## Facts

- Jack Rudman built and operated a small, profitable test-book publishing company, primarily producing exam-preparation manuals and related educational materials.
- Rudman sought expansion and, through a financial consultant, negotiated with Cowles Communications, Inc., a large publishing company.
- The parties executed two separate contracts: (1) an acquisition agreement under which Cowles acquired the company’s stock, and (2) an employment agreement under which Rudman joined Cowles for a fixed term with specified compensation.
- After the acquisition, Cowles integrated the business into its corporate structure and assigned significant editorial and managerial control away from Rudman.
- Rudman asserted he had been promised operational authority over the test-book business; Cowles contended Rudman was insubordinate when he resisted the changed arrangement.
- Cowles terminated Rudman before the end of the employment term, asserting discharge for cause; Rudman claimed wrongful discharge.
- Rudman and the other selling shareholders also claimed Cowles misrepresented its intentions about operating the business and Rudman’s role, seeking fraud remedies including rescission of the acquisition agreement.

## Issues

1. Whether Rudman was terminated for just cause under the fixed-term employment agreement, or whether the discharge was wrongful because Rudman’s conduct did not amount to inexcusable insubordination.
2. Whether alleged statements about Cowles’s future plans and Rudman’s expected role constituted actionable fraud supporting rescission or other fraud relief.
3. Whether a breach of the employment agreement could justify rescission of the separate acquisition agreement based on the asserted unity of the overall transaction.

## Decision

- The court modified the intermediate appellate order and reinstated the wrongful-discharge cause of action.
- The court held the weight of the evidence supported the Referee’s finding that Rudman was wrongfully discharged and not guilty of inexcusable insubordination.
- The court affirmed dismissal of the fraud causes of action, holding fraud was not established as a matter of law and, given affirmed factual findings below, further review of those facts was unavailable.
- The case proceeded with contractual damages for wrongful discharge under the employment agreement, but without rescission or fraud relief regarding the acquisition.

## Legal Principles

- A fixed-term employment agreement limits termination to discharge for cause or as permitted by the contract; discharge without cause supports contract damages.
- Insubordination justifies termination only when the employee’s conduct is sufficiently serious to constitute inexcusable insubordination under the contract and the facts found.
- Fraud generally requires a misrepresentation of present fact or a present intent not to perform; statements about future conduct, business plans, or expectations ordinarily do not suffice without proof of then-existing fraudulent intent.
- When affirmed factual findings dispose of the fraud theory, an appellate court’s ability to revisit those facts is limited.
- Related contracts may generate different remedies: breach of an employment contract may support damages without supplying the elements necessary to rescind a separate acquisition agreement.

## Conclusion

The court restored Rudman’s recovery for wrongful discharge under his fixed-term employment contract because the record supported the finding that Cowles lacked just cause, but it refused to unwind the acquisition or award fraud relief because the alleged misstatements amounted to nonactionable promises of future conduct and the affirmed factual findings foreclosed further review.


Rudman v. Cowles Commc’ns, Inc., 280 N.E.2d 867 (N.Y. 1972)