Opinion ID: 198503
Heading Depth: 2
Heading Rank: 1

Heading: Enforcement of the Oral Modification

Text: Wolfe first challenges the district court's refusal to enforce the alleged oral modifications of his employment contract.He asserts, in sum, that CVG owes him money pursuant to his agreement with Kutsch, which involved a profit center, a new bonus structure and a vested ownership interest. The district court looked to the four corners of the contract, several provisions of which, it found, precluded enforcement of the alleged promises for additional pay. Section 7.5, for example, provides that if Wolfe were terminated without cause (as defined in 7.2(c)) after the Initial Employment Period, as he was, then CVG owed him only thirty days' base salary (it paid him ninety days') and any othercompensation expressly included in the written contract. The district court found no evidence that Wolfe's alleged bonuses had been incorporated in writing in the contract. Further, 3 provided that all forms of compensation other than base salary were at the sole discretion of the Board of Directors. Similarly, because none of the other alleged modifications was in writing, and 11 of the contract expressly required modifications to be in writing, the district court refused to enforce them. Wolfe now calls the district court's strict reliance on the language of the employment contract an unfounded legal fiction. Appellant's Br. at 25; see also Appellant's Reply Br. at 2. Under the principles of Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938), Texas law supplies the substantive framework for determining whether the district court's approach was as fanciful as Wolfe claims. As a federal court sitting in diversity, it is, of course, our task to interpret and apply as best we can the state rules of decision. See, e.g., Blinzler v.Marriott Int'l, Inc., 81 F.3d 1148, 1151 (1st Cir. 1996). Relying on pronouncements of the state supreme court and, if these are not conclusive, on other instructive sources, ultimately our task is to ascertain the rule the state court would most likely follow under the circumstances, even if our independent judgment on the question might differ. Id. So guided, we beat our way through the thicket of Texas contract law to determine the validity of Wolfe's charge. Wolfe would plunge us deep into this briar patch by raising various complicated issues of contract interpretation. He would lead us close to cases limiting the significance of integration clauses and canceling the strictures of the Statute of Frauds. But we cannot be waylaid by such thorny issues; there is a clearer path, and, although we could pick our way over Wolfe's obstacle course, we take the safer route. Thus, the alleged oral modifications are unenforceable because they are not sufficiently definite to supply the terms ofa valid contract. The terms of an alleged oral modification to an employment contract must be definite enough to allow a court to know what it is being asked to enforce. See, e.g., Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998); Hathaway v. General Mills, Inc., 711 S.W.2d 227, 228-29 (Tex. 1986); Botello v. Misener-Collins Co., Ltd., 469 S.W.2d 793, 795 (Tex. 1971). General statements and [g]eneral comments will not do; an employee cannot construct [a formal agreement] out of indefinite comments, encouragements, or assurances. Montgomery County, 965 S.W.2d at 502. In order to be legally binding, a contract must be sufficiently definite in its terms so that a court can understand what the promisor undertook. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). Here, the district court's characterization of Wolfe's breach claim as convoluted is a masterpiece of understatement. Even giving all reasonable inferences to Wolfe, as we must do on summary judgment, the terms of the alleged oral modification are soindefinite and uncertain that Wolfe himself was unable to articulate exactly what he was owed and under what formula the extent of the deficit could be calculated. His deposition testimony is telling. CVG questioned Wolfe about the basis for his claim that he was owed bonus compensation: Q. Your claim for bonus, is that related to this written employment agreement? A. Yes. Q. Is your claim for a bonus related to any other agreement? A. The agreement we talked about the profit center agreement. Q. Anything other than that? A. Not under claim for bonus, no. Q. And then you say there's a profit center agreement. Is that separate from the bonus? A. No. That's the same type program. . . .when Mr. Kutsch asked me to go out and seek a lot of new business on behalf of the company, he never predicated my payment of bonus based upon the total earnings of the corporation. I was told I would be paid based on my contribution to the company. . . . App. 125-26. Wolfe's deposition testimony regarding his understanding of the new bonus component was in the same vein: A. That particular program was an additional incentive compensation program very similar to the program in place at Vitol. It was fashioned after the Vitol plan, which effectively was a vesting program. For example, if my proportionate share of earnings amounted to $100,000 over and above my participation in the bonus plan, that $100,000 would be put into [sic] my name in the vested program, of which I would receive 25 percent in four annual installments, and that would also be terminated at any time if I left the company. I would be -- there would always be three years' payments that I would never recover if I ever left. So in effect over a period of time -- let's say if you had four years in a row, I mean, there could be sizeable sums of money built up in a deferred account that if you ever left the company you would walk away from. The effect of the program, to my understanding, was to make sure that the employees had significant incentive not to leave the company. Q. How would it be determined how much money any one person would be entitled to under that? A. I don't recall specifically the allocation procedures. I believe it was 10 percent of the net income. 10 to 20 percent of the net income of the company was allocated to this type of program. This is in addition to other bonus programs. Q. This is apart from the bonus concept? A. That's correct. Q. Under this program, as you think you understand it, when would the first payment have been made if you had remained with Catex? A. I believe the first payment would be due at the end of 1994. Q. And can you tell me again, as best you can, how that payment would be determined? A. I don't recall specifically. I think I gave you an adequate explanation. App. 129-30. The questioning continued, and Wolfe was unable to be any more precise about the specifics of the contract he was seeking to enforce. The documents are similarly devoid of detail. The memorandum -- entitled a Proposed ... Plan -- simply outlined scales. For example, 25 percent of the deferred component (what Wolfe calls the new bonus) would vest each year for four years from the grant. The minutes from the Board of Directors meeting at which the BIP was discussed indicate only that the Board agreed to the proposed scale as a means of creating an incentive for certain employees. Nothing in any document specifies what would be paid to whom and when it would be paid. More, there is no evidence to suggest that CVG took any steps to provide for the implementation of any of the components of the BIP outlined in the memorandum. The briefs and filings below are also less than illuminating.In order to enforce the oral modifications, Wolfe asks us to fill in critical details. We would have to decide, for example, what percentage of CVG's net income between 10 and 20 percent would be allocated to the bonus program and, based on his contribution to the company, what part of that allotment CVG owed Wolfe. This we cannot do. In the end, all of the sources which might flesh out the terms of his alleged oral contract -- Wolfe's recollection of the specifics of his agreement with Kutsch, the BIP memo, minutes from Board of Directors meetings, etc. -- provide nothing more than general and indefinite comments. Wolfe cannot forge a contract out of such hazy materials. See, e.g., Montgomery County, 965 S.W.2d at 502; Hathaway, 711 S.W.2d at 228-29. Accordingly, the oral modifications are unenforceable. We therefore affirm the district court's order of summary judgment in favor of Kutsch and CVG and against Wolfe on Wolfe's breach counter-claim.