Schmidt V Wells Fargo & Company

2018 WL 11000692 (2018)

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Nature of the Case

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Facts

Schmidt (P) worked for Wells Fargo (D) from 2011 to 2016 per a five-year employment contract. Near the end of his five-year term, P accepted a new position as Head of Supply Chain Finance. The terms of P's new position were set forth in oral communications and in a written letter sent to P. P claims the parties agreed to a five-year contract for his new role. The letter lacks any mention of an employment agreement for a term of years. The broken promise at issue concerns P's nearly $ 4.5 million in D-managed hedge funds. P's investments are at issue because those investments are subject to the requirements of the 'Volcker Rule.' The Volcker Rule prohibits an employee of a banking entity from investing in certain types of funds sponsored by the banking entity unless the employee is directly engaged in providing investment advisory or other services to the covered fund. The restrictions became effective on July 21, 2012, but that deadline was extended to July 21, 2017. D contacted P to inform him that he may remain invested in D-managed funds until June 30, 2017. D arbitrarily accelerated the Volcker Rule redemption deadline to December 31, 2016, with little notice to P. As a result, P 'did not have sufficient information to decide the financial impact of the redemption and was forced to resign his employment.' P sued D asserting four claims: (1) breach of contract; (2) negligent misrepresentation; (3) negligence; and (4) promissory estoppel. D filed a motion to dismiss. The court dismissed the first three claims. The court held that P failed to satisfy the pleading standards for the third and fourth elements of promissory estoppel: that he detrimentally relied on the promise, and that this Court must enforce the promise to prevent injustice. P argued only that D's actions in December 2016 forced him to accelerate his decision-making process regarding redemption which forced him to resign. P failed to allege that had D given him more time, he would have made a 'different, better decision.' Because P did not allege that he would have made a different decision in reliance on D’s promise, the court dismissed the promissory estoppel action. P amended and reduced his case to one claim: promissory estoppel. D moved to dismiss.