Tropicana Hotel Corp. v. Speer
692 P.2d 499, 1985 Nev. LEXIS 364, 101 Nev. 40 (1985)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
When parties contemplate that an agreement will become effective only when reduced to writing and signed, no binding contract is formed until the written document is executed, even if one party begins performance.
Facts:
- Mitzi Stauffer Briggs, the new controlling owner of the Tropicana Hotel, offered Donald Speer the position of general manager.
- Speer indicated he would only accept the position if he received both a generous salary and an equity interest in the hotel corporation.
- At a meeting in Atherton, California, Briggs and Speer reached an oral agreement on the terms of employment, but could not agree on the specific mechanism for transferring the stock due to tax complications.
- Following the meeting, Speer resigned from his position at the Desert Inn and began working as the general manager of the Tropicana Hotel.
- Two months later, Briggs's attorneys prepared a written employment agreement reflecting the Atherton discussions, which Briggs signed and sent to Speer.
- On the advice of his counsel, Speer never signed the written employment agreement, intending to withhold his signature until a satisfactory stock option agreement was also prepared and signed by Briggs.
- Disagreements over hotel management arose, and Speer left his position at the Tropicana after two of his trusted subordinates were fired by the hotel's executive committee.
Procedural Posture:
- Donald Speer filed suit against the Tropicana Hotel Corporation in district court, alleging breach of an oral employment contract.
- Speer later amended his complaint to add a cause of action against Mitzi Stauffer Briggs for breach of an oral stock option agreement.
- The district court, sitting without a jury, found that a binding oral employment contract existed and had been breached, awarding liquidated damages to Speer.
- The district court also found the oral stock option agreement was unenforceable under the statute of frauds.
- Both Tropicana Hotel Corporation (appellant) and Speer (appellant) appealed the district court's judgment to the Supreme Court of Nevada.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a binding oral employment contract exist when the parties contemplated a formal written agreement and one party subsequently refuses to sign the prepared written draft that accurately reflects the oral terms?
Opinions:
Majority - Gunderson, J.
No, a binding oral employment contract does not exist under these circumstances. When the evidence clearly shows that the parties intended to be bound only by a signed written agreement, no enforceable contract is formed. Speer's own conduct—specifically, his deliberate refusal to sign the written employment agreement to pressure Briggs on the separate stock option issue—is inconsistent with his claim that the oral agreement was intended to be immediately binding. Although performance can sometimes indicate a binding oral agreement, it does not compel that conclusion when a party's other actions clearly demonstrate an intent not to be bound until a formal writing is executed. The court also held that there was no meeting of the minds on the stock option agreement and that Speer's departure did not constitute a constructive discharge.
Dissenting - Shearing, D.J.
Yes, a binding oral agreement existed. There was substantial evidence in the record to support the trial court's finding that a binding agreement was consummated and subsequently breached by Tropicana. The majority improperly substituted its own findings of fact for those of the trial judge, who had the opportunity to observe the witnesses and assess their credibility. The trial court's judgment awarding Speer damages for breach of the employment contract should be affirmed.
Analysis:
This decision reinforces the principle that the parties' intent is paramount in contract formation. It clarifies that even when parties reach an oral agreement on terms and one party begins performance, no binding contract exists if they manifested a clear intent to be bound only by a subsequent written and signed agreement. The case serves as a significant precedent illustrating how a party's own conduct, such as refusing to sign a document, can be used as conclusive evidence of their intent not to be bound, undermining their later claim that a binding oral contract existed. It cautions parties against beginning performance before all contemplated formalities are finalized.
