Chutzpah -- Stealing money and trying to enforce severance agreement
Every so often, a case comes down that requires comment, even if it is not specifically an insurance case. Such a case is Creative Consumer Concepts Inc v. Kreisler. We believe Ms. Kreisler deserves a chutzpah award for this case.
Ms. Kreisler worked for CCC. She was terminated. She was given an unsigned severance agreement. She requested and was given some additional items (such as a letter of recommendation), but these items were not put into writing. Then, she added a mutual release clause to the severance agreement, signed it and presented it to CCC’s human resource director (without advising her of the changes) who signed it on behalf of CCC. Later, it was discovered that Ms. Kreisler had embezzled over $860,000 from CCC, and had changed the severance agreement. Payments under the severance agreement were stopped, and CCC sued Kreisler for recission of the severance agreement and for various claims relating to the embezzlement. Kreisler counterclaimed for enforcement of the severance agreement, including the mutual release.
The first day of trial, CCC asked the court to let it raise the issue of the lack of authority of the human resources director to sign the modified agreement. The court reviewed this issue under a plain error standard because 1) there was no claim that the evidence fell outside the pleadings until after trial; 2) there was no contemporaneous objections to the evidence at trial; and 3) her contemporaneous objection was only as to the submission of a late brief and request for additional time which could not be construed as an objection to the evidence. The court said that while CCC should have raised this issue earlier, it was not error to permit it to address the issue at trial. The court found that “Ms. Kreisler had notice of the defense of lack of authority and, therefore, suffered no prejudice from CCC’s failure to comply with Rule 8(c). . .”
Her claim that she was entitled to a jury trial on the issue of authority to sign the agreement was without merit, since she had agreed to a bench trial. The agreement was not ratified by performance, since once it was discovered that the agreement had been changed, performance was discontinued.
Ms Kreisler also claimed error in admitting parts of her deposition at trial because she was available to testify. But Fed.R.Civ.P. 32 allows the use of a deposition of a party “for any other purpose allowed by the Federal Rules of Evidence.” The evidence rules permit the admission of a party’s deposition as a statement of a party.
Finally, Ms. Kreisler claimed the civil action should have been stayed pending the outcome of the criminal charges against her. But, because the only issue before the court in the civil action was the validity of the release provisions and the severance agreement, there was no abuse of discretion in proceeding with the civil case.
Based on the above, it is not at all surprising that the Tenth Circuit affirmed the trial court’s judgment in favor of CCC. Even if Ms. Kreisler had made a better record, I think it is doubtful the result would have been different. On the other hand, CCC is lucky that its failure to preserve its affirmative defense was allowed to be corrected by the trial court. Had the trial court gone the other way, we are not sure that the Tenth Circuit would have found an abuse of discretion. This case certainly highlights the importance of preserving a record for appeal.
