Murray v. Abt Associates Inc.
| Decision Date | 21 April 1994 |
| Docket Number | No. 93-3096,93-3096 |
| Citation | 18 F.3d 1376 |
| Parties | James R. MURRAY, Plaintiff-Appellant, v. ABT ASSOCIATES INC. and Walter R. Stellwagen, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Elliott E. Petlak, John J. Gaines, III, Huff & Gaines, Chicago, IL, Logan T. Johnston (argued), Johnston, Maynard, Grant & Parker, Phoenix, AZ, for James R. Murray.
Stuart Berks (argued), LaDonna M. Loitz, Deutsch, Levy & Engel, Chicago, IL, for defendants-appellees.
Before POSNER, Chief Judge, and EASTERBROOK and RIPPLE, Circuit Judges.
In March 1988 James Murray was unemployed, having been released from his former position as Associate Director of the National Opinion Research Center (NORC). Murray opened negotiations with Abt Associates, which like NORC conducts survey research. Murray specializes in large-scale surveys for units of government; Abt wanted to enter that segment of the business. Murray proposed that Abt create and fund a subsidiary (Scientific Surveys, Inc., or SSI) to carry on these surveys. He envisaged that he and three former colleagues--Martin Frankel, Calvin Jones, and Mary Cay Burich, all still at NORC--would operate the subsidiary in Chicago (Abt's headquarters are in Massachusetts) and receive half of the subsidiary's equity. Walter Stellwagen, the chief executive of Abt, thought the concept good but the implementation problematic. Murray and colleagues (the Group) had not operated their own shop before, and the proposed operation would require a lot of Abt's money before producing a profit.
Abt was unwilling to promise that it would create SSI without first satisfying itself that the prospects for profit were good. Frankel, Jones, and Burich were reluctant to leave NORC while things were so uncertain. The Group's lawyer therefore proposed that Abt agree to employ the four for a minimum term even if SSI never came into being. Abt accepted and entered into two-year contracts of employment with each of the Group's four members. Then all four members of the Group, plus Stellwagen on behalf of Abt, signed a contract, the Proposed Term Sheet, setting forth in detail the terms on which the subsidiary would be created and funded, and who would own what portion of its stock--if Abt's board approved after studying "a three year business plan to be prepared and delivered on or before April 29, 1988." The last paragraph of this contract reads:
Unless the definitive Agreements are executed and delivered by each party to the other on or before May 30, 1988, the matters set forth herein shall terminate and neither party shall have further rights against the other, excepting existing agreements of employment with each of the Major Shareholders [i.e., the Group]. [Abt] agrees, however, to pay all costs and expenses of the Major Shareholders incurred to professional advisors in negotiating the definitive Agreements, such costs and expenses not to exceed $25,000.
The Group's plan was not acceptable to Abt's board, which thought the projections unrealistic and insufficiently detailed. On May 25, 1988, the board voted not to establish SSI. Frankel presently returned to NORC; Murray, Jones, and Burich stayed on under the terms of their employment contracts and set about securing large-scale governmental survey work for Abt, in the hope that deeds By 1991 the remaining three members of the Group had secured more than $50 million in business and believed that they had attained profitability. Stellwagen agreed and proposed that Abt create SSI as a subsidiary, although on terms that differed from those of 1988. There were two obstacles: (i) Abt had fired Murray, putting him on leave pending a last effort to create SSI; (ii) Jones and Murray were no longer on speaking terms. Jones rejected Abt's proposal to establish SSI under conditions that would commit him to an ongoing relationship with Murray, and Abt was unwilling to proceed without Jones's approval. Discussions collapsed, and Murray's discharge became final. (An employee at will after the two-year contract expired, Murray does not contest Abt's right to let him go.) Abt later reached a financial accommodation with Jones and Burich, who have remained with the firm.
would speak more loudly than words. Stellwagen encouraged them in this course.
On the street once again, Murray filed this suit under the diversity jurisdiction. Applying Illinois law (which the parties agree governs), the district court entered summary judgment for the defendants. The court concluded that the parties' conduct did not create any contract beyond the Proposed Term Sheet itself; because this agreement left Abt's board with discretion not to create a subsidiary, and because Abt fulfilled its promise to employ Murray for two years, the court held that he is not entitled to relief. The parties' actual contract left no room for recovery on a theory of unjust enrichment, the court thought, adding that Murray has not produced evidence that would support recovery on any other theory.
Like the district court, we believe that Murray received his due under the contract. Abt's board exercised a power, contemplated in the contract, not to establish SSI as a subsidiary. Under the parties' bargain, "neither party shall have further rights against the other, excepting existing agreements of employment"--and Abt honored those agreements. Murray insists, however, that the Proposed Term Sheet is not the whole agreement. After the board decided not to establish SSI as a subsidiary, Stellwagen sent the Group a letter inviting all four to remain as employees and to carry on the work that SSI would have conducted. Stellwagen wrote, among other things, that "we would move along a course intended to eventuate in spinning off SSI as a corporation in which you had a significant ownership position." Other portions of the letter suggested that if the Group's operations fulfilled the goals in the business plan a spinoff could occur one to three years in the future. Murray depicts this as a legally enforceable promise.
Yet there is a gulf between a promise to work toward a goal and a commitment to accomplish that end. Just as the Proposed Term Sheet conditioned establishment of SSI on the board's approval, Stellwagen's letter conditioned further steps on success as Abt (which is to say,...
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