PAUL v. FARMLAND INDUSTRIES, INC.

Rehearing and Suggestion for Rehearing En Banc Denied October 26, 1994.

BEAM, Circuit Judge.

Ronald B. Paul appeals an adverse judgment in this action for age discrimination in employment, fraud and breach of contract. We affirm.

I. BACKGROUND

Paul was hired by Farmland in 1987 as Vice-President and Chief Information Officer and was terminated less than two years later. He filed this action alleging age discrimination in employment under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621, and breach of contract and fraud under Missouri law. At the close of the evidence, after a nine-day trial, the district court entered judgment as a matter of law in favor of Farmland on Paul's fraud and breach of contract claims. The age discrimination claim was submitted to the jury and the jury returned a verdict in favor of Farmland.

On appeal, Paul asserts that the district court erred in entering judgment as a matter of law on the fraud and breach of contract claims and erred with respect to the ADEA claim in receiving certain documents from Paul's personnel file from a former employer. He asserts that the improper evidence requires reversal of the jury verdict.

II. DISCUSSION

We review the district court's interpretation of state law de novo. Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991). In reviewing the district court's grant of judgment as a matter of law, we apply the same standard as the district court. Jacobs Mfg. Co. v. Sam Brown Co., 19 F.3d 1259, 1263 (8th Cir.1994). We consider the evidence and the reasonable inferences that may be drawn from the evidence in the light most favorable to Paul. Id.

A. Breach of Contract

We agree with the district court that Paul did not present a submissible breach of contract claim. Paul relies on several documents to create an ostensible contract of employment for a term of three years.1 These include a letter from the President of Farmland offering Paul the position and a long-term management incentive plan referenced in the letter. Nowhere in these documents do we find any expression, or even intimation, that either party contemplated employment for a term of years. The three-year management incentive plan merely outlines a component of Paul's compensation package. Under Missouri law, absent an employment contract to the contrary, an employee may be discharged for cause or without cause and the employee has no cause of action for wrongful discharge as a matter of law. Johnson v. McDonnell Douglas, Corp., 745 S.W.2d 661, 662 (Mo.1988) (en banc). Because Paul has presented no evidence of a contract for a term of years, the district court properly entered judgment on his breach of contract claim.

B. Fraud

Similarly, Paul did not prove a submissible case of fraud. Paul's fraud claim is premised on the contention that he was induced to leave another job and induced to work for Farmland by the false promise of Mr. James Rainey, Farmland's President, that Paul would have a contract of employment for three years. The district court found that an employee "may not assert a fraud claim that is essentially a cloaked contract claim." Paul v. Farmland Indus., Inc., No. 90-0594-CV-W-1, Order at 7 (W.D.Mo. Sept. 27, 1993) (citing Hanrahan v. Nashua Corp., 752 S.W.2d 878, 883 (Mo.Ct.App.1988)).

Under Missouri law, when a tort action arises from the breach of a contract, a plaintiff is precluded from maintaining both a breach of contract and a fraud claim against an employer. Bernoudy v. Dura-Bond Concrete Restoration, Inc., 828 F.2d 1316, 1318 (8th Cir.1987). A fraud claim is permitted only if it arises from acts that are separate and distinct from the contract. Id. We need not resolve the issue of whether Paul presented a "cloaked" contract claim or a fraud claim based on separate and distinct acts, because we find, in any event, that Paul did not present a submissible case of fraud.2

Under Missouri law,

Washburn v. Kansas City Life Ins. Co., 831 F.2d 1404, 1411 (8th Cir.1987) (quoting Heitman v. Brown Group, Inc., 638 S.W.2d 316, 319 (Mo.Ct.App.1982)). Each of these elements must be established to make a submissible case of fraud, and failure to establish any one is fatal to recovery. Id.

The critical element in a fraud case based on a statement of present intent is proof that the speaker, at the time of the utterance, actually did not intend to perform consistently with his words. Craft v. Metromedia, Inc., 766 F.2d 1205, 1219 (8th Cir. 1985), cert. denied, 475 U.S. 1058, 106 S.Ct. 1285, 89 L.Ed.2d 592 (1986). Absent such an inconsistent intent there is no misrepresentation of fact or state of mind but only a breach of promise or failure to perform. Id. It is not enough that for any reason, good or bad, the speaker changes his mind and fails or refuses to carry his expressed intention into effect. Id. Whether the facts and circumstances justify a conclusion that a defendant knows a representation is false when made is ordinarily a question for the jury. Jacobs, 19 F.3d at 1263. Intent not to perform cannot be shown solely by nonperformance, it must be shown by other evidence. Id.

Here, Paul presented no facts or circumstances which, if believed, would allow a jury to find that Farmland knew its representations, if made, were false when made. Paul relies only on the testimony of Rainey to establish his fraud claim. Having carefully reviewed the testimony of Rainey in the light most favorable to Paul and giving Paul the benefit of all favorable inferences, we conclude that there is insufficient evidence for a reasonable jury to have found that Rainey's expressed desire to establish a long-term employment relationship with Paul was false when it was made. The evidence points to nothing more than a later "change of mind" by Rainey when Paul did not live up to the company's expectations as Chief Information Officer. Because Paul failed to produce any evidence that Rainey did not intend to perform consistently with his words, the district court properly dismissed the fraud claim. See, e.g., Washburn, 831 F.2d at 1412 (affirming entry of directed verdict on fraud claim for failure of proof under Missouri law).

C. Admission of Evidence

Paul further asserts that improper admission of his personnel file from a former employer requires reversal of the jury's age discrimination verdict. We give great deference to a district court's rulings on admissibility of evidence and will reverse only if the court has committed a clear abuse of discretion. United States v. Jackson, 914 F.2d 1050, 1053 (8th Cir.1990). We find no abuse of discretion here. Paul "opened the door" with respect to the personnel file by introducing evidence of his work record at his former employer. The evidence refuted Paul's contention that he could have continued working for his former employer.

Moreover, a jury's verdict will not be disturbed absent a showing that the evidence was so prejudicial as to require a new trial which would be likely to produce a different result. O'Dell v. Hercules, Inc., 904 F.2d 1194, 1200 (8th Cir.1990). Given Paul's weak age discrimination case — Paul was over fifty when he was hired; he was terminated at age fifty-two by the same people who hired him, all of whom were older than he was — it is unlikely that the result would have been different if the evidence had been excluded. There was ample evidence that Paul was terminated because of poor performance and inability to achieve goals within the cost constraints placed upon him. Under the circumstances, we are unable to find that the evidence, even if improper, was so prejudicial that its exclusion would change the outcome of the trial.

III. CONCLUSION

Accordingly, the judgment of the district court is affirmed.

HEANEY, Senior Circuit Judge, dissenting.

There is ample evidence in this record from which a jury could find that Farmland's chief executive officer orally promised Paul that if he accepted employment with Farmland, he would not be terminated, except for cause, before August 31, 1990. There is also sufficient evidence to show that in reliance on that promise, Paul gave up his job in New Jersey and moved himself and his family to take the Farmland job. This evidence, if believed by a jury, is sufficient to establish an enforceable contract between Farmland and Paul, a contract that a jury could find was breached by Farmland when it discharged Paul before August 31, 1990. It follows that I would reverse and remand to the district court for further proceedings consistent with this dissent.

I have no quarrel with the majority with respect to the provisions of the written contract, and would agree with them that were it not for the oral promise of employment for a definite period of time, Johnson v. McDonnell would control, and that under Missouri law, Paul could not recover on a contract theory. Here, however, a jury could find that Farmland made an oral promise to Paul that he would have a job for three years.

Paul called the chief executive officer, James L. Rainey, as an adverse witness. That officer testified as follows:

T. 1731, 1735. Later in the record, Rainey denied that he promised Paul a three-year job (T. 1739-43), but clearly a jury issue as to whether he had made an oral promise of three years of employment was raised. Paul himself testified as follows:

Id. at 155-56, 160, 160-63.

There remains only the question of whether the Missouri Statute of Frauds, which provides that contracts that cannot be performed within one year must be in writing, Mo.Rev.Stat. § 432.010, bars recovery in this case. In my view, it does not. If the party to whom the promise has been made fully performs his part of the bargain, he can enforce the contract. See Performance of Personal Service as a Ground for Taking Oral Contracts Out of the Statute of Frauds, 26 Wash.U.L.Q. 275 (1941); Services as Part Performance to Take an Oral Contract Out of the Statute of Frauds, 21 St. Louis L.Rev. 262 (1936). Here a jury could certainly find that Paul had fully performed by giving up his old job, moving to a new community, taking up the new job with Farmland, and performing it satisfactorily.

In my view, Paul can also recover on a promissory estoppel theory. See Bower v. AT & T Technologies, Inc., 852 F.2d 361 (8th Cir.1988).

I would reverse and remand with directions to proceed to trial.