Acklie v. Greater Omaha Packing Co.
944 N.W.2d 297
Neb.2020Background
- Acklie worked as Greater Omaha’s corporate controller from 1986; in 1989 the parties executed a deferred compensation agreement under which the company would establish a general ledger account and (at the board’s discretion) fund deferred compensation for senior managers.
- Paragraph 6 of the agreement provided 100% vesting upon the earlier of 10 consecutive years of service or attaining age 60 (subject to a not‑to‑compete condition); paragraph 4 stated contributions and whether to make them “shall be solely the decision of [Greater Omaha].”
- Acklie was terminated in 1994 and turned 60 in 2006; in 2011 he demanded payment asserting his rights had vested at age 60 and payment was due after age 61; Greater Omaha refused.
- The district court denied Greater Omaha’s dismissal motion, later granted Acklie summary judgment on liability (finding vesting), but held damages were triable; the court also treated paragraph 11 (giving the company sole authority to interpret/administer and value the account) as an ambiguous factual issue for the jury.
- At trial the jury returned a verdict for Greater Omaha on damages; on appeal the Nebraska Supreme Court considered whether the agreement was enforceable given the company’s reserved discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held | |
|---|---|---|---|---|
| Whether paragraph 11 is ambiguous and admissible for extrinsic evidence | Acklie: paragraph 11 is not ambiguous; vesting was already resolved; extrinsic evidence should not undercut vesting | Greater Omaha: paragraph 11 grants binding, conclusive administrative authority, so its meaning is for the jury with extrinsic evidence | Court: paragraph 11 is unambiguous in granting company sole authority; extrinsic evidence not required to interpret it | |
| Whether the agreement created an enforceable contract | Acklie: the contract vested his right at age 60 and is enforceable; implied good faith saves any discretion | Acklie argued the duty of good faith prevents illusory result | Greater Omaha: the agreement left funding and payment to its sole discretion, so no enforceable promise existed | Court: agreement is unenforceable—illusory/indefinite because company retained sole discretion to fund and pay, lacking mutuality |
| Whether the covenant of good faith/fair dealing or the not‑to‑compete clause rescues enforceability | Acklie: implied covenant or the covenant not to compete would prevent company from exercising discretion to render the promise illusory | Greater Omaha: exercise of express contractual discretion is not bad faith | Court: implied covenant cannot create enforceability where no binding contract exists; the not‑to‑compete was itself unenforceable and does not save the agreement | |
| Consequence of finding the agreement unenforceable for other trial rulings | Acklie: prior liability/vesting rulings and jury instructions were erroneous if agreement is ambiguous or enforceable | Greater Omaha: if agreement leaves payment optional, Acklie has no recovery regardless of earlier rulings | Court: because agreement is unenforceable, Acklie cannot recover and appellate challenges to other rulings need not be reached; judgment affirmed |
Key Cases Cited
- Johnson Lakes Dev. v. Central Neb. Pub. Power, 254 Neb. 418 (1998) (principles on contract construction and ambiguity)
- City of Sidney v. Municipal Energy Agency of Neb., 301 Neb. 147 (2018) (contract ambiguity defined objectively; interpretation rules)
- De Los Santos v. Great Western Sugar Co., 217 Neb. 282 (1984) (holding contract void for lack of mutuality where promisor retained effective right to terminate)
- Davis v. Gen. Foods Corp., 21 F. Supp. 445 (S.D.N.Y. 1937) (promisor’s reserved unlimited discretion rendered promise illusory and unenforceable)
- Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306 (6th Cir. 2000) (discussing illusory promises and enforceability)