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McNeff v. Emmert

Court of Appeals of Oregon

December 26, 2013

CYNTHIA K. MCNEFF, an individual, Plaintiff-Appellant,
TERRY W. EMMERT and EMMERT INDUSTRIAL CORP., an Oregon corporation, Defendants-Respondents.

Argued and submitted on March 13, 2013.

Multnomah County Circuit Court 080812489 Youlee Y. You, Judge.

John M. Berman argued the cause and filed the briefs for appellant.

Judy Danelle Snyder argued the cause for respondents. With her on the brief was Robert Snee.

Before Schuman, Presiding Judge, and Wollheim, Judge, and Duncan, Judge.


Plaintiff Cynthia McNeff was hired by defendant Terry Emmert to work as in-house legal counsel for his company, Emmert Industrial Corp. (EIC), which is also a defendant in this case. Less than a year into the job, plaintiff was fired. She subsequently brought breach of contract, tort, and employment discrimination claims against defendants. In response, defendants counterclaimed for fraud, breach of contract, and malpractice.

After the parties presented their cases, the trial court directed a verdict against plaintiff on her breach of contract and fraud claims and sent the remainder of her claims to the jury. On one of plaintiff's claims (defamation), the jury found in her favor and awarded damages of $1, 000 against each defendant. On several other claims (intentional infliction of emotional distress, assault and battery, and wrongful discharge), the jury returned a defense verdict. And on her final claim (workplace discrimination based on a hostile work environment), the jury returned something of a hybrid verdict: The jury found that defendants had discriminated against plaintiff "on account of gender by creating a hostile work environment" and should be punished by an award of punitive damages; yet the jury answered "$0.00" when asked to award noneconomic damages on that claim. The trial court declined to resubmit the verdict form to the jury, instead treating the jury's answer of "$0.00" in damages as a verdict for the defense.

As for the counterclaims by defendants, the jury found that plaintiff had been negligent in handling a number of matters in her role as legal counsel but that her negligence had resulted in a loss to defendants in only one of those matters. The damages for that malpractice, which the jury concluded were $371.00, were further reduced to $241.15 by the jury's finding that Emmert's own negligence caused 35 percent of the loss. The trial court then entered a money judgment in favor of plaintiff in the amount of $1, 758.85--her $2, 000 recovery for defamation, less the offsetting malpractice award of $241.15. The court later entered a supplemental judgment concerning an award of costs.

Plaintiff now appeals the judgment and supplemental judgment, raising four assignments of error. We write to address two of those assignments of error. In her first assignment, she argues that the trial court erred in taking her fraud claim away from the jury by way of a directed verdict. In her third assignment, she contends that the jury's verdict regarding a hostile work environment was internally inconsistent and should have been sent back to the jury for clarification. As discussed below, we conclude that the judgment must be reversed and remanded for a new trial on plaintiff's fraud and hostile work environment claims.[1]


A. Background

In plaintiff's first assignment of error, she argues that the trial court erred in directing a verdict against her on her fraud claim. In this posture, we state the facts underlying that claim in the light most favorable to plaintiff. See Mauri v. Smith, 324 Or 476, 479, 929 P.2d 307 (1996) (describing the standard for review of a directed verdict).

In December 2006, plaintiff attended a holiday party put on by a group of lawyers. At the time, plaintiff was licensed to practice law but was not making her living as a lawyer. Rather, she was managing a small demolition company that she had opened and run since 2000. At the holiday party, plaintiff struck up a conversation with another attorney, Ken Bauman, who was retiring from the United States Attorney's Office. She and Bauman talked about his career and also about her experience running a demolition company.

Bauman, it turned out, was a longtime friend of Terry Emmert. In early 2007, after his retirement, Bauman began working in an advisory capacity for Emmert and EIC, his industrial moving company that transports houses, equipment, and other large items. After observing EIC's operations, Bauman decided that EIC would benefit from hiring another lawyer, and he suggested to Emmert that plaintiff, with whom Bauman had stayed in contact, might be a good fit because of her dual background in the law and industry. (In addition to running a demolition company, plaintiff had worked as an environmental health technician and an industrial hygienist technician.) Bauman arranged a meeting, and the three of them had lunch together.

The lunch meeting resembled a job interview. Emmert asked plaintiff about her experience and her thoughts about legal work. Mostly, though, Emmert voiced complaints about his present attorneys (Bauman excluded) and his dissatisfaction with their performance. After the lunch, Emmert wanted to show plaintiff some of his business operations, and he took her to some of his facilities.

Following the lunch meeting, Emmert and plaintiff continued a dialogue about the possibility of her working for Emmert. One evening, Emmert called plaintiff and "suggested that [she] come over and chat with him about this job that he was offering [her]." During that meeting at Emmert's home, they had "some more in-depth conversations about what [Emmert] needed and what he wanted and his--a lot about his dissatisfaction with things that were going on with his business."

As they continued to discuss a job offer, plaintiff "told [Emmert] that in order to work for him, [she] would have to close [her] demolition company." At that particular time, plaintiff was also starting another company to install solar panels on commercial buildings, and she had started the licensing process for that type of work. She explained her plans to do solar work to Emmert and told him, "[I]f I was going to go to work for him and--and let these things go, I wasn't going to do this without any type of guarantee of employment." Emmert replied that he understood that.

During that same discussion about guaranteed employment, plaintiff and Emmert discussed her desire for a written contract. She told Emmert that, if she were "going to give up these companies to go work for you, I would need something--something in writing that stated that I would have an employment contract for term because of the risk involved of closing my companies." Emmert told plaintiff to send the contract to him through Bauman, so that Emmert's present in-house counsel, Michele Matesi, would not see it.[2]

Plaintiff sent a proposed contract to Bauman and then called him to discuss it. Bauman recommended that plaintiff delete the terms of the contract regarding a holiday schedule and benefits package, and to instead provide that those terms of employment will be "per company manual." Plaintiff made those changes and then sent the contract back to Bauman, for him to forward it on to Emmert. The proposed contract, entitled "Employment Agreement, " stated that plaintiff was to be employed for a period of 36 months[3] and that her compensation would start at $8, 850 per month and then increase each of the next two years of the contract.

At some point before she started work, plaintiff and Emmert had a phone conversation about the terms of the proposed contract. Emmert questioned why plaintiff would be receiving a significant raise each year, and plaintiff explained that she would become more valuable as she learned the company and became more efficient and useful. Emmert was satisfied with that answer, saying, "Well, that sounds reasonable." He did not question any of the other provisions in the proposed contract. He told ...

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