Creative Consumer Concepts, Inc. v. Kreisler

563 F.3d 1070, 2009 U.S. App. LEXIS 8255, 2009 WL 1058056
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 21, 2009
Docket07-3142
StatusPublished
Cited by105 cases

This text of 563 F.3d 1070 (Creative Consumer Concepts, Inc. v. Kreisler) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Creative Consumer Concepts, Inc. v. Kreisler, 563 F.3d 1070, 2009 U.S. App. LEXIS 8255, 2009 WL 1058056 (10th Cir. 2009).

Opinion

McKAY, Circuit Judge.

In this case, we are called upon to review a procedural challenge to the timeliness of an affirmative defense and to determine whether a district court’s findings and conclusions were adequately supported by evidence and law. We also review the court’s denial of a motion to stay. For the reasons that follow, we affirm.

Background

From 1998 to 2004, Defendant Laura Kreisler worked for Plaintiff Creative Consumer Concepts, Inc. (CCC), an integrated brand-marketing agency. In June 2003, Ms. Kreisler became a vice president of the company. All of CCC’s production and operations departments reported to her.

In the fall of 2004, Bob Cutler, the president and sole shareholder of CCC, decided to terminate Ms. Kreisler’s employment, for reasons unrelated to this case. On November 5, 2004, Mr. Cutler met with Ms. Kreisler, fired her, and handed her an unsigned severance agreement. He instructed Ms. Kreisler to direct any contact regarding the agreement or her severance generally to the human resources department.

The agreement Mr. Cutler gave Ms. Kreisler provided her with benefits in exchange for her release of CCC from potential legal claims. However, it did not release Ms. Kreisler from claims by CCC. After leaving with the severance agreement, Ms. Kreisler contacted the human resources manager, Joy Baker-Flanigan. She requested additional items related to the termination, such as a letter of recommendation and reimbursements for some expenses. Ms. Flanigan took Ms. Kreisler’s requests to Mr. Cutler for approval and, with his permission, satisfied these requests without including them in the agreement. Then, without contacting CCC, Ms. Kreisler scanned the severance agreement into her computer and added a mutual release provision. Specifically, Ms. Kreisler modified the second paragraph to indicate CCC was releasing her from any claims resulting from her actions while employed at CCC. She made comparable modifications to the sixth paragraph.

A number of days after Ms. Kreisler met with Mr. Cutler, Ms. Flanigan met with Ms. Kreisler in a restaurant parking lot. Ms. Kreisler handed Ms. Flanigan the severance agreement. Ms. Flanigan briefly looked at the agreement, then signed it in Ms. Kreisler’s presence. Ms. Kreisler never disclosed to Ms. Flanigan that she had altered the agreement. Shortly thereafter, CCC began providing Ms. Kreisler *1074 with the benefits and payments provided for in the agreement.

Then, on December 7, 2004, CCC learned Ms. Kreisler had embezzled funds from the company, although the full extent of the loss was unknown at that time. Around the same time, CCC learned of the release Ms. Kreisler had added to the severance agreement. CCC immediately stopped providing Ms. Kreisler with benefits and payments pursuant to the agreement. Eventually, CCC determined Ms. Kreisler had embezzled around $860,000 over the course of three or four years.

CCC filed a complaint against Ms. Kreisler in the United States District Court, District of Kansas, on January 28, 2005. The complaint alleged the severance agreement should be rescinded because Ms. Kreisler materially altered its terms, unbeknownst to CCC. Independent of that claim, CCC sought damages from Ms. Kreisler for breaching her fiduciary duty, being a faithless servant, and committing fraud, among other things. Ms. Kreisler filed a pro se answer and counterclaim on March 3, 2005. 1 Read liberally, Ms. Kreisler’s pleading asserted a defense of mutual release and counterclaimed that CCC could not sue her and that it owed her the benefits of the agreement because of the mutual release clause. The parties agreed to a bench trial as opposed to a jury trial on the sole issue of the validity of the mutual release. Counsel subsequently entered an appearance for Ms. Kreisler, and the bench trial was held on December 20, 2005.

Just before the bench trial began, CCC submitted a supplemental trial brief regarding Ms. Flanigan’s lack of authority to bind CCC to the severance agreement. Ms. Kreisler objected to the late submission of the brief and asked for a continuanee to research the law and to develop challenges to the briefs factual premises. CCC responded that the brief only addressed issues of authority that had been covered in discovery. The court gave Ms. Kreisler time to review the brief and an opportunity to point to evidence the theory might impact, indicating that if there were no such evidence, the court would proceed with the trial but would give Ms. Kreisler a full opportunity to respond afterward. Although Ms. Kreisler’s counsel expressed certainty that he could rebut certain facts in the brief, the only specific fact he listed as rebuttable was CCC’s claim that Ms. Kreisler received no severance pay pursuant to the agreement. The court ultimately denied Ms. Kreisler’s motion for a continuance, but granted Ms. Kreisler leave to submit her own supplemental brief on the issue of authority and reminded her that she could controvert the theory through witness examination.

During the trial, CCC introduced evidence on the issue of authority. For instance, Mr. Cutler testified that he had told both Ms. Kreisler and Ms. Flanigan that only he had authority to set terms of severance agreements. Ms. Flanigan merely had authority to sign previously approved agreements on behalf of CCC and, when she was still employed by CCC, Ms. Kreisler’s authority was also limited to executing the original offer. Mr. Cutler denied ever authorizing anyone at CCC to sign a modified severance agreement or to enter into a mutual release with Ms. Kreisler.

Likewise, Ms. Flanigan testified that Mr. Cutler was the only person at CCC with authority to approve changes to a severance agreement. Consequently, she lacked authority to sign the agreement Ms. Kreisler altered. Ms. Flanigan indicated *1075 that the protocol at CCC was the same when Ms. Kreisler dealt with severance agreements. Ms. Flanigan also testified that when Ms. Kreisler handed her the modified agreement, she thought it was the original, unaltered agreement. Ms. Flanigan said she would not have signed the document if she had known any changes had been made; instead, she would first have taken it to Mr. Cutler for review and approval, consistent with CCC’s protocol.

Also during the trial, CCC read portions of Ms. Kreisler’s deposition into evidence over Ms. Kreisler’s objection. In her deposition, Ms. Kreisler admitted familiarity with CCC’s process for preparing and executing severance agreements. She acknowledged she had no authority to execute modified agreements without Mr. Cutler’s approval during her employment at CCC. She conceded that she also knew Ms. Flanigan lacked that authority as well. Moreover, Ms. Kreisler knew of no instances during her employment in which CCC had entered into a severance agreement containing a mutual release. Finally, Ms. Kreisler admitted to being surprised when Ms. Flanigan signed the agreement, because she thought Mr. Cutler would be handling the paperwork and that Ms. Flanigan would be taking the documents to him.

Analysis

On appeal, Ms. Kreisler raises four main issues. Primarily, Ms. Kreisler claims the district court erred by allowing CCC to pursue a new affirmative defense just before the trial began.

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Bluebook (online)
563 F.3d 1070, 2009 U.S. App. LEXIS 8255, 2009 WL 1058056, Counsel Stack Legal Research, https://law.counselstack.com/opinion/creative-consumer-concepts-inc-v-kreisler-ca10-2009.