Opinion ID: 3009677
Heading Depth: 1
Heading Rank: 2

Heading: The Statute of Frauds Issue

Text: Lindsey argues that the district court erred in concluding her breach of contract claim was barred by Delaware's statute of frauds. It provides: § 2714. Necessity of writing for contracts; definition of writing; evidence. (a) No action shall be brought to charge any person upon any agreement . . . that is not to be performed within the space of one year from the making thereof . . . unless the contract is reduced to writing, or some memorandum, or notes thereof, are signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized in writing . . . . Del. Code Ann. tit. 6, § 2714(a) (1993).0 Lindsey argues the statute is satisfied by five written documents when they are considered together with the parties' testimony and other evidence and that her part performance brings this eighteen month contract within the part performance 0 The statute of frauds applies to employment contracts which cannot possibly be performed within one year. Kirschling v. Lake Forest Sch. Dist., 687 F. Supp. 927, 930 (D. Del. 1988) (citation omitted). Lindsey alleges her contract was for eighteen months. 7 exception to the statute. The five documents include the two written proposals; Lindsey's federal employment eligibility verification form; a document containing copies of Lindsey's pay stubs and canceled pay checks; and a document containing copies of canceled checks drawn on Zeccola's account for health insurance reimbursements that were signed by him and made payable to Lindsey. In Delaware a collection of several writings, only one of which is signed, may satisfy the Delaware statute of frauds. Abramson v. Delrose, Inc., 132 F. Supp. 440, 442 (D. Del. 1955). In determining whether any particular writing or writings satisfy the statute, Delaware relies on section 131 of the Restatement (Second) of Contracts which requires that at least one of the writings be signed by the party to be charged and that all the writings taken together: (a) reasonably identif[y] the subject matter of the contract, (b) [are] sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and (c) state[] with reasonable certainty the essential terms of the unperformed promises in the contract. Restatement (Second) of Contracts § 131 (1981); see Kirschling v. Lake Forest Sch. Dist., 687 F. Supp. 927, 931 (D. Del. 1988). It is undisputed that Zeccola's signature appears on some of the five documents. The dispute is over the other three requirements of Restatement section 131. After the district 8 court reviewed all the documents, it held that none of them, singly or together, sufficiently identified the subject matter, duration, job description or hours of employment with the precision needed to satisfy the statute: Plaintiff's first unsigned document . . . contains two different salary proposals. Since plaintiff did not accept either of these proposals, it cannot be considered as identifying the subject matter of the contract. Plaintiff's second unsigned document . . . also sets forth two salary proposals. Although plaintiff eventually accepted one of the two proposals on this page, the document standing alone is deficient since 1) defendant did not sign it and 2) it fails to set forth any specific terms of employment. Moreover, the notation calculated on 18 month's does not conclusively demonstrate an offer for an 18- month contract. Plaintiff's employment verification form . . . payroll records . . . and canceled checks for health insurance . . . all fail to provide job description, hours or other terms of employment. Moreover, none of these three documents contain any internal or direct connection with each other or with the first two documents. Lindsey, slip op. at 7. Lindsey argues that the district court erred in making these determinations. She relies heavily on section 132 of the Restatement. It states [t]he memorandum may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction. Restatement (Second) of Contracts § 132 (1981). Lindsey stresses illustration five. It states: 9 A agrees orally to employ B for two years. An unsigned memorandum of the contract, stating its terms, is prepared at A's direction. Later B begins work and payroll cards are made and initialed by A which state some of the terms but not the duration of the employment. If it is clear that the unsigned memorandum and the payroll cards refer to the same agreement, they may be read together as a sufficient memorandum to charge A. Id. at § 132 cmt. c, illus. 5. This illustration is drawn from Crabtree v. Elizabeth Arden Sales Corp., 110 N.E.2d 551 (N.Y. 1952). Id. at § 132 reporter's note. In Crabtree the documents at issue included two payroll cards signed by the defendant's agents. They contained the parties' names, plaintiff's position and his salary. Crabtree, 110 N.E.2d at 553. Significantly, the second payroll card, prepared by defendant's comptroller at plaintiff's insistence that the original agreement entitled him to a pay raise, noted 'Salary increase per contractual arrangements with [the defendant.]' Id. at 555. The court found this statement certainly constitutes a reference of sorts to a more comprehensive 'arrangement . . . .' Id. at 555. It therefore considered parol evidence to show defendant's consent to the terms of the unsigned office memorandum. Id. Reasoning that a sufficient connection between writings is established by a clear reference in them to the same subject matter or transaction, the court found all three documents at issue refer[red] on their face to the same transaction because all of the information contained in the office memorandum was entirely consistent with the detailed information in the payroll cards, so 10 that it is hardly possible that such detailed information could refer to another or a different agreement. Id. at 554-55. In Crabtree the term of employment at issue was the length of the contract. Id. at 555. The court decided the unsigned memorandum's notation two years to make good designated the term of employment. Id. The court concluded this notation could not be given meaning unless it was read as a reference to the duration of employment. To the extent the statement was ambiguous, the New York court concluded that it could consider parol evidence to interpret its meaning. Id. The Crabtree court reasoned [w]hat purpose, other than to denote the length of the contract term, such a notation could have, is hard to imagine. Id. Unless the notation were meaningless, the court had to relate it to the length of the employment contract. Id. After considering the wage scale, the plaintiff's periodic pay increases, the parties' relationship, the course of negotiations and the plaintiff's insistence upon employment security, the court found the purpose of the phrase . . . was to grant plaintiff the tenure he desired. Id. We, like the district court, believe that Crabtree is distinguishable. In Crabtree each of the two signed payroll cards contained all but one of the essential terms of the employment contract and the terms embodied in the payroll cards exactly matched the terms in the unsigned office memorandum.0 We do not have such specific and unequivocal evidence here. The 0 This is also true of the facts in illustration five to section 132 of the Restatement. 11 signed documents we have are a Department of Justice Employment Eligibility Form I-9 (Form I-9), canceled payroll checks and canceled health insurance reimbursement checks. They do not describe Lindsey's job or her work hours, and none of them clearly indicate that they relate to the same transaction. Restatement (Second) of Contracts § 132. Form I-9 is dated February 6, 1990 and is signed by Lindsey and Robert Cook, Zeccola's bookkeeper. It provides no employment terms but simply verifies Lindsey's eligibility to work in the United States. It contains no reference to any of the other documents and does not even show that Lindsey was employed by Zeccola. The weekly payroll checks starting February 8, 1990 and ending May 17, 1990 are signed by Michael or Lawrence Zeccola and show Lindsey received a net pay of $481.84 per week. The corresponding pay stubs show a weekly gross pay of $647.00. Lindsey's weekly gross or net pay, multiplied by the seventyeight weeks that make up an eighteen month term, does not match any of the three salary figures Zeccola offered her in the two written proposals.0 The pay checks and stubs show that Lindsey worked for Zeccola from February to May 1990 but they do not show her position, hours or term of employment.0 0 The documents at issue purportedly offer salaries of $31,200.00, $50,400.00 and $52,500.00. Lindsey's weekly net pay of $481.84 multiplied by seventy-eight weeks equals $37,583.52. Her gross pay of $647.00 multiplied by seventy-eight weeks equals $50,466.00. While some of the numbers are close, neither Lindsey's gross pay nor her net weekly pay match any of the proposed salaries Zeccola offered her. 0 One of the pay stubs appears to show the number 40.00 under the area marked Date. This number could relate to forty hours per week, but the reproduction is poor and we are unable to tell 12 The two checks Michael Zeccola made payable to Lindsey to reimburse health insurance premiums which Lindsey had advanced pose the same problem as the payroll checks. Lindsey says they show the parties' performance was in accord with the provision for health insurance in the second written proposal Zeccola offered her, but the amounts of these checks, $886.40 and $289.26, are not shown to have any relation to the $9,000.00 figure opposite the notation insurance. App. at 2. Neither the checks nor the insurance premium notices show Lindsey's position, hours, salary or duration of employment. Accordingly, Lindsey's argument that these checks, read together with the two written proposals, disclose all the essential terms of her contract fails. They do not show Lindsey had a position whose hours, fringes, or salary coincided with any of Zeccola's offers. They do not help us tell which of the three proposals memorializes the essential terms of the employment contract the parties finally agreed upon. Lindsey argues, however, that the only real dispute in this case concerns the length of the employment contract and that the eighteen month term is evidenced in writing by the statement calculated on 18 month's which heads both columns of the second proposal. App. at 2. Unless this statement clearly and explicitly identifies the length of employment as eighteen months, Delaware's presumption in favor of employment at-will what the 40.00 represents. This notation on the stubs does not correspond to her testimony that she worked approximately 34-36 hours per week. Even if it could be interpreted to indicate her hours per week, our conclusion would not be changed. 13 comes into play to defeat Lindsey's claim. Delaware Courts will not hold an employment relationship to be anything but at-will absent clear and explicit terms providing otherwise. Mann v. Cargill Poultry, Inc., No. 88C-AU37, 1990 Del. Super. LEXIS 225, at  (June 13, 1990), aff'd, 584 A.2d 1228 (Del. 1990); see Merrill v. Crothall-American, Inc., 606 A.2d 96, 102 (Del. 1992) ([Delaware] law provides a heavy presumption that a contract for employment, unless otherwise expressly stated, is at-will in nature, with duration indefinite.) (citation omitted). With this presumption in mind, we consider the statement calculated on 18 month's. We note it is underlined and appears near the top of the page; directly beneath it are two columns, one beginning salary (2,800 per mo) 50,400 and the other beginning Susan, and underneath that (2,916 per mo) 52,500. App. at 2. Zeccola asserts that the statement merely explains how the calculations of earnings were done. Lindsey admitted that the eighteen month period involved in the calculations was based on the time the parties estimated that it would take to sell-out the Hampton Pointe project. We believe the calculations could likewise imply either that the contract was for eighteen months, as Lindsey argues, or, as Zeccola contends, that the parties were using the time it ultimately would take to sell out the Hampton Pointe project in order to predict total wages during a sell-out phase whose future duration was not fixed or known. Zeccola's interpretation of the proposal as no more than a calculation based on the estimated period of the sell-out phase is supported by the proposal's estimate that 14 Lindsey would also earn commissions from the sale of 18 homes. Id. At best, the statement calculated on 18 month's could mean either that the salary was calculated based on an estimated, but yet unknown, eighteen month sell-out phase or that it is an offer of employment for eighteen months.0 Thus, it is ambiguous and we believe such ambiguity in the written description of the parties' agreement on a term is fatal to Lindsey's case because of Delaware's heavy presumption in favor of employment at-will. To establish an agreed upon eighteen month term of employment, Lindsey is wholly dependent on an ambiguous written statement whose interpretation is in turn dependent on the resolution of a conflict in oral testimony. In Delaware all the provisions of an employment contract must be clearly expressed in writing to create an employment agreement that is not one for employment at-will. Crabtree was decided under New York law and it is not controlling because Delaware's general adherence to Restatement principles is modified by a strong presumption in favor of employment at-will which affects Lindsey's case. We do not believe the notation calculated on 18 month's refers to the length of Lindsey's employment with the clarity we believe is needed to avoid Delaware's presumption in favor of construing employment contracts as contracts for employment at-will. Lindsey also argues that partial performance of her contract with Zeccola brings it within the statute of frauds' 0 There is no evidence suggesting that Lindsey would continue to be employed by Zeccola after all the Hampton Pointe homes were sold. 15 exception for contracts evidenced by part performance. In rejecting Lindsey's part performance argument the district court distinguished Quillen v. Sayers, 482 A.2d 744 (Del. 1984). Lindsey argues that the district court erred in drawing that distinction. In Quillen the Delaware Supreme Court recognized a well settled general exception to . . . the statute of frauds [which] exists when there is evidence of actual part performance of an oral agreement and applied the exception to an oral agreement concerning a mortgage foreclosure. Id. at 747 (citations omitted). The district court distinguished Quillen because Quillen enforced an oral agreement between a buyer and seller of land. It concluded that the statute of frauds' exception for part performance of contracts does not extend to employment contracts. Lindsey, slip op. at 9 (citing Hull v. Brandywine Fibre Prods. Co., 121 F. Supp. 108, 114 (D. Del. 1954)) (It is . . . uncontroverted that partial performance of services under an oral contract not to be performed within a year does not remove the contract from the operation of the Statute of Frauds so as to affect the portion of services not performed.). In Hull the plaintiff alleged his former employer breached an oral employment agreement for a five year term by terminating plaintiff after three years. Plaintiff argued the statute of frauds did not apply because plaintiff had partially performed the contract when he worked for three of the five years. Hull, 121 F. Supp. at 114. The argument rejected in Hull illustrates the difficulty of applying the partial performance exception to determine whether an employment contract falls 16 within the statute of frauds. 'The act relied on as part performance should be such as would not have been done independent of [the] contract or agreement . . . because as you are from the act performed to infer a contract, it must therefore be an act of that description, which will not admit any other inference.' Durand v. Snedeker, 177 A.2d 649, 653 (Del. Ch. 1962) (quoting Houston v. Townsend, 1 Del. Ch. 416 (1833), aff'd, 1 Harr. 532 (1835)). When the duration of an employment contract is not specified in writing, the partial performance exception assumes the fact at issue and allows any employee who claims an oral employment contract for a term in excess of one year to avoid the statute of frauds without written proof of the contract's duration. This is precisely what the statute of frauds' provision requiring a writing before employment contracts in excess of one year will be enforced is intended to prevent: [T]o allow the fact that an employee worked and was paid for part of that year to act as such a bar [to application of the statute of frauds] would make the relevant provision of the statute of frauds totally meaningless. Any contract where the employee had started work and received a paycheck would be protected from the application of the statute. . . . A check stub or even a signed paycheck indicates nothing except what a particular employee has been paid for a particular period. It does not act as a contract to pay the employee the same amount for even the next pay period, much less for an entire year. . . . 17 Lessman v. Universal Spray Applications, Inc., 690 F. Supp. 679, 681 (N.D. Ill. 1988) (quoting Mapes v. Kalva Corp., 386 N.E.2d 148 (Ill. App. Ct. 1979)). Lindsey, in arguing that the district court should not have distinguished Quillen, refers us to other Delaware cases applying the partial performance exception to disputes between buyers and sellers of real estate that do not involve their contracts of sale. She cites Nepa v. Marta, 348 A.2d 182, 185 (Del. 1975). In Nepa the Delaware Supreme Court considered whether a real estate broker was entitled to a sales commission and rejected the defendant's statute of frauds defense by applying the statute's exception for partial performance and alternately relying on a determination that the terms of any such agreement could be performed within a year. Nepa, 348 A.2d at 185. Nepa concerns contracts to pay a real estate broker a commission. It does not concern Delaware's statute of frauds relating to employment contracts. Lindsey also relies on John Julian Const. Co. v. Monarch Builders, Inc., 306 A.2d 29 (Del. Super. Ct. 1973), aff'd on other grounds, 324 A.2d 208 (Del. 1974). It too did not deal with the statute of frauds covering employment contracts. In Monarch a judgment creditor sought payment from stockholders who had succeeded to the assets of a dissolved debtor corporation. The Delaware Superior Court held the statute of frauds did not prevent the plaintiff from seeking payment on the stockholders' oral promise that they would assume the debtor's liabilities, because it clearly appears that the assumption of liability--if 18 it in fact included the liability to [the plaintiff]--has been partially performed. Id. at 34. Delaware does not apply the partial performance exception to employment contracts with a fixed duration of over one year. Enforcement of oral service contracts for a specified period exceeding one year is precluded by the statute of frauds, even if it is possible to perform them within one year. See Guyer v. Haveg Corp., 205 A.2d 176, 181 (Del Super. Ct. 1964) (citing Hull), aff'd, 211 A.2d ___ (Del. 1965). Lindsey's argument that her partial performance permits oral proof an eighteen month contract of employment despite the statute of frauds fails. Moreover, even if the partial performance exception were to apply to oral contracts of employment, Lindsey's argument would still founder against Delaware's already discussed heavy presumption in favor of employment at-will. As we have demonstrated, that presumption requires Lindsey to present clear and convincing evidence of all the essential terms of the eighteen month employment contract she is trying to enforce. See Durand, 177 A.2d at 652. Both state and federal courts applying Delaware law continue to follow Hull and so will we. See, e.g., Behr Salyard & Partners, L.P. v. Leach, 1992 U.S. Dist. LEXIS 9584,  (E.D. Pa. July 13, 1992) (no partial performance exception to statute of limitations in case involving purported ten-year contract to form leveraged buyout fund under Hull). We reject Lindsey's arguments and will affirm the part of the 19 district court's order granting summary judgment against her on her claim that Zeccola breached her employment contract.0 0 Lindsey argues Zeccola admitted that a contract existed in depositions and in the course of their negotiations over her employment. She contends these admissions, coupled with the terms of employment shown by the documents she produced, are an adequate substitute for the written memorandum required by the statute of frauds. This argument is made for the first time on appeal. Therefore, we will not address it at this time. Frank v. Colt Indus., Inc., 910 F.2d 90, 100 (3d Cir. 1990). Moreover, Lindsey gives no citations to the record showing the alleged admission(s). Zeccola denies he made them. 20