The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
BRIAN SIMON : CIVIL ACTION
:
v. :
:
FIRST SAVINGS BANK OF INDIANA, : NO. 23-721
et al. :
MEMORANDUM
Bartle, J. August 8, 2024
Plaintiff Brian Simon brings this diversity action
against his former employers, Defendant First Savings Bank of
Indiana and its holding company Defendant First Savings
Financial Group, Inc. (collectively “First Savings Bank”).
Having been terminated from his position as the Senior Vice
President and Mortgage Banking Director, Simon claims in his
Amended Complaint breach of contract, breach of implied
contract, breach of the covenant of good faith and fair dealing,
promissory estoppel, violation of the Pennsylvania Wage Payment
and Collections Law (43 Pa. Cons. Stat. § 260.1, et seq.), and
fraud in the inducement. The gravamen of his Amended Complaint
is that Defendants violated the advance notice of termination
and severance terms of Simon’s alleged employment agreement.
This court previously denied the motion of Defendants
to dismiss the Amended Complaint for lack of personal
jurisdiction. Simon v. First Sav. Bank of Indiana, 692 F. Supp.
3d 479 (E.D. Pa. 2023). Defendants have moved for summary
judgment pursuant to Rule 56 of the Federal Rules of Civil
Procedure.
I
Under Rule 56, summary judgment is appropriate “if the
movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986). A dispute is genuine if the evidence is
such that a reasonable factfinder could return a verdict for the
nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 254 (1986). The court views the facts and draws all
inferences in favor of the nonmoving party. See In re Flat
Glass Antitrust Litig., 385 F.3d 350, 357 (3d Cir. 2004).
Summary judgment is granted when there is insufficient
record evidence for a reasonable factfinder to find for the
nonmovant. See Anderson, 477 U.S. at 252. “The mere existence
of a scintilla of evidence in support of the [nonmoving party]’s
position will be insufficient; there must be evidence on which
the jury could reasonably find for [that party].” Id. In
addition, Rule 56(e)(2) provides that “[i]f a party fails to
properly support an assertion of fact or fails to properly
address another party’s assertion of fact as required by
Rule 56(c), the court may . . . consider the fact undisputed for
the purposes of the motion.” Fed. R. Civ. P. 56(e)(2).
II
The facts viewed in the light most favorable to
Plaintiff are as follows.
In December 2020, Defendants engaged an outside
recruiter to search for candidates for the role of Senior Vice
President and Mortgage Banking Director. As a result of the
recruiter’s efforts, First Savings Bank’s Chief Executive
Officer Larry Myers, its Chief Financial Officer Anthony Schoen,
and others interviewed Simon for the position. At the time, he
was employed as the president of multiple mortgage origination
businesses for a portfolio management company and was living in
Pennsylvania.
On February 10, 2021, Schoen emailed Simon a letter
offering him the Senior Vice President and Mortgage Banking
Director position. Simon did not sign the offer letter. He had
reservations about taking a position with a bank. He was
worried that he could be out of a job if Defendants downsized
their mortgage business once interest rates began to rise.
However, he did not convey these concerns to Defendants or to
the recruiter at that time.
Simon called Schoen to request changes in the offer
letter. The record does not specify what was said during this
telephone call except that Simon admits he did not at this point
request thirty days’ notice of termination and severance pay
equal to one years’ base salary.
On February 12, 2021, Schoen sent Simon a revised
offer letter dated February 11, 2021. Schoen wrote in the
covering email that the revised offer letter “includes the
commitment to a one-year employment contract which is
substantially similar to those currently between [First Savings]
Bank and various executive officers.”
The February 11, 2021 letter offered Simon the
position of Senior Vice President and Mortgage Banking Director.
As part of his duties, Simon would also be a member of the
Mortgage Banking Compliance and Governance Committee. He would
report directly to Schoen.
The letter stated that Simon’s annual base salary
would be $350,000, with payment every two weeks. Simon would
also participate in the Mortgage Banking Director Compensation
Plan, under which he would receive 5% of the net pretax income
for the Mortgage Banking Division. His starting date would be
“no later than March 8, 2021.” He would receive four weeks of
pro-rated vacation time in each calendar year. He would be
eligible to participate in Defendants’ health, vision, and
dental insurance plans. He would further receive life,
disability, supplemental cancer, and supplemental critical care
insurance paid by Defendants. He would have the opportunity to
participate in a 401(k) plan. Defendants also promised to
reimburse him for various business expenses, including $55 per
month for cellular phone use, as well as travel expenses and
overnight lodging. The letter, however, made no mention of
advance notice of termination or severance pay.
The letter also contained the following paragraph:
You will be provide[d] the
opportunity to enter into a one-year
employment agreement with the Bank that is
mutually agreeable to both parties and which
shall include customary conditions for
voluntary (for and without Good Reason) and
involuntary (for and without Cause)
termination and restrictive covenants
relating to competition and solicitations
post-employment.
Simon and Schoen both signed the February 11, 2021
letter as of that date.
Sometime after the February 11, 2021 letter was
signed, Simon contacted Dawn Black, the Human Resources Manager
of First Savings Bank. He asked her for a draft of the proposed
employment agreement before he started working for Defendants.
Black told Simon that the draft proposed agreement would not be
ready until after his start date because it would first be
reviewed by the Compensation Committee of First Savings Bank’s
Board of Directors [“Compensation Committee”]. Without any
further conversations or documentation, Simon left his prior
position and began working for Defendants remotely from
Pennsylvania on March 1, 2021. There is no evidence that he did
not receive the salary or benefits set forth in the February 11,
2021 letter which he and Schoen had signed.
On April 20, 2021, Schoen emailed Simon a draft of the
proposed employment agreement. Schoen wrote that it was “a very
standard [employment agreement] used by the other executives at
the Bank but you [Simon] may have specific concerns, questions
or thoughts.” Schoen further wrote that he would relay any
requested changes “northward to the appropriate authorities
(e.g. the Company’s Comp[ensation] Comm[ittee]).”
The proposed agreement was for a term of employment of
one year beginning on March 1, 2021. It provided for thirty
days’ advance notice by Defendants of involuntary termination
without cause. It further provided that in the event of
involuntary termination without cause or voluntary termination
by Simon with good reason, Defendants would pay him the base
salary for the remaining term of the agreement as a single lump
sum. Simon reviewed but never signed the April 20, 2021
proposed employment agreement.
Shortly after, he met with Schoen and Myers.
According to Simon, this meeting was the first and only time
that he specifically requested advance notice of termination and
a year of salary as severance in the event that Defendants
terminated his employment without cause:
Q: Paragraph 18 [of the Amended Complaint]
says, “Simon told Larry Myers, [First
Savings Bank’s] Chief Executive Officer, and
Tony Schoen, [First Savings Bank’s] Chief
Financial Officer, that he would not accept
a position with [First Savings Bank], unless
they provided him with downside[] protection
in the event that [First Savings Bank]
trimmed or exited the mortgage business.”
When did you tell them that?
A: When I received the Employment Agreement.
. . . .
Q: It says, “Specifically, Simon told Myers
and Schoen that he required advance Notice
of Termination and a year of salary of
severance if [First Savings Bank] terminated
his employment without cause.” . . . That’s
the conversation we just [alluded] to?
A: Correct.
. . . .
Q: You told me you said it to [Schoen] in
the one occasion with the Employment
Agreement. Are there others?
A: I only had to say it once. . . . I asked,
and they granted what I asked for.
According to Schoen, Myers relayed these requested changes to
the Compensation Committee for approval.
The Compensation Committee convened on April 30, 2021
to consider a revised draft of Simon’s proposed employment
agreement. Changes were approved and a revised draft was signed
that evening by the John Colin, the Chairman of First Savings
Bank’s Board of Directors.
That same day, Schoen emailed Simon the revised draft
of the proposed employment agreement. Unlike the prior draft,
this draft included one years’ salary as severance pay as
requested by Simon.1 Schoen noted that no other revisions were
1. The April 20, 2021 proposed employment agreement contained
the following language regarding severance pay:
4.1 Cash Severance after
Termination Without Cause or Termination for
Good Reason. Subject to Section 8.9 of this
Agreement, if the Officer’s employment
terminates involuntarily but without Cause
or if the Officer voluntarily terminates
employment with Good Reasons, the Officer
shall receive from the Bank the Base Salary
for the remaining term of the Agreement,
with the amount paid in a single lump sum
within ten (10) calendar days of
termination. . . .
(emphasis added). In comparison, the April 30, 2021 proposed
employment agreement revised the language regarding severance
pay:
4.1 Cash Severance after
Termination Without Cause or Termination for
Good Reason. Subject to Section 8.9 of this
Agreement, if the Officer’s employment
terminates involuntarily but without Cause
or if the Officer voluntarily terminates
employment with Good Reasons, the Officer
shall receive from the Bank the Base Salary,
with the amount paid in a single lump sum
within ten (10) calendar days of
termination. . . .
(emphasis added).
made. He wrote to Simon “[i]f you’re good with this, please
execute and return a scanned copy of the signature page.”
Schoen added that he would send Simon a copy of the agreement
with Colin’s signature once Schoen received Simon’s signature.
Simon never signed the April 30, 2021 proposed
employment agreement. He admits that he “had some additional
changes that [he] wanted to request.” Simon set up a meeting
with Schoen to continue negotiations on May 17, 2021. The
record does not specify what was said during this conversation
except for Simon’s email to Schoen on May 18, 2021 memorializing
their discussion. The email listed Simon’s proposed changes to
the April 30, 2021 draft employment agreement:
Section 2.2- can we be explicit
about the fact that any incentive earned
will be paid even if I am termed for no
reason prior to the payment date of such
incentive? Ie: we make money in May, I am
due an incentive to be paid on June 17, but
on June 3 you and Larry decide to shut down
the mortgage division
Section 2.4- can you confirm for
me that the D&O includes a tail?
Section 4.1- its still a little
unclear how the severance would be paid- can
we parrot here the language in 5.1 which is
super clear?
Section 7.3- can we make the one-
way fee shifting two way/mutual?
That’s it- just let me know your
thoughts and we can put this to bed[.]
Simon considered these requested changes to be material. It is
undisputed that Defendants never agreed to his changes.
From that point onward, Defendants became unresponsive
to Simon’s attempts to discuss the proposed employment
agreement. According to Simon’s deposition testimony, he was
“still negotiating” but “we never reached a mutually [sic]
agreement because one party stopped negotiating in good faith.”
Schoen never gave Simon a copy of the April 30, 2021 proposed
agreement bearing Colin’s signature. On October 18, 2021, Simon
contacted a member of the Human Resources department regarding
the agreement. That individual responded that Defendants were
still “reviewing the Agreement originally provided to you
[Simon] not to make any material changes, but to ensure that the
language is concise and clear” and that a revised draft would be
sent to him by the end of the week. Defendants never sent Simon
a revised draft.
In 2022, rising interest rates began to affect
negatively the Defendants’ Mortgage Banking Division led by
Simon. On January 17, 2023, Defendants terminated Simon’s
employment for financial and economic reasons. The termination
was effective immediately. Defendants offered severance pay in
the amount of two weeks of his base salary in exchange for a
release of claims agreement. He did not agree and never signed
the release.
III
Simon maintains that he had an employment agreement
with Defendants (Count One), and in the alternative, that he had
an implied employment agreement with them (Count Two).
According to Simon, the express or implied employment agreement
provided for 30-days’ notice of termination and severance pay
equal to one years’ salary. It is undisputed that Defendants
terminated Simon without any advance notice and provided him
with severance pay equal to two weeks’ salary. Defendants argue
that summary judgment should be granted in their favor because
the parties never entered into any employment agreement.
To succeed in a breach of contract action under
Pennsylvania law, a plaintiff must establish: (1) the existence
of an agreement, including its essential terms, (2) a breach of
a duty imposed by the agreement, and (3) resultant damages.”2
McShea v. City of Philadelphia, 995 A.2d 334, 340 (Pa. 2010)
(internal citations omitted). As to the first element, a valid
agreement requires an offer, acceptance, consideration, and
mutual assent by the parties to be bound by the essential terms
of the contract. See Shovel Transfer and Storage, Inc. v.
Pennsylvania Liquor Control Bd., 739 A.2d 133, 136 (Pa. 1999);
2. The parties do not dispute that Pennsylvania law governs
the interpretation and construction of any alleged employment
agreement between Simon and Defendants.
Chilutti v. Uber Techs., Inc., 300 A.3d 430, 443 (Pa. Super.
2023). In the employment context, the essential terms are the
rate of compensation and any additional terms that are material
to the parties. Browne v. Maxfield, 663 F. Supp. 1193, 1197-98
(E.D. Pa. 1987) (applying Pennsylvania law). “So long as the
parties agree on essential terms which they intend to be
binding, a contract is formed even though they intend to adopt a
formal document with additional terms at a later date.” Courier
Times, Inc. v. United Feature Syndicate, Inc., 445 A.2d 1288,
1295 (Pa. Super. 1982). Whether an undisputed set of facts
establishes an agreement is a matter of law. E.g., United
Environmental Group, Inc. v. GKK McKnight, LP, 176 A.3d 946, 963
(Pa. Super. 2017) (internal citation omitted).
The court disagrees with the parties’ characterization
that the signed offer letter dated February 11, 2021 was merely
an agreement to agree. The letter contained all of the terms
that were material to the parties at that time, including the
position being offered to Simon, his starting date, base salary,
additional compensation from a share of the profits, vacation
time, health insurance, health benefits, retirement benefits,
and reimbursement for business expenses. See Browne, 663 F.
Supp. at 1197-98. The terms are definite and nothing of
significance disclosed by the parties to each other at that time
is missing. See Forte Sports, Inc. v. Toy Airplane Gliders of
Am., Inc., 371 F. Supp. 2d 648, 650 (E.D. Pa. 2004). The court
finds that the February 11, 2021 offer letter signed by Simon
and Schoen on behalf of Defendants formed a binding agreement.3
It is true that the letter also stated that Defendants
would provide Simon “the opportunity to enter into a one-year
employment agreement.” (emphasis added). This term simply
expressed the intent of the parties to “adopt a formal document
with additional terms at a later date.” See Courier Times, 445
A.2d at 1295. It does not vitiate the February 11, 2021
agreement. See Field v. Golden Triangle Broad., Inc., 305 A.2d
689, 693 (Pa. 1973). Indeed, the parties fully performed their
obligations pursuant to the terms of this agreement. Without
further discussions or negotiations, Simon left his prior
position and worked as Senior Vice President and Mortgage
Banking Director for Defendants for almost two years. Simon
does not dispute that during this extended period Defendants
compensated him and provided him the benefits promised in the
February 11, 2021 letter. There was definitely a meeting of the
minds at that time. On April 20, 2021, Defendants also
fulfilled their promise when they presented him with a proposed
3. There is no evidence in the record that the parties entered
into an agreement prior to February 11, 2021. Up to that time,
the parties were doing nothing more than discussing and
negotiating. There was no meeting of the minds.
one-year employment agreement. Simon never signed it because he
wanted material changes.
Simon has sued for breach of contract for the failure
of Defendants to have honored a thirty-day advance notice of
termination and to pay him a severance of a year’s salary. The
February 11, 2021 agreement does not include either of these
benefits. At the time it was signed, Simon had never conveyed
to Defendants that these were essential terms. His signing of
the February 11, 2021 letter clearly establishes the contrary.
Moreover, Simon testified that the first and only time that he
requested these terms was at some point between April 20 and
April 30, 2021, and thus after the February 11, 2021 letter was
signed.
Simon argues that an oral employment agreement was
reached shortly after he received the April 20, 2021 draft
employment agreement. He testified that he requested severance
in the amount of one year’s salary and that Schoen and Meyers
“granted what I asked for.” Defendants presented Simon with
these exact terms in writing on April 30, 2024. It is
undisputed that Simon never signed that agreement. Moreover,
Simon testified that at this point he “wasn’t finished” and that
he was “still negotiating.” He also wanted to request “some
additional changes” that he considered to be material. “To
constitute a contract, the acceptance of the offer must be
absolute and identical with the terms of the offer.” Hedden v.
Lupinsky, 176 A.2d 406, 408 (Pa. 1962). Accordingly, there was
never a meeting of the minds as to these terms.
In the alternative, Simon alleges in the Amended
Complaint that the conduct of the parties created an agreement
implied in fact “concerning 30 days’ notice of termination and
the payment of $350,000 in severance.” See Bricklayers of W.
Pennsylvania Combined Funds, Inc. v. Scott's Dev. Co., 90 A.3d
682, 695-96 (Pa. 2014). In his supporting brief in opposition
to this motion, Simon does not explain the conduct from which it
can be inferred that such an obligation was created. See id.
As previously discussed, the parties began performance after the
February 11, 2021 agreement, which did not contain provisions
for advance notice of termination or severance.
Having determined that the parties formed a valid
employment agreement on February 11, 2021, the court now turns
to the second element of breach. Pennsylvania law presumes that
an employment relationship is at-will. “Absent a statutory or
contractual provision to the contrary, the law has taken for
granted the power of either party to terminate an employment
relationship for any or no reason.” Geary v. United States
Steel Corp., 319 A.2d 174, 176 (1974). “Courts require
definiteness in employment contracting in order to overcome the
at-will presumption.” Martin v. Capital Cities Media, Inc., 511
A.2d 830, 834 (1986). There is no definite provision in the
February 11, 2021 agreement that could permit a jury to find
that the contract was anything other than terminable at will.
While a contractual employment relationship can give
rise to a breach of contract claim, the termination of an at-
will employee cannot support such a claim. Wurth Baer Supply
Co. v. Strouse, 627 F. Supp. 3d 422, 436-37 (M.D. Pa.
2022)(aggregating Pennsylvania cases). Accordingly, the
circumstances of Simon’s termination did not breach the terms of
his employment agreement with Defendants.
The court will grant Defendants’ motion for summary
judgment as to Counts One and Two.
IV
Simon claims that Defendants breached the implied
covenant of good faith and fair dealing. The implied covenant
of good faith and fair dealing does not allow for a cause of
action separate from a breach of contract claim. Burton v.
Teleflex Inc., 707 F.3d 417, 432 (3d Cir. 2013)(summarizing
Pennsylvania law). The court will also grant summary judgment
as to Count Three.
V
Simon also claims that Defendants violated the
Pennsylvania Wage Payment and Collection Law, 43 Pa. Cons. Stat.
§ 260.1, et seq. As previously discussed, his employment
agreement did not provide for thirty days’ notice of
termination. Therefore, Simon is not entitled to recover thirty
days’ wages under the statute. See 43 Pa. Cons. Stat.
§§ 260.2a, 260.9a. The court will enter summary judgment in
favor of Defendants as to Count Five.
VI
Simon’s claim for promissory estoppel also fails.
Promissory estoppel is “an equitable remedy to be implemented
only when there is no contract; it is not designed to protect
parties who do not adequately memorialize their contracts in
writing.” Iversen Baking Co. v. Weston Foods, Ltd., 874 F.Supp.
96, 102 (E.D. PA. 1995). As previously discussed, Simon had a
valid contract with Defendants. The court will enter summary
judgment in favor of Defendants as to Count Four.
VII
Simon also asserts that he was fraudulently induced by
Defendants to accept employment with them. To succeed in a
claim of fraud in the inducement, the plaintiff bears the prima
facie burden of demonstrating fraud, that is “anything
calculated to deceive, whether by single act or combination, or
by suppression of truth, or suggestion of what is false.” Moser
v. DeSetta, 589 A.2d 679, 682 (Pa. 1991). The burden of
persuasion is not merely by a preponderance of the evidence, but
by clear and convincing evidence. Id.
Simon falls well short of this high bar. There is not
even a scintilla of evidence of fraud. Again, the parties did
not consider advance notice of termination or severance until
sometime after April 20, 2021. By that time, Simon had been
working for Defendants for nearly two months. The court will
also grant Defendants’ motion for summary judgment as to Count
Five.