July 17, 2003
HOWARD UNIVERSITY, APPELLANT,
HAROLD E. LACY, JR., APPELLEE.
Appeals from the Superior Court of the District of Columbia (CA3012-99) (Hon. Susan R. Winfield, First Trial Judge) (Hon. Mary Ellen Abrecht, Second Trial Judge)
Before Schwelb, Farrell, and Washington, Associate Judges.
The opinion of the court was delivered by: Schwelb, Associate Judge
Argued June 25, 2003
This is an ap peal by Howard University from a judgment in favor of Harold E. Lacy, Jr., for breach of an alleged contract of employment. Lacy was discharged following an incident on April 6, 1996, in which he allegedly placed a student in an illegal chokehold.
The alleged contract on which Lacy's case is based was the 1980 edition of the Howard University Employee (Non-Faculty) Handbook. The Handbook provides in substance that although temporary or probationary employees may be terminated at any time, regular employees may be discharged only for unsatisfactory work performance, neglect of duty, or conduct incompatible with the welfare of the University. The Handbook also sets forth specific disciplinary and grievance procedures. At the same time, it is stated on the first page of the Handbook that "[t]his document is not to be construed as a contract." In the Handbook, the University also reserves to itself the exclusive discretion to exercise traditional management prerogatives, which include the sole authority to "select, hire, promote, demote, suspend [and] terminate . . . employees." *fn1 (Emphasis added.)
The case was tried in two parts before two different judges and two different juries. In October 2001, in a trial over which Judge Susan R. Winfield presided, the jury found that the University had discharged Lacy without good cause, in breach of the alleged employment contract. The jurors were, however, unable to agree on the is sue of damages. A second trial, limited to damages alone, was held in April 2002, with Judge Mary Ellen Abrecht presiding. The jury at the second trial returned a verdict in Lacy's favor in the total amount of $265,000. Judge Abrecht entered judgment in conformity with the verdict.
On appeal, Howard University contends, inter alia, that Judge Winfield erred by ruling as a matter of law that the Handbook constituted an enforceable contract and by precluding the University from arguing the contrary to the jury. *fn2 We agree with the University on the issue of liability .
The University also claims that Judge Abrecht committed reversible error with respect to the award of damages. We conditionally sustain the awards of $121,000 for front pay and $120,000 for back pay, *fn3 but vacate as unduly remote and speculative the award of $24,000 in tuition remission.
Following Lacy's institution of this action, the University filed a motion for summary judgment. The University contended, as a matter of law, that in light of (1) the statement in the Handbook that the document is not a contract, and (2) the University's retention in the Handbook of the authority to terminate employees, the Handbook did not constitute an enforceable employment contract. Consistently with authorities holding that, in similar circumstances, the presence of such disclaimers creates an ambiguity but does not conclusively negate the existence of a contract, see, e.g., Strass v. Kaiser Found. Health Plan of Mid-Atlantic, 744 A.2d 1000, 1011-14 (D.C. 2000); Yesudian, supra, note 1, 332 U.S. App. D.C. at 72-73, 153 F.3d at 747-48, Judge Winfield denied the University's motion.
In advance of trial, Lacy requested the court to rule that, under the doctrine of offensive collateral estoppel, the University should be precluded from contending that the Handbook did not constitute an enforceable contract. Lacy claimed - inaccurately, as we show at page 5, infra, and as his counsel acknowledged at oral argum ent - that juries in three previous cases, namely Law v. Howard Univ., 558 A.2d 355 (D.C. 1989); Howard Univ. v. Baten, 632 A.2d 389 (D.C. 1993); and Yesudian, 332 U.S. App. D.C. at 72-73, 153 F.3d at 747-48, had fo und the Handbook to be a contract.
We have stated that collateral estoppel, also known as issue preclusion,
renders conclusive in the same or a subsequent action determination of an issue of fact or law when (1) the issue is actually litigated and (2) determined by a valid, final judgment on the merits; (3) after a full and fair opportunity for litigation by the parties or their privies; (4) under circumstances where the determination was essential to the judgment, and not merely dictum.
Davis v. Davis, 663 A.2d 499, 501 (D.C. 1995) (quoting [Washington Med. Ctr., Inc. v. Holle, 573 A.2d 1269, 1283 (D.C. 1990)] (other citations omitted). "Offensive use of collateral estoppel arises when a plaintiff seeks to estop a defendant from relitigating the issues which the defendant previously litigated and lost against another plaintiff." Ali Baba Co. v. WILCO, Inc., 482 A.2d 418, 421-22 (D.C. 1984) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 329 (1979)).
Newell v. District of Colum bia, 741 A.2d 28, 36 (D.C. 1999) (emphasis added).
For offensive collateral estoppel to be properly invoked, "[t]he issue to be concluded must be the same as that involved in the prior action[, and] must have been raised and litigated, and actually adjudged." Ali Baba Co., 482 A.2d at 421 n.6 (quoting 1B MOORE'S FEDERAL PRACTICE ¶ 0.443 (2d ed. 1982)) (emphasis added); Newell, 741 A.2d at 36. "We apply the doctrine of offensive collateral estoppel with some caution . . . because it presents issues relating to . . . potential unfairness to a defendant." Newell, 741 A.2d at 36 (internal quotation marks omitted); Ali Baba Co., 482 A.2d at 422. As we stated in Ali Baba Co., 482 A.2d at 422 and reiterated in Newell, 741 A.2d at 36, we review the trial court's application of the doctrine of offensive collateral estoppel for abuse of discretion.
Lacy's attempt to invoke offensive collateral estoppel was based on an erroneous premise. An examination of the opinions in Law and in Baten reveals that the question whether the Handbook constituted a contract was not contested or "actually litigated," Newell, 741 A.2d at 36, in either case. At oral argument before this court, counsel for Lacy acknowledged this to be true. Nevertheless, the trial court, explicitly treating as correct Lacy's claim that three juries had decided the issue against the University, sustained the application of the doctrine of offensive collateral estoppel. We cannot agree with this ruling.
The exercise of discretion must be based on a firm factual foundation, and the court abuses its discretion if the stated reasons for its actions do not rest upon a sufficient factual predicate. See In re J.D.C., 594 A.2d 70, 75 (D.C. 1991); Johnson v. United States, 398 A.2d 354, 364 (D.C. 1979). In this case, contrary to the plaintiff's representation and the trial court's assumption, there was only a single contested jury determination - that in Yesudian - that the Handbook constituted a contract between the employer and an employee. *fn4 Given the restraint with which offensiv e collateral estoppel should be invoked, Newell, 741 A.2d at 36, we do not think that a single verdict in a markedly different case *fn5 supports issue preclusion in Lacy's favor here.
This court has repeatedly held, and indeed it is undisputed in this case, the Roberts footnote (favoring the University) to the contrary notwithstanding, that the Handbook is ambiguous with respect to the critical question whether the parties have entered into an employment contact. See, e.g., Yesudian, 332 U.S. App. D.C. at 72-73; 153 F.3d at 747-48; Dantley, 801 A.2d at 964-65. Where an ambiguity is present, the intent and understanding of the parties is of critical importance. "Extrinsic evidence of the parties' subjective intent may be resorted to . . . if the document is ambiguous." 1010 Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199, 205 (D.C. 1984). "In order to form a binding agreement, both parties must have the distinct intention to be bound; without such intent, there can be no assent and therefore no contract." Edmund J. Flynn Co. v. LaVay, 431 A.2d 543, 547 (D.C. 1981). Further, in determining whether the parties entered into a contract, the intent of each party must be "closely examined." Jack Baker, Inc. v. Office Space Dev. Corp., 664 A.2d 1236, 1239 (D.C. 1995). That "close examin[ation]" surely requires a probing inquiry into the understanding of each party to the alleged contract regarding its m eaning and effect. This inquiry is not to be foreclosed by a jury verdict in a single and, in our view, quite distinguishable case. We are therefore unable to agree with the trial court's initial disposition of Lacy's claim of offensive collateral estoppel.
Following Judge Winfield's initial ruling, the University filed a motion for reconsideration. The judge denied the motion, but she apparently revised, in part, the grounds for her decision:
Defendant cites Newell for the proposition that offensive collateral estoppel only applies when the same factual issues are presented in subsequent cases. Defendant claims that the intent of the parties to form a contract is factually relevant to each case. Defendant misunderstands the application of offensive collateral estoppel. Under defendant's argument, offensive collateral estoppel would never be allowed because each new plaintiff would present new issues of intent. But where the contract here is unambiguous, intent of the parties is not an issue. Offensive collateral estoppel prevents unnecessary relitigation of the issue.
The precise meaning of the italicized phrase is unclear. The judge obviously did not mean, and could not have m eant, that a Handbook containing an explicit statement that it is not a contract is nevertheless, unambiguously, an enforceable employment contract. Indeed, the authorities on which the judge relied, including Yesudian, explicitly hold that the Handbook is ambiguous, and not unambiguous, with respect to whether or not the Handbook imposes a contractual obligation on the U niversity. Further, as we have noted at page 6, the existence of am biguity renders inquiry into the intent of the parties indispensable.
Notwithstanding these considerations, the case w ent to trial, and the judge effectively instructed the jury that the Handbook was an enforceable contract. The judge also barred the University from arguing the contrary to the jury. The first jury, as we have noted, found the University liable to Lacy, but was unable to agree on damages. *fn6
The first jury's finding in favor of Lacy on the issue of liability was predicated on what we view as an inappropriate application by the trial court of the doctrine of offensive collateral estoppel. In addition, the judge apparently concluded that the intent of the parties was irrelevant to the question whether the Handbook constituted a contract. In light of what we regard as these incorrect legal rulings, we are compelled to set aside the verdict as to liability. *fn7 Accordingly, the judgment is reversed, and the case is remanded to the trial court for a new trial with respect to liability and for further proceedings consistent with this opinion. *fn8
So ordered. *fn9