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GRUN v. PNEUMO ABEX CORP.

October 1, 1992

WILLIAM F. GRUN, Plaintiff,
v.
PNEUMO ABEX CORPORATION, et al., Defendants.


LEFKOW


The opinion of the court was delivered by: JOAN HUMPHREY LEFKOW

To: The Honorable Charles R. Norgle, Sr.

United States District Judge

 Joan H. Lefkow, Executive Magistrate Judge:

 Plaintiff, William F. Grun ("Grun"), seeks to recover monies allegedly due under a Severance Compensation Agreement ("SCA") that he had with defendant, Pneumo Abex Corporation ("Pneumo Abex"). Grun also seeks recovery from defendants, PA Holdings Corporation ("PA Holdings") and The Henley Group ("Henley"), based on their alleged interference with the contractual relations created by the SCA.

 Counts I and III of Grun's three-count complaint are directed against Pneumo Abex. The first count alleges that Pneumo Abex breached the SCA into which it entered with Grun. In Count III, Grun claims that Pneumo Abex also breached a NWL executive bonus plan. Count II, directed against PA Holdings and Henley, sets forth Grun's claim for intentional interference with contractual relations.

 PROCEDURE ON SUMMARY JUDGMENT

 Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). To determine whether any genuine issue of fact exists, the court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions and affidavits that are part of the record. Fed. R. Civ. P. 56, Notes of Advisory Committee on Rules. The initial burden of proving there is no genuine issue of material fact is on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). To discharge this initial burden, the moving party need only point out to the court that there is an absence of evidence to support the non-moving party's case. Id. at 325, 106 S. Ct. at 2553. In response, the non-moving party cannot rest on bare pleadings alone but must use the evidentiary tools listed above to designate specific material facts showing that there is a genuine issue for trial. Id. at 324, 106 S. Ct. at 2553. A material fact must be outcome determinative under the governing law. Pritchard v. Rainfair, Inc., 945 F.2d 185, 191 (7th Cir. 1991). Although a bare contention that an issue of fact exists is insufficient to create a factual dispute, Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir. 1983), the non-moving party's evidence is to be believed and all reasonable inferences from the facts must be viewed in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986); Korf v. Ball State University, 726 F.2d 1222, 1226 (7th Cir. 1984).

 FACTS

 In January, 1986, Grun became president and general manager of NWL Control Systems ("NWL"), a division of Pneumo Abex that was engaged in the manufacture of flight controls. His office was located at NWL's headquarters in Kalamazoo, Michigan. Pneumo Abex was headquartered in Boston, Massachusetts.

 In 1987, Pneumo Abex's parent company, IC Industries, Inc., decided to offer Pneumo Abex for sale. As a result, Pneumo Abex entered into a number of severance compensation agreements with key corporate officers. The SCAs had three stated purposes: to encourage the executives' continued attention and undistracted dedication to their duties during the potentially disturbing and unsettled circumstances surrounding the possible change in the control of Pneumo Abex, to provide the executives with a degree of personal financial security and to induce the executives to remain in the employ of the company. In October, 1987, Grun and Norman J. Ryker, as president and chief executive officer of Pneumo Abex, entered into the SCA at issue herein. According to defendants, the terms of Grun's SCA were identical, or virtually so, to the SCAs given to Pneumo Abex's other key executives. Grun does not dispute this fact. Essentially, the SCA provided that Grun would be entitled to severance compensation, calculated in accordance with the SCA, if he terminated his employment for any one of several "good reasons" set forth in the SCA within two years after a change in control of Pneumo Abex. Five of the several "good reasons" set forth in the SCA are of particular interest to this litigation:

 (1) "the assignment to the Executive . . . of any duties inconsistent with, or a diminution of, the Executive's position, duties, titles, offices, responsibilities and status with the company . . . immediately prior to the change in control. . . ." SCA, P 3(e)(i);

 (3) "any failure by the Company . . . to continue in effect or make provision for any plan or arrangement to receive securities of [IC Industries, Inc.] (including, without limitation, the 1982 Stock Option, Restricted Stock Award and Performance Award Plan . . .) in which the Executive is participating at the time of Change in Control of the Company (or to substitute and continue plans . . . providing the Executive with substantially similar benefits). . . ." SCA, P 3(e)(v).

 (4) "a relocation of the Company's principal executive offices or the Executive's relocation to any place other than the location at which the Executive performed the Executive's duties prior to a Change in Control of the Company." SCA, P 3(e)(vi); and

 (5) "a substantial increase in business travel obligations over such obligations as they existed at the time of a Change in Control of the Company." SCA, P 3(e)(vii)."

 Approximately five months after Grun's SCA was executed, Mr. Ryker wrote to Grun apparently to explain the purpose of the SCA. *fn1" Mr. Ryker stated that the SCA was to provide Grun with certain protection if a change of control occurred and Grun's position or compensation was substantially adversely affected. Mr. Ryker identified a change in the location of Grun's place of work as a potential adverse effect, but went on to state:

 For holders of severance compensation agreements who do not work at the Company's headquarters, a relocation of its principal executive offices is not an adverse event. Inasmuch as you do not work at the Company's headquarters, this letter is to advise you that the Company did not intend for you to become entitled to termination compensation under Section 3(e)(vi) of the Agreement by virtue of the relocation of the Company's principal executive offices unless there is also a relocation of your present office.

 On April 5, 1988, Grun responded to Ryker's letter advising that,

 I cannot agree with the interpretation of the Severance Compensation Agreement which is contained in your letter of 3/25/88. My family and I consider a change in the location of the principal executive offices from the Boston area, which we consider to be our home, as one of ...


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