Alexander v. Codemasters Group Limited

• Decision Date: 15 November 2002
• Docket Number: No. F038832.,F038832.
• Citation: 127 Cal.Rptr.2d 145,104 Cal.App.4th 129
• Court: California Court of Appeals Court of Appeals
• Parties: Craig ALEXANDER, Plaintiff and Appellant, v. CODEMASTERS GROUP LIMITED et al., Defendants and Respondents.

127 Cal.Rptr.2d 145

104 Cal.App.4th 129

Craig ALEXANDER, Plaintiff and Appellant, v. CODEMASTERS GROUP LIMITED et al., Defendants and Respondents.

No. F038832.

Court of Appeal, Fifth District.

November 15, 2002.

As Modified on Denial of Rehearing December 13, 2002.

Bacigalupi, Neufeld & Rowley and Daniel W. Rowley, Fresno, for Plaintiff and Appellant.

Gibson, Dunn & Crutcher, Nancy P. McClelland, Los Angeles, and Paul De-Camp for Defendants and Respondents.

OPINION

GOMES, J.

An executive appeals the grant of summary judgment in favor of his former employer in a dispute over whether the employer was contractually obligated to provide him with vested stock options. The employer contends the parties did not agree when the stock options would vest and, as a result, the purported stock options agreement was uncertain and unenforceable. On appeal, the executive claims the superior court erred in concluding as a matter of law that (1) vesting of the promised stock options was a material term of the agreement, (2) the agreement could not be interpreted to provide for vested stock options, and (3) the absence of an agreement concerning vesting precluded the existence of an enforceable contract and equitable estoppel.

The employer never informed the executive that the promised stock options would not be vested, but bases its interpretation of the agreement on inferences drawn from written documents, oral communications and acts of the parties that occurred over a period of several months. Obtaining summary judgment on a contract cause of action based on inferences is not easy, and in this case the employer has failed to carry its burden. We conclude triable issues of material fact exist concerning the contents of the agreement reached by the parties. Thus, summary judgment is not appropriate. We reverse the judgment and remand.

PROCEDURAL BACKGROUND

On August 28, 2000, Craig Alexander filed a first amended complaint asserting causes of action for promissory estoppel, breach of contract, and equitable estoppel against Codemasters Group Limited, a United Kingdom company, and Codemasters Yosemite, Inc., a Delaware corporation (collectively, Codemasters). Alexander's prayer for relief requested (1) $50,000 for man unpaid performance bonus ¹

and (2) stock options to purchase 35,000 shares of Codemasters' stock at an exercise price of $3.25 per share or, alternatively, monetary damages equivalent to the value of the options. Codemasters answered the first amended complaint with a general denial. The first cause of action for promissory estoppel was voluntarily dismissed by Alexander later in the proceedings.

On April 20, 2001, Codemasters filed a motion for summary judgment contending, among other things, that its purported offer to grant Alexander a performance bonus and stock options in Codemasters was too uncertain and indefinite to be enforceable. On May 7, 2001, Alexander filed his opposition papers, which included his declaration. On May 11, 2001, Codemasters filed its reply papers to Alexander's opposition to the motion for summary judgment, including evidentiary objections to various matters in 15 of the paragraphs of Alexander's declaration. The record on appeal does not contain a written response by Alexander to Codemasters' evidentiary objections.

The first hearing on the motion for summary judgment was held on May 18, 2001. As to the evidentiary objections, the superior court stated it would only consider admissible evidence. As its tentative ruling, the superior court stated it was inclined to grant summary judgment. After hearing argument, the superior court granted a continuance to allow Alexander the opportunity to take the deposition of Nick Wheelwright, managing director of Codemasters and the person with whom Alexander had negotiated the terms of his employment with Codemasters.

Mr. Wheelwright's deposition was taken on June 4, 2001. Additional briefing was filed by the parties. The continued hearing on the motion was argued on June 7, 2001. At the beginning of the hearing, the superior court stated, "I'm going to only consider relevant evidence." Counsel for Codemasters did not orally request specific rulings on the evidentiary objections and the superior court said nothing further about the evidentiary objections of Codemasters. At the conclusion of argument, the superior court said it did not think the documents and discussions rose "to the level that's necessary to have a contract," stated the motion for summary judgment would be granted, and directed counsel for Codemasters to prepare the order.

Judgment was entered in favor of Codemasters on July 3, 2001. A nine-page order granting the motion for summary judgment was signed and entered by the superior court on July 5, 2001. Alexander filed a timely notice of appeal stating he "appeals from the Judgement by Court Under CCP § 437c entered on July 3, 2001." Alexander's notice of appeal and appellate briefs do not directly challenge any purported evidentiary rulings of the superior court.

FACTS

Between February 1995 and June 1999, Alexander was employed in Oakhurst, California as the general manager of Yosemite Entertainment, a division of the computer game company Sierra On-Line. In early 1999, Sierra On-Line announced its intentions to close the Oakhurst facility and reduce its workforce.

Alexander attempted to find a company willing to purchase the assets of the business that Sierra On-Line was closing, hire him to manage the business, and employ the other workers who were being laid off. Codemasters was one of the computer game companies contacted by Alexander and it became interested in the acquisition.

After Codemasters decided to acquire the assets from Sierra On-Line, negotiations regarding Alexander's employment began. Mr. Wheelwright asked Alexander to provide him with information about Alexander's compensation package with Sierra On-Line, details of other offers Alexander had received, and the compensation Alexander wanted. On June 8, 1999, Alexander sent Mr. Wheelwright an e-mail responding to his request. The e-mail listed Alexander's "current target yearly compensation" with Sierra at $250,000 based on salary, bonus and stock options. The email also listed other offers for (1) $260,000 plus 15,000 stock options and (2) $190,000 plus 150,000 stock options and stated the options in both offers vested over five years.

Following the June 8, 1999, e-mail, Alexander went to the United Kingdom and discussed with Codemasters the acquisition of the assets of Sierra On-Line and his possible employment with Codemasters. The July 5, 2001, order ruled the description of this meeting contained in the second sentence of paragraph 9 of Alexander's declaration was inadmissible.

At some point in early to mid-1999, three representatives of Codemasters held a meeting in a rented movie theater in Oakhurst with employees of Sierra On-Line. This meeting was the first discussion anyone from Codemasters had with Alexander regarding employee stock or options or equity should Codemasters commence business operations in the United States. At this meeting, nothing specific was said regarding the details of a stock option plan, other than that providing the prospective United States employees something that they had before was a goal. Not all of the prospective employees had been eligible for options with Sierra On-Line.

On June 16, 1999, Alexander became an employee of Codemasters assigned to the Oakhurst facility. On July 8, 1999, Alexander signed a document dated June 24, 1999, and titled "Offer to Craig Alexander" (Letter Agreement) that was sent to him by Nick Wheelwright. The Letter Agreement stated in part:

"1. Your appointment as a senior executive with Codemasters Software Company Limited. (Full title to be decided later) with effect from 16th June 1999.[¶] ...

"9. We intend to grant you share options provided we are advised that this is feasible and appropriate. If we do not do this we will review your overall package and bonus structure to compensate for this.

"As an employee of Codemasters, you agree that you will sign a Contract of Employment, which will be prepared upon receipt of your acceptance. We will also require you to sign a Non-Disclosure Agreement upon acceptance of this offer. [¶] ...

"I accept the offer of employment with the above terms and conditions"

In paragraph 10 of his declaration, Alexander claims he signed the Letter Agreement in reliance upon Mr. Wheelwright's promise that the stock options he was to receive would be as good or better than the ones he received from Sierra On-Line.

In mid-1999, a few weeks after Alexander was hired but before any other employees were hired at the Oakhurst facility by Codemasters, Alexander had a meeting in Oakhurst with two representatives of Codemasters' United Kingdom head office operations, Finance Director Sarah Gosbell and Mr. Wheelwright.

During the initial discussion about the potential stock option plan for United States employees, Mr. Wheelwright proposed a two-and-a-half-year period for "vesting"² of the options granted under that plan. Subsequently, probably after the meeting, Alexander informed Codemasters that the options granted by Sierra On-Line had a five-year vesting schedule.

During the meeting, Alexander discussed with Ms. Gosbell and Mr. Wheelwright the issue of vesting of options in the event of termination of employment by a United States employee. Alexander asked what would happen to any options awarded to a United States employee whose employment with Codemasters terminated. The discussion ended with no resolution of that question and with Alexander acknowledging that "we just need to work the details out."

Alexander contends the discussions concerning the vesting of options in the event of termination concerned the stock option plan for other United States employees and did not concern his options. The parties do not dispute that they never...