Jackman v. WMAC Inv. Corp., 85-1710

Citation809 F.2d 377
Decision Date20 February 1987
Docket NumberNo. 85-1710,85-1710
Parties105 Lab.Cas. P 55,668 John JACKMAN, Plaintiff-Appellee, v. WMAC INVESTMENT CORPORATION, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Gilbert W. Church, Foley & Lardner, Leonard G. Leverson, Milwaukee, Wis., for defendant-appellant.

Terry E. Nilles, Gibbs, Roper, Loots & Williams, Milwaukee, Wis., for plaintiff-appellee.

Before CUMMINGS and CUDAHY, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

This diversity case concerns the interpretation under Wisconsin law of a stock incentive plan for employees. Plaintiff brought suit to recover money which he claimed was due to him under the plan. Defendant had refused to pay, arguing that plaintiff had forfeited his rights under the plan by leaving the company. Ruling on a motion in limine, the trial court interpreted the plan to provide that plaintiff was entitled to the payments he sought and held that defendant could not introduce parol evidence that the parties intended differently in making the plan. Agreeing that the ruling effectively determined the outcome of the case, the litigants entered into a stipulation to avoid the need for trial and to enable defendant to appeal. The stipulation provided that if the court's ruling on the motion in limine was correct, judgment should be granted to plaintiff. The stipulation did not settle the additional issue of whether plaintiff should also be granted attorney's fees under the Wisconsin Wage Claim statute, leaving that issue for the court to decide. The trial court entered judgment for plaintiff on the basis of the stipulation and granted attorney's fees to plaintiff. We have jurisdiction under 28 U.S.C. Sec. 1291.

Defendant advances two arguments on appeal. Defendant asserts error in the district court's ruling that the defendant could not present extrinsic evidence or argument concerning the parties' intent in entering into the stock incentive plan. Defendant also argues that the district court erred in awarding attorney's fees under the Wisconsin Wage Claim statute, both by treating the award as mandatory, where the statute makes it a discretionary decision, and by failing to give an adequate basis for the award. For the reasons stated below, we will affirm on both the granting of the motion in limine and the award of attorney's fees.

I.

The essential facts are undisputed. Plaintiff John Jackman was employed by defendant MGIC Investment Corporation (which has since changed its name to WMAC Investment Corporation) as a vice president. In early 1981, his 1980 job performance evaluation was negative and he was told to look for another job. During the rest of 1981 MGIC gradually removed virtually all his job responsibilities. Jackman repeatedly requested a new job within MGIC. Toward the end of the year MGIC offered and he accepted a new job as vice president of a subsidiary, at about one half his former salary.

Jackman retained his rights in MGIC's "1979 Restricted Stock Performance Plan" ("1979 Plan"). Under the 1979 Plan, participant employees were awarded "Restricted Stock" of MGIC. The stock remained "restricted," meaning the employee's rights in it did not vest until the end of a period set by the company at the award of the stock, the "Restricted Period." If the employee was fired or quit, he forfeited all rights in stock that had been awarded to him that was still restricted.

An exception to the complete forfeiture rule was that if the termination was due to the employee's death or retirement, a portion of the stock, corresponding to the part of the "Restricted Period" for that stock that had elapsed, vested and the remaining portion was forfeited. For example, an employee might receive 200 shares of restricted stock in August, 1975, with a "Restricted Period" of four years. If he was still with the company in August 1979, the stock would become unrestricted, meaning he would now own 200 shares of common stock. If he left the company before August of 1979, for any reason other than death or retirement, he would forfeit the stock. If he retired in August of 1977, halfway through the "Restricted Period," he would receive 100 shares and forfeit his rights in the other 100. Holding restricted stock, then, was an incentive for the employee to remain with the company. Jackman had a total of 900 shares of such restricted stock at the time of the events discussed here.

On December 13, 1981, MGIC announced that it would be acquired by Baldwin-United Corporation ("Baldwin"). The merger was completed on March 2, 1982.

After the announcement of the merger but before its consummation, Baldwin announced a replacement stock plan, the "1982 Deferred Compensation Plan" ("1982 Plan"), that would take effect upon the consummation of the merger. The 1982 Plan was substantially similar to the 1979 Plan, with the following differences. Under the 1982 Plan, participants would receive cash rather than stock upon the vesting of restricted stock. The 1982 Plan also introduced a feature advantageous to participants, the "Non-Forfeiture Termination."

"Non-Forfeiture Termination"--means the termination of a Participant's employment with the Company, Baldwin-United or any Baldwin-United subsidiary or parent immediately after which termination the Participant is not an employee of the Company, Baldwin-United or any Baldwin-United subsidiary or parent, if such termination is (1) as a result of the death or permanent disability of the Participant, (2) made by the Participant's employer other than for cause, or (3) made by the Participant as a result of a material diminution by the Participant's employer in the Participant's job responsibilities.

A participant whose employment ended through a "Non-Forfeiture Termination" did not forfeit his rights in any restricted stock, as he would have under the 1979 Plan for any termination other than one due to his death or retirement. In fact, the vesting was accelerated, and the employee became entitled to the full cash payment five days after termination. Thus, an employee holding restricted stock under the 1982 Plan stood to receive cash for it unless he was fired for cause or quit for any reason other than a "material diminution" in his job responsibilities by his employer. In February, 1982, Jackman signed an agreement to participate in the 1982 Plan.

About three months after the merger, Jackman left MGIC and took employment elsewhere. He requested the cash payment due for 900 shares, on the basis that he fell into the third category of "Non-Forfeiture Termination," a termination "made by the Participant as a result of a material diminution by the Participant's employer in the Participant's job responsibilities." MGIC refused payment, stating that non-forfeiture was not applicable in Jackman's case because the "material diminution" in his duties had occurred before the time of the merger.

After bringing suit on April 1, 1983, Jackman filed a motion in limine to exclude extrinsic evidence and argument about the purpose and intent of the 1982 Plan. MGIC opposed the motion, seeking to adduce such evidence and argument to demonstrate that a "Non-Forfeiture Termination" could not be based on a "material diminution" of an employee's job responsibilities that occurred before the effective date of the merger. The trial court granted the motion, holding the provision to be neither patently nor latently ambiguous. In interpreting the 1982 Plan to decide on the motion, the court held that the provision applied to "material diminutions" made before or after the merger, thus rejecting MGIC's proffered interpretation as a matter of law.

To enable appeal, the parties stipulated that, if the ruling on the motion was correct, Jackman was due a judgment of $47,853 plus interest. MGIC thus waived such possible arguments as that Jackman did not quit as "a result" of the diminution in his responsibilities. The district court entered judgment for Jackman and granted his motion for attorney's fees in the amount of $20,000. 610 F.Supp. 290.

II. Parol Evidence

In Wisconsin, although parol evidence is not admissible to vary the terms of a complete and unambiguous contract, such extrinsic evidence is admissible to aid interpretation of ambiguous contract language. Marshall & Ilsley Bank v. Milwaukee Gear Co., 62 Wis.2d 768, 216 N.W.2d 1, 5 (1974). Such ambiguity may appear on the face of the contract or it may appear only as the contract applies to its subject matter. 216 N.W.2d at 7.

For ambiguity to appear on the face of a writing, the language must be reasonably susceptible of more than one meaning. Jones v. Jenkins, 88 Wis.2d 712, 277 N.W.2d 815, 819 (1979).

A word or term in a contract to be ambiguous must have some stretch in it--some capacity to promote more than one meaning--before parol evidence is admissible.

Conrad Milwaukee Corporation v. Wasilewski, 30 Wis.2d 481, 141 N.W.2d 240, 244 (1966). The simplest type of ambiguity exists when a phrase or word, in and of itself, is susceptible of multiple meanings. For example, the phrase "in the event there shall be a ... recapitalization or exchange of shares or other reorganization" can be read to refer to all exchanges of shares or only to exchanges of shares that occur as part of a reorganization. Carey v. Rathman, 55 Wis.2d 732, 200 N.W.2d 591, 594 (1972). The phrase at issue here, however, "material diminution by the Participant's employer in the Participant's job responsibilities," is not of itself ambiguous, since it clearly lacks any requirement that the "material diminution" must occur after the date of the merger. MGIC argues that, although the clause is not so limited expressly, when read in light of the other provisions of the plan, it evinces the intent to have such a limitation or at least becomes ambiguous. Because determining that the writing is unambiguous...

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