Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

JOHN M. FLOYD & ASSOCIATES v. OCEAN CITY HOME SAVINGS BK.

August 18, 2005.

JOHN M. FLOYD & ASSOCIATES, INC. Plaintiff,
v.
OCEAN CITY HOME SAVINGS BANK, Defendant.



The opinion of the court was delivered by: JOSEPH RODRIGUEZ, Senior District Judge

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] OPINION

This matter has come before the Court on Defendant Ocean City Home Savings Bank's ("Ocean City Bank" or the "Bank") Motion for Summary Judgment, and Plaintiff John M. Floyd & Associates' ("Floyd") Cross Motion for Summary Judgment. Also before the Court is a Motion in Limine filed by Floyd, with his cross motion for summary judgment, to preclude the testimony of the Bank's expert, Nicholas Ketcha ("Ketcha"). For the reasons discussed herein, the Bank's motion for summary judgment is granted as to Floyd's breach of contract and implied warranty of good faith and fair dealing claims. Floyd's cross motion for summary judgment is granted in-part and denied in-part; it is granted as to the Bank's counterclaim for refund of its $25,000 retainer, but denied in all other aspects. Additionally, Floyd's motion in limine is denied as moot because no aspect of Ketcha's testimony was relied upon by the Court in reaching this decision.

I. Factual Background

  This litigation concerns a contract that was entered into between Floyd and the Ocean City Bank, and allegedly breached when the Bank rejected Floyd's recommendations and hired a different consulting firm. On May 16, 2001, a teleconference took place between Paul Esposito ("Esposito"), Regional Sales Director of the Bank, and Mark Roe, Executive Sales Director for Floyd, whereby Roe proposed consulting services for an overdraft privilege program. (Roe Dep. at 9.) On June 27, 2001, Roe presented a written proposal (the "Contract") to Esposito, in which Floyd sought to provide certain computer consulting services to the bank in exchange for a $25,000 retainer, out of pocket expenses, and a percentage of future savings as a result of the program. (See Def.'s Exh. C.) The Contract called for Floyd to analyze the Bank's current computer systems, make recommendations, create and instal an overdraft privilege program, and train the Bank's employees. Esposito signed the Contract on August 21, 2001 and Floyd's president, John Floyd, signed the agreement on August 27, 2001. (Id. at 6.) It is undisputed that a contract was formed; however, the parties dispute whether the Bank's actions constitute a breach of that agreement.

  The parties dispute the overall goals of the overdraft privilege program. Esposito testified that one of the Bank's main objectives in the program's implementation was to insure it was fully-automated. (See Esposito Dep. at 47.) Further, Esposito states that he had conversations in the summer of 2001 with Rick Wade ("Wade") of Bisys Corporation, the company that provided core processing services to the Bank, concerning compatibility issues with the Bank's existing hardware and the overdraft privilege program. (Id. at 182.) In August 2001, Roe testified that he had two phone conversations with Esposito and Wade in which they discussed compatibility issues. (Roe Dep. at 20.) In the first conversation, Roe testified that he assured Wade and Esposito that Floyd had never encountered a core processing system in which it could not implement the overdraft program. (Id. at 20.) On October 2, 2001, at the request of Esposito, Roe and Floyd technician Eric Hudgins, called Wade to talk about the compatibility problems. Roe's notes from that conversation state:
After much discussion, thought I had him convinced to let us make our recommendations to the bank, let the bank approve or not approve them, and then Bisys would be contacted to inform them of any programming/modifications that would have to be made.
(Id. at 56.)

  Another, and less significant dispute concerned a free checking option, which, Esposito testified, was allegedly communicated to Roe that the Bank was not interested in this feature in the overdraft program. (Esposito Dep. at 20.) Roe admitted that one of the concerns of the Bank was whether this aspect of the program could be modified to have a no free checking program. (Id. at 31-32.) Nevertheless, Roe stated that once the free checking program was presented, the Bank would have the option to approve or disapprove the recommendation. (Id. at 32.) The full-automation and the no free checking options in the overdraft program were not expressly mentioned in the Contract drafted by Floyd.

  The Contract called for a four phase implementation. First, was the Analysis Phase where Floyd would identify existing account structures and procedures through interviews, observation, and review of historical data. (Id. at 3.) Second, was the Presentation Phase, where Floyd would propose recommended changes to the Bank's management, and identify those recommendations that are approved by the Bank. (Id.) These were followed by the Implementation Phase and the Follow-up Phase. (Id. at 4.) The Contract did not include an exclusivity provision, which prohibited the Bank from negotiating and contracting with another consulting firm for a similar program, nor did the Contract prohibit Floyd from selling is overdraft program to other competing banks. The following portions of the Contract are pertinent to the parties' motions for summary judgment:
Objectives — Our objective is to install our Overdraft Privilege program in Ocean City Home Bank. There will be an emphasis on installing a product that will result in a significant increase in non-interest income without a disproportionate increase in non-interest expense. We will install systems to monitor income and associated costs to ensure the bank is receiving the appropriate income for the designed product. Accomplishing these objectives will result in an estimated increase in first-year pre-tax earnings between $370,000 and $510,000. Moreover, we are so confident that this increase is achievable that we offer our service on a contingency basis. (Emphasis added).
(Def.'s Exh. C at 1.)

  Overdraft Privilege Program.

 
1. Perform a comprehensive profile analysis of the banks demand deposit customer base to establish Overdraft privilege limits.
2. Perform an analysis of the banks NSF and Overdraft processing and assist the bank in making the necessary changes for an effective overdraft privilege program.
* * *
8. Assist the bank in the installation of an automated collection system that interfaces with the core application processing system. (Emphasis added). (Id. at 1-2.)
Cost of the Assignment
The cost to your institution of the engagement will be one-third of the first year's quantified net increase in pre-tax earnings plus out of pocket expenses. At the beginning of the assignment the bank agrees to pay a $25,000 fully refundable retainer. (Emphasis added). After the recommendations have been installed we will quantify the increased income and the bank agrees to pay monthly one-third of the quantified net increase in pre-tax earnings. After the bank has recovered the retainer the bank agrees to make these payments by the 15th of the following month. We will invoice semi-monthly for out-of-pocket expenses.
(Id. at 2.)

  Quantification of Earnings.

 
If a recommendation is not approved it will not be included in the fee calculation (emphasis added). However, if any recommendation, within 24 months of the initial engagement is approved or approved as modified, or initially declined and later approved as recommended or as subsequently modified it will be included in the fee calculation.
(Id. at 3.)

  Performance on the Contract began on or about November 5, 2001, when Earl Shipp ("Shipp") was assigned by Floyd to be the project manager for the Contract. (Shipp Dep. at 11.) Shipp testified that he was simply given a copy of the Contract and was told by Roe that the Contract explained the assignment. (Id. at 52.) Roe did not advise Shipp that the Bank had compatibility concerns. (Roe Dep. at 51.) Shipp conducted interviews with the Bank's employees, reviewed the Bank's ledger, and visited competing institutions. (Id. at 41.) On November 27, 200, Shipp presented the results of his work, the "Overdraft Privilege Study," to several of the Bank's officers, including Esposito and the Bank's president. (See Def.'s Exh. G.) The presentation included 32 recommendations, which included a free check service application, but did not address whether the system was to be fully-automated, or if modifications could be made to create a fully-automated system. (Id.)

  After the presentation, Esposito testified that the Bank's management met to discuss Shipp's proposal, and that they were disappointed that Shipp's presentation still included recommendations for the free checking option, and that it did not address the automation concerns. (Esposito Dep. at 159-60.) In sum, the Bank's management believed that Shipp presented boiler plate recommendations, and they did not have confidence in Floyd continuing in its implementation of the overdraft program. (Id. at 161-62.) In a December 19, 2001 phone conversation, and followed by a letter dated December 24, 2001, Esposito advised John Floyd that it was not satisfied with the presentation and that it had decided not to implement the Floyd program. (Pl.'s Exh. G.) In a letter dated January 11, 2002, Floyd acknowledged receipt of the Bank's termination letter.

  On January 2, 2002, following a referral from another bank, Esposito contacted Pinnacle Financial Strategies, L.L.C. ("Pinnacle") to inquire about implementing an overdraft privilege program at Ocean City Bank. (Esposito Dep. at 193.) On April 18, 2002, the Bank and Pinnacle entered into a Professional Services Agreement and a Software Licensing Agreement, whereby Pinnacle would implement an overdraft privilege program at the Bank. (See Def.'s Exh. J.) The Bank is seeking summary judgment on Floyd's claims of breach of contract and breach of the implied warranty of good faith and fair ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.