Wednesday, December 16, 2015
Indiana Decisions - Supreme Court decides one today
In AM General LLC v. James A. Armour, a 13-paage, 5-0 opinion, Justice David writes:
Today this Court holds that the promissory note in the present case does not satisfy the requirement of “payment” under the disputed employment contract. This issue arose when James Armour’s employment contract with AM General entitled him to payment of a long-term incentive plan (LTIP). When Armour retired in early 2012, he was to receive a lump sum LTIP payment on or about January 20, 2012. Instead, Armour started receiving quarterly installment payments in the form of checks, which Armour accepted.
However, in December of 2012, AM General attempted to make the final installment payment with a subordinate promissory note (the Note). The language within the Note provided that acceptance would function to fully release AM General from its obligations under the LTIP provision of the Employment Agreement. It also contained various other conditions on payment and transferability. Armour promptly rejected the Note, requesting full payment. This case reaches us today based upon Armour’s claim that the Note did not constitute payment under the Employment Agreement.
We agree. The term “pay” within the Employment Agreement obligated AM General to make the LTIP payment to Armour in cash or a cash equivalent. The Note tendered to Armour was merely a conditional promise to pay and cannot constitute payment where no provision within the Employment Agreement permits payment in the form of a subordinate promissory note. As such, AM General breached the Employment Agreement when it failed to pay Armour the LTIP amounts when due. We affirm the trial court’s award of summary judgment in favor of Armour, including the award of pre-judgment interest. * * *
AM General failed to satisfy its obligation under the Employment Agreement LTIP provision when it offered Armour a subordinate promissory note as payment. As a matter of law, payment under the contract required the LTIP to be paid in cash or a cash equivalent. The various conditions placed upon the Note demonstrates that the Note was not a cash equivalent. We affirm the trial court’s grant of summary judgment in favor of Armour, awarding him the remaining portion of his LTIP payments. We also affirm the trial court’s order awarding Armour pre-judgment interest calculated from January 20, 2012, the time at which the LTIP payment was due under the Employment Agreement.
Posted by Marcia Oddi on December 16, 2015 05:04 PM
Posted to Ind. Sup.Ct. Decisions