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holding that under Sullivan, Plaintiff "is permitted under federal and state law to record his conversations"
Summary of this case from Fisher v. PerronOpinion
CASE NO. 99-CV-71190-DT.
October 16, 2000.
OPINION AND ORDER I. INTRODUCTION
This matter is before the Court on numerous Motions in Limine. The parties have responded and replied to the motions. The Court finds that the parties have adequately set forth the relevant law and facts and oral argument would not aid in the disposition of the instant motions. See E.D. Mich. I.R 7. l(e)(2). Accordingly, the Court ORDERS that the motions be decided on the briefs submitted. For convenience, the specific decision as to each motion will be set forth in the following opinion.
II. BACKGROUND
The Court has set forth the facts of this case in two prior opinions. Consequently, only a short recitation is needed here. Douglas W. Ruth (hereinafter "Ruth") filed a complaint against Superior Consultant Holdings Corporation (hereinafter "Superior") on March 11, 1999 for breach of contract. Ruth contends that he was hired by Superior for the position of Senior Vice President. After working for Superior for a little more than two years, Ruth resigned, claiming that his duties were inconsistent with his position as a Senior Vice President. Ruth claimed that his resignation was for "Good Reason" wider the contact, and therefore, he is entitled to nearly $1,000,000 and 45,000 stock options.
On March 27, 2000, Superior filed a lawsuit against Ruth claiming that he made various fraudulent representations about his prior employment. Specifically, Superior claims that Ruth misrepresented his responsibilities and compensation with his former employers. Further. Superior contends that it relied upon Ruth's misrepresentations when it hired him.
III. RUTH'S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND ARGUMENT RELATING TO DEFENDANT'S UNPLED FRAUD THEORY
On March 27, 2000, Superior filed a complaint against Ruth, claiming fraud, On June 6, 2000, this Court entered an order denying Ruth's Motion to Dismiss Superior's complaint. Consequently, the Court finds that this motion in limine to exclude evidence and argument relating to defendant's unpled fraud theory is DENIED as moot because the Court has allowed Superior's claims against Ruth for fraud to go forward.
IV. RUTH'S MOTION IN LIMINE TO EXCLUDE TAX DOCUMENTS
Ruth argues that his tax documents are not relevant to this action and therefore, should be excluded. Federal Rule of Evidence 401 defines relevant evidence as "evidence having any tendency to make the existence of any fact that is of consequence to the determination oF the action more probable or less probable than it would be without the evidence."
In the present case, Superior has alleged in its complaint that Ruth misrepresented his salary at his previous employer and his bonus. Consequently, Ruth's tax documents which show his earnings at his prior employer, Larson, Allen Weshair, are relevant to this action.
Ruth also argues that introduction of his tax returns would violate his privacy. Both Ruth and Superior rely upon Terwilliger v. York Intern. Corp., 176 F.R.D. 214, 216 (W.D. Va. 1997), which sets forth the following general rules about the introduction of tax documents:
Courts have made it increasingly clear that tax returns in the hands of a taxpayer are not privileged from civil discovery. Nevertheless, judicial consensus exists that, as a matter of policy, great caution should be exercised in ordering the disclosure of tax returns. Unnecessary disclosure of tax returns is to be avoided.
Examination of case law reveals the emergence of a judicially developed "qualified privilege . . . that disfavors the disclosure of income tax returns as a matter of general federal policy." A two-prong test has been utilized to assess whether the qualified privilege should be overcome and a party's income tax returns should be disclosed. The court must determine whether (1) the tax return is relevant to the subject matter in dispute; and (2) a compelling need exists for the return, because the information sought is not obtainable from other sources. While the party seeking discovery of the tax returns bears the burden of establishing its relevance, the resisting party has the task to identify an alternative source for the information.
In contrast, a minority of courts have held that the sole inquiry governing discovery of tax returns is whether the information contained in the return is relevant. This court, however, favors the two-prong approach. . . . We believe that test artfully balances the privacy interest inherent in tax returns with the policy favoring broad civil discovery. Proper consideration is also afforded to the relevancy and materiality of the information.
Although Terwilliger examines the use of tax documents in the discovery context, the Court finds that its reasoning is applicable to the present situation. Consequently, the Court will apply the two-prong test discussed in Terwilliger to the present case.
As already stated, the tax documents which show Ruth's earnings at his prior employer, Larson, Allen Weshair, are relevant to this action. Further, as set forth in Superior's response to this motion, this information is not available from another source. Consequently, the Court finds that the tax documents should not be excluded for privacy reasons.
Finally, Ruth argues that the tax documents should be excluded because they may unfairly prejudice the jury. Federal Rule of Evidence 403 states:
Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.
Ruth contends that if his tax returns are presented to the jury, he may be prejudiced because he is "moderately well-off" which might create a bias with the jury when it considers the issue of damages. The Court finds that Ruth's claim of potential bias should not result in the exclusion of the tax documents because the probative value of the tax documents is not substantially outweighed by the danger of unfair prejudice. First. Ruth only argues that the tax documents "might" create a bias. Second, these documents are highly relevant to Superior's claim of fraud. Consequently, Ruth's motion to exclude tax documents which show Ruth's earnings at his prior employer, Larson. Allen Weshair, is DENIED. However, the tax documents admitted into evidence at trial shall be redacted so that only Ruth's income from Larson, Allen Weshair is presented to the jury.
V. RUTH'S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND ARGUMENT RELATING TO RECORDING LIVE TELEPHONE CONVERSATIONS
Plaintiff also asks that the Court exclude any argument or evidence relating to the contention that Ruth illegally or improperly tape recorded telephone conversations. Both Michigan and federal law provide that it is not unlawful for a person that is a participant in a conversation to intercept that conversation. See 18 U.S.C. § 2511(2)(d) (stating that "[i]t shall not be unlawful under this chapter for a person not acting under color of law to intercept a wire, oral, or electronic communication where such person is a party to the communication. . . ."); see also Sullivan v. Gray, 117 Mich. App. 476, 480 (Mich.App. 1982) (holding that M.C.L. § 750.539a(2) "unambiguously excludes participant recording from the definition of eavesdropping. . . .").
Because Ruth is permitted under federal and state law to record his conversations, his motion to exclude any argument or evidence relating to the contention that he illegally or improperly tape recorded telephone conversations is GRANTED. However, Superior is free to question Ruth as to his motives for recording conversations.
VI. RUTH'S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND ARGUMENT RELATING TO MITIGATION OF DAMAGES
Ruth asks that the Court exclude all evidence and argument relating to Superior' s mitigation of damages defense. Superior counters, arguing that the separation payment provided for in the contract is unreasonable, and therefore, it should be disregarded. Superior relies on cases such as Curran v. Williams, 352 Mich. 278, 283 (1958), which states "[j]ust compensation for the injuries sustained is the principle at which the law attempts to arrive. Courts will not permit parties to stipulate unreasonable sums as damages, and where such an attempt is made have held them penalties and therefore void and unenforceable."
Although, if successful, Ruth would be entitled to a large award under the contract, the Court finds that it does not violate the principle of just compensation. The parties had an opportunity to bargain over this provision prior to formation of the contract, and the Court is persuaded by long-standing rules of contract, which provide that absent "mistake, fraud, or some other legally recognized ground . . . courts may not relieve parties of what prove to be unfair bargains." Christner v. Anderson, Nietzke Co., P. C., 433 Mich. l, 12 (1989). Because the separation payment under the contract does not violate the principle of just compensation, Ruth had no duty to mitigate. Consequently, Ruth's motion to exclude all evidence and argument relating to Superior's mitigation of damages defense is GRANTED.
VII. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF RECEIPT [OF] STOCK OPTIONS AS PART OF SEPARATION PAY
Superior argues that Ruth failed to properly exercise his stock options, and therefore, any evidence of the options should be excluded from trial. The facts giving rise to this motion are as follows. On February 3, 1999, Ruth resigned from Superior. The following day, Ruth received a letter from Superior's General Counsel, informing him that he was not entitled to any separation payments or any other ongoing compensation under [his] Employment Agreement." On February 10, 1999, Ruth attempted to exercise stock options under his employment agreement. In a letter to Superior, Ruth stated that he intended to exercise his stock options and purchase the shares of stock on February 10, 1999. Ruth also asked if he could purchase the options through a "cashless exercise" by which Superior would retain enough shares to cover the option price owed by Ruth. Ruth stated that if this was unsatisfactory, then he would make alternate arrangements for payment of the option price. On February 12, 1999, Ruth received a letter from Superior's General Counsel which informed Ruth that his options had been "canceled immediately upon [Ruth's] resignation." On February 17, 1999, the Compensation Committee of the Board of Directors canceled Ruth's 45,000 unvested stock options.
In its motion, Superior argues that Ruth did not Follow the proper procedures for exercising his stock options. Section 4 of Superior's Nonstatutory Stock Option Agreement provides that written notice must be given in order to exercise the options and that this notice must "specify a date . . . not less than five (5) nor more than ten (10) days after the date of such written notice, as the date on which the Shares will be purchased." Basically, Superior contends that since the date of the written notice and the date of the exercise of the options was the same date, February 10, 1999, Ruth did not comply with Section 4.
The Court agrees with Superior's argument that Ruth did not comply with Section 4 of the Nonstatutory Stock Option Agreement. However, as Ruth correctly points out, as early as February 4, 1999, and no later than February 12, 1999, Ruth was informed that his stock options had been canceled. This was the reason given by Superior for not allowing Ruth to exercise his options. Had Superior stated that Ruth failed to comply with Section 4 of the Nonstatutory Stock Option Agreement, then Ruth would have had until March 20, 1999 to rectify the noncompliance. Instead, Superior told Ruth that his options were canceled upon his resignation. The Court finds that Ruth acted reasonably in relying upon Superior's statements that his options had been canceled. Consequently Superior's motion to exclude evidence of the options is DENIED.
VIII. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF THE OMISSION OF PLAINTIFF'S NAME FROM THE COMPANY'S REGISTRATION STATEMENT
Superior argues that a securities registration statement, known as a Form S-1, should not be allowed into evidence. First, Superior argues that the evidence should be excluded because under securities laws, Ruth's name was not required to be put on the registration statement. Ruth counters. arguing that his name was intentionally left off of the Form S-1 because his role at Superior was diminishing. Second, Superior argues that the Form S-1 is irrelevant to the determination of this action.
The Court finds that the Form S-1 may he admitted into evidence at trial The fact that Superior did not put Ruth's name on the Form S-1 because it believed that it had no legal obligation to do so goes to the weight the evidence should be given, and Superior is free to present this argument at trial. Further, the Court finds that under Fed.R.Evid. 401 and 402, this evidence is relevant. Consequently, Superior's motion to exclude the Form S-1 is DENIED.
IX. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF ALLEGED BREACHES IN WHICH CONDITION PRECEDENT WAS NOT MET
In this motion, Superior argues that Ruth should not be allowed to present evidence concerning issues that were not raised in Ruth's request for remedy letter. The following facts give rise to this motion. Under his employment contract, Ruth was required to notify Superior of any alleged breaches of his employment contract. The contract further provided that Superior would have ten days to cure any breach of the contract. Superior contends that in Ruth's letter of January 18, 1999, he did not give specific notice of breach due to demotion, nor did he give specific notice as to his claims of breach with regard to his bonus. Therefore, Superior argues that Ruth should not he permitted to present evidence as to his claim that he was demoted or about his claims of breach with regard to his bonus.
Superior's motion, which is based on semantics, borders on frivolous. Although it is true that Ruth's letter of January 18, 1999 did not specifically use the term "demoted," the letter clearly defined the breaches which Ruth believed had occurred. Further, the letter sets forth Ruth's belief that he had not received the bonuses he believed he was entitled to. Consequently, Superior's motion is DENIED.
X. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF MEMBERSHIP ON SUPERIOR'S OPERATING COMMITTEE AND RECEIVING ANNUAL REVIEWS
Superior argues that Ruth should not be allowed to present evidence at trial about his membership, or lack thereof, on Superior's Operating Committee, nor should he be allowed to present evidence on his lack of salary or performance reviews. The following facts give rise to this motion. In a letter dated January 18, 1999, Ruth set forth several matters which he claimed were breaches of his employment contract. He stated that he was no longer on Superior's Operating Committee, and as a Senior Vice President, he needed to be on the committee. Further, Ruth also stated that neither he nor his salary had been reviewed annually as required by his contract. Richard Helppie, Superior's Chief Executive Officer, responded to the letter by stating that Ruth's contract did not require that he be on the committee, but he was welcome to rejoin the committee's weekly conference call. Further, Helppie stated that Ruth's salary had been evaluated annually and that Ruth's performance had heen evaluated "on a continual ongoing basis."
In its motion, Superior argues that because both of the above-referenced breaches have been cured, Ruth should not be permitted to raise either matter during trial. As previously noted, Fed.R. Evid, 401 defines relevant evidence as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." The Court finds that the status of Ruth's membership on Superior's Operating Committee is relevant to his claims against Superior, as this evidence may be highly probative or whether Ruth's role at Superior was diminishing in violation of his employment agreement. Further, although Helppie's letter states that Ruth was reviewed constantly and his salary was reviewed on an annual basis. Superior presents no other evidence that this breach was in fact cured. The Court has nothing more than Helppie's letter to establish that the breaches were cured. Therefore, Superior's contention that the breaches were in fact cured may or may not be true. Consequently, Superior's motion to exclude evidence at trial about Ruth's membership, or lack thereof, on Superior's Operating Committee, and to exclude evidence of Ruth's lack of performance and salary reviews is DENIED.
XI. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF ALLEGED ACCOUNTING ISSUES, IRRELEVANT STATEMENTS AND PRIOR LITIGATION
In this motion, Superior asks the Court to exclude three different things. First, Superior asks the Court to exclude evidence of accounting problems. Superior points to no specific accounting data, but instead argues that since Ruth has never raised any accounting issues, this evidence should be excluded. However, as Ruth points out in his response, if he is portrayed by Superior as a poor performer, then Ruth may have to point to accounting problems at Superior, in addition to other problems, as the cause of Superior's woes. Consequently, the Court finds that these accounting issues may be relevant to the present case, and Ruth is free to raise these issues, but only in response to any argument by Superior that the financial problems experienced by Superior's Enterprise division were Ruth's Fault.
Superior also argues that evidence of prior lawsuits and threatened litigation involving itself and its subsidiary should be excluded. Superior makes this argument without any discussion about the facts of the prior threatened litigation and lawsuits. Without such a discussion, the Court does not have a basis upon which to make a decision.
Superior also claims that two statements made by Helppie should not be admitted. In an e-mail from Helppie to Ruth, Helppie stated "Great answers Monkey-boy." Superior argues that this statement should be excluded because it is irrelevant and even if it were relevant, it is highly prejudicial. Superior attempts to explain the statement as a "term of endearment — given to someone for a job well done." However, the Court finds that the statement is relevant to the issue of whether Ruth was demoted. Further, Superior's argument about the term's "humorous background" is for the jury to consider. Finally, the Court finds that the statement is not more prejudicial than probative under Fed.R.Evid. 403.
Helppie also stated to Ruth that he would "take Ruth's house." This statement was made after Ruth threatened to bring the present lawsuit, The Court finds that this statement is irrelevant under Fed.R.Evid. 402, and consequently, it is excluded.
Consequently, Superior's motion is GRANTED IN PART and DENIED IN PART. Ruth may present evidence concerning accounting issues only in response to any argument by Superior that the financial problems experienced by Superior's Enterprise division were Ruth's fault. Further, Ruth may not introduce as evidence Helppie's statement that he was going to take Ruth's house. Superior's motion is DENIED in all other respects.
XII. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE CONVERSATIONS PROTECTED BY ATTORNEY CLIENT PRIVILEGE
Superior's next motion is to exclude any evidence at trial that is protected by the attorney-client privilege. It is well-established that a private corporation may invoke the attorney-client privilege. Reed v. Baxter, 134 F.3d 351, 356 (6th Cir. 1998). However, the problem with Superior's motion is that it does not explicitly state which evidence it wishes to exclude. Without this information, the Court cannot make a determination as to whether the proposed evidence is in fact protected by the attorney-client privilege. As Ruth argues in his brief, Superior may have waived the attorney-client privilege in some instances. Consequently, Superior's motion to exclude any evidence protected by the attorney-client privilege is HELD IN ABEYANCE until such time Superior presents the Court with specific evidence that it believes is protected by the attorney-client privilege.
XIII. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE TAPE RECORDED CONVERSATIONS
Superior asks the Court to exclude several tape recorded conversations which Ruth has listed on his witness list. One of the recordings is a telephone message left by Helppie for Ruth on his voicemail. The message concerns a conversation Ruth needed to have with Superior's counsel regarding the acquisition of a company. Another recording left on Ruth's voicemail was about different ears and the amount they pollute. The remaining messages left on Ruth's voicemail concern several issues about time sheets.
Superior argues that each of the above recordings should be excluded because the statements on the recordings are inadmissible hearsay. Federal Rule of Evidence 801(c) defines hearsay as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." However, Fed.R. Evid, 801(d)(2) states that the following statements are not hearsay:
(2) Admission by party-opponent. The statement is offered against a party and is (A) the party's own statement, in either an individual or a representative capacity or (B) a statement of which the party has manifested an adoption or belief in its truth, or (C) a statement by a person authorized by the party to make a statement concerning the subject, or (D) a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship, or (E) a statement by a coconspirator of a party during the course and in furtherance of the conspiracy. The contents of the statement shall be considered but are not alone sufficient to establish the declarant's authority under subdivision (C), the agency or employment relationship and scope thereof under subdivision (D), or the existence of the conspiracy and the participation therein of the declarant and the party against whom the statement is offered under subdivision (E).
After reviewing the transcripts of the messages provided by Superior, the Court finds that all but one of the messages may be admitted into evidence at trial under Fed.R.Evid. 801(d)(2)(D). The message left by Helppie concerning the acquisition of another company and the messages about the time sheets are admissible. Superior argues that because the messages "are riot made regarding [Ruth's] employment or position with Superior . . . [they are] not made within the scope of their employment." However, Superior misunderstands the requirements of Fed.R.Evid, 301(d)(2)(D). The advisory committee notes for Fed.R.Evid. 801(d)(2)(D) asks the following question: "ZVas the admission made by the agent acting in the scope ofhis employment?" The detennination to he made is not whether the statements concerned the scope of Ruth's employment. Instead, the determination to be made is whether the statements made were within the scope of the employment of those persons making the statements.
In the present case, the Court has reviewed the Transcripts of the messages and finds that each of the messages IdY on Ruth's voicemail were in the scope of the employment of those persons making the statement. However, the Court finds that the voicemail message left by Steven Locke concerning different cars and how much they pollute does not satisfy Fed.R. Evict. 801(d)(2)(D).
Further, Superior argues that even if the messages are admissible, they are not relevant. Ruth argues that the statements may be relevant to rebut an argument by Superior that his performance was inadequate. The Court agrees, and therefore, the recordings are admissible only to rebut any claim by Superior that Ruth's performance was inadequate. Finally, the Court does not agree that the messages are more prejudicial than probative under Fed.R.Evid. 403.
Consequently, Superior's motion in limine is GRANTED as to Locke's message and DENIED in all other respects. Further, the messages are admissible only to rebut any claim by Superior that Ruth's performance was inadequate.
XIV. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE MITCH REIFF, ROBERT BUTTERS, HOWARD NEVIN, JAMES POSNER AND TIM MORRIS FROM TESTIFYING IN THIS MATTER
Superior asks the Court to exclude the testimony of several people at trial. First, Superior asks that the testimony of Mitch Reiff, Robert Butters, Howard Nevin, and James Posner he excluded from trial. Each of these proposed witnesses is a former employee of Superior. Superior contends that none of these former employees has any relevant evidence to offer. Ruth disagrees. arguing that each of these former employees "may be called to testify regarding the alteration or Ruth's position, status, offices, and responsibilities that the witness observed during his employment at Superior." The Court finds that this proposed testimony is relevant and admissible under Fed.R.Evid. 401 and 402. Further, the Court finds that Superior has not demonstrated that the testimony of these witnesses would be more prejudicial than probative under Fed.R.Evid. 403. Although these witnesses may have negative things to say about Superior, Superior will have the opportunity to cross-examine these witnesses at trial and reveal any bias.
As to the proposed testimony of Tim Morris, the Court finds that his testimony is admissible as well. Again, Superior claims that Morris will have no relevant evidence to offer at trial. Ruth states that Morris can offer testimony concerning a conversation he had with Helppie prior to Ruth being hired by Superior. Ruth contends that Morris can offer evidence about his representations to Helppie concerning Ruth's qualifications. The Court finds that such evidence would be relevant to Superior's fraud claim. Further, the Court finds that Superior has not shown how Morris' testimony would be more prejudicial than probative under Fed, R. Evid. 403. Consequently, Superior's motion to exclude the testimony of Mitch Reiff, Robert Butters, Howard Nevin, James Posner, and Tim Morris is DENIED.
XV. SUPERIOR'S MOTION IN LIMINE TO EXCLUDE PAROL EVIDENCE
Superior's final motion in limine is to exclude any parol evidence relating to the bonus provision in Ruth's contract as well as his position at Superior. Initially, a brief discussion of contract interpretation and the parol evidence rule is necessary. In UAW-GM Human Resource (Center v. KSL Recreation Corp., 228 Mich. App. 486 (1998), the Michigan Court of Appeals discussed the basic principles behind contract interpretation:
The primary goal in the construction or interpretation of any contract is to honor the intent of the parties. We must look for the intent of the parties in the words used in the instrument. This court does not have the right to make a different contract for the parties or to look to extrinsic testimony to determine their intent when the words used by them are clear and unambiguous and have a definite meaning.UAW-GM Human Resource Center, 228 Mich. App. at 491 (citations and internal quotations omitted). The Court then discussed the duties of a court when determining whether contract language is clear and unambiguous. A court will interpret a contract if it is clear and unambiguous. However, if the contract is unclear or open to multiple interpretations, then interpretation is a question of fact. See Id. When interpreting a contract, a court should be guided by the following principles:
A contract is ambiguous if "its words may reasonably be understood in different ways." Courts are not to create ambiguity where none exists. "Contractual language is construed according to its plain and ordinary meaning, and technical or constrained constructions are to be avoided." If the meaning of an agreement is ambiguous or unclear, the trier of fact is to determine the intent of the parties.Id. at 491-92 (quotations omitted). The court then outlined the parol evidence rule:
The parol evidence rule may be summarized as follows: "[p]arol evidence of contract negotiations, or of prior or contemporaneous agreements that contradict or vary the written contract, is not admissible to vary the terms of a contract which is clear and unambiguous." This rule recognizes that in "[b]ack of nearly every written instrument lies a parol agreement, merged therein," "The practical justification for the rule lies in the stability that it gives to written contracts; for otherwise either party might avoid his obligation by testifying that a contemporaneous oral agreement released him from the duties that he had simultaneously assumed in writing." In other words, the parol evidence rule addresses the fact that "disappointed parties will have a great incentive to describe circumstances in ways that escape the explicit terms of their contracts."
However, parol evidence of prior or contemporaneous agreements or negotiations is admissible on the threshold question whether a written contract is an integrated instrument that is a complete expression of the parties' agreement.Id. at 492. However, the court explained that there are four exceptions to the parol evidence rule:
[E]xtrinsic evidence is admissible to show (1) that the writing was a sham, not intended to create legal relations, (2) that the contract has no efficacy or effect because of fraud, illegality, or mistake, (3) that the parties did not integrate their agreement or assent to it as the final embodiment of their understanding, or (4) that the agreement was only partially integrated because essential elements were not reduced to writing.Id. at 493. Finally, with respect to the issue of the interplay between the parol evidence rule and a merger and integration clause, the court stated:
[W]hen the parties include an integration clause in their written contract, it is conclusive and parol evidence is not admissible to show that the agreement is not integrated except in cases of fraud that invalidate the integration clause or where an agreement is obviously incomplete "on its face" and, therefore, parol evidence is necessary for the "filling of gaps."Id. at 502.
In the present case, Ruth's employment contract with Superior contains a merger and integration clause. Consequently, parol evidence should not be admitted unless one of the above exceptions is satisfied.
Superior argues that parol evidence should not be admitted concerning the bonus clause of Ruth's contract. That clause states:
For and with respect to each year during the term of this Agreement, the Employee shall be eligible for a performance bonus in an amount not less than One Hundred Thousand and 00/100 Dollars ($100,000). Prior to the beginning of each year during the term of this Agreement, the Employee and the Chief Executive Officer of the Company shall agree as to the criteria upon which such bonus, for such year, shall be based and made payable. Each of the Employee and the Chief Executive Officer of the Company shall act reasonably in that regard.
After reviewing the above bonus clause, the Court finds that there is no ambiguity as to whether Ruth was guaranteed a $100,000 bonus. The terms of the contract clearly state that Ruth will be eligible for a bonus. The contract does not state that Ruth was guaranteed a $100,000 bonus. Consequently, the Court finds that Ruth was not guaranteed a $100,000 bonus. Therefore, no parol evidence as to the amount of Ruth's bonus or whether it was guaranteed will be admitted at trial
Superior also asks the Court to exclude any parol evidence concerning the basis for Ruth's bonus. Superior argues that Ruth's contention that his bonus was based upon the performance of Superior as a whole is an attempt by Ruth to rewrite the contract. However, after reviewing the contract, the Court disagrees. The contract states "prior to the beginning of each year during the term of this Agreement, the Employee and the Chief Executive Officer of the Company shall agree as to the criteria upon which such bonus, for such year, shall be based and made payable." The Court finds that this phrase contemplates that there will be further negotiations about the basis of Ruth's bonus. Clearly, if the pates agreed to negotiate at a later date about the criteria for determining Ruth's bonus, then the contract is not a complete agreement and there are still gaps to be filled. Consequently, the parties are free to admit parol evidence at trial concerning the criteria for determining Ruth's yearly bonus.
Finally, Superior argues that any parol evidence concerning Ruth having a defined position of performing all non-healthcare mergers and acquisitions for Superior should be excluded. In his response, Ruth does not dispute that this term was not included in his contract with Superior. Consequently, Ruth is prohibited from admitting parol evidence to establish that part of his employment agreement was that he would be responsible for all non-healthcare mergers and acquisitions. However, as stated in his response, Ruth is free to show that this was one of the duties he was assigned when he was hired, and further, that this duty was later taken from him.
Therefore, Superior's motion to exclude parol evidence is GRANTED IN PART and DENIED IN PART. The parties may not introduce evidence at trial concerning whether Ruth's bonus was guaranteed, nor may they introduce evidence to show that the parties agreed that Ruth would be responsible for all non-healthcare mergers. However, the parties are free to admit parol evidence concerning the criteria for establishing Ruth's bonuses.
XVI. CONCLUSION
For ease of reference, the following summarizes the Court's rulings on the motions in limine presented by the parties:
Ruth's Motion in Limine to exclude Evidence and Argument Relating to Defendant's Unpled Fraud Theory is DENIED as moot.
Ruth's Motion to Exclude Tax Documents is DENIED, however, the tax documents admitted into evidence at trial shall be redacted so that only Ruth's income from Larson, Allen Weshair is presented to the jury.
Ruth's Motion in Limine to Exclude Evidence and Argument Relating to Recording Live Telephone Conversations is GRANTED, however, Superior may question Ruth as to his motives for recording conversations.
Ruth's Motion in Limine to Exclude Evidence and Argument Relating to Mitigation of Damages is GRANTED.
Superior's Motion in Limine to Exclude Evidence of Receipt of Stock Options as Part of Separation Pay is DENIED.
Superior's Motion in Limine to Exclude Evidence of the Omission of Plaintiff's Name From the Company's Registration Statement is DENIED.
Superior's Motion in Limine to Exclude Evidence of Alleged Breaches in which Condition Precedent was not Met is DENIED.
Superior's Motion in Limine to Exclude Evidence of Membership on Superior's Operating Committee and Receiving Annual Reviews is DENIED.
Superior's Motion in Limine to Exclude Evidence of Alleged Accounting Issues, Irrelevant Statements and Prior Litigation is GRANTED IN PART and DENIED IN PART. Ruth may present evidence concerning accounting issues only in response to any argument by Superior that the financial problems experienced by Superior's Enterprise division were Ruth's fault. Further, Ruth may not introduce as evidence Helppie's statement that he was going to take Ruth's house. Superior's motion is DENIED in all other respects
Superior's Motion in Limine to Exclude Conversations Protected by the Attorney-Client Privilege is HELD TN ABEYANCE until such time Superior presents the Court with specific evidence that it believes is protected by the attorney-client privilege.
Superior's Motion in Limine to Exclude Tape Recorded Conversations is GRANTED as to Locke's message and DENIED in all other respects. Further, the messages are admissible only to rebut any claim by Superior that Ruth's performance was inadequate.
Superior's Motion in Limine to Exclude Mitch Reiff; Robert Butters, Howard Nevin, James Posner, and Tim Morris from Testifying in this Matter is DENIED.
Superior's Motion in Limine to Exclude Parol Evidence is GRANTED IN PART and DENIED IN PART. The parties may not introduce evidence at trial concerning whether Ruth's bonus was guaranteed, nor may they introduce evidence to show that the parties agreed that Ruth would be responsible for all non-healthcare mergers. However, the parties are free to admit parol evidence concerning the basis for Ruth's bonuses.
IT IS SO ORDERED.