959 F.2d 425 (2nd Cir. 1992), 656, Seiden Associates, Inc. v. ANC Holdings, Inc.

Docket Nº:656, Docket 91-7770.
Citation:959 F.2d 425
Party Name:SEIDEN ASSOCIATES, INC., Plaintiff-Appellant, v. ANC HOLDINGS, INC., American National Can Co., Defendants-Appellees.
Case Date:March 23, 1992
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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959 F.2d 425 (2nd Cir. 1992)

SEIDEN ASSOCIATES, INC., Plaintiff-Appellant,

v.

ANC HOLDINGS, INC., American National Can Co., Defendants-Appellees.

No. 656, Docket 91-7770.

United States Court of Appeals, Second Circuit

March 23, 1992

Argued Dec. 10, 1991.

Page 426

Daniel A. Pollack, New York City (Edward T. McDermott, Pollack & Kaminsky, of counsel), for plaintiff-appellant Seiden Associates, Inc.

Jeremy G. Epstein, New York City (Michael W. Jahnke, James R. Warnot, Jr., Shearman & Sterling, of counsel), for defendants-appellees ANC Holdings, Inc. and American Nat. Can Co.

Before: FEINBERG, NEWMAN and CARDAMONE, Circuit Judges.

CARDAMONE, Circuit Judge:

The appeal before us presents a question of contract interpretation. When the meaning of a contract is litigated, a reviewing court ordinarily looks only at the words used by the drafters, who presumably understood what they intended. Where the language used creates an ambiguity, a reviewing court must permit the receipt of evidence in order to see what was in the drafters' minds. Plaintiff Seiden Associates, Inc. (Seiden) commenced this action to recover unpaid fees it claimed to have earned when, pursuant to an agreement, it recruited William Sick, Jr. as chief executive officer of defendant American National Can Company (National Can). Seiden appeals from an order entered on July 3, 1991 in the United States District Court for the Southern District of New York (Mukasey, J.), granting summary judgment in favor of National Can and defendant ANC Holdings, Inc. (ANC), the successor-in-interest to Triangle Industries, Inc. (Triangle), the original party to the agreement.

BACKGROUND

Seiden is a New York executive recruiting firm. On December 2, 1986 it entered into a contract dated October 31, 1986 with Triangle to recruit a chief executive officer for Triangle's container business, National Can. The letter agreement entered into by Seiden's president, Steven Seiden, and Triangle's president, Peter May, set forth the following:

Our fee for this assignment, which shall be an exclusive one, will be equivalent to 30% (thirty percent) of the executive's first year's earned base and incentive compensation, reduced by the paid portion of our retainer but not lower than the total retainer, as set forth in the

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following paragraph. The final fee will be determined 12 months from the date of employ.

As such retainer, Triangle Industries Inc. agrees to pay Seiden Associates $300,000 (three hundred thousand) in five equal monthly payments of $60,000 (sixty thousand) beginning on the date this letter is signed by you. This retainer is based on 30% of the Chief Executive Officer's initially estimated first year's total cash compensation of $1 million.

After reviewing more than 100 candidates, Seiden recruited Sick and assisted the executive in negotiating with Triangle for the terms of his employment. Sick began employment with National Can on January 1, 1988 with a five-year contract that provided him with an annual salary of $800,000. In addition, he was eligible to receive cash incentive compensation from a deferred Performance Incentive Plan, which did not vest until his third year of employment, and to participate in two stock option plans. Most significant for purposes of this appeal, the agreement provided for a discretionary "cash bonus award up to an amount equal to 100% of the actual salary payable ... for such year. The amount of any such award shall be based upon the achievement, as determined by the Company's Board of Directors in the exercise of its reasonable judgment" of yearly company and personal performance goals and "shall be payable in a lump sum on or before each April 1 for the immediately preceding calendar year." During 1988 Triangle and its subsidiaries, including National Can, were purchased by the Pechiney Group. Pechiney is the parent of ANC, the successor-in-interest to Triangle.

Sick's 1988 W-2 income statement shows that he received $800,004...

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