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Marilyn R. Sugalski v. Manufacturers and Traders Trust Company

July 16, 2012

MARILYN R. SUGALSKI
v.
MANUFACTURERS AND TRADERS TRUST COMPANY, T/A M&T BANK



The opinion of the court was delivered by: Surrick, J.

MEMORANDUM

Presently before the Court are Defendant's Cross-Motion for Summary Judgment (ECF No. 20) and Plaintiff's Motion for Partial Summary Judgment (ECF No. 22).*fn1 For the following reasons, Plaintiff's Motion will be granted in part and denied in part, and Defendant's Motion will be denied.

I. BACKGROUND

The undisputed facts are as follows. On April 6, 1998, David McCarthy entered into an employment agreement ("McCarthy Agreement") with Provident Bank of Maryland ("Provident") to become the President and CEO of Court Square Leasing Company ("Leasing Co"), which Provident agreed to establish as a wholly-owned subsidiary. (McCarthy Agreement, Def.'s Summ. J. Mem. Ex. B, ECF No. 21.) The McCarthy Agreement provides that if McCarthy is terminated for a reason other than cause, McCarthy is entitled to receive a payment as if McCarthy were the equity owner of twenty-five percent of Leasing Co ("imputed interest") and Provident were purchasing such imputed interest. (Id. at ¶ 5.1-5.2.) The McCarthy Agreement sets forth a specific formula for calculating the imputed interest. McCarthy is not entitled to the imputed interest if Leasing Co terminates him for cause. (Id. at ¶ 5.7.)*fn2

On April 14, 1998, Plaintiff entered into an employment agreement ("Sugalski Agreement") with Provident to serve as a director of Leasing Co. (Def.'s Summ. J. Mem. Ex. C.) The Sugalski Agreement provides, in relevant part:

4.1 Within 45 days after the Determination Date as defined in Paragraph 4.2, and provided that Employee is employed by Leasing Co on such Determination Date, [Provident] will make a payment to Employee as if Employee were the equity owner of 2% of Leasing Co (the "Imputed Interest") and [Provident] were purchasing such Imputed Interest . . .

4.2 The "Determination Date" is the date David McCarthy is paid by [Provident] for his imputed interest in Leasing Co pursuant to the terms of this Agreement with [Provident] dated April 6, 1998. David McCarthy will be paid for his imputed interest in Leasing Co on the earliest to occur of the following events:

a. Leasing Co terminates David McCarthy's employment for a reason other than cause . . . .

(Sugalski Agreement ¶¶ 4.1-4.2.)

The Sugalski Agreement also provides that in the event Plaintiff's employment is terminated for a reason other than cause, Leasing Co would continue to pay Plaintiff her salary for three months. (Id. at ¶ 5.1.) However, as "a condition to receiving that severance compensation, Employee agrees to make no other claim against Leasing Co." (Id.)

On January 21, 2005, Leasing Co terminated McCarthy's employment. (Def.'s Admis. Req. 15, Def.'s Summ. J. Mem. Ex. A.) Following his termination, McCarthy demanded that Provident pay him the imputed interest in accordance with his employment agreement. Provident refused to make the payment and subsequently filed a lawsuit seeking declaratory relief in the United States District Court for the District of Maryland. (Def.'s Summ. J. Mem. Ex. D.) In that lawsuit, Provident contended that McCarthy was terminated for cause and that it therefore did not owe McCarthy his imputed interest. McCarthy filed a counterclaim for breach of contract and violation of the Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code Ann. Lab. & Empl. § 3-501, et seq. (Def.'s Summ. J. Mem. Ex. E.) Each of McCarthy's claims was premised on his contention that Provident owed him the imputed interest because he was terminated without cause. He alleged that at the time of his termination, the imputed interest owed to him in accordance with the formula set forth in the McCarthy Agreement was $4,846,050.00.*fn3

Provident filed a motion to dismiss McCarthy's MWPCL claim on the ground that the imputed interest payment is not a "wage" for purposes of the statute. The motion was denied. See Provident Bank of Md. v. McCarthy, 383 F. Supp. 2d 858 (D. Md. 2005). On June 29, 2006, Provident and McCarthy settled their dispute. (McCarthy Settlement Agreement, Def.'s Summ. J. Mem. Ex. F.) Provident agreed to pay McCarthy $1.25 million.*fn4 The settlement agreement states, in relevant part:

Provident and McCarthy understand and agree that this Agreement pertains to disputed claims set forth in the Lawsuit, and that neither the execution of this Agreement, nor the payment or receipt of the settlement amount described herein are to be construed as an admission of liability on the part of either Party with respect to any of the disputed claims set forth in the Lawsuit, and that each Party, in fact, expressly denies liability to the other Party and intends merely to avoid litigation and to buy their respective peace without further expense. In particular, the Parties understand and acknowledge that this Agreement should not be construed as an express or implied admission by Provident or an agreement by the Parties that McCarthy was not terminated "for cause" or that a sufficient basis for a "for cause" termination did not exist. (McCarthy Settlement Agreement ¶ D.)

On May 23, 2009, Defendant M&T Bank acquired Provident. Three days later, Defendant notified Plaintiff that her position would be permanently eliminated effective June 19, 2009, as a result of the acquisition. (Pl.'s Mot. Summ. J. Ex. J, ECF No. 22.) Defendant offered Plaintiff four months of severance pay, rather than the three months that was outlined in the Sugalski Agreement. Plaintiff was later offered a different severance package, which included up to six months pay. These offers were expressly contingent on Plaintiff signing a general release in favor of Defendant. Plaintiff rejected these severance packages. After Plaintiff learned about her forthcoming termination and while she was still employed by Leasing Co, Plaintiff made a demand for the payment of her imputed interest and severance benefits as provided in the Sugalski Agreement. On April 13, 2009, Plaintiff received an email, which denied her claim for the imputed interest. The email stated in relevant part: "Because Dave McCarthy was terminated for cause and never paid his imputed interest, any rights you had to imputed interest payments is of no further force or effect." (Pl.'s Mot. Summ. J. Ex. L.) In addition, Plaintiff did not receive any severance pay.

Plaintiff filed the instant Complaint against Defendant which includes claims for violation of the MWPCL (Count One) and Breach of Contract (Count Two) (ECF No. 1). Plaintiff and Defendant have each filed Motions for Summary Judgment.

II. LEGAL STANDARD

A party is entitled to summary judgment when "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 [party] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Fed. Home Loan Mortg. Corp. v. Scottsdale Ins. Co., 316 F.3d 431, 443 (3d Cir. 2003). Where the nonmoving party bears the burden of proof at trial, the moving party may identify an absence of a genuine issue of material fact by showing the court that there is no evidence in the record supporting the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 325 (1986); UPMC Health Sys. v. Metro. Life Ins. Co., 391 F.3d 497, 502 (3d Cir. 2004). If the moving party carries this initial burden, the nonmoving party must set forth specific facts showing that there is a genuine issue for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (noting that the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts"). The nonmoving party may not avoid summary judgment by relying on speculation or by rehashing the allegations in the pleadings. Ridgewood Bd. of Educ. v. N.E. for M.E., 172 F.3d 238, 252 (3d Cir. 1999). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Matsushita, 475 U.S. at 587 (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 289 (1968)). "We must construe the evidence in favor of the non-moving party, and summary judgment must be denied if there exists enough evidence 'to enable a jury to reasonably find for the non-movant on the issue.'" Brown v. J. Kaz, Inc., 581 F.3d 175, 179 (3d Cir. 2009) (quoting Giles v. Kearney, 571 F.3d 318, 322 (3d Cir. 2009)).

Where, as here, the parties file cross-motions for summary judgment, "Rule 56(c) does not mean that the case will necessarily be resolved at the summary judgment stage. The court must consider the motions separately. Each party must still establish that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law." Atl. Used Auto Parts v. City of Phila., 957 F. Supp. 622, 626 (E.D. Pa. 1997).

III. DISCUSSION

A. Breach of Contract

Addressing first Count Two of Plaintiff's Complaint, Plaintiff argues that Defendant failed to pay her the imputed interest and severance benefits to which she was entitled as provided in the Sugalski Agreement.

The McCarthy Agreement and the Sugalski Agreement both specifically provide that they are governed by Maryland law.*fn5 Maryland courts apply the principle of objective interpretation of contracts. Atl. Contracting & Material Co. v. Ulico Cas. Co., 844 A.2d 460, 469 (Md. 2004); Sy-Lene of Wash., Inc. v. Starwood Urban Retail II, LLC, 829 A.2d 540, 546 (Md. 2003) (citing cases). Under the objective test, the "written language embodying the terms of an agreement will govern the rights and liabilities of the parties, irrespective of the intent of the parties at the time they entered into the contract, unless the written language is not susceptible of a clear and definite understanding, or unless there is fraud, duress or mutual mistake." Long v. Maryland, 807 A.2d 1, 8 (Md. 2002) (quoting Slice v. Carozza Props., Inc., 137 A.2d 687, 693 (Md. 1958)). "When the clear language of a contract is unambiguous, the court will give effect to its plain, ordinary, and usual meaning, taking into account the context in which it is used." Sy-Lene, 829 A.2d at 546 (citations omitted).

The interpretation of a contract, including the determination of whether a contract is ambiguous, is a question of law for the court. United Servs. Auto. Ass'n v. Riley, 899 A.2d 819, 833 (Md. 2006). A contract is ambiguous if, "when read by a reasonably prudent person, it is susceptible of more than one meaning." Id. (quoting Calomiris v. Woods, 727 A.2d 358, 363 (Md. 1999)). A "contract is not ambiguous simply because, in litigation, the parties offer different meanings to the language. It is for the court, supposing itself to be that reasonably prudent person, to determine ...


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