United States District Court, S.D. Texas
David M. Sellers, Plaintiff,
Cetco Energy Services Company, LLC, a al., Defendants.
OPINION ON SUMMARY JUDGMENT
N. Hughes United States District Judge
vice president of an oilfield service company had an
employment contract that said he would earn a long-term
incentive if he worked at the company for five years. The
company fired him 29 days before his five'year mark and
did not pay the incentive. He sued claiming it. The company
Sellers was the vice president of business development for
new-build capital-process equipment at Cetco Energy Services,
an oilfield service company. Onjanuary 18, 2010, Sellers
signed a contract with Cetco. It included a conditional
long-term incentive. If Sellers were employed onjanuary 18,
2015 - his fifth anniversary - he would be paid under the
formula in the contract.
2014, Cetco restructured, and Sellers was fired on December
19, 2014 - 29 days before he would have qualified for the
incentive. Sellers and Cetco agree that he was fired without
cause, but disagree whether that precludes his receiving the
incentive. Sellers says that Cetco owes him $428, 681.71, the
amount he would have been paid if he had been employed on the
end date. Sellers also argues that, at the very least, he is
entitled to a pro rata share of the incentive. Cetco says
that it owes Sellers nothing because it did not employ him
through January 18, 2015.
first sentence of the incentive clause is an unambiguous
condition: If Sellers is employed onjanuary 18, 2015, he will
receive a long'term incentive.Sellers was not employed by
Cetco onjanuary 18, 2015.
second sentence further qualifies Sellers's eligibility.
It says that he is not eligible for the incentive if he is
fired for cause or resigns. That paragraph also addresses
what would happen if someone did not meet the condition
because of death or disability. The clause does not mention
termination without cause.
structure of Sellers's compensation package also
indicates the conditional nature of the incentive. Part one
says that Sellers will receive an annual base salary
and part two says that Sellers will be paid
commission. Part three, which addresses the incentive does
not say that Sellers will receive the incentive. The
contract distinguishes the salary and commission that Sellers
will and did receive from the incentive that Sellers may
receive if he meets the condition.
interprets the contract to mean that he gets the incentive
unless he resigns or is terminated for cause. He also says
that because termination without cause is not addressed, it
would not prevent him from receiving the incentive.
are not required to address every possible occasion for
firing when writing a contract. If a situation is not covered
by an exception, then it is covered by the general rule.
Cetco did not address termination without cause because it
was not an exception to the condition. Imposing an equitable
clause to ensure that Sellers is paid the incentive would
weaken every contract and promote rigidity in the labor
market, which would harm workers, employers, and the economy.
also insists that he should get a pro rata share of the
incentive for the time he worked at Cetco. In one case, seven
workers who were fired without cause were allowed to recover
a bonus despite not meeting its requirements.The workers were
fired because the company they worked for was acquired and
they were no longer needed. Under the contract, a worker
would earn a bonus on December 31 each year and that bonus
would be paid in four installments over four years. If a
worker resigned or left the company for any reason other than
death or disability, he would not be paid future installments
of the previously earned bonus. The plan did not mention what
would happen in the case of termination with and without
workers were employed for two years and ten months. During
their last year of work they were fired ten weeks before
their bonus date and, according to their contract, should not
have received a bonus for that year. Also, since they left
the company for a reason other than death or disability, they
should not have received continued payments on the bonuses
earned during their first two years of work. In allowing the
workers to recover, the court emphasized the absence of a
clause addressing termination without cause and ignored what
the company did address. The contract clearly stated how a
worker could receive a bonus: employment on December 31 and
continued employment on the day bonuses were paid. The court
supplied a clause that was not in the original contract in
order to ...