-
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 94-1680
WILLIAM G. COLL,
Plaintiff - Appellant,
v.
PB DIAGNOSTIC SYSTEMS, INC.,
Defendant - Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Coffin, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________
_____________________
David Rapaport, with whom Rapaport & Rapaport, was on brief ______________ ___________________
for appellant.
Scott C. Moriearty, with whom Laurie F. Rubin and Bingham, __________________ _______________ ________
Dana & Gould, were on brief for appellee. ____________
____________________
March 30, 1995
____________________
TORRUELLA, Chief Judge. This appeal comes to us on the TORRUELLA, Chief Judge. ___________
basis of diversity jurisdiction. The parties agree that it is
governed by the substantive law of the state of Massachusetts.
The plaintiff is the former chief executive officer of the
defendant corporation, and his claims stem from an alleged breach
of his employment agreement with the defendant. Specifically,
the plaintiff maintains that the district court improperly
granted the defendant's summary judgment motion because there
were genuine issues of material fact as to whether 1) the
defendant breached its agreement to create a long-term incentive
plan and communicate its goals to the plaintiff; 2) the doctrine
of promissory estoppel required that the defendant create a long-
term incentive plan; 3) the defendant fired the plaintiff in bad
faith, in order to deprive him of a benefit to which he was
entitled; and 4) the defendant deceived the plaintiff concerning
its intention to establish a long-term incentive plan. For the
following reasons, we affirm the district court's grant of ______
summary judgment.
I. BACKGROUND I. BACKGROUND
Plaintiff William G. Coll ("Coll") sued defendant PB
Diagnostic Systems, Inc. ("PB") in the United States District
Court for the District of Massachusetts. Coll asserted various
claims regarding PB's alleged promise to develop a long-term
incentive bonus program in connection with Coll's employment as
PB's Chief Executive Officer ("CEO"). After extensive discovery,
the court granted PB's motion for summary judgment.
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Although the parties heatedly dispute many of the
issues on appeal, the facts central to our inquiry are largely
uncontroverted.1 The defendant, PB, was founded in 1985 to
develop and market medical diagnostic instruments. PB was
started as a joint venture owned in equal shares by Polaroid
Corporation ("Polaroid") and a German company called
Behringwerke, A.G. ("Behring"). In 1987, PB representatives
contacted the plaintiff, Coll, and informed him that PB was
looking for a CEO to run the start-up company.
A. Pre-hire statements A. Pre-hire statements ___________________
Coll agreed to an interview to discuss the position,
and met with PB Board Chairman Peter Kliem ("Kliem") and
Polaroid's Donald Fronzaglia ("Fronzaglia") at the Pillar House
restaurant. Coll expressed concern that PB would not be able to
offer him an equity share in the company because it was a "50/50"
joint venture. Kliem confirmed that PB could not offer an equity
share in the company, but explained that PB intended to create a
Long Term Incentive Plan ("LTIP") that would give the CEO the
opportunity to earn up to $1,000,000 provided that PB met certain
performance goals. Kliem indicated that PB did not yet have the
LTIP in place, but that the company looked forward to developing
it with the new CEO. In his deposition, Coll admits that he
understood this to mean that any payout under the LTIP would be
____________________
1 Much of the factual background recited here comes from PB's
Statement of Material Facts Concerning Which There Is No Genuine
Triable Issue, the remainder coming from our scrutiny of the
exhibits and depositions.
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contingent upon the achievement of yet-to-be-defined performance
goals. Coll also testified that he understood that PB had not
yet extended him an employment offer.
B. The offer letters B. The offer letters _________________
After meeting with several other PB representatives,
Coll determined that he was interested in managing PB. On
December 4, 1987, Kliem sent Coll a letter offering Coll the CEO
position at PB (the "First Offer Letter"). The First Offer
Letter set forth the salary and annual bonus to be paid Coll, and
further stated: "It is our intent, that in 1989, we would jointly
engage in establishing criteria to appropriately reflect your
direct contribution to the success of the venture in 1990." Coll
called Fronzaglia and expressed his concern that the First Offer
Letter did not adequately address the LTIP or what would happen
in the event that the venture failed.
In response to Coll's concerns, Kliem sent Coll another
offer letter, dated December 14, 1989 (the "Second Offer
Letter"). This letter stated:
As we have discussed, we are pleased
to confirm our offer of employment as
General Manager, PB Diagnostic Systems,
Inc. (PBDS, Inc.) . . . .
You will be an employee of PBDS, Inc.
at a starting salary of $160,000.00 per
year, with a guaranteed bonus of
$40,000.00 per year for 1988 and 1989,
payable on your first and second
anniversary of employment. You must be
an employee of PBDS, Inc. on those dates
to receive payment of these bonuses.
During 1989, we intend to jointly ______________________________________
explore with you appropriate methods of _________________________________________
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compensation to reflect your contribution _________________________________________
to the success of the venture in 1990 and _________________________________________
beyond. _______
In the event PBDS, Inc. initiates your
termination of employment in the period
between your employment date and
December 31st, 1989, PBDS, Inc. will
provide you one year's base salary.
Further, in the event of your
separation, for any reason, you will
refrain from working directly or
indirectly for a competitor in the field
of medical diagnostics for a period of
one year. This provision, of course,
will not apply if PBDS, Inc. has chosen
to cease this joint venture.
For purposes of administration only,
Polaroid Corporation will provide
benefits in areas of medical and dental
insurance, life insurance and 401K
savings plans.
We are enthusiastic about your
contribution and leadership as we look
forward to the long-term success of PBDS,
Inc.
(emphasis added).
After Coll received the Second Offer Letter, he
telephoned Fronzaglia and accepted the offer. During this
conversation, Fronzaglia said: "Does that take care of it?" Coll
replied, "You and I understand what it is, so I guess it's O.K."
Coll admitted in his deposition that at that time he believed
that the Second Offer Letter incorporated all the terms and
conditions of his employment, and that he believed that there was
no material difference between the First and Second Offer Letters
with regard to the LTIP.
C. Coll's tenure at PB C. Coll's tenure at PB ___________________
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In October 1988, the PB Board of Directors formed a
Compensation Committee to develop compensation packages for PB's
senior executives. In April 1989, the Compensation Committee
developed an executive compensation proposal which included an
Annual Bonus Plan and a LTIP. The proposal, which was shown to
Coll prior to being presented to the Board of Directors, included
a payout package that gave Coll the opportunity to earn over
$1,000,000 in incentive compensation.
On April 20, 1989, PB's Board of Directors met and
unanimously approved both the Annual Bonus Plan and the LTIP.
Payout under the LTIP was contingent upon the achievement of
certain long term goals, described in the LTIP as:
Milestones as developed by PBDS in
accordance with the business plan and
subject to approval of the Board.
Evaluation of business progress made by
the Board prior to the 1992 and 1994
payouts.
On July 18, 1989, in response to the Board's request, Coll
submitted a written memorandum suggesting payout milestones for
the LTIP:
The Board of Directors has approved
conceptually a LTIP for PBDS senior staff
(7 persons). The Board has also approved
specific funding for this Plan, 1/3
payable in 1992 and 2/3 payable in 1994.
Per your request, we have considered
targets appropriate to such a long term
plan and our recommendation follows.
Since the Annual Bonus Plan has
targets approved each year which are
tactical and short-term in nature, we
believe that the company's interests can
be best served by emphasizing strategic
and results-oriented goals in the Long
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Term Plan.
For 1992 (year end), criteria should
include
-entrance into US market
-entrance into European market
-profitability
-positive cash flow
Criteria for 1994,
-profitability at "x" level or better
-internal rate of return at "y%" or
better
I look forward to discussing with you the
utilization of these strategic goals.
PB claims that in October 1989, its Board of Directors
considered and approved the goals proposed by Coll for the LTIP.
The relevant minutes from this meeting read: "Various
compensation and incentive matters were discussed and approved."
In April 1990, Coll presented his revised five-year
business plan for PB, projecting "profitability" and "positive
cash flow" by the end of 1992. A year later, it became clear
that PB would not meet the profitability and positive cash flow
goals embodied in the revised five-year plan. To the contrary,
PB suffered tremendous losses in the years 1989, 1990, 1991, and
1992. On April 4, 1991, Coll wrote to the Compensation
Committee, proposing to lower the original goals of the LTIP:
This memo will address several issues
related to the [LTIP] and to the
discussion points raised at the
Compensation Committee meeting on
March 27, 1991. . . .
1. The goals originally established __________________________________
for the 1992 payout of the [LTIP] are _________________________________________
conceptually satisfactory. The goal of __________________________
"entrance into the US market" is already
met and the goal of "entrance into the
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European market" is well underway.
Perhaps the more critical goals are,
however, "profitability" and "positive
cash flow." I believe that we should use
the concepts of profitability and
positive cash flow, but that we should
look at these numbers not as absolute
dollar amounts within absolute time-
frames, but as measures of progress
against marketplace, product and business
goals. To state that "our goal is to
become profitable and to have positive
cash flow by Q4, 1992" is an excellent
tool to motivate managers and their
organizations and we have communicated
profitability and cash flow goals and
responsibilities to our employees. . . .
Certainly, we will not use these tools
indiscriminately and without the
concurrence of the Board. Further, we
agree that we must continuously show
positive results in profitability and
cash flow. As a result, the management
should be measured against its ability to
deliver positive profitability on the
incremental shipments/revenue that are
made in 1992.
. . . .
Therefore, my recommendations for the
goals are
-entrance into US market
-entrance into European market
-25% operating profit on incremental 1991
to 1992 revenues
. . . .
(emphasis added).
PB's Board of Directors was scheduled to meet on
September 5, 1991. Just prior to this meeting, Coll submitted a
lengthy memo in which he again proposed to lower the targets of
the LTIP. He informed the Board that the current targets of the
LTIP were unattainable and that, therefore, the LTIP was unlikely
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to create the desired incentives. He urged the Board to lower
the targets of the LTIP so that there would be a potential in
1992 for payout under the LTIP. In pertinent part, the memo read
as follows:
Background: In 1989 the Board
approved the basic Long Term Incentive
(LTI) plan concepts, including the split
of goals to effect 1992 and 1994
payments. At that time, the targets for
1992 were suggested to be:
-entrance into US market
-entrance into European market
-profitability
-positive cash flow
. . . .
Half of the goals cited above will not be
met. . . . Profitability and positive
cash flow are now forecast for 1993, not
1992.
The retentive and motivational
capabilities of the LTI are therefore
compromised for 1992, and the original
reason the Compensation Committee had for
designing a 1992 payment was to "keep
people interested."
The dilemma therefore is do we keep a ______
plan that in its current construct is _________________________________________
unlikely to fulfill its purpose? ________________________________
Do we keep the original plan or do we
review other options?
. . . .
(emphasis added).
At its September 5, 1991, meeting, the Board considered
Coll's proposal and rejected it. The minutes of that meeting
read as follows:
A management proposal to replace the
Company's Long-Term Incentive Plan was
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considered. The existing Plan appears
unlikely to produce incentive
compensation payments under the Company's
present business forecasts. The
management proposed replacing the plan
with one that would provide realistic
incentives to the Company's management.
. . . Directors pointed out the
inadvisability of lowering the objectives
of an incentive plan to match lowered
performance expectations. . . .
After further discussion, the Board did
not accept the proposal to modify the
current plan. The Board approved in
principle the adoption of a successor
long-term incentive compensation plan for
later years, with the prospect of a one-
third payout in 1993 and a two-thirds
payout in 1995.
D. Coll's termination D. Coll's termination __________________
On January 14, 1992, Coll's employment at PB was
terminated by unanimous decision of the Board of Directors. PB
wrote Coll, explaining that the sponsor companies -- Polaroid and
Behring -- were disappointed with PB's business performance.
Nevertheless, the letter explained, because Coll's termination
was due in part to corporate restructuring, PB would pay Coll one
year's salary as a lump sum severance payment, in accordance with
his employment contract. Moreover, the letter continued, "in the
unlikely event of a payout under the long term bonus plan, you
will be eligible for participation on a pro-rated basis." PB
never achieved the two of the four goals originally proposed by
Coll to be the 1992 targets of the LTIP.
II. STANDARD OF REVIEW II. STANDARD OF REVIEW
We review a district court's grant of summary judgment
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de novo and read the record in a light most favorable to the ________
non-moving party, drawing all inferences in the non-moving
party's favor. LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841 _______ ___________________
(1st Cir. 1993), cert. denied, ___ U.S. ___, 114 S. Ct. 1398, ____________
128 L.Ed.2d 72 (1994). Summary judgment is appropriate when "the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Fed. R. Civ. P. 56(c). A "material" fact is one "that might
affect the outcome of the suit under the governing law."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. ________ ____________________
2505, 2510, 91 L.Ed.2d 202 (1986). A dispute about a material
fact is "genuine" if "the evidence is such that a reasonable jury
could return a verdict for the nonmoving party." Id. ___
Essentially, Rule 56(c) mandates the entry of summary judgment
"against a party who fails to make a showing sufficient to
establish the existence of an element essential to that party's
case, and on which that party will bear the burden of proof at
trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. ____________ _______
2548, 2552, 91 L.Ed.2d 265 (1986). The nonmoving party "may not
rest upon the mere allegations or denials of the . . . pleadings,
but . . . must set forth specific facts showing that there is a
genuine issue for trial." Fed. R. Civ. P. 56(e). See Anderson, ___ ________
477 U.S. at 248, 106 S. Ct. at 2510.
We have advocated a cautious approach to summary
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judgment motions where issues of motive and intent must be
resolved. Oliver v. Digital Equip. Corp., 846 F.2d 103, 109 (1st ______ ____________________
Cir. 1988). Nevertheless, "[e]ven in cases where elusive
concepts such as motive or intent are at issue, summary judgment
may be appropriate if the nonmoving party rests merely upon
conclusory allegations, improbable inferences, and unsupported
speculation." Medina-Mu oz v. R.J. Reynolds Tobacco Co., 896 ____________ __________________________
F.2d 5, 8 (1st Cir. 1990).
III. DISCUSSION III. DISCUSSION
A. The Contract Claim A. The Contract Claim __________________
The crux of Coll's breach of contract claim is that PB
breached its agreement to implement a long-term incentive plan.
He further alleges that the parties' agreement required PB to
communicate to Coll the goals on which the incentive bonuses
would be premised, and that PB failed to do so.
To recover damages for breach of contract at trial,
Coll would have been required to demonstrate (1) that the parties
reached a valid and binding agreement with regard to the LTIP;
(2) that PB breached the terms of this aspect of his employment
contract; and (3) that he suffered damages from the breach. To
survive PB's summary judgment motion, Coll was required to put
forth competent evidence on each of these issues.
The district court offered alternate holdings in
support of its summary judgment ruling against Coll. As one
basis, the district court held that Coll's employment agreement
did not obligate PB to create and implement a LTIP but, rather,
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was only a non-binding "agreement to agree." As an alternative
basis, the district court found that, even assuming that the
parties reached a binding agreement regarding the LTIP, PB had
not breached it. The court held that the contract merely
obligated PB to "jointly explore . . . appropriate methods of
compensation to reflect [Coll's] contribution to the success of
the venture in 1990 and beyond," and that PB had fulfilled this
obligation.
The pertinent law is well settled. "Under
Massachusetts law, interpretation of a contract is ordinarily a
question of law for the court." Fairfield 274-278 Clarendon ____________________________
Trust v. Dwek, 970 F.2d 990, 993 (1st Cir. 1992) (quoting Edmonds _____ ____ _______
v. United States, 642 F.2d 877, 881 (1st Cir. 1981) (citing ______________
Freedlander v. G. & K. Realty Corp., 357 Mass. 512, 516, 258 ___________ _____________________
N.E.2d 786, 788 (1970))). "Only if the contract is ambiguous is
there an issue of fact for the jury." Id. (citing cases). ___
"Moreover, where the contract is unambiguous, it is to be
enforced according to its terms." Id. (citing cases). In the ___
absence of fraud or mistake, an agreement is presumed to express
the intent of the parties. Id. (citing Hess Oil & Chemical Corp. ___ _________________________
v. Ristuccia, 3 Mass. App. Ct. 772, 772, 331 N.E.2d 823, 823 _________
(1975)).
"Evidence of prior or contemporaneous oral agreements
cannot be admitted to vary or modify the terms of an unambiguous ____ ______
written contract." Fairfield 274-278 Clarendon Trust, 970 F.2d __________________________________
at 993 (citing New England Financial Resources, Inc. v. __________________________________________
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Coulouras, 30 Mass. App. Ct. 140, 145, 566 N.E.2d 1136, 1139 _________
(1991) (parol evidence rule precludes use of oral evidence to
modify integrated agreement)). Moreover, "parol evidence may not
be used to 'create ambiguity where none otherwise exists.'" Rey ___
v. Lafferty, 990 F.2d 1379, 1385 (1st Cir.) (quoting Boston Car ________ __________
Co. v. Acura Auto. Div., American Honda Motor Co., Inc., 971 F.2d ___ ________________________________________________
811, 815 (1st Cir. 1992), cert. denied, 114 S. Ct. 94 (1993)). _____________
Instead, "parties are bound by the plain terms of their
contract," Hiller v. Submarine Signal Co., 325 Mass. 546, 550, ______ ____________________
91 N.E.2d 667, 669 (1950), and their subjective contemplations
are immaterial where the agreement is unambiguous. Blakeley v. ________
Pilgrim Packing Co., 4 Mass. App. Ct. 19, 24, 340 N.E.2d 511, 514 ___________________
(1976).
Language within a contract "is usually considered
ambiguous where an agreement's terms are inconsistent on their
face or where the phraseology can support reasonable
difference[s] of opinion as to the meaning of the words employed
and obligations undertaken." Rey, 990 F.2d at 1384. "Where ___
possible, words should be given their natural meaning, consistent
with the tenor of contractual terms." Fashion House, Inc. v. K ___________________ _
Mart Corp., 892 F.2d 1076, 1084 (1st Cir. 1989). __________
Of course, the parol evidence rule only applies where
the parties have created a partially or completely integrated
document. Restatement (Second) of Contracts 213.2 An
____________________
2 "(1) A binding integrated agreement discharges prior
agreements to the extent that it is inconsistent with them. (2)
A binding completely integrated agreement discharges prior
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integrated agreement is a writing that constitutes a final
expression of one or more terms of an agreement. See id. 209. ___ ___
"Where the parties reduce an agreement to a writing which in view
of its completeness and specificity reasonably appears to be a
complete agreement, it is taken to be an integrated agreement
unless it is established by other evidence that the writing did
not constitute a final expression." Id.; see also Ryder v. ___ ________ _____
Williams, 29 Mass. App.Ct. 146, 150, 558 N.E.2d 1134,1136 (1990). ________
With regard to long-term incentive compensation, Coll's
employment contract contains the following language: "During
1989, we intend to jointly explore with you appropriate methods
of compensation to reflect your contribution to the success of
the venture in 1990 and beyond." Coll maintains that this
language embodies a previously reached agreement on the subject
and thus obligated PB to develop a LTIP, establish clear and
reasonable goals for the plan, and communicate those goals to
Coll. He relies on his contractual negotiations as evidence that
PB intended to obligate itself to create a LTIP that would
provide Coll with the opportunity to earn at least $1,000,000 in
incentive compensation. To prevail on this theory, Coll
initially must show either (1) that his employment contract with
PB was not an integrated agreement with respect to incentive
compensation, or (2) that the contractual language is consistent
with his assertions. We think he has done neither.
____________________
agreements to the extent that they are within its scope."
Restatement (Second) of Contracts 213.
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All the relevant evidence indicates that the employment
contract was an integrated and final expression of the parties'
agreement with respect to compensation matters. The agreement
lists Coll's base salary, his annual bonus, his severance
compensation, and a non-competition agreement. In short, the
face of the document contains nothing that would indicate that
the parties did not intend it to be a complete and final
expression of their rights and obligations. Moreover, Coll
admitted in his deposition that he thought at the time that the
contract embodied all the material terms and conditions of his
employment. Given these considerations, we find that Coll's
employment agreement was an integrated document subject to the
tenets of the parol evidence rule, and as such must be enforced
according to its terms unless the terms are ambiguous on their
face.
Coll asserts that the relevant contractual language is
ambiguous and should be submitted to the jury to determine
whether it obligated PB to develop a LTIP and communicate its
goals to Coll. We disagree. The clear language of the contract
states only that PB "intend[s] to jointly explore with [Coll]
appropriate methods of compensation." Any ambiguity in this
language centers around whether it obligates PB to do anything. ________
Assuming it creates a binding obligation,3 the language clearly
____________________
3 As we stated above, the district court held that the parties
had merely created a non-binding agreement to agree with respect
to long-term compensation. For the purposes of this appeal, we
assume arguendo that the language is binding, and base our
analysis on whether PB breached its contractual obligations.
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does not support Coll's assertions. To turn the words "we intend
to jointly explore appropriate methods of compensation" into a
binding obligation to develop, fund, and implement a LTIP that
would provide up to $1,000,000 of incentive compensation would be
completely at odds with the common and natural meaning of the
words. Rather, we assume that the parties intended what they
wrote: that PB intended to make a good faith effort to explore an
appropriate compensation package for Coll, including incentive
bonuses.
The evidence presented for summary judgment
demonstrates clearly that PB fulfilled this obligation. Not only
did it explore new incentive packages, it developed and funded a
LTIP plan for Coll and his senior executives. And although Coll
disputes the point, the evidence shows that Coll himself proposed
the plan's goals, which PB failed to meet under his stewardship.
Under these circumstances, there was no breach of contract and
summary judgment on that claim was certainly appropriate.
B. The promissory estoppel claim B. The promissory estoppel claim _____________________________
As an alternative to his contract claim, Coll argues
that he is entitled to damages on the basis of promissory
estoppel. Specifically, Coll alleges that during contract
negotiations PB promised to develop a LTIP in order to persuade
Coll to accept the CEO position at PB. The district court
____________________
Because we conclude that there was no breach, we need not address
whether the employment contract was in fact binding regarding
long-term compensation or whether it was, as the district court
found, merely a non-binding agreement to agree.
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rejected Coll's promissory estoppel claim, holding that Coll
could not have reasonably relied on the pre-hire discussions
regarding the LTIP. We agree.
"An element of promissory estoppel is that the party
invoking it must have reasonably relied on the alleged promise to __________
his detriment."4 Hall v. Horizon House Microwave, 506 N.E.2d ____ _______________________
178, 184 (Mass. App. Ct. 1987)(emphasis added). Where a written
statement conflicts with a prior oral representation, reliance on
the oral representation is generally held to be unreasonable.
See Trifiro v. New York Life Insurance Co., 845 F.2d 30, 33-34 ___ _______ ____________________________
(1st Cir. 1988)("The conflicting content of [the defendant's]
oral statement with [his] written statement . . . should have
placed [the plaintiff] on notice that he should not rely on
either statement."). As this Court has noted,
[c]onfronted by such conflict a
reasonable person investigates matters
further; he receives assurances or
clarification before relying. A
reasonable person does not gamble with
the law of the excluded middle, he
suspends judgment until further evidence
is obtained. Explicit conflict engenders
doubt, and to rely on a statement the
veracity of which one should doubt is
unreasonable. The law does not supply
epistemological insurance. Nor does it
____________________
4 "The theory of promissory estoppel, as embodied in the
Restatement [(First)] of Contracts 90 (1932), permits recovery
if (1) a promisor makes a promise which he should reasonably
expect to induce action or forbearance of a definite and
substantial character on the part of the promisee, (2) the
promise does induce such action or forbearance, and (3) injustice
can be avoided only by enforcement of the promise." Loranger ________
Construction Corp. v. E.F. Hauserman Co., 6 Mass. App. Ct. 152, __________________ ___________________
154, 374 N.E.2d 306, 308, aff'd, 376 Mass. 757, 384 N.E.2d 176 _____
(Mass. 1978) (citations omitted).
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countenance reliance on one of a pair of
contradictories simply because it
facilitates the achievement of one's
goal.
Id. ___
In a case similar to the one at bar, an employee sought
entitlement to stock options allegedly promised him during
compensation-package negotiations with his employer. Hall, 506 ____
N.E.2d at 184. In rejecting the promissory estoppel claim, the
court held that "[g]iven the extended and persistently
inconclusive nature of his negotiations . . . about an over-all
employment and compensation package, [the plaintiff] could not
have had more than a well founded hope that the stock option
aspect of the deal would work out satisfactorily for him.
Inchoate negotiations are no better basis for reliance than for
an action on the purported contract as such." Id. (citing Tull ___ ____
v. Mister DonutDev. Corp., 389 N.E.2d 447 (Mass. App. Ct. 1979)). ______________________
Assuming arguendo that PB in fact promised Coll that it
would create a LTIP worth $1,000,000, Coll could not have
reasonably relied on it. Coll's employment offer was clearly at
odds with his understanding of PB's prior oral representations
regarding long-term compensation. Upon receipt of the First
Offer Letter, Coll called PB and raised his concern that the
language in the offer did not seem to obligate PB to create a
LTIP that could pay him up to $1,000,000.5 When the Second
____________________
5 The First Offer Letter stated, in pertinent part: "It is our
intent, that in 1989, we would jointly engage in establishing
criteria to appropriately reflect your direct contribution to the
success of the venture in 1990."
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Offer Letter essentially rephrased the same noncommittal language
contained in its predecessor, Coll should have been aware that
there was a potential disagreement over the LTIP. Nevertheless,
Coll acquiesced to the language in the Second Offer Letter,
purportedly because he did not want PB to think that he did not
trust them. He cannot now second-guess his negotiating strategy
and claim the benefit of a bargain he did not negotiate. As we
discussed above, the language in the Second Offer Letter clearly
did not obligate PB to do anything more than explore the
feasibility of a LTIP. Moreover, Coll admitted that, despite the
concerns he had raised, he recognized that the terms of the offer
letters were essentially identical regarding long-term
compensation. In short, PB's refusal to "firm up" the language
regarding long-term compensation rendered any reliance on prior
oral representations unreasonable. Accordingly, we affirm the
district court's grant of summary judgment for PB on Coll's
promissory estoppel claim.6
C. The bad-faith-termination claim C. The bad-faith-termination claim _______________________________
Lastly, we turn to Coll's claim that PB fired him in
bad faith in order to deprive him of a benefit to which he was
entitled.
Under Massachusetts law, the implied covenant of good
faith and fair dealing prohibits an employer from terminating an
____________________
6 Coll's claim for deceit also fails because, like promissory
estoppel, it requires that the plaintiff demonstrate reasonable
reliance. See Trifiro, 845 F.2d at 33-34. Accordingly, we ___ _______
affirm the district court's summary judgment ruling on this issue
as well.
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employee in order to deprive him of a benefit to which he is
entitled. Fortune v. National Cash Register, Inc., 364 N.E.2d _______ _____________________________
1251, 1257 (Mass. 1977). Essentially, "[a]n employer may not
discharge an employee in order to . . . reap for itself financial
benefits due [the] employee." Maddaloni v. Western Mass. Bus _________ __________________
Lines, Inc., 438 N.E.2d 351, 356 (Mass. 1982)(citing Fortune, 364 ___________ _______
N.E.2d 1251). An employer's obligation of good faith and fair
dealing imposes liability for the loss of compensation clearly
related to an employee's past service when that employee is
discharged without good cause. Gram v. Liberty Mut. Ins. Co., ____ ______________________
429 N.E.2d 21, 27-29 (Mass. 1981). As we noted in Biggins, _______
[T]he Gram court was careful to ____
distinguish between recovery based on the
employee's loss of future wages for past
services, and any claim for recovery
based on loss of future income for future
services. The Massachusetts Supreme
Judicial Court explicitly limited this
theory of "wrongful discharge" to
situations in which the employee's
discharge without good cause deprives the
employee of compensation for services
previously earned or past services.
Biggins v. Hazen Paper Co., 953 F.2d 1405, 1416 (1st Cir. 1992) _______ _______________
(discussing Gram, 429 N.E.2d at 27-29). Fortune liability does ____ _______
not encompass situations where the employee merely was fired
arbitrarily. Id. Rather, in order to establish a claim of ___
wrongful termination, the plaintiff must demonstrate that his
discharge was "contrived to despoil [him] of earned commission or
similar compensation due for past services." Id. ___
In the present case, we do not find that Coll's
termination deprived him of any particular benefit to which he
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was entitled. Coll contends that because his termination
occurred just as he was "pressing [PB's Board] to define the
goals of the LTIP," there is a genuine issue as to whether the
Board terminated him to avoid paying him nearly $1,000,000 under
the LTIP. Brief for Appellant at 44. The undisputed facts do
not support this contention. Coll's own writings indicate that
two of the four goals of the LTIP would not be met, and that
there was thus no potential for payout in 1992 under the LTIP:
"Half of the goals . . . will not be met . . . . Profitability
and positive cash flow are now forecast for 1993, not 1992. The
retentive and motivational capabilities of the LTI are therefore
compromised for 1992 . . . ." The Board's minutes echo this: "A
management proposal to replace the Company's Long-Term Incentive
Plan was considered. The existing Plan appears unlikely to
produce incentive compensation payments under the Company's
present business forecasts." Accordingly, we agree with the
district court that Coll's termination did not strip him of
compensation due for past services, and affirm the dismissal of
Coll's wrongful termination claim.
We have considered the other issues raised by Coll and
find them equally meritless.
Affirmed. ________
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Document Info
Docket Number： 94-1680
Filed Date： 3/30/1995
Precedential Status： Precedential
Modified Date： 9/21/2015