Botterbusch v. Preussag Intern. Steel Corp.

• Decision Date: 31 December 2004
• Docket Number: No. A04A2281.,A04A2281.
• Citation: 609 S.E.2d 141,271 Ga. App. 190
• Parties: BOTTERBUSCH v. PREUSSAG INTERNATIONAL STEEL CORP.
• Court: Georgia Court of Appeals

271 Ga. App. 190

609 S.E.2d 141

271 Ga.App. 190

BOTTERBUSCH v. PREUSSAG INTERNATIONAL STEEL CORP.

No. A04A2281.

Court of Appeals of Georgia.

December 31, 2004.

G. Raley, Raley & Sandifer, Atlanta, for Appellant.

John Meyers, Seyfarth, Shaw, Fairweather & Geraldson, Atlanta, John Telford, Atlanta, for Appellee.

RUFFIN, Presiding Judge.

Reiner Botterbusch sued his former employer, Preussag International Steel Corporation ("PISC"), for breach of his employment contract. PISC subsequently moved for summary judgment, and the trial court granted the motion. The trial court also denied Botterbusch's motion for partial summary judgment. Botterbusch appeals both rulings, and for reasons that follow, we affirm in part and reverse in part.

Summary judgment is appropriate when no genuine issues of material fact remain and the movant is entitled to judgment as a matter of law.¹ We review a trial court's summary judgment ruling de novo, construing the evidence and all reasonable inferences in a light most favorable to the nonmovant.²

Viewed in this manner, the record shows that PISC, an American subsidiary of a German conglomerate, was incorporated in 1981 under the name Salzgitter International, Inc. ("Salzgitter International"). In 1989, Salzgitter International's parent company merged with another entity, and Salzgitter International changed its name to Preussag International, Inc., which later became Preussag International Steel Corporation.

The record further shows that, when PISC (then known as Salzgitter International) was incorporated, Botterbusch immediately became the company's president and chief executive officer, as well as a member of its board of directors. Nevertheless, he did not enter a written employment agreement with the company until January 1, 1986. The agreement, which designated Botterbusch as the company's president and CEO, established a 36-month employment term that would be automatically renewed for "additional and successive periods of thirty-six (36) months each ... until [Botterbusch's] employment is terminated as herein provided."

On December 16, 1985, Salzgitter Stahl GmbH ("STH"), which apparently owned PISC,³ sent this agreement to Botterbusch for his signature. A cover letter accompanied the agreement and detailed certain aspects of Botterbusch's employment. Through the letter, STH also "confirm[ed] to [Botterbusch] [its] promise to carry an old-age pension plan in accordance with the guidelines of the Essener Verband," a German pension fund.

Botterbusch operated under the 1986 employment agreement until it was amended on February 15, 1994. The amended agreement established an employment term of sixty months, or five years, from January 1, 1995. The amendment further provided that if this term was not otherwise terminated, it would "be extended thereafter automatically for an additional period to expire at such time as [Botterbusch] reaches 65 years of age, ... at which time [Botterbusch's] employment shall be terminated." All provisions of the original employment agreement that were not modified by the amended agreement remained in effect.

On August 25, 1998, during the 60-month employment term established by the amended employment agreement, PISC informed Botterbusch by letter that it had terminated his employment without cause and had dismissed him from the board of directors. Although Botterbusch's employment agreement authorized a termination without cause "upon written notice given not less than two hundred seventy (270) days prior to such termination," PISC did not afford him this notice period. Rather, it indicated that his termination was effective immediately and instructed him not to return to the PISC offices. Through the letter, however, PISC promised to fully compensate Botterbusch during the 270-day notice period and, as required under the employment agreement, pay him for the remainder of his employment term plus 12 months thereafter. It appears that PISC made these payments to Botterbusch.

Botterbusch subsequently sued PISC for breach of contract, asserting two claims. In his complaint, he first argues that his August 25, 1998 termination was ineffective and that PISC never actually terminated him before his 60-month employment term expired on January 1, 2000. Thus, he contends, his employment automatically renewed for another period that extended through his 65th birthday on July 22, 2003. According to Botterbusch, PISC owes him no less than $1,000,000 in additional compensation. Second, he claims that PISC breached its promise to provide him supplemental retirement benefits equivalent to those he would have received under the Essener Verband.

The trial court rejected Botterbusch's claims, finding that PISC terminated his employment before the employment contract automatically renewed on January 1, 2000. It also concluded that, although PISC did not give Botterbusch the required 270-day termination notice, Botterbusch's damages were limited to compensation he would have received during the notice period, which PISC had already paid. Finally, the trial court determined that Botterbusch was not entitled to the claimed retirement payments. Given these findings, the trial court granted PISC's summary judgment motion and denied Botterbusch partial summary judgment on his claim that the employment agreement automatically renewed on January 1, 2000.

1. (a) On appeal, Botterbusch first argues that PISC never properly terminated him. Specifically, he argues that his termination violated the corporate bylaws, rendering the termination decision a nullity.

PISC's bylaws empower the board of directors to manage and direct the company's business affairs. Included in those responsibilities is the power to appoint and remove corporate officers from office. The board consists of four directors elected by the corporation's shareholders. At all board meetings, "a majority of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board."

Two members of PISC's board of directors purportedly signed Botterbusch's August 25, 1998 termination notice. According to the minutes of PISC's August 25, 1998 board meeting, these same two directors were the only board members present at the meeting that day.⁴ Citing this evidence, Botterbusch argues that a quorum of directors was not available to make the termination decision, rendering it invalid.

Pretermitting whether the initial decision-making process suffered from an inadequate quorum, the evidence shows that the PISC board later ratified Botterbusch's termination. And, under Georgia law, the termination of a corporate officer without board authority may be ratified, and thus rendered legal, by a subsequent vote of the board of directors.⁵ The record reveals that, on September 2, 1998, the board of directors of PISC's sole shareholder — Preussag North America, Inc. — appointed a new board for PISC. Three of the four newly elected PISC directors were present at the September 2, 1998 meeting. These three directors, as well as Preussag North America, Inc., approved, confirmed, adopted, and ratified Botterbusch's August 25, 1998 termination.

On appeal, Botterbusch argues that PISC's "parent" company could not effectively ratify his termination. But three of the four newly installed PISC board of directors attended the September 2, 1998 meeting, and these three individuals voted to ratify the firing. Botterbusch does not argue that Preussag North America improperly installed or elected the new board. And the record shows that Preussag North America, PISC's sole shareholder, was authorized to remove the prior PISC board and elect new members. Moreover, Peter Seeger, the only newly installed PISC director who did not attend the September 2, 1998 meeting, was one of the former directors who signed the original August 25, 1998 termination notice. Thus, the other three new directors approved the decision previously made by the one PISC director not available at the September 2, 1998 meeting.⁶

Botterbusch further argues that the new PISC directors in attendance at the September 2, 1998 meeting, who also happened to be directors of Preussag North America, actually acted on behalf of Preussag North America when they voted to ratify his termination. To support this claim, he notes that the record contains no minutes of a PISC board meeting memorializing the ratification. He also asserts that Preussag North America directors cannot ratify the actions of the PISC board.

An individual who attended the September 2, 1998 meeting, however, testified that, after their appointment to the PISC board, the three PISC directors voted to ratify Botterbusch's termination. Furthermore, regardless of the various positions they may have held, nothing in the record indicates that these individuals were not acting as PISC directors. In fact, after approving Botterbusch's termination, the newly appointed chairman of the PISC board advised the board of Preussag North America who would take over for Botterbusch as president and CEO of PISC.

The record shows that, by September 2, 1998, all four current PISC directors had approved Botterbusch's August 25, 1998 termination. Furthermore, Botterbusch apparently did not return to work at PISC after August 25, 1998, although the company continued to pay him through the end of his contract term plus 12 additional months, as mandated by his employment contract. Under these circumstances, we agree with the trial court that, as a matter of law, PISC terminated Botterbusch before his contract automatically renewed on January 1, 2000. To find otherwise and require PISC to pay him through July 2003 would elevate form over substance, giving Botterbusch an unjust windfall.

(b) Botterbusch also argues that, even if the PISC board of directors ratified his...