PHILLIP L. ROSEMANN, v. ROTO-DIE, INC.,

Citations: 377 F.3d 897; 64 Fed. R. Serv. 1204; 2004 U.S. App. LEXIS 15598; 2004 WL 1688545Docket: 03-2158

Court: Court of Appeals for the Eighth Circuit; July 29, 2004; Federal Appellate Court

Combined Opinion SummaryCombined Opinion Original

EnglishEspañolSimplified EnglishEspañol Fácil

Philip Rosemann, a minority shareholder in Roto-Die, Inc., initiated a legal action against the company after a dispute arose over the redemption price for twenty shares of his stock, which he alleged Roto-Die failed to redeem at fair market value as stipulated in a 1978 Stock Redemption Agreement. The Agreement indicated that upon Rosemann's request to sell his shares, Roto-Die was obliged to purchase them at a specified price, which was noted as $9.75 per share at the time of the Agreement's execution. The district court initially granted summary judgment for Roto-Die, determining the price term was unambiguous.

Upon appeal, the Eighth Circuit found the price term ambiguous and remanded the case for further proceedings, allowing the introduction of extrinsic evidence to clarify the parties' intent. After a jury trial, a verdict favored Roto-Die, prompting Rosemann to appeal again, claiming errors in jury instructions and evidentiary rulings.

The district court’s jury instructions were based on Missouri Approved Instruction 26.06, relevant for contract disputes, which correctly addressed the ambiguity in the Agreement. The court instructed that Rosemann needed to prove the existence of an agreement, his performance under it, Roto-Die's failure to perform, and his resulting damages. Rosemann contested that the district court violated the law of the case doctrine by not instructing the jury on the ambiguity of the price term, but the appellate court held this argument lacked merit, clarifying that ambiguity alone does not necessitate jury intervention without specific direction from the appellate court. The appellate court affirmed the district court's decisions.

Rosemann contends that the lack of an explicit ambiguity instruction misled the jurors into thinking they could only find in his favor if the Agreement clearly defined the price term, which he argues was prejudicial. However, both the district court and the appellate court disagree, noting that Rosemann's complaint specified that Roto-Die breached the Agreement by not redeeming shares at "present fair market value." The district court had ruled that Rosemann could only seek valuation based on fair market value, and under Missouri law, conflicting interpretations of an ambiguous term necessitate that the jury be directed to consider the proponent's interpretation. Thus, the jury was correctly instructed that Rosemann needed to prove Roto-Die's agreement to purchase his stock at fair market value, allowing him to present his case adequately.

Additionally, Rosemann argues that the district court improperly limited his brother Michael's testimony under the Missouri parol evidence rule. The Redemption Agreement, which Rosemann signed as a "Non-selling Shareholder," stated it contained the entire understanding of the parties. Rosemann sought to introduce evidence suggesting Michael received $3,000,000 for his shares instead of the agreed $850,000. The court excluded this evidence, adhering to the parol evidence rule, which prohibits the admission of extrinsic evidence to alter an unambiguous written contract. The court correctly excluded Michael's notes and testimony about prior negotiations, as these were superseded by the integrated agreement. Although Rosemann attempted to introduce evidence from separate agreements to argue Michael received more than $850,000, this was inherently contradictory to the Redemption Agreement. The district court determined that such evidence would complicate the trial and potentially confuse the jury, thus it did not abuse its discretion in excluding it.

The main issue at trial focused on whether the redemption price stated in the 1978 Stock Redemption Agreement was fair market value, as claimed by Rosemann, or set at $9.75 per share, as argued by Roto-Die. Evidence presented included Roto-Die's payment of $170 per share to Michael in 1988, which Rosemann highlighted to the jury. The outcome indicated that any other transactions involving Michael and Roto-Die did not influence the jury's decision to reject Rosemann's claim regarding the redemption price.

In 1989, Rosemann diverted $800,000 from Roto-Die to an account he controlled, which he later referred to as an "insurance policy" during his trial testimony. Although he filed a motion in limine to exclude evidence of this transfer, the district court allowed it, citing its relevance to Rosemann's belief about the redemption price. On appeal, Rosemann argued that admitting this evidence was prejudicial; however, he failed to preserve any objection as he discussed the transfer during his opening statement and testimony without objection.

Rosemann also contended that the district court wrongly admitted evidence of buyout negotiations when Roto-Die's President, Melvin Stanley, testified about their willingness to negotiate with Rosemann in 1997. The district court ruled that Rosemann opened this issue by introducing relevant letters, which allowed for Stanley's testimony to be admissible for another purpose.

Lastly, Rosemann argued that the testimonies of Roto-Die's president and attorney regarding their understanding of the price term in relation to minority shareholders should not have been allowed due to a lack of personal knowledge. The court disagreed, stating that the interpretation of ambiguous contract terms can consider the surrounding circumstances, including the parties' interpretations.

The judgment of the district court was affirmed, and the appellant's motion to supplement the appeal record was granted.