AM General, LLC v. James A. Armour
27 N.E.3d 817
Ind. Ct. App.2015Background
- James A. Armour was AM General’s President/CEO and had a written Employment Agreement (Nov. 14, 2007) that required AM General to "pay" salary, an annual cash bonus, and LTIP payments per Schedule A.
- LTIP for the 2011 fiscal year was due "at the time" 2011 bonuses were paid (around Jan. 20, 2012); Armour received his bonus then but did not receive the full LTIP amount.
- AM General paid about 61.5% of the LTIP in three cash checks during 2012 (Mar, May, Aug); a remaining balance remained unpaid.
- On Dec. 14, 2012 AM General tendered a promissory Note stating it satisfied the remaining LTIP obligation, but the Note was unsecured, subordinated to bank debt, not payable until Dec. 14, 2015, and contained transfer restrictions; Armour refused the Note and returned it.
- Armour sued; trial court granted summary judgment for Armour holding AM General breached by not paying the LTIP in cash and the Note was not a cash equivalent; appeal followed.
Issues
| Issue | Armour's Argument | AM General's Argument | Held |
|---|---|---|---|
| Whether AM General breached the Employment Agreement by failing to "pay" the LTIP in cash when bonuses were paid | The contract required payment (salary/bonus in cash); tendering a promissory note does not constitute payment | The contract did not specify the form of LTIP payment; the Note could be an acceptable substitute and raises factual issues | Majority: Summary judgment was improperly entered for Armour because AM General designated an affidavit creating a factual dispute about whether the Note could satisfy the payment obligation; case reversed and remanded for trial |
| Whether summary judgment was appropriate given AM General’s designated evidence | Armour: No genuine issue of material fact — the Note is not payment as a matter of law | AM General: Affidavit from HR VP and documentary evidence create a genuine issue of material fact about parties’ intent and whether note is equivalent to cash | Majority: Affidavit raised a factual dispute under Indiana summary-judgment standards, so Armour was improperly granted summary judgment; dissent would affirm, treating promissory note as not payment as a matter of law |
Key Cases Cited
- Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (summary-judgment standard and burden-shifting; courts construe summaries to protect a party’s day in court)
- Merchants Nat’l Bank & Trust Co. v. Winston, 159 N.E.2d 296 (Ind. Ct. App. 1959) (payment is discharge in money or its equivalent; mere promise to pay is generally not payment)
- The Kimball, 70 U.S. 37 (U.S. 1865) (statement that a mere promise to pay is not effective payment)