JOHN T. BYRD; JOHN T. BYRD & ASSOCIATES, INC. v. PACKAGING UNLIMITED, INC.; PETER HANEKAMP; ROBERT HANEKAMP
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RENDERED: MARCH 19, 2004; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2002-CA-002209-MR
JOHN T. BYRD; JOHN T.
BYRD & ASSOCIATES, INC.
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE THOMAS B. WINE, JUDGE
ACTION NO. 00-CI-007964
v.
PACKAGING UNLIMITED, INC.;
PETER HANEKAMP; ROBERT
HANEKAMP
APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** ** ** ** **
BEFORE:
DYCHE, COMBS, AND JOHNSON, JUDGES.
DYCHE, JUDGE:
John T. Byrd, III, and John T. Byrd & Associates,
Inc., appeal from a jury verdict in favor of appellees Packaging
Unlimited, Inc., Robert Hanekamp, and Peter Hanekamp determining
that appellees did not wrongfully discharge Byrd from his
managerial position with Packing Unlimited as a result of Byrd’s
refusal to permit false entries to be made into the business
records of Packaging Unlimited.
Appellants contend that the
trial court erred by denying their motion pursuant to Kentucky
Rules of Civil Procedure (CR) 15.02 to amend their complaint to
conform to the evidence; by requiring appellants to prove an
intent to defraud in association with their claim that Byrd was
discharged for refusing to permit the alteration of business
records; and by submitting an erroneous instruction to the jury.
Appellants also appeal the trial court’s award of summary
judgment to appellees on their claim of breach of contract
and/or promissory estoppel.
Because the trial court, over
appellants’ objection, submitted an erroneous jury instruction
which required appellants to prove that business records had
been falsified subsequent to Byrd’s discharge, an element which
is not required to be proven in a wrongful discharge case, we
reverse and remand for a new trial.
In 1979 Byrd was hired as a full-time professor at the
Rubel School of Business at Bellarmine University.
Beginning in
1985, Byrd also worked as a business consultant through his
company John T. Byrd & Associates, Inc., of which Byrd is the
sole shareholder and employee.
During the late 1980s and the
1990s Byrd did consulting work for Packaging Unlimited and one
of its associated companies, Promotional Packaging, Inc.
Appellee Packaging Unlimited is a closely-held
corporation which, among other things, produces retail display
boxes for manufacturing clients.
2
During the period involved in
this case, one of Packaging Unlimited’s most important customers
was Colgate-Palmolive.
During the relevant time period
Packaging Unlimited produced and packaged retail display boxes
for Colgate for its consumer product Total Toothpaste.
Appellee Robert Hanekamp is the Chief Executive
Officer of Packaging Unlimited.
He is also the majority
stockholder of Hanekamp Family Limited Partnership which, in
turn, is the majority stockholder in Packaging Unlimited.
Robert Hanekamp likewise holds a controlling interest, either
individually or through his Family Limited Partnership, in
multiple companies associated with Packaging Unlimited.
Appellee Peter Hanekamp is the son of Robert Hanekamp and is the
Assistant Chief Executive Officer of Packaging Unlimited.
In 1998 the president of Promotional Packaging sold
his minority interest in the company and retired.
Robert
Hanekamp subsequently decided to merge Promotional Packaging
with Packaging Unlimited.
In September 1998 Robert Hanekamp
began discussions with Byrd concerning his accepting a full-time
position with Promotional Packaging to replace the departing
president.
Beginning in December 1998 Byrd was hired to a fulltime position with Promotional Packaging.
Though Byrd
functioned as the general manager of Promotional Packaging, for
various reasons, including tax reasons, Byrd was not placed on
3
the payroll as a regular employee; rather, he was paid salary
and benefits via Byrd & Associates.
In or about March 1999, the
merger of Promotional Packaging and Packaging Unlimited was
completed.
Byrd thereafter functioned as an employee of
Packaging Unlimited in charge of the Promotional Packaging
Division.
In order to preserve his retirement benefits with
Bellarmine, Byrd took a sabbatical leave from his position with
the University.
1999.
Byrd commenced his sabbatical leave in August
According to appellees, Byrd was supposed to have been
working exclusively and full-time for them following his hiring
in December 1998, and Byrd deceived them by continuing to work
full-time for Bellarmine between December 1998 and August 1999.
According to Byrd, the parties had an agreement that
he was to be paid $8,800.00 per month until he reached the age
of fifty-eight on April 25, 2001, approximately two years and
four months after his initial employment.
Byrd contends that he
was also to be paid annual bonuses consistent with those paid to
the departing president, plus a reimbursement of expenses.
Byrd
summarized these terms in a memorandum to Packaging Unlimited
President Bob Faller dated November 12, 1999.
Byrd alleges that
the memorandum is misdated and that the actual date of the
memorandum was November 12, 1998.
4
According to Byrd, during the initial months of his
employment he began to investigate shipping irregularities
taking place at Packaging Unlimited.
Byrd claims that in
December 1999 he was twice instructed by Peter and/or Robert
Hanekamp to allow the inputting of data which would falsely
report Colgate display products as being ready to be shipped.
During the trial evidence was presented by appellants that
several bills of lading contained forged signatures and that
actual shipment dates did not match the shipment dates entered
on the bills of lading.
The Hanekamps deny Byrd’s allegation
that he was instructed to permit the falsification of business
records or that they or any of their companies engaged in
fraudulent or improper business practices.
On December 27, 1999, Byrd was terminated from his
position with Packaging Unlimited.
Byrd contends that he was
discharged because he refused to permit the falsification of
business records as instructed by Robert and/or Peter Hanekamp.
The Hanekamps contend that Byrd was fired for managerial
incompetence and excessive absenteeism.
On December 14, 2000, Byrd and Byrd & Associates filed
a complaint in Jefferson Circuit Court relating to the
discharge.
As subsequently amended appellants’ complaint
asserted claims for fraud; breach of contract and/or promissory
estoppel; the tort of outrage; and wrongful discharge.
5
On May 15, 2002, the trial court entered an order
granting appellees summary judgment on appellants’ claims of
fraud; breach of contract and/or promissory estoppel; and the
tort of outrage.
Commencing on September 17, 2002, a jury trial was
held on appellants’ remaining claim for wrongful discharge.
On
September 23, 2002, the jury returned a verdict in favor of
appellees.
This appeal followed.
First, appellants contend that the trial court
erroneously granted summary judgment on their claim for breach
of contract and/or promissory estoppel.
While it is undisputed
that a formal written contract between Byrd and Packaging
Unlimited was never executed, Byrd argues that a November 12,
1998, memorandum from Byrd to Packaging Unlimited president Bob
Faller, in combination with a January 4, 1999, letter from Bob
Faller to Bellarmine University in support of Byrd’s request for
a sabbatical leave, constituted an integrated agreement.
In its May 15, 2002, order granting summary judgment,
the trial court concluded that because the memorandum was not
signed by either party, because the writings did not refer to
each other, and because the letter from Faller refers to the
academic school year 1999 – 2000 whereas Byrd’s employment with
Promotional Packaging began in December 1998, that the writings
do not constitute an integrated agreement.
6
Summary judgment is only proper where the movant shows
that the adverse party could not prevail under any
circumstances.
Steelvest, Inc. v. Scansteel Service Center,
Inc., Ky., 807 S.W.2d 476, 480 (1991).
However, a party
opposing a properly supported summary judgment motion cannot
defeat that motion without presenting at least some affirmative
evidence demonstrating that there is a genuine issue of material
Hubble v. Johnson, Ky., 841 S.W.2d 169,
fact requiring trial.
171 (1992).
The circuit court must view the record "in a light
most favorable to the party opposing the motion for summary
judgment and all doubts are to be resolved in his favor."
Steelvest, supra at 480 (citations omitted).
On appeal, the
standard of review is "whether the trial court correctly found
that there were no genuine issues as to any material fact and
that the moving party was entitled to judgment as a matter of
law."
Scifres v. Kraft, Ky. App., 916 S.W.2d 779, 781 (1996)
(citation omitted).
Since factual findings are not at issue,
deference to the trial court is not required.
Id.
Byrd contends that he had an agreement with Packaging
Unlimited for a period of employment extending from December
1998 until at least his fifty-eighth birthday, April 25, 2001.
Based upon this contention, Byrd alleges that the agreed upon
period of employment was for at least two years and four months,
7
bringing the purported agreement within the statute of frauds.
KRS 371.010, the Kentucky Statute of Frauds, provides that
No action shall be brought to charge any
person . . . [u]pon any agreement that is
not to be performed within one year from the
making thereof . . . unless the promise,
contract, agreement, representation,
assurance, or ratification, or some
memorandum or note thereof, be in writing
and signed by the party to be charged
therewith, or by his authorized agent. It
shall not be necessary to express the
consideration in the writing, but it may be
proved when necessary or disproved by parol
or other evidence.
KRS 371.010(7).
As stated above, Byrd argues that the writing
requirement is satisfied by two written documents, a memorandum
dated November 12, 199[8],1 from Byrd to Bob Faller, and a letter
dated January 4, 1999, from Bob Faller to Vice President and
Dean of Bellarmine College John A. Oppelt in support of Byrd’s
request for a sabbatical leave.
The November 12, 199[8],
memorandum states as follows:
All things seem to working [sic] out for me
to assume the responsibility at Promotional.
John is leaving on December 18, and the Dean
has recommended me for a sabbatical. The
following is important to me in order to
finalize our plans:
1
The memorandum is dated November 12, 1999. However, Byrd contends that the
actual date of the memorandum was November 12, 1998, and that the mistake was
a result of a typographical error. Since we are considering a summary
judgment granted against Byrd, the nonmovant, we accept his contention that
the actual date of the memorandum was November 12, 1998.
8
I need to continue to be paid the way I am
currently; that is, via John T. Byrd &
Associates, Inc. This allows me to continue
the level of retirement contribution, and
allows me to stay on the Bellarmine
hospitalization program as well as the
retirement component at the level of income
I will continue to receive. This will
decline by $44,000 if I go to Promotional,
so I need to make $8,800 monthly plus
whatever the fringe percentage would be, in
order to stay even. (Bob Haner could figure
this amount). However, I would like to
switch to the Packaging program at age 58.
I need to stay on the Bellarmine system
until age 58. Given my years of service, if
I quit at 58, they will pay me a meaningful
amount toward retirement until age 65,
regardless of whether I’m working elsewhere.
This also applies to their hospitalization
equivalent. It would be stupid for me to
give this up since I’m so close.
Bob, if you need to reduce the year end
bonus due to the monthly requirements, I
understand. I trust you will be fair. I
assume my bonus will be the same as John.
Also, he stated he has a car plus expense
reimbursement. I recently renewed my lease
on my car and don’t need an extra car – will
I get some type of monthly reimbursement for
this?
Thanks in advance for your consideration.
After you have talked with Bob [Hanekamp]
regarding these issues, please advise me
accordingly.
The memorandum was unsigned.
The second writing
relied upon by Byrd, the January 4, 1999, letter from Bob Faller
to John A. Oppelt, states as follows:
I am writing in support of Dr. John T.
Byrd’s application for sabbatical for the
academic year 1999-2000. He will be working
9
with Packaging Un-limited [sic], and it is
my understanding that he will be developing
a case study during his sabbatical. He has
access to our data, and will be involved in
a very relevant area of management. We
believe we are leading edge in the area of
supply chain management, and two of our
largest customers are Colgate Palmolive and
3M. There is much to be learned in this
area of management, and we welcome a case
study of what we have accomplished. We are
supportive of this effort, and look forward
to working with him as he pursues this work.
Once again, I recommend he be given this
opportunity and will support his effort
throughout.
Sincerely,
Bob Faller
/s/
Bob Faller
President
“To satisfy and conform to the requirements of the
statute of frauds, it is essential that the material conditions
and terms of the contract appear in writing so that it may be
established without resort to parol evidence.”
Gibson v.
Crawford, 247 Ky. 228, ___, 56 S.W.2d 985, 988 (1932)(citations
omitted).
The logic behind the prerequisite of a signed writing
has been explained to be:
“[E]videntiary, to require reliable
evidence of the existence and terms of the contract and to
prevent enforcement through fraud or perjury of contracts never
in fact made.”
Restatement (Second) of Contracts § 131 cmt. c
(1981).
10
“Separate writings may form the memorandum of contract
required by the Statute of Frauds.”
Lonnie Hayes & Sons Staves,
Inc. v. Bourbon Cooperage Co., Ky. App., 777 S.W.2d 940, 942
(1989) (citing Restatement (Second) of Contracts, § 132, and 72
Am. Jur. 2d, Statute of Frauds § 371).
The Restatement (Second)
of Contracts § 132 (1981) states the rule as “[t]he memorandum
may consist of several writings if one of the writings is signed
and the writings in the circumstances clearly indicate that they
relate to the same transaction.”
However, while it is true that
multiple documents may be considered together to satisfy the
statute of frauds, the rule in Kentucky is that several writings
may be considered together only where the documents refer one to
the other without the use of parol evidence.
See Antle v. Haas,
Ky., 251 S.W.2d 290, 295 (1952), and Nicholson v. Clark, Ky.
App., 802 S.W.2d 934, 938 (1990).
Further, the contract terms
must be ascertainable without resort to parol evidence.
Nicholson, supra at 938.
When multiple documents are to be considered together
to satisfy the statute of frauds, the initial document to be
examined is the one containing the signature of the party to be
charged.
In this case that is the January 4, 1999, letter from
Bob Faller to John Oppelt.
That letter does not refer to the
11
November 12, 199[8]2 memorandum and the two writings may be
connected only by the use of parol evidence.
Hence, under Antle
and Nicholson, supra, the two documents cannot be considered
together.
Further, the January 4, 1999, letter alone is
insufficient to establish a written contract for the specific
period of time asserted by Byrd.
The subject matter of that
letter is concerned with supporting Byrd’s sabbatical leave from
Bellarmine for the academic year 1999-2000, which would normally
be construed as from August 1999 to May 2000.
At best, this
letter would support an agreement for employment during this
nine-month period.
However, the letter contains no language
that would indicate the parties had a contract for the
employment of Byrd for the period alleged by Byrd, i.e., from
December 1998 until April 25, 2001, his 58th birthday.
Further,
the letter contains no language or indication that Byrd was to
be employed by Packaging Unlimited as something other than an
at-will employee.
In summary, as the two writings cannot be connected
without resort to parol evidence, and because the letter signed
by the party to be charged does not evidence a contract for the
term of employment alleged by Byrd (December 1998 to April 2001)
or the employment status alleged by Byrd (a non-at-will
2
The November 12, 199[8], memorandum also does not refer to the January 4,
1999, letter.
12
employee), summary judgment on the breach of contract claim was
proper.
Steelvest, supra.
In the caption to their first argument appellants also
allege that the trial court erred in granting summary judgment
on their estoppel theory.
The doctrine of estoppel may, under the proper
circumstances, prevent a party from employing the statute of
frauds.
Smith v. Ash, Ky., 448 S.W.2d 51 (1969).
The vital principle is that he who by his
language or conduct leads another to do,
upon the faith of an oral agreement, what he
would not otherwise have done, and changes
his position to his prejudice, will not be
allowed to subject such person to loss or
injury, or to avail himself of that change
to the prejudice of such other party. The
party asserting the estoppel must,
therefore, show affirmatively that he has
done or omitted some act or changed his
position to his prejudice in reliance upon
the acts, conduct (active or passive),
language, or representations of the person
sought to be estopped which he would not
have done except for such acts, language or
conduct.
Nicholson v. Clark, Ky. App., 802 S.W.2d 934, 939 (1990) (citing
73 Am. Jur. 2d “Statute of Frauds” § 567).
While appellants identify estoppel as an issue in the
caption of their first argument, they do not provide any
discussion or line of reasoning addressing the merits of their
estoppel theory.
Further, they do not explain how the elements
of estoppel apply in this case, nor have they provided any
13
citations to the record in support of their estoppel theory.
As
appellants have failed to present arguments in support of their
estoppel theory, we will not disturb the trial court’s granting
of summary judgment on this issue.
Baker v. Commonwealth,
Ky., 465 S.W.2d 305, 308 (1971).
Next, appellants contend that the trial court erred
when it denied their motion to amend their complaint pursuant to
CR 15.02 and to permit the issue of whether appellants were atwill employees or under contract to be presented to, and decided
by, the jury as an issue of fact.
Appellants contend that,
irrespective of the previous summary judgment, the issue of
whether a contract existed between Byrd and Purchasing Unlimited
was implicitly tried, and the issues of whether there was a
contract and/or whether there had been an oral modification to
Byrd’s “at-will” employment relationship should have been
presented to the jury.
CR 15.02 provides as
follows:
When issues not raised by the pleadings are
tried by express or implied consent of the
parties, they shall be treated in all
respects as if they had been raised in the
pleadings. Such amendment of the pleading
as may be necessary to cause them to conform
to the evidence and to raise these issues
may be made upon motion of any party at any
time, even after judgment; but failure so to
amend does not affect the result of the
trial of these issues. If evidence is
objected to at the trial on the ground that
it is not within the issues made by the
14
pleadings, the court may allow the pleadings
to be amended and shall do so freely when
the presentation of the merits of the action
will be subserved thereby and the objecting
party fails to satisfy the court that
admission of such evidence would prejudice
him in maintaining his action or defense
upon the merits. The court may grant a
continuance to enable the objecting party to
meet such evidence.
The motion to amend was made following the close of
all the evidence.
The trial court denied the motion to amend on
the basis that the case was not tried as a contract case and
that the defendants would be prejudiced to permit the submission
of the issue of an oral contract to the jury when the defendants
were not on notice that this was an issue in the trial.
“The
allowance of an amended pleading to conform to the proof is a
matter of discretion for the [trial court].”
Fella v. Horney,
Ky., 316 S.W.2d 62, 64 (1958)(citation omitted).
“‘Abuse of
discretion in relation to the exercise of judicial power implies
arbitrary action or capricious disposition under the
circumstances, or at least an unreasonable and unfair
decision.’”
Sherfey v. Sherfey, Ky. App., 74 S.W.3d 777, 783
(2002)(citation omitted).
First, we note that CR 15.02 applies only to issues
not raised in the pleadings.
Appellants raised the issue of
whether there was an employment contract in their pleadings,
and, as noted above, summary judgment was properly granted in
15
favor of appellees.
Appellants do not explain why CR 15.02 is
applicable under these circumstances.
Further, appellants have cited us to no specific
evidence or testimony presented in the lengthy trial in support
of their position that the issue of an oral contract was
implicitly tried.
Appellants do not cite to any specific oral
statement made by Bob Faller, Bob Hanekamp, Pete Hanekamp, or
anyone else associated with Packaging Unlimited to the effect
that Byrd was being hired as a non-at-will employee pursuant to
a contract for a guaranteed period of employment for the period
of December 1998 until April 2001.
Appellants do cite to the November 12, 199[8],
memorandum from Byrd to Bob Faller; however, as indicated in the
discussion concerning summary judgment, that writing does not
contain the signature of the party to be charged; does not
otherwise comply with the statute of frauds; and does not
include language to the effect that Byrd was being hired
pursuant to a contract for a guaranteed period of employment for
the period of December 1998 until April 2001.
In light of this
omission, it would not have been appropriate to submit to the
jury the issue of whether that memorandum constituted a contract
altering Byrd’s status as an at-will employee, and we cannot
conclude that the trial court abused its discretion by denying
appellants’ motion to amend.
16
Next, appellants contend that the trial court erred in
holding that the intent to defraud requirement of KRS 517.050
required an intent to defraud a specific victim.
At the conclusion of appellants’ expert forensic
accountant’s testimony, appellees moved for a directed verdict.
In the course of the ensuing discussion, the trial court
observed that under KRS 517.050 there must be an intent to
defraud and, further, there must be an identifiable victim of
the intent to defraud.
In their arguments opposing a directed verdict,
appellants identified Colgate, Colgate shareholders, the
Securities and Exchange Commission, and readers of Colgate’s
financial reports as potential victims of the alleged altered
business records.
The trial court denied appellees’ motion for directed
verdict, both at this stage of the trial, following the close of
the plaintiff’s proof, and following the close of defendant’s
proof.
Appellants have not identified any prejudice associated
with the trial court’s comments that there must be an
identifiable victim to prevail on a wrongful discharge action
based upon KRS 517.050.3
Inasmuch as appellants prevailed in the
various motions for a directed verdict, including the motion
associated with the trial court’s comments regarding the
3
For example, the jury instructions did not contain a requirement that
appellants identify a specific victim.
17
identification of a victim, and appellants have failed to
identify any prejudice associated with the comments which could
have affected the outcome of the trial, any error was harmless
error.
CR 61.01.
Finally, appellants contend that the jury instructions
for wrongful discharge were erroneous.
Specifically, appellants
contend that Interrogatory No. 1 was improper.
“The general rule is that an employer may discharge an
‘at-will employee for good cause, for no cause, or for a cause
that some might view as morally indefensible.’"
Northeast
Health Management, Inc. v. Cotton, Ky. App., 56 S.W.3d 440, 446
(2001) (citation omitted).
Only two situations exist where
grounds for discharging an employee are so contrary to public
policy as to be actionable absent explicit legislative
statements prohibiting the discharge:
first, where the alleged
reason for the discharge of the employee was the failure or
refusal to violate a law in the course of employment"; second,
"when the reason for a discharge was the employee's exercise of
a right conferred by well-established legislative enactment."
Grzyb v. Evans, Ky., 700 S.W.2d 399, 402 (1985) (citing
Suchodolski v. Michigan Consolidated Gas Co., 412 Mich. 692,
___, 316 N.W.2d 710, 711-712 (1982)).
Byrd brought his action for wrongful discharge based
upon the allegation that he was discharged by Packaging
18
Unlimited for refusing to violate a law in the course of his
employment.
Specifically, Byrd alleged that he was dismissed
based upon his refusal to violate the law against falsifying
business records.
This falls squarely within the first
exception to at-will employment identified in Gryzb.
KRS 517.050, the statute which codifies the offense of
falsifying business records, provides, in relevant part, as
follows:
(1) A person is guilty of falsifying
business records when, with intent to
defraud, he:
(a) Makes or causes a false entry to be made
in the business records of an enterprise; or
(b) Alters, erases, obliterates, deletes,
removes or destroys a true entry in the
business records of an enterprise; or
(c) Omits to make a true entry in the
business records of an enterprise in
violation of a duty to do so which he knows
to be imposed upon him by law or by the
nature of his position; or
(d) Prevents the making of a true entry or
causes the omission thereof in the business
records of an enterprise.
Instruction No. 1 and Interrogatory No. 1 stated,
respectively, as follows:4
Instruction No. 1
4
Appellants did not object to this instruction and, in fact, tendered a
similar instruction. This instruction is replicated to provide context to
the discussion.
19
A person is guilty of falsifying business
records when, with intent to defraud, he
prevents the making of a true entry or
causes the omission thereof in the business
records of an enterprise.
Interrogatory No. 1
From the evidence you have heard, do you
believe the Defendants, Robert Hanekamp
and/or Peter Hanekamp and/or an employee or
agent of Packaging Unlimited, Inc. falsified
the bills of lading from Colgate?
Instruction No. 2 and Interrogatory No. 2 stated,
respectively, as follows:
Instruction No. 2
Under the law of Kentucky, the Plaintiff,
John T. Byrd, III & Associates, Inc., was an
employee-at-will. His employment could be
terminated by his employer at any time for
any cause, or even without cause. However,
an employer can not discharge an employee
for refusing to violate a statute.
You will find for the Plaintiffs, John T.
Byrd, III and John T. Byrd, III &
Associates, Inc., if you believe from the
evidence that the Defendants intended to
prevent the Plaintiff from making or having
made true entries in the business records of
Packaging Unlimited, Inc., and that such
intention was a substantial and motivating
factor in the decision of the Defendants,
Robert Hanekamp and/or Peter Hanekamp and/or
Packaging Unlimited, Inc., to discharge the
Plaintiff, but for which the Plaintiff would
not have been discharged.
Interrogatory No. 2
From the evidence presented to you, do you
believe the Defendants intended to prevent
the Plaintiff from making or having made
20
true entries in the business records of
Packaging Unlimited, Inc., and that such
intention was a substantial and motivating
factor in the decision to terminate the
Plaintiff’s employment and but for which
Plaintiff would not have been discharged?
Appellants contend that the trial court’s
Interrogatory No. 1 improperly interposed the additional
requirement that the jury first find that there had actually
been a falsification of Colgate bills of lading by employees or
agents of Packaging Unlimited.
Appellants contend that this
preliminary interrogatory should not have been presented to the
jury and, in addition, that the instruction referred to the
alteration of bills of lading whereas their theory of the case
was that Byrd was fired for refusing to permit false computer
entries which resulted in the false tendering of bills of
lading.
We must address appellees’ argument that this issue is
not properly preserved.
At the conclusion of the trial, the trial court
provided the parties with a copy of its proposed jury
instructions for review and comment.
Upon his initial review of
the instructions, lead counsel for appellants, Lawrence Zielke,
stated “. . . the way you have Number 1 is fine.”
Appellants
then requested unrelated changes to the instructions which were
agreed to by the trial court.
21
After the unrelated changes were agreed to, co-counsel
for appellants, Scott Byrd, asked the trial court to revisit
Instruction Number 1.
The following discussion then occurred:
Mr. Byrd: Judge, just one point. On
Interrogatory Number 1, it appears you’re
making it a prerequisite to continuing on a
finding that one of the defendants falsified
bills of lading. And from the case I
submitted, granted it was from another
jurisdiction, I don’t think we have to show
that falsification actually took place.
I think we just have to show that the
plaintiff or plaintiffs were asked to
falsify or not to prevent the falsification.
I don’t think we have to make an affirmative
showing that such falsification took place.
Trial Court: Well you have to go back and
look at what Interrogatory Number 1 refers
to and that’s Instruction Number 1. A
person is guilty of falsifying business
records when, with intent to defraud, he
prevents the making of a true entry.
That’s . . . that’s . . . were talking about
falsifying records.
Mr. Byrd:
Ok.
Trial Court: And falsifying records is
defined as making a true entry [sic].
Mr. Byrd:
I agree.
Trial Court: You don’t have to actually
falsify the record. All you have to do is
stop somebody from putting in a true entry.
Mr. Byrd:
Right.
Trial Court: That’s what falsifying a
record in this particular case is limited
to.
22
Mr. Byrd:
Right.
Trial Court: And if that wasn’t done, if
they don’t believe that Dr. Byrd was
prevented from . . . entering . . . causing
these entries to be made, if they don’t
believe that anybody did that, that’s the
end of the case. If they believe it then we
go on to the next one, and that is . . . was
there . . . if they believe that they
prevented him was that then a substantial
factor but for which he . . . would not . .
. he was fired . . . would not have been
discharged. Again, it’s a two step process
and I think we define . . . that’s how we
define falsifying records in this case.
All right, anything else?
Following this discussion, counsel for appellants
expressed no disagreement with the trial court’s analysis of the
instructions, and, to the contrary, Mr. Zielke can be heard on
the tape addressing someone who appears to be affiliated with
plaintiffs’ counsel, stating, “It looks all right to me, does it
look all right to you?”
The associate then appears to nod
affirmatively.
CR 51(3) provides that a party may not "assign as
error the giving or the failure to give an instruction unless he
has fairly and adequately presented his position by an offered
instruction or by motion, or unless he makes objection before
the court instructs the jury, stating specifically the matter to
which he objects and the ground or grounds of his objection."
In essence this rule requires the lawyers in the case to assist
23
the judge in giving correct instructions and disallows an ex
post facto objection as a means of obtaining a reversal of the
judgment on appeal.
(1963).
Cox v. Hardy, Ky., 371 S.W.2d 945, 947
Where a party does not object to the instruction, his
complaint to the instruction will not be heard on appeal.
Mikkelsen v. Fischer, Ky., 347 S.W.2d 525, 528 (1961).
It is
necessary to have a specific objection to the giving of or
failure to give instructions at the trial level, so as to
properly preserve error for appeal.
Cobb v. Hoskins, Ky. App.,
554 S.W.2d 886, 887-888 (1977).
Appellant’s counsel specifically objected to the
instruction.
During the trial court’s discussion and
explanation of the instruction, Mr. Byrd’s expressions of
agreement were regarding general principles of law, not the
instruction itself.
There is ambiguity regarding appellants’
ultimate objection to the instruction because, at the conclusion
of the trial court’s explanation, counsel did not restate an
objection or offer a counter-argument.
While this could be
construed as an indication that counsel accepted the trial
court’s explanation and now agreed with the instruction, on the
other hand, counsel had clearly stated an objection to the
instruction, and we are not persuaded that, following the trial
court’s comments, counsel had an obligation to argue with the
judge in order to preserve the issue.
24
With regard to Mr.
Zielke’s comment “it looks all right to me,” that comment was
not directed to the trial court and it cannot be ascertained
with certainty that the comment was even in reference to the
instruction.
As appellants specifically objected to the
instruction and, further, tendered proposed instructions which
did not include the instruction, we conclude that the issue is
preserved.
On the merits, we agree with appellants that the
instruction requiring a preliminary determination that
defendants or their agents actually falsified the bills of
lading following the dismissal of appellants was an erroneous
instruction.
In their case in chief, appellants devoted a
significant effort into proving that, after Byrd refused to
falsify or permit the falsification, and after the dismissal,
appellees had proceeded with their alleged plan to falsify
business records.
However, the relevance of this evidence was
to corroborate Byrd’s allegation that he had been asked to
permit the falsification of business records.
The truth or
falsity of whether the alleged plan was actually carried out
following Byrd’s dismissal was not an element of his wrongful
discharge claim.
To prevail in a wrongful discharge case, an employee
need only show that (1) he was asked to violate a law in the
course of employment; (2) that he failed or refused to violate
25
the law; and (3) that his failure or refusal to violate the law
was a substantial and motivating factor but for which he would
not have been discharged.
See Gryzb, supra; First Property
Management Corp. v. Zarebidaki, Ky., 867 S.W.2d 185, 186 (1993).
He need not, in addition, prove that the law he was asked to
break was actually violated at some point.
Interrogatory No. 1, by requiring an initial finding
that a violation of law actually occurred, imposed an element
upon appellants that they were not required to prove in their
wrongful discharge claim.
In addition, in the course of the
trial there was much testimony concerning the logistics relating
to the bills of lading.
One theory advanced by appellees was
that, if the bills of lading were falsified or forged, the
falsification or forgery may have been made by employees of the
shipper, Big T Trucking Co.
The jury could have believed that
Byrd was asked to falsify business records in violation of KRS
517.050, he refused, and was fired as a result thereof.
appellants should have prevailed.
If so,
However, if the jury also
believed that personnel at Big T Trucking made the forgeries or
falsifications to the bills of lading, or that some other party
did, or for some reason believed that there had been no
forgeries or falsifications of the bills of lading, under
Instruction 1 its deliberations were side tracked and cut short
26
by an interrogatory imposing an element upon appellants they
were not required to prove.
While it would have been proper to include an
instruction regarding whether the actions appellees allegedly
asked Byrd to take were in violation of KRS 517.050, see Gryzb,
supra, that is not what Interrogatory 1 does.
The instruction,
in effect, required appellants to prove that, after Byrd refused
to permit the falsification of the records and was discharged as
a result, the plan was nevertheless carried out anyway.
Appellants were not required to prove this.
“The rule is that generally an erroneous instruction
is presumed to be prejudicial to appellant, and the burden is
upon the appellee to show affirmatively from the record that no
prejudice resulted; and when the appellate court cannot
determine from the record that the verdict was not influenced by
the erroneous instruction, the judgment will be reversed.”
McKinney v. Heisel, Ky., 947 S.W.2d 32, 35 (1997)(citation
omitted).
As already noted, the jury could have believed that
Byrd was asked by appellees to falsify business records in
violation of KRS 517.050, that he refused to do so, and that he
was fired as a result.
If so, but the jury also did not believe
that appellants or their agents subsequently falsified the bills
of lading, then the jury was short-circuited from reaching a
27
decision favorable to appellants on account of Interrogatory 1.
Appellees have not overcome their burden of showing that the
verdict was not influenced by this erroneous instruction.
We
accordingly reverse the judgment and remand for a new trial.
The Jefferson Circuit Court is reversed and this case
is remanded for additional proceedings consistent with this
opinion.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEES:
Gwendolyn L. Snodgrass
Gailor Law Office
Louisville, Kentucky
J. Bruce Miller
Michael J. Kitchen
J. Bruce Miller Law Group
Louisville, Kentucky
28
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