
USCA1 Opinion

	




                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 96-1638                           BANK OF NEW ENGLAND CORPORATION,                                Defendant, Appellant,                                          v.                                   LACY G. NEWMAN,                                 Plaintiff, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. William G. Young, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                            Aldrich, Senior Circuit Judge,                                     ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________            James Donnell with  whom Andrews &  Kurth L.L.P. was on  brief for            _____________            _______________________        appellant.            George F.  Parker, III  with whom  Lawrence J.  Cohen and  Badger,            ______________________             __________________      _______        Dolan, Parker & Cohen were on brief for appellee.        _____________________                                 ____________________                                  December 16, 1996                                 ____________________                      ALDRICH, Senior Circuit Judge.  The agreed question                               ____________________            in  this appeal from the bankruptcy court is whether security            for  an employer's  breach of  contract posted  following the            execution  of a  written employment  contract on  November 1,            1990,  was  security  for  that,   or  was  security  for  an            antecedent  debt within  11 U.S.C.    547(b) because  an oral            contract had already been made in June.  If it  was June, the            security was invalid as a preference -- November 1 being less            than  90 days before the employer's filing under Chapter 7 of            the Bankruptcy Code on January 7, 1991.  11 U.S.C.   547.1                      By  granting   defendant   Bank  of   New   England            Corporation  (Bank)'s trustee's  motion for  summary judgment            the bankruptcy  court ruled, without opinion,  that plaintiff            Lacy  G.  Newman (Newman)  and  defendant  Bank had  in  fact            contracted  by  June  18,  1990, when  Newman  started  work.            Newman  v. Bank  of  New England  Corp.,  187 B.R.  405,  409            ______     ____________________________                                            ____________________            1.  11 U.S.C.   547 provides in relevant part:            (b) Except as provided in subsection (c) of this section, the            trustee may avoid any  transfer of an interest of  the debtor            in property--                      (1) to or for the benefit of a creditor;                      (2) for or on account of an antecedent debt owed by            the debtor before such a transfer was made;                      (3) made while the debtor was insolvent;                      (4) made--                           (A)  on or within  90 days before  the date of            the filing of the petition . . . .                                         -2-            (Bankr.  D.  Mass. 1995).   On  Newman's appeal  the district            court reversed, stating that, on the record before it, it was            not possible  to tell whether  there was an  agreement before            the written contract in November.  Upon remand for trial, the            bankruptcy court found "there was no definite agreement until            November  1, 1990."    On Bank's  appeal  the district  court            affirmed.  On Bank's further appeal, we too affirm.                      The  contractual  problem  arose  because   of  the            provisions of the bankruptcy  laws and the desire of  Newman,            in  no way  opposed  by Bank,  that  in case  his  employment            contract was terminated without  cause,2 his damages would be            secured.  The facts were these.  In May, 1990 Bank and Newman            began consideration  of the  latter's becoming employed  as a            senior vice  president.  There  were, of course,  talks about            terms, but by June 18, the parties, as evidenced by a written            memorandum, had  agreed that Newman's employment  was for two            years;  his title was to be Senior Vice President; his annual            salary was $225,000, with  a guaranteed bonus the first  year            of  $25,000; there was to be a relocation bonus and expenses,            and an option for 35,000 shares of common stock with standard            anti-dilution  provisions.   Particularly where  Newman began            working,  if the matter had ended there, this might have been                                            ____________________            2.  It   is  disputed  whether   the  Chapter  7  proceedings            terminated the  contract.  The  successor bank did  not adopt            it.   The bankruptcy court's finding in Newman's favor is too            clearly correct to call for further discussion.                                         -3-            a  typical  case  permitting  a  finding  of  an  established            contract even though the parties planned a writing that might            add  minor   details.     Chedd-Angier  Prod.  Co.   v.  Omni                                      ________________________       ____            Publications Int'l, 756 F.2d  930, 935 (1st Cir. 1985).   The            __________________            matter,  however,  did  not   stop  there.    The  memorandum            indicated  that  there was  to be  added  a provision  to the            effect that in  case of termination without fault on Newman's            part, damages were to  be secured to protect him  from having            to claim with ordinary creditors.  Bank agreed in principle -            -  apportionment   among  its   creditors  would  be   of  no            consequence to  it.    The  problem,  as  recognized  in  the            memorandum, was the needed approval of the bank regulators.                      This matter  was of consequence to  Newman, who had            an unhappy  memory of  what happened  to his  severance claim            when employed by a previous bank that went into receivership.            The  present  resolution  took  some  four  months.    Partly            responsible, as the bankruptcy court noted, was the fact that            Bank's  senior  counsel "had  neither  previously written  an            employee or severance agreement nor understood the applicable            banking  regulations   [and]  struggled  to  draft   a  final            document."  Thereby went the passage of time.                      This  produced  an  unusual  situation.    If  full            expression  of  the  promised  severance  provision   was  an            essential matter, Rosenfield v.  United States Trust Co., 290                              __________     _______________________            Mass.  210, 216, 195 N.E.  323, 325 (1935),  Newman went four                                         -4-            months without any contractual protection at  all in order to            obtain  an  agreement in  which  it  was positively  assured.            Without mentioning  this dilemma the  bankruptcy court  found            that Newman had in fact chosen the positive security route.                      We see  possible grounds  for this conclusion.   In            the  first place, the importance of being secured was high in            Newman's mind  not only from past  experience, but especially            because Bank was  a "troubled  institution."  He  was not  in            need  of this  particular  employment; he  had other  offers.            Against  waiting  for  final  resolution,  however,  Bank had            agreed that it  was willing  to afford security  and to  work            jointly in appeasing the bank regulators.  It had even agreed            to work  out some other device if the regulators did not come            through.   Might  not  this be  enough so  that  there was  a            definite June  contract, the  eventually selected form  to be            but  a detail?  Could this not  have been claimed if the Bank            had discharged Newman in October?                      There  was,  however,   a  further  reason.     The            bankruptcy court  found that  the various severance  packages            that  were  considered  "varied  as  to  amount  and  terms."            "Varied"  was  an  understatement.   The  record  shows  that            amounts differed so substantially that Newman might well have            delayed over this aspect alone.                      Taken  altogether,  we  can accept  the  bankruptcy            court's finding  that there  was no completed  June contract.                                         -5-            Hence the funds deposited in escrow were in connection with a            November agreement, and thus reachable.                      Affirmed.                      _________                                         -6-
