121 F.3d 763 (1st Cir. 1997), 96-2326, Steinke v. Sungard Financial Systems, Inc.

Docket Nº:96-2326.
Citation:121 F.3d 763
Party Name:James A. STEINKE, Plaintiff, Appellant, v. SUNGARD FINANCIAL SYSTEMS, INC., Defendant, Appellee.
Case Date:August 06, 1997
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

Page 763

121 F.3d 763 (1st Cir. 1997)

James A. STEINKE, Plaintiff, Appellant,



No. 96-2326.

United States Court of Appeals, First Circuit

August 6, 1997

Heard May 8, 1997

Page 764

[Copyrighted Material Omitted]

Page 765

[Copyrighted Material Omitted]

Page 766

Margaret S. Garvey, with whom Wm. David Byassee, Freeborn & Peters, David C. Casey, Thomas A. Bockhorst, and Peckham, Lobel, Casey, Prince & Tye, were on brief for Plaintiff, Appellant.

Mark Blondman, with whom Scott F. Cooper, Blank Rome Comisky & McCauley, and Testa, Hurwitz & Thibeault, LLP, were on brief for Defendant, Appellee.

Before STAHL and LYNCH, Circuit Judges, and O'TOOLE, [*] U.S. District Judge.

STAHL, Circuit Judge.

Plaintiff-appellant James A. Steinke appeals the district court's grant of summary judgment in favor of defendant-appellee SunGard Financial Systems, Inc. ("SFS") on his breach of contract and promissory estoppel claims. We affirm.


We state the facts in the light most favorable to the party opposing summary judgment. See Hoeppner v. Crotched Mountain Rehabilitation Ctr., 31 F.3d 9, 14 (1st Cir. 1994).

Steinke is a former SFS employee. SFS, a wholly-owned subsidiary of SunGard Data Systems, Inc., develops and sells computer software used for investment and financial purposes. In 1992, SFS decided to create a brokerage division called "Phase3" 1 to develop software applications for the securities industry and specifically to compete with Security Industrial Software ("SIS"). SIS was a multi-service company whose primary business involved providing software and related services to self-clearing broker dealers. In 1992, Steinke was the President and Chief Executive Officer of SIS. In December 1992, Citicorp/Quotron, SIS's parent corporation, decided to sell SIS to a company called ADP.

When Dr. David Wismer, President and Chief Executive Officer of SFS, learned of ADP's acquisition of SIS, he thought Steinke might become available to head Phase3 and immediately began to recruit Steinke to come to Waltham, Massachusetts to lead Phase3. SFS's first efforts to recruit Steinke began in April or May 1992, when Wismer told Steinke that he understood SIS was well run and that he could use that type of management at Phase3. Late in 1992, Steinke attended a presentation that Wismer and James Mann, Chairman and Chief Executive Officer of SunGard Data Systems, made to

Page 767

Quotron. During this presentation, Wismer and Mann discussed with Quotron the possibility of SunGard Data Systems acquiring SIS. Mann also told Steinke during the meeting that if Steinke was to work for SFS, he would have one year to get to know the operations of Phase3 and two years after that to "conquer the ADP market."

In early February 1993, Steinke met with Wismer at Stapleton International Airport in Denver to discuss possible employment at SFS. During this meeting, Wismer told Steinke that he wanted him to fill Phase3's need for professional management. Wismer informed Steinke that SFS expected him to take three years to acquire former SIS customers and to reach Phase3's $50 million annual revenue target.

Later that month, Steinke met with Fraser Chambers, Executive Vice President of SFS's Eastern Region. Steinke inquired as to how SFS funded its divisions; Chambers responded that funding would be available if Steinke returned profits over a three-year period.

Over the weekend of February 19-20, 1993, Steinke attended an SFS meeting in Naples, Florida. In Naples, Steinke met with a variety of SFS personnel, including Wismer, Chambers, and Mann, in order to finalize the terms of his employment with SFS. Wismer informed Steinke that he was in the process of putting together an offer letter for Steinke. The SFS executives also reiterated that SFS senior executives were rated by their performance over a three-year period. Wismer in particular indicated that Steinke would have three years to "show his mettle" at SFS by achieving the aggressive financial results SFS demanded of its Phase3 division. Wismer told Steinke that SFS might not make its numbers in 1992, but that the plan Wismer had developed was sound and Steinke had three years to "make his numbers." Wismer reassured Steinke that if he could make his numbers in that time frame, he would have a long and successful career at SFS. The following day, Mann confirmed that SFS operated on a three-year financial plan.

On February 22, 1993, Wismer sent Steinke a letter constituting a formal offer of employment. The letter offered Steinke the position of President of SFS's Phase3 division at an annual salary of $195,000 plus bonuses and certain expenses. The letter stated that "[t]his offer is contingent upon your written acceptance of our [attached] Employee Agreement." The attached employment agreement contained a provision entitled "Termination," which provided:

I understand that this agreement does not contain a guarantee of employment and that, at any time and for any reason, I may resign or SFS may terminate my employment. If I decide to resign, I will give at least two weeks' prior notice, and I will remain for the full notice period unless SunGard instructs me to leave earlier and pays the remaining salary I would have earned during the notice period. In return, if SunGard terminates my employment after six months without cause, I will receive at least two weeks' salary as severance pay.

SFS previously had not informed Steinke that it required its employees to sign a form agreement before beginning employment.

Prior to executing the relevant documents, Steinke telephoned Wismer and told him that he was concerned about several issues in the form agreement, including the termination provision. Specifically, Steinke expressed concern about the fact that temporary housing would only last until July 15, 1993 and indicated that he found SFS's offer of five expense-paid trips per year between his home in Colorado and SFS's offices in Massachusetts to be unacceptable. Wismer verbally agreed to modify the term of the temporary housing and to work with Steinke so that he could take some additional trips to Colorado. When Steinke asked Wismer whether or not he had to sign the form agreement, Wismer informed him it was required of all SFS employees. In his deposition, Steinke recounted that Wismer responded: "You'll be judged on your numbers and you've got three years to make them. [E]verybody signs it. It's not an issue."

Steinke signed the Employee Agreement on February 26, 1993. Although the offer letter indicated "a most desirable start date"

Page 768

of March 15, 1993, after executing the Employee Agreement, Steinke informed Wismer that he could not start work before April 19, 1993 due to a non-compete agreement he had negotiated with SIS. Wismer responded that he wanted Steinke to start work on March 15, 1993. Steinke replied that he would be willing to work in some unofficial capacity and suggested that he be paid as a consultant. Wismer objected to this method of payment due to the accounting difficulties it apparently would occasion and remarked that "in the scheme of working together for the next five to ten years," Steinke should consider beginning work on March 15 with compensation for expenses only until he could officially start with SFS on April 19. Steinke agreed to this solution. When negotiations resulted in an acceptable arrangement, Steinke ceased considering alternative employment opportunities. 2

On one occasion after Steinke began his employment with Phase3, Mann told him that he had three years to make his numbers under SFS's three-year plan. Also after starting his employment, Steinke learned that Phase3's expenses were running far beyond what they should be if he was to make a bottom line profit of $6.7 million for 1993. On July 14, 1993, Wismer and Steinke discussed SFS's financial situation and Wismer informed Steinke that the 1994 numbers would be even more critical. Wismer indicated that it was Steinke's job to put the Phase3 business plan together to achieve the goals, reinforcing the perception that Steinke had three years to make his numbers.

On August 12, 1993, Wismer informed Steinke that his performance was "excellent." On October 15, 1993, however, SFS terminated Steinke's employment.

Steinke filed suit against SFS in Massachusetts Superior Court, alleging breach of contract, breach of implied contract, fraud in the inducement, negligent misrepresentation, and promissory estoppel. The gist of Steinke's claims was that SFS was obligated to compensate him for three years' worth of service based on its alleged oral representations to him and his subsequent reliance on these representations. SFS removed the case to federal district court on the basis of diversity of citizenship. See 28 U.S.C. § 1332(a) (1). On October 18, 1995, SFS filed a motion for summary judgment. The district court granted SFS's motion as to the breach of contract and breach of implied contract claims, but not as to the fraud in the inducement and negligent misrepresentation claims. The district court dismissed the promissory estoppel claim, and Steinke, after voluntarily dismissing the fraud and negligent misrepresentation claims pursuant to Fed.R.Civ.P. 41(a) (2), now appeals the district court's rulings.

Standard of Review

We review the district court's grant of summary judgment de novo. See Werme v. Merrill, 84 F.3d 479, 482 (1st Cir. 1996). Summary judgment is appropriate when the record reveals no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). A fact becomes material when it has the potential to affect the outcome of the suit. See J. Geils...

To continue reading