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Bryson v. Brand Insulations Inc.

decided: April 30, 1980.



Before Hunter, Higginbotham and Sloviter, Circuit Judges.

Author: Hunter


Paul E. Bryson appeals from the judgment entered against him in an action which he brought against his former employer, Brand Insulations, Inc. Invoking our diversity jurisdiction, 28 U.S.C. ยง 1332 (1976), Mr. Bryson alleged several breaches of an oral employment agreement. After submission of a number of stipulations and with discovery underway but without prior warning to the parties, the district court, on his own, entered judgment in favor of the defendant. Although the court entered judgment on the entire action, it addressed only one issue of Bryson's multi-issue complaint, whether Bryson was entitled to unpaid portion of his 1976 bonus. The other issues were swept away in the undercurrent of the one issue on which the court focused. The other issues in Bryson's complaint include an alleged failure by Brand to pay $16,608.80, representing the difference between bonuses earned and paid for the years 1974 through 1976, as well as, an alleged failure by Brand to repay $468.75 due on a loan made to the Company. Because the district court erred by entering pretrial judgment*fn1 in favor of the defendant, the judgment will be reversed and the action will be remanded to the district court.


Mr. Bryson worked for the defendant and its predecessor company under an oral employment agreement from 1974 until June 1977 when he voluntarily left his employment. He seeks to recover the unpaid portion of his 1976 bonus. The defendant admitted that under the agreement Bryson's compensation included salary plus an annual bonus. In his deposition, Mr. Bryson stated that the amount of his annual bonus was not predetermined, but instead was computed on the basis of his work performance in a given year. Beginning with payment of the 1974 bonus, Brand switched its practice from paying the bonus in one lump sum to paying in installments over the following year. Thus the 1974 bonus was paid in ten installments in 1975; the 1975 bonus was paid in eleven installments in 1976.

In mid-December 1976, two weeks prior to the conclusion of its fiscal year, the defendant distributed to its employees a leaflet entitled "Bonus Incentive Plan." In this leaflet, the company set forth the terms by which it intended to pay the bonuses that employees had earned in 1976. Under the plan, an employee would not be entitled to the unpaid portions of his 1976 bonus unless he continued to be employed by the defendant at the time an installment of the bonus was scheduled for payment. The installment payment period was extended to three years. The relevant portion of the Bonus Incentive Plan specifically provides that

Each eligible participant will be informed of the amount of his/her award for the preceding year during March of the current year.

The award will be paid in six equal installments on April 1 and October 1 of the first payment year and on each April 1 and October 1 of succeeding years.

A participant who terminates employment voluntarily, or is terminated for cause, will not be entitled to receive accrued but unpaid installments under the Incentive Bonus Plan.

Subsequent to receiving payment of the first of six installments of his 1976 bonus, Bryson left the defendant's employment. Brand has refused to pay him the unpaid portion of his bonus, relying on the clause in its Bonus Incentive Plan that provides for forfeiture of accrued but unpaid portions of the bonus if an employee voluntarily terminates his employment prior to the scheduled date of the installment payment.

Bryson does not deny that he was notified of this plan and its terms, but claims that he bargained for a salary plus bonus in exchange for his work performance. Alleging that he has fulfilled his part of the bargain under the terms of the initial oral agreement he complains that Brand refuses to fulfill its obligation to pay him the bonus he earned during 1976. The essence of Bryson's argument is that the requirement of three years continued employment as a condition precedent to receipt of all of the bonus earned in 1976 is an additional term to the preexisting oral employment agreement and invalid as a unilateral modification. The question boils down to what, if anything, did these parties agree to respecting a bonus before the defendant announced the bonus plan set forth in the December leaflet?

In an attempt to frame the legal issue for purposes of briefing, the court specifically had the parties stipulate in ...

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