Opinion
No. C98-131 MJM
June 14, 1999.
ORDER
Introduction
This matter comes before the court on the defendant's motion for summary judgment. The plaintiff, Barry Buchholz, asserts claims for damages under theories of promissory estoppel and equitable estoppel. From 1993 to 1997, Buchholz served as the "general agent" for the defendant, Aid Association for Lutherans (AAL), in Cedar Rapids, Iowa. Buchholz alleges that he detrimentally relied on promises by AAL that he would be have not have to move again if he adequately built the agency in Cedar Rapids. Specifically, Buchholz alleges that "at his own expense [he] furnished an office for the Defendant, hired employees, and took steps to develop the agency by writing business which would generate long-term benefits to the company rather than generate immediate commissions for the short term." (Compl. ¶ 6). In April, 1997, however, AAL decided to close the general agency as part of a nation-wide reorganization. AAL offered to make Buchholz a general agent in Lincoln, Nebraska; an assistant general agent in Houston, Texas; or to remain in Cedar Rapids as a district representative. Buchholz rejected these offers and instead resigned under protest in June, 1997. He filed this lawsuit on November 13, 1998. This court has diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Although the complaint contained a claim for breach of contract, (Doc. No. 1), the plaintiff, Barry Buchholz, expressly stated in his resistance to the defendant's motion for summary judgment that he is no longer asserting a breach of contract claim. (Doc. No. 13).
In its motion for summary judgment, AAL argues that its written contract with Buchholz provided for termination for any reason with ten days written notice, that this written contract was fully integrated and bars Buchholz's estoppel claims, and that even if earlier statements could be considered, they were not sufficiently clear and definite to form the basis of liability. Furthermore, AAL contends that Buchholz failed to show reasonable and detrimental reliance. Buchholz responds that the doctrine of integration does not bar fraudulent misrepresentation claims; that the promises, when seen in the proper context, were sufficiently clear and definite; and that his detrimental reliance was to invest in the agency for the long term.
Summary Judgment Standard
Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, shows "`there is no genuine issue to any material fact and the moving party is entitled to judgment as a matter of law.'" Snow v. Ridgeview Med. Ctr., 128 F.3d 1201, 1205 (8th Cir. 1997) (quoting Fed.R.Civ.P. 56(c)). Accordingly, the court will review the facts in the record in the light most favorable to Buchholz to determine whether AAL is entitled to judgment as a matter of law.
Factual Background
Buchholz began working for AAL in 1983 as a district representative for 600 policy holders in Lexington, Nebraska. (Buchholz Dep. 5-6.) In 1989, Buchholz became the assistant general agent for AAL in Grand Rapids, Michigan. ( Id. at 6.) The assistant general agent position for AAL was considered a short term position (approximately two to four years). ( Id. at 27.) In the early 1990s, Buchholz became interested in finding a more permanent position with AAL in a Midwest location where he could raise his children.
Buchholz considered several positions with AAL around the country, but finally his job search focused on the general agent position in Cedar Rapids, Iowa, in large part due to the encouragement of Gary Johnson, an AAL executive. (Buchholz Dep. 31.) While Buchholz was interviewing in Charlotte, North Carolina, in October, 1992, Johnson called Buchholz and told him, "[B]efore you make any rash decisions about taking the Charlotte agency, . . . you might consider Cedar Rapids, Iowa, because that will be coming open very soon." ( Id.) In early November, 1992, Buchholz drove to Chicago to meet with Johnson about the Cedar Rapids agency. Buchholz testified that Johnson told him: "This was going to be a Midwest [location], where you want to go, you're going to be closer to home, this is really probably a very good fit for you and your family just because of the size of the community, the type of people out here, . . . the school systems in Iowa and all that." ( Id. at 32.)
About two weeks later, Buchholz and his wife traveled to Cedar Rapids to interview again with Johnson. (Buchholz Dep. 34.) Buchholz was one of six candidates for the position. ( Id. at 33.) Both Buchholz and his wife participated in the interview. ( Id. at 34.) Buchholz testified that "once again, I can remember distinctly [Johnson] looking across the table and saying this is a good fit for Barry, this is where you need to be, this is where your future is. . . . He made comments quite often that, Barry, this is a good fit for you, I can see you raising your family here." ( Id. at 35.) Buchholz claims that Johnson "effectively told me that I could build my life [in Cedar Rapids] even to the point of retiring in Cedar Rapids." ( Id. at 35-36). His deposition then reads as follows:
Q. What specifically did he say about retiring?
A. As long as you do your job in Cedar Rapids, as long as you build the agency there and do the right things and make the long-range decisions, I don't see any reason why you should have to move again unless you so desire to.
Q. Are you paraphrasing or are those the exact words he used?
A. I would say I'm paraphrasing. The words that are exact is sic — that I want to use is sic Cedar Rapids, Iowa, is a good fit for Barry and Barry is a good fit for Cedar Rapids, Iowa. He said that numerous times, even a year or two after we were here, saying I'm feeling better and better about my decision bringing you here because you just fit here.
( Id. at 36.) Buchholz further testified that, before taking the general agent position in Cedar Rapids, Kevin Van Eron, AAL's senior vice president for field operation, told him "[t]hat our main goal is to get Barry and Jolene and their family where they want to be in the long-range." (Buchholz Dep. 76.)
By Thanksgiving in 1992, Buchholz formally notified Johnson that he accepted the position. In December, 1992, Buchholz reviewed and executed a written employment agreement with AAL for his new position as general agent in Cedar Rapids, Iowa. (Buchholz Dep. 39-40.) The contract allowed the parties to terminate the agreement "with or without cause" by giving ten days written notice. The contract also contained merger and integration clauses as follows:
This contract supersedes and is in lieu of any and all previous General Agent's or other agency contracts between the parties hereto. . . .
. . .
No verbal statement heretofore or hereafter made by either party hereto, or any Representative thereof, shall affect or change this contract in any respect. Any modification of this contract must be in writing and signed by both parties before the same shall become effective.
(Def. Ex. B.)
In early January, 1993, Buchholz started working as the general agent in Cedar Rapids, Iowa. Buchholz contends that he made numerous decisions and investments based on his expectation of a long-term general agency relationship with AAL. Buchholz testified, "I was brought here to build an agency. I was building an agency. I did everything I was asked to do. Growth, I brought an assistant in, I eliminated bad agents. I did everything on the long-range scale.
. . . If I would have been here short term I would not have brought an assistant over because of the cost of that to me. I actually eliminated about three agents in the agency. One of them was a majority of my income." (Buchholz Dep. 61-62.) Buchholz explained that he eliminated the high-producing agent because he was "unethical" and made "bad sales decisions." ( Id. at 79.) Buchholz also explained that Johnson "highly recommended" hiring an assistant, but that Buchholz made the final decision to hire the assistant. ( Id. at 78-79.) Despite these additional costs, however, it is undisputed that Buchholz earned a larger salary as the general agent in Cedar Rapids than in his prior positions.
In November, 1996, Buchholz was informed by Bruce Fear that AAL was planning a national reorganization which would reduce the number of general agencies from 80 down to between 30 and 50. (Buchholz Dep. 50.) Buchholz told Fear that he did not want to relocate and "that there's a way for us to build around my base unit in Cedar Rapids, that we can expand out of here and help your reorganization go smooth." ( Id.) In response, Fear stated, "He understood where I was coming from because he was not in a position to move his family again. . . . So basically he said I understand where you're coming from 100 percent." ( Id.) After this meeting, Buchholz testified he "[a]lways had a slight concern [that his agency would be closed], but I really didn't have any indication that that was going to happen." ( Id. at 51).
In April, 1997, Jack Hollingsworth, an AAL executive, called Buchholz to notify him that AAL decided to close the Cedar Rapids agency. (Buchholz Dep. 48.) When Buchholz tried to discuss the decision, Hollingsworth stated that "the decision has been made, there's no discussion involved, [and so] you'd better listen to" other offers from AAL. ( Id.) AAL offered Buchholz positions as assistant general agent in Houston, Texas, and as general agent in Lincoln, Nebraska. ( Id. at 42). Buchholz declined these positions because he did not want to relocate his family. ( Id. at 45). When Buchholz declined these offers, AAL offered to let him stay in Cedar Rapids as a "district representative" with a guaranteed salary for a year that provided declining percentages of his salary as general agent. ( Id. at 57-58.) Buchholz declined this offer because he was "concern[ed] about working for an organization that did what they did to me." ( Id. at 60.) In June, 1997, Buchholz resigned from AAL and accepted a position working with Principal Financial Group. (Buchholz Ans. to Interrog. No. 9, Def. Ex. D.) He filed this lawsuit on November 13, 1998.
In Buchholz's answers to interrogatories, Buchholz stated his damages were the difference between what he expected to earn as the general agent for AAL less what he actually earned or projected earning in his current position from 1997 through 2003. (Buchholz Ans. to Interrog. No. 12, Def. Ex. D.) When asked to explain the method by which he computed damages, Buchholz answered that his damages were based on the cost of hiring an assistant for "over $50,000.00" and terminating "a number of agents that were like a cancer on the agency." (Buchholz Ans. to Interrog. No. 13, Def. Ex. D.)
Analysis 1. Parol Evidence Rule
AAL first argues that Buchholz's estoppel claims are barred because the written contract was "fully integrated" such that the parol evidence rule "prevents the receipt of any extrinsic evidence to contradict (or even supplement) the terms of a written agreement." Whalen v. Connelly, 545 N.W.2d 284, 290 (Iowa 1996). In Whalen, the Iowa Supreme Court held that the parol evidence rule applied because the written contract at issue was "handcrafted," contained an integration clause, and was "negotiated at arm's length" by "successful businessmen separately represented by counsel." Id. at 291.
Although it presents a close question, the court will assume for purposes of ruling on this motion that the parol evidence rule does not bar Buchholz's promissory estoppel and equitable estoppel claims. Based on the current record, it appears that Buchholz and AAL reached an oral employment agreement before it was reduced to writing, that the written contract was not "handcrafted," that Buchholz was not represented by counsel in his negotiations with AAL, and that Buchholz was not as "sophisticated" as the businessmen involved in Whalen. Moreover, there is evidence that AAL continued to make statements to Buchholz after the written contract was executed. The parol evidence rule clearly would not apply to the statements made after the written contract was executed. See Whalen, 545 N.W.2d at 291. The court recognizes there is evidence that Buchholz read and understood the agreement, (Buchholz Dep. 41), but AAL has not cited any authority which holds that a party's understanding of an agreement by itself is enough to bar parol evidence. Therefore, based on the current record, the court will assume for purposes of ruling on this motion that the parol evidence rule does not apply.
This is true notwithstanding the clause that any modifications to the contract must be in writing, because such a clause is ineffective. Whalen, 545 N.W.2d at 291 ("[A] provision in a written contract that it can be modified or rescinded only in writing is ineffective.")
2. Promissory Estoppel
AAL next argues that the statements which allegedly were made to Buchholz were insufficient as a matter of law to give rise to a promissory estoppel claim. The court agrees. Under Iowa law, a plaintiff can recover under the doctrine of promissory estoppel only if the plaintiff shows (1) "a clear and definite oral agreement," (2) proof of reasonable and detrimental reliance by the plaintiff, and (3) equitable circumstances in favor of the plaintiff. Neely v. American Family Mut. Ins. Co., 123 F.3d 1127, 1129 (8th Cir. 1997) (per curiam) (citing In re Harvey, 523 N.W.2d 755, 756-57 (Iowa 1994)); Simmons Poultry Farms v. Dayton Road Dev., 82 F.3d 217, 220 (8th Cir. 1996) (citing Uhl v. City of Sioux City, 490 N.W.2d 69, 73 (Iowa Ct.App. 1992)).
In Neely, the district court overturned a jury verdict in favor of an insured and entered judgment as a matter of law for an insurance company where there was no evidence of a clear and definite oral agreement that the insurance company would cover injuries to executives and officers of the insured. Neely v. American Family Mut. Ins. Co., 930 F. Supp. 360, 369-75 (N.D. Iowa 1996) (Bennett, J.). The insured testified that he asked the insurance salesman if the policy would cover "everyone and everything," and was assured that "everything would be covered and that [the insured] had what [it] asked for." Id. at 373 (some alterations added). The district court ruled that this oral agreement was neither clear nor definite, and thus could not be enforced in light of the written exclusion for executives and officers. Id. at 374. Further, there was no evidence that the insured would not have purchased the insurance but for the oral assurance given by the insurance salesman. Id. at 375. The Eighth Circuit affirmed without "further elaboration." Neely, 123 F.3d at 1130.
Similarly, in Simmons, the court reversed a jury verdict in favor of the plaintiff because there was insufficient evidence that the defendant made an oral guarantee of providing 50,000 pounds of raw turkey per week. The court held that the language sounded like a goal or a projection, rather than a guarantee, and the defendant in writing had refused to guarantee 50,000 pounds per week. 82 F.3d at 221. In these circumstances, the court held that the parties did not have a "`a clear understanding'" that the plaintiff "`was seeking an assurance upon which [it] could rely and without which [it] would not act.'" Id. (quoting National Bank of Waterloo v. Moeller, 434 N.W.2d 887, 889 (Iowa 1989)).
In this case, like Neely and Simmons, there is no evidence of a "clear and definite oral agreement" that Buchholz would be AAL's general agent in Cedar Rapids for any specific period of time. Even viewing the record in the light most favorable to Buchholz, AAL did nothing more than promise Buchholz he "should" not have to move again. Like the promise in Neely, this statement is too generalized and ambiguous to fulfill the requirements of a promissory estoppel claim. Moreover, this statement is aspirational in nature, like the statement in Simmons. If Buchholz contends the statement entitled him to permanent lifetime employment as general agent, he has failed to show what additional consideration he gave in exchange for the lifetime contract as required by Iowa law. See Kunzman v. Enron Corp., 902 F. Supp. 882, 906 (N.D. Iowa 1995) (Bennett, J.); Kabe's Restaurant, Ltd., 538 N.W.2d 281, 283-84 (Iowa 1995); Kavanaugh v. Medical Assocs. Clinic, P.C., 491 N.W.2d 194, 195-96 (Iowa Ct.App. 1992); cf. Fox v. T-H Continental Ltd. Partnership, 78 F.3d 409, 413-15 (8th Cir. 1996) (reversing jury verdict on promissory estoppel claim which was based on statement that employee would have "permanent position" with a "long term" commitment under Minnesota law). If the statements entitled him to something less than permanent lifetime employment, Buchholz has not shown specifically what the statements meant. In fact, it appears to the court that AAL fulfilled whatever promise it made to Buchholz by allowing him to operate the general agency for almost four-and-a-half years and, when AAL decided to close the general agency, by offering him the opportunity to remain in Cedar Rapids as a district representative for AAL. For these reasons, the court will grant summary judgment in favor of AAL on Buchholz's promissory estoppel claim.
Even if the court were to find that AAL's statements in context were sufficient promises to form the basis of a promissory estoppel claim, the court questions whether Buchholz has made an adequate showing that he detrimentally relied on the alleged promise. As AAL argues, Buchholz obtained a salary increase when he took the general agent position. Moreover, to the extent that Buchholz argues he made out-of-pocket expenditures based on his expectation of a "long term" position as general agent, Buchholz has not presented any specific evidence about the expenses he claims he incurred.
3. Equitable Estoppel
Finally, AAL argues that Buchholz cannot establish a prima facie case of equitable estoppel. To state a claim of equitable estoppel under Iowa law, a plaintiff must show by clear and convincing evidence that (1) the defendant made a false representation or concealed material facts; (2) the plaintiff did not know of the defendant's misrepresentation; (3) the defendant intended the plaintiff to act on the misrepresentation; and (4) the plaintiff relied on the misrepresentation and was prejudiced. Neely, 123 F.3d at 1130 (citing Morgan v. American Family Mut. Ins. Co., 534 N.W.2d 92, 100 (Iowa 1995)); In re Marriage of Gallagher, 539 N.W.2d 479, 482 (Iowa 1995); Bricker v. Maytag Co., 450 N.W.2d 839, 841 (Iowa 1990). In this case, the court finds, for the reasons stated above, that Buchholz has not shown any specific misrepresentation which could form the basis of a misrepresentation claim. Moreover, there is no evidence that AAL intended to make any misrepresentations to Buchholz. See Neely, 123 F.3d at 1130. For example, there is no evidence that at the time AAL hired Buchholz as the general agent in Cedar Rapids, it intended to close the general agency in Cedar Rapids. In these circumstances, the court will grant summary judgment in favor of AAL on Buchholz's equitable estoppel claim.ORDER
For the foregoing reasons, the defendant Aid Association for Lutherans' motion for summary judgment (Doc. No. 6) is GRANTED.