Shipner v. Eastern Air Lines, Inc.

• Decision Date: 23 March 1989
• Docket Number: No. 87-5861,87-5861
• Citation: 868 F.2d 401
• Parties: Robert J. SHIPNER, Plaintiff-Appellant, v. EASTERN AIR LINES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 401

868 F.2d 401

Robert J. SHIPNER, Plaintiff-Appellant, v. EASTERN AIR LINES, INC., Defendant-Appellee.

No. 87-5861.

United States Court of Appeals, Eleventh Circuit.

March 23, 1989.

Edward R. Lev, Larry L. Varn, Sullivan & Worcester, Boston, Mass., and Duncan J. Farmer, Moore, Farmer, Menkhaus & Juran, P.A., Boca Raton, Fla., for plaintiff-appellant.

Francis A. Anania, and James E. Tribble, Blackwell, Walker, Fascell & Hoehl, Miami, Fla., for defendant-appellee.

Appeal from the United States District Court For the Southern District of Florida.

Before HATCHETT and CLARK, Circuit Judges, and FITZPATRICK ^*, District Judge.

HATCHETT, Circuit Judge:

In this action between Eastern Airlines (Eastern) and one of its former officers for benefits under a severance agreement, we are asked to determine whether the district court correctly interpreted the agreement and properly entered summary judgment. Finding the district court's interpretation correct and summary judgment proper, we affirm.

FACTS

In August, 1984, Robert J. Shipner, the appellant, accepted the position of Vice-President Flight Operations and Systems Chief Pilot with Eastern Air Lines. Prior to assuming this management position, Shipner had been an Eastern pilot for approximately twenty-six years, advancing to the rank of Captain in 1967. As a result of the Eastern Air Line Pilots Association (ALPA) collective bargaining agreement, Shipner preserved his Eastern pilot status while serving in the management position.

Amid rumors that Eastern was a takeover target, the Eastern Board of Directors offered severance agreements to Shipner and twenty of its officers and senior managers. On January 15, 1986, Shipner signed the severance agreement (Agreement) which provided benefits to him upon termination within twenty-four months of a "change in control of the Company." The Agreement defined a "change in control of the Company" to "have occurred if (1) any 'person' is or becomes the 'beneficial owner' ... directly or indirectly of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities...."

On March 26, 1986, Texas Air Corporation (Texas Air) acquired 47-percent of Eastern's outstanding common stock. By June 16, 1986, Texas Air reported that it had acquired 51.25-percent of Eastern's outstanding common stock. On July 1, 1986, Eastern dismissed Shipner as its Vice President Flight Operations and Systems Chief Pilot. Upon termination as an officer, Shipner returned to pilot duty. On October 1, 1986, Texas Air exercised control over Eastern after gaining Department of Transportation approval of the takeover.

PROCEDURAL HISTORY

On August 4, 1986, Shipner filed a two-count complaint against Eastern alleging a breach of the Agreement. Count I alleged that Eastern breached the terms of the Agreement through its refusal to pay Shipner three times his annual salary of $165,000 and fringe benefits upon his dismissal as an officer. Shipner moved for a partial summary judgment on Count I; Eastern moved for summary judgment on both counts of the complaint. The district court, in a memorandum order, granted Eastern's motion for summary judgment.

In response to the district court's memorandum order, Shipner moved for leave to amend and supplement his complaint under Fed.R.Civ.P. 15(a) and (d). In a proposed Count III, Shipner requested a declaratory judgment on whether he would be entitled to receive benefits under the Agreement if he resigned as an Eastern pilot. In a proposed Count IV, Shipner sought recovery of legal fees and related expenses incurred during the litigation. The district court denied Shipner's rule 15 motion to amend and entered final judgment for Eastern.

In his reply brief filed in this court, for the first time, Shipner indicated that he has terminated his employment as an Eastern pilot and is no longer an Eastern employee in any capacity. Shipner contends that if we do not reverse the district court's summary judgment, we should remand this case for a ruling on the effect of his voluntary termination as a pilot under the Agreement. Eastern moves to strike portions of Shipner's reply brief and for a determination that the issue presented for declaratory relief raised in Shipner's brief is moot. In opposition to Eastern's motion to strike, Shipner responds that the issue of declaratory relief is moot.

ISSUES

Shipner raises the following issues on appeal:

(1) whether the district court erred in ruling that the phrase "termination of your employment" in the Agreement is clear and unambiguous;

(2) whether the district court erred by refusing to consider extrinsic evidence of the parties' intent;

(3) whether the district court erred in denying Shipner's motion for partial summary judgment;

(4) whether the district court abused its discretion in denying Shipner's motion for leave to amend and supplement the complaint; and

(5) whether we should consider facts which developed during the pendency of this appeal.

DISCUSSION

I. TERMINATION OF EMPLOYMENT

The provision of the Agreement, paragraph 4, which gives rise to this case provides:

4. TERMINATION FOLLOWING CHANGE IN CONTROL. If a Change in Control of the Company occurs while you are an employee of the Company, you shall be entitled to the benefits provided in paragraph 8 below upon the termination of your employment within twenty-four (24) months after such event, unless such termination is as a result of (a) your 'Disability' (as defined in clause 4(i) below), (b) your 'Retirement' (as defined in clause 4(ii) below, (c) your death, (d) your termination by the Company for 'Cause' (as defined in clause 4(iii) below), or (e) termination by you for other than 'good reason' (as defined in clause 4(iv) below), in any of which events you shall not be entitled to receive termination benefits under this Agreement.

Shipner contends that the district court erred in ruling that the phrase "termination of your employment" is clear and unambiguous. He argues that the Agreement is ambiguous on its face as to whether the phrase "termination of your employment" means "termination of your employment as an officer" or "termination of your employment as an employee." Shipner argues that a contract is ambiguous if it is "susceptible to either of the divergent meanings contended for by the parties," citing Ocean Reef Club, Inc. v. UOP, Inc., 554 F.Supp. 123, 128 (S.D.Fla.1982).

Eastern contends that the phrase "termination of your employment" is unambiguous. Eastern argues that Shipner's attempt to alter the plain meaning of the phrase to connote "termination of your employment as an officer" is unreasonable, and that the district court's determination is correct.

We must independently review the district court's order granting summary judgment and determine whether any genuine issue of material fact exists. Mercantile Bank and Trust Co. v. Fidelity and Deposit Co., 750 F.2d 838 (11th Cir.1985).

The district court found that the Agreement does not specify whether "termination of employment" means termination of employment as an officer of the company, or whether it means total severance of any employment relationship with Eastern. In interpreting the contract, the district court endeavored to determine whether the definition of "termination of employment" is ambiguous. The district court first examined the "four corners" of the Agreement to determine if the intent of the parties could be gleaned from the Agreement itself. The district court considered the preamble of the Agreement, and determined that these severance agreements were intended only for officers who filled critical management positions. The district court found the phrase "termination of employment" to be unambiguous. The court conceded that extrinsic evidence would support Shipner's contentions that the purpose of the Agreement was to keep him in the position of an officer, but it held that other terminology in the Agreement refuted this contention.

The district court found that the author of the Agreement foresaw a situation wherein new management could merely demote senior officers without terminating their employment with Eastern, thereby defeating the Agreement. To avoid this situation, the author of the Agreement provided, in paragraph 4(iv)(A), that termination of employment with benefits could be accomplished by resignation upon:

a change in your status or position(s) as an officer of the Company which, in your reasonable judgment, does not represent a promotion from your status and position(s) as was in effect immediately prior to the Change in Control of the Company....

The district court further found that Eastern removed Shipner as an officer at a salary of $165,000 per year, which resulted in his continued employment with Eastern as a pilot at a salary of $95,000 per year. Shipner concedes that Eastern did not reassign him to the lesser position, but that he reverted to that position due to his rights under the ALPA union contract. Nevertheless, the district court found that the fact of reversion did not detract from the inescapable conclusion that Shipner had the right to claim the benefits of the severance agreement upon refusing to accede to the demotion and submitting his resignation. The district court found that Shipner elected to accept his reduced status with the company and to also enforce his contractual benefits; which, according to the district court, Shipner could not do. The district court also found no ambiguity in the phrase "termination of employment" and ruled that the phrase means complete severance of any employment relationship with Eastern. We agree; we find no ambiguity and affirm the district court on this issue. See Fabrica Italiana Lavorazione v. Kaiser Aluminum, 684 F.2d 776 (11th Cir.1982).

II. EXTRINSIC EVIDENCE

Shipner also contends that Florida law required the district court to consider extrinsic evidence, not...