Sellers v. Minerals Technologies, Inc. et al
OPINION on Summary Judgment. Sellers met the condition for neither the incentive plan nor COBRA offer. This case does not call for sympathy. Sellers is a smart executive who understood his contract and did not negotiate an exception for termination without cause. Sellers will take nothing from Cetco Energy Services. (Signed by Judge Lynn N Hughes) Parties notified. (ghassan, 4)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS District Court
Southern District of Texas
August 03, 2017
David M. Sellers,
Cetco Energy Services Company, LLC,
David J. Bradley, Clerk
Civil Action H-IS-2.6S7
Opinion on Summary Judgment
A 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 2.9 days before his five-year mark
and did not pay the incentive. He sued claiming it. The company will prevail.
David Sellers was the vice president of business development for new-
build capital-process equipment at Cetco Energy Services, an oilfield service
company. On]anuary 18,2.010, Sellers signed a contract with Cetco.lt included
a conditional long-term incentive. If Sellers were employed on] anuary 18, 2.0 IS
- his fifth anniversary - he would be paid under the formula in the contract.
In 2.014, Cetco restructured, and Sellers was fired on December 19,
2.014 - 2.9 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 $42.8,681.71, 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
The first sentence of the incentive clause is an unambiguous condition:
If Sellers is employed onJanuary I 8, 20I 5, he will receive a long-term incentive. 1
Sellers was not employed by Cetco onJanuary I8,20I5.
The second sentence further qualifies Sellers's eligibility. It says that he
is not eligible for the incentive ifhe 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
The 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
Sellers 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
Parties 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
Sellers 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
See Criswell v. European Crossroads, 792 S.W.2d 945, 948 (Tex. I990).
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 3 I 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 cause.
The 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 3 I and continued employment on the day bonuses
were paid. The court supplied a clause that was not in the original contract in
order to interpret the contract beyond its clear language. If courts amend
contracts to ensure that workers are paid regardless of the situation, companies
will stop devising inventive ways to pay and motivate their workers.
In another case, a court did not let a group of workers recover a bonus
after being fired without cause because they did not meet the condition to receive
it. 3 The contract said that if a worker was employed for two years, he would be
eligible to receive a bonus of $ I
The worker would forfeit the bonus ifhe
was terminated for cause or resigned before the two-year mark.
Similar to Sellers, the workers were terminated without cause before a
bonus was paid, an event not addressed. The court did not allow the workers to
2Enstar Corp. v. Bass, 737 S.W.2d 890,892 (T ex.App,-El Paso 1987), no writ.
'Smith v. Carter, No. 2-03'313'CV, 2005 WL 327181, at *3 (T ex.App.-Fort
Worth 2005), no pet.
recover the bonus because there was a condition precedent that the contract and
the court said must be met.
Where there is a condition that must be met, the court's job is to enforce
the contract as written, not convert it from what it says to what the worker
wants it to say. The condition that Sellers must be employed for five years before
becoming eligible for the long-term incentive does not change because Cetco
and Sellers did not explicitly address the circumstances of his termination.
Sellers says that Cetco owes him six months of premiums to cover his
continued health insurance through the Consolidated Omnibus Budget
Reconciliation Act. It requires companies to supply the opportunity for the
worker to continue group-health insurance for six months after they leave. If a
worker chooses to keep coverage, he pays the premiums. Sellers's contract says
that Cetco will pay his premiums for six months only if he signs a release of all
claims in a form acceptable to Cetco. It sent Sellers a release, and he refused to
sign it. Cetco furnished the required coverage, and it offered to pay the premiums
as consideration for the release. Sellers rejected that offer.
Sellers met the condition for neither the incentive plan nor COBRA offer.
This case does not call for sympathy. Sellers is a smart executive who understood
his contract and did not negotiate an exception for termination without cause.
David M. Sellers will take nothing from Cetco Energy Services Company, LLC.
Signed on August 3,
at Houston, Texas.
=- ~ .\~~.....,,~~~- .....
Lynn N. Hughes
United States DistrictJudge
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