FILED: August 5, 1998
ROBERT VANDERSELT,
Appellant,
v.
PETER T. POPE and POPE & TALBOT,
INC., a Delaware corporation,
Respondents.
Appeal from Circuit Court, Multnomah County.
Andrew K. Chenoweth, Judge.
Argued and submitted June 3, 1998.
Scott N. Hunt argued the cause for appellant. With him on the briefs were Richard C. Busse and Busse & Hunt.
Jonathan T. Harnish argued the cause for respondents. With him on the brief were Barbara A. Flug and Bullard, Korshoj, Smith & Jernstedt, P.C.
Before Riggs, Presiding Judge, and Landau and Wollheim, Judges.
RIGGS, P. J.
Affirmed.
RIGGS, P. J.
Plaintiff brought this action against his former employer Pope & Talbot,
Inc. (P&T), as well as its president, Peter Pope (Pope), asserting numerous tort and
contract claims. The trial court granted defendants' motion for summary judgment on all
but one of plaintiff's claims.(1) On appeal, plaintiff assigns error to the trial court's decision
to grant defendants' motion for summary judgment on his other claims. For the following
reasons, we affirm.
On a motion for summary judgment, we view the facts in the light most
favorable to the non-moving party. Jones v. General Motors, 325 Or 404, 939 P2d 608
(1997). Plaintiff's complaint alleged that defendants, by offering him only six months'
severance pay on his termination, breached their contract for severance pay, breached
their fiduciary duty to him, and tortiously breached an implied covenant of good faith and
fair dealing. Plaintiff also alleged that defendants breached a contract for a loan, and that
defendants defamed him.
The following facts are relevant to plaintiff's claims concerning severance
pay. In 1991, plaintiff was approached by a headhunter, Fred Green, about coming to
work for P&T to run its Consumer Products Division. Plaintiff told Green that he wanted
a contract that provided for two years' severance pay. Green contacted Pope, then
recontacted plaintiff and told him that P&T would not agree to the two-year severance
pay proposal. Plaintiff then called Pope directly to discuss this issue. According to
plaintiff's deposition, Pope told him "we don't do -- we don't write, we don't give
contracts that guarantee severance, that you are just going to have to trust me to be fair on
that." Plaintiff accepted the job. The subject of severance pay was not brought up again.
The performance of the Consumer Products Division was poor between
1991 and 1995, and P&T contemplated the sale of that division. In May 1995, plaintiff
met with some investment bankers and discussed the possibility of a management buyout
of the division. Plaintiff and the investment bankers drafted a proposal by which plaintiff
and other investors would acquire the division, and plaintiff presented the proposal to
Pope. At that time, however, P&T was negotiating the sale of the division to another
party, and Pope instructed plaintiff not to pursue his management buyout proposal. Pope
also was concerned that plaintiff had revealed confidential financial information to the
investment bankers in the course of preparing the proposal. Pope discussed his concerns
with P&T's investment banker, who gave the opinion that plaintiff should be fired. Pope
decided, however, that terminating plaintiff at that point could jeopardize the negotiations
for sale of the division.
In October 1995, plaintiff's employment was terminated. Plaintiff was told
that the reason for the termination was the poor performance of the Consumer Products
Division. Plaintiff was offered a severance package of three months' salary. Plaintiff
suggested that he should receive a severance package of one year's salary as well as
extension of his stock options. He was then offered a severance package of six months'
salary, which he rejected.
The facts pertaining to plaintiff's claim for breach of a contract for a loan
are as follows. Plaintiff was living in Philadelphia at the time he accepted the job with
P&T. P&T offered plaintiff relocation assistance pursuant to a written policy. That
policy provided that P&T would buy plaintiff's Philadelphia house, with the price being
based on the average of several independent appraisals. The appraisals, conducted in
1991, valued the house between $480,000 and $500,000. Plaintiff decided to try to sell
the house himself, listing it with a realtor for $750,000 or $795,000. No offers were
forthcoming in 1991 or 1992. In 1992, the tax-assessed market value of the house was
dropped to $400,000. One of plaintiff's acquaintances in Philadelphia, Mr. Kontra,
produced a potential buyer named Mr. Bradstreet. Ultimately, in March 1993, P&T
purchased plaintiff's Philadelphia house for $600,000 and sold it to Mr. Bradstreet on
contract. Kontra then demanded a commission, and P&T gave plaintiff $6,000 to pay
Kontra's commission. Bradstreet later defaulted on the contract, and P&T subsequently
sold the house for $350,000.
Before the deal on the Philadelphia house was closed, P&T advanced
plaintiff $25,000 to make a down payment on the house plaintiff was purchasing in
Portland. P&T also advanced plaintiff another $15,000 for house-related purposes.
When the sale of the Philadelphia house closed, plaintiff received an additional amount of
about $150,000. After plaintiff purchased the Portland house, he approached Pope for a
$50,000 loan to renovate the house. Pope refused to loan plaintiff the money, saying
"We're not in the renovation business." Plaintiff then sold some stock to cover the costs
of remodeling, and the price of the stock later rose.
The facts surrounding plaintiff's defamation claim are as follows. In early
1995, plaintiff terminated his vice president of operations, Bellafronto, in the course of
downsizing the division. Shortly thereafter, Pope received a letter from Bellafronto
claiming that P&T had terminated the wrong person and that plaintiff was running the
Consumer Products Division into the ground so he could buy it at a low price. Pope
showed the letter to several of the top management of P&T, and they decided that no
response was appropriate as they did not believe the accusation against plaintiff.
Defendants moved for summary judgment on each of the claims described
above, and the trial court granted defendants' motion. On appeal, plaintiff asserts that the
trial court erred because genuine issues of material fact exist as to each of his claims. We
turn first to the claims concerning plaintiff's severance pay.
Plaintiff asserts that the trial court erred in granting defendants' motion for
summary judgment on his claim that defendants breached plaintiff's employment contract
by failing to provide him with two years' severance pay on termination. The trial court
granted defendants' motion on the ground that no contract for severance pay existed
because no price was established. Plaintiff argues that a jury could have found that
Pope's statement about being "fair" created an implied contract for severance pay for a
"fair" amount, and that the question of what amount is "fair" is a question of fact.
Plaintiff is correct that, under certain circumstances, "fairness" or "good
faith" may be a guide in establishing the price term of a contract. See, e.g., Wyss v.
Inskeep, 73 Or App 661, 699 P2d 1161, rev den 300 Or 64 (1985) (terms of a bonus plan
promised to employees were definite enough to establish enforceable contract, where the
amount of money in the bonus pool was ascertainable and the written bonus plan stated
that allocation of the pool would be determined "in good faith" by the board of directors).
Here, however, we agree with the trial court that Pope's statement about trusting him to be
fair about severance pay can not, as a matter of law, be sufficient to form an implied
contract to guarantee a "fair" amount of severance pay, given the circumstances. Pope's
statement concerning fairness must be viewed in the context of the parties' negotiations
for an express contract: Pope offered plaintiff employment; plaintiff made a counteroffer
proposing that severance pay be included in their express contract; Pope rejected that
counteroffer, stating that "we don't give contracts that guarantee severance, that you are
just going to have to trust me to be fair on that." (Emphasis supplied.) Thus, Pope
explicitly stated that he did not wish to enter into a contract with plaintiff concerning
severance pay. We are aware of no cases where a party has been held to have formed an
implied contract in spite of the party's clear, explicit, contemporaneous declaration that it
did not wish to form a contract on that subject. Formation of a contract requires the
meeting of minds, which is measured by objective manifestations of intent by both parties
to form the contract. Kaiser Foundation Health Plan v. Doe, 136 Or App 566, 572, 903
P2d 375 (1995), mod on recons 138 Or App 428, 908 P2d 850, rev den 324 Or 294
(1996). Pope explicitly declared an intent not to enter into a contract for severance pay
with plaintiff. The trial court correctly concluded that, as a matter of law, no contract for
severance pay existed under those circumstances.
We next turn to plaintiff's tort claims concerning severance pay. Plaintiff
asserts that, by offering only six months' severance pay, defendants breached a fiduciary
duty they owed to him and also breached an implied covenant of good faith and fair
dealing. In the present case, it is not necessary for us to discuss the nuances of difference
between these two types of tort action because,
"[u]nder either theory breach of fiduciary duty or the tortious breach of duty
of good faith and fair dealing, plaintiff was required to present evidence that
a special relationship or fiduciary-type relationship existed between the
parties that was independent of the duties under the [contract]." Bennett v.
Farmers Ins. Co., 150 Or App 63, 79, 945 P2d 595 (1997) (citations
omitted).
Plaintiff asserts that Pope's request that plaintiff trust him to be fair gave
rise to extra-contractual duties and created a special relationship between them.(2) In support of his
argument, plaintiff cites Eulrich v. Snap-On Tools Corp., 121 Or App 25, 853 P2d 11350,
rev den 317 Or 583 (1993), vacated on other grounds 512 US 1231, ___ S Ct ___, ___
P2d ___ (1994).
In Eulrich, the defendant fraudulently induced the plaintiff to enter into a
dealership agreement to market its tools, misrepresenting the earning potential of the
dealership and encouraging the plaintiff to overextend credit to customers. 121 Or App at
28-29. Within about a year, the plaintiff was in financial trouble and sought to exercise
his rights under the agreement to terminate the dealership. Id. at 29. The plaintiff signed
a termination agreement waiving any claims against the defendants without reading the
agreement. He later sued to rescind the termination agreement and also claimed that the
defendants had tortiously breached their duties of good faith and fair dealing. We held
that the termination agreement was properly rescinded due to duress and that the plaintiff
had a claim in tort for breach of a covenant of good faith and fair dealing that existed
separate from the defendants' contractual duties. Id. at 34-36. We noted that, although
generally a manufacturer-dealer relationship would not give rise to such duties, the
defendants in that case had fostered a "fiduciary-type dependency relationship" with the
plaintiff that was not typical of a dealership relationship, because the defendants'
representatives rode along with the plaintiff, performed sales for him, completed his
paperwork, told him what office equipment and supplies to purchase, and exercised
almost complete control over his stock, as well as encouraging him to overextend himself
financially. Id at 36-37.
By comparison, in Bennett v. Farmers Ins. Co., 150 Or App 63, 945 P2d
595 (1997), we found no special relationship to exist between the plaintiff, an insurance
agent, and several insurance companies with whom he contracted. 150 Or App at 81-82.
Under his agreement with the defendants, the plaintiff acted as a district manager over a
geographical area. The plaintiff successfully managed his district for about 10 years,
earning the defendants over $27 million in profits. The defendants then terminated the
agreement, and the plaintiff sued them for breach of contract, breach of fiduciary duty,
and tortious breach of the duty of good faith and fair dealing. Id. On the tort claims, we
agreed with the trial court that, as a matter of law, there was no evidence of a special
relationship between the parties giving rise to extra-contractual duties. Id. at 79.
Applying the rules of law from Eulrich and from Conway v. Pacific University, 324 Or
231, 924 P2d 818 (1996), we concluded that the defendants did not have a fiduciary
relationship with the plaintiff, because there was no undertaking by the defendants to act
in the plaintiff's interest. Id. at 82.
The Conway case is perhaps the closest to the case at hand. In Conway,
when the plaintiff was negotiating the renewal of his employment contract with the
defendant university, an agent of the defendant assured him that poor student evaluations
of his teaching "would not be a problem" that would affect his chances of obtaining
tenure. 324 Or at 233-34. Several years later, the plaintiff was shifted off the "tenure-track" due to his poor student evaluations. Id. The plaintiff sued for negligent
misrepresentation, which is actionable under Oregon law only if the defendant owes some
duty to the plaintiff beyond the common law duty of reasonable care. Id. at 236. Thus,
the threshold question in Conway was whether a "special relationship" existed between
the plaintiff and his employer that gave rise to a duty beyond the common law duty of
reasonable care. Such a heightened duty arises "when one party is acting, at least in part,
to further the economic interests of the other party." Id. at 236, citing Onita Pacific Corp.
v. Trustees of Bronson, 315 Or 149, 159, 843 P2d 890 (1992). The court went on:
"Another way to characterize the types of relationships in which a
heightened duty of care exists is that the party who owes the duty has a
special responsibility toward the other party. This is so because the party
who is owed the duty effectively has authorized the party who owes the
duty to exercise independent judgment in the former party's behalf and in
the former party's interests. In doing so, the party who is owed the duty is
placed in a position of reliance upon the party who owes the duty; that is,
because the former has given responsibility and control over the situation at
issue to the latter, the former has a right to rely upon the latter to achieve a
desired outcome or resolution." Conway, 324 Or at 240.
The court then proceeded to examine the nature of the relationship between
the plaintiff professor and the defendant university to determine if a special relationship
existed giving rise to a heightened duty. Comparing the relationship between the plaintiff
and the university to the relationship between the parties in Onita,(3) the court noted that,
unlike the Onita parties, the parties in Conway already had a contractual relationship
when the misrepresentations were made, and thus "were not strangers coming to the
bargaining table to negotiate a first time contract," and "were not in a fully arm's-length
relationship" as were the parties in Onita. Id. at 241. Despite that factor, the court
concluded that the relationship between the professor and the university "still falls short"
of a special relationship, because at the time the misrepresentations were made, "both
parties were acting in their own behalf, each for their own benefit, for the purpose of
negotiating a renewal of Conway's contract." Id. at 242. The court concluded that no
special relationship existed under those circumstances.
The present case is much more analogous to Conway and Bennett than it is
to Eulrich. Here, plaintiff and Pope were negotiating at arm's length--they were
"strangers coming to the bargaining table to negotiate a first time contract," id. at 241, and
were experienced businessmen each acting on their own behalf and for his own benefit to
negotiate an employment contract. A statement by one party that another would just have
to trust him to be fair, uttered at the same time that the party is refusing to make any
contractual guarantees on the subject under discussion, does not give rise to a duty to
provide the very thing the party refused to contract to provide. It would be anomalous, to
say the least, for us to conclude that an employer that has specifically stated that it will
not guarantee severance benefits as part of an employment contract nonetheless has
entered into a special relationship and undertaken a duty to act on behalf of the employee
and against its own best interests in providing severance benefits. The trial court properly
granted defendants' motion for summary judgment on plaintiff's claims for breach of
fiduciary duty and tortious breach of the duty of good faith and fair dealing.
Plaintiff next contends that the trial court erred in granting defendants'
motion for summary judgment on his claim that defendants breached an oral contract to
loan him $50,000. Plaintiff's complaint alleged that defendants promised him at the time
he was hired "a $50,000 loan to facilitate his purchase of a home in Portland, Oregon." In
his deposition, plaintiff indicated that no promise for such a loan was made before his
employment, but that, while his Philadelphia house was on the market, he discussed with
Pope and various people who worked for P&T whether he could "get a loan to help with
the down payment to get into a house in Portland." Plaintiff further indicated that no
repayment terms were discussed. Plaintiff also indicated during his deposition that P&T
gave him a $25,000 advance on his equity in the Philadelphia house, which he used as
part of the down payment on his Portland house, as well as another $15,000 advance that
plaintiff also used on the house. Both plaintiff and Pope indicated in depositions that,
when plaintiff approached Pope for a loan to remodel his Portland house, Pope refused.
Plaintiff contends on appeal that a genuine issue of material fact exists as to
whether defendants breached an oral contract to loan him $50,000. The trial court
granted summary judgment on the ground that there was no evidence in the record to
support plaintiff's contention that there was a contract to loan him $50,000 for renovation
of his house. We agree. Plaintiff alleged in his pleadings that a loan was promised to
"facilitate his purchase" of a house in Portland, and his deposition testimony further
indicates that the promised loan was to be for purposes of a "down payment" on a house
in Portland. The evidence is undisputed that P&T did advance plaintiff money for
purposes of closing on his Portland house. The record is entirely devoid of any evidence
that defendants promised to loan plaintiff any money to remodel his house after he had
purchased it. The trial court properly granted defendants' motion for summary judgment
on this claim.
Finally, plaintiff alleges that the trial court erred in granting defendants'
motion for summary judgment on his defamation claim. Plaintiff contends that Pope's
repetition to several P&T management personnel of the allegation in Bellafronto's letter
that plaintiff ran the Consumer Products division for his own personal gain was
defamatory per se and that the trial court erred in granting defendant's motion for
summary judgment. The trial court concluded that the statements in question fell within a
qualified privilege.(4) That qualified privilege that may operate in the employment context
has been described as follows:
"A statement is conditionally privileged if: (1) it was made to
protect the interests of defendants; (2) it was made to protect the interests of
plaintiff's employer; or (3) it was on a subject of mutual concern to
defendants and the person to whom the statement was made." Wattenburg
v. United Medical Lab., 269 Or 377, 380, 525 P2d 113 (1974), citing
Restatement Torts, §§ 594-96.
Whether a statement falls within the qualified privilege or not may present an issue of
fact. Wallulis v. Dymowski, 323 Or 337, 350-51, 918 P2d 755 (1996). In the present
case, however, we agree with the trial court that no genuine issue of material fact was
presented for the following reasons.
In order to overcome the qualified privilege, the plaintiff must produce
evidence "of some kind of improper motive on defendant's part." Wattenburg, 269 Or at
380. In their motion for summary judgment, defendants pointed out that Pope discussed
the accusation against plaintiff set forth in Bellafronto's letter only with several top
management employees in the course of determining whether or how P&T should
respond to the letter. Plaintiff responded that, because Pope did not have reasonable
grounds for believing Bellafronto's accusation when he discussed the contents of the letter
with other high-level management, a factual issue is presented as to whether the privilege
was abused.
The fact that Pope had no basis for forming an opinion as to whether
Bellafronto's accusation was true at the time he discussed it with his top management is
not a fact from which malice or improper motive may reasonably be inferred under the
circumstances. Plaintiff produced no evidence in opposition to defendants' motion for
summary judgment that Pope acted with malice or an improper motive in discussing
Bellafronto's accusation with certain P&T management personnel.
Plaintiff argues that, nonetheless, numerous cases stand for the proposition
that one of the ways in which a qualified privilege may be lost is if the publisher lacked a
belief or a reasonable ground for belief in the truth of the defamatory statement. See, e.g.,
Benassi v. Georgia Pacific, 62 Or App 698, 703, 662 P2d 760, mod on recons 63 Or App
672, 667 P2d 532, rev den 295 Or 730 (1983). However, a variation on that rule applies
in situations where a person who republishes a defamatory statement does so under
circumstances that make it clear that it is an allegation, not a fact, that is being repeated.
In Cooper v. PGE, 110 Or App 581, 824 P2d 1152, rev den 313 Or 209 (1992), we
addressed arguments that are virtually identical to those made by plaintiffs here. In
Cooper, the plaintiff worked for a subcontractor of the defendant PGE at a location that
required a security clearance from PGE. 110 Or App at 583. An informant told PGE that
the plaintiff was involved in drug dealing, and on the basis of that information PGE
suspended the plaintiff's security clearance. Id. at 583-85. PGE repeated the allegation
about drug dealing to the plaintiff's employer, and the plaintiff was dismissed. We
concluded that trial court properly granted summary judgment in PGE's favor, for the
following reasons:
"[E]ven if it did lack reasonable grounds for [belief in the truth of the
statements], there is another basis for holding that PGE did not abuse its
privilege. Restatement (Second) Torts § 602 says:
"'One who upon an occasion giving rise to a conditional privilege
publishes a defamatory rumor or suspicion concerning another does not
abuse the privilege, even if he knows or believes the rumor or suspicion to
be false, if
"'(a) he states the defamatory matter as rumor or suspicion and not as
fact, and
"'(b) the relation of the parties, the importance of the interests
affected and the harm likely to be done make the publication reasonable.'
"Here, the alleged defamatory statements were not that PGE knew as a fact
that plaintiff was a security risk; rather, the essence of the statements was that PGE
had received information that indicated that plaintiff's presence in the Trojan
nuclear plant would constitute a security risk." Cooper, 110 Or App at 590-91
(footnote omitted).
The present case is analogous to Cooper. Pope discussed Bellafronto's accusations
against plaintiff with management in order to determine if something should be done
about them. Rather than presenting Bellafronto's accusations as fact, Pope indicated to
those to whom he communicated that he did not believe the accusations against plaintiff.
Legitimate reasons for repeating Bellafronto's statements to P&T management were
present here; statements made by disgruntled former employees accusing a person within
a company of wrongdoing are, necessarily, "on a subject of mutual concern to" an
employer and its top management. Wattenburg, 269 Or at 380. If merely repeating an
accusation that has been made in the context of determining what should be done about it
constituted defamation, then employers would be severely crippled in their abilities to
verify rumors and accusations by employees about management, or about employees by
management, for that matter.
The statements from Bellafronto's letter that Pope repeated to P&T
management were subject to a qualified privilege, and plaintiff produced no evidence that
the privilege had been abused. The trial court properly granted defendants' motion for
summary judgment on plaintiff's defamation claim.
Affirmed.
1. Plaintiff's remaining claim, for breach of a contract for stock options, went
to trial and resulted in a verdict in defendant's favor, and that claim is not before us.
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2. The parties acknowledge that employment, in and of itself, does not create a "special relationship." See Conway v. Pacific University, 324 Or 231, 244, 924 P2d 818 (1996).
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3. Onita Pacific Corp. v. Trustees of Bronson, 315 Or 149, 843 P2d 890 (1992), concerned the relationship between parties to a real estate deal.
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4. No issues are presented on appeal as to whether the statement was published, whether it was false, etc. Thus, we limit our analysis to the question of qualified privilege.
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