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HENNESSEY v. FDIC

July 29, 1994

JOHN T. HENNESSEY, et al., Plaintiffs,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION as receiver for MERITOR SAVINGS BANK, Defendant. THOMAS CALLAHAN, Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver for MERITOR SAVINGS BANK, Defendant



The opinion of the court was delivered by: BY THE COURT; MARVIN KATZ

 AND NOW, this 29th day of July, 1994, upon consideration of Plaintiffs' Motion for Summary Judgment, Defendant's Motion for Summary Judgment and the responses thereto, it is hereby ORDERED that the Plaintiffs' Motion is DENIED and Defendant's Motion is GRANTED.

 This is an action by former managers of Meritor Saving Bank ("Bank") to recover severance pay from the Federal Deposit Insurance Corporation ("FDIC") following the FDIC's takeover of the Bank. The parties' cross-motions for summary judgment raise a number of issues:

 
1. Did the events surrounding the closing of the Bank constitute a "reorganization" which would trigger the Bank's severance pay plan (SPP)?
 
2. Did the plaintiffs' rights to severance pay vest prior to their termination? That is, did the plaintiffs' rights to severance pay become fixed and certain prior to the appointment of the FDIC as receiver?
 
3. Did the FDIC repudiate the severance plan?
 
4. Are the plaintiffs' claimed damages actual compensatory damages?

 I. FACTS

 The plaintiffs are all former managers of the Bank. During a period of major downsizing, *fn1" the Bank's parent unit, the Meritor Financial Group (the Bank and its parent are hereinafter collectively referred to as "Meritor"), created a severance pay program ("SPP") in order to retain employees. See Pls.' Ex. C., McCarron Dep. p. 48-49.

 The plaintiffs each received personally addressed, but otherwise essentially identical letters, dated October 3, 1990, from Meritor's Chairman Roger S. Hillas. Statement of Undisputed Facts, P 9; see also Second Amended Compl., Ex. B. The letters addressed Meritor's SPP. The operative parts of these letters state:

 
Meritor senior management is acutely aware that it is essential to retain motivated employees such as you in key positions.
 
As evidence of this awareness, Meritor is extending the severance benefit provided to you under the Separation Pay Program to a total of 52 weeks pay. This enhanced benefit will be payable under the same terms and conditions as provided for in the Separation Pay Program if you are separated from employment by Meritor anytime on or before December 31, 1992. *fn2"

 Second Amended Compl, Ex. B.

 The SPP was "designed to provide financial assistance during an employee's transition to new employment following an involuntary separation from the service of Meritor Financial Group where that separation results from lack of work, job elimination, reorganization, or reduction-in-force." Second Amended Compl, Ex. A, p. 1. The Summary Description of the SPP *fn3" stated that "Meritor reserves the right to modify the Separation Pay Program at any time and from time to time, and to discontinue the Program in whole or in part at any time." Id. The SPP was an "employee ...


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