Sands v. Ridefilm Corp.

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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