Shaffer v. Regions Financial Corp.

• Decision Date: 28 August 2009
• Docket Number: 1061223.
• Citation: Shaffer v. Regions Fin. Corp., 29 So.3d 872 (Ala. 2009)
• Parties: Raymond L. SHAFFER v. REGIONS FINANCIAL CORPORATION.
• Court: Alabama Supreme Court

29 So.3d 872

Raymond L. SHAFFER v.REGIONS FINANCIAL CORPORATION.

1061223.

Supreme Court of Alabama.

August 28, 2009.

Richard E. Smith, Deborah Alley Smith, and Clark A. Cooper of Christian & Small, LLP, Birmingham, for appellant.

James C. Pennington and Christopher A. Mixon of Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Birmingham, for appellee.

PER CURIAM.

Raymond L. Shaffer appeals from a summary judgment in favor of Regions Financial Corporation("Regions").We affirm in part, reverse in part, and remand.

Procedural History

On March 2, 2005, Shaffer sued Regions, alleging breach of contract, fraudulent suppression, and fraudulent misrepresentation and seeking specific performance of a contract arising out of Shaffer's employment with Regions.All the claims concerned a change-of-control agreement¹ Shaffer alleges he entered into with Regions.On April 7, 2005, Regions answered Shaffer's complaint.On November 14, 2006, Shaffer moved for a partial summary judgment on his breach-of-contract claim, and on January 8, 2007, Regions moved for a summary judgment on all claims.On May 4, 2007, the trial court, without stating the specific basis for its holding, entered a summary judgment in favor of Regions on all the claims.Shaffer appealed.

Facts

The evidence, viewed in the light most favorable to Shaffer, the nonmovant, Wilma Corp. v. Fleming Foods of Alabama, Inc.,613 So.2d 359(Ala.1993), suggests the following facts.

John Dick, Regions' chief information officer and an executive vice president, worked with Shaffer at General Motors Acceptance Corporation("GMAC") until August 2001, when Dick left GMAC to work for Regions.In early 2002, after being contacted by Dick, Shaffer applied for a position with Regions.Dick and Shaffer had several discussions about the position at Regions.According to Shaffer, part of those discussions concerned Shaffer's receiving a change-of-control agreement as part of a job offer from Regions.Regions decided to hire Shaffer and sent him a letter dated March 14, 2002, which set forth the terms of Regions' job offer to Shaffer.The letter stated, in pertinent part:

"Please allow me to reiterate the elements of our job offer to you.They are as follows:

"Title: Director of Technology Management Senior Vice President

"Reports To: John Dick

Chief Information Officer

Executive Vice President

"Salary: $5,846.16 bi-weekly

($152,000.00 annually)

"Plus:

Inclusion into the Management Incentive Plan (35% target), and the Long Term Incentive Plan (target of 5,000 options), effective calendar year 2002.

— Included with the MIP incentive plan throughout employment is Regions' Change of Control agreement.

"Start Date: April 8, 2002

"Benefits: Regions Financial Corporation employee benefits as outlined in our Benefits Brochure.Plus, in exception to standard Regions Vacation Policy as described in the benefits summary, two (2) additional weeks, for a total of three (3) weeks of paid vacation in 2002.Thereafter, running concurrent with your title, a total of three (3) weeks paid vacation each year."

(Emphasis added.)Shortly after receiving this letter, Shaffer began working for Regions.

Shaffer testified that he did not rely on the specific terms of the change-of-control agreement when he accepted the job with Regions and that he did not know what the specific terms of the agreement were.Shaffer further testified that he did not discuss the specific terms of the change-of-control agreement with anyone before he started working for Regions.Shaffer stated that he does not know whether he would have taken the job with Regions if the change-of-control agreement was not part of the job offer.Shaffer testified that Dick used the change-of-control agreement as a selling point whenever they talked about the job, telling him that, "because Regions was a regional bank, a change-of-control agreement was a good item to have."

Shaffer testified that "a couple of weeks" after he began working for Regions, he received a change-of-control agreement through the interoffice mail.He testified that he signed the agreement and returned it to Regions' human-resources department and that he did not keep a copy of the agreement.Regions has been unable to find the agreement Shaffer says he signed and returned.Shaffer never saw a copy of the change-of-control agreement that was signed by a representative of Regions.

Rebecca Crenshaw, Regions' professional recruiting manager, testified that she had no doubt that Shaffer had a change-of-control agreement with Regions.According to Crenshaw, Shaffer was designated to be in tier three of the management-incentive plan, and a change-of-control agreement was an automatic component of the compensation of any employee who was designated to be in tier three.

A designated representative of Regions testified that Regions used two standard forms of the change-of-control agreement.The two forms were identical, except that one contained a "walk-away" provision that was offered to the very top executives at Regions.The representative testified that Shaffer was not at such a level in Regions' organizational structure that he would have been offered the change-of-control-agreement form containing the "walk-away" provision.

As evidence of the terms of the change-of-control agreement that Shaffer says he entered into with Regions, Shaffer presented to the trial court a change-of-control agreement signed by Srinivas Surapaneni, who was part of the technology-management department and who reported directly to Shaffer.Surapaneni's change-of-control agreement states, in pertinent part:

"3.Termination of Employment.If the Employee's employment with the Company and with its Affiliates shall be terminated within twenty-four (24) months following a Change of Control, the Employee shall be entitled to the following compensation and benefits:

"(a) If the Employee's employment with the Company and with its Affiliates shall be terminated (I) by the Company for Cause or Disability, (ii) by reason of the Employee's death, or (iii) by the Employee other than for Good Reason, the Company shall pay to the Employee the Employee's Accrued Compensation.The Employee's entitlement to any other compensation or benefits shall be determined in accordance with the Company's employee benefit plans and other applicable programs and practices then in effect.

"(b) If the Employee's employment with the Company and with its Affiliates shall be terminated for any reason other than as specified in Section 3(a) above, the Company shall pay to the Employee the aggregate of the Employee's Accrued Compensation plus an amount equal to two times the sum of the Employee's Base Amount and Bonus Amount as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date."

The agreement defines "Good Reason" as follows:

"(I) the occurrence, after a Change of Control of any of the following events or conditions:

"(A) a change in the Employee's status, title, position or responsibilities (including reporting responsibilities) which, in the Employee's reasonable judgment, represents a materially adverse change from his status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Employee of any duties or responsibilities which, in the Employee's reasonable judgment, are materially inconsistent with his status, title, position, responsibilities; or any removal of the Employee from or failure to reappoint or reelect him to any such offices or positions, except in connection with the termination of employment of the Employee for Disability, Cause, as a result of the Employee's death or by the Employee other than for Good Reason."

The agreement further states:

"7.Fees and Expenses.The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Employee may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Employee or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee thereof (including as a result of any contest by the Employee about the amount of any payment pursuant to this Agreement)."

In January 2004, a merger between Regions and Union Planters Bank was announced.The merger was consummated on July 1, 2004.

In late April 2004 or early May 2004, change-of-control agreements were discussed in a staff meeting for some of Regions' employees.The human-resources department informed everyone at the meeting that the department was willing to provide them with a document summarizing the important aspects of the change-of-control agreement.After the staff meeting, Shaffer obtained a copy of the summary document from Angie Parker, Regions' group human-resources manager.The summary document stated, among other things, that "the consummation of the pending merger between Regions and Union Planters will constitute a `Change of Control' within the meaning of your Change of Control Agreement with Regions."

After the merger was announced, Dick formed various committees to analyze how to integrate the Regions and Union Planters technology departments.The committees included people from both Regions and Union Planters, and Shaffer was on two of the committees, one of which was the committee that developed the plan for the new planning and integration department.This committee did not recommend that Shaffer be in charge of the new department.Shaffer agreed with the committee's recommendations concerning how to structure the new department.Shaffer testified that the committee's recommendations "made sense for that organization."Shaffer further testified that as an officer of the company he had a responsibility to build the organization in the best way for Regions and that is what he did.

Regions conducted interviews to decide what positions certain people...