Bryson v. Brand Insulations, Inc.
| Decision Date | 30 April 1980 |
| Docket Number | No. 79-2042,79-2042 |
| Citation | 621 F.2d 556 |
| Parties | BRYSON, Paul E., Appellant, v. BRAND INSULATIONS, INC., Appellee. |
| Court | U.S. Court of Appeals — Third Circuit |
Christopher F. Stouffer (argued), Joseph A. Malloy, Jr., Hamilton, Darmopray & Malloy, Philadelphia, Pa., for appellant.
William B. Carr, Jr. (argued), Morgan, Lewis & Bockius, Philadelphia, Pa., for appellee.
Before HUNTER, HIGGINBOTHAM and SLOVITER, Circuit Judges.
Paul E. Bryson appeals from the judgment entered against him in an action which he brought against his former employer, Brand Insulations, Inc. Invoking our diversity jurisdiction, 28 U.S.C. § 1332 (1976), Mr. Bryson alleged several breaches of an oral employment agreement. After submission of a number of stipulations and with discovery underway but without prior warning to the parties, the district court, on his own, entered judgment in favor of the defendant. Although the court entered judgment on the entire action, it addressed only one issue of Bryson's multi-issue complaint, whether Bryson was entitled to unpaid portion of his 1976 bonus. The other issues were swept away in the undercurrent of the one issue on which the court focused. The other issues in Bryson's complaint include an alleged failure by Brand to pay $16,608.80, representing the difference between bonuses earned and paid for the years 1974 through 1976, as well as, an alleged failure by Brand to repay $468.75 due on a loan made to the Company. Because the district court erred by entering pretrial judgment 1 in favor of the defendant, the judgment will be reversed and the action will be remanded to the district court.
Mr. Bryson worked for the defendant and its predecessor company under an oral employment agreement from 1974 until June 1977 when he voluntarily left his employment. He seeks to recover the unpaid portion of his 1976 bonus. The defendant admitted that under the agreement Bryson's compensation included salary plus an annual bonus. In his deposition, Mr. Bryson stated that the amount of his annual bonus was not predetermined, but instead was computed on the basis of his work performance in a given year. Beginning with payment of the 1974 bonus, Brand switched its practice from paying the bonus in one lump sum to paying in installments over the following year. Thus the 1974 bonus was paid in ten installments in 1975; the 1975 bonus was paid in eleven installments in 1976.
In mid-December 1976, two weeks prior to the conclusion of its fiscal year, the defendant distributed to its employees a leaflet entitled "Bonus Incentive Plan." In this leaflet, the company set forth the terms by which it intended to pay the bonuses that employees had earned in 1976. Under the plan, an employee would not be entitled to the unpaid portions of his 1976 bonus unless he continued to be employed by the defendant at the time an installment of the bonus was scheduled for payment. The installment payment period was extended to three years. The relevant portion of the Bonus Incentive Plan specifically provides that
Each eligible participant will be informed of the amount of his/her award for the preceding year during March of the current year.
The award will be paid in six equal installments on April 1 and October 1 of the first payment year and on each April 1 and October 1 of succeeding years.
A participant who terminates employment voluntarily, or is terminated for cause, will not be entitled to receive accrued but unpaid installments under the Incentive Bonus Plan.
Subsequent to receiving payment of the first of six installments of his 1976 bonus, Bryson left the defendant's employment. Brand has refused to pay him the unpaid portion of his bonus, relying on the clause in its Bonus Incentive Plan that provides for forfeiture of accrued but unpaid portions of the bonus if an employee voluntarily terminates his employment prior to the scheduled date of the installment payment.
Bryson does not deny that he was notified of this plan and its terms, but claims that he bargained for a salary plus bonus in exchange for his work performance. Alleging that he has fulfilled his part of the bargain under the terms of the initial oral agreement he complains that Brand refuses to fulfill its obligation to pay him the bonus he earned during 1976. The essence of Bryson's argument is that the requirement of three years continued employment as a condition precedent to receipt of all of the bonus earned in 1976 is an additional term to the preexisting oral employment agreement and invalid as a unilateral modification. The question boils down to what, if anything, did these parties agree to respecting a bonus before the defendant announced the bonus plan set forth in the December leaflet?
In an attempt to frame the legal issue for purposes of briefing, the court specifically had the parties stipulate in writing to the following facts:
(1) an employee is awarded a bonus in the year 1977 for work performed in 1976.
(2) that the bonus is paid in several installments, and
(3) that the employee is advised that receipt of installment payments is dependent upon the employee remaining in the company's employ as of a scheduled payment date, and the employee has been informed but contests the validity of this condition, and
(4) the employee on June 1, 1977 voluntarily terminated his employment prior to the end of the bonus installment period;
The written stipulation framed the pertinent legal issue: 2
Is the employee legally entitled to bonus installments scheduled for payment subsequent to the date he voluntarily terminates his employment?
Shortly after the stipulation and before trial, the district court, on its own initiative, entered judgment in favor of the employer. In its opinion of July 16, 1979, the court stated that the parties had agreed to submit this case on the basis of the pleadings. The opinion further stated that the parties agreed that the sole issue of the case is whether the employee is entitled to bonus installments scheduled for payment subsequent to the date he voluntarily terminates his employment. From the entry of judgment against him, Mr. Bryson appeals.
The appellant, alleging that the parties actually had not agreed to submit this case on the pleadings, assigns error to the court's sua sponte decision to grant judgment on the pleadings. The record supports Bryson's contention that the parties had not so agreed; nor did the defendant move for judgment on the pleadings. Nevertheless, for a court to grant judgment on the pleadings, sua sponte, is not error. The district court may on its own initiative enter an order dismissing the action provided that the complaint affords a sufficient basis for the court's action. Tamari v. Bache & Co. (Lebanon) S.A.L., 565 F.2d 1194, 1198 (7th Cir. 1977), cert. denied, 435 U.S. 905, 98 S.Ct. 1450, 55 L.Ed.2d 495 (1978). Certain protections, however, are guaranteed the plaintiff. A court may not dismiss a complaint on the pleadings unless no set of facts could be adduced to support the plaintiff's claim for relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). In addition, because judgment on the pleadings results in an early assessment of the merits of plaintiff's action, the plaintiff must be given the safeguard of having all its allegations taken as true and "all inferences favorable to plaintiff will be drawn." Mortensen v. First Federal Savings & Loan Association, 549 F.2d 884, 891 (3d Cir. 1977). But judgment on the pleadings would not be appropriate here because the complaint states a cause of action in contract. Bryson alleges he earned a bonus that the defendant refuses to pay.
Having set for the prerequisite standard for reviewing pleadings and concluded that judgment on the pleadings would not have been proper here, we note that despite the district court's labeling its review as "on the pleadings", its dismissal was not based solely on the pleadings. The district court considered matters beyond the scope of the pleadings, such as the terms of the...
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