Opinion
Civil Action No. 3:00-CV-1294-L
October 20, 2003
ORDER
Before the court are Defendant Lucent Technologies Inc.'s Motion for Summary Judgment, filed May 21, 2001; and Plaintiff O'Brien's Cross-Motion for Partial Summary Judgment, filed June 4, 2001. After careful consideration of the parties' motions, briefs, responses, reply, summary judgment evidence, and the applicable law, the court grants Defendant Lucent Technologies Inc.'s Motion for Summary Judgment and denies Plaintiff O'Brien's Cross-Motion for Partial Summary Judgment.
I. Factual and Procedural Background
Richard O'Brien ("O'Brien" or "Plaintiff") filed suit in state court against Lucent Technologies, Inc. ("Lucent" or "Defendant") alleging breach of contract after Lucent refused to pay him the monetary value of stock options granted to him under a stock option agreement with his former employer Ascend Communications, Inc. ("Ascend"), a predecessor corporation. The facts giving rise to the claims alleged in this lawsuit are not in dispute.
Approximately eight months before he began employment with Ascend, O'Brien worked as an account executive for Ascend's predecessor corporation, Stratus Computer, Inc. ("Stratus"). As an account executive for Stratus, O'Brien sold Stratus products and services to the company's corporate clients. His primary sales account was GTE, a telecommunications company.
At the time of hire, O'Brien enrolled in certain employee benefit plans offered by Stratus, including group health, dependent group life, and long term disability insurance. O'Brien also enrolled in the Stratus Employees' Capital Accumulation Plan and the Stratus Employee Stock Purchase Plan ("ESPP"); however, he did not participate in any Stratus stock option plan, did not participate in any other agreement giving him an option to buy Stratus stock, and was not awarded any stock options from Stratus during his period of employment with the company.
In mid-1998, Ascend announced its intention to acquire Stratus. Thereafter, O'Brien received a letter, dated October 2, 1998, from Ascend's corporate representative, Gary Zieses ("Zieses"), Vice President of the Human Resources Department ("Offer Letter"). The Offer Letter informed O'Brien that upon completion of the merger, Ascend intended to offer him the position of Named Account Manager. The offer was contingent upon approval of the acquisition. The Offer Letter further stated:
Upon the closing of the merger, you will maintain your current 1998 Stratus compensation and commission plan. In 1999, you will convert over to Ascend's Sales Compensation Program. Additionally, for a period of one year following the acquisition date, you will continue to participate in employee benefit plans or arrangements that are, in the aggregate, not less favorable than you've had at Stratus. Information on the benefits programs will be forthcoming.
Subject to the approval of [Ascend's] Board of Directors, you will be granted an option to purchase 11,600 shares of [Ascend's] common stock. The terms and conditions of your stock options are set out in [Ascend's] standard form of stock option agreement, which you will receive within a few weeks of employment and will be required to sign.
It is our wish that our association be long-lasting and mutually rewarding. You should understand, however, that all employees of [Ascend] are employed "at will," which means that each employee, as well as [Ascend], has the right to terminate the employment relationship at any time for any reason, with or without cause[.]
To indicate your acceptance of this offer, please sign and date this letter, along with the enclosed Employee Non-Disclosure Agreement and return them to the Ascend Human Resources Department within two weeks of the date of this letter. This letter, along with the Non-Disclosure Agreement, set forth the terms of your employment with Ascend and supersedes any prior representations or agreements, whether written or oral. This letter may not be modified or amended except by a written agreement signed by an authorized officer of Ascend Communications and you.
Def. App. at 30. O'Brien signed the letter on October 5, 1998, and returned it to Ascend pursuant to Zieses's instructions. On October 19, 1998, Ascend completed its merger with Stratus.
As a condition of his employment with Ascend, O'Brien was required to sign an Employee Agreement Regarding Confidentiality and Inventions ("Ascend Employee Agreement"), which he did on November 4, 1998. The agreement affirmed that O'Brien's employment with Ascend was "at-will," and could therefore be terminated at the will of either O'Brien or Ascend, with or without cause, at any time. O'Brien also acknowledged that the Ascend Employee Agreement represented his "entire understanding with [Ascend] with respect to the subject matter of this agreement and supersedes all previous understandings, written or oral." Def. App. at 36 ¶ 14.
On January 13, 1999, Lucent and Ascend announced their plan to merge. Soon thereafter, on or about January 29, 1999, Ascend provided O'Brien with an Immediately Exercisable Non-Qualified Stock Option Agreement ("Stock Option Agreement"), a 1998 Supplemental Stock Incentive Plan ("Supplemental Plan"), and a Personnel Option Status sheet dated January 14, 1999.
The court will discuss the relevant provisions of these documents later in this order during its analysis of Plaintiff's claims.
As an employee of Ascend, O'Brien participated in its Employee Stock Purchase Plan ("ESPP") which allowed participants to set aside money for six months, known as the offering period, via payroll deductions and then purchase shares of Ascend stock at a preferred price at the end of that time period. The offering period began on February 1, 1999.
There is contradicting evidence with respect to the last day of the offering period: O'Brien contends it was June 18, 1999, and Lucent contends it was July 31, 1999. This fact question, however, does not materially affect any issue decided by the court.
On or about March 29, 1999, O'Brien provided his supervisor, Gerry Pagano, with a memorandum describing the impact of the Lucent merger on his sales efforts with his primary customer account, GTE, and expressing concern about the limited amount of work that would be available for him in light of the merger, In early April 1999, Ascend decided to eliminate O'Brien's position as an Account Representative. O'Brien was informed by his supervisor in April 1999, that his position would be eliminated. At that time, Plaintiff's supervisor gave him a package of documents relating tho his discharge that outlined the terms of the severance package. The severance package included a cover memorandum from Human Resources, the purpose of which was to provide O'Brien with information regarding benefits. The memorandum further explained that O'Brien's Stock Options would stop vesting as of his last date of employment, which according to the papers was June 11, 1999. On June 24, 1999, the merger between Lucent and Ascend became complete.
O'Brien disputes that his last date of employment was June 11, 1999. According to O'Brien, his last day of employment was June 18, 1999, the day on which he received his final paycheck from Ascend. Plaintiff argues that the reference on the paycheck that he was being paid for the pay period ending June 18, 1999 read in conjunction with the memorandum he received from Human Resources, which stated that the Offering Period of the ESPP was ending as of June 18, 1999, supports the argument that his employment ended on June 18, 1999 rather than June 11, 1999. Lucent disagrees, contending that the Ascend Severance Pay Plan "Schedule of Benefits — Non-Executives" shows that O'Brien's last day of work was April 16, 1999, and that his last day of employment was June 11, 1999. Moreover, Lucent maintains, the Severance and Salary Summary included in the package explained that Ascend would pay O'Brien his weekly salary of $1,538.46 through June 11, 1999. Lucent states that Ascend paid O'Brien his weekly salary through June 11, 1999, and on that date O'Brien's employment with Ascend ended. Plaintiff presents no evidence which indicates that he continued employment after June 11, 1999, and acknowledges that his final paycheck covered the two-week period of June 5 through June 18, 1999. O'Brien also admits that he was only paid one week's worth of salary, that is, $1,538.46. The record shows that O'Brien did not receive a salary for the week of June 12 through June 18, 1999. Having considered the summary judgment evidence as a whole, the court rejects O'Brien's argument that his last day of employment was June 18, 1999. O'Brien's argument is specious, and the only reasonable inference to make regarding the summary judgment evidence is that O'Brien's last day of employment was June 11, 1999.
O'Brien seeks to recover the monetary value of the stock option, the monetary gain that he would have realized had he been allowed to participate in the ESPP offering period which ended shortly after his termination, and attorney's fees. Lucent contends that the agreements upon which O'Brien bases his claim do not entitle him to the relief he seeks.
O'Brien also demanded payment of monies owed to him under the Ascend 401k plan; he now admits that he has been paid these monies and has abandoned this claim.
II. Summary Judgment Standard
Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Ragas, 136 F.3d at 458. Further, a court "may not make credibility determinations or weigh the evidence" in ruling on motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871 (1994). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id.; see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir.), cert. denied, 506 U.S. 832 (1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues which are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
III. Analysis
A. Claims for Breach of Contract
1. Stock Option Agreement
O'Brien alleges that Lucent breached the Stock Option Agreement, Supplemental Plan, and Offer Letter by refusing to acknowledge that he is 1/4 vested in the stock granted to him by Ascend, and by refusing to pay to him, upon demand, the monetary value of such stock options. Lucent counters that O'Brien had no vested right to exercise any part of the option to purchase shares of Ascend stock offered under the Stock Option Agreement.
(a) Choice of Law
As a preliminary matter, the court must determine which substantive law governs this claim. Lucent urges the application of Delaware law because the Stock Option Agreement specifically provides that it "shall be governed by the laws of the State of Delaware"; O'Brien agrees that the Stock Option Agreement provides that it will be governed by the laws of Delaware.
In a diversity case such as this, a federal court is required to follow the choice of law rules of the state in which it sits. Godwin Gruber, P.C. v. Deuschle, 261 F. Supp.2d 682, 688 (N.D. Tex. 2003) (citing Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496(1941); see Alberto v. Diversified Group, Inc., 55 F.3d 201, 203 (5th Cir. 1995). This court therefore applies Texas choice of law principles to determine whether Texas or Delaware law should apply to O'Brien's breach of contract claim with respect to the Stock Option Agreement. Texas choice of law principles allow the law of the jurisdiction chosen by the parties to be applied as long as the chosen law has a reasonable relationship to the contract and the choice of law does not violate the public policy of the state whose laws otherwise would apply. Monsanto Co. v. Boustany, 73 S.W.3d 225, 229 (Tex. 2002) (citing DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677 (Tex. 1990)).
The Stock Option Agreement is explicit that it shall be governed by Delaware law; Lucent is a Delaware corporation; and O'Brien has not alleged that the choice of law provision in this case violates public policy in Texas, nor has he contested the application of Delaware law. Accordingly, the court determines that Delaware law applies to this breach of contract claim.
(b) Delaware Law
Under Delaware law, the elements of a breach of contract claim are: (1) the existence of a contractual obligation; (2) a breach of that obligation; and (3) damages resulting from the breach. Delta Star, Inc. v. Patton, 76 F. Supp.2d 617, 639 (W.D. Pa. 1999) (applying Delaware law) (citing Fitzgerald v. Cantor, 1998 WL 842315, *1 (Del.Ch. 1998)); see H-M Wexford LLC, Encorp, Inc., ___ A.2d. ___, 2003 WL 21254843, *7 (Del.Ch. 2003) (elements of breach of contract claim under Delaware law).
The parties do not dispute that the Stock Option Agreement is a contract; therefore, the court concludes that the first element of a breach of contract claim has been satisfied. The court must next determine whether a breach occurred, which is predicated on the terms and conditions of the Stock Option Agreement.
When interpreting contractual language and discerning the parties' intent, the contract should be read as a whole and "if possible, interpreted to reconcile all of the provisions of the document." Monsanto, 73 S.W.3d at 229 (applying Delaware law) (citing Kaiser Alum. Corp. v. Matheson, 681 A.2d 392, 395 (Del. 1996)). If the contract language is unambiguous, the court "must give effect to the clear language" of the contract. Id. The parties may not create an ambiguity merely by disagreeing about the meaning of the contractual language. Id. "Rather, a contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings." Id. (internal quotations omitted). If an ambiguity exists, the court must consider extrinsic evidence to ascertain the proper interpretation of the contractual language. Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).
(c) Relevant Facts
The Stock Option Agreement grants O'Brien an option to purchase a certain number of shares of Ascend common stock, in the manner set forth in and subject to the provisions of the agreement. Def. App. at 52. The "Initial Vesting Date" for the option is one year after the "Date of Option Grant," and the "Date of Option Grant" was October 20, 1998. Id. In other words, the "Initial Vesting Date" was October 20, 1999. Moreover, the "Vested Ratio" of the option is zero prior to the "Initial Vesting Date," that is, October 20, 1999; and 1/4 on the "Initial Vesting Date," provided certain requirements regarding service with the company were satisfied. Id. The Stock Option Agreement also provides that "[t]he Option shall terminate and may no longer be exercised on the first to occur of (a) the Option Term Date as defined above or (b) the last date for exercising the Option following cessation of service as described in paragraph 7 below." Id. at 54. Only the latter subpart is at issue here.
The Stock Option Agreement provides that the option was "immediately exercisable" subject to Ascend's repurchase rights. Def. App. at 53 ¶ 4(a). The repurchase rights allowed Ascend to purchase the attempted sale, exchange, transfer, pledge or disposal (other than pursuant to ownership change) of any unvested shares for a price equal to the optionee's original cost per share. Id. at 56 ¶ 10 (emphasis added).
"The "Option Term Date" is defined as "the date (10) years after the Date of Option Grant" (Def. App. at 53), that is, October 20, 2008.
Paragraph 7 of the Stock Option Agreement, titled Cessation of Service, provides, in relevant part:
(a) Termination of Option. The option term specified in paragraph 1 shall terminate (and this option shall cease to be outstanding) prior to the Option Term Date [October 20, 2008] should any of the following provisions become applicable:
(1) Should [O'Brien] cease to remain in service for any reason (other than Death, Disability or Misconduct) while this option is outstanding, then this option shall remain exercisable until the earlier of (A) the expiration of the three (3)-month period measured from the date such cessation of service or (B) the Option Term Date [October 20, 2008].
* * *
(4) During the applicable post-service exercise period, this option may not be exercised in the aggregate for more than the number of vested Option Shares for which the option is exercisable on the date of [O'Brien's] cessation of service. Upon the expiration of the applicable exercise period or (if earlier) upon the Option Term Date, this option shall terminate and cease to be outstanding for any vested Option Shares for which the option has not been exercised. However, this option shall, immediately, upon [O'Brien's] cessation of service for any reason, terminate and cease to be outstanding to the extent this option is not otherwise at the time exercisable for vested shares.
(b) Cessation of Service Defined. For purpose of paragraph 7, [O'Brien's] Service shall be deemed to have terminated either upon an actual termination of employment or upon [O'Brien's] employer ceasing to be a Related Corporation.
Def. App. at 55 (emphasis added).
(d) Parties' Contentions
O'Brien's employment terminated on June 11, 1999, four months prior to the "Initial Vesting Date" of October 20, 1999. Lucent contends that O'Brien's option also terminated on June 11, 1999 pursuant to Cessation of Service provision because his option was not exercisable for vested shares at the time of his discharge.
O'Brien contends that the vesting of his option accelerated under the "Transfer of Control" provision of the Supplemental Plan. The Supplemental Plan provides, in relevant part:
Section 8 of the Stock Option Agreement incorporates the "Transfer of Control" provision found m the Supplemental Plan. Def. App. at 56.
14. Adjustments. Upon the occurrence of any of the following events, [O'Brien's] rights with respect to the Options granted hereunder will be adjusted as hereinafter provided, unless otherwise specifically provided in the written agreement between [O'Brien] and [Ascend] relating to such Option:
* * *
B. Transfer of Control and Other Transactions. A "Transfer of Control" will be deemed to have occurred in the event any of the following occurs with respect to [Ascend] (which for this purpose includes a successor whose stock is issued under the Plan).
* * *
(ii) a merger . . . in which the stockholders of [Ascend] immediately before such merger do not retain, directly or indirectly and in substantially the same proportion, beneficial interest in the voting stock of the surviving entity representing a majority of the voting power of all voting stock;
* * *
In the event of any Transfer of Control, each outstanding Option, shall automatically accelerate so that each such Option shall, immediately prior to the effective date of the Transfer of Control, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such Option and may be exercised for any or all of those shares as fully vested shares of Common Stock, subject to the consummation of the Transfer of Control. An Option shall not so accelerate if and to the extent (i) such Option is assumed or otherwise continued in full force or effect by the successor corporation . . . pursuant to the terms of the Transfer of Control. . . .
Def. App. at 61-64 (emphasis added).
Specifically, O'Brien contends that there was a "Transfer of Control" on the date of the Ascend/Lucent merger (June 24, 1999) because the merger agreement provided "for an exchange from Ascend stock to Lucent stock in which the stockholders of Ascend did not retain a beneficial interest in the voting stock of the surviving entity that represented `a majority of the voting power of all voting stock'" and that such "Transfer of Control" accelerated the vesting of his option. Lucent counters that O'Brien's option did not accelerate because Lucent assumed and otherwise continued in full force and effect the outstanding Ascend stock options under the same terms and conditions that had existed before the merger.
O'Brien also contends that the Ascend/Lucent merger modified the Stock Option Agreement by converting option rights to acquire Ascend stock into rights to acquire Lucent stock and that this modification violated the Stock Option Agreement because it was done without his consent. Specifically, O'Brien refers to the "Termination or Amendment" provision of the Stock Option Agreement:
15. Termination or Amendment. The Board, including any duly appointed committee of the Board, may terminate or amend the Plan and/or the Option at any time; provided, however, that no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Optionee.
Def. App. at 57.
Lucent contends that the conversion did not require O'Brien's consent because it did not adversely affect him as he was no longer an employee of Ascend when the merger occurred. Additionally, Lucent argues, the optionees were not adversely affected by the conversion because the terms of the options to acquire shares of Lucent stock remained the same as the terms of the options to acquire shares of Ascend stock.
O'Brien further contends that the language in the Offer Letter entitled him to exercise the option granted to him by the Stock Option Agreement because the Offer Letter states that he would "continue to participate in employee benefit plans or arrangements that are, in the aggregate, not less favorable than [he] had at Stratus" for one year following the acquisition date. O'Brien reasons that because he participated in the purchase of stock through Stratus's employee stock purchase plan, the Offer Letter obligated Lucent, as the successor corporation of Ascend, to allow him to participate in its stock option plan for at least one year following the acquisition date.
Lucent counters that the Offer Letter does not entitle O'Brien to the option because (1) the letter specifically provides that the terms of the option would be set out in the Stock Option Agreement; and (2) Stratus never granted him stock options and the Offer Letter only provides for participation in the employee benefit plans or arrangement that were "not less favorable than [he] had at Stratus." Lucent further contends that even if the Offer Letter obligated participation in the stock option plan, it only provided so for one year after the acquisition date. The acquisition date was October 19, 1998; one year after this date would have been one day shy of the "Initial Vesting Date." Moreover, Lucent contends that the Employment Agreement superseded the Offer Letter because it specifically states that benefits could be modified at the sole discretion of Ascend. According to Lucent, the Stock Option Agreement modified the benefits and is the only document governing O'Brien's option.
Finally, O'Brien concedes that "Lucent may be technically correct that [his] stock option and ESPP rights terminated upon his cessation of employment," but contends that the termination of these rights is contrary to Texas law with respect to the forfeiture of benefits. Lucent counters that an analysis of forfeiture of benefits under Texas case law is inapplicable in this case.
(e) Application
The court determines that the provisions of the Stock Option Agreement are unambiguous. The vesting of the option is contingent on O'Brien's continuous service for one year from October 20, 1998, the Date of the Option Grant, to October 20, 1999, the "Initial Vesting Date." As O'Brien's employment was terminated prior to the "Initial Vesting Date," his option did not vest and therefore it terminated on the last date of his employment. Further, O'Brien's option was not accelerated under the "Transfer of Control" provision because the options to purchase Ascend stock were "assumed or otherwise continued in full force or effect" by Lucent. Finally, O'Brien's consent was not necessary for the conversion of options from Ascend stock to Lucent stock resulting from the merger because his option was terminated before the merger.
Because the provisions in the Stock Option Agreement are unambiguous, the court need not look to extrinsic evidence, such as the Offer Letter or the Employment Agreement, to interpret the contractual language. See Eagle Indus., Inc., 702 A.2d at 1232 ("If a contract is unambiguous, extrinsic evidence may not be used to interpret the intent of the parties, to vary the terms of the contract or to create an ambiguity."). Further, O'Brien's forfeiture of benefits arguments are nothing more than an attempt to use extrinsic evidence to create ambiguity with respect to the intent behind the Stock Option Agreement. Thus, the court need not address this argument. See id. Finally, the court notes that the Stock Option Agreement is clear that it constitutes the entire agreement between O'Brien and Ascend on the subject matter contained in the agreement and that there are no other agreements regarding this subject matter between the parties.
For the reasons stated above, there are no genuine issues of material fact with respect to O'Brien's breach of contract claim based on the Stock Option Agreement. Accordingly, Lucent is entitled to judgment as a matter of law on this claim.
2. Ascend ESPP
O'Brien also contends that Lucent breached the terms of the ESPP by terminating his participation in it. O'Brien seeks to recover the gain that he would have realized had he been allowed to complete participation in the ESPP offering period that was running at the end of his employment. Lucent contends that O'Brien's participation in the ESPP ended on June 11, 1999, the date of his termination, and thus it is not obligated to pay him any unrealized gains.
It is undisputed that Lucent returned to O'Brien the money he had set aside via payroll deductions during the ESPP offering period that was in effect at the time of his termination. Thus, only unrealized gains are at issue.
O'Brien concedes that based on the terms of the ESPP alone, his participation terminated on the date of his discharge. Nonetheless, he contends that the Offer Letter obligated Lucent to allow him to continue to participate in the ESPP for at least one year after the acquisition date. Lucent counters that the Offer Letter states that the terms and conditions of the benefit programs would be forthcoming and thus O'Brien cannot ignore the termination provision in the ESP because to do so would effectively rewrite the ESPP. Lucent further counters that the Employment Agreement, which superseded the Offer Letter, provides that there can be no contractual obligation to allow participation in the ESPP greater than that provided in the ESPP itself.
(a) Choice of Law
The court must initially determine what substantive law governs this claim. The parties do not address what law should apply to O'Brien's breach of contract claim with respect to the ESPP. As previously stated, this court is required to follow Texas choice of law rules. See Godwin Gruber, P.C., 261 F. Supp.2d at 688 (citing Klaxon, 313 U.S. at 496; see Alberto, 55 F.3d at 203. Texas has adopted the "most significant relationship" test of the Restatement (Second) of Conflict of Laws in contract cases. Id. at 688-89 (citing Access Telecom, Inc. v. MCI Telecommunications Corp., 197 F.3d 694, 705 (5th Cir. 1999), cert. denied, 531 U.S. 917 (2000)). Under the most significant relationship test, courts consider (1) the place of the contract; (2) the place where the contract was negotiated; (3) the location of the subject matter of the contract; and (4) the domicile, residence, nationality, place of incorporation, and place of business of the parties. Id. at 689.
Consideration of these factors in this case leads the court to conclude that Texas is the state having the most significant relationship to the ESPP. O'Brien is a Texas citizen, and Lucent is Delaware citizen. This factor is therefore irrelevant. The parties have not provided the court with evidence regarding the place of negotiation or contracting; however, O'Brien worked in Texas and therefore participated in the ESPP while in Texas, and thus the place of performance was Texas. The court therefore concludes that Texas has the most significant relationship to the ESPP, and Texas law applies to this claim.
(b) Texas Law and Application
The essential elements in a suit for breach of contract are: (1) the existence of a valid contract; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and (4) plaintiff was damaged as a result of the breach. Runge v. Raytheon E-Sys., Inc., 57 S.W.3d 562, 566 (Tex.App.-Waco 2001, no pet.); Southwell v. University of Incarnate Word, 974 S.W.2d 351, 354-55 (Tex.App. — San Antonio 1998, pet. denied).
The parties do not dispute that the ESPP is a contract. Thus, the first element of a breach of contract claim is satisfied. The court next determines whether a breach of the ESPP has occurred by interpreting its provisions.
The entire contract should be examined in an effort to harmonize and give effect to all the provisions in the contract so that none will be rendered meaningless. See Ogden v. Dickinson State Bank, 662 S.W.2d 330, 335 (Tex. 1983); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). "Unless two provisions in the agreement are necessarily repugnant or contradictory, the parties are presumed to have intended each one to accomplish some particular purpose." Ogden, 662 S.W.2d at 335. If, after applying rules of construction, the term is susceptible to more than one reasonable meaning, it is ambiguous. D.E. W., Inc. v. Local 93, Laborers' Int'l Union, 957 F.2d 196, 199 (5th Cir. 1992) (applying Texas law). The determination whether a contract term is ambiguous is a matter of law. Id. A contract is unambiguous if the court can give it a definite legal interpretation, Coker, 650 S.W.2d at 393, and is not rendered ambiguous simply because the parties disagree over its interpretation. See Praeger v. Wilson, 721 S.W.2d 597, 600 (Tex.App. — Ft. Worth 1986, writ ref'd n.r.e.). "The interpretation of an unambiguous insurance contract is a question of law." Utica Nat'l Ins. Co. v. Fidelity Cas. Co., 812 S.W.2d 656, 661 (Tex.App.-Dallas, 1991, writ denied).
The court determines that the provisions of the ESPP are unambiguous. Specifically, the "Termination of Employment" provision clearly dictates that O'Brien's participation in the ESPP immediately terminates upon his termination of employment. As his employment was terminated on June 11, 1999, his participation in the ESPP also terminated on the same day. Because the language of the ESPP are unambiguous, the court need not look to other evidence, such as the Offer Letter or the Employment Agreement, to interpret the contractual language. See National Union Fire Ins., Co., v. CBI Indus., Inc., 907 S.W.2d 517, 521 (Tex. 1995) (per curiam) (Parol evidence is inadmissible if the contractual language is unambiguous).
For the reasons stated above, there are no genuine issues of material fact with respect to O'Brien's breach of contract claim based on the ESPP. Accordingly, Lucent is entitled to judgment as a matter of law on this claim.
B. Plaintiff's Claim for Attorney's Fees and Expenses
Plaintiff claims he is entitled to an award of attorney's fees and expenses. The court, however, found in favor of Defendant on Plaintiff's breach of contract claims. Accordingly, the court denies Plaintiff's claim for attorney's fees and expenses.
C. Plaintiff O'Brien's Cross-Motion for Partial Summary Judgment
Plaintiff moved for summary judgment on his breach of contract claims. The court has granted summary judgment to Defendant on Plaintiff's breach of contract claims. Granting Plaintiff's cross-motion for partial summary judgment would be inconsistent with the court's ruling granting Defendant's motion for summary judgment. Accordingly, Plaintiffs cross-motion for partial summary judgment is denied. IV. Conclusion
For the reasons herein stated, there is no genuine issue of material fact regarding any claims asserted by Plaintiff. Accordingly, the court grants Defendant Lucent Technologies Inc.'s Motion for Summary Judgment. For the reasons herein stated, the court denies Plaintiff O'Brien's Cross-Motion for Partial Summary Judgment. Accordingly, this action is dismissed with prejudice. Judgment will issue by separate document as required by Fed.R.Civ.P. 58.