Source: https://law.justia.com/cases/federal/appellate-courts/F3/284/86/495448/
Timestamp: 2020-07-05 11:14:26
Document Index: 498872945

Matched Legal Cases: ['§ 1332', '§ 59', '§ 69', '§ 69', '§ 69', '§ 69', '§ 2725', '§ 69', '§ 69']

George R. Mcgurn, Plaintiff, Appellee, v. Bell Microproducts, Inc., Defendant, Appellant, 284 F.3d 86 (1st Cir. 2002) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › First Circuit › 2002 › George R. Mcgurn, Plaintiff, Appellee, v. Bell Microproducts, Inc., Defendant, Appellant
George R. Mcgurn, Plaintiff, Appellee, v. Bell Microproducts, Inc., Defendant, Appellant, 284 F.3d 86 (1st Cir. 2002)
US Court of Appeals for the First Circuit - 284 F.3d 86 (1st Cir. 2002) Heard November 6, 2001
[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.
[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.
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 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.
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:
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., 416 Mass. 684, 624 N.E.2d 959, 964 (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).
Importantly, we also noted in Gateway that "absent the [cover] letter, the case would seem more like" Kidder v. Greenman, 283 Mass. 601, 187 N.E. 42 (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).
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.
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.
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.
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).
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, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
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 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.
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 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.
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 not differ over their meaning," Bourque 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 Alan 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).
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., 416 Mass. 684, 624 N.E.2d 959, 964 (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 offeror expected to receive. Id., cmt. b. Thus, fundamental fairness permits silence to operate as an acceptance.
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, 23 L. Ed. 203 (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.
Bell testified that he returned the letter to "Teague or Bill Murphy." Teague testified that her department received the letter
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).
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."
The actual discussions (in person and via telephone) between Bell and McGurn were conducted by Bill Murphy and Donald Bell, not by Teague
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.
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