JOHN MARTIN, JR. v. MAN O WAR RESTAURANTS, INC.; ROBERT LANGLEY, JR.; DON POOLE; AND W. KENT TAYLOR and MAN O WAR RESTAURANTS, INC. v. JOHN MARTIN, JR.
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RENDERED:
November 2, 2001; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2000-CA-001547-MR
JOHN MARTIN, JR.
APPELLANT
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE LAURANCE B. VANMETER, JUDGE
ACTION NOS. 92-CI-00447 & 99-CI-03314
v.
MAN O WAR RESTAURANTS, INC.;
ROBERT LANGLEY, JR.; DON POOLE;
AND W. KENT TAYLOR
AND
NO.
APPELLEES
2000-CA-001695-MR
MAN O WAR RESTAURANTS, INC.
CROSS-APPELLANT
CROSS-APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE LAURANCE B. VANMETER, JUDGE
ACTION NO. 92-CI-00447
v.
JOHN MARTIN, JR.
CROSS-APPELLEE
OPINION
AFFIRMING IN PART AND REVERSING IN PART
APPEAL NO. 2000-CA-001547-MR AND
AFFIRMING CROSS-APPEAL NO. 2000-CA-001695-MR
** ** ** ** **
BEFORE:
DYCHE, EMBERTON, AND HUDDLESTON, JUDGES.
DYCHE, JUDGE:
Appellant, John Martin, Jr. (Martin), and cross-
appellant Man O War Restaurants, Inc. (MOWR), seek review of
various orders of the Fayette Circuit Court in this matter on
remand from the Kentucky Supreme Court.
We affirm in part and
reverse in part as to Appeal No. 2000-CA-001547-MR and affirm in
cross-appeal No. 2000-CA-001695-MR.
This case originated in February of 1992 when MOWR
filed suit to enforce a stock surrender provision in Martin’s
employment contract.
Martin had been allowed to purchase stock
when he was hired by MOWR.
The terms of the contract required
Martin to surrender his stock in the company upon termination.
When MOWR terminated his employment, Martin fought the surrender
provision.
The trial court ruled the provision was enforceable.
However, this Court reversed the trial court holding the stock
surrender provision unenforceable as against public policy.
Kentucky Supreme Court affirmed this Court.
The
Man O War
Restaurants, Inc. v. Martin, Ky., 932 S.W.2d 366 (1996).
The
matter was remanded to the Fayette Circuit Court for further
proceedings.
stock.
A jury trial was held to determine the value of the
The jury determined that the value of Martin’s MOWR stock
at the time of surrender was zero.
APPEAL NO. 2000-CA-001547-MR
Martin’s initial argument on appeal is that he was
entitled to restitution of his stock pursuant to the Supreme
Court’s holding.
reasons.
This argument is without merit for several
First, the Supreme Court’s opinion in Man O War
Restaurants v. Martin did not specifically state restitution was
required.
The Supreme Court held that Martin was entitled to
“appropriate compensation,” not specific restitution.
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Id. at
369.
Second, the trial court properly relied on section 74 of
the Restatement of the Law of Restitution and Sebastian v. Floyd,
Ky., 585 S.W.2d 381 (1979), in ruling that specific restitution
is not always required and certainly not when it is inequitable.
Finally, Martin’s argument for restitution is a complete change
from his argument all through the first part of this case, where
he simply sought compensation for the value of his stock and not
the right to retain that stock.
Therefore, the Court did not err
in failing to amend its November 7, 1997, order that denied
Martin’s request for specific restitution.
We now address the agreed order of March 2, 1993, which
Martin relies on in part of his specific restitution argument.
An agreed order was entered at the very beginning of this case
which required neither party to post a supersedeas bond if an
appeal occurred.
However, for some reason, Martin filed a motion
for a nominal supersedeas bond after the trial court ordered
enforcement of the stock surrender provision.
This motion was a
waiver of Martin’s rights under the agreed order.
Barker v.
Stearns Coal & Lumber Co., 291 Ky. 184, 163 S.W.2d 466 (1942).
Martin fails to offer any explanation or defense regarding the
motion for nominal bond and the waiver of the agreed order.
Thus, his reliance on the March 2, 1993, agreed order is
misplaced.
Martin next argues that the trial court erred in
denying his motion for summary judgment regarding the value of
his stock based on the deposition testimony of MOWR’S president.
Martin’s motion fell far short of the standard of Steelvest, Inc.
-3-
v. Scansteel Service Center, Inc., Ky., 807 S.W.2d 476 (1991).
The deposition testimony of MOWR’s president does not clearly
show the value to be $125,000; therefore there is a genuine issue
of material fact, and the trial court did not err in denying his
motion for summary judgement.
Martin also argues the trial court erred in dismissing
his conversion claim against MOWR.
merit.
This argument is without
The trial court correctly held that privilege protected
MOWR pursuant to American States Insurance Co. v. Citizens
Fidelity Bank & Trust Co., Ky. App., 662 S.W.2d 851 (1983).
Having held privilege a valid reason to dismiss Martin’s
conversion claim, we need not address the statute of limitations
issue.
Finally, Martin argues the trial court erred in failing
to grant his motion for new trial pursuant to CR 59.011.
We
have carefully reviewed the record of the trial and agree with
Martin that a new trial is necessary and thus reverse the trial
court.
1
CR 59.01 — A new trial may be granted to all or any of the
parties and on all or part of the issues for any of the following
causes:
(a) Irregularity in the proceedings of the court, jury or
prevailing party, or an order of the court, or abuse of
discretion, by which the party was prevented from
having a fair trial.
. . . .
(d) Excessive or inadequate damages, appearing to have been
given under the influence of passion or prejudice or in
disregard of the evidence or the instructions of the
court.
(e) Error in the assessment of the amount of recovery
whether too large or too small.
(f) That the verdict is not sustained by sufficient
evidence, or is contrary to law.
-4-
Martin is entitled to a new trial under either CR 59.01
(e) or (f).
The jury verdict of zero is both inadequate and
contrary to the proof in the case.
In its response to Martin’s
motion for a nominal bond made after the trial court held the
stock surrender provision enforceable, MOWR stated the stock had
substantial value and that the parties had stipulated the stock
was worth more than $1000.00.
That admission or argument is
important, not based on whether it was a judicial admission, but
because it was a part of the record which informed the decision
of this Court and the Supreme Court in the first review of this
matter.
The Supreme Court stated in Man O War Restaurants, Inc.
v. Martin that Martin’s stock could not be taken without
“appropriate compensation.”
932 S.W.2d at 369.
The Supreme
Court also pointed out that MOWR had numerous other options to
avoid vesting Martin with part ownership of the company but
failed to do so. Id.
Just as the Supreme Court’s use of the term
“appropriate compensation” prevents the return of Martin’s stock,
it also prevents the use of fair market value or book value if
those figures fail to produce “appropriate compensation.”
“[B]ook value or fair market value may not be the exclusive point
of reference for ascertainment of equitable compensation in ‘buyback’ circumstances, if the contract so provides.”
Id. at 368.
As Martin was vested with ownership rights in MOWR, MOWR must
give “appropriate compensation” for removing him as an owner.
Regaining complete control of the company allowed MOWR to sell
control to those who could help make MOWR profitable, therefore
-5-
that control had value.
A verdict of zero does not conform with
the Supreme Court’s holding in Man O War Restaurants, Inc. v.
Martin.
Accordingly, the trial court is reversed and this case
is remanded for a new trial to determine “appropriate
compensation,” which must not be less than $1000.00.
CROSS-APPEAL NO. 2000-CA-001695-MR
MOWR argues on cross-appeal that the trial court erred
in failing to reform the contract.
We agree with the trial court
that reformation is not appropriate in this case as there was not
the type of mutual mistake that allows for reformation.
Jur. 2d Reformation of Instruments § 1 (1973).
66 Am.
Additionally we
agree with the trial court that Hodges v. Todd, Ky. App., 698
S.W.2d 317 (1985), is distinguished from this case since the
contract in Hodges was incomplete as opposed to unenforceable.
Thus, we affirm the trial court on the issue of reformation.
ALL CONCUR.
BRIEF FOR APPELLANT/CROSSAPPELLEE:
BRIEF FOR APPELLEES/CROSSAPPELLANT:
William C. Jacobs
Lexington, Kentucky
Gregory P. Parsons
J. Jeffrey Patterson
Lexington, Kentucky
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