Philip Rosemann is a minority shareholder in Roto-Die, Inc., a closely held corporation. Rosemann and other family members entered into a Stock Redemption Agreement in 1978, when Rosemann received his initial Roto-Die shares by gift frоm his father. When a dispute arose concerning the redemption price under that Agreement, Rosemann commenced this diversity action, alleging that he tendered twenty shares of stock and Roto-Die “breached the Stoсk Redemption Agreement by failing and refusing to redeem the twenty (20) shares ... at present fair market value.”
The Agreement provides that, if Rosem-ann notifies Roto-Die of his desire “to sell any or all of his shares of stock ... then the Company shall purchase all of said shares of the selling shareholder at the price above set forth.” The only provision that arguably contains a “price above set forth” appears in a different paragraph of thе Agreement and states: “The value of each share of stock of the Company held by each Stockholder shall be $9.75, which is the fair market value at the date of this agreement.” The district court granted summary judgment in favor of Roto-Die, concluding that Roto-Die properly refused Rosemann’s conditional tender of the twenty shares because the Agreement unambiguously calls for a sale price of $9.75 per share. We remanded for further proceedings, concluding that the redemption price term is ambiguous and extrinsic evidence is needed to determine the intent of the contracting parties.
Rosemann v. Roto-Die, Inc.,
I. The Jury Instructions.
The district court based its verdict directing instruction on Missouri Approved Instruction 26.06, which applies when the “terms and breach” of a contract are at issue. This was clearly the correct approach. “In any case where an issue of ambiguity exists, the terms of the contract are in dispute; and MAI 26.06 must be the starting point for the instruction of the jury.”
Busch & Latta Painting Corp. v. State Highway Comm’n,
Your verdict must be for [Rosemann] if you believe:
First, [Rosemann] and [Roto-Die] entered into an agreement whereby [Roto-Die] would pay [Rosemann] ... current fam market value of [Roto-Die]’s stock upon request of [Rosemann] that [Roto-Die] purchase any or all of [Rosemann]’s stock; and
Second, [Rosemann] performed his agreement; and
Third, [Roto-Die] failed to perform its agreement; and
Fourth, [Rosemann] was thereby damaged.
On appeal, Rosemann first argues that the district court violated the law of the case doctrine by refusing to instruct the jury that the price term in the Agreement was ambiguous when our prior opinion so held. This contention is without merit. Our prior opinion reversed the grant of summary judgment and remanded for further proceedings. We did not address the question of jury instructions; indeed, we did not direct that the issue be submitted to a jury. See Busch & Latta, 597 S.W.2d at 198 (“the mere fact of ambiguity does not automatically require intervention of a jury”).
Rosemann next argues that the failure to give an explicit ambiguity instruction misled the jurors into believing “they could find in favor of Rosemann only if the Agreement is definitive concerning the price term.” This was unfairly prejudicial, Rosemann explains, because to prevail he did not have to convince a jury “that the Agreement has an unambiguous price term — fair market value.” Like the district court, we disagree. Rosemanris complaint alleged that Roto-Die breached the Agreement by refusing to redeem the tendered twenty shares “at present fair market value.” Prior to trial, in an order not challenged on appeal, the district court ruled, in accordance with the complaint, that Rosemann “is precluded from seeking any valuation for his shares except fair market value.” Under Missouri law, when the parties urge conflicting interpretations of an ambiguous term, “[t]he verdict directing instruction must hypothesize the proponent’s version of the agreement.”
Graham v. Goodman,
II. The Challenged Evidentiary Rulings.
A. A Parol Evidence Rule Issue. Ro-semann argues that the district court misapplied the Missouri parol evidence rule in limiting the testimony of Rosemann’s brother Michael. In 1988, Roto-Die purchаsed Michael’s five thousand shares óf stock for $850,000 ($170 per share) under a Redemption Agreement expressly providing that it “contains the entire understanding of the parties hereto.” The parties to the agreement included Rosemann, who signed as a “Non-selling Shareholder” and was an “Obligor” under a portion of the agreement that gave Michael the possibility of an additional payment if Roto-Die was sold to a third party within the following ten years. At trial, Rosemann offered evidence intended to show that Michael in fact received $3,000,000 rather than $850,000 for his stock. The district court excluded that evidence as contrary to the parol evidence rule. As the parol evidence rule is a rule of substantive law, we apply Missouri law in resolving this issue.
See Union Elec. Co. v. Fundways, Ltd.,
Under Missouri law, “Extrinsic evidence of a prior or contemporaneous agreement is generally not admissible to vary, add to, or contradict the terms of an unambiguous and complete written document.”
Union Elec.,
In addition, the main issue at trial was whether the redemption pricе in the. 1978 Stock Redemption Agreement was fair market value, as Rosemann contended, or $9.75 per share, as Roto-Die contended. Evidence that Roto-Die paid Michael $170 per share in 1988 was relevant to that issue, admittеd at trial, and emphasized by Rosemann to the jury. In these circumstances, -whether other transactions between Michael and Roto-Die had the effect of increasing the $850,000 that Michael received for his stock would not have affected the jury’s decision to reject Rosem-ann’s claim that current fair market value is the redemption price that he must be paid under the Stock Redemption Agreement.
This contention is without merit. Rosemann failed to preserve any evidentiary issue at trial because he referred to the transfer in opening statement, testified to it on direct examination, and did not object to crоss examination on the issue.
See Huff v. Heckendorn Mfg. Co.,
C. Buyout Negotiations. Rosemann next argues that the district court improperly admitted evidence of settlement negotiations when it permitted Melvin Stanley, Rоto-Die’s President, to testify about Roto-Die’s willingness to engage Rosemann in buyout negotiations in 1997. During his case-in-chief, Rosemann introduced an exchange of letters in which Rosemann demanded that Roto-Die state a share pricе under the Agreement and Stanley responded, “we take your letter as an invitation to negotiate the buyout of your shares outside of the stock redemption agreement.” Stanley then testified for the defense, over Rosemann’s relevance objection, that the letters signaled Roto-Die’s willingness “to engage Phillip in negotiations with respect to a potential purchase of his shares outside of the stock redemption agreement.”
Assuming without deciding that Ro-semann properly preserved this issue for appeal, the district court did not err. Rosemann opened up the issue by introducing and testifying about the exchange of letters.
See Anheuser-Busch, Inc. v. John Labatt Ltd.,
D. Personal Knowledge About the Agreement. Finally, Rosem-
We affirm the judgment of the district court and grant appellant’s motion to supplement the record on appeal.