Kincaid v. Wells Fargo Securities, L.L.C.
Kincaid v. Wells Fargo Securities, L.L.C.
Opinion of the Court
OPINION AND ORDER
Before the Court are Plaintiffs Motion for Partial Summary Judgment
A. Undisputed Factual Background
The instant case arises from an employment contract between the Plaintiff Kincaid and Wachovia Capital, a subsidiary of Wachovia Corporation, executed by Plaintiff on July 14, 2008.
At issue in this summary judgment motion is a provision of the Offer Summary that Plaintiff contends entitles him to a Special Award under the Wachovia Special Award Plan (the Plan) in the amount of $2,225,000.
On or about October 15, 2010, Defendant Wells Fargo terminated Plaintiff without providing written reasons for the basis of the termination.
Upon dismissal, Plaintiff reviewed his Offer Summary, and believing he was due the Special Award, demanded payment of the award through counsel.
B. Relevant Procedural Background
On November 23, 2010, Plaintiff filed the instant suit in Tulsa County District Court.
On December 22, 2010, Defendants filed a Motion to Dismiss Plaintiffs Petition.
DISCUSSION
A. Summary Judgment Standard
Although a bit convoluted, Plaintiffs instant Motion for Partial Summary Judgment ultimately asks this Court to find that Wells Fargo’s decision to terminate Plaintiff was not “for cause” as defined by Plaintiffs Offer Summary, therefore Defendant breached Plaintiffs employment contract by failing to pay him the Special Award under the Plan.
Federal Rule of Civil Procedure 56(c) provides the standard courts must use when determining whether summary judgment is proper. According to the rule, summary judgment “should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.”
B. Applicability of the Terms of the Offer Summary
Plaintiff seeks summary judgment for breach of contract, alleging he was not terminated “for cause” under the terms of the Offer Summary, therefore Defendants’ breached their contract by failing to pay him the Special Award. In addition to their arguments that Plaintiff was terminated “for cause” pursuant to the terms of the Offer Summary and therefore not entitled to any of the benefits provided by that contract, Defendants also contend that the Special Award Plan provides a distinct definition of “for cause” and that this language militates against summary judgment.
As the Offer Summary itself is apparently a creature of Oklahoma law, this Court, sitting in diversity, must apply Oklahoma law as announced by the highest court of the state.
In concluding that the differing “for cause” definitions in his Offer Summary entitle him to summary judgment, Plaintiff largely disregards the terms and conditions of the Plan.
Where a contract is partly written and partly printed, or where part of it is written or printed under the special directions of the parties, and with a special view to their intention, and the remainder is copied from a form originally prepared without special reference to the particular parties and particular contract in question the written parts control the printed parts, and the parts which are purely original control those which are copied from a form. And if the two are absolutely repugnant, the latter must be so far disregarded.40
If the Court accepts Plaintiffs legal assertions, it would necessarily need to apply both the “for cause” definition of the Offer Summary, rather than those of the Plan in ruling on Plaintiffs Motion. However, unlike the contract scenarios contemplated in § 158 and § 167, this is not a case in which multiple instruments were contemporaneously executed by the parties. The Special Award in dispute was included as part of Plaintiffs compensation under his Offer Summary.
In January 2009 we are pleased to inform you that you will receive a special award under the Wachovia Special Award Plan in the amount of $2,225,000 effective on the last day of the month in which your hire date occurs. Your award will be subject to a 3 year cliff vesting schedule. Executive compensation will provide you with full details of your award on or shortly after your hire date.42
These terms clearly reference the Plan and note that its terms and conditions were delineated in a pre-existing document, the details of which would be provided after the start of Plaintiffs employment. From this language, the Court finds that the terms and conditions of the Plan were incorporated into Plaintiffs Offer Summary by this reference to the Plan.
As the terms and conditions of the Plan were incorporated by reference into the Offer Summary, the Court must read the provisions of the entire contract, taking the two documents together, so as to give effect to every part if reasonably practicable.
A plain reading of the phrase “under the Plan” is unambiguous, indicating that the Special Award is granted under the terms of the Plan, and that the obligations under the Plan are necessarily distinct from those in the Offer Summary. Had the parties intended the terms and conditions of Plaintiffs award under the Plan to differ from those already set out in the pre-existing Plan documents, they could have explicitly set this out in the Offer Summary or negotiated Addendum. Instead, the Offer Summary explicitly states the Special Award is granted under the existing Special Award Plan
Under the elementary principles of contract interpretation discussed above, the Court cannot apply § 167 to the entire contract in the manner suggested by Plaintiff. To do so would render the terms and conditions of the Plan superfluous, despite the plain language of the Offer Summary clearly establishing that the Special Award sought by Plaintiff in his Motion is granted pursuant to the terms and conditions of the Plan. Because of this clarity, the two documents comprising the contract are not in conflict and construction pursuant to § 167 is inapplicable.
Ultimately, Plaintiffs Offer Summary does not set out the conditions under which Plaintiff would receive the Special Award under the Plan. In fact, Plaintiffs participation in the Plan as it existed appears to be the sole bargained-for benefit provided by the Offer Summary with regard to the Plan. Because the Offer Summary unambiguously sets out that the Special Award was granted pursuant to the Plan, and because Plaintiffs participation in the Plan, rather than the award itself, is the material benefit set out in the Offer Summary, the question of whether or not Defendants breached their duties under the Plan is rightly governed by the Plan’s terms and conditions.
C. “For Cause” Under the Plan
Finding the terms and conditions of the Plan to be incorporated by reference into the Offer Summary, the Court analyzes the Plan’s terms and conditions under contract principles. As noted above, when determining issues of law in a diversity action, this Court generally has an obligation to apply Oklahoma law as announced by the highest court of the state.
Consequently, the Court looks to the decisions of North Carolina courts regarding the Plan’s interpretation, noting that North Carolina contract law differs little from the generally accepted principles of contract law used by Oklahoma and other states. Under North Carolina law, “[a] contract must be considered as an entirety; the problem is not what the separate parts mean, but what the contract means when considered as a whole.”
The parties agree that the Special Award was subject to a cliff vesting schedule, under which vesting was contingent on Plaintiffs continued employment for three years.
Should the Participant voluntarily resign from Employee status or should his or her Employee status be involuntarily terminated as a result of a Termination for Cause, then each of his or her unvested Special Award Subaccounts shall be immediately forfeited.56
The Plan’s definitions at Section 3.16 provides an extensive, but not exhaustive, list of what may constitute a “for cause” termination:
“Termination for Cause ” shall include, but shall not be limited to, the termination of Employee status due to (i) any act or omission on the part of the Employee that constitutes a breach of his or her duties or obligations to the Participating Employer or other Affiliated Company, (ii) the Employee’s commission of any act of fraud, misappropriation, embezzlement or dishonesty that may be reasonably expected to have an injurious effect upon the Participating Employer or other Affiliated Company, (iii) the Employee’s failure to obtain or retain any NYSE, NASD or other necessary registration or licensing approvals required for his or her position with the Participating Employer, (iv) any breach by the Employee of the Code of*1261 Conduct and Ethics established by his or her Participating Employer or any material violation of the employment or compliance policies or procedures of his or her Participating Employer, (v) any act of insubordination or misconduct by the Employee or his or her reporting to work or otherwise working while under the influence of alcohol, narcotics or unlawful controlled substances, (vi) the Employee’s conviction of any felony or the commission of a dishonest or fraudulent act, (vii) any conduct by the Employee that is in violation of state or federal law or that would constitute a basis for criminal charge or indictment of a felony or of a misdemeanor involving moral turpitude, (viii) the Employee’s violation of any securities or commodities laws, any rules or regulations pursuant to such laws, any rules or regulations of any securities or commodities exchange or association of which the Participating Employer is a member, or his or her violation of any similar federal, state or local law, regulation, ordinance or licensing requirement applicable to employees of financial institutions or (ix) any other conduct on the Employee’s part that may reasonably be expected to have a material adverse effect upon the financial interest or business reputation of the Participating Employer or other Affiliated Company.57
In claiming Plaintiff was terminated “for cause,” Defendants allege that Plaintiff (1) required female employees to hold Plaintiffs hands while he led them into office meetings; (2) rubbed female employees’ shoulders; (3) regularly called employees “stupid” or “idiot;” (4) made sexual innuendoes or other inappropriate comments about female employees; (5) slapped food out of a female employee’s hands; and (6) accused a female employee of having sex with a customer to get a better price. The veracity of these allegations remains in dispute.
These allegations, viewed in a light most favorable to the Defendants, create a material question of fact as to whether or not Plaintiffs termination was “for cause” either under enumerated examples in Sections 3.16(iv)(v) or (ix) of the Plan or under the Plan’s catchall “but shall not be limited to” language. Consequently, summary judgment on the matter of whether or not Defendants breached their duties under the Plan by failing to pay Plaintiff the Special Award is improper.
D. Plan Amendment/Procedural Concerns
Plaintiff further seeks summary judgement on the basis that Defendants breached the overall employment contract (the Offer Summary and the Plan) by failing to provide him the specific procedural protections set out in the Plan.
Defendants argue that, as a consequence of the merger between Wachovia and Wells Fargo, the Plan was amended to include certain administrative changes that included a change in the requirement for committee action.
Any reference in this document to a policy, plan or program is subject to the terms and conditions of such policy plan or program, as amended, and applicable law. Wachovia reserves the right to modify, replace or eliminate any of its policies, plans and programs, at any time, without notice; provided, however, that if Wachovia changes its policies, plans or programs, such changes will not affect your right to receive the special award under the Wachovia Special Award Plan described under the “Compensation” section of the Offer Summary, or your right to vested benefits under any Company plan.65
Looking to the plain language, it is apparent that Wachovia, and Wells Fargo as its successor, clearly retained the right to “modify,” “replace” or even “eliminate” the Plan. The only protection provided Plaintiff under this language would be triggered by Plan changes that altered Plaintiffs “right to receive” the Special Award as outlined in his Offer Summary. This might include elimination of the Plan entirely, or reducing awards under the Plan, but the plain language of the negotiated clause does not seem to foreclose changing the claims process and procedure as was allegedly done by Defendant Wells Fargo.
At best, the juxtaposition of Defendants’ right to “modify, replace, or eliminate” the Plan with the language promising that such changes will not “affect [Plaintiffs] right to receive” the Special Award creates an ambiguity as to what the Parties intended to be protected by Plaintiffs “right to receive.” This ambiguity cannot be clarified by other provisions of the contract, as nothing else in the Offer Summary, Plaintiffs Addendum, or the Plan speaks to this question. Ultimately, extrinsic evidence will be required to determine the intent of the parties.
There is a question as to whether the Plan’s choice of law provision governs this
CONCLUSION
Based on the foregoing reasons, Plaintiffs Motion for Summary Judgment is DENIED.
. Docket No. 72.
. Docket No. 73.
. Docket No. 83.
. Docket No. 95.
. The following facts are either not specifically controverted in accordance with Local Civil Rule 56.1(c), or are described in the light most favorable to the non-moving party. Immaterial facts are omitted.
. Plaintiff’s Brief in Support of His Motion for Summary Judgment at 2, Docket 73.
. Id. The employment contract generally referred to by the parties is actually an executed document entitled “Offer Summary.” For precision and ease of understanding, the Court uses the term "Offer Summary,” rather than “employment contract” when referring to terms and conditions from the "Offer Summary” proper, and "employment contract” when referring to the collection of the Offer Summary, Plaintiffs Addendum to the Offer Summary, and the Plan documents.
.Id.
. Id. at 3.
. Id. See also Plaintiff’s Reply Brief at 1, Docket No. 95. Although Plaintiff’s Motion and Defendant’s Response Brief address issues related to breaches of other duties under the Offer summary by the Defendants, Plaintiff clarifies in his Reply that the instant Motion regards only the alleged breach for failure to pay Plaintiff the Special Award.
. Id.
. Id.
. Id. at 5.
. Id. at 6.
. Id.
. Id. at 7.
. See id. at 8; Defendant's Response Brief at 8, Docket No. 83 (internal citations omitted).
. Plaintiff's Brief in Support of His Motion for Summary Judgment at 9, Docket 73 (citing Affidavit of James L. Kincaid Jr. at 7-8, Docket No. 74).
. Id.
. See id. (citing Letter at 72-73, Docket No. 74).
. See Petition at 8, Docket No. 2-1.
. Id. at 13.
. See Notice of Removal 3-4, Docket No. 2.
. See Docket No. 7.
. See Docket No.’s 14, 20.
. Docket No. 21.
. Docket No 72.
. See Docket No.'s 72-74.
. Plaintiff’s Brief in Support of His Motion for Summary Judgment at 23, Docket 73.
. Id. at 11.
. See Jennings v. Badgett, 2010 OK 7, ¶¶ 4-5, 230 P.3d 861, 864; Fed.R.Civ.P. 56(c).
. Ricci v. DeStefano, 557 U.S. 557, 129 S.Ct. 2658, 2677, 174 L.Ed.2d 490 (2009).
. See, e.g., GEICO Gen. Ins. Co. v. Northwestern Pac. Indem. Co., 2005 OK 40, ¶ 11, 115 P.3d 856, 858; Schenkel & Shultz, Inc. v. Hermon F. Fox & Associates, P.C., 362 N.C. 269, 658 S.E.2d 918 (2008).
. See Defendants' Response at 24-25, Docket No. 83.
. Comm’r v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967).
. See id.
. See Plaintiffs Brief in Support of His Motion for Summary Judgment at 21-22, Docket 73. But see supra note 29.
. See Plaintiffs Brief in Support of His Motion for Summary Judgment at 21-22, Docket 73 (citing Okla. Stat. tit. 15, § 158).
. Id.
. Okla. Stat. tit. 15, § 167.
. See Offer Summary at 11, Docket No. 74.
. Id. (emphasis added).
. Cf. New Moon Shipping Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24, 30 (2nd Cir. 1997) (“Under general principles of contract law, a contract may incorporate another document by making clear reference to it and describing it in such terms that its identity may be ascertained beyond doubt”) (citing 4 Williston on Contracts § 628, at 903-04 (3d ed. 1961)).
.Pierce Couch Hendrickson Baysinger & Green v. Freede, 1997 OK 33, ¶ 18, 936 P.2d 906, 911 (citing 15 Okla.Stat.tit. § 157).
. Oklahoma Oncology & Hematology P.C. v. U.S. Oncology, Inc., 2007 OK 12, ¶27, 160 P.3d 936, 946 (internal citation omitted).
. See Offer Summary at 11, Docket No. 74. This clause also provides that the exact details of that plan would be provided subsequent to Plaintiff's signing of the Offer Summary. Id. The fact that the award was not officially conferred until January 31, 2009, well after Plaintiff's July 14, 2008 execution of the Offer Summary, further evidences that the Special Award was distinct from Plaintiff's other compensation. See Plaintiff's Brief in Support of His Motion for Summary Judgment at 3, Docket 73.
. Comm’r v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967).
. See Wachovia Corporation Special Award Plan (Plan) at 26, Docket No. 83-2 (“The Plan and all rights hereunder shall be construed and governed in all respects in accordance
. See, e.g., Dean Witter Reynolds, Inc. v. Shear, 796 P.2d 296, 298-99 (enforcing an uncontested choice-of-law provision).
. Meehan v. American Media Intern., LLC, — N.C.App. -, 712 S.E.2d 904 (N.C.Ct.App. 2011) (internal quotation omitted).
. Liptrap v. Coyne, 196 N.C.App. 739, 675 S.E.2d 693, 696 (2009).
. Carolina Place Joint Venture v. Flamers Charburgers, Inc., 145 N.C.App. 696, 551 S.E.2d 569, 571 (2001) (internal quotations omitted).
. Anderson v. Anderson, 145 N.C.App. 453, 550 S.E.2d 266, 269 (2001).
. Kimbrell v. Roberts, 186 N.C.App. 68, 650 S.E.2d 444, 447 (2007).
. See Plaintiff’s Brief in Support of His Motion for Partial Summary Judgment at 2, Docket 73; Defendants' Response Brief at 24— 25, Docket No. 83.
. See Plan at 11, Docket No. 83-2 (emphasis added).
. Id. at 16 (bold/underline in original, italics added).
. See Plaintiff's Brief in Support of His Motion for Partial Summary Judgment at 18, Docket 73 (claiming Wells Fargo "ginned up an investigation” and citing "Wells Fargo's trumped-up misconduct allegations”); Defendants' Response Brief at 21, Docket No. 83.
. Plaintiff's Brief in Support of His Motion for Partial Summary Judgment at 11, Docket 73.
. See Plan at 13, Docket No. 83-2 ("The Plan shall be administered by a committee of two (2) or more members ... The Administrative Committee shall also have the discretionary authority to determine whether the involuntary termination of any Participant’s Employee status constitutes a Termination for Cause
. See id. at 28.
. Plaintiff's Brief in Support of His Motion for Partial Summary Judgment at 11, Docket 73.
. See Plaintiff's Reply Brief at 5-6, Docket No. 95.
. Defendants’ Response Brief at 11, Docket No. 83.
. See Plaintiff's Brief in Support of His Motion for Summary Judgment at 5, Docket 73; Plaintiff's Addendum to Offer Summary at 20, Docket No. 74.
. See Plan at 26, Docket No. 83-2 ("The Plan and all rights herenunder shall be construed and governed in all respects in accordance with the laws of the State of North Carolina without resort to its conflict-of-laws provisions”).
. See Liptrap v. Coyne, 196 N.C.App. 739, 675 S.E.2d 693, 696 (2009) (“If the agreement is ambiguous, however, interpretation of the contract is a matter for the jury”) (internal quotation omitted).
. See also Oklahoma Oncology & Hematology, P.C. v. U.S. Oncology, Inc., 2007 OK 12, ¶ 27, 160 P.3d 936, 946 (interpreted as a matter of law only when ambiguity does not arise from extrinsic facts).
. Employers Reinsurance Corp. v. Mid-Continent Cas. Co., 358 F.3d 757, 764 (10th Cir. 2004).
. Docket No. 72.
Reference
- Full Case Name
- James L. KINCAID, Jr. v. WELLS FARGO SECURITIES, L.L.C.
- Status
- Published