AM General LLC v. James A. Armour
46 N.E.3d 436
| Ind. | 2015Background
- James Armour's employment agreement with AM General promised a long-term incentive plan (LTIP) payment to be paid when other 2011 bonuses were paid (around Jan 20, 2012).
- Armour retired Jan 2, 2012; he did not receive the lump-sum LTIP payment on Jan 20, 2012.
- AM General issued three installment checks in 2012 (March, May, August), which Armour accepted, then tendered a subordinate promissory note in December 2012 for the remaining balance.
- The Note deferred full payment until 2015, was unsecured, subordinated to other debts, restrictively transferable, and expressly recited that acceptance would satisfy AM General’s LTIP obligations.
- Armour rejected the Note, sued for breach; trial court granted Armour summary judgment and awarded prejudgment interest from Jan 20, 2012; Court of Appeals reversed in part; Indiana Supreme Court granted transfer.
Issues
| Issue | Armour's Argument | AM General's Argument | Held |
|---|---|---|---|
| Whether the word “pay” in the Employment Agreement required cash or cash equivalent | “Pay” has its plain meaning: discharge of obligation in money or equivalent; note is not payment | Contract did not specify form of payment; extrinsic evidence and contemporaneous Redemption Agreement permit payment by subordinated note | Held: “Pay” requires cash or cash equivalent; Note is not cash equivalent; AM General breached |
| Whether the subordinated promissory note constituted a cash equivalent | Note is a conditional promise to pay, unsecured, subordinated, delayed — not equivalent to cash | The Note could be an equivalent; affidavit raises factual dispute precluding summary judgment | Held: Note is not cash equivalent as a matter of law; summary judgment proper |
| Whether Armour’s acceptance of three installment checks or alleged oral modification waived or modified the payment date | Acceptance of checks did not waive right to lump sum; contract required written modification and no consideration supported oral modification | AM General contends Armour agreed orally to installments and ratified later payments, so interest start date should be Dec 31, 2012 | Held: Oral modification invalid for lack of consideration and written-modification clause; no waiver; prejudgment interest starts Jan 20, 2012 |
| Whether a self-serving affidavit created a genuine issue of material fact to defeat summary judgment | Affidavit did not create a factual dispute on what “pay” means or the Note’s materially undisputed terms | Affidavit of HR VP showing form of payment unspecified creates fact issue | Held: Affidavit raised only a legal issue; undisputed Note terms mean no genuine factual dispute |
Key Cases Cited
- Ryan v. Ryan, 972 N.E.2d 359 (Ind. 2012) (plain-meaning rule for contract terms)
- Indiana Restorative Dentistry, P.C. v. Laven Ins. Agency, Inc., 27 N.E.3d 260 (Ind. 2015) (standard of review for summary judgment)
- Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (when affidavits create genuine factual disputes at summary judgment)
- Egbert v. Egbert, 132 N.E.2d 910 (Ind. 1956) (payment defined as discharge in money or equivalent)
- Key Markets, Inc. v. First Federal Sav. Bank of Indiana, 559 N.E.2d 600 (Ind. 1990) (contract construction and unambiguous terms)
- Sees v. Bank One, Indiana, N.A., 839 N.E.2d 154 (Ind. 2005) (written-modification clauses can be orally modified but require contract elements)