Deal v. Consumer Programs, Inc.

• Decision Date: 06 December 2006
• Docket Number: No. 06-1067.,No. 06-1068.,06-1067.,06-1068.
• Citation: 470 F.3d 1225
• Parties: Peggy J. DEAL, Appellee/Cross-Appellant, v. CONSUMER PROGRAMS, INCORPORATED, Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

470 F.3d 1225

Peggy J. DEAL, Appellee/Cross-Appellant, v. CONSUMER PROGRAMS, INCORPORATED, Appellant/Cross-Appellee.

No. 06-1067.

No. 06-1068.

United States Court of Appeals, Eighth Circuit.

Submitted: September 28, 2006.

Filed: December 6, 2006.

COPYRIGHT MATERIAL OMITTED

Steven P. Handler, argued, Chicago, IL (Gerald M. Richardson, Matthew B. Robinson, on the brief), for appellant/cross-appellee.

Joe D. Jacobson, argued, Clayton, MO (Allen P. Press, James J. Simeri, on the brief), for appellee/cross-appellant.

Before RILEY and COLLOTON, Circuit Judges, and KYLE,¹ District Judge.

RILEY, Circuit Judge.

In May 2004, Peggy J. Deal (Deal), an executive with Consumer Programs, Incorporated (CPI), was terminated without cause following a change of control within CPI. Deal brought suit against CPI, claiming damages for her unaccrued annual base salary, annual bonus, lump-sum cash severance payment, and stock options. Following mediation, CPI paid Deal her severance payment, but the parties were unable to resolve the remaining issues. Both parties moved for summary judgment. The district court² held Deal's written Employment Agreement (Employment Agreement) required CPI to pay Deal's unaccrued base salary and bonus, but found Deal failed to exercise her option properly to purchase stock. Both parties appeal. We affirm.

I. BACKGROUND

On October 21, 2002, CPI employed Deal as an Executive Vice-President under the Employment Agreement. The Employment Agreement contains a one-year term with an automatic renewal clause for an additional one-year period, unless Deal or CPI provides written notice at least sixty days before the renewal date of an intention to terminate the Employment Agreement.

Section 6 of the Employment Agreement sets forth four scenarios under which CPI could terminate Deal's employment: (a) death or permanent disability, (b) for cause, (c) notification before the one-year automatic extension, and (d) payment for involuntary termination without cause. The Employment Agreement specifies Deal's compensation upon each scenario's occurrence. Specifically, subsection 6(d)(2) of the Employment Agreement addresses Deal's compensation following her termination without cause after a change of control:

If following a Change of Control (i)[CPI] terminates [Deal's] employment (other than for Cause pursuant to Subsection 6(b) hereof), or (ii) [Deal's] employment terminates by reason of [CPI's] termination of this Agreement pursuant to subsection 6(c) hereof, [CPI] shall, at the time of such involuntary termination, make a lump sum cash payment to [Deal] equal to 200% of her Base Salary for the Fiscal Year of termination.³ In addition to the payment pursuant to this Subsection 6(d)(2) . . . [Deal] shall be entitled to all remedies available under this Agreement or at law in respect of any damages suffered by [Deal] as a result of an involuntary termination of employment without Cause.

The Employment Agreement also required CPI to pay Deal an annual bonus after a change in control.⁴ Additionally, the Employment Agreement expressly did not obligate Deal to mitigate any damages by seeking other employment.

Deal and CPI also entered into a separate written Stock Option Agreement (Stock Option Agreement), which granted Deal the option to purchase 16,204 shares of CPI common stock at $12.96 per share. Pursuant to the agreement, Deal could exercise her option to purchase stock within ninety days of termination "by giving written notice to [CPI] of the intention to exercise the option, accompanied by full payment of the purchase price of the shares with respect to which the option is exercised."

During the first year of Deal's employment, neither Deal nor CPI terminated the Employment Agreement. Thus, on October 21, 2003, the Employment Agreement automatically became effective for another year. However, on May 14, 2004, CPI terminated Deal without cause following a change of control. At the time of her termination, Deal had already earned and received $138,991 of her then-annual base salary of $245,000. Upon Deal's termination, CPI did not pay Deal's unaccrued base salary, annual bonus, or severance benefits.

In a letter dated June 25, 2004, Deal, through her counsel, sent CPI written notice of her intent to exercise the option to purchase CPI common stock. Deal also demanded the remainder of her annual base salary pursuant to section 5(a) of her Employment Agreement, the severance payment set forth in subsection 6(d)(2), as well as the annual bonus detailed in subsection 5(b). Deal did not accompany her letter with full payment of the shares' purchase price, which totaled $210,004. Rather, the letter stated Deal "intends to exercise her options pursuant to the parties' Stock Option Agreement. . . . and is prepared to tender cash in the amount of $210,004 for her stock. Please inform me if CPI intends to perform its agreement under that contract." CPI did not respond to this letter. On August 4, 2004, Deal's counsel sent a second letter berating CPI's failure to pay Deal and stating: "Under the current circumstances, Ms. Deal will not pay CPI the purchase price for the stock. We assume that CPI would keep the money and refuse to issue Ms. Deal her stock." Again, CPI did not respond to the letter.

Deal sued CPI for breach of the Employment Agreement and the Stock Option Agreement, and sought, inter alia, the $106,009 remainder of her annual base salary, a $12,035 bonus payment, the $490,000 severance payment, and damages resulting from CPI's breach of the Stock Option Agreement. The district court ordered the parties to mediation, after which CPI agreed to pay Deal the $490,000 severance payment plus interest, but refused to pay Deal any additional amounts.

The parties filed cross-motions for summary judgment. CPI argued Deal's severance payment was in lieu of her unpaid base salary and annual bonus payment under the Employment Agreement. In response, Deal contended she was entitled to her unpaid base salary and bonus payment, and effectively exercised her stock option. The district court granted summary judgment in favor of Deal regarding Deal's salary and bonus payment claim, and in favor of CPI regarding the stock option claim. Both parties appeal.

II. DISCUSSION

A. Standard of Review

Our standard of review is a familiar one. When considering a district court's grant of summary judgment, we review findings of fact for clear error and conclusions of law de novo, viewing the facts in the light most favorable to the nonmoving party and giving that party the benefit of all reasonable inferences that may be drawn from the facts. ACLU Neb. Found. v. City of Plattsmouth, 419 F.3d 772, 775 (8th Cir.2005) (citations omitted). The parties agree Missouri law governs this dispute. "Under Missouri law, summary judgment is appropriate [in a contract case] where the language of the contract is clear and unambiguous such that the meaning of the portion of the contract in issue is so apparent that it may be determined from the four corners of the document." Family Snacks of N.C., Inc. v. Prepared Prods. Co., 295 F.3d 864, 867 (8th Cir.2002) (internal quotations, citations, and footnote omitted).

B. Unaccrued Salary and Bonus Payment

On appeal, CPI challenges Deal's entitlement to her unaccrued salary and annual bonus payment, arguing subsection 6(d)(2) of the Employment Agreement exclusively governs Deal's post-termination payments and only allows recovery of the $490,000 severance payment. According to CPI, a contrary conclusion pays Deal for time not worked, renders a key provision of the Employment Agreement meaningless and produces an absurd result. We reject CPI's contentions and thus affirm the district court.

"When a contract uses plain and unequivocal language, it must be enforced as written." Lake Cable, Inc. v. Trittler, 914 S.W.2d 431, 436 (Mo.Ct.App.1996) (citation omitted); see, e.g., Sligo, Inc. v. Nevois, 84 F.3d 1014, 1019 (8th Cir.1996). To determine whether a contract is ambiguous, we consider the instrument as a whole, giving the words contained therein their ordinary meaning. Young Dental Mfg. Co. v. Engineered Prods., Inc., 838 S.W.2d 154, 156 (Mo.Ct.App.1992) (citation omitted). A contract is not ambiguous merely because the parties dispute its meaning. Sligo, 84 F.3d at 1019 (citing Young Dental Mfg., 838 S.W.2d at 155-56).

With these principles in mind, we note it is undisputed Deal's Employment Agreement was in effect at the time of her termination. On October 21, 2003, Deal's term of employment automatically renewed for an additional one-year period and would expire early only upon Deal's death, permanent disability, or termination for cause. By terminating Deal without cause before her Employment Agreement expired on October 21, 2004, CPI breached its contract with Deal, thus entitling Deal to the remaining amount CPI would have paid her had it fully performed under the contract. See Cornejo v. Crawford County, 153 S.W.3d 898, 902-03 (Mo.Ct.App. 2005) (noting it is well settled a plaintiff's measure of damages for breach of an employment contract is "prima facie the contract price agreed upon for such service" (quoting Koenigkraemer v. Mo. Glass Co., 24 Mo.App. 124, 128 (1887))). Because the Employment Agreement specifically provides Deal is not required to mitigate her damages, Deal is entitled to the full amount of her unaccrued annual base salary: $106,009, plus interest.

In a similar fashion, Deal also is entitled to her annual bonus payment, pursuant to subsection 5(b) of the Employment Agreement, which provides "[a]fter a Change of Control, in addition to the Base Salary, [Deal] shall be awarded for each Fiscal Year during the Term of Employment an annual bonus." (emphasis added). The Employment Agreement contains no exceptions for payments of the bonus based upon Deal's termination without cause, thus entitling Deal to her annual bonus payment in the amount of $12,035, plus...