March 2, 1993 UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
No. 92-1196
FRANK B. ABBADESSA,
Plaintiff, Appellant,
v.
MOORE BUSINESS FORMS, INC.,
Defendant, Appellee.
No. 92-1197
ROBERT D. MARIOTTI,
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Norman H. Stahl, U.S. District Judge]
Before
Selya, Circuit Judge,
Higginbotham,* Senior Circuit Judge,
and Cyr, Circuit Judge.
James H. Shulte with whom Burns, Bryant, Hinchey, Cox & Schulte,
P.A. was on brief for appellants.
Edward M. Kaplan with whom William D. Pa.ndolph and Sulloway
Hollis & Soden were on brief for appellee.
March 2, 1993
*Of the Third Circuit, sitting by designation.
Higginbotham, Senior Circuit Judge. This is an appeal Higginbotham, Senior Circuit Judge.
from an order of summary judgment in favor of defendant, Moore
Business Forms, Inc., and against plaintiffs, Frank B. Abbadessa
and Robert D. Mariotti. Abbadessa and Mariotti sued Moore for
wrongful termination of employment. Moore moved for summary
judgment, arguing that Abbadessa and Mariotti each agreed in
writing at the time of their termination to release Moore from
any claims arising from plaintiffs' employment or termination of
employment. Plaintiffs opposed the motion for summary judgment,
each alleging that the agreement to release their claims against
Moore had been signed under economic duress.
The United States district court for the District of
New Hampshire, applying New Hampshire law, granted Moore's
summary judgment motion as to both Abbadessa and Mariotti. The
court, in separate orders, found, as a matter of law, that even
if Abbadessa and Mariotti had signed their respective agreements
under duress, each also subsequently ratified the agreements by
failing to repudiate them promptly and by accepting the benefits
that flowed under the agreements.
Because we agree that Abbadessa and Mariotti ratified
their respective resignation agreements, we will affirm the
district court's orders of summary judgment in favor of Moore.
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This is a diversity action. Both Abbadessa and Mariotti are
citizens of New Hampshire. Moore is a Delaware corporation with
its principal place of business in Illinois. The district court
had subject matter jurisdiction pursuant to 28 U.S.C. 1332. We
have appellate jurisdiction pursuant to 28 U.S.C. 1291.
I
Frank B. Abbadessa
Frank B. Abbadessa began working as an accountant for
Moore Business Forms, Inc. in December 1973. By 1988, Abbadessa
had advanced to the managerial position of Comptroller of Moore's
Locust Street plant in Dover, New Hampshire. On January 19,
1988, in a meeting between Abbadessa, R.J. Barth, the General
Manager of the Locust Street plant, and Brian Groves, the
Director of Human Resources, Moore requested Abbadessa to resign
and to sign a resignation agreement. Under the resignation
agreement, Moore would provide Abbadessa with the following
benefits from January 19, until April 30 1988: (1) compensation
in the amount of $4,611.75 per month; (2) payment for any
vacation owed Abbadessa for 1988; (3) continued participation in
Moore's Healthcare plan, Dental Plan, and Group Insurance Plan,
with an option to extend participation after April 30, 1988, if
Abbadessa made quarterly payments; and (4) payment by Moore for
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outplacement counseling services to assist Abbadessa in finding
other employment. The agreement also provided that Abbadessa and
Moore released each other from any other claims or obligations
arising from Abbadessa' employment with, and termination by,
Moore.
Moore informed Abbadessa that he was being asked to
resign because his performance had not been satisfactory.
Further, Moore made clear to Abbadessa that he could either
resign with the benefits provided under the agreement or not
resign and face the possibility of being fired without any
benefits. Abbadessa did not sign the resignation agreement
during the January 19 meeting. He considered the agreement for
two weeks and, in early February, he returned it signed,
backdated to January 20. During the interval between the January
19 meeting and the time in early February when he signed the
agreement, Abbadessa sought payment of his vacation pay from
Moore. Moore apparently refused to pay any benefits until
Abbadessa signed the resignation agreement. According to
Abbadessa, he finally signed the agreement because his lack of
financial resources left him no other choice.
On May 27, 1988, Abbadessa requested that Moore extend
payment of the benefits provided under the January 18 agreement
which had expired on April 30, 1988. Abbadessa requested the
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extension because he had not been able to find other employment
and had run out of money. Moore agreed to extend benefits to
Abbadessa for one more month and amended the January 18 agreement
to reflect that Abbadessa would receive the benefits provided
under the original agreement through May 31, 1988. Abbadessa
signed the amended agreement and dated it June 6, 1988. Toward
the end of June 1988, Abbadessa again requested that Moore grant
him a further extension of his benefits. Moore agreed to
provide Abbadessa with benefits covering half the month of June.
Finally, in July Abbadessa made one more request for extension of
his benefits. This time Moore refused.
Robert D. Mariotti
Robert Mariotti began working as a salesman for Moore
in December 1970. By 1988, Mariotti had advanced to the
managerial position of Operations Manager for Moore's Locust
Street plant. On May 24, 1988, in a meeting between Mariotti,
Barth and Groves, Moore requested Mariotti to resign and to sign
a resignation agreement similar to the one presented to Abbadessa
on January 18, 1988. The agreement provided similar benefits as
those paid to Abbadessa and covered the period of May 24 to
August 31, 1988: (1) compensation in the amount of $5,296.60 per
month; (2) payment for any vacation owed Mariotti for 1988; (3)
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continued participation in Moore's Healthcare Plan, Dental Plan,
and Group Insurance Plan, with an option to extend participation
after August 31, 1988, if Mariotti made quarterly payments; and
(4) payment by Moore for outplacement counseling services to
assist Mariotti in finding other employment. The agreement also
provided that Moore and Mariotti released each other from any
other claims or obligations arising from Mariotti's employment
with, or termination by, Moore.
As with Abbadessa, Moore informed Mariotti that he was
being asked to resign because his performance had not been
satisfactory. Mariotti was also presented with the choice of
resigning with benefits or facing the possibility of being
terminated without benefits. After thinking about the agreement
for two days, Mariotti returned it signed on May 26, 1988.
Mariotti claimed that he signed the agreement under financial
pressure and that, being aware of Abbadessa's experience with
Moore, he understood that he would receive no benefits until he
signed the agreement.
Procedural Background
On September 21, 1988, Abbadessa and Mariotti wrote to
counsel for Moore that "they believed they had been terminated
without cause in violation of the established policies and
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procedures of Moore and that they had signed the letters of
resignation under duress." On April 11, 1989 Abbadessa and
Mariotti brought separate actions for breach of employment
contract against Moore in New Hampshire's Strafford County
Superior Court. Plaintiffs, in their separate complaints,
alleged that Moore issued written policies, providing that
employees would not be terminated except for cause and then only
after being made aware of deficiencies in their job performance
and given the opportunity to correct those deficiencies.
According to plaintiffs, these written policies constituted an
enforceable employment contract under New Hampshire law, which
Moore breached by terminating plaintiffs without just cause and
without giving plaintiffs the opportunity to correct what Moore
deemed to be deficiencies in their job performance.
On May 5, 1989, both actions were removed to the United
States district court for the District of New Hampshire on
Moore's petition pursuant to 28 U.S.C. 1441. On September 9,
1989, Moore moved for summary judgment as to the claims of both
Abbadessa and Mariotti. Moore argued that the written policy
upon which Abbadessa and Mariotti relied, which stated that
employees would not be terminated except for cause, had been
replaced by a subsequent policy issued during plaintiffs' terms
of employment. The new policy did not provide that employees
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would not be terminated except for cause. As such, Moore
maintained, there existed no enforceable employment contract
between plaintiffs and Moore. In any event, Moore continued, the
resignation agreements signed by Abbadessa and Mariotti released
Moore from any and all liability arising from plaintiffs'
employment with, or termination by, Moore.
Abbadessa and Mariotti opposed the motions for summary
judgment. They argued that they never received notice of the
change of policy. They also argued that they never received any
consideration for the new policy, and that New Hampshire law does
not permit an employer to unilaterally modify conditions of
employment to the detriment of an employee in the absence of new
consideration to the employee. As to Moore's claim that they had
released any right to sue, Abbadessa and Mariotti argued that
their respective resignation agreements were invalid because they
had signed the agreements under economic duress.
On October 25, 1989, the district court denied Moore's
motion for summary judgment as to Mariotti. On November 7, 1989,
the court denied Moore's motion for summary judgment as to
Abbadessa. The court employed the same reasoning to deny both
motions. According to the court, Moore's motions for summary
judgment presented three issues: (1) whether Moore's initial
personnel policy represented an enforceable contract; (2) if it
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was an enforceable contract, whether it was amended by the
subsequent policy; and (3) whether Abbadessa and Mariotti signed
their respective resignation agreements under duress. In denying
Moore's motions, the court concluded that all three questions
involved genuine issues of material fact which would have to be
decided at trial.1
On August 20, 1991, Moore renewed its motion for
summary judgment as to Abbadessa, and the next day, on August 21
1991, Moore renewed its motion for summary judgment as to
Mariotti. This time, Moore argued that even if Abbadessa and
Mariotti had signed their resignation agreements under duress,
they had subsequently ratified the agreements by failing to
repudiate promptly and by accepting all benefits that flowed
under the agreements. Abbadessa and Mariotti, in a joint
memorandum, raised three grounds to defeat Moore's motions for
summary judgment. First, plaintiffs argued that the doctrine of
the "law of the case" precluded the district court from
considering Moore's renewed motions. Second, plaintiffs argued
that Moore had not pleaded the affirmative defense of
1The case of Robert Mariotti v. Moore Business Forms was
originally assigned to Judge Loughlin, while the case of Abbadessa v. Moore Business Forms was assigned to Judge
Devine. Subsequent to the denial of Moore's first motions for summary judgement, both cases were reassigned to Judge Stahl's calendar.
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ratification in its answer or in its original motions for summary
judgment and that, pursuant to Rule 8(c) of the Federal Rules of
Civil Procedure, an affirmative defense which is not pleaded is
waived. Finally, plaintiffs maintained that there were genuine
issues of material fact as to whether they were capable of
ratifying the resignation agreements.
On January 9, 1992, in two separate orders, the court
granted Moore's motion for summary judgment as to Abbadessa and
Mariotti. The court rejected plaintiffs' "law of the case" and
"waiver of unpleaded affirmative defense" arguments, and
concluded that, under New Hampshire law, plaintiffs had indeed
ratified their respective resignation agreements and that Moore
was entitled to summary judgment as a matter of law.
Abbadessa and Mariotti now appeal, raising two of the
grounds that were before the district court. Specifically,
plaintiffs maintain that the "law of the case" doctrine precluded
the district court from ruling on Moore's renewed motion for
summary judgment, and that there were genuine issues of material
fact as to whether plaintiffs were capable of ratifying the
resignation agreements.
II
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Our review of the district court's orders for summary
judgment is plenary. United States v. One Parcel of Real
Property with Bldgs, 960 F.2d 200, 204 (1st Cir. 1992). A Rule
56 motion for summary judgment will only be granted if there is
no genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law. Celotex Corp. v.
Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
In a diversity action the substantive law of the forum
state determines which facts are material. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). Here, New Hampshire
substantive law will determine if plaintiffs raised genuine
issues of material fact as to whether they ratified their
respective resignation agreements. But first, we turn to the
question of whether the doctrine of the "law of the case"
precluded the district court from ruling on Moore's renewed
motion for summary judgment.
A.
Under the doctrine of the "law of the case", a decision
on an issue of law made by the court at one stage of a case
becomes a binding precedent to be followed in successive stages
of the same litigation except in unusual circumstances. FCC v.
WOKO, Inc., 329 U.S. 223 (1946); U.S. v. Rivera-Martinez, 931
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F.2d 148, 151 (1st Cir. 1991) Piazza v. Aponte Roque, 909 F.2d
35, 38 (1st Cir. 1990). 1B J. Moore, Federal Practice 0.404[1]
(1980).
Here, the district court, in denying Moore's initial
motions for summary judgment, decided that there were genuine
issues of material fact as to whether Abbadessa and Mariotti were
under such economic duress at the time they signed the
resignation agreements as to render the agreements voidable. In
its renewed motions for summary judgment, Moore argued that, even
if Abbadessa and Moore signed the agreements under the sort of
economic duress which would render the agreements voidable,
Abbadessa and Mariotti had nonetheless ratified the agreements by
their subsequent conduct. The issue of whether Abbadessa and
Mariotti ratified the agreements is one which the district court
did not consider, much less decide, in ruling on Moore's initial
motions for summary judgment.
We have stated in this circuit that the doctrine of the
"law of the case" "merely expresses the practice of courts
generally to refuse to open what has been decided." Piazza, 909
F.2d at 38. The issue raised in Moore's renewed motions for
summary judgment was never decided by the district court.
Accordingly, the district court was not precluded from
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considering whether Abbadessa and Mariotti ratified their
respective resignation agreements.
B.
In New Hampshire, contracts signed under economic
duress are voidable. King Enterprises v. Manchester Water Works,
122 N.H. 1011, 453 A.2d 1276 (1982); Cheshire Oil Co. v.
Springfield Realty Corp., 118 N.H. 232, 385 A.2d 835 (1978). In
the words of the Supreme Court of New Hampshire: "the payment of
money or the making of a contract might be under such
circumstances of business necessity or compulsion as will render
the same involuntary and entitle the party so coerced to recover
the money paid or excuse him from performing the contract."
Cheshire Oil Co., 385 A.2d at 838.
In order to be "excused" from performing the contract,
a party relying on a theory of business compulsion or economic
duress must demonstrate four elements. First, the party relying
on economic duress must have involuntarily accepted the terms of
another. "It must appear that consent was actually induced by
the pressure applied and would not have been given otherwise."
Id. at 839, quoting Morrill v. Bank, 90 N.H. 358, 365, 9 A.2d
519, 525 (1939). Second, "the coercive circumstances must have
been the result of the acts of the opposite party." Cheshire Oil
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Co., 385 A.2d at 839. Third, "the pressure must have been
wrongful." Id. An act or threat of an act may be wrongful
"although the act or threat is not criminal or tortious or in
violation of a contractual duty." Id. Fourth, "circumstances
must have permitted no other alternative but to accept the terms
of another if there is to be a finding of business compulsion."
Id. Thus, if the party relying on the theory of economic duress
"had a legal remedy adequate to redress or compensate for the
injury threatened, the threat will not amount to duress." Id.
Given the above definition of economic duress, there
are, as the district court found, disputed issues of material
fact as to whether Abbadessa and Moore satisfied the four
elements of duress. Specifically, looking at the facts in the
light most favorable to plaintiffs, it is disputed whether the
"coercive circumstances" surrounding the signing of the
resignation agreements were "the result of acts of" Moore.
Abbadessa and Mariotti claim that Moore created "coercive
circumstances" by refusing to negotiate any of the terms of the
agreements and by withholding benefits plaintiffs were entitled
to until they signed the agreement. It is further disputed
whether the choice given by Moore to Abbadessa and Mariotti of
resigning with benefits or not resigning and risking termination
without benefits was "wrongful." Abbadessa and Mariotti claim
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that Moore's bargaining position was wrongful because it was done
in bad faith. It is finally disputed whether Abbadessa and
Mariotti were left with "no other alternatives but to accept the
terms" proposed by Moore. Abbadessa and Mariotti claim that they
were not fully aware of any internal appeal procedures available
to them at the time they were presented with the requests for
them to resign. They also claim that they were in no financial
or mental shape to begin court actions.
Therefore, assuming for purposes of summary judgment
that Abbadessa and Mariotti signed the agreements under duress,
the question now becomes whether Moore is nonetheless entitled to
judgment as a matter of law because Abbadessa and Mariotti
ratified the agreements by their subsequent actions.
In New Hampshire, voidable contracts are subject to
ratification. Sawtelle v. Tatone, 105 N.H. 398, 201 A.2d 111, 115
(1964). Since a contract executed under economic duress is
voidable it is also subject to ratification. New Hampshire has
never specifically identified the circumstances under which a
contract executed under economic duress will be considered to
have been ratified. But generally, a voidable contract will be
deemed to have been ratified when the party who is entitled to
avoid the contract "does any act which amounts to a ratification
after full knowledge of all the facts and circumstances." Id.
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Acts amounting to ratification are payment or acceptance of the
benefits of the contract and failure to repudiate the contract
promptly. Id. 2 As the Supreme Court of New Hampshire has
stated: "A party cannot treat the contract as binding and as
rescinded at the same time, and after he has elected to stand by
the contract and receive the benefits it confers on him, and has
thus ratified and confirmed it, he cannot thus rescind and
repudiate it." Bechard v. Amey, 82 N.H. 462, 471, 136 A. 370, 375
(1926).
Here, both Abbadessa and Mariotti sought to treat their
resignation agreements as "binding and rescinded at the same
time." Both accepted the benefits the agreements conferred on
them and neither attempted to repudiate the agreements promptly.
2See also Hillside Assoc. of Hollis, Inc. v. Maine Bonding &
Casualty Co., 135 N.H. 325, 605 A.2d 1026 (1992) (voidable
insurance contract between insurance agent and construction company based on mutual mistake was not ratified when insurance company promptly notified construction company of mistake); Derouin v. Granite State Realty, Inc., 123 N.H.
145, 148, 459 A.2d 231, 233 (1983) (voidable land sale contract based on mutual mistake was ratified because purchaser had performed significant improvements to property and property could not be returned to seller in substantially the same condition in which purchaser received it); Michael v. Rochester, 119 N.H. 734, 736, 407 A.2d 819,
821 (1979) (city ratified initially invalid construction contract for building a water main when it failed to notify the contractor before construction was complete that it intended to repudiate contract); Lucier v. Manchester, 80
N.H. 361, 363, 117 A. 286, 287 (1922) (acceptance of services of attorney by city amounted to ratification of invalid employment contract).
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Abbadessa considered the agreement for two weeks before signing
it. After his benefits under the January 19 agreement had
expired, Abbadessa requested that Moore extend him benefits on
three separate occasions. Moore acceded to two of these requests
and refused to extend added benefits on Abbadessa's third and
final request. So, from February 1988 until April 1988,
Abbadessa treated the agreement as binding by accepting the
benefits Moore had promised. Moreover, from April 1988 until
June 1988, Abbadessa further ratified the original agreement by
making three separate requests that Moore extend benefits which
were not owed under the agreement. It was not until after Moore
had refused additional extensions of benefits that Abbadessa
notified Moore's counsel by letter in July 1988 that he had
signed the agreement under duress. Finally, even after Abbadessa
had filed his suit against Moore, at no point did he attempt to
return to Moore the benefits of the agreement which he now claims
he signed under duress.
Similarly, Mariotti considered his agreement for two
days before signing it. From May 1988 until August 1988,
Mariotti continued to receive the benefits under the agreement.
Even after Mariotti supposedly wrote to Moore Counsel in July
1988 that he had signed the agreement under the duress, he
continued to received the benefits under the agreement for August
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1988. As with Abbadessa, even after having filed suit against
Moore, at no point did Mariotti attempt to return to Moore the
benefits of the agreement which he now claims he signed under
duress.
The Supreme Court of New Hampshire has written that "a
person seeking to rescind cannot treat the contract as rescinded
and binding at the same time." Sawtelle, 201 A.2d at 115. By
accepting the benefits of their respective resignation agreements
and by failing to notify Moore promptly that they intended to
repudiate the agreements, Abbadessa and Mariotti treated the
agreements as binding. After having done so, they now wish to
treat the agreements as rescinded. That, under New Hampshire
law, they may not do.
Abbadessa and Mariotti argue that they could not have
possibly ratified the agreements until after the duress was
removed. Since, according to Abbadessa and Mariotti, they signed
the agreements under duress because basically, by asking them to
resign, Moore caused them to be in desperate need for money, we
understand plaintiffs' argument to mean that duress would have
been removed when they were no longer in such dire financial
straits. But, as we stated at the outset of our discussion, the
issue in this case is whether appellants raised genuine issues of
material fact as to whether they ratified their respective
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agreements. Stated another way: whether they raised genuine
issues of material fact that the claimed duress had not been
removed between the time they signed the agreements and the time
they brought this action. Appellants have failed to raise any
facts to that effect. While Moore has advanced undisputed facts
that appellants accepted the benefits of their respective
agreements, Abbadessa and Mariotti have offered no facts
(disputed or undisputed) about how long the economic duress
lasted; or put another way, if and when their claimed duress
ceased.3 Having failed to satisfy their burden of production,
3We should also point out that we have found no authority that New Hampshire has adopted or would adopt the theory that a contract signed under economic duress is capable of being ratified only after the duress is removed. The only case from this circuit addressing the issue is Ismert and
Associates, Inc. v. New England Mutual Life Insurance Co.,
801 F.2d 536 (1st Cir. 1986). In that case, this circuit considered an action brought by a tax consulting service firm against an insurance company. The firm argued that the agreement it had signed, releasing the insurance company from any claims resulting from the firm's loss of business opportunities, was unenforceable because it was obtained under duress. Judge Maletz authored the majority opinion as well as a dissent. In his dissent on the issue of economic duress, Judge Maletz wrote that "there can be no affirmance [of a contract] unless the duress has ended." Ismert and
Associates, 801 F.2d at 548. Judge Breyer, writing for the
majority on the question of duress, did not address the issue of whether a contract signed under duress is not capable of being ratified until the duress has ended. Instead, Judge Breyer found that plaintiff had not made a sufficient showing that it signed the release agreement under duress. Id.. In Ismert, this circuit was applying
Massachusetts law. Thus, the decision is not controlling in this case involving New Hampshire law. Moreover, the
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their argument necessarily fails. See, e.g., Mesnick v. General
Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991) (where opponent of
summary judgment motion "bears the ultimate burden of proof, he
must present definite, competent evidence" sufficient to document
a factual disagreement over some issue of material fact).
For the foregoing reasons, we will affirm the summary
judgment orders of the district court in favor of Moore Business
Forms, Inc., and against Frank B. Abbadessa and Robert D.
Mariotti.
Affirmed.
statement of Judge Maletz that "there can be no affirmance unless duress has ended", cannot even be used as persuasive authority in this case given that it was not adopted by a majority of the panel.
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