Deal v. Consumer Programs, Inc.
| Decision Date | 18 November 2005 |
| Docket Number | No. 4:04CV1789 RWS.,4:04CV1789 RWS. |
| Parties | Peggy DEAL, Plaintiff, v. CONSUMER PROGRAMS, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
Allen P. Press, Green and Schaaf, St. Louis, MO, for Plaintiff.
Gerald M. Richardson, Matthew B. Robinson, Lowenbaum Partnership, L.L.C., St. Louis, MO, for Defendant.
Peggy Deal was a top-level executive with CPI when the company changed hands in March of 2004. She was terminated without cause shortly thereafter. Deal had a written employment agreement and a stock option agreement with CPI, and in this action she seeks damages for breach of both. After a mediation of this case, CPI paid Deal $490,000 plus interest1 in accordance with her employment agreement. This case, however, was not finally resolved because Deal contends that she is owed additional amounts under the contract, including her unpaid base salary and a bonus. Deal also claims that CPI breached the stock option agreement by refusing her offer to exercise the option, and she seeks damages as a result. Finally, Deal seeks punitive damages for CPI's refusal to pay her severance amount in a timely fashion.2 Deal seeks summary judgment on her breach of employment contract and breach of stock option claims.
CPI also seeks summary judgment, contending that it has now paid Deal all she was entitled to under the terms of the employment agreement. CPI further contends that Deal failed to fulfill the conditions precedent necessary to exercise the option, and it is accordingly entitled to judgment as a matter of law on her claim that it breached the stock option agreement.
The parties agree that the agreements are unambiguous and governed by Missouri law. After careful review of the entire record in light of the relevant standards, I find that Deal is entitled to her unpaid salary and bonus, but she failed to properly exercise her stock option in accordance with the terms of the agreement. My analysis follows.
In determining whether summary judgment should issue, I must view the facts and inferences from the facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., Alb U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The moving party has the burden to establish both the absence of a genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., All U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met this burden, the non-moving party cannot rest on the allegations in his pleadings but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e). "[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323, 106 S.Ct. 2548.
On or about October 21, 2002, CPI employed Deal as an Executive Vice-President under a written employment agreement. The agreement has a one-year term with an automatic renewal for a one-year period unless Deal or CPI notifies the other "in writing at least sixty (60) days prior to the commencement of such one (1) year period of an intention to terminate this Agreement." Section 3 of the agreement entitled "Term of Employment" further provides in relevant part:
Notwithstanding anything herein to the contrary, the Term of Employment shall terminate upon Executive's death or Permanent Disability ... or upon the Corporation's termination of Executive's employment for cause....
Section 5(b) agreement also provides for an annual bonus in relevant part as follows:
After a Change in Control, in addition to the Base Salary, the Executive shall be awarded for each Fiscal Year during the Term of Employment an annual bonus ... in cash at least equal to the highest bonus paid or payable to the Executive in respect of any of the Fiscal Years during the three Fiscal Years immediately prior to the date of the Change of Control.
Section 6 of the agreement is entitled "Termination of Employment." It is divided into four subsections: Death or Permanent Disability; Cause; Notification Prior to One Year Extension; and, Payments for Involuntary Termination Without Cause. Subsection (d) of the agreement, "Payments for Involuntary Termination Without Cause," provides in full as follows:
(1) If prior to a Change of Control (i) the Corporation terminates Executive's employment (other than for Cause pursuant to subsection 6(b) hereof), or (ii) the Executive's employment terminates by reason of the Corporation's termination of this Agreement pursuant to subsection 6(c) hereof, the Corporation shall pay Executive following such involuntary termination her full accrued Base Salary through the date of termination of employment plus an amount equal to one hundred percent (100%) of Executive's Base Salary for the fiscal year in which the termination occurs, payable in twenty-six (26) equal bi-weekly installments or at such other intervals as salary is normally paid by the Corporation to its employees. In addition, within ninety (90) days after conclusion of the Fiscal Years in which the Executive's employment is involuntarily terminated without Cause, the Corporation shall pay the Executive the Annual Bonus she would have earned for the fiscal year, if any, prorated on the basis of the percentage of the Fiscal Year preceding such termination of Executive's employment. The payments pursuant to this Subsection 6(d)(1) and any payments to which Executive may be entitled pursuant to Subsections 5(g), 5(h), and 5(i) shall be in full discharge of any claims, actions, demands or damages of every nature and description which Executive might have or might assert against the Corporation or any Affiliated Company in connection with or arising from the termination of Executive's employment or the termination of this Agreement. (2) If following a Change of Control (i) the Corporation terminates Executive's employment (other than for Cause pursuant to Subsection 6(b) hereof), or (ii) the Executive's employment terminates by reason of the Corporation's termination of this Agreement pursuant to subsection 6(c) hereof, the Corporation shall, at the time of such involuntary termination, make a lump sum cash payment to the Executive equal to 200 % of her Base Salary for the Fiscal Year of termination. In addition to the payment pursuant to this Subsection 6(d)(2) and any payments to which Executive may be entitled pursuant to Subsections 5(g), 5(h) and 5(i), Executive shall be entitled to all remedies available under this Agreement or at law in respect of any damages suffered by Executive as a result of an involuntary termination of employment without Cause.
(emphasis supplied). The parties refer to the lump-sum cash payment described in Section 6(d)(2) as a severance payment. Section 8 of the agreement also states that if Deal is terminated, she "shall not be obligated to mitigate any damages by seeking employment or otherwise, and no amount payable hereunder and no benefit or service credit for benefits shall be reduced in the event that the Executive shall accept alternative employment."
Finally, Deal's employment agreement contains two provisions relating to attorney's fees. The first, Section 12, provides that, following a change of control, "the Corporation agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof...." The second attorney's fees provision is found in Section 18(b) and states that "[i]n the event that litigation is required to enforce any provision of this Agreement, subject to the provisions of Section 12 hereof, the prevailing party shall be entitled to reasonable attorneys fees."
Deal's employment agreement was automatically renewed for one year on October 21, 2003. However, it is undisputed that on May 14, 2004, CPI terminated Deal without cause following a change in control. At the time of her termination, Deal's annual base salary was $245,000 per year, $138,891 of which she had already received. CPI did not pay Deal her severance upon her termination.
Deal and CPI were also parties to a stock option agreement which granted Deal the option to purchase 16,204 shares of CPI capital stock at $12.96 per share. Upon her termination, Deal had the right under the agreement to exercise her option. Section 5 of the stock option agreement is entitled "Manner of Exercise" and provides in full as follows:
This option shall be exercised by Optionee or his estate or beneficiary by giving written notice to the Company 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. Such full payment shall be tendered either (a) in cash or (b) in shares of the Company's common stock, with a certificate representing such shares duly endorsed for transfer and with any other documents that may be reasonably required by the Company to effectuate the transfer of the shares. Ownership of the shares acquired upon exercise of the option shall vest when the Company's secretary or transfer agent (as the case may be) records the transfer of such shares to Optionee on the permanent books of the Company.
(emphasis supplied). On June 25, 2004, Deal, through counsel, sent CPI written notice of her intent to exercise the stock option. It is undisputed, however, that her written...
To continue reading
Request your trial
-
W. Silver Recycling, Inc. v. Nidec Motor Corp., Case No. 4:20-CV-00837 JAR
...Provision is that it obligates WSR to guarantee the highest scrap prices available in the industry. See Deal v. Consumer Programs, Inc., 458 F. Supp. 2d 970, 975 (E.D. Mo. 2005) (citation omitted) ("When a contract uses plain and unequivocal language it must be enforced as written."). But o......