Facts
- In November 2005, Rosa LaRue agreed to leave Florida Power & Light, where she earned about $103,000 annually, to take a vice president position with Kalex Construction and Development, Inc.
- LaRue began working for Kalex in February 2006.
- Her compensation started at $140,000 per year plus benefits (including items such as a company truck, phone, laptop, insurance, and paid vacation) and later increased to $180,000 per year.
- LaRue alleged that, as part of the employment arrangement, Kalex verbally agreed that if she worked for Kalex for three years, she would receive a 25% ownership interest in the company.
- Kalex disputed that any enforceable oral agreement existed to transfer an ownership interest.
- Kalex terminated LaRue in December 2009, after she had worked for the company for more than three years.
- LaRue sued for breach of contract and sought an accounting, seeking to enforce the alleged oral promise of a 25% ownership interest.
- The trial court entered summary judgment for Kalex, ruling the claim was barred by Florida’s statute of frauds, Fla. Stat. § 725.01.
- LaRue appealed to the Florida Third District Court of Appeal.
Issues
- Whether an alleged oral employment agreement promising a 25% ownership interest only after three years is an agreement “not to be performed within the space of 1 year” under Fla. Stat. § 725.01 and therefore unenforceable absent a signed writing.
- Whether the employee’s full performance (working more than three years) removes such a multi-year oral agreement from the statute of frauds.
Decision
- The Third District Court of Appeal affirmed the summary judgment for Kalex.
- The court held that an oral promise conditioned on three years of employment is, by its terms, incapable of being performed within one year and falls within Fla. Stat. § 725.01.
- The court held that full performance by the employee does not make enforceable an oral agreement that could not, at the time it was made, be fully performed within one year.
- Because the alleged ownership-transfer promise was not memorialized in a writing signed by Kalex, LaRue’s contract-based claims seeking enforcement of that promise were barred.
Legal Principles
- Fla. Stat. § 725.01 bars an action on an agreement that is not to be performed within one year from its making unless there is a written memorandum signed by the party to be charged.
- For the one-year provision, the question is whether the agreement, as alleged, could have been fully performed within one year when made; if it could not, the statute applies.
- Full performance does not take an agreement outside the statute of frauds when the agreement is, on its face, incapable of full performance within one year.
- An oral employment-related promise to convey an ownership interest only after a stated multi-year service period is within the statute of frauds and requires a signed writing to be enforceable.
Conclusion
The Third District affirmed summary judgment for Kalex because the alleged verbal promise to grant LaRue a 25% ownership interest only after three years of employment was an agreement not performable within one year under Fla. Stat. § 725.01, and LaRue’s completion of more than three years of work did not eliminate the statute’s writing requirement.