962 F.2d 1085 (2nd Cir. 1992), 844, Ginett v. Computer Task Group, Inc.
|Docket Nº:||844, Dockets 91-7768, 91-7792.|
|Citation:||962 F.2d 1085|
|Party Name:||Frank J. GINETT, Plaintiff-Appellee, Cross-Appellant, v. COMPUTER TASK GROUP, INC., Defendant-Appellant, Cross-Appellee.|
|Case Date:||April 21, 1992|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Final Submissions Jan. 31, 1992.
Argued Jan. 28, 1992.
[Copyrighted Material Omitted]
Robert E. Knoer, Buffalo, N.Y. (Marcus, Knoer & Crawford, of counsel), for plaintiff-appellee, cross-appellant.
H. Kenneth Schroeder, Jr., Buffalo, N.Y. (Joseph G. Makowski, Hodgson, Russ, Andrews, Woods & Goodyear, of counsel), for defendant-appellant, cross-appellee.
Before: TIMBERS, WINTER, and PRATT, Circuit Judges.
GEORGE C. PRATT, Circuit Judge:
Defendant Computer Task Group, Inc. (CTG) appeals from a partial final judgment entered pursuant to Fed.R.Civ.P. 54(b) in the United States District Court for the Western District of New York, John T. Elfvin, Judge, awarding plaintiff Frank J. Ginett $138,320 on his claim for severance pay. We conclude that we have jurisdiction to entertain CTG's appeal and, on the merits, we affirm in part, reverse in part, and remand the matter to the district court for further proceedings.
I. FACTS AND BACKGROUND
Ginett was hired by CTG in 1985 as manager of its newly-created Corporate Projects Office (CPO), which was designed, inter alia, to acquire lucrative, long-term corporate contracts. CTG fired him on November 28, 1988, ostensibly for unsatisfactory job performance. The composition and basis of Ginett's compensation during this period was the subject of a series of agreements.
The 1985 employment agreement.
The first agreement, entitled "COMPUTER TASK GROUP EMPLOYMENT AGREEMENT", was effective from Ginett's first day of employment at CTG. It had no expiration date. This agreement included, inter alia,
1. A "compensation plan", effective until December 31, 1986, which provided that Ginett would receive $78,000 in total compensation "at 100% performance".
2. A "guide for future compensation", which entitled Ginett to 4% of that portion of the CPO's gross profit which exceeded 30% of CTG's lowest revenue projections.
3. A paragraph labeled "General Terms and Conditions", which included a covenant not to compete and a nondisclosure provision.
4. A recitation that as consideration for Ginett's agreement, CTG agreed to pay Ginett, in the event of severance, "an amount equal to the sum of compensation (including incentive or commission compensation) earned by [Ginett] from Computer Task Group during the prior calendar month immediately preceding the month in which termination occurs."
The 1987 compensation plan.
On March 23, 1987, Stephen P. Keider, CTG's senior vice president, sent a memorandum to Ginett which began: "As we agreed at our meeting today, your compensation plan for 1987, effective January 1, 1987 will be composed of several components". The described components included an annual base salary of $72,000; a bonus of $2,000 per quarter conditioned on the attainment of certain objectives; a car allowance of $450 per month; and certain other incentives, including an "incentive component" of 5% of the CPO's gross margin, "calculated year to date and paid monthly".
The 1987 deals.
In 1987, Ginett's efforts began to bear fruit for CTG. After protracted negotiations, Ginett landed a series of long-term contracts with USS-POSCO Industries, Inc. (UPI) that provided for $27.6 million in revenues, and an estimated profit of $9.1 million for CTG. Additionally, Ginett successfully negotiated a contract with Geneva Steel with projected revenues of over $10 million. His incentive compensation under the 1987 compensation plan, on the UPI deal alone, would have amounted to approximately $455,400. Ginett never received this incentive compensation. He did, however, receive effusive praise from his superiors for the UPI deal, and the board of directors voted Ginett a stock option of 5000 shares, "[i]n recognition of your contribution to the accomplishments of the firm during 1987, and as an incentive/reward for future performance".
The 1988-92 compensation plan.
On March 17, 1988, Ginett sent a memo to Keider which began: "Per our discussions, the following is the basis for my compensation effective January 1, 1988 thru [sic ] December 31, 1992." This memo, which was endorsed "Frank, I agree. S.P. Keider", included this language:
My compensation is composed of the following:
1) Base Salary is $96,000 per annum.
2) Deferred Incentive Compensation of $80,000 per annum subject to the following conditions:
. Amount to be paid to a third party insurer under provisions acceptable to all three parties.
3) Other incentive for over or under achievement of annual margin targets identified below.
The deferred incentive compensation portion is to be paid quarterly, as long as I am employed by CTG.
(underscoring in original). According to Ginett, the "deferred incentive compensation" portion of this agreement was "a mechanism for deferring receipt of those [455,400] incentive dollars [from the UPI deal] to later years for income tax purposes."
The 1988-92 compensation plan also included the following three paragraphs:
If, during this five year period, Frank Ginett is terminated by Computer Task Group, he will be paid four month's [sic ] severance, based upon the average of the last three months['] total compensation. (i.e. Ginett shall receive 1.33 times the prior quarter['s] total compensation).
* * * * * *
Ginett will sign a new non-compete agreement as part of this agreement.
CTG and Ginett shall execute required agreements between themselves and third parties to effect the deferred incentive plan.
Ginett never signed a "new non-compete agreement". In fact, no such agreement was ever prepared and presented to him for signature.
The deferred compensation agreement.
On August 15, 1988, CTG and Ginett executed the deferred compensation agreement contemplated by the 1988-92 compensation plan. This agreement recited that CTG, "in order to enhance the compensation paid to [Ginett], wishes to provide him with deferred compensation payable in the event of his retirement or other termination of employment with the Company" and further provided that CTG would "contribute to a trust established for the benefit of" Ginett. The first contribution, in the amount of $80,000, was to be made on November 1, 1988; further contributions, each in the amount of $40,000, were to be made on January 1 and July 1 of 1989, 1990, 1991, and 1992.
The deferred compensation agreement also contained a section 1.02, entitled "Cessation of Contributions", which recited that on the occurrence of any of four enumerated events (Ginett's permanent disability; his death; the liquidation, dissolution or winding up of CTG; or January 1, 1996), or in the event of the termination of Ginett's employment, CTG would immediately be
relieved of any obligation to make further contributions to the trust. This section also contained a proviso which read: "Notwithstanding the foregoing, the Company agrees that this Section 1.02 shall not be construed to terminate [Ginett's] right to receive any compensation which may be due him by the Company pursuant to any written compensation plan in effect between the Company and [Ginett] as of the date of termination of employment." Ginett maintains that this section 1.02 was the subject of some negotiation; to this end, he submitted to the district court a copy of a prior draft of this trust agreement, which provided for the cessation of contributions only upon the occurrence of the first four events enumerated above, but not upon his termination. Ginett also maintains that when CTG expressed its wish to add termination as one of the events which would relieve CTG from its duty to make contributions, he demanded that the "Notwithstanding the foregoing" term be inserted in order to protect his right to the $455,400 in incentive compensation which he claims to have forfeited in exchange for the deferred incentive plan.
The events of November 1988.
On November 3, 1988, CTG's President and Chief Operating Officer, John P. Courtney, wrote a letter to Ginett, which purported to reduce to writing an October 31, 1988 discussion between the two. This letter stated (1) that CTG was "prepared to honor its present obligations" under the deferred compensation agreement (that same day, CTG sent a check for the initial $80,000 contribution to the First Southern Trust Company); (2) that CTG desired "to amend the funding formula" of the deferred compensation plan by tying future payment obligations directly to Ginett's "attainment of revenue targets and profit margins as set in your annual compensation plan", i.e., "that CTG's future payment obligations under the Deferred Compensation Plan will be directly related to earned incentives"; and (3) that CTG was prepared to increase Ginett's base compensation to $100,000 for the year 1989. The letter ended with a line for Ginett to sign and date, indicating that the terms of the letter were "understood and accepted this ___ day of November, 1988." Courtney included a stamped, self-addressed envelope for Ginett to return a signed copy.
Ginett did not sign and return the Courtney letter. Instead, on November 14, 1988, he sent Courtney a letter of his own, indicating that the November 3 letter was "not consistent with my understanding of the incentive compensation agreements which I currently have with CTG." Ginett indicated that his understanding was that the deferred compensation agreement was executed in lieu of the incentive monies earned from the UPI deal. Ginett added: "To suggest that those obligations should...
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