Opinion ID: 2981149
Heading Depth: 4
Heading Rank: 1

Heading: Waiver of the statute of frauds

Text: Missouri’s statute of frauds provides, in relevant part, that “an agreement that is not to be performed within one year from the making thereof” is not enforceable “unless the agreement upon which the action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged.” Mo. Rev. Stat. § 432.010 (emphasis added). Although the statute of frauds is a state-law defense, whether it was waived is a question of federal law. See Montgomery v. Wyeth, 580 F.3d 455, 468 n.7 (6th Cir. 2009) (stating that, in diversity actions, state law defines “the nature of defenses” while federal law governs “procedural rules”); see also Morgan 4 Nos. 10-6258/10-6507, Jack Henry & Associates, Inc. v. BSC, Inc. Guar. Trust Co. v. Blum, 649 F.2d 342, 344 (5th Cir. 1981). Thus, federal law and the Federal Rules of Civil Procedure determine whether BSC has waived its statute-of-frauds defense. Federal Rule of Civil Procedure (50)(a)(2) requires that a motion for judgment as a matter of law “specify the judgment sought and the law and facts that entitle the movant to the judgment.” Fed. R. Civ. P. 50(a)(2). A post-verdict motion for judgment as a matter of law “may not advance additional grounds that were not raised in the pre-verdict motion.” Kusens v. Pascal Co. Inc., 448 F.3d 349, 361 (6th Cir. 2006). And judgment as a matter of law “is not available at anyone’s request on an issue not brought before the court prior to submission of the case to the jury.” Am. & Foreign Ins. Co. v. Bolt, 106 F.3d 155, 160 (6th Cir. 1997). BSC argues that it preserved its statute-of-frauds defense by using language from the statute in its pre-verdict motion for judgment as a matter of law. This, it argues, put Jack Henry and the court “on notice” of its statute-of-frauds defense. Specifically, BSC stated that the EFTA was “signed by the party to be charged,” i.e., not by BSC. It also argues that its pre-verdict motion should be construed liberally in light of the rule’s purposes. We disagree. BSC never actually raised the statute of frauds in its pre-verdict motion or otherwise at trial, and thereby waived that defense. Indeed, by the trial’s conclusion, the statute was specifically mentioned only twice: once in BSC’s Answer and Counterclaims, and once by the court. The latter occurred after BSC rested, during discussions regarding BSC’s motion for a directed verdict on the basis that it was not a party to the EFTA. During a colloquy between the district court and Jack Henry’s counsel, the court asked whether the EFTA was subject to the statute, and counsel for Jack Henry acknowledged that it was. Notably, BSC did not attribute what it now characterizes as a 5 Nos. 10-6258/10-6507, Jack Henry & Associates, Inc. v. BSC, Inc. quotation of the statute to the statute. There is a difference between merely using words from a law and actually making arguments that reference and rely on that law and case law. Further, there are two statutes of frauds in Missouri—one for sales under the Uniform Commercial Code (“UCC”), Mo. Rev. Stat. § 400.2-201, and one for all other transactions, id. § 432.010. The statute of frauds governing UCC sales contains three exceptions that the general statute lacks, including for speciallymanufactured goods, partial payment and performance, and acknowledgment of a contract in pleadings or testimony in court. § 400.2-201(3). Because it failed to mention or cite the statute of frauds in general, much less which of the two Missouri statutes it purportedly relied upon, we think it is clear that BSC’s failed to “specify . . . the law and facts” entitling it to judgment. Fed. R. Civ. P. 50(a)(2). Whether BSC’s pre-verdict motion should nevertheless be liberally construed as having put the court and opposing counsel “on notice” of its would-be statute-of-frauds defense is a closer call. “Although Rule 50(a) requires a motion for judgment as a matter of law to state its ‘specific grounds,’ the rule does not define how specific the grounds must be.” Kusens, 448 F.3d at 361 (citing Anderson v. United Tel. Co. of Kansas, 933 F.2d 1500, 1504 (10th Cir. 1991)). “Because the requirement that a Rule 50(a) motion precede a Rule 50(b) motion is ‘harsh in any circumstance,’” a Rule 50(a) motion should be reviewed in light of the rule’s purpose: to secure a just, speedy, and inexpensive determination of the case, and to provide notice to the court and opposing counsel of any deficiencies in the opposing party’s case before sending it to the jury. See Kusens, 448 F.3d at 361. “Accordingly, where Rule 50(a)’s purpose . . . has been met, courts usually take a liberal view of what constitutes a pre-verdict motion sufficient to support a post-verdict motion.” Id. Phrased 6 Nos. 10-6258/10-6507, Jack Henry & Associates, Inc. v. BSC, Inc. differently, where there is notice, a somewhat vague pre-verdict motion may nevertheless preserve an argument for a post-verdict motion. See id. Kusens—a case on which BSC relies—is illustrative but, ultimately, does not help BSC. In Kusens, we found a judgment not withstanding the verdict properly granted where Defendant’s preverdict motion “was a general argument made orally that [the] plaintiff failed to argue his public policy claim, at all.” Id. at 362. Counsel for the defense stated, “The public policy claim was not argued, not mentioned in the opening statement. Therefore, at that point in time, I was actually entitled to make a directed verdict [motion] . . . and . . . I am doing that at this point now, because there’s been no reference to it in this case.” Id. at 362-63 (alterations in original). The district court “expressly acknowledged” that Defendant was correct and there had been “no argument regarding the public policy claim.” Id. at 354 (alteration omitted). Defendant’s post-verdict motion, “which was made in writing and was fully briefed, presented the failure to establish a public policy claim with specificity.” Id. at 362. Upon considering these facts, we found that “[d]efense counsel’s argument and the court’s on-the-record statements and ruling were sufficient to alert Plaintiff to the evidentiary insufficiency alleged by Defendant—his failure to plead and prove his cause of action.” Id. at 363. It was “a close question,” but we nevertheless found “no error” in the district court’s conclusion that Defendant’s pre-verdict motion sufficiently preserved the issue raised in its postverdict motion. Id.1 Yet Kusens does not help BSC: even if BSC need not use technical specificity 1 The Kusens Court relied on the Eighth Circuit case Rockport Pharmacy, Inc. v. Digital Simplistics, Inc., 53 F.3d 195 (8th Cir. 1995). In Rockport Pharmacy, the defendant presented “only a generalized no-duty-of-care argument” in its pre-verdict motion and, in its post-verdict motion, made the same argument with “specificity.” Kusens, 448 F.3d at 362. The Eighth Circuit found that 7 Nos. 10-6258/10-6507, Jack Henry & Associates, Inc. v. BSC, Inc. in its pre-verdict arguments, Kusens shows that it must at least make an argument, even a general one. Like Kusens, this case arguably is a close call; but the closest BSC’s pre-verdict motion came to making even a general argument was using a bit of language that appears in two similar statutes, i.e., that the EFTA was “signed by the party to be charged,” not by BSC. This did not put the court and Jack Henry on notice regarding a defense tied to one of the state’s two statutes of frauds, and without notice, “technical noncompliance” need not be excused. Kusens, 448 F.3d at 361. BSC also directs this court to an Eastern District of New York case in support of its “notice” argument, Hamptons Locations, Inc. v. Rubens, 640 F. Supp. 2d 208, 212-13 (E.D.N.Y. 2009), but that case is distinguishable and non-controlling. In Hamptons Locations, the district court found that the defendant had, in fact, put the parties on notice for the purposes of a Rule 50(b) motion where it “explained its position in detail following the presentation of Plaintiff’s case-in-chief,” “articulated several perceived inadequacies in Plaintiffs’ proof,” and “laid out his legal arguments.” Id. at 213. Here, however, BSC rested after Jack Henry’s case-in-chief and did not mention or cite either statute of frauds in its pre-verdict motion. We are thus unprepared to say that BSC described its statute of frauds defense in detail, articulated its case, and laid out its legal arguments. the general question of duty of care (raised in the pre-verdict motion) was “inextricably intertwined” with the specific question regarding the duty of care (raised in the post-verdict motion.) Id. at 362. As such, the later argument encompassed the earlier argument. See id. Just as in Kusens, however, the defendant in Rockport Pharmacy did, in fact, make an argument, including references to controlling law, in its pre-verdict motion, to wit: that under controlling law, there must be a duty of care owed to the plaintiff and that a mere breach of contract did not establish that duty. See Rockport Pharmacy, 53 F.3d at 197. 8 Nos. 10-6258/10-6507, Jack Henry & Associates, Inc. v. BSC, Inc. In light of the foregoing, we conclude that just as BSC’s failure to cite the statute of frauds and argue it affirmatively resulted in a waiver of that defense, it also resulted in a lack of notice to the district court and Jack Henry. 2. Satisfying the statute of frauds and the EFTA as written In addition to arguing that it preserved its statute-of-frauds defense, BSC argues that the record evidence does not satisfy the statute anyway. BSC argues that it did not sign the EFTA, and that this alone is dispositive because the statute requires contracts to be signed by the party to be charged. BSC further asserts that documents outside the EFTA cannot be used to satisfy the statute because, since BSC struck its name and changed the signatory to First Corbin Data before Jack Henry signed the contract, the contract “clearly” shows that BSC was not a party. Its arguments are meritless and we reject them. “To satisfy the statute of frauds, it is not essential that a writing be a single document.” In re Estate of Looney, 975 S.W.2d 508, 515 (Mo. Ct. App. 1998). “Instead, the agreement may be contained in separate writings when the separate writings, taken together, meet the requirements of the statute.” Id. (internal quotation and citation omitted). The separate writings “need only be connected either by express reference to one another or by clear implication established through their respective contents.” Id. In this case, there are at least three documents that, taken together and in context, satisfy the statute: (i) the EFTA; (ii) the termination letter; and (iii) the Deconversion Agreement, in which Jack Henry agreed to assist BSC in switching its processing to software owned by another vendor. The EFTA itself memorializes the terms of the agreement. Although BSC did not sign the EFTA, BSC 9 Nos. 10-6258/10-6507, Jack Henry & Associates, Inc. v. BSC, Inc. did sign two other documents that specifically acknowledge that BSC was a party to the EFTA. The first sentence in the Deconversion Agreement recites: “Whereas, Jack Henry & Associates, Inc. (JHA) and BSC INC. formerly FIRST CORBIN DATA, 2400 S. MAIN ST, CORBIN KY 40701 (Client) entered into an Electronic Funds Transfer Processing Services Agreement . . . .” The termination letter begins with a similar acknowledgment, and is written on BSC stationary. Mark Terry, President of BSC, signed both the Deconversion Agreement and the termination letter. These documents show that the parties understood the contractual relationship with Jack Henry to extend, in relevant part, to BSC. We also conclude that, because the EFTA was ambiguous, the court properly admitted extrinsic evidence, and a reasonable jury could conclude from that evidence that BSC was a party to the agreement. Under Missouri law, a contract is ambiguous “if its terms are susceptible to more than one meaning so that reasonable persons may fairly and honestly differ in the their construction of the terms.” PlaNet Prods. v. Shank, 119 F.3d 729, 731-32 (8th Cir. 1997). “In construing ambiguous contracts the objective is to ascertain and render effective the mutual intent of the parties.” Busch & Latta Painting Corp. v. State Highway Com., 597 S.W.2d 189, 197-98 (Mo. Ct. App. 1980) (quotation and citation omitted). To that end, we consider “the entire contract, subsidiary agreements, the relationship of the parties, the subject matter of the contract, the facts and circumstances surrounding the execution of the contract, the practical construction the parties themselves have placed on the contract by their acts and deeds, and other external circumstances which cast light” on the parties’ intent. Id. at 198 (quotation marks and citation omitted). 10 Nos. 10-6258/10-6507, Jack Henry & Associates, Inc. v. BSC, Inc. There was no error in considering extrinsic evidence because the EFTA is ambiguous regarding whom it binds. The EFTA identifies BSC by its former name, First Corbin Data; BSC’s president signed a modification to the EFTA; and First Corbin Bancservices (not First Corbin Data, the name under which BSC formerly did business) executed the EFTA. Because “the contract [was] ambiguous, and extrinsic evidence [was] proper, . . . construction of the agreement [was] for the jury under proper instructions from the court.” Id. (internal quotation marks omitted). Making all reasonable evidentiary inferences in Jack Henry’s favor—as we must—we conclude that a jury could find BSC was a party to the contract. We therefore cannot say that there is “a complete absence of probative facts to support” the jury’s conclusion. Erdman, 97 S.W.3d at 88.