Court Opinion

ID: 201244
Source: CourtListenerOpinion
Date Created: 2011-02-07 05:10:44+00
Date Added: 2024-06-11T17:27:15.880146
License: Public Domain

Not for Publication in West's Federal Reporter
              Citation Limited Pursuant to 1st Cir. Loc. R. 32.3

          United States Court of Appeals
                       For the First Circuit

No. 03-2469

                          PETER MASSMANIAN,

                        Plaintiff, Appellee,

                                     v.

      B. BROS. PACKAGING, INC. d/b/a FOX PACKAGING COMPANY,

                        Defendant, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

     [Hon. Edward F. Harrington, Senior U.S. District Judge]

                                  Before

                         Boudin, Chief Judge,

               Selya and Howard, Circuit Judges.

     Gael Mahony with whom Paul Killeen, Damon M. Seligson and
Holland & Knight, LLP were on brief, for appellant.
     Laura R. Studen with whom Lawrence P. Murray and Burns &
Levinson, LLP were on brief, for appellee.

                          September 14, 2004
            HOWARD, Circuit Judge.      B. Bros. Packaging, Inc., d/b/a

Fox Packaging Co. (“Fox”), challenges a $300,000 judgment in favor

of its former employee, Peter Massmanian. After a seven-day trial,

a jury found that Fox, a Minnesota-based manufacturer of windshield

washer fluid, used false promises to lure Massmanian away from a

comfortable job with a Massachusetts competitor.                Fox alleges a

failure of proof on critical elements of Massmanian's claim of

deceit and an absence of damages under a theory of mitigation.              We

affirm.

            In reviewing the district court's denial of Fox's motion

for judgment as a matter of law, we recite the relevant facts in

the light most favorable to the jury verdict.             Santos v. Sunrise

Medical, Inc., 351 F.3d 587, 590 (1st Cir. 2003).              In 1997, Elliot

Badzin, a co-owner of Fox, recruited Massmanian to oversee Fox's

operations in Minnesota and California.         Massmanian testified that

while negotiating his three-year employment contract with Fox,

Badzin    discussed   the   possibility    of   opening    a    Massachusetts

manufacturing facility in a few years, and promised that Massmanian

would have an ownership interest in such a venture.                     Badzin

declined to put his promise in writing, stating that it could

create legal problems because Massmanian had a two-year non-compete

agreement with his former employer in Massachusetts.             Massmanian’s

employment   contract   with   Fox   contemplated    that       his   severance

                                     -2-
package and bonus would be eliminated “[w]hen and if the parties

agree upon a plan for [Massmanian] to acquire stock” in Fox.

               Massmanian   worked     for      Fox    a   few    years,     ultimately

overseeing the operations of the Massachusetts facility when it

opened in September 1999.          Massmanian repeatedly asked Badzin to

follow through on his promise to make him a partner in the

Massachusetts venture.          Massmanian testified that Badzin told him

on   numerous     occasions     that   a     partnership         agreement    would     be

forthcoming and that Massmanian would have a ten percent share. In

January    2001,     frustrated      by    Badzin’s        failure    to     proffer    a

partnership agreement, Massmanian resigned.

               In March 2001, Massmanian brought suit in Middlesex

Superior Court, alleging breach of contract and deceit.                                Fox

removed the case to federal court on the basis of diversity.                           28

U.S.C.    §§    1332,   1441.     Following       a    seven-day      trial,    a   jury

concluded that there had been no enforceable contract between

Massmanian and Fox, but that Fox had used intentional or reckless

misrepresentations to induce Massmanian to become an employee. The

jury awarded $300,000 to Massmanian.                  Fox appealed.

               Fox contends that Massmanian failed to prove critical

elements of his claim for deceit.                We will not disturb the jury

verdict unless “the facts and inferences point so strongly and

overwhelmingly in favor of the movant that a reasonable jury could

not have reached a verdict against that party.”                      Santos, 351 F.3d

                                          -3-
at 590.    Our review is therefore weighted in favor of the jury’s

verdict.

              Fox alleges a dearth of record evidence demonstrating an

intention to mislead.         Because the statement at issue here was

promissory in nature, Massmanian bore the burden of proving that at

the time the promise was made, Fox (acting through Badzin) did not

intend to carry it out.        See McEvoy Travel Bureau, Inc. v. Norton

Co., 408 Mass. 704, 709 (1990); Barrett Assoc., Inc. v. Aronson,

346 Mass. 150, 152 (1963).          A promise made with an intent to follow

through is not actionable in deceit, even if the promise ultimately

goes unfulfilled.         See Palmacci v. Umpierrez, 121 F.3d 781, 787

(1st   Cir.    1997).      Therefore,     under    Massachusetts    law,   mere

nonperformance of a promise is not enough to prove a promisor’s

intent to deceive.        Galotti v. United States Trust Co., 335 Mass.

496, 501 (1957) (citing Restatement (First) of Torts § 530 cmt. c

(1938)); Zhang v. Massachusetts Institute of Tech., 46 Mass. App.

Ct. 597, 605–06 (1999) (citing Restatement (Second) of Torts § 530

(1977)).

              According to Fox, Massmanian’s only evidence of Fox’s

intent to mislead was the fact that he never became a partner in

the Massachusetts venture.          We disagree.     At trial, Badzin denied

ever promising      any    equity    interest   to   Massmanian.     The   jury

apparently rejected this critical testimony when it found that Fox

intentionally      or     recklessly     made     representations   on     which

                                        -4-
Massmanian relied.      The jury could have found that Badzin was not

credible; this would have been a relevant consideration where

Badzin’s intention to follow through on his promise was at issue.

On these facts, a reasonable jury could have found that Badzin

never intended to make Massmanian a partner.

           Fox also alleges that no reasonable jury could conclude

that   Massmanian     reasonably   relied       on   the   promise   of   future

partnership.     It    argues   that     such    reliance    would   have     been

unreasonable because it was contradicted by the plain language of

Massmanian’s employment contract, which eliminated his severance

benefits and bonus “[w]hen and if the parties agree upon a plan for

[Massmanian]   to   acquire     stock”    in    Fox.       This   language,    Fox

contends, “unambiguously states that the parties had reached no

agreement regarding a stock ownership interest by Massmanian.”                  We

note the jury’s agreement with this interpretation to the extent

that it rejected Massmanian’s claim for breach of contract. But we

cannot conclude that language like this in an employment contract

forecloses any claim that a future partnership was promised.

Indeed   the   language    suggests      that    the   parties     foresaw     the

possibility of future partnership, but that there had not yet been

a meeting of the minds on the subject.           We find no conflict between

the written employment contract and the oral promise made to

Massmanian that would have rendered his reliance unreasonable. Cf.

Turner v. Johnson & Johnson, 809 F.2d 90, 97 (1st Cir. 1986)

                                    -5-
(rejecting deceit claim where the alleged oral representation was

flatly    inconsistent     with    a     contract     provision    specifically

addressing the particular point at issue).

            Fox further argues that any promise it made was too vague

and indefinite to justify reasonable reliance because at the time

Badzin was recruiting Massmanian, Badzin did not specify the size

of the ownership interest Massmanian would receive.                      Indeed,

Massmanian testified that no particular percentage was promised —

he simply expected that the partnership would be "fair."                 We think

the promise is comparable to that made in Hurwitz v. Bocian, 41

Mass. App. Ct. 365, 373 (1996), where the defendant claimed that an

"unconfirmed oral promise that [the plaintiff] would some day have

an opportunity to become a 'partner' . . . was not a promise on

which a prudent person could reasonably rely."              The Massachusetts

Appeals Court found that although the promise was not made in a

manner    that   satisfied   the       statute   of   frauds,     the   plaintiff

presented sufficient evidence that a promise in fact had been made.

Id.   Fox attempts to distinguish this case on the ground that the

promise    in    Hurwitz   was    one   of    equal   partnership,      thus   the

percentage of the promised share was known.             But we think the jury

could have found that Fox promised Massmanian an interest in the

company, and that whether the share ultimately offered was one

percent or ninety-nine percent, Massmanian could have reasonably

                                        -6-
relied on the promise of some interest in agreeing to work for

Fox.1

            Fox’s remaining argument is that Massmanian should not

have recovered any damages because after he left his employment

with Fox he secured a job and an equity interest in his new company

worth far more than anything Badzin had ever promised him.                   Fox

contends that the district court failed properly to instruct the

jury on the issue of mitigation.              But Fox did not object to the

jury instructions as given, and we therefore review them only for

plain error.    See Estate of Keatinge v. Biddle, 316 F.3d 7, 16 (1st

Cir. 2002).     Under this unforgiving standard, the party claiming

error must prove an error that is obvious, that likely affected the

outcome, and     that   was    so    fundamental   that    it   threatened   the

fairness,     integrity   or        public    reputation   of    the   judicial

proceedings. See id. (citing United States v. Olano, 507 U.S. 725,

        1
      Fox also alleges that promises that Massmanian would receive
a ten percent share in the Massachusetts venture, which allegedly
were made around the time Massmanian's employment contract expired
in 2000, were not actionable because Massmanian did not rely on
them to his detriment.    Massmanian had accepted a reduction in
salary at the time — a change he contends was made as part of an
agreement that he would receive a share in the business. Fox argues
that because Massmanian had become an at-will employee, he was not
entitled to any continued employment at all; therefore any decision
to stay based on a promise of partnership could not have been to
his detriment.     Although we question whether this issue is
necessary to our affirmance of the judgment on the basis of the
representations made during Massmanian's recruitment, we think a
reasonable jury could have found that these promises induced
Massmanian to stay on at Fox and thereby refrain from exercising
his right to leave the company.

                                        -7-
735-36 (1993)); see also    United States v. Colon Osorio, 360 F.3d

48, 52 (1st Cir. 2004).

          The instruction proposed by Fox essentially told the jury

that if Massmanian, as a result of his departure from the company,

got a job whose stock incentive plan proved to be very lucrative,

then the damages from the deceitful promise should be automatically

disregarded. Whatever the correct state of the law on the tricky

issue of windfall gains made possible by a prior wrongful act,

telling the jury that the wrongdoer automatically gets the benefit

cannot be right. The refusal to give the requested instruction was

not error at all.     See United States v. David, 940 F.2d 722, 738

(1st Cir. 1991).    ("It is beyond peradventure that a trial court

may refuse to give a proposed instruction which is incorrect,

misleading, or incomplete in some material respect.")

          Affirmed.

                                 -8-