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STAT v. AVENUE GROUP

August 1, 1990

THOMAS K. STAT, Plaintiff,
v.
AVENUE GROUP, INC., and PHH GROUP, INC., Defendants. PHH CORPORATION and PHH ENVIRONMENTS CORPORATION, Counterplaintiffs, v. THOMAS K. STAT, Counterdefendant


James H. Alesia, United States District Judge.


The opinion of the court was delivered by: ALESIA

JAMES H. ALESIA, UNITED STATES DISTRICT JUDGE

 Plaintiff, Thomas K. Stat ("Stat"), originally filed this action in the Chancery Division of the Circuit Court of Cook County, Illinois, seeking a declaration of the rights and liabilities of the parties under an employment agreement and bonus agreement. Defendants, Avenue Group, Inc., and PHH Group, Inc. *fn1" (collectively, "PHH"), subsequently removed the action to this Court based on diversity of citizenship. Stat and PHH have now filed cross-motions for partial summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Neither party has raised a genuine issue of material fact. For the reasons set forth below, Stat's motion for partial summary judgment is granted in part and denied in part and PHH's motion for partial summary judgment is granted in part and denied in part.

 I. FACTS

 For the purposes of these motions, we recount the relevant, undisputed facts. On May 30, 1986, Stat contemporaneously entered into an Employment Agreement and a Bonus Agreement with PHH. Stat's term of employment under the agreement extended through June 20, 1989. Stat was the only Avenue Group employee to receive an employment agreement from PHH Group.

 
(i) his base salary and benefits for the remainder of the employment period and
 
(ii) the executive's unpaid share of the bonus pools as specified in Schedule H of the Bonus Agreement dated May 30, 1986, among the company and the participants as defined in said Bonus Agreement, whether or not the Pre-Tax Income Requirements have been met.

  (emphasis supplied). Schedule H of the Bonus Agreement specifies that Stat's share of a particular year's bonus pool is 13.5%. The other seven participants in the Bonus Agreement originally shared in the Bonus Pools in the following percentages: Byron H. Apple 5.4 John M. Bondeson 4.1 James B. Cohen 4.1 Frank B. Gorski 4.1 Theodore E. Kloss 6.8 Gary E. Peterson 4.1 Peter W. Shull 8.1

 Paragraph 1 of the Bonus Agreement defines the term "Bonus Pools":

 
For each of the fiscal years of Avenue ending April 30, 1987, 1988, 1989, and 1990, there shall be a minimum earnings requirement (the "Minimum Requirement") of $ 700,000, $ 850,000, $ 1,000,000 and $ 1,220,000, respectively, and a bonus pool ("Bonus Pool") equal to the amount by which Pre-Tax Income (as defined in paragraph 2) for such year exceeds such Minimum Requirement, except that such Bonus Pool shall not exceed (a) for the fiscal year 1987, the sum of $ 185,000, (b) for fiscal year 1988, the sum of $ 185,000 plus the amount by which $ 185,000 exceeds the fiscal year 1987 Bonus Pool, (c) for fiscal year 1989, the sum of $ 185,000 plus the amount by which $ 370,000 exceeds the sum of the fiscal year 1987 and 1988 Bonus Pools, and (d) for the fiscal year 1990, the amount by which $ 550,000 exceeds the sum of the fiscal year 1987, 1988 and 1989 Bonus Pools. In no event, however, shall total composite bonus payments for all years combined exceed $ 550,000.

 Paragraph 3 of the Bonus Agreement defines how each participant shares in the Bonus Pool:

 
Shares. Each Participant shall be entitled to that share of the Bonus Pool for each of the foregoing fiscal years as indicated on one of the attached schedules labeled A through H bearing his name. Such share may be increased, at the discretion of Avenue and PHH Group, Inc. management, based on the Participant's performance and contribution to the Company and other relevant factors. In any event, however, the total amount paid to the Participants will equal the amount of the Bonus Pools earned for each year. A Participant must be employed by Avenue on the last day of the respective fiscal year in order to share in the Bonus Pool for such fiscal year, and if he is not so employed, the amount that would have represented his share shall be divided among the other Participants according to their respective percentages.

 Stat is not entitled to participate in the Bonus Pool for fiscal year 1990 because he was not employed by PHH at the ...


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