of the damages which would probably be caused by a breach or is reasonably proportionate to the damages which have actually been caused by the breach. (Emphasis in original.) See, also, Bando v. Cole, supra . Further explanation is found in Stanford Motor Co. v. Westman, 151 Neb. 850, 858, 39 N.W.2d 841, 846 (1949), quoting Yant Construction Co. v. Village of Campbell, 123 Neb. 360, 243 N.W. 77 (1932): If the damages arising from a breach of the contract are difficult of ascertainment or admeasurement, and if the stipulated amount is not disproportionate to the amount of damages that may be reasonably anticipated from the breach, it will usually be regarded as a provision for liquidated damages. On the other hand, if the damages may be easily and readily ascertained, and if the amount stipulated is more than sufficient to compensate for the breach, it will be regarded as a penalty. Although both of the foregoing quotations focus on the reasonableness of the stipulated damages with regard to an anticipated breach of purchase contracts, we can discern no reason not to apply the same principles to employment contracts. As noted earlier, the reasonableness of the stipulated damages can be judged as of the time the contract was formed. Growney v. C M H Real Estate Co., supra . The evidence demonstrates that as of that time the parties were concerned about protecting Kozlik from the early termination of his employment in view of the client base he had developed and the opportunities available to him in his position with the accountancy firm. As noted in Wassenaar v. Panos, 111 Wis.2d 518, 331 N.W.2d 357 (1983), a discharged employee may suffer permanent injury to professional reputation, as well as loss of career development opportunities. Under the circumstances, the stipulated damages were reasonable when the contract was formed, and the trial court correctly upheld them as liquidated damages.