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explaining that, absent circumstances not present here, a party who signs a contract but does not read it is nevertheless bound by its terms
Summary of this case from Simon v. Health Care Serv. Corp.Opinion
Case No. 116,876
04-09-2020
Kenneth L. FRANCO, M.D., Plaintiff/Appellee, v. STATE of Oklahoma, EX REL. BOARD OF REGENTS OF the UNIVERSITY OF OKLAHOMA, Defendant/Appellant.
Stanley M. Ward, Barrett T. Bowers, WARD & GLASS, L.L.P., Norman, Oklahoma, for Plaintiff/Appellee Heidi J. Long, Stephen Martin, UNIVERSITY OF OKLAHOMA, OFFICE OF LEGAL COUNSEL, Norman, Oklahoma, Michael Burrage, WHITTEN BURRAGE, Oklahoma City, Oklahoma, for Defendant/Appellant
Stanley M. Ward, Barrett T. Bowers, WARD & GLASS, L.L.P., Norman, Oklahoma, for Plaintiff/Appellee
Heidi J. Long, Stephen Martin, UNIVERSITY OF OKLAHOMA, OFFICE OF LEGAL COUNSEL, Norman, Oklahoma, Michael Burrage, WHITTEN BURRAGE, Oklahoma City, Oklahoma, for Defendant/Appellant
OPINION BY JOHN F. FISCHER, JUDGE: ¶1 The Board of Regents of the University of Oklahoma appeals a judgment entered on a jury verdict in favor of Dr. Kenneth L. Franco in this breach of contract case. Because Dr. Franco failed to prove that he entered into a contract with the University, Dr. Franco's breach of contract claim fails as a matter of law. Dr. Franco's claim should not have been submitted to the jury. Therefore, the Judgment in favor of Dr. Franco is reversed, and this case is remanded with instructions to enter judgment for the Board of Regents of the University of Oklahoma.
BACKGROUND
¶2 This case concerns a purported contract between Dr. Franco and the University of Oklahoma's College of Medicine. The College is part of the Health Sciences Center and both are part of the University of Oklahoma. The College and the Health Sciences Center are supervised by the University's Board of Regents. The rules and procedures for employing physicians at the College have been established by the Regents and are contained in a Faculty Handbook.
¶3 In late 2014, Dr. Harold Burkhart, the Chief of the Division of Cardiovascular and Thoracic Surgery, and his superior, Dr. Russell Postier, the Chair of the Department of Surgery in the University's College of Medicine, discussed adding an adult cardiac surgery program and employing two cardiac surgeons. Dr. Franco is a cardiothoracic surgeon. In May of 2015, Dr. Franco expressed an interest in one of the new positions. During the summer of 2015, Dr. Franco traveled to Oklahoma and was interviewed by some of those who would be involved in the cardiac surgery program, including Dr. Burkhart and Dr. Postier.
¶4 Eventually, Dr. Franco received a letter dated August 31, 2015, signed by Dr. Postier. The letter stated, in part: "I am pleased to provide you this letter of offer ... regarding an appointment in the Department of Surgery at the ... College of Medicine." The letter also stated: "Official letters of appointment come from the Senior Vice President and Provost of the University of Oklahoma Health Sciences Center and are contingent upon approval of the appointment by the Board of Regents of the University of Oklahoma." Dr. Franco was asked to acknowledge receipt of the letter and acceptance of its terms within ten days. The letter stated: "When we receive the acknowledgement from you, we will proceed to finalize this faculty appointment." The letter concluded: "Later you will receive a contract from the University that will formally offer you a position."
¶5 The Acknowledgment attached to the end of the letter provides: "I hereby acknowledge receipt of this Preliminary Letter of Offer and accept the terms of the offer as stipulated." On September 3, 2015, Dr. Franco signed the Acknowledgment and communicated his acceptance of the Preliminary Letter of Offer to College officials.
¶6 However, before Dr. Franco received an official letter of appointment from the Senior Vice President and Provost or approval of an appointment from the Board of Regents, Dr. Burkhart decided that Dr. Franco should not be hired for the adult cardiac unit. Dr. Burkhart informed Dr. Franco of this decision during a telephone conversation on September 10, 2015. Dr. Franco received a letter dated September 14, 2015, confirming that conversation.
¶7 Dr. Franco filed this suit alleging that the August 31, 2015 letter constituted a contract of employment and that the Regents had breached this contract when the University refused to finalize Dr. Franco's employment. The case was tried to a jury and the jury returned a verdict in favor of Dr. Franco in the amount of $397,000. The Regents appeal the Judgment entered on that verdict. STANDARD OF REVIEW
¶8 Dr. Franco contends that whether the August 31, 2015 letter was a preliminary offer or an official offer of appointment "is immaterial to the analysis and determination of the legal issues before the Court to decide." This argument could not be more mistaken. The fundamental legal issue in this case is whether the August 31, 2015 letter was an offer to contract or an offer to enter into negotiations that might result in a contract. Until that legal issue is correctly resolved, there are no facts for a jury to decide. "[D]etermining the proper legal procedure for a particular controversy presents an issue of law, and is reviewed by a non-deferential de novo standard." Christian v. Gray , 2003 OK 10, ¶ 40, 65 P.3d 591. See also Lincoln Farm, L.L.C. v. Oppliger , 2013 OK 85, ¶ 12, 315 P.3d 971 (stating that appellate jurisdiction to review the district court's determination of an issue of law is de novo). De novo review involves a plenary, independent, and non-deferential examination of the trial court's legal rulings. Neil Acquisition L.L.C. v. Wingrod Inv. Corp ., 1996 OK 125, n.1, 932 P.2d 1100.
ANALYSIS
¶9 The Regents raise eight issues in this appeal. Seven concern the legal question of whether the Regents entered into a contract with Dr. Franco that could form the basis for his breach of contract action. We find these issues dispositive, because the evidence regarding these issues supports only one conclusion—Dr. Franco never received an offer of employment from the Regents. This conclusion makes it unnecessary to address any of the University's other appellate issues.
I. The Trial Court Record
¶10 Although the parties disagree on the legal significance of the relevant facts, those facts are not in material dispute. In 2015, the University of Oklahoma's College of Medicine recruited physicians for two cardiac surgeon positions. Dr. Burkhart and his superior, Dr. Postier, were the College employees principally involved in this effort. During this process, Dr. Franco became a candidate for one of the positions.
¶11 Dr. Franco was interviewed by phone and he was invited to Oklahoma twice to interview for the position. During his time in Oklahoma, Dr. Franco met with College and Health Sciences Center personnel. He also met with the Chief of the medical staff at the Veterans Administration Medical Center in Oklahoma City, where the new cardiac surgeons would be expected to spend one-half of their time. Neither hospital had an adult cardiac surgery program at the time, and discussions centered on what Dr. Franco thought would be necessary to establish those programs. After the second interview, Dr. Burkhart called Dr. Franco and told him that the College was looking at another candidate.
¶12 In early August, Dr. Burkhart learned that the other candidate had decided not to pursue employment with the College. On August 19, 2015, Dr. Burkhart called Dr. Franco and asked him if he was still interested in the position. When Dr. Franco stated that he was, Dr. Burkhart stated that he and Dr. Postier had decided to offer the position to Dr. Franco. Dr. Burkhart said College officials would be in contact regarding the terms of a contract.
During Oral Argument, Dr. Franco clarified that his breach of contract claim was based only on the August 31, 2015 letter and not also on any oral contract theory of recovery based on this conversation with Dr. Burkhart.
¶13 On August 26, 2015, Dr. Franco was mailed a letter signed by Dr. Postier, "regarding a faculty appointment in the Department of Surgery at the University of Oklahoma College of Medicine." The first sentence of the letter states: "I am pleased to provide you this letter of offer ...." The second sentence of the letter provides: "Official letters of appointment come from the Senior Vice President and Provost of the University of Oklahoma Health Sciences Center and are contingent upon approval of the appointment by the Board of Regents of the University of Oklahoma." The second paragraph of the letter advised Dr. Franco that the Faculty Handbook for the Health Sciences Center was available for his review and provided the internet web page address where Dr. Franco could find the Handbook.
¶14 The August 26 letter proposed an initial start date and listed Dr. Franco's "expected duties." Included in that description was the statement that Dr. Franco would also have an appointment at the Oklahoma City VA medical center for "4/8ths" of his time. The letter set out Dr. Franco's anticipated total compensation and fringe benefits. From previous discussions, Dr. Franco understood that the federal government would be responsible for approximately $200,000 of his $750,000 anticipated compensation. The letter also identified six specific contingencies on which the offer was based. The letter stated that the offer was also contingent on Dr. Franco's agreement to "abide by all University policies governing faculty." Dr. Franco was asked to acknowledge his receipt and acceptance of the terms set out in the "Preliminary Letter of Offer" within ten days. On receipt of that acknowledgment, the letter states "we will proceed to finalize this faculty appointment." The letter concluded: "Later you will receive a contract from the University that will formally offer you a position."
¶15 Dr. Franco did not accept the terms set out in the August 26 letter. Instead, he called the administrator of the Department of Surgery and requested two changes, one concerning his compensation and the other to delete one of the six "contingencies" because it was not applicable to his area of practice. Those changes were made and a second letter, dated August 31, 2015, but otherwise identical to the first, was mailed to Dr. Franco. This letter was also signed by Dr. Postier.
¶16 However, the two changes discussed with the Department's administrator were not the only contract terms that concerned Dr. Franco. On August 27, 2015, Dr. Franco sent an email to Dr. Burkhart with a copy to the Department administrator. In that email, Dr. Franco stated: "we agreed to put in writing a number of issues so we all know what is important as we move forward. I have attached a list ...." The attachment listed twenty-two items. Included on the list was a request for four weeks of vacation and three weeks of continuing medical education, a request for reimbursement of the fees incurred in obtaining an Oklahoma medical license and a request for certain equipment and the employment of certain support personnel to be used in the cardiac surgery unit. Some of the support personnel did not exist at the time but, according to Dr. Franco, had been "promised to him" by Dr. Postier and others. Dr. Franco testified that the "promise" to hire additional personnel was not documented in the August 26 or the August 31 letters signed by Dr. Postier. In fact, most of the items on Dr. Franco's list that "we agreed to put in writing" were not documented in either letter.
¶17 In a telephone conversation with Dr. Burkhart on August 28, 2015, Dr. Franco discussed some of the items on his email list. Dr. Burkhart did not agree with all of Dr. Franco's requests. For example, Dr. Franco requested the employment of three physician assistants dedicated to the cardiac surgery program, one of whom would cover night call. Dr. Franco made this request because he was concerned that he would not be able to provide the care for cardiac surgery patients he thought was necessary without the support of physician assistants. And, after talking to the physician assistants currently employed by the College, Dr. Franco had determined that they did not want to take night call. Dr. Burkhart told Dr. Franco that he did not agree to employ the requested physician assistants. Dr. Franco signed and returned the August 31 letter on September 3, 2015.
¶18 However, from their August 28, 2015 telephone conversation and for additional reasons, Dr. Burkhart determined that Dr. Franco should not be hired for the position. On September 10, 2015, Dr. Burkhart called Dr. Franco. Dr. Burkhart told Dr. Franco that for financial reasons the College would not be able to support some of the issues that Dr. Franco thought were important to the program. Dr. Franco received a letter dated September 14, 2015, signed by Dr. Burkhart and Dr. Postier. That letter referred to the September 10th phone conversation and the institutional issues previously discussed, advised that the search for an adult cardiac surgeon had stopped and stated that the preliminary offer of August 31, 2015, had been withdrawn.
¶19 During this time, Dr. Postier notified the Dean of the College, Dr. Dewayne Andrews, that Dr. Burkhart decided Dr. Franco should not be hired. The Dean accepted that decision and, as a result, did not request that the Senior Vice President and Provost of the College send Dr. Franco an official letter of appointment. Because Dr. Burkhart's decision essentially ended the recruitment of Dr. Franco, the Regents were not asked to and did not offer Dr. Franco a contract of employment.
II. Dr. Franco's Contract Evidence
¶20 Despite these undisputed facts, Dr. Franco contends that the August 31, 2015 letter constituted a written offer of employment that Dr. Postier "had the full authority" to make and that Dr. Postier was acting within the scope of his authority as the University's agent when he signed that letter. Dr. Franco argues that the August 31 offer became a contract binding on the University when he communicated his acceptance on September 3, 2015, and, therefore, the offer could not have been withdrawn on September 14, 2015. Dr. Franco also argues that the contract contained conditions precedent to finalize his employment that the University was obligated, but failed to perform and that its failure to do so constituted a unilateral repudiation and breach of the contract. Dr. Franco's legal theories fail in the context of the facts in this case.
¶21 First, when Dr. Franco and Dr. Burkhart discussed the position during their August 19, 2015 telephone conversation, essential terms regarding operation of the cardiac surgery program at both hospitals required by Dr. Franco had not been agreed to by the College or officials at the VA hospital. When Dr. Franco received the August 26 letter he did not agree with the terms in that letter and testified that certain things that had been "promised to him" were not included in the August 26 or in the August 31 letters. And, Dr. Postier's August 31, 2015 letter is expressly made contingent on Dr. Franco receiving an official offer from the Senior Vice President and Provost and the approval of that official offer by the Regents. Consequently, the August 31, 2015 "letter of offer" appears to be nothing more than the beginning of negotiations that might result in a contract.
¶22 Before there can be a contract there must first be an offer, an expression that a person is willing to enter into a contract. See Restatement (Second) of Contracts § 19(2) (Am. Law Inst. 1981) ("The conduct of a party is not effective as a manifestation of his assent [to enter into a contract] unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.") (cited with approval in Dunbar Engineering Corp. v. Rhinosystems, Inc ., 2010 OK CIV APP 49, n.9, 232 P.3d 931 ). Further, "[a] manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent." Restatement (Second) of Contracts § 26 (Am. Law Inst. 1981).
The Restatement of Contracts has been regularly cited by the Oklahoma Supreme Court for its statement of legal principles governing contracts. See Truel v. A. Aguirre LLC , 2017 OK 105, ¶ 7, 430 P.3d 1016 (citing the Restatement of Contracts § 26 for the proposition that an advertisement listing the price and other terms of a proposed sale was not an "offer" capable of being accepted to form a contract). We also do so here because section 26 is a correct statement of Oklahoma law. See McMahan v. Copiah Cnty. , 1921 OK 366, 84 Okla. 222, 202 P. 1007 (rejecting, as not supported by the evidence, the argument that a telegram from potential bond purchaser was not an offer to negotiate but an offer to purchase that became a binding contract when accepted by the seller).
¶23 Not only did Dr. Franco have "reason to know" from the Faculty Handbook that any "offer" by Dr. Postier required "a further manifestation of assent" from the Provost and the Regents before it could form the basis for a contract, but also Dr. Franco actually knew that Dr. Postier did not intend to enter into a contract on August 31, 2015. The August 31 letter clearly states that it is a "preliminary" letter and any "official" offer of appointment would have to come from the Senior Vice President and Provost and that any "official" offer of employment would be contingent on approval by the Regents.
¶24 Consequently, Dr. Franco's evidence purporting to show that the August 31 letter constituted an "unqualified proposal" that he "unconditionally" accepted is highly questionable, if not implausible.
When a purported contract, evidenced by letters between the parties, is offered as basis of recovery in an action for damages for breach of contract, and examination of such contract fails to disclose that at some point in the negotiations there was a definite, unqualified proposal by one party, unconditionally accepted by the other party, so that thereafter nothing was left in doubt, no contract can be said to have existed so as to permit recovery for breach thereof.
J. B. Klein Iron & Foundry Co. v. Midland Steel & Equip. Co. , 1938 OK 385, ¶ 0, 183 Okla. 487, 83 P.2d 157 (Syllabus 1). Initially, that is a question of law for the court in any breach of contract case. Id . ¶ 0 (Syllabus 2). See Oklahoma Oncology & Hematology P.C. v. US Oncology, Inc. , 2007 OK 12, ¶ 27, 160 P.3d 936. Further, on the basis of the evidence in this record, it is doubtful that any reasonable jury could have concluded that Dr. Franco entered into an employment contract with the University. See Harder v. F.C. Clinton, Inc., 1997 OK 137, ¶ 6, 948 P.2d 298 (noting that the trial court should direct a verdict where there is no evidence on which a reasonable jury could find for the plaintiff). However, we do not decide the appeal on this basis. As a matter of law, Dr. Postier's lack of authority to contractually bind the University is dispositive, and Dr. Franco has failed to demonstrate otherwise.
Dr. Franco cites Gomes v. Hameed , 2008 OK 3, ¶ 18, 184 P.3d 479, for the proposition that whether an offer was made is a question of fact for the jury to decide. That general statement of law does not support the proposition argued by Dr. Franco. In Gomes , the offeror denied that he made an offer. Here, the legal capacity of Dr. Postier to make an offer is the issue. Only after the court determines as a matter of law that the August 31, 2015 letter could constitute an offer capable of being accepted to form a contract would a jury get to decide any disputed facts about whether a contract was actually formed. See J. B. Klein Iron & Foundry Co. v. Midland Steel & Equip. Co. , 1938 OK 385, ¶ 0, 183 Okla. 487, 83 P.2d 157 (Syllabus 2), the lead case relied on by the Gomes Court.
A. The Elements Required for Dr. Franco's Contract Claim
¶25 As Dr. Franco correctly points out, a contract requires an offer by one party and the acceptance of that offer by the other party. See Nat'l Outdoor Advertising Co. v. Kalkhurst , 1966 OK 85, ¶ 13, 418 P.2d 661 ("It is an elementary rule of law in this jurisdiction that in order to constitute a contract there must be an offer on the part of one and an acceptance on the part of the other."). However, there is a preliminary step in this analysis that, although not often an issue, is critical in this case. "It is essential to the existence of a contract that there should be: 1. Parties capable of contracting." 15 O.S.2011 § 2.
¶26 The August 31 letter signed by Dr. Postier did not purport to offer Dr. Franco employment in a private practice or some other private venture with Dr. Postier. That letter discussed "the terms and conditions regarding a faculty appointment in the Department of Surgery at the University of Oklahoma College of Medicine." Although Dr. Postier was acting as the University's agent when he signed that letter, an agent contracting on behalf of a disclosed principal is not a party to the contract, only the third-party and the principal are parties to the contract. Restatement (Third) of Agency § 6.01 ( Am. Law Inst. 2006). Dr. Postier's principal is clearly disclosed in the August 31 letter.
¶27 Consequently, it is undisputed that the "parties" to the "contract" that Dr. Franco contends was breached are Dr. Franco and the University acting through the Board of Regents. The fact that Dr. Postier signed the August 31 letter fails to prove that Dr. Franco accepted an offer from a "part[y] capable of contracting." 15 O.S.2011 § 2. Therefore, Dr. Franco's case fails unless he can show that Dr. Postier had authority to enter into a contract on behalf of the University, the other "party" to the alleged contract.
B. Dr. Postier's Authority to Bind the University
¶28 The Board of Regents of the University of Oklahoma is established by the Oklahoma Constitution as the governing body of the University. Okla. Const., art. 13, § 8. Pyeatte v. Bd. of Regents of Univ. of Okla ., 102 F. Supp. 407, 410 (W.D. Okla. 1951), aff'd 342 U.S. 936, 72 S. Ct. 567, 96 L.Ed. 696 (1952) (recognizing that "government of the University [of Oklahoma] is vested in a Board of Regents with authority delegated to do everything necessary to accomplish the objects of the school, not expressly or impliedly prohibited"). "The term ‘government’ is very broad and necessarily includes the power to pass all rules and regulations which the Board of Regents considers to be for the benefit of the health, welfare, morals and education of the students. ..." Id. at 413.
¶29 In addition to their Constitutional authority, the Oklahoma Legislature has delegated to the Regents the sole "supervision, management and control of the University of Oklahoma ... and all its integral parts," including the power to adopt rules and regulations, enter into contracts and employ personnel. 70 O.S.2011 §§ 3302(a) and 3305(a) through (c). The College of Medicine and the Health Sciences Center are "integral parts of the University of Oklahoma." 70 O.S.2011 §§ 3103(A)(1) and 3301. Pursuant to their statutory authority, the Regents adopted a Faculty Handbook which sets out rules and the procedures required to employ new faculty at the College of Medicine.
¶30 Dr. Franco agrees, as he must, that the Regents had and properly exercised their authority when adopting the Faculty Handbook. "There can be no question but that the Board of Regents has all power necessary to accomplish the objects it was constitutionally empowered to achieve and is therefore authorized to enact rules, regulations and bylaws for the good government and management of the university and its every department." Randolph v. Bd. of Regents of Okla. Colleges , 1982 OK 75, ¶ 6, 648 P.2d 825 (citing Pyeatte v. Bd. of Regents of Univ. of Okla. , 102 F. Supp. 407 (W.D. Okla. 1951) ).
¶31 In addition, Dr. Franco does not deny that he agreed "to abide by all University policies governing faculty" when he accepted the terms of the August 31, 2015 letter on September 3, 2015. However, Dr. Franco does argue that the hiring procedures set out in the Faculty Handbook do not apply to him because no one specifically told him to read the Handbook and, therefore, he did not. Dr. Franco testified: "I don't know a faculty member that I've worked with over the last thirty years that has ever read a Faculty Handbook." It may be that Dr. Franco has never read a faculty handbook. His lawsuit against his former employer, Yale University, was dismissed, in part, because he failed to follow the procedures in that University's Faculty Handbook. Franco v. Yale Univ. , 238 F. Supp.2d 449, (D. Conn. 2002).
Dr. Franco testified that he did read three pages of the Yale University Faculty Handbook on one occasion because he "had to do that in order to get promoted."
¶32 Nonetheless, absent circumstances not present here, one who signs a contract but does not read it is still bound by the terms of the contract. See Mayfield v. Fidelity State Bank of Cleveland , 1926 OK 664, ¶ 6, 121 Okla. 179, 249 P. 136. Further, Dr. Franco's professed ignorance of the University's hiring procedures makes them no less binding. Ashland Oil, Inc. v. Corp. Comm'n , 1979 OK 17, ¶ 22, 595 P.2d 423 (stating oil company's ignorance of agency's rules did not excuse its non-compliance). Based on these legal principles, the Faculty Handbook applies, and the hiring procedures contained therein govern Dr. Franco's potential employment by the University.
¶33 In addition to their broad Constitutional authority, the Board of Regents have specific statutory authority to authorize University officials "to act in its behalf in the making of contracts, in carrying out the powers conferred upon [the Regents]." 70 O.S.2011 § 3305(d). In the Faculty Handbook, the Regents authorized the University President to delegate "signatory authority" to "sign contractual documents on behalf of the University" to "appropriate University executives, officers and directors." Faculty Handbook § 5.26.2. The Faculty Handbook also provides: "Unless the President specifically delegates this authority to an individual by formal written communication, the individual may not sign any document whatsoever that binds or has the appearance of binding the Board of Regents, the University, and/or any element thereof." Where the Regents have provided that the University President can only delegate contractual signatory authority to another pursuant to a formal written communication, the President is "powerless" to waive that requirement. Indiana Nat'l Bank v. State Dep't of Human Servs. , 1993 OK 101, ¶ 16, 857 P.2d 53 (citing Ashland Oil, Inc. v. Corp. Comm'n , 1979 OK 17, 595 P.2d 423 ).
¶34 Dr. Franco produced no document or any other evidence showing that Dr. Postier had any "formal written communication" from the University's President authorizing him to sign any document with Dr. Franco that would be binding on the University. To the contrary, the evidence in this record shows that Dr. Postier did not have authority from the University President or the Regents to enter into a contract with Dr. Franco or otherwise bind the University. Dr. Postier testified that he did not have that authority. And, the Faculty Handbook confirms that the chair of a college department, like Dr. Postier, only has the authority to "make recommendations for" the appointment of new faculty members to the college dean and to sign "a written statement or preliminary letter of offer ...." discussing the responsibilities accompanying any such appointment. Faculty Handbook §§ 2.8.1(a), 2.8.2(a)(2) and 3.2.1(a). "The offer of employment must come from the Senior Vice President and Provost ... and will include the statement that employment is contingent upon the approval of the Board of Regents." Faculty Handbook § 3.2.1(b).
¶35 Dr. Franco testified that he thought that "it was necessary" for the Senior Vice President and Provost and the Regents to approve his employment. Even if he had not, Dr. Franco is charged with the knowledge that Dr. Postier alone could not enter into a contract of employment. State ex rel. State Ins. Fund v. JOA, Inc. , 2003 OK 82, ¶ 22, 78 P.3d 534 (noting the general rule that "persons dealing with public officials are charged with notice of limitations upon the powers of the officials"). This is not new law. See State ex rel. Comm'rs of Land Office v. Frame , 1948 OK 240, ¶ 15, 200 Okla. 650, 199 P.2d 215 (noting that those who deal with state officers are bound to know the extent of the officer's authority).
¶36 Even though Dr. Franco claims ignorance of the University's hiring procedures set out in the Faculty Handbook, he did read and accept the terms of the August 31, 2015 letter. That letter, as required by the Faculty Handbook, clearly states that any official letter of appointment must come from the Senior Vice President and Provost of the Health Sciences Center and that any such official offer was still contingent upon approval by the University's Regents. Dr. Franco agreed to be bound by those requirements.
¶37 Yet, it is undisputed that Dr. Franco never received an official letter of appointment from the Provost. And, Dr. Franco never received an employment contract from the Regents. "Where there is no evidence introduced at the trial which supports a theory of recovery, it is the duty of the trial court to sustain a demurrer to the evidence and to dismiss the unsupported cause." U.C. Leasing, Inc. v. State ex rel. State Bd. of Public Affairs , 1987 OK 43, ¶ 25, 737 P.2d 1191 (footnote omitted). Further, in the absence of some other basis to bind the University to the August 31, 2015 letter, the Regents' motion for directed verdict should have been granted. Harder v. F.C. Clinton, Inc., 1997 OK 137, ¶ 6, 948 P.2d 298 (stating that a motion for directed verdict is properly sustained where there is no evidence tending to show the right to recover after considering as true all evidence favorable to the non-movant and all inferences that could reasonably be drawn therefrom). Despite the force of this evidence and the inescapable consequences for his legal theories, Dr. Franco contends that Dr. Postier did have "actual authority" to bind the University to an employment contract. III. Dr. Franco's Actual Authority Argument
¶38 Dr. Franco argues that even though Dr. Postier did not have written authority to enter into contracts, "Dr. Postier had the actual authority to make a binding offer on the University." This argument takes two forms. First, Dr. Franco argues that as a matter of "practice and custom" the University had occasionally ignored the hiring procedures set out in the Faculty Handbook in the past and, therefore, the procedures in the Faculty Handbook were not mandatory. Second, Dr. Franco contends that the August 31 letter is binding on the University because Dr. Postier was the University's agent and acting within the scope of his authority when he signed it. Neither of these arguments is supported by the law or the facts in this appellate record.
A. The Practice and Custom Argument
¶39 Dr. Franco contends that the University had ignored the hiring procedure set out in the Faculty Handbook in the past and, therefore, it should have done so in his case as well. Dr. Franco acknowledged that the Regents were authorized by statute to adopt written procedures required to be followed when hiring faculty at the College. See 70 O.S.2011 § 3305. Dr. Franco acknowledged that the Regents exercised that authority when they adopted the hiring policy set out in the Faculty Handbook. Included in that Handbook is the procedure requiring an official letter of appointment to come from the Senior Vice President and Provost and the requirement for Regent approval of any offer of employment. Nonetheless, and without citation to any supporting authority, Dr. Franco argues that the Board of Regents could " lawfully ignore ... that policy in any way that it sees fit. " (emphasis in original). No principle of Oklahoma law supports that argument.
¶40 Pursuant to 70 O.S.2011 § 3305(a), the Board of Regents shall have authority to "[a]dopt such rules and regulations as it deems necessary ...." Once adopted, applicable provisions in the Faculty Handbook become terms of any employment contract between the University and its medical faculty. Russell v. Bd. of Cnty. Comm'rs , 1997 OK 80, ¶ 23, 952 P.2d 492 (recognizing that employee handbooks may form the basis of an implied contract between an employer and its employees). Clearly inherent in the Regent's statutory authority to adopt rules is also the authority to change any rules or regulations previously adopted. Randolph v. Bd. of Regents of Okla. Colleges , 1982 OK 75, ¶ 5, 648 P.2d 825 (concluding that change to tenure policy in faculty handbook was effective and applicable to existing non-tenured faculty members). However, Dr. Franco has provided no case law which holds that an agency's legislatively granted authority to adopt a rule or change a rule previously adopted also includes the authority to ignore a rule that has been adopted.
¶41 In Indiana National Bank v. State Department of Human Services , 1993 OK 101, 857 P.2d 53, the Director of Public Affairs had legislative authority to promulgate rules and regulations governing contracts by which the State could acquire goods and services. Once those rules were passed, they had "the force and effect of law" and could only be changed by the Director. Id . ¶ 13. See also 75 O.S.2011 § 308.2(C) ("Rules shall be valid and binding on persons they affect, and shall have the force of law unless amended or revised or unless a court of competent jurisdiction determines otherwise.").
¶42 We recognize that the rules at issue in Indiana National Bank were adopted pursuant to Article I of the Administrative Procedures Act, and that the University is not subject to the rule making provisions of Article I. See 75 O.S.2011 § 250.4(A) (7). With respect to agencies not governed by the Act, this issue does not appear to have been previously decided. However, we are unable to conclude that once adopted, the University's rules have an inferior legal status to the rules adopted by every other State agency that is subject to Article I of the Act.
¶43 Dr. Franco argues, again without supporting authority, that the Faculty Handbook is not a source of contract law. We are not persuaded. Once adopted, the rules and procedures stated in the University's Faculty Handbook have the same "force and effect of law," Indiana Nat'l Bank , 1993 OK 101, ¶ 13, 857 P.2d 53, as any rule adopted by any other State agency granted rule making authority by the Oklahoma Legislature until those rules are amended, revised or declared invalid. And, once adopted, the hiring procedures set out in the Faculty Handbook cannot be ignored. Where a statute like section 3305 authorizes a State agency to adopt rules, any State official, including Dr. Postier, is "powerless" to ignore those rules. Id. ¶ 16.
¶44 Dr. Franco's construction of 70 O.S.2011 § 3305(a) is simply irrational. The fact that the Regents can make rules and change the rules they make does not mean, as Dr. Franco argues, that they can " ignore " those rules " in any way that [they] see fit ." Construction of a statute "that would lead to an absurdity must be avoided and a rational construction should be given to a statute if the language fairly permits." Ledbetter v. Okla. Alcoholic Beverage Laws Enforcement Comm'n , 1988 OK 117, ¶ 7, 764 P.2d 172 (footnote omitted).
¶45 Ultimately, and as he argued during closing, Dr. Franco maintains that there was some "custom and practice" that the University should have followed despite its written rules and procedures to the contrary. That argument is simply not available. Any such "common practice" or "common law of universities," assuming it even existed, "falls to the mandate of the rules promulgated by the Board of Regents just as the common law of jurisprudence ceases to have force and effect in the face of contrary positive legislation." Randolph v. Bd. of Regents of Okla. Colleges , 1982 OK 75, ¶ 11, 648 P.2d 825. In this case, the rules for hiring faculty were promulgated by the Board of Regents and are set out in the Faculty Handbook. Those rules apply to anyone seeking employment with the University, particularly Dr. Franco, who agreed in writing to be bound by those rules. Pursuant to those rules, Dr. Postier's August 31, 2015 letter was not an "offer" to contract, and Dr. Franco's "acceptance" of the terms of that letter did not create an employment contract binding on the University.
B. Dr. Franco's Scope of Authority Argument
¶46 Dr. Franco also argues that evidence showing that the University had granted Dr. Postier written authority to contract on its behalf was not necessary because Dr. Postier was the University's agent and acting within the scope of his authority when he signed the August 31, 2015 letter. During oral argument, Dr. Franco agreed that the scope of Dr. Postier's authority was not unlimited. For example, Dr. Franco did not argue that Dr. Postier had the authority to offer Dr. Franco a faculty position and the presidency of the University. Dr. Franco agreed that Dr. Postier did not have authority to bind the federal government. Yet, the August 31, 2015 letter from Dr. Postier, which Dr. Franco contends constitutes an employment contract, states that Dr. Franco "will have a 4/8ths appointment at the VA." And, Dr. Franco testified that the VA would be obligated to pay a substantial portion of his salary.
¶47 According to Dr. Franco, these limitations on Dr. Postier's authority mark only the outer bounds of Dr. Postier's agency. Dr. Franco argues that there was competent evidence on which the jury could have found that Dr. Postier "did have the authority to bind the University." (Emphasis in original). Dr. Franco then argues that we cannot reach a different conclusion because it is the sole province of the jury to weigh the evidence, judge the credibility of the witness and decide the facts and, according to Dr. Franco, the facts regarding Dr. Postier's authority were disputed.
¶48 Our deference to proper findings of fact by the jury is not the issue. Sides v. John Cordes, Inc ., 1999 OK 36, ¶ 17, 981 P.2d 301 (recognizing that deference to the trier of fact does not relieve appellate courts from their duty to review fact findings, nor does it mean that a judgment on a verdict cannot be disturbed on appeal). In the first instance, whether Dr. Postier had the authority to make an offer to Dr. Franco that was binding on the University is not a question of fact; it is a question of law. This Court and the Oklahoma Supreme Court are "the ultimate authority on the interpretation of the laws of this State ...." Dobson Tel. Co. v. State ex rel. Okla. Corp. Comm'n , 2017 OK CIV APP 16, ¶ 15, 392 P.3d 295 (Approved for Publication by the Supreme Court). In order to raise an issue appropriate for the jury to resolve, Dr. Franco was required to show that the facts regarding the scope of Dr. Postier's authority were disputed.
¶49 In his appellate briefing and during oral argument, Dr. Franco identified three "facts" concerning the scope of Dr. Postier's authority that he contends were in conflict. First, Dr. Franco introduced evidence of three occasions on which a faculty member at the College was permitted to begin working before the Regents formally approved his employment. Dr. Franco contends that this evidence shows that Faculty Handbook procedures were not required to be followed when hiring new faculty. The smoke created by this argument cannot screen the fact that in each of the three examples relied on by Dr. Franco, those physicians had received and accepted an official letter of appointment signed by the Senior Vice President and Provost, not a "preliminary letter of offer" signed by the chair of a college department like Dr. Postier. And, in each of those instances, the Regents approved the appointment and offered the physician an employment contract at their next regularly scheduled meeting. No matter how Dr. Franco construes the August 31, 2015 letter, these facts remain. He never received an official offer from the Provost, and the Regents never offered him a contract of employment.
For example, Dr. Burkhart testified that he started working twenty days before the Regents approved his appointment, "but I had an official letter of appointment from the Provost." Even with an official letter of appointment from the Provost, Dr. Burkhart testified that he knew that if the Regents found something in his background and did not approve his appointment, he "would be without a job."
¶50 Second, Dr. Franco emphasizes Dr. Andrews' testimony that he would have recommended Dr. Franco's employment to the Provost if Dr. Postier had made that recommendation to him and that Dr. Andrews was not aware of any instance when the College had withdrawn a preliminary letter of offer. Dr. Andrews testified that when he received a preliminary letter of offer in 1976 he did not have "too much doubt" that he would be employed. But, the letter stated that his employment had to be approved by the Provost and the Board of Regents and he knew that until the Regents acted his employment with the College "wasn't an absolute certainty." Dr. Andrews' employment became a "certainty" when he later received an official offer from the Provost and an employment contract from the Regents. Further, Dr. Andrews was Dean of the College, not the Provost. Like Dr. Postier, Dr. Andrews had no authority to contract on behalf of the College or obligate the University to employ Dr. Franco. Faculty Handbook § 3.2.1(a).
¶51 Third, Dr. Franco relied on internal emails and text communications obtained during discovery that are from Dr. Burkhart to College personnel. Those emails state that Dr. Franco had "accepted the senior adult cardiac position" and make similar assertions. Dr. Franco argues that this is evidence that College officials "believed" that they had entered into a contract with Dr. Franco. However, Dr. Burkhart testified, without contradiction, that he did qualify the text in these emails by writing that Dr. Franco had only "accepted the preliminary offer" for that position because he was communicating with College officials who knew that he did not have the authority to hire anyone, including Dr. Franco, without further approval. More importantly, these emails were produced during discovery, they were not sent to, seen or relied on by Dr. Franco. And, emails from Dr. Burkhart do not create a question of fact regarding the scope of the authority granted by the Regents to Dr. Postier.
¶52 These "facts" asserted by Dr. Franco do not contradict the written evidence of Dr. Postier's authority. As the Chair of the Department of Surgery, the Regents granted to Dr. Postier the authority to "make recommendations for" the appointment of new faculty members to the College Dean and to sign "a written statement or preliminary letter of offer ...." Faculty Handbook §§ 2.8.1(a), 2.8.2(a)(2) and 3.2.1(a). A principal, like the University, is ordinarily bound by the acts of the principal's agent. C. H. Stuart, Inc. v. Bennett , 1980 OK 135, ¶ 23, 617 P.2d 879. However, "[t]he essential factor in any agency relationship is the principal's right to control the conduct of the agent." Murray Cnty. v. Homesales, Inc. , 2014 OK 52, ¶ 15, 330 P.3d 519. Here, the Regents did not grant Dr. Postier the authority to offer employment to Dr. Franco. "The offer of employment must come from the Senior Vice President and Provost ... and will include the statement that employment is contingent upon the approval of the Board of Regents." Faculty Handbook § 3.2.1(b). And the University President did not delegate to Dr. Postier "by formal written communication" the authority to enter into an employment contract with Dr. Franco. Faculty Handbook § 5.26.2.
A principal may also be bound by the acts of an agent where the agent has apparent authority to act or the principal is estopped to deny the agency. C. H. Stuart, Inc. v. Bennett , 1980 OK 135, ¶ 23, 617 P.2d 879. However, Dr. Franco did not argue to the jury and he has specifically disclaimed in this appeal that Dr. Postier had apparent authority to contract with Dr. Franco or that the University is estopped to deny that it contracted with Dr. Franco. Even if he had done so, those legal theories would be unavailable in this case as a matter of law. Board of Ed. of Indep. Sch. Dist. No. 48 v. Rives , 1974 OK 153, ¶ 11, 531 P.2d 335 (estoppel not available against the State, absent some public policy not present here); General Motors Corp. v. Okla. Cnty. Bd. of Equalization , 1983 OK 59, ¶ 17, 678 P.2d 233 (citing the general rule that public agents have no power to bind the State by apparent authority in excess of their actual authority).
¶53 Fundamental to the law of agency is also the rule that an agent cannot unilaterally expand the scope of authority granted by the principal. Home Owners' Loan Corp. v. Thornburgh , 1940 OK 424, ¶ 14, 187 Okla. 699, 106 P.2d 511. Consequently, Dr. Postier was powerless to unilaterally expand the scope of the authority specifically granted to him by the Regents. Id . Any evidence of past instances when College officials may have deviated from the Faculty Handbook hiring procedures is simply evidence of an unauthorized act which would not be binding on the University. Nichols v. Jackson , 2002 OK 65, ¶ 1 (8), 55 P.3d 1044 ("Contracts of public officials entered without constitutional, statutory or other authority are void.").
¶54 Finally, Dr. Postier testified that he did not believe that he had the authority to bind the University to a contract when he signed the August 31, 2015 letter. "An agent acts with actual authority when, at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal's manifestations to the agent, that the principal wishes the agent so to act." Restatement (Third) of Agency § 2.01 (Am. Law Inst. 2006).
The Restatement (Third) of Agency is cited with approval in Surety Bail Bondsmen v. Ins. Commissioner , 2010 OK 73, ¶¶ 23-24, 243 P.3d 1177, although for different propositions.
¶55 The uncontradicted evidence in this record shows that Dr. Postier was acting within the scope of his authority when he signed the August 31, 2015 preliminary letter of offer. However, as a matter of law, that letter did not constitute an "offer" to enter into a contract. J. B. Klein Iron & Foundry Co. v. Midland Steel & Equip. Co. , 1938 OK 385, ¶ 0, 183 Okla. 487, 83 P.2d 157 (Syllabus 2) (holding that the court determines whether a letter constitutes an offer to contract). And, there is no evidence showing that contracting on behalf of the University was within the scope of Dr. Postier's authority.
¶56 If the facts relied on to establish the existence and scope of an agency are undisputed and conflicting inferences cannot be drawn, whether or not an agency exists and the scope of an agent's authority "is [a] question of law for the court." Keel v. Titan Constr. Corp. , 1981 OK 148, ¶ 3, 639 P.2d 1228 (footnote omitted). The scope of Dr. Postier's authority as an agent for the University is an issue that should not have been submitted to the jury. Based on the evidence in this record, the University was entitled to a directed verdict as to Dr. Franco's "scope of authority" theory of recovery.
C. The Condition Precedent Argument
¶57 We address our attention to one final argument made by Dr. Franco. He contends that when he accepted the terms of the August 31, 2015 letter, the "Defendant" was required to " ‘proceed to finalize this faculty appointment’ by submitting the accepted offer to the Senior Vice President and Provost of OUHSC and, after that, the Board of Regents." Dr. Franco derives this obligation from the following language in the August 31 letter: "When we receive the acknowledgement from you, we will proceed to finalize this faculty appointment." Dr. Franco describes this as a "condition precedent" quoting the 1916 case of Northwestern National Life Insurance Company v. Ward , 1915 OK 1096, 56 Okla. 188, 155 P. 524, where the Court held: "A ‘condition precedent’ of a contract is one which calls for the performance of some act, or the happening of some event, after the contract is entered into , and upon the performance or happening of which its obligations are made to depend." Id. ¶ 0 (Syllabus 3) (emphasis added). The obvious problem with this legal theory is that it depends on the existence of a contract that we have held was never "entered into." Id .
¶58 But that is not the only problem with this argument. Dr. Franco's position regarding who was subject to the condition and what that condition required cannot be supported by any reasonable interpretation of the August 31 letter. First, it is clear that the only signatory to the August 31 letter was Dr. Postier. As we have held, Dr. Postier did not have authority to "finalize" any contract with Dr. Franco. Dr. Franco's legal theory is not directed at some individual obligation Dr. Postier undertook when he signed the August 31 letter, and Dr. Franco did not sue Dr. Postier for breach of the August 31, 2015 "contract."
¶59 Instead, Dr. Franco argues that the "Defendant" was required to "finalize" his employment once he communicated his acceptance on September 3, 2015. In other words, Dr. Franco argues that once he "accepted" the August 31, 2015 letter, the Provost was required to send him an official letter of appointment and the Regents were required to approve his appointment and issue him a formal contract of employment. This interpretation requires us to ignore clearly contradictory language in the letter and traditional rules of contract construction.
¶60 For example, the August 31 letter clearly states that any offer of employment received by Dr. Franco was "contingent" on the Regents' approval. As it is ordinarily used, the word "contingent" means an event that is "[p]ossible, but not assured ...." Black's Law Dictionary 290 (5th ed. 1979). Dr. Franco's interpretation requires us to redefine "contingent" to mean that the Regents' approval was not just "possible" but "assured." This we cannot do. "The words of a contract are to be understood in their ordinary and popular sense ...." 15 O.S.2011 § 160.
¶61 Further, as noted in Woods v. City of Lawton , 1992 OK 167, 845 P.2d 880, the terms condition precedent and condition subsequent are not used in the Restatement (Second) of Contracts. Id. n.3 (Summers, J., dissenting). See Restatement (Second) of Contracts § 224 cmt. e ( Am. Law Inst. 1979). Instead, a condition is an event that must be met before a party is required to perform contractual obligations. "A condition is an event, not certain to occur, which must occur ... before performance under a contract becomes due." Restatement (Second) of Contracts § 224. The only "conditions" stated in the August 31, 2015 letter were receipt of an official letter of appointment from the Senior Vice President and Provost and approval of that appointment by the Regents. Because neither event occurred, the University's "performance," the obligation to hire Dr. Franco, never became due.
The term "condition precedent" is used in the Oklahoma Uniform Jury Instructions—Civil (OUJI). See OUJI Instruction 23.22. However, use of the Uniform Jury Instructions is not mandatory. "The instructions in this book should be modified where appropriate to fit the facts and circumstances of the particular case." OUJI 3rd (Rev. 2009) "INTRODUCTORY NOTE ON USE OF INSTRUCTIONS." And, the Restatement (Second) of Contracts is regularly cited as source law in the Comments to Uniform Jury Instructions on Contracts.
¶62 Once a contract is formed, according to the Restatement, a party's duty to perform its contractual obligations may be excused or terminated on the failure of an event to occur. Restatement (Second) of Contracts § 230. It appears that it is in this sense in which Dr. Franco argues that finalization of his employment was a "condition subsequent" required by the terms of the August 31, 2015 letter. Because the University never became obligated to employ Dr. Franco in the first place, it never undertook any contractual duty that was subject to termination. Further, if the duty to "finalize" Dr. Franco's employment was incurred, it could only have been a duty Dr. Postier incurred because he was the only University official who signed the August 31 letter. In this sense, Dr. Postier's duty to finalize Dr. Franco's employment was excused on the failure of the Provost to issue an "official letter of offer." Either way, Dr. Franco's argument fails.
CONCLUSION
¶63 Dr. Franco filed this case arguing that the University's failure to employ him constituted a breach of the August 31, 2015 letter. Dr. Franco did not establish that the August 31, 2015 letter was issued by an individual who had been delegated the authority to contract on behalf of the Regents. See 70 O.S.2011 § 3305. Dr. Franco did not establish that the August 31, 2015 letter was issued in compliance with the Faculty Handbook adopted by the Regents pursuant to that statutory authority. As a matter of law, the August 31, 2015 letter did not constitute an "offer" capable of being accepted to form a contract. In the absence of any contract, the University cannot be held liable for breach of contract. The Judgment in favor of Dr. Franco is reversed, and this case is remanded with instructions to enter judgment in favor of the Board of Regents of the University of Oklahoma.
¶64 REVERSED AND REMANDED WITH INSTRUCTIONS .
WISEMAN, C.J., concurs, and BARNES, J., concurs specially.
BARNES, J., concurring specially:
¶1 I concur with the Majority's Opinion, including its conclusion that Dr. Franco did not establish that the August 31, 2015 letter was issued by an individual who had been delegated the authority to contract on behalf of the Regents. I write separately to express my view that, in addition, no reasonable juror, presented with a document containing the terms quoted by the Majority, could determine it is an offer "so made as to justify [one] in understanding that his assent to that bargain is invited and will conclude it ." Restatement (Second) of Contracts § 24 (1981) (emphasis added). In my view, the August 31, 2015 letter, as a matter of law, does not constitute an offer.
As set forth in the Majority's Opinion, the letter states, for example, that "[o]fficial letters of appointment come from the Senior Vice President and Provost of the University of Oklahoma Health Sciences Center and are contingent upon approval of the appointment by the Board of Regents of the University of Oklahoma," the letter states that "[w]hen we receive the acknowledgement from you, we will proceed to finalize this faculty appointment," the letter concludes that "[l]ater you will receive a contract from the University that will formally offer you a position," and the Acknowledgment attached to the end of the letter and signed by Dr. Franco provides, "I hereby acknowledge receipt of this Preliminary Letter of Offer and accept the terms of the offer as stipulated."
The Majority states it does not need to decide the appeal on this basis, but I view this basis as an additional reason for reversing the Judgment entered in favor of Dr. Franco and remanding this case with instructions to enter judgment for the Regents.
Although the applicable standard of review requires that we generally consider as true all the evidence and inferences favorable to Dr. Franco, and that we disregard other evidence, this requirement, of course, does not apply to the contents of the written letter. See, e.g. , Restatement (Second) of Contracts § 203 (We must, above all, attempt to interpret any purported "promise or agreement" in order to arrive at "an interpretation which gives a reasonable, lawful, and effective meaning to all the terms" rather than an interpretation "which leaves a part unreasonable, unlawful, or of no effect."). Dr. Franco's proposed reading of the letter is one that renders numerous terms of the letter of no effect. See n.1, supra .
Dr. Franco's counsel agreed at the oral argument before this Court that the August 31, 2015 letter constitutes the only alleged offer.
¶2 Dr. Franco's counsel has repeatedly argued, including at oral argument before this Court, that the letter became a "contract with conditions" or a "contract with conditions precedent." However, the letter's expression of contingencies which, if fulfilled, would result in a future contract cannot be construed as conditions within an already formed contract, and, relatedly, a promise to form a contract in the future is not a contract. See Restatement (Second) of Contracts § 224 cmt. c ("Events which are part of the process of formation of a contract, such as offer and acceptance, are ... excluded under the definition in this section. It is not customary to call such events conditions.").
¶3 I concur with the Majority's Opinion but view the absence of an offer as a second and independent basis for reversal.