UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 94-1375
DIANE GIBSON,
Plaintiff, Appellant,
v.
CITY OF CRANSTON, ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ronald R. Lagueux, U.S. District Judge]
Before
Selya, Circuit Judge,
Aldrich, Senior Circuit Judge,
and Boudin, Circuit Judge.
Lauren E. Jones, with whom Jones Associates, Daniel V.
McKinnon, and McKinnon & Harwood were on brief, for appellant.
William F. Holt, Assistant City Solicitor, for appellees.
October 3, 1994
SELYA, Circuit Judge. This appeal arises out of Dr.
SELYA, Circuit Judge.
Diane Gibson's short and stormy stay as superintendent of schools
in Cranston, Rhode Island. It stands as a vivid illustration
that some of life's most instructive lessons are learned in the
classroom of adversity. After educating ourselves about the
facts of the case, the applicable law, and the proceedings below,
we conclude that the district court correctly refused to give the
plaintiff's case a passing grade.
I. BACKGROUND
Because the trial court took this case from the jury
and terminated it by means of an instructed verdict, we summarize
the facts adduced below in the light most congenial to
appellant's claims.
In early 1989, while serving as Assistant
Superintendent of Schools in Waterloo, Iowa, plaintiff-appellant
Diane Gibson applied for a job as school superintendent in
Cranston. The school committee (the Committee) interviewed her
twice (once publicly and once privately) and eventually offered
her the post. On August 21, 1989, she met in Rhode Island with
members of the Committee concerning her employment contract (the
Contract). The parties signed it the next day.
The Contract contained 11 sections, counting the
preamble, spread over eight pages. It specified a term that ran
from October 1, 1989 to June 30, 1992. The Contract contained
various clauses related to professional growth, compensation,
contract renewal, salary adjustments, termination for cause, and
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resignation. It also provided for such miscellaneous items as
certification, annual medical examinations, and disability
protection. Article III described the superintendent's duties,
stating that she
shall be the chief administrator and agent of
the Cranston schools and have charge of the
administration of the schools under the
direction of the Committee. In this capacity
she shall implement, among other things, all
policies approved by the Committee, provide
for efficient administration of the system
and provide for the performance evaluation of
all administrators, teachers, and quality of
the education provided.
The same article stated that the parties' "respective rights and
responsibilities . . . shall be as specified in Chapter 2 of
Title 16 of the [Rhode Island General Laws]."
Article VI of the Contract has particular pertinence in
this litigation. By its terms, the article obligated the
Committee to assess in writing the Superintendent's overall
performance at least annually. The format and procedure for the
evaluation were to be decided upon by the parties no later than
60 days after the Contract's effective date. Once an evaluation
emerged, the Committee and the Superintendent were to meet for
discussion of it; specifically, the Contract indicated that a
meeting dedicated to this purpose would be held between February
15 and March 15 of each contract year. The evaluation was to be
used in determining "if the Superintendents's Contract is
renewed/not renewed." To this end, Article VI also contained a
non-exclusive list of factors to be considered in the evaluation
process and required that the end product describe in reasonable
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detail "specific instances of strengths and commendations as well
as specific instances of any unsatisfactory performance."
At the end of the first 60 days of her reign, Dr.
Gibson had not heard from the Committee regarding the evaluation
process. She brought the matter to the attention of Stephen
Dambruch, the Committee's chairman. Dambruch suggested that
appellant develop and disseminate a proposed evaluation form. On
December 4, 1989, appellant complied. On March 1, 1990, Dambruch
notified the Committee that an evaluation was due between
February 15 and March 15 of each year. Five of the nine
Committee members responded on the form appellant had prepared.
Two other members wrote letters commenting upon appellant's
performance. Two Committee members kept their own counsel. In
any event, the Committee never composed a unified performance
evaluation.
This lollygagging took place during a period of
considerable turmoil. In January 1990 the Committee voted to
restructure the public schools, only to reverse itself two months
later.1 Spurred in part by this dramatic about-face, appellant
requested that the Committee provide her with a written statement
of its goals. Although a meeting was held to discuss this
request, the Committee never complied with it.
In March 1990 appellant became aware that the school
1To add to the muddle, hard on the heels of the vote to
restructure the school system a Committee member circulated a
poll requesting teachers' input. This impulsive action
ultimately led to the filing of an unfair labor practice charge.
4
system had improperly paid health benefits on behalf of former
employees. She brought this matter to the Committee's attention.
Dambruch and his colleagues commissioned an ad hoc committee (the
AHC) to mull the problem. The AHC sought to exclude appellant
from its deliberations. To compound this contretemps, an
assistant city solicitor wrote to Dambruch on June 8, 1990
suggesting that the AHC might be illegally infringing on the
Superintendent's administrative prerogatives and might lack the
legal authority necessary to arrange for an audit of the school
system's records. Eventually, the Committee retained a certified
public accountant. Although the accountant completed a study of
the situation, the Committee never provided appellant either with
the accountant's report or with any feedback regarding the
accountant's recommendations.
Cranston held a municipal election in November of 1990.
The electoral results significantly affected the Committee's
composition. A member suggested that appellant's evaluation be
completed before the newly elected members took office. The
Committee scheduled a special meeting for this purpose, but
appellant resigned before the meeting could be held. In her
letter of resignation, dated December 28, 1990, appellant accused
the Committee of violating the Contract by not providing a proper
evaluation and statement of goals, and by infringing on the scope
of her autonomy as superintendent.
All was serene for well over a year. On June 10, 1992,
however, appellant, then a citizen and resident of North
5
Carolina, sued for breach of contract in a Rhode Island state
court. She claimed that the City of Cranston, acting through the
Committee, disregarded duties owed under the contract, and she
sought damages including the balance of her salary and benefits
for the period from January 1, 1991 through June 30, 1992.2
Noting the existence of diversity jurisdiction, 28 U.S.C. 1332
(1988), Cranston removed the case to federal district court, see
28 U.S.C. 1441 (1988).
In due course, Chief Judge Lagueux empaneled a jury and
trial commenced. At the close of the appellant's case, Cranston
moved for a judgment as a matter of law.3 The district judge
assumed arguendo that Cranston had not fulfilled its contractual
commitments, but ruled that, even so, the evidence did not permit
a rational jury to find a breach of sufficient materiality as to
allow appellant to cease performance and recover damages for the
balance of the unexpired term. This appeal followed.4
2Although Dr. Gibson originally sued a bevy of defendants,
only Cranston and its treasurer remain in the case. Because
Rhode Island law treats a suit against the treasurer of a
municipality, in his or her official capacity, as a suit against
the city, see R.I. Gen. Laws 45-15-5 (1991), these two
defendants are in effect the same entity. We refer to them
collectively as "Cranston."
3In 1991, Fed. R. Civ. P. 50 was amended to change the
appellation "directed verdict" to "judgment as a matter of law."
This change in nomenclature does not affect the substance of the
applicable legal standard.
4Although we affirm the grant of judgment as a matter of
law, see infra, we caution that in most cases a trial court will
be better advised to reserve decision on such a motion, passing
on the legal question only after submitting the case to the jury.
Mid-trial directed verdicts should be the exception, not the
rule. We concluded long ago that refraining from granting a
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II. STANDARD OF REVIEW
When confronted with a motion for judgment as a matter
of law, whether at the end of a plaintiff's case or at the close
of all the evidence, a trial court must scrutinize the proof and
the inferences reasonably to be drawn therefrom in the light most
amiable to the nonmovant. See Rolon-Alvarado v. Municipality of
San Juan, 1 F.3d 74, 76 (1st Cir. 1993); Wagenmann v. Adams, 829
F.2d 196, 200 (1st Cir. 1987). In the process, the court may not
consider the credibility of witnesses, resolve conflicts in
testimony, or evaluate the weight of evidence. See Wagenmann,
829 F.2d at 200. A judgment as a matter of law may be granted
only if the evidence, viewed from the perspective most favorable
to the nonmovant, is so one-sided that the movant is plainly
entitled to judgment, for reasonable minds could not differ as to
the outcome. See Rolon-Alvarado, 1 F.3d at 77.
Because granting a judgment as a matter of law depends
upon the legal sufficiency of the evidence, appellate review is
plenary. See Jordan-Milton Mach., Inc. v. F/V Teresa Marie, II,
978 F.2d 32, 34 (1st Cir. 1992). It is incumbent upon the court
of appeals to apply precisely the same criteria that constrain
the trial court. See Rolon-Alvarado, 1 F.3d at 77. Moreover,
judgment as a matter of law until the jury has had a chance to
deal with the merits is frequently a "wise and time-saving
precaution." Talbot-Windsor Corp. v. Miller, 309 F.2d 68, 69
(1st Cir. 1962). By following that course, the judge minimizes
the risk that the trial will have to be replayed yet retains the
power to pass on the sufficiency of the evidence in a timely
manner. Of course, everything depends upon the circumstances,
and in some cases granting the motion is both efficient and wise.
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the standard of review affords no place for any deference to the
district court's view anent state-law questions. See Salve
Regina Coll. v. Russell, 499 U.S. 225, 238 (1991).
III. ANALYSIS
The substantive law of Rhode Island governs in this
diversity case. Under Rhode Island law, a contracting party may
cease performance and seek damages if the other contracting party
commits a breach that is "material," see, e.g.,Philip Carey Mfg.
Co. v. General Prods. Co., 151 A.2d 487, 493 (R.I. 1959), or that
"goes to the essence of the contract," Aiello Constr., Inc. v.
Nationwide Tractor Trailer Training & Placement Corp., 413 A.2d
85, 87 (R.I. 1980). Some courts and commentators have cast the
standard in terms of a "total" breach as opposed to a "partial"
breach, with only the former justifying termination of a
contract. See, e.g., Lovink v. Guilford Mills, Inc., 878 F.2d
584, 586-87 (2d Cir. 1989); Arthur L. Corbin, Corbin on Contracts
946, at 809 (1951). Because we believe these terms constitute
various ways of saying the same thing, we will use them
interchangeably.5
5The rigid material/non-material dichotomy may oversimplify
the universe of breaches. Although this case, in its present
posture, does not require us to make a finer distinction, we do
not deprecate the possibility that there may be an intermediate
level of breach, i.e., breaches which are not serious enough to
warrant repudiation of the contract and a suit for damages by the
injured party, but which nonetheless might constitute a defense
to an action for damages brought by the party committing the
initial breach. Thus, our holding that the Committee's alleged
breaches were not material, see infra, does not necessarily
betoken that Dr. Gibson would have been liable had the Committee
sued her for breach.
8
Appellant invites us to rule that materiality is always
a question of fact, thereby eliminating the possibility of a
directed verdict where, as here, the issue is disputed. We
decline the invitation. While the state supreme court has
indicated that, in this context, materiality "is essentially a
factual question," and that its resolution ordinarily "requires
consideration of all the pertinent evidence and the conduct and
relationship of the parties," Dunne Leases Cars & Trucks, Inc. v.
Kenworth Truck Co., 466 A.2d 1153, 1160 (R.I. 1983), the first
part of this statement is a generalization, and, like most
generalizations, it admits of exceptions. Though questions of
materiality are usually to be determined by the trier of fact, in
this case the jury, the rule is not universal. As is true of
virtually any factual question, if the materiality question in a
given case admits of only one reasonable answer (because the
evidence on the point is either undisputed or sufficiently
lopsided), then the court must intervene and address what is
ordinarily a factual question as a question of law.
The task of delineating which particular breaches may
justify an injured party ceasing performance and bringing an
action for damages is demanding, but the case law affords some
insights. In Aiello, for example, the plaintiff, a contractor,
sued a property owner for nonpayment of installments due under a
construction contract. The Rhode Island Supreme Court upheld a
finding that the defendant's failure to pay installments as they
came due went to the essence of the contract and, therefore,
9
excused further performance by the plaintiff. See Aiello, 413
A.2d at 87. In Dunne, the court upheld a finding that a dealer
committed a material breach of its franchise agreement with a
truck manufacturer by failing to honor its promise to separate
its leasing activities from its dealership operation. See Dunne,
466 A.2d at 1159. In its opinion, the court emphasized the
presence of evidence that the leasing activities adversely
impacted the truck dealership in the areas of parking,
cleanliness, parts sales, and service. See id. at 1158. On this
basis, the court concluded that the dealer's breach might be
deemed material even though the dealer regularly achieved its
sales quota under the franchise agreement.6 See id. at 1159.
Despite the insights that can be gleaned from these
cases, the Rhode Island courts thus far have not precisely
defined what constitutes a material breach. Nonetheless, we
believe that the proper analysis is informed by certain
commentaries and decisions from outside Rhode Island. See
Michelin Tires (Canada), Ltd. v. First Nat'l Bank, 666 F.2d 673,
682 (1st Cir. 1981) ("In the absence of a definitive ruling by
the highest state court, a federal court may consider analogous
decisions, considered dicta, scholarly works, and any other
6Although Dunne involved allegations that the defendant's
decision to terminate the franchise agreement had been reached
without "due cause" as then required by R.I. Gen. Laws 31-5.1-
4(C)(3) (1979 reenactment), the Rhode Island Supreme Court
interpreted "due cause" as turning on the materiality of certain
breaches committed by the franchisee. See Dunne, 466 A.2d at
1157. Thus, Dunne is useful authority in connection with the
question sub judice.
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reliable data tending convincingly to show how the highest court
in the state would decide the issue at hand, taking into account
the broad policies and trends so evinced.") (citation and
internal quotation marks omitted). The Restatement is an
especially helpful source of guidance because Rhode Island courts
frequently turn to the Restatement to fill gaps in state law.
See, e.g., Bibby's Refrig., Heating & Air Cond. Inc. v.
Salisbury, 603 A.2d 726, 729 (1992); Durapin, Inc. v. American
Prods., Inc. , 559 A.2d 1051, 1059 (1989). The Restatement lists
five factors that may be considered in determining whether a
breach is material.7 Other commentators have espoused slightly
7These factors are:
(a) the extent to which the injured party
will be deprived of the benefit which he
reasonably expected;
(b) the extent to which the injured party can
be adequately compensated for the part of
that benefit of which he will be deprived;
(c) the extent to which the party failing to
perform or offer to perform will suffer
forfeiture;
(d) the likelihood that the party failing to
perform or to offer to perform will cure his
failure, taking account of all the
circumstances including any reasonable
assurances;
(e) the extent to which the behavior of the
party failing to perform or to offer to
perform comports with standards of good faith
and fair dealing.
Restatement (Second) of Contracts 241 (1979).
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different sets of relevant factors for use in determining
materiality, such as the extent to which the contract has been
performed at the time of the breach, the willfulness vel non of
the breach, and the degree of seriousness attributable to the
breach, expressed in quantitative terms. See 2 E. Allan
Farnsworth, Farnsworth On Contracts 8.16, at 442 (1990); J.
Calamari & J. Perillo, Contracts 408-09 (2d ed. 1977). We
believe that when the occasion arises, the Rhode Island Supreme
Court will adopt some variant of these tests to determine the
materiality of a breach of contract.8 In our view, the test
will concentrate on factors such as those listed in the
Restatement, with special emphasis, in the employment context, on
the extent to which the alleged breach interferes with the duties
and benefits flowing from the contract in its entirety. We need
not dice matters too finely, however, for appellant's proof can
meet neither the Restatement standard nor any reasonable variant
of it. We explain briefly.
While a material breach of an employment contract need
not completely frustrate the entire purpose of the contract, it
must be so important that it makes continued performance by the
plaintiff virtually pointless, see Lovink, 878 F.2d at 587.
Thus, if Cranston refused to pay appellant, or, conversely, if
8Appellant suggests that "a breach is material if it denies
a party a bargained-for exchange." We find this formulation
unacceptable, for it does not reflect how significant a contract
provision must be before its breach will be deemed material.
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appellant completely withheld her services for no valid reason,
the ensuing breach would reach the essence of the Contract.
But that is not what transpired here. We think it is
readily apparent that, under the stringent standard that obtains,
the Committee's alleged breaches of the Contract are, as a matter
of law, not material. The superintendent's job encompasses a
complex and varied set of responsibilities. Under a provision of
the Rhode Island General Laws, which is incorporated into the
Contract by explicit reference, the post includes a vast array of
administrative, supervisory, managerial, and policymaking
functions. See R. I. Gen. Laws 16-2-11 (1988), reprinted in
the appendix. This elaborate compendium of responsibilities,
complemented by the multifarious provisions of the Contract
itself, put appellant's grievances into proper perspective. And
so viewed, we are unable to see how a reasonable jury could find
that the Committee's conduct involved matters of sufficient
significance to constitute a material breach.
Appellant's flagship claim pirouettes around the
Committee's failure to provide her with a unified evaluation.
Given the admitted feedback that appellant received from a
majority of the individual Committee members, we cannot discern
how the failure to reduce the feedback to a unified evaluation or
the other shortcomings in the evaluation process could be deemed
a material breach. Without the evaluation, appellant was still
able to carry out virtually all of her responsibilities. She
still received the overwhelming majority of the benefits to which
13
the Contract entitled her. Her mere testimony that without the
evaluation provision she would not have signed the employment
agreement cannot make this otherwise unremarkable provision into
one that "goes to the essence of the contract." Salo Landscape &
Constr. Co. v. Liberty Elec. Co., 376 A.2d 1379, 1382(R.I. 1977).
The determination of materiality, like other aspects of contract
interpretation, must be based largely on a standard of objective
reasonableness rather than purely subjective belief. Cf. John F.
Davis Co. v. Shepard Co., 47 A.2d 635, 637 (R.I. 1946) (noting
that the "true question" in determining the intention of the
parties is "not what intention existed in the minds of the
parties, but what intention is expressed by the language used")
(internal quotation marks omitted); Pahlavi v. Palandjian, 809
F.2d 938, 945 (1st Cir. 1987) (commenting that "contracting
parties are bound by objective manifestations and expressions,
not subjective expectations"). In other words, a party cannot
transmogrify a provision that, from an objective standpoint, has
only marginal significance into one of central salience by the
simple expedient of saying in retrospect that she believed it to
be very important.
Here, notwithstanding plaintiff's post hoc
rationalization, the Committee's failure to provide a unified
evaluation seems much more a matter of form than of substance.
It did not in any way shrink plaintiff's major duties or deprive
her of the principal benefits of her contractual bargain.
Nothing about the failure betokens bad faith or an unfair course
14
of conduct. And the sockdolager is that, at the time Dr. Gibson
resigned, there was a high likelihood that the Committee would
soon cure its breach by providing an evaluation; a special
meeting for this purpose was scheduled to occur less than one
week after she precipitously resigned.
Appellant's fallback position is that the Committee
never furnished her with a written statement of goals. But
appellant had ample contact with the Committee and its members to
get a sense of the school system's objectives. Thus, as with the
first alleged breach, this failure did not interfere
significantly with either her duties or her benefits under the
Contract. Consequently, it could not be deemed a material
breach.
Finally, appellant alleges that the Committee infringed
upon her administrative responsibilities. She offers two
incidents to illustrate her contention: a Committee member's
action in sending a questionnaire directly to the faculty, see
supra note 1, and the AHC's attempt to exclude her from its
deliberations. Given the minor nature of these supposed
infractions and their subsequent resolution, no reasonable jury
could find that they constitute a material breach.
IV. CONCLUSION
We need go no further. Considering all the evidence in
the light most hospitable to plaintiff, no reasonable jury could
find that the Committee's alleged breaches of the Contract gutted
it. Consequently, the court below did not err in granting
15
judgment as a matter of law.
Affirmed.
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