DeMuth v. Miller

652 A.2d 891, 438 Pa. Super. 437, 1995 Pa. Super. LEXIS 20, 67 Empl. Prac. Dec. (CCH) 43,920

• Court: Superior Court of Pennsylvania
• Decided: January 11, 1995
• Status: Published

Opinions

POPOVICH, Judge:

This case involves an appeal from the order (reduced to judgment) of the Court of Common Pleas of Cumberland County denying a motion for judgment notwithstanding the verdict and a new trial by the defendant/appellant, Daniel C. Miller. We affirm.

The facts, viewed in a light most favorable to the verdict-winner and granting all reasonable inferences to be drawn therefrom, reveal that the defendant was hired by the plaintiff, Donald L. DeMuth, in December of 1985 as an independent contractor to do accounting work. In May of 1986, the defendant became an employee of the DeMuth firm as a professional management consultant and signed an employment contract to that effect for one year (June 1,1986, to May 31, 1987). This business relationship was renewed on a fiscal basis for each of the next four years, but executed copies of employment contracts could be produced for only two of those years. More specifically, the plaintiff could not locate, but recalls signing, a contract dated May 31, 1989, and expiring June 1, 1990. Each of the contracts, save for 1986, contained the following language:

8. Contingent Note Payable: If within five years of the termination of this Agreement if the Employee terminates the Agreement or the Employer terminates the Agreement for cause, and the Employee establishes a professional management consulting or accounting firm within a 50-mile radius of any of Employer’s current or former clients, he agrees to ' pay the Employer 125% of the previous 12 months’ charges for each of the employer’s clients who retain his professional management consulting or accounting services. Cause shall include, but is not limited to, moral turpitude, being charged with a felony, use of illicit drugs, intoxication while working, insulting Employer’s family and clients, not working, intentionally working slowly, intentionally losing clients, engaging in sexual activities in the office, and homosexuality.

See Paragraph 8, Reproduced Record at 13a.

On October 17, 1990, the plaintiff called the defendant into the office and terminated his employment because of his appearance on a Harrisburg television station representing a gay and lesbian coalition in violation of Paragraph 8. After leaving the plaintiffs employ, the defendant opened a competing consulting firm and solicited the plaintiffs clients, some of whom (17 in number) changed their business allegiance to the defendant. Once the plaintiff learned of this, the defendant was notified that such conduct violated the employment agreement. See Paragraph 8, supra.

When the defendant refused to compensate the plaintiff for the loss of business, a two-count complaint sounding in contract and misappropriation of the plaintiffs property rights was filed seeking judgment in excess of $120,000.00. The defendant’s reply was an answer denying, inter alia, the existence of a written contract for the last year of his employment, thus negating the effectiveness of Paragraph 8. Under new matter, the defendant averred that his dismissal was premised upon the “homosexual” provision of the employment contract and his television interview concerning a controversial issue (gay and lesbian bashing), the former of which was violative of public policy.

In a counterclaim, the defendant alleged that he had been: wrongfully discharged for appearing on television in support of gay/lesbian rights; defamed when the plaintiff communicated to third parties that he was gay and at the risk of AIDS if a continuing work relationship was contemplated; and contractually interfered with by the plaintiff as to clients.

At the commencement of trial, the defendant argued a motion in limine to exclude any testimony by the plaintiff that the contract continued in effect until the termination date (October 17, 1990) on the ground that “there was a judicial admission in the [plaintiffs] pleadings that it had not been renewed.” The plaintiff countered that the provision allowing dismissal for “homosexuality” persisted because of the dealings of the parties. The court agreed with the plaintiff and allowed testimony on the parties’ business dealings post-May 31, 1989.

The parties stipulated that damages did not exceed (under the 125% provision of actual loss) $110,000.00 and the defendant’s wrongful discharge claim was excluded on the plaintiffs motion for compulsory non-suit. Thereafter, in answer to special interrogatories, the jury held that the parties were bound by the terms of the 1990 Agreement as a consequence of their post-1989 conduct leading up to and encompassing the defendant’s dismissal (October 17, 1990). Damages were awarded (and later molded by the court) in the amount of $110,000.00. Post-trial motions were denied. This appeal followed and raises three issues, the first of which to be addressed concerns the allegation that the trial court erred in allowing the plaintiff to present evidence in support of his contractual claim when the plaintiff had “judicially] admitted] in his complaint that the employment agreement ... was not renewed or extended at its expiration on May 31, 1990.”

It is well established that a judicial admission is an express waiver made in court or preparatory to trial by a party or his attorney, conceding for the purposes of trial, the truth of the admission. Jewelcor Jewelers & Distributors, Inc. v. Corr, 373 Pa.Super. 536, 542, 542 A.2d 72, 75 (1988). It has the effect of a confessory pleading, in that the fact is thereafter to be taken for granted, so that the opposing party need offer no evidence to prove it and the party by whom the statement was made is not allowed to disprove it. Jeweleor Jewelers, supra, at 542, 542 A.2d at 75. A principal element of a judicial admission is that the fact has been admitted for the advantage of the admitting party, and consequently, a judicial admission cannot be subsequently contradicted by the party that made it. Jewelcor Jewelers, supra, at 543; 542 A.2d at 76. As our Supreme Court stated:

Pennsylvania has followed this rule since Wills v. Kane, 2 Grant 60, 63 (Pa.1853), where the court insisted: “Where a man alleges a fact in a court of justice, for his advantage, he shall not be allowed to contradict it after-wards. It is against good morals to permit such double dealing in the administration of justice.”

Jewelcor Jewelers, supra, at 542; 542 A.2d at 75 (quoting Tops Apparel Mfg. Co. v. Rothman, 430 Pa. 583, 587-88 n. 8, 244 A.2d 436, 438 n. 8 (1968) (emphasis added).

Nasim v. Shamrock Welding Supply Co., 387 Pa.Super. 225, 563 A.2d 1266, 1267-1268 (1989) (Emphasis added in part).

In the present case, we hold that the averment of fact contained in Paragraph 5 of the plaintiffs complaint (i.e., the employment contract “was not renewed or extended at its expiration on 31 May 1990”) did not constitute a judicial admission as the averment was not advantageous to the plaintiff when viewed in the context of the remaining allegations and damages sought to be recouped. In pertinent part, the complaint reads:

4. Pursuant to an Employment Agreement dated 31 May 1989, Plaintiff employed Defendant. A copy of said Employment Agreement is attached hereto and marked as Exhibit A.

5. The Employment Agreement between the parties was not renewed or extended at its expiration on 31 May 1990.

6. Following the expiration of the Employment Agreement between the parties, Defendant continued to be employed by Plaintiff and continued to be paid a salary and other compensation for such employment.

7. On 17 October 1990, Plaintiff terminated Defendant’s employment.

8. Following termination of his employment, Defendant solicited a large number of the clients served by Plaintiffs business during the time that Defendant was employed in that business, suggesting and requesting that those clients terminate the services of Plaintiff and retain Defendant to provide those professional services to the clients in the future.

9. As a result of Defendant’s solicitation of and contacts with Plaintiffs clients following the termination of Defendant’s employment by Plaintiff, several of Plaintiffs clients have terminated Plaintiffs services. Plaintiff believes that many of those clients have now retained the services of Defendant and that Defendant is providing professional accounting and business management services to those clients.

COUNT I

CONTRACT CLAIM

10.

11. To the extent that the Employment Agreement of 31 May 1989 was in effect in October of 1990, Defendant is bound and obligated by the terms of that agreement.

12. Defendant’s employment with Plaintiff was terminated by Plaintiff for cause as such cause is defined in Paragraph 8 of said agreement.

13. Pursuant to Paragraph 8, Defendant owes Plaintiff a sum of money equal to 125 percent of the previous twelve months’ charges for each of Plaintiffs clients who retained Defendant to provide professional services for them following his termination.

14. Plaintiff believes that the clients of Plaintiff who are now served by Defendant are those clients listed on Exhibit B which is attached hereto. The previous twelve months’ charges for each of those clients is set out next to the clients name on said schedule and totals $98,918.75.

15. Pursuant to Paragraph 8 of the Employment Agreement between the parties, and to the extent said Employment Agreement was still in effect and still binding as of October, 1990, Plaintiff owes Defendant the sum of $123,~ 648.43.

16. Defendant is indebted to Plaintiff in the sum of $123,648.43. Despite repeated demands by Plaintiff, Defendant had failed and refused to pay said sum.

WHEREFORE, Plaintiff demands judgment against Defendant in the amount of $123,648.43, plus interest from 30 November 1990, plus costs of suit.

Viewed in a vacuum, the allegation in Paragraph 5, supra, would appear to bind the plaintiff to the assertion therein of non-existence of the contractual relationship between the parties. However, reading the complaint as a whole, we find that the “non-renewal, non-extension” averment was tempered by the allegations in the remaining portions of the complaint (which were echoed at the trial as well) that the contractual relationship “continued” between the parties past the 31 May 1989 term of the written and executed agreement of employment with the payment of wages and benefits for services rendered by the defendant up until dismissal in 1990.

The defendant’s homosexual activity triggered his dismissal for cause under the terms of the extended 1989 contract and suit was instituted for his solicitation of the plaintiffs clients consistent with language of the same Agreement continued by the parties’ conduct until October 17, 1990.

To hold that the content of Paragraphs 5’s “non-renewal” language is a judicial admission foreclosing the plaintiff from looking to Paragraph 8’s dismissal for “cause” and compensation proviso of the 1989 written contract flies in the face of treating something as a judicial admission only if it is advantageous to the admitting party. Contrast Nasim, supra, and compare with Jewelcor Jewelers & Distributors, Inc. v. Corr, 373 Pa.Super. 536, 542, 542 A.2d 72, 75 (1988).

Instantly, we fail to discern how it would be beneficial to the plaintiff to treat as an admission the expiration of the contract containing verbiage entitling him to dismiss the defendant for cause and seeking compensation for violation of the non-competition clause. Id. Accordingly, given the non-beneficial aspects flowing from labelling Paragraph 5 as an admission (so as to preclude the plaintiff from offering evidence of the defendant’s conduct as violative of a contract), we hold that Paragraph 5 does not rise to the level of a judicial admission. Id.

The conclusion that the viability of the contractual relationship between the parties was unresolved opened the door for the jury to assess the contradictory versions of conduct and behavior surrounding the renewal procedures practiced by the parties with the formal expiration of a contractual period and the continuation of its terms thereafter. This is consistent with established case law; to-wit:

“[W]hen a contract of employment for a definite time is made and the employee’s services are continued after the expiration of the time, without objection, the inference is that the parties have assented to another contract for a term of the same length with the same salary and conditions of service.” Smith v. Shallcross, et al., 165 Pa.Super. 472, 475, 69 A.2d 156, 158 (1949). “If an agent is employed for a specified period of a year or less and thereafter continues in the employment, without further arrangements being made, it ordinarily is inferred that the employment continues upon the same terms and for a similar period as that for which he was first employed.” Id. at 476, 69 A.2d at 158-159. See also P.L.E. Labor § 9.

Burge v. Western Pa. Higher Education Council, Inc., 391 Pa.Super. 108, 570 A.2d 536, 538 (1990).

It was the defendant’s testimony that one-year contracts were signed with the plaintiff in 1986, 1987 and 1988, with no agreement being signed in 1989 and for the period from June of 1990 to October, of 1990. Even though the first three contracts contained the “homosexual” provision as “cause” for dismissal, the defendant never confronted the plaintiff (except in passing) with its exclusion since he did not want to jeopardize his employment by making it an issue pivotal to his remaining on the job.

In fact, the defendant testified that no extension of his June 1, 1988, to May 31, 1989, contract was signed because he “wanted to negotiate th[e] issue” of calculating his bonus not on hours worked but on his productivity. This was refuted by the plaintiff, who took the stand and admitted that he could not produce the May 31,1989, contract, but he swore that such a document was executed by the defendant and he witnessed the signing. N.T. 6/21/93 at 18-19.

Despite the defendant’s refutation of an employment contract after May 31, 1989, he remained on the job'thereafter until the date of his termination and received wages and benefits during this employment period such that his salary had risen from $32,500.00 to $50,000.00 (plus benefits) for the time in question. Further, both parties agreed that it was not unusual for a formal contract to be signed 4-5 months into the new fiscal year, with increments in pay being made retroactive to June 1st of that work year. Id. at 25-26.

For example, after the expiration of the contract on May 31, 1989, it was the defendant’s contention that no other contract was signed because the bonus features had to be resolved. This element was agreed upon in February of 1990, with the bonus paid according to its terms. N.T. 6/22-23/93 at 48-51. Thus, the employment relationship continued uninterrupted and its attendant terms and conditions were part and parcel of the work environment up until the defendant’s termination date. See Burge, supra. As such, we assign no error to the trial court’s allowance of testimony on the employment relationship during that period where no written contract could be produced (from May 31, 1989, to the date of the defendant’s dismissal), which we find was proper under accepted principles of law concerning the continuation of contracts and their conditions beyond the written period of their existence. Id.

The next issue to be proffered relates to the claim that the “contingent note payable” clause of the employment contract is a penalty clause, or, alternatively, an unreasonable restrictive covenant. Our review of the record discloses that this issue was not raised in pre-trial, trial or post-trial motions. Furthermore, the trial court did not address it in its opinion to this Court. Therefore, we find it waived for appeal purposes. See McGonagle v. Union Fidelity Corp., 383 Pa.Super. 223, 556 A.2d 878, 881 n. 3 (1989); see also Commonwealth v. Sheaff, 518 Pa. 655, 544 A.2d 1342 (1988), reversing Commonwealth v. Sheaff, 365 Pa.Super. 613, 530 A.2d 480 (1987).

The last of the appellant’s complaints consists of a general challenge to his termination as violative of public policy, followed by a list of sub-issues aimed at assailing the loss of employment on federal and state constitutional grounds. See Appellant’s Brief at i-ii.

The constitutional arguments appear for the first time in the appellant’s appellate brief. An examination of the pleadings, pre-trial memoranda, arguments before trial and at the compulsory non-suit and direct verdict stages of the case, as well as in post-trial motions, are devoid of any mention of the constitutional grounds offered in the appellant’s appellate brief as justification to entry of judgment notwithstanding the verdict or a new trial. This lack of presentment of such a theory for relief would normally be fatal to preservation of such grounds on appeal. However, the trial court addressed the constitutional challenges in its opinion. The reason for and timing of such a response by the trial court was the result of “[t]hose arguments [being] first made when Miller filed his brief in support of the post-trial motions, which occurred after he changed counsel.”¹ See Appellee’s Brief at 6. The trial court, having exercised its discretion in responding to the constitutional issues raised in the defendant’s post-trial brief and at oral argument, preserved such claims for appellate review. See Thatchers Drugs of West Goshen, Inc. v. Consolidated Supermarkets, Inc., 391 Pa.Super. 524, 571 A.2d 490, 494 (1990), reversed on other grounds, 535 Pa. 469, 636 A.2d 156 (1994), where we observed on this exact issue that:

... there has been a shift in this Court’s approach to dealing with issues not timely filed below but addressed, nevertheless, by the trial court on their merits (without leave of court being sought and granted in advance of submission).

For example, in Commonwealth v. Hewett, 380 Pa.Super. 334, 551 A.2d 1080 (1988), a panel of this Court did not find an issue waived even though it was raised in supplemental post-trial motions without the benefit of leave of court being obtained as required by Pa.R.Crim.P. 1123(a). We did so on the strength of the Supreme Court’s reversal of Superior Court treating as waived an issue raised for the first time in supplemental post-trial motions without leave of court being obtained beforehand because the trial court elected to treat the issue on its merits. Reliance was had upon the Supreme Court’s per curiam reversal order in Commonwealth v. Sheaff, 518 Pa. 655, 544 A.2d 1342 (1988), of this Court’s panel decision finding waiver in Commonwealth v. Sheaff,

365 Pa.Super. 613, 530 A.2d 480 (1987). Accord Commonwealth v. Markovich, 388 Pa.Super. 244, 247-49, 565 A.2d 468, 470 (1989); cf. Kurtas v. Kurtas, 521 Pa. 105, 109, 555 A.2d 804, 806 (1988) (plurality). As such, we will respond to the appellant’s claim that the Statute of Frauds precluded the court below from restricting the use it made of its leased premises. In doing so, we would note that the issue is preserved not solely because of its appearance in the appellant’s post-trial supplemental brief. Rather, we address the question because of its presence in the supplemental brief, counsel’s oral argument on the issue before the trial court and the trial court exercising its discretion to address the Statute of Frauds matter.[²] Cf. Weis by Gasper v. Estate of Ciao, 521 Pa. 491, 556 A.2d 819 (1989). [Emphasis in original]

Accord Commonwealth v. Austin, 428 Pa.Super. 466, 631 A.2d 625 (1993); contrast Commonwealth v. Metz, 534 Pa. 341, 633 A.2d 125 (1993).

Despite the appellee’s protestation that the trial court did not have the opportunity to digest or respond to the appellant’s public policy and constitutional arguments, the trial court’s opinion indicates otherwise; to-wit:

The defendant first suggests that the judgment must be entered, notwithstanding the verdict, for the reason that the contract whereby the plaintiff was permitted to fire the defendant for being gay violated either public policy or state and federal constitutions.

Trial Court Opinion, 12/10/93 at 3. The court then proceeded to find meritless the specific arguments raised on the grounds that “there was no factual record made with respect to the due process or public policy claim * * * [and there was no] current legislative or societal consensus on these matters ... justifying the court] in defining public policy based on what [the court] thought it should be.” Id. at 6.

Therefore, consistent with the precept re-confirmed by our Supreme Court in Sheaffi, supra, and looked to in Thatcher’s Drugs, supra, to find an issue preserved where raised for the first time in a post-trial supplemental brief and addressed by the trial court on its merits, we can do no less here and find the public policy and constitutional issues preserved for appellate scrutiny. Id.

It is imperative that we focus on exactly what issue(s) the appellant seeks to have reviewed under the caption of “public policy,” as well as the federal and state constitutional assertions, before we may embark on an analysis of the viability of the claim(s) raised. To assist us in this objective, we look to the appellant’s appellate brief at 10-11, labelled “Summary Of Argument”, which reads in pertinent part:

This case involves plaintiffs attempt to use the state’s power, and the resources of this court, to enforce monetarily, his punitive policy of discrimination. Not content with having fired a qualified employee solely because he is gay (which decision is not challenged here), plaintiff sought to go further and to employ the courts’ assistance in collecting a money judgment provided for in the unconscionable contract clause at issue.

H* ^ H*

■ It was defendant’s position throughout that even had the contract relied upon by plaintiff been renewed by inference, its terms were unenforceable because the federal and Pennsylvania constitutions do not permit judicial enforcement of DeMuth’s blatantly discriminatory interference with Miller’s right to practice his profession without regard to his sexual orientation, or any other irrational classification. [Emphasis added]

At first blush, it appears that appellate counsel seeks to invalidate Paragraph 8’s 125% penalty provision, which prohibits the appellant from initiating a competitive business within 50 miles of the appellee’s clients and within 5 years of leaving the appellee’s employ. “It is the court’s enforcement of that penalty [provision] which constitutes state action, and which is at issue in this appeal.” Id. Yet, the issue is clouded by the appellant linking the enforceability of Paragraph 8 to a form of punishment for his sexual preference under the guise of constitutional law (federal and state) or public policy.

One cannot state that the dismissal aspect of the case is not being challenged, then in the next breath equate the enforcement of a non-competition clause as appears in Paragraph 8 as an endorsement of discrimination premised upon sexual orientation violative of constitutional law and public policy. As a result, we do not read the appellant’s position to be one of assailing his termination of employment because of sexual orientation as violative of public policy or constitutional law, be it state or federal in scope. Rather, we interpret the appellant’s complaint to consist of a challenge to the enforcement of the non-competition clause as proscribed by public policy, statutory law, or federal or state constitutional law.

To explicate, the money damages awarded the plaintiff were not because the defendant was a homosexual. On the contrary, an award in favor of the plaintiff was made with the jury’s finding that the defendant had violated the non-competition clause of the contract by soliciting seventeen (17) clients of the plaintiff. This is the only logical inference to be drawn from the verdict in light of evidence wherein the parties stipulated to money damages of $110,000.00 on the contract claim. See N.T. 6/22-23/93 at 99; Plaintiffs Complaint, Paragraph 13. To hold that the jury could issue damages in the amount stated because the defendant breached the terms of the contract solely for being a homosexual would be at odds with the clear language of the agreement allowing for a 125% penalty payment if the defendant were to compete with the plaintiff within 50 miles and 5 years after terminating his employment.

Because we view the plaintiffs suit as one seeking remuneration for a loss of business attributable to the defendant’s solicitation of his clients, which activated Paragraph 8 of the contract allowing for damages of “125 percent of the previous twelve months’ charges for each of Plaintiffs clients who retained Defendant to provide professional services for them following his termination,” (see Complaint, Paragraph 13), we focus on the propriety of the non-competition clause. Nevertheless, with the defendant’s failure to mount an assault on this segment of the contract at any level of this lawsuit, we find the matter waived. See McGonagle, supra.

Lastly, we turn to the appellant’s contention that this Commonwealth’s courts’ enforcement of the penalty provision (restrictive covenant) of the contract constitutes state action violative of the equal protection and due process clause of the federal and Pennsylvania Constitutions.

“A plaintiff suing for an alleged breach of his constitutional rights has an obvious burden of proving the existence of those facts which make out the breach.” Doe v. Gates, 981 F.2d 1316, 1323 (D.C.Cir.1993). Here, the appellant has pointed to no evidence to show such a breach.³

At trial, the plaintiff testified that the defendant was not discharged only because of his sexual predilections. It was the fact that the defendant communicated on a local television station his views concerning a controversial issue (gay and lesbian bashing on behalf of a Harrisburg organization opposed to such conduct). The plaintiff believed that such outspoken remarks by the defendant would be imputed to the business because of the defendant’s employee status. Further, clients and prospective clients might be offended by the remarks and choose not to do business with the plaintiffs firm. Also, the plaintiff made reference to his loss of trust in the defendant with regard to business dealings given the defendant’s failure to disclose his homosexuality during the 5 years of employment. .

At bar, the appellant has not claimed to have been treated discriminatorily because he is a male, but rather because he is a homosexual who chose to publicize his sexual preference. This type of claim is not actionable under any Pennsylvania statute or its constitution and is certainly not in violation of the doctrines of due process and equal protection in the Fourteenth Amendment to the U.S. Constitution. See Holloway v. Arthur Andersen and Co., 566 F.2d 659, 644 (9th Cir.1977); Acanfora v. Bd. of Education of Montgomery Cty., 491 F.2d 498 (4th Cir.1974), cert. denied, 419 U.S. 836, 95 S.Ct. 64, 42 L.Ed.2d 63 (1974).

It surely follows that, because the defendant agreed to the terms of his contract for a period of 5 years without objection or renegotiation, he must be held to adhere to its (non-competition) terms, absent any evidence of a clear violation of public policy which we have not detected here. The courts, as extensions of the state, may not intervene to protect employees from treatment that is merely arbitrary or unfair, the remedy for which is resignation or renegotiation of the terms of employment. The appellant intended doing the latter but never took the initiative. See Madsen v. Erwin, 395 Mass. 715, 481 N.E.2d 1160 (1985).

Further, our review of the record indicates that the appellee’s suit was more the product of the appellant’s opening a competing business and soliciting some of the appellee’s clients in the course of doing so and not because of any sexual predilections of the appellant.

Had the appellee not lost his clients and money to the appellant’s competing business, it is unlikely that any lawsuit would have been instituted. See Plaintiff’s Complaint, Paragraphs 8, 9, 13-16. But, with the non-competition clause in effect and agreed to by the appellant, enforcement of its terms was proper under the circumstances of this case without violating any public policy or constitutional positions regarding homosexuals and the private sector employment arena. The absence of evidence to the contrary undermines the appellant’s request for either judgment notwithstanding the verdict or a new trial.⁴

Judgment affirmed.

OLSZEWSKI, J., files a Concurring Opinion. JOHNSON, J., files a Concurring and Dissenting Opinion.

1 . From the record we glean the following sequence of events: 1) June 30, 1993, the defendant’s post-trial motions were filed; 2) September 23, 1993, the defendant’s attorney’s petition for admission pro hac vice was granted; 3) November 24, 1993, trial counsel’s petition to withdraw and new counsel's entry filed; and 4) December 20, 1993, trial court granted post-trial motions in part.

2 . Interestingly, the Statute of Frauds issue upon which Superior Court was reversed was the issue Superior Court found preserved even though raised for the first time in the appellant’s post-trial supplemental brief, argued at oral argument and addressed by the trial court despite the appellee's waiver contention. The Pennsylvania Supreme Court did not question the propriety of the preservation issue.

3 . The appellant cites Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948), for the proposition that a state court’s enforcement of a penalty provision of a restrictive covenant based on one’s race or color constitutes state action allowing for the scrutiny of such penalty provision under the federal constitution's Fourteenth Amendment due process and equal protection precepts.

In Shelley, homeowners had executed contracts with clauses restricting the sale of their real estate to Caucasians. When some homes were sold to blacks, the remaining homeowners filed suit to enforce the restrictive covenants. The United States Supreme Court noted that the inhibitions of the constitutional provisions applied only to governmental action and not to actions between private property owners. Nonetheless, the Court ultimately ruled that the restrictive covenants constituted a pattern of discrimination violative of the Fourteenth Amendment; to-wit:

We have noted that previous decisions of this Court have established the proposition that judicial action is not immunized from the operation of the Fourteenth Amendment simply because it is taken pursuant to the state's common-law policy. Nor is the Amendment ineffective simply because the particular pattern of discrimination, which the State has enforced, was defined initially by the terms of a private agreement. State action, as that phrase is understood for the purposes of the Fourteenth Amendment, refers to exertions of state power in all forms. And when the effect of that action is to deny rights subject to the protection of the Fourteenth Amendment, it is the obligation of this Court to enforce the constitutional commands.

Note 3 — Continued

We hold that in granting judicial enforcement of the restrictive agreements in these cases, the States have denied petitioners the equal protection of the laws and that, therefore, the action of the state courts cannot stand. We have noted that freedom from discrimination by the States in the enjoyment of property rights was among the basic objectives sought to be effectuated by the frames of the Fourteenth Amendment. That such discrimination has occurred in these cases is clear. Because of the race or color of these petitioners they have been denied rights of ownership or occupancy enjoyed as a matter of course by other citizens of different race or color. The Fourteenth Amendment declares "that all persons, whether colored or white, shall stand equal before the laws of the States, and, in regard to the colored race, for whose protection the amendment was primarily designed, that no discrimination shall be made against them by law because of their color.” Strauder v. West Virginia, supra, 100 U.S. [303] at 307, 25 L.Ed. 664 [(1879)]. Only recently this Court has had occasion to declare that a state law which denied equal enjoyment of property rights to a designated class of citizens of specified race and ancestry, was not a legithnate exercise of the state’s police power but violated the guaranty of the equal protection of the laws. Oyama v. California, 1948, 332 U.S. 633, 68 S.Ct. 269, 92 L.Ed. 249. Nor may the discriminations imposed by the state courts in these cases be justified as proper exertions of state police powers. Cf. Buchanan v. Worley, supra [245 U.S. 60, 38 S.Ct. 16, 62 L.Ed. 149 (1917)].

334 U.S. at 20-21, 68 S.Ct. at 846 (Footnotes omitted; emphasis added). Protections against discrimination in the enjoyment of property rights comes within the ambit of the Fourteenth Amendment; to-wit:

The Supreme Court has long held that the constitutional guarantee of due process extends to protect property interests, broadly defined as the “interests that a person has already acquired in specific benefits.” Board of Regents v. Roth, 408 U.S. 564, 576, 92 S.Ct. 2701, 2708, 33 L.Ed.2d 548 (1972). Property interests in employment are not themselves constitutionally created; rather, they are derived from independent sources, such as statutes, regulations, ordinances, or “existing rules or understandings ... that secure certain benefits and that support claims of entitlement to those benefits.” Id. at 577, 92 S.Ct. at 2709; Perry v. Sindermann, 408 U.S. 593, 601-02, 92 S.Ct. 2694, 2699-2700, 33 L,Ed.2d 570 (1972). The rules and understandings on which an employee bases his Fifth Amendment claims, however, must create an “objectively reasonable expectation” of continued employment. Hall v. Ford, 856 F.2d 255, 266 (D.C.Cir. 1988).

Doe v. Gates, 981 F.2d 1316, 1320 (D.C.Cir.1993).

Shelley and Doe, supra, acknowledge the existence of property rights which may not be infringed by discriminatory action violative of the U.S. Constitution. Instantly, however, the appellant is not complaining about the denial of a property right (employment), an issue the appellant excluded specifically from appellate review in his brief at 9. This restricts the appellant's argument on appeal to the implementation of a penalty provision claimed to be violative of his federal and State constitutional rights to due process and equal protection.

Note 3 — Continued

We find that Paragraph 8’s penalty section is not at odds with the appellant’s constitutional rights. It was triggered with the appellant's dismissal for espousing homosexual views reflective of his employment status. It was not until the appellant set up a competing business against the plaintiff with customers from the plaintiff that suit was instituted in compliance with Paragraph 8. This aspect of the contract is not challenged and was agreed to by the appellant without objection or any attempt to renegotiate its terms. Thus, the appellant will not be heard to complain now of its enforcement.

4 . Parenthetically, we would note that the appellant's arguments of discrimination in the work place, directed at gays and lesbians, would be better directed toward the Legislature (the real body politic) to effectuate a change in the treatment of those whose sexual preferences impact upon their work environment. See Voyles v. Ralph K. Davies Medical Center, 403 F.Supp. 456 (N.D.Calif.1975); Siniscalco, Gary R., Homosexual Discrimination in Employment, 16 Santa Clara L.Rev. 495 (1976).

The altering of societal norms is a process which is incremental at best, but we are not presented with the legal and factual scenario requiring our inquiry into the area to accelerate change which affects homosexuals in the work environment. This will be left for another day where the issues are preserved and articulated with clarity and not requiring this Court to extend itself to reach for issues to decide where none exist in the record as presented on appeal. The appellant's contentions to the contrary are not persuasive.