York v. Zurich Scudder Investments, Inc.

• Decision Date: 26 June 2006
• Docket Number: No. 05-P-976.,05-P-976.
• Citation: 849 N.E.2d 892,66 Mass. App. Ct. 610
• Parties: Ronald A. YORK v. ZURICH SCUDDER INVESTMENTS, INC.
• Court: Appeals Court of Massachusetts

849 N.E.2d 892

66 Mass. App. Ct. 610

Ronald A. YORK v. ZURICH SCUDDER INVESTMENTS, INC.

No. 05-P-976.

Appeals Court of Massachusetts, Suffolk.

Argued March 3, 2006.

Decided June 26, 2006.

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Richard C. Van Nostrand, Worcester, for the plaintiff.

Scott A. Roberts, Boston, for the defendant.

Present: GREENBERG, DUFFLY, & KATZMANN, JJ.

KATZMANN, J.

Ronald A. York, who was an at-will employee of Zurich Scudder Investments, Inc., and its predecessors in interest (Scudder), filed suit in Superior Court seeking recovery of incentive compensation he claims was improperly denied him after Scudder terminated him. He alleged counts of breach of contract, breach of the implied covenant of good faith and fair dealing, misrepresentation, and quantum meruit. The judge allowed Scudder's motion for summary judgment on all counts without written opinion, and York appeals. We affirm.

Background. York's claims center on incentive compensation that he argues Scudder should have continued to pay him even after he was terminated in 2000. We summarize the facts in the light most favorable to York. See Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120, 571 N.E.2d 357 (1991). However, we note at the outset that where the facts conflict, we consider the statements made by York during his deposition, and not the assertions in his affidavit made two months later. See Morrell v. Precise Engr., Inc., 36 Mass.App.Ct. 935, 937, 630 N.E.2d 291 (1994), quoting from O'Brien v. Analog Devices, Inc., 34 Mass.App.Ct. 905, 906, 606 N.E.2d 937 (1993) ("a party cannot create a disputed issue of fact by the expedient of contradicting by affidavit statements previously made under oath at a deposition").

When York began his employment with Scudder in 1990 as a nonsales employee, he was not eligible for the sales incentive compensation program that is at the heart of this lawsuit. However, in 1994, York was recruited to become a sales representative, responsible for selling group retirement plans managed by Scudder. At that point, a manager named Mark Cassidy informed York that as a sales representative his salary would remain the same, but he would receive additional sales incentive compensation. The amount of the incentive compensation, according to Cassidy, would depend on the account value of each client York recruited over a period of years. Specifically, York was told that he would receive a certain percentage of the account value in the first year the account resided with Scudder, and a lesser percentage for each of the following three years of the account. York understood that the sales incentive payments would be made quarterly and would only commence if and when a client actually transferred funds to Scudder. York also understood that sales incentive compensation would cease during a payout period if the client withdrew the funds from Scudder, as clients were entitled to do at any time.

Cassidy did not discuss with York the existence of any written Scudder policy that would govern his sales incentive compensation arrangement. Nevertheless, at the time of his discussion with Cassidy, there had been a written incentive compensation plan in existence for two years (the 1992 plan) that was substantially similar to the arrangement described to York by Cassidy. York acknowledges that he learned of the 1992 plan at some point and accepted that it governed his incentive compensation from 1994 through at least 1999. The 1992 plan did not provide that an employee would forfeit earned but unpaid incentive compensation if his employment was terminated during the payout period. The 1992 plan also did not require that sales representatives perform any further work with a particular client after the sale in order to receive incentive compensation.

In January, 1998, Scudder issued a new employee handbook that covered a broad array of topics and was published on Scudder's intranet. As part of its content on employment termination, the handbook stated: "In every separation, the formal employer-employee relationship ceases as of the separation date. The privileges and rights associated with employment end as of the separation date, including all forms of compensation, commissions, benefits, vacations, and leaves of absence." Scudder also issued other policies on various topics from time to time on its intranet. Although York never discussed the handbook and policies with anyone, he did know that they were available, and he recognized that he was subject to them, at least where they did not conflict with his oral negotiations with Cassidy.

On January 1, 1999, Scudder issued a new incentive compensation plan for sales representatives. Under this plan, sales representatives would only be paid the incentive compensation for three instead of four years, but additional assets would be included in calculating incentive compensation. In addition, Scudder issued a new incentive compensation plan for senior sales representatives, also effective as of January 1, 1999, that was substantially identical in relevant respects to the plan for sales representatives. (We refer to both plans collectively as the 1999 plan.) The 1999 plan stated the following: "Participants who terminate employment with [Scudder] for all other reasons (e.g., voluntary termination, involuntary termination with or without cause, etc.) prior to the payment of incentive awards, forfeit all rights to the payment of any and/or all awards under this Plan."

From 1994 to 1999, York secured a number of new accounts and was paid in accordance with the 1992 plan. In October, 1999, York was promoted to senior sales representative and given a new territory. York did not dispute that his sales incentive compensation was subject to the 1999 plan after January, 1999. By late spring of 2000, however, York was told that Scudder managers were cutting costs, including employee compensation costs, and that there would be layoffs. On August 28, 2000, York was informed that his employment was being terminated as of September 15, 2000, because his position was being eliminated in a sales group restructuring, and because Scudder did not believe that there were enough business opportunities to justify his position. Between October, 1999 (when he assumed his new position), and August, 2000, York did not bring any funds under management to Scudder. During his deposition, York admitted that he did not believe that Scudder's business decision was "improper" or that Scudder was not exercising "honest judgment" in terminating him. When Scudder terminated York, it also terminated thirty-five other employees, including three sales people, and it closed requisitions for fifty-nine open positions. After York was terminated, his former territory was divided between the Chicago representative and a more senior representative who previously shared the New England territory with York and whose territory geographically surrounded that of York.

During his deposition, York acknowledged that he had no basis to state that Scudder's reason for terminating him was to avoid paying him commissions after the date of his termination. Moreover, York did not contend that Scudder made false representations to him during his employment.

Scudder contends that York was paid all the salary and incentive compensation that he was due through the date of his termination. York was told that he would not be receiving any further incentive payments after his employment ended, although Scudder would pay him a severance package as provided in the 1998 employee handbook. In accordance with Scudder's separation policy applicable to involuntary terminations resulting from job restructuring, York received severance pay of $137,933.31, which included an enhanced severance benefit of $58,604.31.

Subsequently, York brought suit in Superior Court, claiming that at the time of his termination, he was still owed incentive compensation of approximately $212,000 for sales made prior to 1999, and another $223,000 for sales made after January 1, 1999. York also claims that before he was terminated, he had received verbal commitments from four new clients that they would bring their assets to Scudder, and that he is owed incentive compensation for these clients as well.

Discussion. "[A] party moving for summary judgment in a case in which the opposing party will have the burden of proof at trial is entitled to summary judgment if he demonstrates . . . that the party opposing the motion has no reasonable expectation of proving an essential element of that party's case." Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716, 575 N.E.2d 734 (1991). In his deposition and by his failure to controvert in relevant respects Scudder's statement of undisputed facts, York has admitted facts that establish that he has no reasonable expectation of proving any of his claims or any right to recover posttermination increments of incentive compensation.

York first contends that the judge erred in entering summary judgment on his breach of contract claim because she ignored a factual dispute whether his employment contract was defined by his oral agreement with Cassidy in 1994, at least with regard to when his incentive compensation discontinued, or whether it included the documents Scudder issued between 1992 and 1999, as Scudder claims. Under York's theory of the case, an oral employment contract was formed when he accepted the sales representative position on the terms offered by Cassidy, and any subsequent modification that conflicted with those terms did not apply to him unless he specifically agreed. However, York's employment contract was at-will, and as such Scudder could modify its terms or "terminate[] [the employment] at any time for any reason or for no reason at all," with limited exceptions, such as public policy considerations. Gram v. Liberty Mut. Ins. Co., 384 Mass. 659, 668 n. 6, 429 N.E.2d 21 (19...