McGurn v. Bell Microproducts, Inc.

United States Court of Appeals
For the First Circuit

No. 01-1329

GEORGE R. MCGURN,

Plaintiff, Appellee,

v.

BELL MICROPRODUCTS, INC.,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Reginald C. Lindsay, U.S. District Judge]

Before

Selya and Lipez, Circuit Judges,
and Singal,* District Judge.

Robert W. Tollen, with whom Kent D.B. Sinclair and Seyfarth
Shaw were on brief, for appellant.

Theresa Kelly Banash for appellee.

March 25, 2002

____________
* Of the District of Maine, sitting by designation.
 LIPEZ, Circuit Judge. This case requires us to evaluate

the district court's application of an exception to the general

rule that silence does not constitute acceptance of the terms of a

contract offer.

I.

Bell Microproducts, Inc. (Bell) mailed George R. McGurn

a signed offer of employment, which stipulated that if McGurn was
terminated without cause during the first twelve months of his

employment with Bell he would receive a severance package worth

$120,000. In countersigning and returning the offer letter, McGurn
crossed out the word "twelve" and replaced it with "twenty-four."
McGurn initialed his alteration, but otherwise did nothing to call
it to Bell's attention. Bell terminated McGurn thirteen months

later and refused to pay him the severance package on the ground
that the twelve-month period stipulated in the offer letter had
passed, and that McGurn's replacement of "twelve" with "twenty-

four" was a counteroffer which Bell had never accepted.
McGurn filed an action in the Massachusetts Superior
Court to collect the compensation he claimed Bell owed him under
the contract, and Bell removed the case to federal district court

on the basis of diversity of citizenship. The parties agree that

Massachusetts law governs this dispute. Presented with cross-

motions for summary judgment, the district court granted summary

judgment for McGurn, finding that Bell's silence in response to

McGurn's counteroffer constituted an acceptance of the 24-month

termination clause. We find that conclusion premature. The import

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of Bell's silence cannot be decided as a matter of law on a motion

for summary judgment because of genuine issues of material fact

about whether Bell knew or should have known of McGurn's
counteroffer. We therefore vacate the district court's judgment

and remand for further proceedings.

II.

Except as noted, the following facts are undisputed.

Bell Microproducts is a distributor of semiconductor parts and

components with headquarters in San Jose, California. McGurn is a

resident of Massachusetts. In March of 1997, Bell's President,
Donald Bell, met with McGurn, who at the time was gainfully

employed elsewhere, to discuss the position of Vice President for
the Eastern Region at Bell. McGurn said that if he came to work
for Bell he would require a written contract that included a

"termination clause" stipulating that he would receive six months
salary and half his commissions in the event that he was fired.
During the next few months McGurn communicated several times with

Bill Murphy, the Bell official to whom McGurn would report, and
expressed interest in pursuing the position.
Based on these discussions, Murphy's secretary prepared

an offer letter and delivered it to Linda Teague, Bell's Director
of Human Resources. Teague dated the letter June 10, 1997, signed
it, and mailed it to McGurn. Upon receipt of the letter, McGurn

telephoned Murphy to discuss the offer and the absence of a
termination clause. McGurn then had a series of telephone

conversations with Donald Bell in which a termination clause was

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discussed. On June 29, McGurn requested a termination clause that

would remain in force as long as he worked for Bell. However, he

also said to Donald Bell that he would consider one that was
limited to the first twenty four months of his employment.

According to McGurn, Donald Bell replied that a twenty-four month

termination clause would be acceptable.
Teague then drafted a second offer letter, in

consultation with Donald Bell, which she signed and dated July 1,

1997. The letter included a termination clause stipulating that

"[i]f your status as an employee with Bell Microproducts is

terminated within the first 12 months of employment for any reason

other than gross misconduct, upon termination you will receive a

six-month severance package." In response, McGurn drafted his own
proposed offer letter, dated July 2, 1997, which included a

paragraph on termination "for cause," defined as conviction of a

felony or gross negligence or misconduct on the job, and a
paragraph on termination "without cause," which was open-ended:

[T]he Company may terminate your employment
without cause. In such event, you will
continue to receive your base salary for a
period of six (6) months following your
termination of employment, [and] . . . you
will receive an additional lump-sum amount
equal to $40,000 or 50% of annual incentive.

McGurn faxed his proposed offer letter to Murphy.

McGurn's next contact with Bell was his receipt of an

offer letter dated July 3, 1997, signed by Teague. The letter

included the following paragraph on termination without cause (we

have underlined the material change from McGurn's July 2 proposal):

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 [T]he Company may terminate your employment
without cause. In the event that this occurs
within your first twelve months of employment,
you will continue to receive your base salary
for a period of six (6) months following your
termination of employment, [and] . . . you
will receive an additional lump-sum amount
equal to $40,000 or 50% of annual incentive.
The letter concluded with Teague's request that McGurn "sign an

acknowledgment of this offer of employment and return to me for our

files." The following appeared under Teague's signature:

I acknowledge my acceptance of the offer as
described above and my start date will be
__________.

Signed _________________ Date _______________

McGurn signed his name and entered "7-8-97" in the other two blank
spaces. In addition, he crossed out the word "twelve" in the

termination clause, inserted "twenty four" directly above it, and

initialed the change. The alteration was in the center of the
second page of the two-page letter, five inches above McGurn's

signature. McGurn returned the letter to Teague (or possibly to

Murphy), and started work on July 8, 1997.1

McGurn advised no one at Bell that he had modified the

July 3 offer letter, and Teague, Murphy, and Donald Bell all deny

having viewed the letter upon its return. The Human Resources

Department did receive the letter, but Teague testified that she

herself would only have been notified if the letter had not been

received, as McGurn could not have been paid unless a countersigned

1
Bell testified that he returned the letter to "Teague or
Bill Murphy." Teague testified that her department received the
letter.

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copy of the offer letter was in Bell's files. Although there is no

direct evidence that anyone in the Human Resources Department

examined the returned letter, there was evidence that it was Bell's
practice to check that returned offer letters had been signed by

the employee.

In or around April of 1998, Brian Clark (Murphy's
successor at Bell) concluded that McGurn's performance was not

satisfactory. At some point after Clark made this determination,

but before he fired McGurn on August 3, 1998, Murphy discovered

McGurn's alteration of the offer letter, and discussed it with

Teague and Donald Bell. Upon learning of his termination on August

3, 1998, after approximately 13 months at Bell, McGurn conveyed to

Clark his belief that his contract included a two-year termination
clause. Clark disagreed, and Bell refused to pay the amounts

specified in the termination clause.

McGurn sued Bell for breach of contract in the Superior
Court of Middlesex County, Massachusetts. Based on diversity of

citizenship, Bell removed the case to federal district court. 28

U.S.C. § 1332(a)(1). The parties filed cross-motions for summary

judgment. In a Memorandum and Order dated February 15, 2001, the

district court granted McGurn's motion and denied Bell's motion.

The district court found that McGurn's alteration of the July 3

offer letter constituted a counteroffer which, in the circumstances

of this case, Bell had accepted by its silence. The court entered

judgment for McGurn in the amount of $120,000 plus interest, and

Bell filed a timely notice of appeal.

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 III.

The parties agree that McGurn's alteration of Bell's

offer letter constituted a rejection of that offer and created a

counteroffer. See Restatement (Second) of Contracts § 59 (1981)

("A reply to an offer which purports to accept it but is

conditional on the offeror's assent to terms additional to or

different from those offered is not an acceptance but is a counter-

offer."). What is in dispute is whether Bell accepted McGurn's

counteroffer. The district court concluded that it did because

Bell should have known about the change made by McGurn, and hence
its silence constituted an acceptance of McGurn's counteroffer:

Although no one on behalf of the defendant
signed McGurn's counteroffer, the defendant
admits it received the offer and accepted
McGurn's services for thirteen months. A
presumably sophisticated employer who receives
a signed letter of engagement from a
prospective employee and fails to read the
letter, particularly after weeks of
negotiation, does so at its own peril. Thus,
in the circumstances of this case, the
defendant's failure to read the terms of the
offer [does] not preclude the formation of a
contract. The defendant accepted the terms of
the plaintiff's offer when it decided to and
did employ the plaintiff for thirteen months.
Urging a different theory than the "should have known" theory

adopted by the district court, McGurn argues that Bell's silence in
the face of his counteroffer amounted to an acceptance because Bell
knew that McGurn had amended the termination clause, but gave no

indication that it rejected the change. Bell denies that it knew
about McGurn's alteration of the offer letter.

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 As a general rule, silence in response to an offer to

enter into a contract does not constitute an acceptance of the

offer. See Restatement (Second) of Contracts § 69 cmt. a
("Acceptance by silence is exceptional."); Polaroid Corp. v.

Rollins Envtl. Servs. (NJ), Inc., 624 N.E. 2d 959, 964 (Mass. 1993)

(noting that "silence does not ordinarily manifest assent"). There
is, however, an exception to the rule against acceptance by silence

"[w]here an offeree takes the benefit of offered services with

reasonable opportunity to reject them and reason to know that they

were offered with the expectation of compensation."2 Restatement

(Second) of Contracts § 69(1)(a).

In Gateway Co. v. Charlotte Theatres, Inc., 297 F.2d 483

(1st Cir. 1961), a case in many respects similar to this one, the
defendant had sent the plaintiff two copies of a document which

reduced to writing an oral agreement for the defendant to install

air conditioning in the plaintiff's movie theater, with one copy to
be countersigned and returned. Id. at 485. The plaintiff signed,

but also inserted a provision that the work would be performed by

a certain date. Id. The plaintiff returned the countersigned

contract with a cover letter noting its "understanding" that the

work would be performed by that date (although the letter made no

2
Although the Restatement exception, by its terms,
addresses a situation in which the offeree advances no payment at
all in exchange for the offeror's services, the district court
concluded correctly that the exception also applies when there is
a dispute about the nature or extent of required compensation. See
Polaroid, 624 N.E.2d at 964 (applying the exception to a dispute
over whether a waste disposal contract included an indemnification
clause).

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reference to the alteration of the contract itself). Id. at 485-

86. We stated that "[i]n the absence of actual knowledge [of the

alteration of the contract], the test is whether there was reason
for [the defendant] to suppose that such addition might have been

made." Id. at 486. We held that because of the cover letter

flagging the issue, defendant's silence could constitute acceptance
of plaintiff's counteroffer.

Importantly, we also noted in Gateway that "absent the

[cover] letter, the case would seem more like" Kidder v. Greenman,

187 N.E. 42 (Mass. 1933). Gateway, 297 F.2d at 486. In Kidder, a

tenant had signed and returned a lease to her landlord with the

understanding that the landlord would fill in certain blank spaces

pursuant to an oral agreement. The landlord then completed the
lease so as to include a term contrary to the oral understanding,

signed it, and returned it to the tenant, who "did not look at the

lease at the time she received it except to slit the envelope and
see it contained a lease." Kidder, 187 N.E. at 45 (internal

quotation marks omitted). The court declined to enforce the

disputed term against the tenant on the ground that she "had no

reason to think that the [landlord] had not completed the lease in

the authorized manner and, therefore, [had] no occasion to examine

it, when it was returned to her, to see if he had done so." Id. at

48. The Kidder court concluded that "[i]n these circumstances the

doctrine that a person who accepts an instrument . . . without

reading it . . . is charged with knowledge of [its] contents is not

applicable." Id. (citations omitted).

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 We distill from the Restatement and the Gateway and

Kidder precedents the legal rule in Massachusetts that silence in

response to an offer may constitute an acceptance if an offeree who
takes the benefit of offered services knew or had reason to know of

the existence of the offer, and had a reasonable opportunity to

reject it. See Restatement (Second) of Contracts § 69(1)(a);

Gateway, 297 F.2d at 485-86; Kidder, 187 N.E. at 48. We turn now

to the application of that rule in this case.

IV.

Under Federal Rule of Civil Procedure 56(c), a court may
enter summary judgment if the record "show[s] 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." We review the district
court's grant of summary judgment de novo, and examine the record

in the light most favorable to the party against whom summary
judgment had been entered, drawing all reasonable inferences in
that party's favor. Barreto-Rivera v. Medina-Vargas, 168 F.3d 42,

45 (1st Cir. 1999). We note that "disputes about whether a
contract has or has not been formed as the result of words and
conduct over a period of time . . . present interpretive issues

traditionally understood to be for the trier of fact."
Charbonnages de France v. Smith, 597 F.2d 406, 414-15 (4th Cir.

1979). This is so unless "the manifestations of intention of both

parties to be bound, or of either not to be bound, are so
unequivocal as to present no genuine issue of fact." Id. at 415.

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A. The District Court's Opinion

In response to Bell's assertion that it did not notice

McGurn's alteration of the offer letter until just before his

termination, the district court observed that "absent fraud, a

party to a contract is bound by the terms of the contract whether

or not he read them." The court added: "It will not do for a man

to enter into a contract, and, when called upon to respond to its

obligations, to say that he did not read it when he signed it, or

did not know what it contained." The district court's legal

proposition is sound, but inapposite to this case. The disputed
term was added to the offer after Bell had signed it. The relevant

question is why, as a matter of law, Bell should be expected to re-

read an offer it had written and signed, upon its return with
McGurn's countersignature.

In response to that question, the district court declared
that "[a] presumably sophisticated employer who receives a signed
letter of engagement from a prospective employee and fails to read

the letter, particularly after weeks of negotiation, does so at its
own peril." Although the logic of this generalization has some
appeal, its generality is an insurmountable problem. Unless the

record establishes that Bell knew or had reason to know that McGurn
had modified what Bell had written--and the district court points
to no facts in the record that would support such a conclusion--we

cannot say that Bell's silence, as a matter of law, constituted an
acceptance of McGurn's counteroffer.

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 Although we decline to endorse the district court's

generalization, "we may affirm [a summary judgment] order on any

ground revealed by the record." Houlton Citizens' Coalition v.
Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999). We therefore

examine the record to see if, drawing all reasonable inferences in

Bell's favor, the evidence nevertheless compels the conclusion that
responsible officials at Bell knew or should have known about

McGurn's counteroffer far enough in advance of his termination that

Bell had a reasonable opportunity to reject the 24-month

termination clause if it wished to avoid being bound. Summary

judgment for McGurn would be proper if Bell had actual or

constructive knowledge of McGurn's counteroffer at the time he

returned the offer letter, or if, when Clark discovered the
counteroffer, he had a "reasonable opportunity to reject" it before

he fired McGurn, but instead continued to "take[] the benefit of

[McGurn's] services" without speaking up. Restatement (Second) of

Contracts § 69(1)(a).

There are three possible grounds for affirmance suggested

by the record, two involving alleged actual knowledge and one

involving constructive knowledge. We examine them in turn.

B. Prominence of the Alteration

McGurn argues that Bell had actual knowledge of the
alteration of the offer letter at the time of its return. Although

McGurn advances no direct evidence that anyone at Bell noticed his
revision of the termination clause, he points out that the

alteration was made on the same page that bore his signature, which

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Bell acknowledges an unknown employee checked pursuant to company

policy. McGurn infers from this that the unknown employee "had to

have seen the change" in the duration of the termination clause,
because "one's eyes are immediately drawn to the change made by

McGurn and his initials above that change."

While an inference that Bell "had to have seen the
change" would be permissible based on the evidence in the record--

the alteration was in the center of the very page McGurn had

signed--we cannot say that a factfinder would be required to

conclude that the Bell employee who checked for McGurn's signature

must have noticed McGurn's alteration of the termination clause

half-way up the page. That is, the evidence that a Bell employee

must have seen McGurn's alteration is not "so one-sided that
[McGurn] must prevail as a matter of law." Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 252 (1986).

C. Clark's Discovery

Clark declared that he examined the countersigned offer

letter and discovered what McGurn had done "[a]t some point after
making [the] decision [to terminate McGurn], but before the actual
termination." The record only establishes that this discovery was

made during or after April of 1998, and before McGurn was fired in
August of 1998.3 McGurn argues that once Bell discovered his

3
In Bell's Statement of Material Facts, the timing of the
discovery is characterized as follows: "McGurn's change . . . was
not discovered until sometime during or after April, 1998,
after . . . Brian Clark[] had determined that McGurn's performance
was not satisfactory."

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counteroffer it had an obligation to speak up if it wished to

reject it. Bell points out, however, that Clark "could have

discovered the altered document as late as the day before" he fired
McGurn. Whatever the merits of McGurn's legal argument on this

point--a matter as to which we take no view--this factual

uncertainty precludes summary judgment for McGurn based on Clark's
actual knowledge of McGurn's counteroffer.

D. Teague's Responsibility

We also examine the record for evidence that Teague

(Bell's Director of Human Resources), or an employee in her
department acting on her behalf, should have determined if the

returned offer letter had been modified. Teague had participated
in the negotiations with McGurn. She stated at her deposition that
"Bill Murphy and I worked together on all of these offer letters,"

and Donald Bell testified that he "consult[ed] with Linda [Teague]"
during the drafting of the letter.4 The July 3 offer letter from
Bell to McGurn was signed by Teague, and indicated that McGurn

should return the countersigned copy to her. Under these
circumstances, a jury might conclude that McGurn could reasonably
have expected Teague (or Murphy) to inspect the document upon its

return. Moreover, the offer set out in Bell's letter was not a
mere reduction to writing of a previous oral agreement; it was a
step in a negotiation which Bell had no reason to assume had been

4
The actual discussions (in person and via telephone)
between Bell and McGurn were conducted by Bill Murphy and Donald
Bell, not by Teague.

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concluded. Although Teague requested that McGurn simply sign and

return the letter unamended, the evidence supports the inference

that she had no basis for assuming he would do so. Instead, she
should have checked the document to ensure that he had not made

further changes.

Although an inference that Teague should have examined
the returned offer letter with greater care would be permissible

based on the evidence in the record, the evidence, again, does not

compel such an inference. Bell disputes the notion that Teague (or

her subordinates) had any reason to check the returned offer letter

for unauthorized modifications, and a factfinder might conclude

that Teague had no reason to inspect the letter absent any

indication from McGurn that he had revised a material term.5
We have stated that "[o]rdinarily the question of whether

a contract has been made . . . is for the jury," Ismert & Assocs.,

Inc. v. New England Mut. Life Ins. Co., 801 F.2d 536, 541 (1st Cir.
1986), except where "[t]he words and actions that allegedly formed

a contract [are] so clear themselves that reasonable people could

5
Because the July 3 offer letter was signed by Teague, and
McGurn returned it to Teague (or Bill Murphy), we need not be
detained by Bell's argument that the low-level employee who
examined the returned letter lacked the authority to bind the
corporation (with his silence) on the question of McGurn's
termination clause. Teague having requested that McGurn return the
letter to her, it would be no defense for her to say that a
subordinate in her office who lacked the authority to bind the
corporation opened the letter and failed to show it to her. See
Gateway, 297 F.2d at 486 & n.4 (holding corporation responsible for
contents of letter addressed to its president but read by a
secretary). To accept Bell's argument on this point would be to
penalize McGurn for Teague's failure to read her own mail. The
same logic applies if McGurn returned the letter to Murphy, as he
suggested he might have done.

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not differ over their meaning," Borque v. FDIC, 42 F.3d 704, 708

(1st Cir. 1994) (internal quotation marks omitted). When, as is

the case here, "the facts support plausible but conflicting
inferences on a pivotal issue in the case, the judge may not choose

between those inferences at the summary judgment stage." Coyne v.

Taber Partners I, 53 F.3d 454, 460 (1st Cir. 1995); accord 10A
Charles Allen Wright, Arthur R. Miller & Mary Kay Kane, Federal

Practice and Procedure § 2725 at 433-37 (3d ed. 1998) ("[I]f the

evidence presented on [a] motion [for summary judgment] is subject

to conflicting interpretations, or reasonable people might differ

as to its significance, summary judgment is improper.") (footnotes

omitted).

V.

In sum, drawing all reasonable inferences in Bell's

favor, as we must in reviewing the district court's entry of
summary judgment against Bell, we cannot say that the facts in the
record compel a conclusion that Bell noticed or should have noticed

McGurn's modification of Bell's offer letter, and that its silence,
therefore, constituted an acceptance of McGurn's offer. Instead,
those issues must be resolved by the factfinder at a trial.

Judgment vacated. Remanded for further proceedings
consistent with this opinion. Each party to bear his or its own
costs.

-- Separate Opinion Follows --

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 SELYA, Circuit Judge (dubitante). I write separately

because I doubt that the court's opinion reflects either the

practicalities of the case at hand or the result that the Supreme

Judicial Court (SJC) would reach.

The critical facts are undisputed. McGurn's counteroffer

- the letter containing his modification of the termination clause

- was received at Bell's headquarters in the ordinary course and

routed by it to its human resources department. That letter formed

the basis for the company's treatment of McGurn as an employee and

remained part of the corporate personnel records for the duration
of his employment. Given these facts, the case turns on whether

Bell should be said to have accepted McGurn's counteroffer.
While no official of the company ever said "I accept" in
so many words, acceptance can occur by silence under certain

circumstances. See, e.g., Ismert & Assocs., Inc. v. New Engl. Mut.

Life Ins. Co., 801 F.2d 536, 541-42 (1st Cir. 1986); Polaroid Corp.

v. Rollins Envtl. Servs. (NJ), Inc., 624 N.E.2d 959, 964 (Mass.

1993); see also Restatement (Second) of Contracts § 69 (1981). One
such set of circumstances, pertinent here, is when an offeree fails
to reply to an offer yet takes the benefit of the offered services

with reasonable opportunity to reject them and reason to know that
they were tendered in the expectation of a particular
consideration. See Restatement (Second) of Contracts § 69(1). In

such a situation, it would be manifestly unjust for an offeree to
reap the benefit of the services without letting the offeror know

that it had no intention of paying the remuneration that the

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offeror expected to receive. Id., cmt. b. Thus, fundamental

fairness permits silence to operate as an acceptance.

This principle is part of the warp and woof of
Massachusetts contract law. See Polaroid, 624 N.E.2d at 964; Bump

v. Robbins, 509 N.E.2d 12, 18-19 (Mass. App. Ct. 1987). On the

facts of record here, I think it likely that the SJC would find, as
did the able district judge, that Bell implicitly assented to (and,

therefore, should be bound by) the terms of McGurn's counteroffer.

After all, Bell unreservedly accepted McGurn's services, having

reason to know from its own files that those services were being

rendered with an expectation that the terms of the counteroffer

(including the amended termination clause) would be fulfilled.6

To be sure, Bell tells us that, even though it employed
McGurn for thirteen months pursuant to the letter that set out the

terms of his counteroffer, no one in its employ noticed the

modification. But there is no hint here of chicanery on McGurn's
part, and I doubt that ignorance induced by a party's own

negligence or lassitude is a basis for escaping from contractual
obligations. To the contrary, the acceptance of offered services,

under circumstances in which the beneficiary of those services

ought to have known that the provider expected to be compensated

6
Suppose the shoe was on the other foot, and McGurn's
counteroffer had included not only an expanded termination clause
but also a covenant not to compete. Only an innocent would assume
that Bell would refrain from attempting to enforce the covenant
against McGurn. To my mind, this example illustrates that the
majority's resolution of the case lets Bell have its cake and eat
it too. I have no stomach for so one-sided a result - and I doubt
that the SJC would find it appetizing.

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for them in a certain way, is the functional equivalent of express

assent. See Bump, 509 N.E.2d at 18-19. This case seems to fit

within the contours of that rule.
To sum up, I believe that a party should not be able to

insulate itself from ex contractu liability by professing that it

neglected to read the very document essential for the formation of
the contract, especially when that document has reposed in its own

files at all relevant times. Were the law otherwise and the

majority's view taken to its logical extreme, an offeree could

completely redefine its responsibilities by the simple expedient of

claiming that it was not aware of what its own records plainly

showed. I doubt that the SJC would countenance so counterintuitive

a result. Cf. Upton v. Tribilcock, 91 U.S. 45, 50 (1875)
(observing that "[i]t will not do for a man to enter into a

contract, and, when called upon to respond to its obligations, to

say that he did not . . . know what it contained. If this were
permitted, contracts would not be worth the paper on which they are

written"). Given this doubt, I respectfully decline to join the

court's opinion.

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