Justia Federal District Court Opinions

Robert Kline appeals from a judgment of the District Court for Connecticut which held that defendant Kline, a citizen of Florida, had breached his employment contracts with plaintiffs, all citizens of Connecticut, and that a July 16, 1968, assignment to Kline, among others, by Annette Heyman of an option in a piece of Tampa, Florida, real estate never became effective. The court awarded plaintiffs $40,452.58 damages for breach of the employment contracts, declared that Kline was entitled to no interest in the Tampa real estate either under the July 16 assignment or as consideration for his employment services, and enjoined him from bringing any suits or making any claims regarding the property.¹

Kline and his attorneys, Harvey B. Oshins and John R. Bush, also appeal from that part of the court's judgment holding them in contempt for filing suit in the Hillsborough County Court of Florida to determine title to the Tampa land after the district court had issued a temporary restraining order (TRO) enjoining such a suit.

We hold that Kline was improperly denied a jury trial on the questions of whether he had breached his employment contracts and whether he was entitled to punitive damages as a result of Mrs. Heyman's alleged breach of her fiduciary relationship with him. The judgment that Kline had no interest in the Tampa real estate also is reversed inasmuch as its determination will depend upon questions first passed upon by the jury.

The facts of this case, undisputed except where otherwise noted are as follows:

Robert Kline was employed by Lazarus Heyman, Mrs. Heyman's husband and testator, pursuant to a written contract of March 31, 1968. The contract provided that Kline would work exclusively for Heyman in the development of real estate, particularly a 73-acre parcel of Tampa, Florida land on which Heyman had an option. In consideration for his services, Kline was to receive $20,000 per year, and a bonus if Heyman determined that one was appropriate. Kline was entitled to use the bonus money to invest as a partner to the extent of 15% in any of Heyman's real estate ventures.

In May, 1968, Lazarus Heyman died. Shortly thereafter, Kline and Mrs. Heyman orally agreed to continue Kline's employment contract. On June 15, 1968, and again on July 15, 1968, Mrs. Heyman, as executrix of her husband's estate, paid $5,000 to renew the option on the Tampa, Florida, land. On the advice of tax counsel, Mrs. Heyman, as executrix, executed an assignment of the option to herself, to her son, Samuel, to her daughter, Abigail, and to Kline on July 16, 1968. Mrs. Heyman signed only the ribbon copy which was given to Samuel to hold for her. Both Mrs. Heyman and Samuel testified that the assignment was never delivered to Kline, but that he found it going through office files. Kline testified that Samuel gave him a copy of the assignment when he returned from a business trip. Judge Timbers accepted the Heymans' version of the events and found that requisite legal delivery of the assignment had never in fact been made and thus that the assignment was ineffective.

Kline continued to work for Mrs. Heyman under the oral agreement until September 9, 1968, when they signed a new written agreement. The agreement provided that Kline would work as a developer of real estate for the Heymans and would have the right to participate in any real estate ventures entered into by the Heymans to the extent of 15%. The contract also recited that it was "understood" that Kline had "opted to participate to the extent of 15% in our Tampa venture" and that, "[a]s a 15% partner," he would be liable for his proportional share of the expenses. In accordance with his arrangement with the Heymans concerning the sharing of expenses associated with the acquisition of the Tampa land, Kline made several payments through December 1968 which totalled $13,591.62.

In August 1968, Mrs. Heyman exercised the option and the closing took place on December 9, 1968. According to Kline's brief, his interest "would have amounted to $600,000.00 to $1,000,000.00 less his 15% share of principal and costs."

In January 1969, Annette Heyman discharged Kline for alleged breaches of his employment contract. At trial Judge Timbers found, after hearing disputed evidence, that Kline had committed "numerous material" breaches of his employment contracts: e. g., submitting fraudulent expense vouchers; performing real estate services for persons other than the Heymans in violation of the exclusivity provision of the contract; accepting a kickback from one of the tenants.

On appeal, Kline argues that the district court erroneously denied his timely filed written demand, under Rule 38, F.R.Civ.P., for a jury trial on all issues so triable. We agree. Kline was denied a jury trial despite his demand therefor, because the district judge found that he had waived his right to jury trial by his counsel's actions at a pretrial conference. In our view, the record does not show any waiver of Kline's right to jury trial.

On February 12, 1970, approximately 13 months after Kline had been discharged, Annette Heyman filed suit in the District of Connecticut seeking damages for Kline's breach of contract and asking for injunctive and declaratory relief to the effect that Kline had no interest in the Tampa property. At the same time, to bar Kline from initiating any legal proceedings with respect to the land, the plaintiff moved for a TRO which Judge Timbers signed that day. No notice of this application was given to the defendant or his counsel and Mrs. Heyman's counsel merely asserted in the application that notice should not be required because "to do so would permit the immediate and irreparable injury, loss and damage to plaintiff Annette Heyman described in the verified complaint. . . ."² After Judge Timbers signed the TRO at 4:00 p. m. it was personally served on Kline at 11:30 that night in Largo, Florida.

On February 13, 1970, Kline filed a quiet title suit in the County Court of Hillsborough County, Florida, alleging his 15% interest in the 73-acre tract in Tampa.

On February 20, 1970, counsel for both parties appeared before Judge Blumenfeld in Bridgeport. Thomas J. Dolan, Esq., appeared specially for Kline and filed a motion to dismiss the complaint for lack of jurisdiction. It was agreed by counsel that the ruling on that motion and the hearing on the plaintiff's motion for a preliminary injunction should be postponed until February 24 when they could be heard by Judge Timbers who had issued the TRO. It was also agreed that the TRO would remain in effect until then.

On February 24, 1970, counsel for Mrs. Heyman filed a motion charging Kline, his New York counsel, Harvey B. Oshins, and his Florida counsel, John R. Bush, with contempt, alleging that the TRO had been violated when Kline's lawsuit was filed in Florida. The hearing of this motion and of the other pending applications were postponed until March 3, 1970 by agreement of counsel.

On March 3, 1970, Judge Timbers heard Kline's motion to dismiss and later denied it with an opinion filed March 19, 1970.³ Hearings on the motions for a preliminary injunction and for judgments of civil contempt were postponed until March 25, 1970, Kline's counsel consenting to continuance of the TRO.

On March 25, Judge Timbers held an extended conference with counsel in his chambers in order to schedule the hearings on the motion for a preliminary injunction and the motion to adjudge Kline and his attorneys in contempt. Neither party was present. Mrs. Heyman was represented by her attorneys, Jacob D. Zeldes and John R. Needle, and Kline by his attorney, Thomas J. Dolan. After some discussion, Judge Timbers suggested that the parties agree to the use of the Rule 65(a) (2), F.R.Civ.P., procedure by which trial on the merits could be consolidated with the hearing for a preliminary injunction.⁴ He also suggested that the contempt motion be heard on the same date. During this discussion, which was concerned solely with the mechanics of scheduling, the following colloquy took place:

Judge Timbers: . . . .

And I would say that I would hope to handle it myself, simply because I have been familiar with it and I have had it up to this point and it would probably save some time.

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