Engstrom's failure to seek other employment is not forbearance of a definite and substantial character as a matter of law because there is not sufficient evidence from which a reasonable person could find that Engstrom failed to look for other work in detrimental reliance on the alleged promises. See Anderson, U.S. at , S. Ct. at , 91 L. Ed. 2d at 215; Brennan, slip op. at 3.
A reasonable person could not find that Engstrom's reliance was reasonable. Engstrom is a sophisticated businessman; however, none of the alleged promises made were in writing and there is no evidence that Engstrom asked to confirm the terms in writing. Wendt made most of the promises in a social setting when they were on vacation. Engstrom stated in his deposition that he did not know of any other Nuveen employees who received assurances of employment until voluntary retirement, excellent treatment in salaries and bonuses, or compensation to "make up" for money lost in investments in Nuveen stock. Engstrom allegedly relied on these promises for 16 years after the promises were made. On this evidence, even drawing all inferences in favor of plaintiffs, the issue of reasonable reliance cannot be resolved in favor of Engstrom.
Even if one could reasonably find that Engstrom relied on the alleged promises, there is insufficient evidence for a jury to find that Engstrom relied on the alleged promises to his detriment. The only evidence plaintiffs produced that could support a finding of detrimental reliance was Engstrom's deposition. At one point in the deposition, Engstrom recounted the 1969 conversation with Wendt where, in response to Engstrom's statement that he would be forced to find another job, Wendt promised Engstrom employment until voluntary retirement and excellent treatment in salaries, bonuses and promotions. Engstrom testified that he responded "sure, okay, Frank. I know it's going to be tough, but I'll stick it out." (Engstrom Dep. 91). Engstrom also stated that he never looked for other employment from 1969 until his discharge in 1985. (Engstrom Dep. 181). On the facts of this case, merely failing to seek other employment is not detrimental reliance because Engstrom chose to remain employed at Nuveen. Engstrom must present sufficient evidence from which it could reasonably be found that Engstrom refused offers of comparable work and relied on the alleged promises of employment until his voluntary retirement and excellent treatment in salaries, bonuses, and promotions to his detriment ; plaintiffs failed to do so. Brennan, slip op. at 3.
The court grants Nuveen's motion for summary judgment on the fraud claim with regard to the alleged representations in paragraphs 16 and 17 of the second amended complaint that Engstrom would receive annual salaries that compared "very favorably to the highest rates paid in [the] industry," cash bonuses in profitable years, "excellent treatment, salary increases and bonuses", "generous payments" to make up for lost stock investment, and employment until his voluntary retirement. Under Pennsylvania law, common-law fraud is defined as "(1) a misrepresentation, (2) a fraudulent utterance thereof, (3) an intention by the maker that the recipient will thereby be induced to act, (4) justifiable reliance by the recipient upon the misrepresentation, and (5) damage to the recipient as the proximate result." Scaife Co. v. Rockwell-Standard Corp., 446 Pa. 280, 285, 285 A.2d 451, 454 (1971), cert. denied, 407 U.S. 920, 32 L. Ed. 2d 806, 92 S. Ct. 2459 (1972); Neuman v. Corn Exchange National Bank & Trust Co., 356 Pa. 442, 51 A.2d 759 (1947).
At trial, Engstrom would have to prove fraudulent intent by clear, precise, and convincing evidence. Beardshall v. Minuteman Press International, Inc., 664 F.2d 23, 26 (3d Cir. 1981); Snell v. Pennsylvania, 490 Pa. 277, 416 A.2d 468, 470 (1980). In ruling on a motion for summary judgment, the court must view the evidence through the prism of the substantive evidentiary burden. Anderson, U.S. at , 106 S. Ct. at 2513, 91 L. Ed. 2d at 215. Engstrom must come forward with affirmative and concrete evidence which would allow a jury to find fraudulent intent by clear, precise, and convincing evidence. Id. Anderson makes clear that a defendant may be entitled to summary judgment even where the defendant's state of mind is at issue. Anderson, U.S. at , 106 S. Ct. at , 91 L. Ed. 2d at 216-217.
Engstrom cannot defeat summary judgment on the fraud count by arguing that a dispute of fact exists because a jury might disbelieve Wendt's testimony as to state of mind and fraudulent intent. No reasonable jury could find from the evidence before the court on summary judgment that Engstrom had proved fraud, because Wendt, at the time he spoke, did not intend to give Engstrom very favorable salaries, bonuses, excellent treatment, or employment until voluntary retirement. Plaintiffs fail to point to any affirmative evidence in the record of fraudulent intent by Wendt or any Nuveen's agent when the representations in paragraphs 16 and 17 of the second amended complaint were made.
The tort of loss of consortium is derivative of the spouse's right to recover on an underlying tort action. Murray v. Commercial Union Insurance Co., 782 F.2d 432, 438 (3d Cir. 1986). Because none of the tort counts survive Nuveen's motion for summary judgment, the court grants summary judgment on Mrs. Engstrom's claim for loss of consortium.
The court also grants plaintiffs' motion to set aside the default on the counterclaim. Under Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 19 (3d Cir. 1985), this court must consider three factors: 1) whether Nuveen will be prejudiced; 2) whether the Engstroms have a meritorious defense; and 3) whether the default was the result of the Engstroms' culpable conduct. A decision to vacate entry of default is in the discretion of the court, although defaults are not favored. United States v. $ 55,518.05 in U.S. Currency, 728 F.2d 192, 194-95 (3d Cir. 1984).
Plaintiffs' counsel states that he failed to receive the defendant's answer and counterclaim to the second amended complaint although someone at his office did accept delivery. The court believes that the Engstroms failed to respond to the counterclaim not because of lack of diligence or culpable conduct, but because their counsel failed personally to receive the counterclaim that was properly served; there is no evidence that the plaintiffs themselves acted in bad faith. See, e.g., Farnese v. Bagnasco, 687 F.2d 761, 764-65 (3d Cir. 1982); cf. Dunbar v. Triangle Lumber and Supply Company, 816 F.2d 126, 127 (3d Cir. 1987) (attorney's derelictions are not sufficient evidence of a party's responsibility or culpability when determining whether to dismiss a complaint for lack of prosecution).
Nuveen will not be prejudiced by vacating the default. Nuveen argues that it will be prejudiced by delay in the ultimate disposition of the case. However, plaintiffs state that they do not plan any discovery on the counterclaim (plaintiffs' reply memorandum, pg. 7). Even if both parties conducted discovery on the counterclaim, the time needed to conduct reasonable discovery is not sufficient delay to constitute the severe prejudice to Nuveen necessary to deny plaintiffs an opportunity to defend against the counterclaim.
The Engstroms also allege a meritorious defense to the counterclaim. Nuveen states a claim to civil damages under Pennsylvania's Wiretapping and Electronic Surveillance Control Act, 18 Pa. C.S.A. § 5725 because the Engstroms allegedly unlawfully recorded telephone conversations with Wendt. The Engstroms state that because Wendt knew the calls were being recorded, Wendt impliedly consented to taping, so their conduct is covered by an exception to the state statute. Without expressing any view on their likelihood of success, the court finds that the Engstroms may present a meritorious defense sufficient to support the decision to vacate the entry of default.
Because the default did not result from culpable conduct by the plaintiffs, Nuveen will not be prejudiced, and the Engstroms may have a meritorious defense, the default is vacated.
An appropriate order follows.
AND NOW, this 31st day of August, 1987, upon consideration of defendant's motion for summary judgment, plaintiffs' response thereto, and defendant's reply, and upon consideration of plaintiffs' motion to set aside entry of default on the counterclaim, defendant's response thereto, and plaintiffs' reply, and following oral argument held on the motions, it is ORDERED that:
1. The motion for summary judgment on the claims for breach of contract, fraud, promissory estoppel, and loss of consortium is GRANTED.
2. The motion to set aside entry of default on the counterclaim is GRANTED.
3. On or before October 16, 1987, the parties shall complete discovery on the counterclaim.
4. On or before October 30, 1987, the parties shall submit a joint final pretrial memorandum in accordance with Local Rule 21(d).
5. A final pretrial conference shall be held November 16, 1987, at 4:30 p.m.
In addition to trial counsel, plaintiffs and a representative of defendant with full settlement authority shall attend unless leave of court is granted for telephone availability.