## Facts

- William Sharman left an NBA coaching job to coach the Los Angeles Stars (ABA) under a seven-year contract with a $55,000 starting salary and 5% annual increases.
- The contract included (1) an option for Sharman to buy 5% of the club “at a price to be agreed upon,” (2) participation in an unspecified pension plan, (3) a severability clause, and (4) a California choice-of-law clause.
- While the team was in Los Angeles, the parties did not negotiate the option or pension provisions.
- In 1970, Mountain States Sports, Inc. bought the team and relocated it to Salt Lake City (Utah Stars); Sharman moved with the team without a written relocation agreement.
- After the sale, Sharman and Mountain States’ principal negotiated the option and pension terms for months but reached no agreement.
- In 1971, Sharman resigned and signed with California Sports, Inc. to coach the Los Angeles Lakers (NBA).
- Mountain States sued Sharman for breach of contract and California Sports for tortious inducement of breach; after Mountain States later entered bankruptcy, the trustee (Eckles) was substituted as plaintiff.
- The district court directed a verdict against Sharman on liability, sent damages and inducement to the jury, and the jury awarded $250,000 against Sharman and $175,000 against California Sports.

## Issues

1. Whether an employment contract with indefinite, unresolved option and pension provisions was enforceable under California law or an unenforceable “agreement to agree” because those terms were essential.
2. Whether the severability clause allowed a court to excise the option and pension provisions and enforce the remainder as a matter of law, or whether severability depended on jury findings about essentiality.
3. Whether directing a verdict on Sharman’s liability improperly removed disputed fact questions regarding contract formation and essential terms from the jury.
4. Whether California Sports could be liable for inducing breach when the existence of an enforceable underlying contract was disputed.
5. Whether the damages theory and instructions improperly permitted recovery without adequate findings on foreseeability and the alleged uniqueness of Sharman’s services, and whether trial conduct required a new trial.

## Decision

- The court of appeals reversed the judgments against Sharman and California Sports and remanded for a new trial.
- The district court erred by directing a verdict against Sharman because evidence conflicted on whether the option and pension provisions were essential to the parties’ bargain.
- The severability clause did not resolve enforceability as a matter of law; whether the indefinite provisions could be severed depended on factual determinations about essentiality that should have been submitted to the jury.
- Because inducement liability presupposes a valid contract, the judgment against California Sports could not stand when contract enforceability was a jury issue.
- Errors concerning damages instructions and the overall conduct of the trial warranted retrial before a different judge.

## Legal Principles

- Under California law, a contract is unenforceable if the parties fail to agree on essential and material terms; uncertainty in nonessential terms may not defeat enforcement if the core bargain was reached.
- Whether disputed or indefinite terms are “essential” is commonly a fact question when the record supports competing inferences about the parties’ intent.
- A severability clause is an aid to construction, not a mandate; it does not permit a court to sever provisions that are integral to the overall agreement.
- A directed verdict is improper where, viewing the evidence favorably to the nonmovant, reasonable jurors could disagree on contract existence or breach.
- Tortious inducement of breach requires an enforceable underlying contract; if contract validity is not established, inducement liability fails.
- Consequential contract damages require foreseeability at contract formation; substantial recovery based on alleged “unique” personal services requires evidentiary support and proper jury instructions.

## Conclusion

The appellate court held that disputed facts about whether open-ended equity and pension terms were essential prevented a directed verdict on breach, and that severability and contract enforceability had to be decided by a jury; because inducement and damages depended on those determinations and the trial was not conducted with sufficient impartiality, the case was remanded for a new trial before a different judge.


Eckles v. Sharman, 548 F.2d 905 (10th Cir. 1977)