Title: Vague v. Bank One Corporation

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE
RICHARD W. VAGUE,
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No. 511, 2003
Plaintiff Below,
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Appellant,
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v.
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Court Below:
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Court of Chancery
BANK ONE CORPORATION,
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of the State of Delaware
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in and for New Castle County
Defendant Below,
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C.A. No. 18741-NC
Appellee.
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Submitted: February 24, 2004
Decided: May 20, 2004
Before BERGER, STEELE and JACOBS, Justices.
O R D E R
This 20th day of May, 2004, on consideration of the briefs and arguments of the
parties, it appears to the Court that:
1) Richard W. Vague appeals from a decision of the Court of Chancery granting
summary judgment to Bank One Corporation.  The trial court held that Vague’s
reliance on Bank One’s misrepresentations concerning the exercise date for certain
stock options was unreasonable as a matter of law, and that Bank One had no
obligation to “cure” its misrepresentations by alerting Vague to the change in exercise
date.  We conclude that the reasonableness of Vague’s reliance is a question of fact
that requires a trial.  Accordingly, we reverse.
1Gaffin v. Teledyne, 611 A.2d 467, 472 (Del. 1992); Steinman v. Levine, 2002 WL 31761252,
at * 15 (Del. Ch.) aff’d., 822 A.2d 397 (Del. 2003).
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2)  Vague, who was Chief Executive Officer of First USA, Inc. (FUSA) from
1992 - 1999, was granted the disputed stock options in 1995 and 1996.  A few years
later, Bank One acquired FUSA.  When Vague decided to retire in 1999, he inquired
about his severance package and stock options.  Clinton W. Walker, then general
counsel of Bank One’s FUSA unit, checked with the Human Resource Manager, and
reported to Vague’s accountant that Vague would have 3-5 years to exercise his
options, depending on the specific grant.  Bank One’s option administrator sent Vague
a summary as of December 30, 1999, that showed expiration dates in 2005 and 2006.
3) The information Walker gave to Vague, and the information provided in the
December summary, was incorrect.  Although  summaries sent to Vague in March and
June 2000 showed the correct exercise deadline of  August 21, 2000,  Vague did not
review those summaries.  Only after the deadline had passed did Vague learn that the
options had expired.  As a result of the options expiring, Vague suffered a loss in
excess of $5 million.
4) Whether Vague’s claim sounds in fraud or negligent misrepresentation, he
must establish that Bank One provided him false information and that he justifiably
relied on the false information, thereby suffering damages.1  The question of whether
2Wilmington Trust Co. v. Aetna Cas. & Sur., 690 A.2d 914, 916 (Del. 1996).
3Darnell v. Myers, 1998 WL 294012 at *5-6 (Del. Ch.)
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one’s reliance was reasonable generally is a question of fact that cannot be determined
on summary judgment.2  The trial court recognized this general rule, but  granted
summary judgment because it was undisputed that Vague had been given accurate
information in two mailings that he received before the expiration of the options.
5) The reasonableness of one’s reliance on false information depends on all of
the circumstances.3  For purposes of this appeal, the facts establish that Vague relied
on general counsel’s representations, which were “confirmed” in writing by the first
summary he received in January 2000.  The later communications were quarterly
statements that Vague had no reason to believe contained any new or different
information.  Vague was a departing Chief Executive Officer, who was relying on the
bank’s general counsel to give him accurate information involving millions of dollars.
Under these circumstances, we cannot say as a matter of law that it was unreasonable
of Vague to expect that Bank One would notify him directly of any change in the
option expiration dates.  
6) There are additional facts that will bear upon the final decision as to the
reasonableness of Vague’s reliance, including unanswered questions about Bank
One’s apparent failure to provide him the official benefits package that he was told he
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would receive.  While we do not express any views on the ultimate decision, we are
satisfied that this case should be decided on the merits after trial.
NOW, THEREFORE, IT IS ORDERED that the judgment of the Court of
Chancery be, and the same hereby is, REVERSED.  This matter is remanded for
further action in accordance with this Order.  Jurisdiction is not retained.
By the Court:
/s/ Carolyn Berger
Justice