Vogel v. E.D. Bullard Company

Filing 139

MEMORANDUM OPINION & ORDER: (1) Parties shall have 10 days from entry of this order to SHOW CAUSE why judgment should not be entered in favor of Vogel on Count 6 of his Amended Complaint and Count 1 of Bullard's Counterclaim. (2) All scheduled proceedings and deadlines, other than those set forth in paragraph 1, above, are CONTINUED GENERALLY pending further order of the Court. Signed by Judge Joseph M. Hood on 1/31/2014.(SCD)cc: COR,D,JC

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
JAMES D. VOGEL,

)
)
)
)
)
)
)
)
)
)

Plaintiff,
v.
E.D. BULLARD COMPANY,
Defendant.

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Civil Case No.
12-cv-11-JMH
MEMORANDUM OPINION & ORDER

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**

This matter is before the Court by virtue of the Court’s
Order [DE 134] of January 6, 2014, and the parties’ briefing [DE
135-37] on the issue of which terms constitute the parties’
agreement with respect to retention of the signing bonus paid to
Plaintiff and Counter-defendant James D. Vogel by Defendant and
Counter-plaintiff E.D. Bullard Company (“Bullard”).

The Court

being adequately advised, it concludes that the parties’ initial
agreement, the terms of which were set forth in Bullard’s offer
letter dated December 30, 2010, controls as a matter of law.
Having reached that conclusion and upon its own motion, the
Court will require the parties to show cause why judgment in
favor of Vogel should not be entered with respect to Count Six
1

of

his

Amended

Counterclaim.
I.

Complaint

and

Count

One

of

Bullard’s

The Court’s reasoning is set forth below.

Background

As part of its effort to hire Vogel as its Vice-President
of

Marketing

and

Sales,

Bullard

sent

him

a

letter,

dated

December 30, 2010, outlining their offer of employment.

The

company included a promise to pay a $20,000 signing bonus on the
condition

that

Vogel

became

an

thirty days after his start date.

employee

of

Bullard,

[See DE 136-1.]

payable

That signing

bonus was, by the terms of the offer letter, subject to full
repayment

to

Bullard

on

one

condition:

“should

[Vogel]

voluntarily terminate [his] employment within two years of [his]
start date.”
There

[DE 136-1 at 1.]
is

no

dispute

that

Vogel

accepted

the

offer,

commenced his employment with Bullard on January 17, 2011, and
was still employed there thirty days from that date.

Meanwhile,

on February 10, 2011, Bullard’s Vice President and COO, Eric
Pasch, approached Vogel and, after stating that Bullard owed him
the signing bonus, asked him to sign a written document entitled
“Agreement” before receiving the signing bonus owed to him by
the company.

The document restated the terms for the payment of
2

the

signing

bonus

set

forth

in

the

original

offer

letter,

including Vogel’s obligation to repay the bonus in the event of
a voluntary termination of his employment within two years of
the start date of his employment.

[DE 136-2 at 1-2.]

The

“Agreement” also included an additional term requiring that the
bonus

be

repaid

in

full

“if

Bullard

terminate[d]

[Vogel’s]

employment for cause within two years after his hire date.”
[Id. at 1.]
Pasch conceded that Bullard owed Vogel the bonus, stating
to him, “Look, it’s been 30 days; we owe you the bonus . . .”
and that, if Vogel “would have had a problem with it, I would
have

paid

[the

signing

bonus]

anyway.”

signed the Agreement after reviewing it.

Nonetheless,

Vogel

Vogel concedes that he

was aware of the difference in the language contained in the
Agreement and the offer letter and that Pasch pointed out the
difference to him at that time.

Vogel asked no questions about

the modification of the original terms of the parties' agreement
and,

according

change.

to

Pasch,

said

he

was

comfortable

Bullard paid Vogel the $20,000 signing bonus.

with

the

Bullard

terminated Vogel’s employment with the company within six months
of his start date.

3

In

Count

Six

of

his

Amended

Complaint,

Vogel

seeks

a

declaration that the written “Agreement” is not enforceable and
the $20,000 signing bonus is his to keep under the terms of the
parties’ agreement set forth in the offer letter in December
2010 because he did not voluntarily terminate his employment
within

two

Bullard.

years

of

the

start

date

of

his

employment

with

In the sole count of its Counterclaim, Bullard seeks

repayment of the signing bonus by Vogel under the terms of the
February 2011 “Agreement” on the grounds that Vogel’s employment
was

terminated

for

cause

employment with Bullard.

within

two

years

of

commencing

For the reasons set forth below, the

terms of the parties’ initial agreement control this situation
as a matter of law.
II.

Standard of Review

Summary

judgment

should

be

granted

where

there

is

no

genuine issue of material fact and the moving party is entitled
to judgment as a matter of law. Johnson v. United States Postal
Serv., 64 F.3d 233, 236 (6th Cir. 1995). The moving party bears
the initial burden of showing the absence of a genuine issue of
material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). The burden then shifts to the non-moving party to come
forward with evidence showing that there is a genuine issue for
4

trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256
(1986). A mere scintilla of evidence is insufficient; rather,
“there must be evidence on which the jury could reasonably find
for the [nonmovant].” Id. at 252. This standard requires a court
to make a preliminary assessment of the evidence, in order to
decide

whether

the

non-moving

party’s

evidence

concerns

a

material issue and is more than de minimis. Hansel v. Keys, 87
F.3d

795,

800

(6th

Cir.

1996).

The

mere

“possibility”

of

a

factual dispute is not enough. Mitchell v. Toledo Hosp., 964
F.2d 577, 582 (6th Cir. 1992) (quoting Gregg v. Allen Bradley
Co., 801 F.2d 859, 863 (6th Cir. 1986)).
As a practical matter, there are no disputes of fact which
are material to the issues before the Court today.

Rather,

there is a question of what happens when the law is applied to
those facts.

Accordingly, summary judgment is appropriate where

appropriate notice has been provided.
III. Discussion
As an initial matter and as set forth below, the Court
concludes that, as a matter of law, the parties entered into an
enforceable

agreement

on

the

terms

December 30, 2010, offer letter.
5

set

forth

in

Bullard’s

Next, the Court considers

whether

that

document

called

“Agreement,”

dated

February

10,

2011, effectively modified the parties’ earlier agreement with
respect

to

Vogel’s

signing

bonus,

December 30, 2010, offer letter.

set

forth

in

Bullard’s

As explained below, in the

absence of adequate consideration inuring to Vogel in exchange
for the additional term concerning any termination of employment
for cause included in the “Agreement,” no effective modification
of the contract was made.

The initial agreement between the

parties controls the matter, and Bullard has no grounds upon
which to demand repayment of the signing bonus because Vogel did
not voluntarily terminate his employment with Bullard within two
years of his start date.

Thus, the signing bonus is Vogel’s to

keep on the undisputed facts that have been brought before this
Court time and time again.
To form a contract under Kentucky law, parties must have an
offer

and

acceptance,

consideration.

See

full

Collins

v.

and

complete

Kentucky

terms,

and

Corp.

399

Lottery

S.W.3d 449, 455 (Ky. Ct. App. 2012) (citing Cantrell Supply,
Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 384 (Ky. Ct. App.
2002)).
Bullard
inure

In

its

offered

to

him

in

December
Plaintiff
exchange

30,

2010,

Vogel
for
6

offer

several
his

letter

benefits

becoming

an

to

Vogel,

that

would

employee

at

Bullard, including a $20,000 signing bonus. Vogel accepted that
offer

by

commencing

employment

and,

consideration that he owed Bullard.
an

enforceable

agreement,

and,

thus,

fulfilled

the

The parties, thus, formed

under

its

terms,

the

signing

bonus was to be paid to Vogel thirty days after his start date,
subject

to

repayment

in

full

to

Bullard

only

if

Vogel

voluntarily terminated his employment within two years of his
start date.
Bullard then sought to modify the parties’ agreement by
inserting an additional term in the written document that it
provided

to

signature.

Vogel
That

on

February

10,

modification,

if

2011,

when

it

enforceable,

sought

would

his

oblige

Vogel to repay the signing bonus in full if his employment was
terminated for cause within two years of his start date.

The

effort at modification was, however, unsuccessful for want of
consideration inuring to the benefit of Vogel, notwithstanding
his signature on the document.
While

parties

may

modify

an

existing

and

enforceable

contract under Kentucky law, the “modification must conform to
the

principles

of

law

relating

to

the

execution

of

valid

contracts, including a valid consideration, in order for rights
to accrue thereunder.”

Wallace v. Cook, 227 S.W. 279, 280-81
7

(Ky.

1921)

(addressing

oral

modifications

to

prior

written

contracts); Whayne Supply Co. v. Gregory, 291 S.W. 2d 835, 839
(Ky. Ct. App. 1956) (same).

A “material alteration in terms of

an existing agreement cannot be enforced unless a consideration
for the change enures to the party whom the new agreement is
being enforced against.” Martin v. Pack’s Inc., 358 S.W. 3d 481,
484 (Ky. Ct. App. 2011) (citing Pool v. First Nat’l Bank of
Princeton, 155 S.W.2d 4, 6 (Ky. 1941)).

“It is a fundamental

principle of law that a material alteration in the terms of an
existing contract cannot be enforced unless a consideration for
the change passes to the party against whom it is sought to
enforce the altered condition.”

Pool, 155 S.W.2d 4, 6.

Bullard suggests that Vogel’s continued at-will employment
with the company was sufficient consideration inuring to Vogel
to enforce the modified agreement against him because Kentucky
courts have concluded that employer-employee agreements may be
enforced where a promise is made by an employee in exchange for
merely retaining his or her job with the employer, relying on
Charles T. Creech Inc. v. Brown, 2012 Ky. App. Upub. LEXIS 1033,
*21 (Ky. Ct. App. 2012) (citing Dunn v. Gordon Food Servs., 780

8

F. Supp. 2d 570, 574 (W.D.Ky. 2011)).1

This may well be the case

on the right facts, but Bullard points to no evidence that it
obtained

Vogel’s

signature

on

the

modification

document

in

exchange for a promise that he could keep his job rather than be
fired for declining to sign the document.
Pasch testified that he approached Vogel with the Agreement
as he sat “in his office at his desk” where Pasch “put it in
front of him” and said “Look, it’s been 30 days; we owe you the
bonus . . .”

He also testified that if Vogel “would have had a

problem with it, I would have paid [the signing bonus] anyway.”
There is, however, no evidence that Bullard intended to pay the
signing bonus but terminate Vogel’s employment immediately if
Vogel declined to sign the “Agreement” or that Pasch or anyone
at Bullard told Vogel that his further employment was contingent
on his signature.
Nor

can

consideration
suggests.

the
to

$20,000
support

itself

the

be

considered

modification

as

the

Bullard

new
also

Consideration is “a benefit conferred to a promisor

or a detriment incurred by a promisee.” Ham Broadcasting Co.,

The Kentucky Court of Appeals decision in Charles T.
Creech Inc. v. Brown has been withdrawn pending discretionary
review by the Supreme Court of Kentucky.
1

9

Inc. v. Cumulus Media, Inc., Civil Action No. 5:10-cv-00185,
2013

WL

275565,

*3

(W.D.

Ky.

Jan.

24,

2013)

(citing

Huff

Contracting v. Sark, 12 S.W. 3d 704, 707 (Ky. Ct. App. 2000)).
However, a “benefit occurs when the promisor, in exchange for
the promise, obtains a new right to which he was not otherwise
entitled.” Martin v. Pack’s Inc., 358 S.W.3d 481, 484 (Ky. Ct.
App. 2011).

Having agreed to the terms set forth in the letter,

Vogel was already entitled to the payment of the signing bonus
when

he

commenced

employment

with

Bullard,

so

the

payment could not be considered a “new right.”

$20,000

A “detriment

occurs when the promisee, in exchange for the promise, waives a
right to which he was otherwise entitled to exercise.” Id.; Huff
Contracting,

12

S.W.3d

at

707.

There

is

no

evidence

that

Bullard waived any right to which it was otherwise entitled,
including its right to terminate Vogel’s employment “at will” in
that

moment

already

as

consideration

secured

–

the

for

payment

Vogel’s

of

the

giving
$20,000

additional terms beyond those in the offer letter.
Bullard

might

have

secured

the

modification

by

up

a

right

without

any

Certainly,
conditioning

Vogel’s continued at-will employment with the company on his
agreement to the additional term, but Bullard did not do so.

10

Accordingly,

in

the

absence

of

adequate

consideration

inuring to Vogel in exchange for the new term proposed in the
“Agreement”, there was never an effective modification of the
parties’ initial agreement.

Rather, the terms set forth in the

offer letter control as a matter of law.

In the absence of

evidence in the record that Vogel voluntarily terminated his
employment with Bullard within two years of his start date, the
Court

concludes

that

Vogel

is

entitled

to

keep

the

$20,000

signing bonus.
As this final conclusion is being drawn on the Court’s own
motion,
IT IS ORDERED:
(1)

that the parties shall have ten (10) days from entry

of this order to SHOW CAUSE why judgment should not be entered
in favor of Vogel on Count Six of his Amended Complaint [DE 60]
and Count One of Bullard’s Counterclaim [DE 52].
IT IS FURTHER ORDERED:
(2)

that

all

scheduled

proceedings

and

deadlines,

than those set forth in paragraph (1), above, are
GENERALLY, pending further order of the Court.

11

other

CONTINUED

This the 31st day of January, 2014.

12