Gross v. Diehl Specialties International, Inc.

776 S.W.2d 879, 1989 WL 104590
CourtMissouri Court of Appeals
DecidedSeptember 7, 1989
Docket54293
StatusPublished
Cited by7 cases

This text of 776 S.W.2d 879 (Gross v. Diehl Specialties International, Inc.) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gross v. Diehl Specialties International, Inc., 776 S.W.2d 879, 1989 WL 104590 (Mo. Ct. App. 1989).

Opinion

SMITH, Presiding Judge.

Plaintiff appeals from a jury verdict and resultant judgment for defendant in a breach of employment contract case. He also appeals from the granting of a permanent injunction by the court on defendant’s counterclaim.

Plaintiff was employed under a fifteen year employment contract originally executed in 1977 between plaintiff and defendant. Defendant, at that time called Dairy Specialties, Inc., was a company in the business of formulating ingredients to produce non-dairy products for use by customers allergic to cow’s milk. The owner of the company, Harry Schenberg, had produced such a product but the formulation was unable to withstand pastuerization by the customers to whom it was sold for processing and packaging for retail distribution. Schenberg requested plaintiff’s technical assistance in formulating the product, Vi-tamite, for commercial usage. Plaintiff successfully reformulated the product for that usage.

Thereafter, on August 24, 1977, plaintiff and defendant corporation entered into an employment contract employing plaintiff as general manager of defendant for fifteen years. Compensation was established at $14,400 annually plus cost of living increases. In addition, when 10% of defendant’s gross profits exceeded the annual salary, plaintiff would receive an additional amount of compensation equal to the difference between his compensation and 10% of the gross profits for such year. On top of that plaintiff was to receive a royalty for the use of each of his inventions and for-mulae of 1% of the selling price of all of the products produced by defendant using one or more of plaintiff’s inventions or formulae during the term of the agreement. That amount was increased to 2% of the selling price following the term of the agreement. The contract further provided that during the term of the agreement the inventions and formulae would be owned equally by plaintiff and defendant and that following the term of the agreement the ownership would revert to plaintiff. During the term of the agreement defendant had exclusive rights to use of the inventions and formulae and after the term of agreement a non-exclusive right of use.

At the time of the execution of the contract, sales had risen from virtually nothing in 1976 to $750,000 annually from sales of Vitamite and a chocolate flavored product formulated by plaintiff called Chocolite. Schenberg was in declining health and in 1982 desired to sell his company. At that time yearly sales were $7,500,000. Schen-berg sold the company to the Diehl family enterprises for 3 million dollars.

Prior to sale Diehl insisted that a new contract between plaintiff and defendant be executed or Diehl would substantially reduce the amount to be paid for defendant. A new contract was executed August 24, 1982. It reduced the expressed term of the contract to 10 years, which provided the same expiration date as the prior contract. It maintained the same base salary of $14,400 effective September 1982, thereby eliminating any cost of living increases incurred since the original contract. The 10% of gross profit provision remained the same. The new contract provided that plaintiff’s inventions and formula were exclusively owned by defendant during the term of the contract and after its termination. The 1% royalty during the term of the agreement remained the same, but no royalties were provided for after the term of the agreement. No other changes were made in the agreement. Plaintiff received no compensation for executing the new contract. He was not a party to the sale of the company by Schenberg and received nothing tangible from that sale.

After the sale plaintiff was given the title and responsibilities of president of defendant with additional duties but no additional compensation. In 1983 and 1984 the *882 business of the company declined severely and in October 1984, plaintiff’s employment with defendant was terminated by defendant. This suit followed.

Plaintiff’s action was in four counts. The first sought damages for breach of contract arising from an unlawful termination of plaintiff. That count was tried to the jury on the issue of whether defendant had “cause” to terminate plaintiff under the employment agreement. The jury found for defendant. Plaintiff raises three evidentiary issues relating to that count but does not challenge the jury verdict. Count II sought a declaratory judgment as to the ownership and right of use of plaintiff’s formulations. Count III sought an accounting and money judgment based upon the use of plaintiff’s formulations by defendant after plaintiff’s termination. Those counts were resolved by the trial court’s holding that the operative contract at the time of termination was the 1982 agreement, and pursuant thereto defendant was the owner of the formulae at the time of termination.

Count IV dealt with monies owed to plaintiff at the time of termination. The evidence, and the admissions by defendant’s witnesses on the stand, established that defendant did indeed owe plaintiff a substantial amount of money on termination which has never been paid. Defendant asserted some relatively minor offsets to that amount, some of which plaintiff acknowledged and some of which he denied. In any event it is clear from the testimony that defendant owed plaintiff something. The trial court sustained plaintiff’s motion for directed verdict on this count and Count IV was not submitted to the jury. Unfortunately the record, the court, and the parties were not clear whether the directed verdict applied to liability only or liability and damages. In the judgment rendered after the jury verdict no reference was made to Count IV and the judgment decreed simply that plaintiff “take nothing by reason of this cause of action.” The matter of the absence of an award to plaintiff on Count IV was raised in plaintiff’s motion for new trial. Defendant acknowledged that the court had directed a verdict for plaintiff on “liability only” and contended that the jury had ruled against plaintiff on the issue of damages. The court refused to amend the judgment and denied plaintiff’s motion for new trial.

Defendant counterclaimed for an injunction to prevent plaintiff from using the formulations he had originated. Based upon the trial court’s holding that the 1982 agreement was the operative contract, the injunction was ordered by the trial court.

We turn first to plaintiff’s three trial or evidentiary points of error. The first concerns the trial court’s restriction of cross-examination of one of defendant’s witnesses. The witness testified early in the defendant’s case on a broad range of matters. She was fully cross-examined at that time. Her direct testimony was, however, restricted by an in limine ruling of the trial court that she would not be allowed to testify concerning plaintiff’s treatment of employees of defendant while he was president of that company. Later in the case defendant brought to the attention of the trial court that the restricted testimony included testimony that plaintiff ordered two employees not to honor subpoenas to testify in a worker’s compensation hearing involving a claim by a former worker against defendant. The court changed its ruling on the in limine motion and authorized the recall cf the witness to testify in that limited area. Plaintiff then sought to cross-examine the witness on matters unrelated to her recall testimony and which could have been and in some cases were, covered on her original cross-examination.

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Cite This Page — Counsel Stack

Bluebook (online)
776 S.W.2d 879, 1989 WL 104590, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gross-v-diehl-specialties-international-inc-moctapp-1989.