Cohen v. GTECH Corporation, No. 03-2659 (R.I. Super 10/27/2006)

Decision Date27 October 2006
Docket NumberNo. 03-2659,03-2659
CourtRhode Island Superior Court


Before this Court are three motions for summary judgment, each made pursuant to Super. R. Civ. P. 56. The plaintiff, Howard S. Cohen ("Cohen"), moves for partial summary judgment as to Counts II and III of his amended complaint. Defendants, GTECH Corp. and GTECH Holdings Corp. (hereinafter collectively "GTECH"), move for summary judgment as to the first five Counts of the complaint, while defendants, Michael J. Tuchman ("Tuchman") and Levenfeld Pearlstein Glassberg Tuchman Bright Goldstein & Schwartz, LLC ("Levenfeld Pearlstein"), move for summary judgment on Counts VI and VII. This Court's jurisdiction is predicated on G.L. 1956 § 8-2-14.


On March 5, 2001, Cohen and GTECH entered into an Employment Agreement (hereinafter "Employment Agreement"), confirming that he would be CEO of GTECH as of March 12, 2001. The Employment Agreement, in addition to detailing Cohen's salary and benefits, also delineated how future stock options were to be awarded to the plaintiff.

In particular, Section 6(c)(iii)1 of the Employment Agreement stated that future stock options were to be awarded under GTECH's 2000 Omnibus Stock Option and Long-Term Incentive Plan ("2000 Plan"). According to this provision, any future stock option agreement was to contain terms that were "essentially" the same as those set forth in Appendix A of the Employment Agreement, which noted that options "shall remain exercisable for a period of one year." Likewise, said Section also noted that all future stock option grants would have terms "substantially similar" to the stock option agreement that was attached as Appendix D.2 The language in Appendices D and A differed from the language in GTECH's 2000 Plan, which permitted stock options to be exercisable for only six months after termination of employment.3

On March 5, 2001, GTECH granted Cohen, pursuant to a stock option agreement (hereinafter "2001 Stock Option Agreement" or "2001 SOA"), stock options for 400,000 shares. Although the language originally contained the six month exercise period, in accordance with the 2000 Plan, the 2001 SOA was amended to contain a one year exercise period, conforming with the Employment Agreement.

On April 3, 2002, under a second stock option agreement (hereinafter "2002 Stock Option Agreement" or "2002 SOA"), GTECH granted Cohen an additional 450,000 stock options. This grant provided for a six month exercise period. Again, this language, while the same as the 2000 Plan, did not match the language in Section 6(c)(iii), Appendix A, or Appendix D of the Employment Agreement. Cohen alleges that he brought this discrepancy to the attention of GTECH's General Counsel, Marc A. Crisafulli ("Crisafulli"), who agreed to fix it. Crisafulli denies the conversation took place.4

On August 6, 2002, Cohen was terminated from GTECH. That day, Cohen contacted Michael J. Tuchman ("Tuchman"), a partner at the Illinois law firm of Levenfeld Pearlstein who had worked for Cohen on prior employment negotiations. Tuchman claims that he advised Cohen that it was not yet appropriate to begin, in earnest, discussions or negotiations regarding his termination and rights thereunder.

Sometime thereafter, Cohen hired Charlene F. L. Marant ("Marant") (apparently a law school graduate) as an advisor in connection with severance negotiations. Tuchman continued to work for Cohen, drafting, in particular, a summary or abstract of Cohen's rights under the original Employment Agreement. That document summarized both the 2001 SOA and 2002 SOA. Tuchman, who claims to have never read the 2002 SOA, incorrectly noted in the summary that the terms of the 2002 SOA contained a one year stock option exercise period, when, in fact, it allowed for only six months.

During these early negotiations with GTECH, Tuchman successfully argued that Cohen was fired in violation of a 60 day notice provision in the Employment Agreement. GTECH agreed to alter the termination date to October 5, 2002, 60 days after the August 6, 2002 date. Marant, however, had the termination date officially changed to August 7, 2002. Tuchman alleges that, after October 15, 2002, neither he nor anyone at Levenfeld Pearlstein performed any further work for Cohen.

Around this time, Marant began negotiating a separation agreement directly with GTECH. The agreement, entitled Separation Agreement and Mutual Release (hereinafter "Separation Agreement"), was executed on December 13, 2002. The terms of the Separation Agreement not only released the parties from their obligations under the Employment Agreement, but also mandated that stock options were to be exercised in accordance with the terms of the 2001 SOA and the 2002 SOA.

The Separation Agreement also noted that Cohen was not to contact anyone at GTECH directly, and that he was only to contact GTECH's attorneys. Attorney Walter Reed ("Mr. Reed") was named a primary contact. Cohen emailed Mr. Reed regarding a variety of issues that arose surrounding the Separation Agreement. In particular, on January 10, 2003, Cohen emailed Mr. Reed stating that he contacted the Bank of New York ("BNY" or "Bank"), where Cohen's stock option shares were held, but that the Bank stated that his options were not yet vested. In that email he wrote:

"Walter, I left you a phone message. As of today at 2:00 the BNY does not have notification that my 750,000 options are fully vested, nor do they have notification that my 90,000 restricted shares are vested. The agreement in effect and dated Jan. 6, 2003 to the best of my understanding has both fully vested as of the effective date. IS THIS CORRECT? If so why has GTECH not acted accordingly. Have they already breached the contract agreement. Could you please let me know what is going on.


Cohen sent another email asking Mr. Reed to have all his shares delivered to the Bank, and then asked why his 750,0005 options did not vest when he signed the Separation Agreement. Mr. Reed contacted the Bank, which then vested Cohen's shares.

On March 5, 2003, Cohen attempted to exercise all 750,000 of his stock options. He was unable, however, to exercise 450,000 options granted under the 2002 SOA. GTECH refused this request, stating that the exercise period had ended on February 7, 2003, six months after the agreed upon termination date of August 7, 2002.

The Plaintiff filed his original complaint on May 19, 2003, which was later amended on August 26, 2004. The amended complaint has eight Counts: Count I alleges a general breach of contract claim against GTECH; Counts II, III, and IV allege mutual mistake as to the 2002 SOA, the Separation Agreement, and the Employment Agreement, respectively; Count V alleges that GTECH breached a fiduciary duty owed to the plaintiff by failing to notify Cohen that he had only six months to exercise stock options granted under the 2002 SOA; Count VI avers that Marant, Tuchman, and Levenfeld Pearlstein breached their duty of care by incorrectly advising him as to his rights under the Separation Agreement and the 2002 SOA; Count VII posits that Marant, Tuchman, and Levenfeld Pearlstein engaged in the unauthorized practice of law in violation of G.L 1956 § 11-27-12; and Count VIII asks the court to declare the rights of the parties under the 2000 Plan, the Employment Agreement, the 2001 SOA, the 2002 SOA, and the Separation Agreement.

GTECH filed a timely objection, and filed a Counterclaim, alleging a breach of contract with respect to the Separation Agreement. Tuchman and Levenfeld Pearlstein filed an answer and a Counterclaim on August 6, 2003. Defendant Marant has not filed any answer.

In September of 2005, Cohen made a motion for partial summary judgment as to Counts II and III of the amended complaint. GTECH responded and filed a motion for summary judgment on Counts I6, II, III, IV, and V, as well as to its Counterclaim. Tuchman has moved for summary judgment as to Counts VI and VII of the amended complaint. This decision addresses these three motions.


It is well settled that "[s]ummary judgment is a proceeding in which the proponent must demonstrate by affidavits, depositions, pleadings and other documentary matter . . . that he or she is entitled to judgment as a matter of law and that there are no genuine issues of material fact." Palmisciano v. Burrillville Racing Association, 603 A.2d 317, 320 (R.I. 1992) (citing Steinberg v. State, 427 A.2d 338 (R.I. 1981); Ludwig v. Kowal, 419 A.2d 297 (R.I. 1980)); see also Super. Ct. R. Civ. P. Rule 56. During a summary judgment proceeding "the court does not pass upon the weight or credibility of the evidence but must consider the affidavits and other pleadings in a light most favorable to the party opposing the motion." Palmisciano, 603 A.2d at 320 (citing Lennon v MacGregor, 423 A.2d 820 (R.I. 1980)). The Court's purpose during the summary judgment procedure is issue finding, not issue determination. Industrial National Bank v. Peloso, 121 R.I. 305, 397 A.2d 1312, 1313 (R.I. 1979) (citing O'Connor v. McKanna, 116 R.I. 627, 359 A.2d 350 (R.I. 1976); Slefkin v. Tarkomian, 103 R.I. 495, 238 A.2d 742 (R.I. 1968)). Thus, the only task of a trial justice in ruling on a summary judgment motion is to determine whether there is a genuine issue concerning any material fact. Industrial National Bank, 397 A.2d at 1313 (citing Rhode Island Hospital Trust National Bank v. Boiteau, 119 R.I. 64, 376 A.2d 323 (R.I. 1977)).

However, "a party who opposes a motion for summary...

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