Court Opinion

ID: 9470099
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:57:13.356188+00
Date Added: 2024-06-11T17:41:44.047690
License: Public Domain

LOGAN, Circuit Judge,
concurring:
While I agree with much of Judge Doyle’s opinion, my views differ sufficiently that I write separately.
I
Tenneco sued for the $137,265.97, which it alleges was paid because of Joiner’s fraudulent reporting of bonus payments. Tenneco contends that it hired Joiner to be its agent to acquire leases and that Joiner’s only compensation was to be the day rate plus expenses, including reimbursement of only the exact amounts paid out in bonuses. Judge Doyle is correct that Joiner never fully revealed his theory why he was entitled to keep the $137,265.97. But Joiner’s theory apparently is that Tenneco was “to buy the leases Joiner obtained in between $40 and $60 per acre.” R. IV, 77-78. Joiner apparently claims that if he could acquire the leases at less than the $40 per acre bonus Tenneco had authorized, he would receive the difference between the bonus he paid and the $40, in addition to the day rate and expenses.
The trial court, citing inter alia, Barnett v. Life Insurance Company of the Southwest, 562 F.2d 15 (10th Cir.1977); Tyler v. Hartford Accident and Indemnity Co., 195 Okl. 523, 159 P.2d 722 (1945); Johnson v. Caldwell, 180 Okl. 470, 71 P.2d 620 (1937), held that Tenneco had the burden of proving fraud by clear and convincing evidence, and that Tenneco did not meet its burden. Tenneco asserts that the court erred in requiring clear and convincing proof. I agree. Joiner was Tenneco’s lease buying agent and had a fiduciary relationship to his principal. When a principal sues its agent for breach of fiduciary duty, the “clear and convincing evidence” standard is not applicable.
“ ‘Fraud and undue influence will not be presumed, but ordinarily must be proven by clear, cogent and convincing testimony. However, where fraud and undue influence are alleged and facts sufficient to show inadequacy of consideration and a confidential relationship are proven, the one occupying such a position of confidence will be required to go forward and make a full and complete disclosure showing absolute good faith and that there was no fraud or undue influence practiced in a transaction between the parties.’ ”
Renegar v. Staples, 388 P.2d 867, 871-72 (Okl.1964) (quoting Owens v. Musselman, 190 Okl. 199, 121 P.2d 998 (1942)).
Tenneco also argues that once it shows the existence of a confidential relationship, Joiner has the burden of showing that he did not abuse the relationship. But that would be true only after Tenneco has adduced evidence that Joiner acted improperly with regard to the leasehold reimbursements.
“Generally the burden of proof, or the burden of going forward with the evidence, does not shift to the person holding the position of trust and confidence until his opponent has presented some evidence or circumstances which indicates that he has been abused, defrauded, subjected to undue influence, or overreached.”
Renegar v. Staples, 388 P.2d at 871 (emphasis added). Joiner argues that his arrangement with Tenneco entitled him to the $137,265.97 as part of his compensation, as one of the terms of his employment. Before Tenneco can show that its agent was a wrongdoer, Tenneco must carry the burden of proving the terms of the compensation agreement.
The principal evidence bearing on the compensation arrangement between the parties was Steven Hord’s testimony. Hord *778testified that he came to work for Tenneco about October 1, 1978, a few days before the Joiner transaction, and that this was the first employment transaction he had entered into on behalf of Tenneco. He testified that the contract was oral except for the letter quoted above and the accompanying map. R. IV, 54. Hord stated that he did not remember the specifics of the conversation, id., but assumed he discussed Tenneco’s various reimbursement voucher forms “because that is the general course of action that I would have taken,” id. at 55. He admitted that nothing in the letter specified Joiner’s compensation, and he gave the following additional testimony:
“Q. Did you ever tell Mr. Joiner, at any time, that he would not be entitled to make a profit on the leases?
A. Not specifically. I don’t believe I did.
Q. All right, sir. It would — You never told him that all he was going to get paid for the day work?
A. No, sir, I did not.
Q. All right. Did you know at the time that you were talking with Mr. Joiner and entering into this agreement that he had worked for Tenneco previously?
A. No, sir, I did not.
Q. Did you ever, at any time, tell Mr. Joiner that he would have to furnish drafts?
A. I cannot recollect that I did or did not.
Q. Do you know whether or not Mr. Joiner told you he did not furnish drafts where he took the leases in his name?
A. No, sir, I cannot specifically recall any conversation relative to drafts.”
R. IV, 73, 76.
Hord testified that he thought Joiner was to receive only $125 per day plus expenses and exact reimbursement for bonuses paid and that he would not have hired Joiner if payment was to be on another basis. Other witnesses stated that other independent landmen employed on a day-rate basis received reimbursement only for the actual amount paid for landowner bonuses. But Tenneco witnesses also admitted hiring landmen on a per acre commission basis without payment of expenses, R. IV, 116; they also admitted that sometimes Tenneco purchases by “acreage submittals” from individual landmen who have acquired leases for their own account and negotiate the resale of the leases to Tenneco. R. IV, 126-27.
Much of the cross-examination concerned Joiner’s prior employment with Tenneco during June and July of 1978. The evidence showed that in his accounting to Tenneco during the prior employment period Joiner never provided copies of drafts he utilized to pay landowner bonuses, just as he never provided such drafts during the employment period at issue in this appeal. Tenneco’s employee Terry Pargeter admitted that when Tenneco acquires leases either by reimbursement of bonuses or by acreage submittals it uses the same reimbursement form, and that the form indicates only the amount Tenneco is paying the lease broker for the lease. R. IV, 147— 49.
If reasonable minds could differ as to what the compensation arrangement between Joiner and Tenneco was, the directed verdict was improper and the claim should have been submitted to the jury. The trial judge indicated in his opinion that the case might be sufficient to be submitted to the jury if a preponderance standard were applied. After emphasizing that the standard of proof in actions for fraud is high, the court stated:
“Here there is no evidence of what the deal was. There is no evidence of what the contract with this defendant was. The most that can be said from the testimony is according to plaintiff’s witnesses and their conclusions of what it must have been.
There were suspicious circumstances regarding the defendant’s conduct, by his refusal to talk to Mr. Snodgrass on an official basis, by his refusal to submit *779drafts as demanded, but this is not sufficient, and a verdict in plaintiff’s favor would have to be set aside under the quality and quantity of the proof in this case.
It is somewhat regrettable but inescapable conclusion to be reached here, and the only proper conclusion to be reached, in my judgment. The standard of proof has not been met as it might have been under a less demanding theory of recovery, but that was the plaintiff’s choice, and the standards of his choice must be applied.
Accordingly, the Motion for Directed Verdict of the defendant is sustained as to the third cause of action, [for the $137,265.97] and judgment is entered in defendant’s favor on the first cause of action, which was for the constructive trust.”
R. IV, 210-11 (emphasis added).
Despite uncertainties in Tenneco’s proof, I believe Tenneco presented sufficient evidence to have the jury determine the lease bonus issue. Tenneco presented Hord’s testimony and the testimony of other witnesses concerning the general understanding of day-rate compensation in the industry. Also, the only form in the record showing Tenneco’s payment for bonuses is titled “STATEMENT FOR REIMBURSEMENT OF BONUS” and refers to “reimbursement for bonus paid.” Def.Ex. 3. I do not think Joiner’s failure to put on evidence after Tenneco rested required a directed verdict for Tenneco; the cross-examination and the exhibits dealing with Joiner’s earlier employment were sufficient to place the propriety of Joiner’s conduct in issue. For these reasons I support Judge Doyle’s reversal on this count for a new trial.
II
On the issue of whether a constructive trust should be imposed on leases Joiner acquired after termination of his relationship with Tenneco, the trial judge was the trier of fact. I agree with Judge Doyle that the trial judge did not make findings of fact on this issue sufficient under Fed.R. Civ.P. 52(a) to permit us to review his determination. But I am not as certain as Judge Doyle that Joiner’s purchase of the leases after termination of his agency relationship with Tenneco justifies the imposition of a constructive trust.
Tenneco relies upon the general rule that an agent cannot enrich himself, other than by the amount of his agreed-upon compensation, while he serves the principal. Most decisions cited by Tenneco in support of its argument are cases in which the agent took advantage of his position during his employment. The instant case is different; the agency had terminated. A fiduciary duty does not extend beyond the employment period unless the agent improperly uses confidential information acquired during the relationship. Restatement (Second) of Agency § 396 (1958). Thus, Tenneco’s claim turns on whether the map designating certain areas in which Tenneco wished to acquire leases constituted confidential information that Joiner should not have been permitted to use outside the agency relationship.
For purposes of criminal law, Oklahoma has defined trade secrets as “the whole or any portion or phase of any list of customers or prices or any scientific or technical information, design, process, procedure, formula or improvement which is secret and of value.” Okla.Stat.Ann. tit. 21, § 1732(B)(c) (West Supp.1982-1983). However, in a civil suit Oklahoma may apply a less restrictive definition. See Uniform Trade Secrets Act § 1(4) (1979); Restatement of Torts § 757 (1939).
The parties have cited no Oklahoma authority for the proposition that confidential information is subject to restrictions against disclosure and use after termination of the fiduciary relationship. However, in appropriate circumstances such restrictions may apply.
“Unless otherwise agreed, after termination of the agency, the agent:
(b) has a duty to the principal not to use or to disclose to third persons, on his own account or on account of others, in *780competition with the principal or to his injury, trade secrets, written lists of names, or other similar confidential matters given to him only for the principal’s use or acquired by the agent in violation of duty. The agent is entitled to use general information concerning the method of business of the principal and the names of the customers retained in his memory, if not acquired in violation of his duty as agent;
(c) has a duty to account for profits made by the sale or use of trade secrets and other confidential information, whether or not in competition with the principal;”
Restatement (Second) of Agency § 396 (1958). Holding Joiner to the rule set forth above may have the effect of inhibiting him in the exercise of his profession. The Oklahoma legislature has exhibited hostility to contracts that restrain one’s exercise of his profession. See Okla.Stat. tit. 15, § 217 (1966). Further, Joiner’s use of the information gained during his employment may not injure Tenneco. See R. IV, 65-66. In these circumstances restraining use or disclosure of confidential information may be unreasonable.
I have found no factually similar Oklahoma or other case addressing this issue. I think the trial judge should address whether Oklahoma would find the instant case one appropriate for a constructive trust, making findings in compliance with Rules 52(a) and 58 that we can review if appealed. Therefore, I support Judge Doyle’s reversal for a new trial on this issue also.