Cataldo v. Zuckerman

• Citation: 20 Mass.App.Ct. 731,482 N.E.2d 849
• Parties: John A. CATALDO v. Mortimer B. ZUCKERMAN et al. 1
• Decision Date: 30 October 1985
• Court: Appeals Court of Massachusetts

Page 849

482 N.E.2d 849

20 Mass.App.Ct. 731

John A. CATALDO v. Mortimer B. ZUCKERMAN et al. ¹

Appeals Court of Massachusetts Suffolk.

Argued June 7, 1985.

Decided Sept. 10, 1985.

Further Appellate Review Denied Oct. 30, 1985.

Daniel L. Goldberg, Boston, for defendants.

Douglas G. Moxham, Boston (Kenneth R. Berman and Judith Gail Dein, Boston, with him) for plaintiff.

Before KASS, CUTTER and FINE, JJ.

CUTTER, Justice.

In 1971, Zuckerman and Linde were partners in Boston Urban Associates (BUA), formed by them to develop real estate projects. Linde offered to Cataldo the job of supervising BUA's construction operations. Cataldo accepted and began work on August 2, 1971. ²

A memorandum (the 1971 memorandum) from Linde to Cataldo, dated September 17, 1971, but actually signed by Cataldo, Linde, and Zuckerman on November 3, 1971, "outlined ... some of the items ... discussed as elements of ... [Cataldo's] overall compensation as long as ... [Cataldo, Zuckerman, and Linde] continue to be associated in" BUA. These elements included "1. Base salary: $35,000 per year.... 2. Bonus: $10,000 or more as ... [Cataldo, Zuckerman, and Linde] mutually agree upon on a yearly basis." ³ Under the heading "6. Partnership Interests," it was provided that Cataldo "will own a portion of the '[d]eveloper's [e]quity' " in two named projects and in future projects developed by BUA. See subsec. A, B, and C of par. 6 in note 4(b), infra. The paragraph proceeded, " 'Developer's [e]quity' is ... that portion of the entire equity remaining after any equity participation has been made for all outside financing or other interests; e.g., construction, brokerage or architectural fees paid in the form of equity participation, joint venture participations, etc." ⁴

Under the heading "D. Partnership Provisions," ⁵ the 1971 memorandum included the following: "(1) ... [Zuckerman and Linde] will retain the unrestricted right to make all policy decisions with respect to partnership affairs," a provision made thoroughly inclusive by further language; and the provision referred to by the parties as the "buy-back" provision, "(2) In the event ... [Cataldo's] employment by BUA is terminated during the development of the project in question for whatever reason, voluntarily or involuntarily ... [with exceptions not here applicable], ... [Zuckerman and Linde] will have the right to purchase back ... [Cataldo's] partnership interest. The purchase price for ... [that] interest would be based upon the lesser of a.) the appraised value of ... [that] interest or b.) $1,000 per month times the number of months between the time the architect is authorized to begin preparation of design development drawings and the time ... [Cataldo] leave[s], plus $1,000/month times the number of months by which this period exceeds 12 months. This purchase price would be paid off over a three year period." ⁶

The 1971 memorandum was prepared by Linde and Zuckerman. The memorandum went through various drafts, one of which Cataldo admitted he saw. ⁷

There turned out, for a time, to be less construction work for BUA than had been anticipated. Cataldo was not completely employed on that type of work. ⁸ Because BUA's operations encountered some fiscal problems, Cataldo received only one bonus payment, in 1972, and also was subjected in 1974 to a reduction to $25,000 of his basic salary of $35,000, which was partly restored (to $30,000) in 1976.

Thereafter, Cataldo began pressing for the execution of a partnership agreement on each project in which he felt entitled to a share of the developer's equity. He engaged in discussions with Linde and Zuckerman, in which the latter two tried to persuade Cataldo to change the partnership arrangements for individual projects contemplated by the 1971 agreement. The defendants, among other changes, sought to substitute for Cataldo's shares of developer's equity other forms of participation in project profitability.

Cataldo, on August 29, 1977, by a memorandum to Zuckerman and Linde, brought matters to a head. He contended that the terms of the 1971 memorandum should be carried out and was "not willing to accept the various modifications" of that memorandum which had been suggested because they would deprive him "of the very long-range equity participation" which constituted the reason he had "entered the employ of BUA in the first place." As a consequence of Cataldo's memorandum, at a conference among Zuckerman, Linde, and Cataldo on August 29, 1977, Cataldo's employment by BUA was terminated.

This action for damages was initiated by Cataldo on December 20, 1978. In his complaint Cataldo alleged the existence of the 1971 memorandum and asserted that it was a contract of employment. He claimed that Linde and Zuckerman were in breach of their obligations under it by (1) their termination of Cataldo's employment "without cause and in bad faith," (2) their refusal to pay him the remainder of his 1977 salary, (3) their failure to pay him bonuses for the years 1972 through 1977, and (4) their failure to pay for depriving him of his share of the "[d]eveloper's [e]quity" in projects known as Commercial Block, Hayden Avenue, Mainstone Farm, and 133 Federal Street. ⁹

The case was tried before a Superior Court judge and a jury from December 5 to 22, 1983. At the close of Cataldo's case and at the close of all the evidence, Linde and Zuckerman moved for directed verdicts. The motions were denied, and the case was submitted to the jury on special questions.

The special questions were answered, ¹⁰ and judgment for Cataldo was entered on the basis of the answers. ¹¹ The defendant's motions for judgment n.o.v., for a new trial, and for amendment of the findings and entry of additional findings were denied on February 15, 1984. The defendants have appealed.

1. The defendants contend that the 1971 memorandum was too vague and preliminary in nature to be enforced as a contract among the persons who signed it. See Saxon Theatre Corp. v. Sage, 347 Mass. 662, 666, 200 N.E.2d 241 (1964); Blair v. Cifrino, 355 Mass. 706, 707-710, 247 N.E.2d 373 (1969); Tull v. Mister Donut Dev. Corp., 7 Mass.App. 626, 631-632, 389 N.E.2d 447 (1979). Cataldo, on the other hand, takes the position that the 1971 memorandum embodied all the material terms of the arrangement under which Cataldo was to work for BUA, with provisions sufficiently specific to control their relationship, even if some aspects of the transaction were left for later agreement. See Sands v. Arruda, 359 Mass. 591, 594-597, 270 N.E.2d 826 (1971); Roddy & McNulty Ins. Agency, Inc. v. A.A. Proctor & Co., 16 Mass.App. 525, 530-533, 452 N.E.2d 308 (1983); Frank Horton & Co. v. Cook Elec. Co., 356 F.2d 485, 490 (7th Cir.), cert. denied, 384 U.S. 952, 86 S.Ct. 1572, 16 L.Ed.2d 548 (1966). See also Air Technology Corp. v. General Elec. Co., 347 Mass. 613, 626 n. 17, 199 N.E.2d 538 (1964); Restatement (Second) of Contracts, §§ 33 & 34 (1981).

We conclude that the 1971 memorandum contained "[a]ll the essential terms of a contract" in a form "sufficiently definite so that the nature and extent of the obligations of the parties can be ascertained." Simons v. American Dry Ginger Ale Co., 335 Mass. 521, 523, see 523-524, 140 N.E.2d 649 (1957), and cases cited. The parties acted under the 1971 memorandum for some six years and treated it as a contract. All of them signed it, showing an intention to be bound by its provisions. Uncertainty about the terms of the 1971 memorandum arose only when BUA's partners showed unwillingness to abide by the 1971 provisions, when asked by Cataldo to formulate partnership arrangements for the Park Plaza project and for each of four projects which, by 1977, appeared viable. We are of opinion that the formulae set out in the 1971 memorandum gave adequate guidance for stating the several required partnership arrangements, ¹² at least between BUA and Cataldo. This could have been done with considerable flexibility left to BUA's two partners to deal with other aspects of each project partnership as the needs of that partnership might require.

2. The 1971 memorandum gave Cataldo (as consideration for his leaving Aberthaw [see note 2, supra ] and for his continuing to work for BUA) a total compensation measured by all the elements mentioned in that memorandum as base salary, bonuses, perquisites, and partnership interests. Cataldo, under the 1971 memorandum, could have been found entitled to have the defendants work out with him a partnership arrangement to protect his share of developer's equity (a) then as to Park Plaza, in existence in 1971, if determined to be likely to be completed, and (b) as to each new project within a reasonable time after it had made enough progress to indicate a likelihood of completion. The defendants negotiated with Cataldo about such partnership arrangements in 1976 and 1977. It could be found, however, that the defendants then attempted to alter important provisions of the 1971 memorandum in a manner which Cataldo thought to be to his disadvantage. They discharged him when he insisted on his position, although he had continued to perform his obligations under the 1971 memorandum.

This discharge perhaps could have been regarded as part of a simple breach of the defendants' 1971 contract to enter into suitable partnership arrangements. For such a breach, Cataldo might be found to be entitled, upon usual contract principles, ¹³ to what he had lost as a consequence of the breach; viz., at least with respect to the developer's equity interests, the then fair value of these lost interests.

This case, however, was not dealt with only as a simple breach of contract. It also took into account the decision in Fortune v. National Cash Register Co., 373 Mass. 96, 105-106, 364 N.E.2d 1251 (1977). On the evidence in that case, the court held a finding to be warranted that the company's discharge of a salesman, employed "at will," was in bad faith, where it...