Bogue v. Palomino Petroleum, Inc.

1

NOT DESIGNATED FOR PUBLICATION

No. 119,367

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

JAMES L. BOGUE, JR.,
Appellant,

v.

PALOMINO PETROLEUM, INC.,
Appellee.


MEMORANDUM OPINION

Appeal from Sedgwick District Court; WILLIAM S. WOOLLEY, judge. Opinion filed January 21,
2020. Affirmed.

Kevin M. McMaster, of McMaster & McMaster LLC, of Wichita, for appellant.

James A. Walker and Shane A. Rosson, of Triplett Woolf Garretson, LLC, of Wichita, for
appellee.

Before ATCHESON, P.J., MALONE, J., and DANIEL D. CREITZ, District Judge, assigned.

PER CURIAM: James L. Bogue, Jr., appeals a jury verdict against him in Sedgwick
County District Court in his employment dispute with Palomino Petroleum, Inc. Bogue
contends he was due contributions to a pension plan that Palomino failed to make during
part of his two-year tenure with the company. Although Bogue has asserted several
errors, they all depend upon a letter sent on behalf of Palomino's president to him being
an employment contract guaranteeing those contributions. It isn't. We, therefore, find no
error in the jury verdict and otherwise affirm the judgment for Palomino.


2

FACTUAL AND PROCEDURAL BACKGROUND

Given the narrow legal issue, we needn't delve deeply into the background facts.
In early 2014, Palomino, an oil exploration and well-drilling company, purchased two
private aircraft and hired Bogue to maintain the planes and to generally oversee their use.
Bogue was employed elsewhere at the time and negotiated with Palomino and its
president K. Robert Watchous mostly through intermediaries. As a result, the
negotiations seem to have been somewhat convoluted; but those convolutions do not have
any direct bearing on the disputed issues.

The negotiations yielded an agreement on annual salary; contributions to a form of
retirement account known as a simplified employee pension or SEP, a kind of individual
retirement arrangement; and paid health insurance apparently among other things. Bogue
asked for something in writing from Palomino before he quit his current job. In response
to his request, he received a letter on Palomino stationery dated May 29, 2014, and signed
on behalf of Watchous. The letter, in full, stated:

"This letter is to confirm your employment with Palomino Petroleum, Inc.
effective July 7, 2014. Your salary will be $95,000 annually. You will also receive a
benefit that Palomino Petroleum, Inc. contributes 25% of your gross pay into a SEP plan.
Your benefits also includes [sic] health insurance at no cost to you.
"If you have any questions, please feel free to call."

After receiving the letter, Bogue resigned from his position with an aircraft company in
Wichita and began work at Palomino. Bogue understood he would receive the stated
salary, the SEP contributions, and the same fringe benefits as other Palomino employees.
Bogue left Palomino in mid-2016.

The crux of the dispute between Bogue and Palomino rests on the SEP
contributions. Bogue received a SEP contribution in 2014. In December 2015, Palomino
announced no SEP contributions would be made for that year because the company had
3

acquired affiliated business entities whose employees would otherwise be eligible for
those contributions—imposing a prohibitive expense. Palomino says it retained the
discretionary authority to make contributions to its employees' plans each year, consistent
with the governing regulations for that kind of pension account. An employer must make
SEP contributions for a given year to all participating employees or none of them. Bogue
counters that Palomino had unconditionally agreed in the May 29 letter to make those
contributions for him every year he worked for the company. So Bogue asserts he was
contractually entitled to SEP contributions for 2015 and the first half of 2016.

Bogue filed an action against Palomino for the unpaid contributions based on a
breach of his employment contract and, in turn, for a violation of the Kansas Wage
Payment Act, K.S.A. 44-312 et seq. Palomino denied any liability to Bogue for SEP
contributions for 2015 and 2016. Throughout the litigation, Bogue premised his legal
arguments on the May 29 letter being a contract establishing Palomino's unconditional
promise to make the SEP contributions. During a three-day trial, the jury found for
Palomino. Consistent with Bogue's legal theory, the district court asked the jury to
answer this question on its verdict form: "Do you find that the letter dated May 29, 2014
is a written employment agreement (also called a contract)?" The jury answered, "No"—
resulting in a verdict for Palomino. The district court denied Bogue's request for a new
trial and entered a judgment for Palomino consistent with the verdict. Bogue has
appealed.

LEGAL ANALYSIS

On appeal, Bogue continues to argue the May 29 letter is a contract and bases his
claimed errors on that premise. As a necessary condition for granting Bogue any relief,
we have to find the letter is a contract requiring SEP contributions. Or stated in the
negative, if the letter is not a contract, Bogue loses on appeal. He likewise loses if the
letter is a contract but does not unconditionally require Palomino to make SEP
contributions for him.
4


An enforceable contract consists of an offer, acceptance of the offer, and
consideration or something of value given by each party. See M West, Inc. v. Oak Park
Mall, 44 Kan. App. 2d 35, 49, 234 P.3d 833 (2010). In a written contract, as Bogue
characterizes the May 29 letter, each of those components typically would be in writing.
But contracts can be oral (unwritten) or partly written and partly oral. In an employment
contract, the employer commonly will offer to hire a person for a particular job in
exchange for specified compensation, usually wages (or sometimes a commission based
on sales or some other job performance) and often fringe benefits. The potential
employee may accept the offer or make a counteroffer for a higher wage or more
benefits. Assuming the parties reach an acceptable understanding, each, then, agrees to
the negotiated terms. In effect, the employer says I promise to compensate you this much
if you will fill the particular position. And the employee-to-be responds I promise to
come to work for the stated compensation.

The parties then have a contract, since their mutual promises provide legal
consideration. Peoples Exchange Bank v. Miller, 139 Kan. 3, 7, 29 P.2d 1079 (1934). The
terms of the contract must be complete and sufficiently definite that a court would be able
to enforce them in the event of a dispute. See Lessley v. Hardage, 240 Kan. 72, Syl. ¶ 4,
727 P.2d 440 (1986). In short, "[t]o form a legally binding contract, the parties must
agree on the essential terms of their bargain and manifest an intention to be bound by
those terms." Rosen v. Hartstein, No. 108,479, 2014 WL 278717, at *3 (Kan. App. 2014)
(unpublished opinion).

In a written contract, all of the agreed upon terms must be set out in the writing. If
some of the terms are agreed upon orally but are not contained in the writing, then the
contract is partly oral and partly in writing. Chilson v. Capital Bank of Miami, 237 Kan.
442, 446, 701 P.2d 903 (1985) (distinguishing between written and oral contracts in
determining appropriate statute of limitations for breach); Stonehouse Rentals, Inc. v.
Doran, No. 17-CV-4046-JAR-GLR, 2018 WL 324262, at *5 (D. Kan. 2018)
5

(unpublished opinion). Commonly, parties to a fully written contract will express their
acceptance by signing the document. But one party may accept a signed written offer
from the other party orally or by conduct, such as by beginning performance, and the
contract will be considered to be written. Chilson, 237 Kan. at 446; see Stonehouse
Rentals, 2018 WL 324262, at *5.

Given those principles, the May 29 letter can't perform the contractual chores
Bogue requires to prove his claim. The letter does not look to be a written contract in the
sense of setting forth a complete statement of the parties' agreement. The language of the
letter states its purpose as merely confirming the fact of Bogue's future employment. The
letter identifies a starting salary, the SEP contributions, and unspecified "benefits,"
including health insurance. So the job appears to come with other compensation,
presumably including paid vacation and possibly sick leave among other benefits. That's
consistent with Bogue's understanding that he would receive the same benefits as other
Palomino employees.

Similarly, the letter does not invite some form of acceptance from Bogue. For
example, it could have included a place for Bogue to sign, manifesting his acceptance of
the letter as a written contract, with instructions to return a signed copy. Nor does the
letter solicit some other acceptance, such as a telephone call to Watchous or another
corporate officer. All of that shows the parties meant the letter to be a general
confirmation of an existing oral agreement—not a written contract. Contrary to Bogue's
suggestion, the district court could not have found the May 29 letter to be a written
contract as a matter of law and correctly declined to so rule. The jury likewise properly
determined the letter itself was not a contract. See Shamberg, Johnson & Bergman, Chtd.
v. Oliver, 289 Kan. 891, 901, 220 P.3d 333 (2009) ("[W]hether a contract exists is a
question of fact."); Short v. Sunflower Plastic Pipe, Inc., 210 Kan. 68, 75, 500 P.2d 39
(1972) ("Whether the parties intended to be bound absent a written executed contract is a
question of fact.").

6

Even if the May 29 letter were a written contract, Bogue couldn't garner what he
wants from its language. The letter defines no fixed period or duration of employment. So
based on the letter, Bogue would have been an at-will employee. An employer may
terminate an at-will employee at any time, as long as the decision is not made for a
legally prohibited reason, such as race or gender. And an employer may modify the terms
and conditions under which an at-will employee works at any time. Smith v. Kansas
Orthopaedic Center, 49 Kan. App. 2d 812, 816, 316 P.3d 790 (2013).

In that respect, the letter contains no guarantee Palomino would make SEP
contributions for as long as Bogue worked there. As we have said, under the regulations
for SEP plans, an employer has the discretion to make or withhold contributions for a
given year as long as all employees are treated the same. The letter does not purport to
limit that discretion. Bogue could have apprised himself of those regulations at any time,
so he should have known how SEP plans typically operate.

Moreover, had Palomino made such a guarantee in the letter (though the language
doesn't read that way), it could have rescinded the commitment after Bogue began
working there. Palomino, through its agent handling benefits, informed Bogue in late
2014 that the SEP contributions were discretionary. That would have modified any
guarantee Bogue incorrectly ascribes to the letter going forward—covering 2015 and
2016, when Palomino did not make SEP contributions.

We find no reversible error in the district court's handling of the issues the parties
framed and presented.

Affirmed.