Opinion ID: 200478
Heading Depth: 2
Heading Rank: 3

Heading: Officers' Alternative Theory

Text: 25 The Officers assert that even if they resigned, they entered into a later contract with Hudson. In an email message to the Officers, after Hudson writes that he considers the Officers resigned, he writes: 26 As [the Officers] have resigned there seems to be no requirement to pay termination. On the other hand I believe the [Rathje] and [Persson] contracts would normally provide for termination of two or three months if the Company had terminated their employment. I am prepared to pay this sum to each on an ex gratia basis, given a proper and fully cooperative handover to the satisfaction of ISP during the next 14 days. 27 (Emphasis added.) Asked for clarification by the Officers, Hudson reiterated his offer in another email message, also noting that Sjöström was entitled to termination pay in his capacity as chief engineer. 28 The Officers claim that they worked through April 20, satisfying their obligation under the new contract, but did not receive any pay for their termination periods. Thus, they assert that SPC is in breach and liable for damages. 29 The Officers contend that the court improperly excluded evidence of this new contract as an inadmissible offer of settlement. They maintain that the district court should have read their complaint broadly to incorporate two claims — one for breach of employment contract, and one for a separate contract formed after employment had ceased. SPC argues that the district court did consider both arguments, and implicitly found that no new contract was formed. 30
31 Upon review of the record, we find that the district court did not consider the issue of whether or not a separate contract was formed between SPC and the Officers. At trial, the court stated that it was clear that this is a claim of breach of an employment contract. The district court admitted the above email messages only for the purpose of completeness of the story of the parties' ongoing dealings rather than as proof of SPC's liability for, or the invalidity of, a claim or its amount. Rathje, at , n. 13, 15, 16, 2002 U.S. Dist. LEXIS 4078, at , n. 13, , n. 15, , n. 16. 32 In its findings of fact, the court stated only that [n]egotiations between Hudson and the Plaintiffs concerning his offered `ex gratia' payments broke down. Id. at 8, 2002 U.S. Dist. LEXIS 4078 at . In its conclusions of law, the court considered Hudson's email messages offering termination pay only for their potential effect on a breach of employment claim by the Officers — and found that there was no effect because the employment had already ceased when the statements were made. Id. at , 2002 U.S. Dist. LEXIS 4078 at -46. It is therefore clear that the court read the complaint only to incorporate a breach of employment claim, and not to also include a breach of a separate contract between the parties. 33
34 We now consider whether it was error for the district court to exclude the claim. A complaint must include a short and plain statement of the claim showing that the pleader is entitled to relief and a demand for judgment for the relief the pleader seeks. Fed.R.Civ.P. 8(a). This simplified pleading standard must give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A breach of contract complaint must allege (1) the existence of a valid and binding contract; (2) that plaintiff has complied with the contract and performed his own obligations under it; and (3) breach of the contract causing damages. 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1235, at 268-70 (2d ed.2002). 35 The Officers claim that the following language identifies a claim for breach of a separate contract: 36 [T]he plaintiffs conferred by facsimile and/or emails on several occasions resulting in the wrongful termination of plaintiffs. In any event, defendants agreed that plaintiff's last day of work would be April 20, 2001 and that they would be paid their wages, vacation days and time off in accordance with their contracts for that period of time that there was to be a notice of termination as stated in their contracts. 37 (Emphasis added.) 38 While the Officers' complaint clearly establishes a breach of employment contract claim, it fails to set forth the basic elements to show that a separate contract was formed by the parties after conclusion of the employment relationship. The complaint states that defendants agreed that plaintiffs would work two weeks and be paid their notice of termination period but does not explain how this agreement arose, whether it was a binding contract, whether plaintiffs performed under the contract, and whether defendants breached the contract. It therefore is insufficient to establish a claim for breach of a subsequent contract. The district court properly read the complaint to only include a breach of employment contract claim.