United States Court of Appeals
For the First Circuit
No. 99-2006
HOWARD SANDS,
Plaintiff, Appellant,
v.
RIDEFILM CORPORATION and BERNARD PLISHTIN,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor, U.S. District Judge]
Before
Boudin, Circuit Judge,
Bownes, Senior Circuit Judge,
and Lynch, Circuit Judge.
Edward C. Cooley, with whom Giarrusso, Norton, Cooley
& McGlone, P.C. was on brief for appellant.
Scott C. Moriearty, with whom Daniel J. Jackson and
Bingham Dana LLP were on the brief for appellees.
May 18, 2000
BOWNES, Senior Circuit Judge. Plaintiff-Appellant
Howard Sands brought suit for damages in the United States
District Court for the District of Massachusetts against
Defendants-Appellees Ridefilm Corporation and its vice-
president, Bernard Plishtin. The plaintiff asserted diversity
jurisdiction under 28 U.S.C. § 1332(a) (1994), and alleged
breach of contract (Count I), breach of the implied covenant of
good faith and fair dealing (Count II), fraud (Count III),
negligent misrepresentation (Count IV) and promissory estoppel
(Count V). The defendants moved for summary judgment on all
counts. The magistrate judge (Neiman, M.J.) recommended that
summary judgment be allowed as to Counts I, II and III, but
denied as to Counts IV and V. The district court (Ponsor, J.)
granted defendants' motion for summary judgment on all counts,
disposing of the case in its entirety. This appeal followed.
I.
In April 1993, Plishtin, vice president of Ridefilm,
and an employee of its parent company, Trumbull Company, Inc.,
placed a job listing at the Harvard University Graduate School
of Business Administration, seeking applications for “general
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management positions.” It explicitly stated that “[t]he Company
is now in the process of finalizing its initial financing and
expects to be in a position . . . to hire a full-time manager .
. . .” Sands submitted his application. After a series of
interviews with Plishtin and various other employees, Plishtin
informed Sands that he had been chosen for the position.
Shortly thereafter, the defendants flew Sands to Las Vegas to
meet company personnel and acquaint him with one of the
defendants' projects.
The defendants also invited Sands, his parents and his
fiancée to visit the company's headquarters in the Berkshire
Mountains in Massachusetts on June 10 and 11, 1993. During this
visit, Sands and Plishtin met to discuss the specifications of
Sands's employment. Sands alleges that they reached agreement
with respect to salary, bonus, moving expenses and health and
life insurance. The defendants contend, however, and the record
reflects, that at that point they did not reach agreement on all
of those terms. In fact, at his deposition, Sands indicated
that the parties had not reached complete agreement on all of
these terms. Specifically, Sands stated in his deposition: “We
were very close on base compensation, though we hadn't finalized
that. . . . We agreed that there would be an equity position in
the one-to-two-percent range of the company, though the details
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of that would have to be worked out later.” The parties
discussed an equity share for Sands, but agreed that they would
make a final determination of the exact amount of equity when
the company secured equity financing. The plaintiff alleges
that Plishtin assured Sands that the equity deal was “imminent
and expected to close within weeks.”
On June 18, 1993, Plishtin wrote a memorandum to Doug
Trumbull (president of Trumbull/Ridefilm), indicating that he
would like to draft a letter to Sands “in which we can outline
the basis of his deal . . . [and] the letter will be constructed
such that it is clear that we will only be able to commit to a
starting date and construct a formal employment agreement upon
confirmation of a source of funding.” The memorandum concluded:
“Howard understands that we are no longer interviewing for this
position and I have told him that he is our choice for the job.
Needless to say, we will look forward to making this official as
soon as possible.”
On June 24, 1993, Plishtin sent Sands a letter
memorializing their previous conversations. The letter stated
that Sands's starting date would be “approximately July 15, but
no later than July 29. . . . [and a]t the time that we confirm
this starting date an interim employment contract will be
drafted,” that will contain information concerning salary,
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moving expenses, health benefits, and an equity and compensation
plan. The letter concluded:
You understand that we are no longer
interviewing for this position and you are
our choice for the job. Needless to say, we
will look forward to making this official as
soon as possible. We will be able to commit
to a starting date and construct a formal
employment agreement upon confirmation of a
source of funding.
On July 1, 1993, Plishtin wrote to Sands, indicating
that financing remained a problem. The letter stated, in
pertinent part:
I'm sorry that I'm not writing today with a
binding offer. Getting . . . funding
remains the hurdle, since our arrangement
and our ability to set a formal starting
date for you remains contingent upon this
funding.
The funding never materialized. Plishtin sent Sands a letter on
November 23, 1993, which read, in pertinent part:
I find no basis for your suggestion that you
are due something from Ridefilm. To repeat
what I believe has been made more than
evident to you a number of times in our
conversations and correspondences with you,
our ability to hire you has from the outset
been contingent upon successful financing of
the Ridefilm business. . . . Your decision
to stop interviewing was clearly made
despite the contingent nature of this
situation. As you know, I suggested you not
pass on other opportunities and have in fact
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recommended you for other positions, at
least one of which you have pursued.
To repeat, an employment arrangement between
you and Ridefilm along the lines described
in my letter of June 24 would have been
constructed upon confirmation of a source of
funding for this business, and the
contingent nature of this offer was repeated
in my letter of July 1. Unfortunately[,]
this funding has not taken place even at
this late date. . . . Given the disturbing
positions taken and contentions made in your
letter, I believe there is nothing further
for us to discuss with you.
Sands remained unemployed until March 1994. He claimed
that the defendants represented that financing was not an issue.
Sands also claims to have reasonably believed that he had a job
with the defendants and alleges that he rejected other
employment opportunities offered to him.
II.
We review the district court's grant of summary
judgment de novo. See Dubois v. United States Dep't of Agric.,
102 F.3d 1273, 1283 (1st Cir. 1996). Summary judgment may be
granted only 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). "[T]he
mere existence of some alleged factual dispute between the
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parties will not defeat an otherwise properly supported motion
for summary judgment." Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986). Rather, to be considered material, a
disputed fact must have the potential to "affect the outcome of
the suit under the governing law." Id. at 248.
The party moving for summary judgment, here the
defendants, bears the initial burden of demonstrating that there
are no genuine issues of material fact for trial. See Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). This burden "may be
discharged by 'showing'--that is, pointing out to the district
court--that there is an absence of evidence to support the
nonmoving party's case." Id. at 325. After such a showing, the
"burden shifts to the nonmoving party, with respect to each
issue on which he has the burden of proof, to demonstrate that
a trier of fact reasonably could find in his favor." DeNovellis
v. Shalala, 124 F.3d 298, 306 (1st Cir. 1997) (citing Celotex,
477 U.S. at 322-25).
In the final analysis, upon examining the facts in the
light most favorable to the nonmoving party and drawing all
reasonable inferences in his favor, see Dubois, 102 F.3d at
1284, we are required to determine if "there is sufficient
evidence favoring the nonmoving party for a jury to return a
verdict for that party." Anderson, 477 U.S. at 249.
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A. Breach of Contract (Count I)
The plaintiff alleges that the defendants breached
their agreement with him by reneging on a binding employment
agreement. “It is axiomatic that to create an enforceable
contract, there must be agreement between the parties on the
material terms of that contract, and the parties must have a
present intention to be bound by that agreement.” Situation
Management Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878
(2000); see Wilcox, Inc. v. Shell E. Petroleum Prods., Inc., 283
Mass. 383, 388 (1933). “[I]t is essential to the existence of
a contract that its nature and the extent of its obligations be
certain. This rule has been long established.” Caggiano v.
Marchegiano, 327 Mass. 574, 579 (1951).
Defendants argue that an enforceable contract was never
created because the parties failed to reach agreement on all
essential terms of an employment contract. Specifically, the
defendants contend that the parties had not yet reached
agreement on the plaintiff's compensation. The amount of
compensation is an essential term of an employment contract.
See Ferrera v. Carpionato Corp., 895 F.2d 818, 822 (1st Cir.
1990).
The magistrate judge found that, although the essential
terms of the contract lacked specificity, all essential terms of
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employment were stated, and “it may well be considered
contractually binding.” He also stated, however, that the
conditional language of the letters created ambiguity in the
essential terms and “[made] evident that the parties did not
come to an agreement about the essential terms of their
contract.” The district court adopted his findings of law and
fact on this count and granted the defendants' motion for
summary judgment.
The plaintiff now argues that because the judge found
the contract language of the essential terms to be ambiguous, it
became a question of fact for the jury to determine the parties'
intent. We do not address the merits of this contention because
we find that a condition precedent to the contract had not been
fulfilled, thus defeating the alleged contract regardless of the
language of the essential terms.
Even assuming arguendo that all essential terms of the
contract had been agreed upon, an otherwise enforceable contract
will be defeated by the non-occurrence of a condition precedent.
See Tilo Roofing Co., Inc., v. Pellerin, 331 Mass. 743, 746
(1954) (holding that if a condition is shown not to have been
performed, there is no binding obligation). “A condition
precedent defines an event which must occur before a contract
becomes effective or before an obligation to perform arises
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under the contract. If the condition is not fulfilled, the
contract, or the obligations attached to the condition, may not
be enforced.” Massachusetts Mun. Wholesale Elec. Co. v.
Danvers, 411 Mass. 39, 45 (1991) (citations omitted).
After careful review of the record, we find it clear
that the alleged employment agreement between the plaintiff and
the defendants was contingent upon Ridefilm receiving equity
financing. Because that financing never materialized, no
enforceable contract was formed.
Throughout the entire interview process, the defendants
expressly stated that the position was contingent upon equity
financing. The initial job posting, see infra, made clear that
the company had an expectation of hiring in the future, not a
current ability to do so.
Each document received by the plaintiff from the
defendants expressly stated that the position was contingent
upon financing. The memorandum of June 18, 1993, from Plishtin
to Doug Trumbull, a copy of which was sent to the plaintiff,
stated, in pertinent part:
Let me reiterate that the letter will be
constructed such that it is clear that we
will only be able to commit to a starting
date and construct a formal employment
agreement upon confirmation of a source of
funding.
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The letter, dated June 24, 1993, from Plishtin to the plaintiff
contained a copy of the June 18th memorandum and stated, in
pertinent part:
You understand that we are no longer
interviewing for this position and you are
our choice for the job. Needless to say,
we will look forward to making this official
as soon as possible. We will be able to
commit to a starting date and construct a
formal employment agreement upon
confirmation of a source of funding.
And finally, the letter of July 1, 1993, reiterated that funding
remained an obstacle. It stated, in pertinent part:
I'm sorry that I'm not writing today with a
binding offer. Getting . . . funding
remains the hurdle, since our arrangement
and our ability to set a formal starting
date for you remains contingent upon this
funding.
These three documents, which the plaintiff admits he received,
made it unmistakable that the plaintiff's employment with the
defendants was contingent upon Ridefilm receiving funding.
Because that condition precedent was not met, no binding
obligation existed and no enforceable contract was created
between the parties.
We affirm the district court's summary judgment for the
defendants on the ground that a condition precedent to the
contract had not taken place. This is a different rationale
than that used by the district court. There can be no question
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of our power to rely on a different ground than the district
court did in affirming its judgment: “This standard of review
permits us to uphold the district court's summary judgment
regardless of whether we reject or adopt the rationale, so long
as an 'independently sufficient ground' is made manifest by the
record.” Davila-Perez v. Lockheed Martin Corp., 202 F.3d 464,
466 (1st Cir. 2000); see also Bridges v. MacLean-Stevens
Studios, Inc., 201 F.3d 6, 9 (1st Cir. 2000).
B. Breach of the Implied Covenant of Good Faith and Fair
Dealing (Count II)
In the second count of his complaint, the plaintiff
alleges that the defendants breached their implied covenant of
good faith and fair dealing with the plaintiff. Contracts for
employment under Massachusetts law contain “an implied covenant
of good faith and fair dealing, and a termination not made in
good faith constitutes a breach of the contract.” Fortune v.
National Cash Register Co., 373 Mass. 96, 101 (1977). To
prevail under the Fortune doctrine, a plaintiff must demonstrate
that the employer terminated the plaintiff for the purposes of
“depriving the employee of money that he fairly earned and
legitimately expected.” King v. Driscoll, 424 Mass. 1, 7 (1996)
(quoting Kravetz v. Merchants Distribs., Inc., 387 Mass. 457,
463 (1982)).
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Under Fortune, litigants may not recover damages for
future, prospective benefits not earned by past services. See
Sargent v. Tenaksa, Inc., 108 F.3d 5, 8 (1st Cir. 1997) (“[T]he
Supreme Judicial Court has confined recovery to identifiable
future benefit[s] . . . reflective of past services, and firmly
excluded prospective benefits not thus tied to past services.”)
(alterations in original) (internal quotation marks omitted);
see also McCone v. New England Tel. and Tel. Co., 393 Mass. 231,
235 (1984); Gram v. Liberty Mut. Ins. Co., 391 Mass. 333, 335
(1984). Here, it is undisputed that the plaintiff never
performed any services to or for the defendants, and thus is due
no compensation. The district court properly adopted the
recommendation of the magistrate judge, which was based on the
cases cited above and concluded that the defendants were
entitled to summary judgment on the breach of the implied
covenant of good faith and fair dealing count.
C. Fraud (Count III)
In the third count of his complaint, the plaintiff
alleges that the defendants “fraudulently misrepresented
material facts to the plaintiff in order to induce [him] to
forego other employment opportunities and to decline other
offers of employment [and that t]hese misrepresentations were
made with the knowledge that they were false and with the intent
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to deceive the plaintiff, who reasonably relied upon them.” To
recover under a fraud theory, a plaintiff must prove “that the
defendant made a false representation of a material fact with
knowledge of its falsity for the purpose of inducing the
plaintiff to act thereon, and that the plaintiff relied upon the
representation as true and acted upon it to his damage.”
Barrett Assocs., Inc. v. Aronson, 346 Mass. 150, 152 (1963)
(internal quotation marks omitted).
The magistrate judge, in his Report and Recommendation,
found that the defendants were entitled to summary judgment on
the fraud claim. He stated: “The nearest Plaintiff comes [to
alleging a proper fraud claim] is his allegation that Ridefilm
was never close to obtaining financing. However, there is
simply no evidence that Ridefilm knew it would not attain such
funding within the desired time frame.” The plaintiff did not
object to this ruling. The district court adopted the
magistrate judge's recommendation as to this count and allowed
the defendants' motion for summary judgment on the fraud claim.
Plaintiff's failure to object to the ruling of the magistrate
judge constituted waiver.
The plaintiff now argues for the first time that the
defendants misrepresented the material fact that his employment
was contingent upon Ridefilm obtaining funding. We need not
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address this issue because the plaintiff waived his objection to
the entry of summary judgment by failing to raise this objection
before the district court. See Teamsters, Chauffeurs,
Warehousemen and Helpers Union, Local No. 59 v. Superline
Transp. Co., 953 F.2d 17, 21 (1st Cir. 1992) (“If any principle
is settled in this circuit, it is that, absent the most
extraordinary circumstances, legal theories not raised squarely
in the lower court cannot be broached for the first time on
appeal.”); see also Rules for U.S. Magistrates 3(a)(B)
(“[F]ailure to file timely and appropriate objections to that
report and recommendation . . . shall constitute a waiver of the
right to appeal the district court's order to the United States
Court of Appeals.”). The plaintiff has waived this argument and
we will not address it for the first time on appeal.
D. Negligent Misrepresentation (Count IV) and Promissory
Estoppel (Count V)
In Counts IV and V of the complaint, the plaintiff
alleges negligent misrepresentation and promissory estoppel,
respectively. The plaintiff alleges that “the defendant
negligently made misrepresentations of material fact to the
plaintiff in order to induce him to forego other employment
opportunities and to decline other offers of employment.” The
plaintiff further alleges that he reasonably relied on
defendants' misrepresentations to his detriment. The magistrate
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judge, in recommending that summary judgment be denied as to the
fourth and fifth counts, concluded that the plaintiff's reliance
was not unreasonable as a matter of law. The district court,
noting that “the issue presents a close question,” disagreed.
Promissory estoppel and negligent misrepresentation
require the plaintiff to show that his reliance was reasonable.
See Trifiro v. New York Life Ins., Co., 845 F.2d 30, 33 (1st
Cir. 1988) (“[I]f [plaintiff's] reliance is found unreasonable
under the circumstances, . . . these claims must fail.”); see
also Coll v. PB Diagnostic Sys., Inc., 50 F.3d 1115, 1124 (1st
Cir. 1995) (“An element of promissory estoppel is that the party
invoking it must have reasonably relied on the alleged promise
to his detriment.”) (emphasis in original) (internal quotation
marks omitted).
The plaintiff claims that Plishtin repeatedly told him
that “you are our man;” “you will work for us;” and “[you are]
our choice for the job.” The plaintiff contends that he relied
on those assurances to his detriment and declined an offer of
employment from Foothill Capital Corporation, his former
employer. Plaintiff argues that his reliance on the defendants'
statements was both justifiable and reasonable. We disagree.
Sands says that his promissory estoppel and negligent
misrepresentation claims “had fully matured in June when [he]
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declined an offer of employment and stopped interviewing in
reliance upon the defendants' representations.” Assuming
arguendo that he has not waived this argument and that there is
an adequate factual basis to support his claims of reliance, we
will test the reasonableness of his reliance during three
relevant time periods: the time prior to the June 10 and 11
meetings, the time between the June 10 and 11 meetings and the
receipt of the June 18 memo and the June 24 letter, and the time
after Sands received the June 18 memo and the June 24 letter.
As to the time period prior to the June 10 and 11
meetings, the record reflects that the plaintiff spoke with
someone at Foothill in May 1993 and that person inquired whether
he wanted to work at Foothill. The plaintiff explained that he
was likely going to work for Ridefilm and he would not need any
other offers. There was a second, similar phone call between
the plaintiff and someone at Foothill in early June 1993. The
plaintiff reiterated that he would be accepting a position at
Ridefilm and did not need any other offers. The plaintiff, in
his deposition, concedes that these conversations took place
prior to his graduation from Harvard Business School. At that
time, however, any reliance by Sands that he had secured
employment with Ridefilm would have been unreasonable. It is
uncontested that at that early stage of negotiations, no terms
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of employment had been discussed between the plaintiff and the
defendants. In fact, it was not until the June 10 and 11, 1993
meeting at the defendants' place of business that they discussed
any of the terms of employment. This was the same weekend as
the Harvard Business School Commencement. It is evident that
the plaintiff told Foothill that he had secured a position with
Ridefilm and did not need any other offers before any terms of
an employment agreement were even discussed. It was
unreasonable at that time for the plaintiff to presume that he
would be employed by Ridefilm.
The second relevant time period for assessing the
reasonableness of Sands's reliance covers the time after the
June 10 and 11 meetings but before Sands's receipt of the June
18 memo and the June 24 letter. Sands says that during this
time period he continued to rely on the defendants'
representations by not interviewing with any other companies.
This alleged reliance was unreasonable. Although Plishtin may
have told Sands that the job was his and that the financing was
not a problem, it is clear that several essential terms of his
agreement with Ridefilm were still under negotiation following
the June 10 and 11 meetings. There was, for example, no
agreement on compensation. It was unreasonable for Sands to
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rely on the incomplete, tentative, and unwritten agreement that
emerged from the June 10 and 11 meetings.
The third time period is the time beginning when Sands
received the June 18 memo and the June 24 letter. At this
point, Sands had received written confirmation that certain
terms of the deal had been finalized and, he says, he had
continued to receive oral reassurance that financing was not an
issue. The evidence in the record, however, indicates
otherwise. The plaintiff received three written statements from
the defendants which clearly said that his employment was
contingent upon confirmation of a source of funding. See
Memorandum, dated June 18, 1993 (“[W]e will only be able to
commit to a starting date and construct a formal employment
agreement upon confirmation of a source of funding.”); Letter,
dated June 24, 1993 (“We will be able to commit to a starting
date and construct a formal employment agreement upon
confirmation of a source of funding.”); Letter, dated July 1,
1993 (“I'm sorry that I am not writing today with a binding
offer. Getting . . . funding remains the hurdle, since our
arrangement and our ability to set a formal starting date for
you remains contingent upon this funding.”).
The oral statements allegedly made by the defendants
conflict with the express written language of the memo and
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letters sent to the plaintiff. It was unreasonable for the
plaintiff to rely on the alleged oral representations because of
the express written word. See Coll, 50 F.3d at 1124; Trifiro,
845 F.2d at 34. “Confronted 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.” Trifiro, 845 F.2d at 33.
The evidence shows that the plaintiff, in fact, was not
content with the alleged conflicting responses he was receiving
from the defendants. The plaintiff did investigate further by
seeking clarification from the defendants. He sought
confirmation of his employment and the source of funding. The
written clarification received by the plaintiff in the memo and
letters confirms the absence of any final commitment.
We agree with the district court that the plaintiff's
reliance upon the defendants' alleged oral representations was
not reasonable as a matter of law. Therefore, the defendants
are entitled to summary judgment on the negligent
misrepresentation count and the promissory estoppel count of his
complaint.
E. Conclusion
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For the aforementioned reasons, we find that the
defendants are entitled to summary judgment on all counts. The
district court's grant of summary judgment on all counts of the
complaint is hereby Affirmed. Costs awarded to defendants.
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