DiMartino v. De Lage Landen Financial Services, Inc.
DiMartino v. De Lage Landen Financial Services, Inc.
Opinion of the Court
In this contract and wage dispute, the parties have filed cross-motions for summary judgment on the sole issue remaining in this case: whether Plaintiff, Rita DiMartino, was entitled to receive from Defendant De Lage Landen Financial Services, Inc. (“DLL”), a long-term incentive payment of $182,927.88 in 2013 based on performance in 2012. Although the parties agree as to many of the facts, they disagree as to the meaning of the relevant agreements.
I. FACTS
The parties have stipulated to the following facts. Ms. DiMartino became employed with DLL as its Chief Operating Officer pursuant to a written offer dated August 19, 2002, and served in that capacity from February 3, 2003 until December 2006. In July 2007, the parties entered into a written employment agreement memorializing Ms. DiMartino’s promotion to Deputy Chief Operating Officer (Global) on January 1, 2007, a role she held until June 2010, when Ms. DiMartino became Chief Innovation Officer. In all of these roles, Ms. DiMartino reported to DLL’s Chief Executive Officer (“CEO”), Ronald Slaats.
Through 2011, Ms. DiMartino was eligible to receive an annual short-term incentive (“STI”)
Anticipating a change in Plaintiffs role with DLL, the parties then entered into a
On November 12, 2013, Mr. Hendriks sent an email to Ms. DiMartino with the subject “deferral of incentve [sic]” stating that “something has gone wrong with deferral of your incentive 2012 in relationship with the LTIP 2013 grant.”
II. LEGAL STANDARD
A court will award summary judgment on a claim or part of a claim where there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
In evaluating a summary judgment motion, a court “must view the facts in the light most favorable to the non-moving party,” and make every reasonable inference in that party’s favor.
The rule is no different where there are cross-motions for summary judgment.
A. Breach of Contract Claim
Under Pennsylvania law, which the parties agree governs here, a cause of action for breach of contract requires “(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.”
In ruling on the motions for summary judgment, the Court is guided by the following points:
(1) mere disagreement between the parties over the meaning of a term is insufficient to establish that term as ambiguous: (2) each party’s proffered interpretation must be reasonable, in that there must be evidence in the contract to support the interpretation beyond the party’s mere claim of ambiguity; and (3) the proffered interpretation cannot contradict the common understanding of the disputed term or phrase when there is another term that the parties could easily have used to convey this contradictory meaning.29
Defendant argues that Paragraph 5 of Amendment No. 2, which provides that “[e]ffective January 1, 2013, [Ms. DiMarti-no] shall no longer be eligible for any new long term incentive grants or awards” means that Plaintiff waived her eligibility to receive long-term incentive compensation for her performance in 2012. To support this interpretation, Defendant points to Paragraph 8 of Amendment No. 2, which refers to 2010 and 2011 long-term incentive grants, but is silent as to 2012, and Paragraph 4 of Amendment No. 3, which provides that Ms. DiMartino “shall no longer be eligible for any long term
Plaintiff argues that Paragraph 4 of Amendment No. 1 explicitly provided that she would “be eligible for incentive (short term incentive plus long term incentive) of 100% of Base Compensation at target. The annual pay-out of incentive shall be set each year by the CEO.”
Everyone involved in this case is a sophisticated business person, and Ms. DiMartino and DLL were represented by separate counsel in connection with the amendments to the employment agreement. After careful consideration of the record, the Court concludes that the Plaintiffs interpretation accords with the contractual language as a whole. Amendment No. 2 concerned the effects of Ms. DiMar-tino’s change of position in 2013, which would affect bonus treatment going forward; it did not alter Plaintiffs eligibility for a bonus for work performed in 2012. When the parties intended to refer to the 2012 incentive payments they did so explicitly, for example in Paragraphs 2 and 3 of Amendment No. 2. In addition, “[a] court always may consider the course of performance as evidence of the intent of the parties,” and Plaintiffs interpretation— that “new” long-term incentives referred to performance year 2013 and beyond—is consistent with the parties’ conduct.
“The actual performance of the parties under a contract tends to ‘make definite that which was previously un-
Certainly, the parties could have made explicit in Amendment No. 3 (and in Amendment No. 2 instead of using the word “new”) that there was no 2012 long-term incentive payment. Instead, Defendants failed to raise this issue for nearly eight months after Plaintiff received the bonus calculations, and only did so shortly after the resignation of Mr. Slaats, to whom Plaintiff had reported. According to Defendant, Mr. Pierik executed Amendment No. 2 on behalf of DLL, yet even though he was Mr. Hendriks’s superior,
It is also notable that Defendant’s contention that the Executive Board did not authorize the bonus was not raised in either Mr. Hendriks’s November 13, 2013 email or his May 2, 2014 letter, and DLL does not dispute Plaintiffs contention that Mr. Slaats had the authority to grant incentive pay; nor does it offer any explanation of why the CEO requested that Mr. Hendriks send the 2012 bonus calculations (long-term and short-term) to Ms. DiMar-tino if the bonuses were not authorized.
B. Wage Payment and Collection Law
Pennsylvania’s Wage Payment and Collection Law (“WPCL”)
IV. CONCLUSION
Although the parties urge different constructions of the relevant agreements, the contractual language and the parties’ course of conduct compels the conclusion that Plaintiff was awarded both long-term and short-term incentive payments for the 2012 performance year. Therefore, the Court will grant Plaintiff’s Motion for Summary Judgment and deny Defendant’s Motion. An order will be entered.
ORDER
AND NOW, this 19th day of September 2016, upon consideration of the Motions for Summary Judgment and the responses and replies thereto, and for the reasons stated in the accompanying memorandum opinion, it is hereby ORDERED that:
1. Plaintiffs Motion for Summary Judgment [Doc. No. 18] is GRANTED.
2. Defendant’s Motion for Summary Judgment [Doc. No. 19] is DENIED.
3. Within 21 days of the date of this Order, Plaintiff shall submit a proposed form of judgment order, setting forth the relief sought pursuant to the breach of contract and wage act claims, with any supporting documentation. Within 14 days of Plaintiff’s filing, Defendants may file an opposition to any of the relief sought.
It is so ORDERED.
. The parties’ use of hyphenation is inconsistent with regard to the phrases long-term incentive and short-term incentive; where quoting from or using the titles of the documents, the Court retains the hyphenation of the original.
. Joint Statement Ex. 4 at 1.
. Thirty-six percent of Plaintiff's $508,133 salary equals $182,927.88, the amount now at issue.
. As is relevant to this litigation, Amendment No. 1 provided that:
2. This Amendment No. 1 is effective retroactively as of January 1, 2012;
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4. The Section titled Long Term Incentive Plan in the 2003 Contract is deleted in its entirety and the following language inserted in its place:
Incentive Pay. In addition to Base Compensation, the Executive will be eligible for incentive (short term incentive plus long term incentive) of 100% of Base Compensation at target. The annual pay-out of incentive shall be set each year by the CEO. Forty percent (40%) of the incentive will be deferred for a period of at least three years. All regulations in the Rabobank Group Remuneration Policy regarding incentive payout apply.
Joint Statement Ex. 6. Amendment 1 was executed by Plaintiff and Mr. Slaats; although the copy in the record does not include Mr.
.Joint Statement Ex. 8. Amendment No. 2, which was executed by Plaintiff and Rob Pier-ik, Executive Vice President for Human Resources, also stated the following with regard to bonuses:
2. [Ms. DiMartino] and [DLL] agree that [Ms. DiMartino] is being separated from her current position as Global Chief Innovation Officer ("CIO”) as of December 31, 2012, and that such event shall constitute a redundancy for the purposes of determining [Ms. DiMartino’s] 2012 bonus treatment under [the ERP].
3. Effective, January 1, 2013, Executive shall serve as an internal consultant under the direction of Ronald Slaats, or in his absence, his designee ("New Role”). [Ms. DiMartino’s] compensation shall remain unchanged regardless of the New Role’s job grade or other attributes, but such position shall no longer be considered "identified staff” for the purposes of the Capital Requirements Directive. Nevertheless, [Ms. DiMartino] shall be entitled to a pro-rata payment of her 2012 target incentive with each payroll payment based on the number of days employed during such period upon the earlier to occur of: (i) the scope and responsibilities of [Ms. DiMartino’s] New Role is such that it would constitute an executive position if it were a permanent role (a "Senior Role”, e.g., head of information technology for [DLL]), or (ii) [Ms. DiMartino] performs services in the New Role beyond March 31, 2013. It is further understood and agreed that to the extent Executive takes a Senior Role in calendar year 2013, the terms and conditions of such Senior Role shall include, without limitation, that [Ms. DiMartino] shall be entitled to a make whole provision which addresses of [sic] any lost opportunity to realize 100% of [Ms. DiMartino’s] target bonus in such Senior Role due to the timing of her assumption of such position.
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8. [Ms. DiMartino] acknowledges and agrees that she will only be eligible to receive LTIP related payments for her 2010 and 2011 LTIP grants while employed by [DLL] and upon her termination, for any reason, she will no longer eligible [sic] to receive any LTIP payments related to these awards. Nevertheless, to the extent that: (i) [DLL] establishes and funds a new retirement contribution benefit for its executive group based in the United States; and (ii) [Ms. DiMartino] is employed by [DLL] in a Senior Role at such time, then [DLL] shall either include [Ms. DiMartino] in such plan to the extent she is eligible under the terms of such plan or provide her with a payment in the amount that would have been contributed to such plan on her behalf is [sic] she had been eligible without giving effect to any tax benefits.
. Joint Statement Ex. 9.
. Joint Statement Ex. 10.
. Joint Statement Ex. 11. Amendment No. 3 provided in relevant part that:
-4. Compensation and Benefits. As compensation for all services rendered by [Ms. DiMartino] during the Employment Term:
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b. As additional consideration for entering into this Amendment No. 3, [DLL] shall on or about the first regular payroll date following June 30, 2013, Executive shall be paid, subject to required withholding: (I) accrued paid time off determined as of December 31, 2012; and (II) a pro-rated bonus for 2013 in the amount of Two Hundred and Fifty Four Thousand Sixty Six Dollars and Fifty Cents ($254,066.50). Paid time off accrued on and after January 1, 2013 and through the remainder of her Employment Term shall be paid on or about the first regular payroll date following the conclusion of her Employment Term.
c. [Ms. DiMartino] shall no. longer be eligible for any long term incentive programs as of the effective date hereof, but [Ms. DiMartino] shall be eligible to receive any 2011 LTIP awards paid out prior to December 31, 2014.
5. [Ms. DiMartino and DLL] agree that [Ms. DiMartino] is being separated from her current position as of the earlier of (i) June 30, 2013; and (ii) the hiring of a new person to head DLL’s Global Information Technology organization (“Job Change Date”); and that such event shall constitute a redundancy for the purposes of determining [Ms. DiMarti-no’s] 2012 bonus treatment under [the ERP].
Amendment No. 3 was signed by Ms. DiMarti-no and Mr. Slaats, the latter on May 1, 2013.
. The full text of the email is as follows (capitalization, spelling, and punctuation in original):
Hi Rita,
we found out something has gone wrong with deferral of your incentive 2012 in relationship with the LTIP 2013 grant
in February 2013 we assumed you would continu to work in the CIO role and now we know you assumed a new strategic advisory role as of June 2013
what happened is that we added the LTIP 2013-2015 to your STI pay-out 2012 and on the basis of this total sum calculated your bonus deferral (40%) of the total amount) since the LTIP was more than 40% of the total incentive all the necessary deferral was covered by it and we did not need to defer any STI
it seems now that in your contract addendum, it is stated you were/are no longer entitled to an LTIP 2013 grant *
in other words it could not have been included in the basis for the calculation of your bonus deferral and consequently not enough STI was deferred
a second issue is that the pro rata bonus over January-June 2013 was not partly (40%) deferred, which was necessary because you still were Identified Staff in this period we are legally forced to correct this and I want to discuss with you how we can do this can you please call me back ? thnxs
Best regards,
Dick Hendriks
SVP Global Compensation & Benefits
Joint Statement Ex.' 12 Mr. Hendriks sent a more formal letter dated May 2, 2014, elabo
. According to Defendant, the long-term incentive program referred to was the Global Long Term Incentive Plan 2012 (the "2012 GLTIP”). The plan document for the 2012 GLTIP states it was effective from January 1, 2012 through December 31, 2014. Joint Statement Ex. 15.
. Fed. R. Civ. P. 56(a).
. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
. Id.
. Hugh v. Butler Cty. Family YMCA, 418 F.3d 265, 267 (3d Cir. 2005).
. Boyle v. Cty. of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998).
. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505 (internal citations omitted).
. Walden v. Saint Gobain Corp., 323 F.Supp.2d 637, 641 (E.D.Pa. 2004) (citing Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976)).
. Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 83 (3d Cir. 1987).
. Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008).
. Id. (internal quotation omitted).
. Omicron Sys., Inc. v. Weiner, 860 A.2d 554, 564 (Pa.Super.Ct. 2004) (internal quotation marks and brackets omitted).
. Wert v. Manorcare of Carlisle PA, LLC, 124 A.3d 1248, 1259 (Pa. 2015).
. Id. (citing Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 588 Pa. 470, 905 A.2d 462, 468 (2006); Hutchison v. Sunbeam Coal Corp., 513 Pa. 192, 519 A.2d 385, 390 (1986)).
. Wert, 124 A.3d at 1259 (citing TruServ Corp. v. Morgan’s Tool & Supply Co., 614 Pa. 549, 39 A.3d 253, 260 (2012)).
. Bohler-Uddeholm Am., Inc. v. Ellwood Grp., 247 F.3d 79, 93 (3d Cir. 2001) (quoting Mellon Bank, N.A. v. Aetna Bus. Credit, Inc., 619 F.2d 1001, 1011 (3d Cir. 1980)).
. Mericle v. Jackson Nat’l Life Ins. Co., No. 15-419, 193 F.Supp.3d 435, 448-49, 2016 WL 3476400, at *8 (M.D.Pa. June 27, 2016) (quoting Krizovensky v. Krizovensky, 425 Pa.Super. 204, 624 A.2d 638, 643 (1993) (internal citations omitted)).
. Kripp v. Kripp, 578 Pa. 82, 849 A.2d 1159, 1163 (2004).
. Bohler-Uddeholm, 247 F.3d at 95 (footnote omitted).
. Joint Statement Ex. 6.
. In re Old Summit Mfg., LLC, 523 F.3d 134, 137-38 (3d Cir. 2008) (citation omitted); see also Langer v. Monarch Life Ins. Co., 879 F.2d 75, 81 & n. 8 (3d Cir. 1989) (“[E]ven if the contract was not patently ambiguous, we would consider the parties’ course of performance, and in light of that evidence conclude that it is latently ambiguous as to the party to bear the risk of loss if the insurance was not obtained.”).
. Tax Matrix Techs., LLC v. Wegmans Food Mkts., Inc., 154 F.Supp.3d 157, 178-79 (E.D.Pa. 2016) (quoting Greene v. Oliver Realty, 363 Pa.Super. 534, 526 A.2d 1192, 1194 (1987)).
. McManus Dep. at 64, Ex. E to PL’s Opp. to Def.'s Mot. Summ. J. [Doc. No. 26-1].
. Mr. Hendriks's declaration, submitted as an exhibit to Defendant’s motion for summary judgment, states that ”[o]nly the DLL Executive Board has the power to grant incentive compensation to executives,” but also states that in early 2013 he and a colleague "attempted to calculate Ms. DiMartino’s incentive compensation and deferral scheme for the performance year 2012. At the time, I was not aware of a provision in Ms. DiMartino’s employment agreement that made her ineligible for a long-term incentive award in 2013 for performance year 2012. As a result I mistakenly included a long-term incentive plan award in the calculation.” Hendriks Deck ¶¶ 2-3, Ex. to Def.’s Mot. Summ. J. [Doc. No. 19-3], Notably, Mr. Hendriks does not explain why he would have calculated a long-term award if none had been authorized. Although Sean McManus, Vice-President of Human Resources of Defendant in the United States, avers in his declaration that "the Executive Board never approved a grant of long-term incentive compensation to Plaintiff in 2013 based on her performance in 2012,” he does not state the basis for his knowledge, and, although he states that Mr. Hendriks had no authority to make a grant, he does not state that Mr. Slaats, as a member of the Executive Board, lacked the authority, which Ms. DiMartino understood him to have. McManus Decl. ¶¶ 23-24, Ex. to Def.’s Mot. Summ. J. [Doc. No. 19-5].
. Ex. I to PL's Opp. to Def.’s Mot. Summ. J. [Doc. No. 26-1].
. Bohler-Uddeholm, 247 F.3d at 93 (quoting Mellon Bank, N.A. v. Aetna Bus. Credit, Inc., 619 F.2d 1001, 1011 (3d Cir. 1980)).
. 43 Pa. Stat. and Cons. Stat. § 260.1, et seq.
. Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 953 (Pa.Super.Ct. 2011) (quoting Oberneder v. Link Comp. Corp., 548 Pa. 201, 696 A.2d 148, 151 (1997)).
. Braun, 24 A.3d at 953-54 (citing 43 Pa. Stat. and Cons. Stat. §§ 260.2a; 210).
. See Riseman v. Advanta Corp., 39 Fed.Appx. 761, 765 (3d Cir. 2002) (unpublished) (holding that the WPCL applies to a discretionary bonus that was folly earned prior to the termination of employment; "[t]he mere fact that certain compensation is not payable until a future date is not necessarily fatal to a WPCL claim so long as the employee is deemed to have 'earned' it during his employment.”).
Reference
- Full Case Name
- Rita F. DIMARTINO v. DE LAGE LANDEN FINANCIAL SERVICES, INC.
- Status
- Published