Manzon v. Stant Corp.

• Decision Date: 30 March 2001
• Docket Number: No. IP 99-1789-C-B/S.,IP 99-1789-C-B/S.
• Parties: Peter MANZON, Plaintiff, v. STANT CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Indiana

138 F.Supp.2d 1110

Peter MANZON, Plaintiff, v. STANT CORPORATION, Defendant.

No. IP 99-1789-C-B/S.

United States District Court, S.D. Indiana, Indianapolis Division.

March 30, 2001.

Mary Lee Schiff, Ziemer, Stayman, Weitzel & Shoulders, Evansville, IN, for plaintiff.

Michael A Moffatt, Barnes & Thornburg, Indianapolis, IN, for defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND GRANTING PLAINTIFF'S CROSS MOTION FOR SUMMARY JUDGMENT

BARKER, District Judge.

Plaintiff Peter Manzon was an executive employee at Defendant Stant Corporation ("Stant") from October of 1996 to spring of 1999. The terms of his employment were governed by an Employment Agreement. Soon after Manzon's employment was terminated in 1999, he filed suit against Stant alleging that Stant failed to honor its obligations under the Employment Agreement and that Stant violated certain wage laws in effect in Indiana. Defendant responded by filing a counterclaim against Manzon alleging that Manzon criminally converted a vehicle owned by the company and in Manzon's possession through an employee automobile program. Before the Court are various motions for summary judgment. For the reasons set forth below, the Court GRANTS in part and DENIES in part Defendant's Motion for Partial Summary Judgment and GRANTS Plaintiff's Cross Motion for Summary Judgment on Stant's Counterclaim. The Court also DENIES Plaintiff's Motion to Strike.¹

Background Facts

Manzon worked at Stant as the Executive Vice President and General Manager of Standard-Thompson Corporation, a wholly owned subsidiary of Stant. The terms and conditions of Manzon's employment were governed by an Employment Agreement signed October 31, 1996. This contract established, among other provisions, that Manzon would receive a base salary and that he would be eligible to participate in an annual incentive compensation plan for executive employees. Employment Agreement, Section 2, attached as Ex. 1 to Wiggins Aff. Also relevant here, the contract provided for Manzon's participation in the company's automobile incentive program. Finally, the Employment Agreement included various provisions regarding his compensation should Manzon's employment be terminated following a change of control of the company. In May of 1997, Tomkins Corporation acquired Stant, and in March of 1999, James D. Wiggins, the President of Stant, notified Manzon that his employment was terminated. These events put into effect the last of these contract provisions noted above. Disagreements over the meaning and application of the Employment Agreement brought about this litigation. Additional facts will be discussed where relevant to the legal analysis.

Stant's Motion for Summary Judgment on Statutory Wage Claim

In Count I of his complaint, Manzon sues his former employer for incentive compensation² allegedly due to him under his Employment Agreement. In Count II, Plaintiff also maintains that this amount falls within the meaning of "wages" as that term has been defined by courts interpreting the laws of Indiana. If this amount is a wage as legally defined, then Indiana Code § 22-2-5-2 would entitle Manzon to double the amount of compensation due to him and to costs and attorney's fees. Stant's Motion for Partial Summary Judgment addresses only the second count. For this reason, the Court will examine whether the amount at issue is a wage, while taking no position on whether Manzon is entitled to the amount under his Employment Agreement.

Sections 22-2-5-1 and 22-2-5-2 of the Indiana Code do not explicitly define wage, but courts have used legislative history and other sections of the Indiana Code to determine which types of compensation are a wage. See, e.g., Die & Mold, Inc. v. Western, 448 N.E.2d 44, 47 (Ind.Ct. App.1983) (vacation pay is a wage); Wilson v. Montgomery Ward & Co., Inc., 610 F.Supp. 1035, 1038 (N.D.Ind.1985) (severance pay is not a wage).

One case in particular is instructive here. In Herremans v. Carrera Designs, Inc., 157 F.3d 1118, 1121-22 (7th Cir.1998), the Seventh Circuit determined that the plaintiff's claim for pay based on the annual performance of the plant he managed was a bonus, rather than a wage as covered by Indiana Code § 22-2-5-2. The Herremans court looked to Indiana Code § 22-2-9-1(b), which defines wage as "amounts at which the labor or service rendered is recompensed, whether the amount is fixed or ascertained on a time, task, piece, or commission basis, or in any other method of calculating such amount."³ Based on this definition, the Seventh Circuit reasoned that because the plaintiff's disputed pay was not based on "his own time or effort or product, ... but on the profits of his plant," the plaintiff's pay was a bonus, rather than a wage. Herremans, 157 F.3d at 1121-22.

The same reasoning applies to the facts before the Court. The Employment Agreement establishes that "Executive shall participate in an annual incentive compensation plan for executives ... whereby Executive shall have the opportunity each year to earn a cash bonus in an amount of up to 50% of the Base Salary for such year based upon the attainment of financial targets established by the Company and/or STC and the achievement of individual personal objectives." Employment Agreement, Section (2)(b) (emphasis added). As in Herremans, the Manzon's incentive compensation was based, in part, on the success of the company as a whole.

Manzon attempts to distinguish his case, claiming that in Herremans and other cases holding that bonuses were not wages, "the compensation at issue was solely tied to the overall performance of the defendant company." Plaintiff's Response Brief at 16. Manzon argues that his compensation was based in part on his own performance and is therefore a "wage" under the statute. Id. It is certainly true that the Employment Agreement conditioned his pay not only on the success of the company but also on "the achievement of individual personal objectives." Employment Agreement, Section 2(b). However, we do not agree that the principle enunciated in Herremans was meant to be as limited as Manzon argues it should be. In any situation in which additional pay is based on the success of the company, the reasonable assumption is that the employee receiving additional pay somehow contributed to that success through his own performance. The Employment Agreement in this case serves to make that assumption explicit.

Herremans is instructive for another reason. The Seventh Circuit decided that because the plaintiff's disputed pay was based on a share of the annual profits of the plant, this amount could not be considered a wage. Herremans, 157 F.3d at 1121-22. Indiana Code §§ 22-2-5-1 and 22-2-5-2 combine to impose double damages, costs, and attorney's fees when wages are not paid within ten days of the date they are earned. Surmising that "[o]rdinarily it would take weeks [rather than the statutorily decreed ten days] to determine a plant's profits for the year just ended," the Seventh Circuit concluded that the legislature could not have intended to impose such harsh penalties for failure to accomplish a near-impossible task. Id. Here also incentive compensation was paid annually based on the success of the company during the past year. In fact, executives generally received their incentive compensation about four months after the end of the fiscal year, which far exceeds the ten days the statute sets forth for wages. Facts, ¶ 13. Plaintiff has not argued (and cannot do so reasonably) that Stant should be penalized under the statute for all of its "late" payments of incentive compensation over the years.

That infrequent, although regular, disbursements of incentive compensation do not qualify as "wages" is also supported by Jeurissen v. Amisub, Inc., 554 N.E.2d 12, 13 (Ind.Ct.App.1990). In that case, the court adopted a narrow definition of wages as "something akin to the wages paid on a regular periodic basis for regular work done by the employee-the paycheck which compensates for the work done in the previous two weeks." Id. Based on this definition, the court found that additional compensation payable in a lump sum every six months and based on the financial success of the employer was a bonus rather than a wage subject to the additional damages and attorney fees under Indiana Code § 22-2-5-2. Id. The annual incentive compensation payments made here are indistinguishable from those in Jeurissen. For these reasons, Stant is entitled to summary judgment on Manzon's statutory wage claim.

Cross Motions on Conversion

In response to Manzon's lawsuit, Defendant Stant filed a counterclaim for conversion under the Indiana crime victim's relief statute, Indiana Code § 34-24-3-1. Answer, §§ 7-8. Stant alleges that Manzon failed to return a 1999 Jeep Grand Cherokee the company had given him for his use during the period of his employment, in violation of the Indiana statute prohibiting conversion, Indiana Code § 35-43-4-3. Defendant's Reply at 8. The parties have filed cross motions for summary judgment on this issue. Analysis of the contract between Stant and Manzon in light of judicial interpretation of the law against conversion establishes that Manzon is entitled to summary judgment on Stant's counterclaim.

Criminal conversion is committed when "[a] person ... knowingly or intentionally exerts unauthorized control over property of another person." Ind.Code § 35-43-4-3. A person suffering pecuniary loss as a victim of criminal conversion can sue for the costs of the action, attorney's fees, and treble damages. Ind.Code § 34-24-3-1. Recovery on this theory in a civil action does not require a criminal conviction. Huff v. Biomet, Inc., 654 N.E.2d 830, 835 (Ind.Ct.App.1995). Instead, the "claimant need only prove by a preponderance of the evidence that the criminal act was committed by the defendant." Squires v. Utility/Trailers of Indianapolis, Inc., 686 N.E.2d 416,...