Rosenberger v. United Community Bancshares, Inc
73 N.E.3d 642
| Ill. App. Ct. | 2017Background
- Rosenberger was hired as CenTrust’s Chief Lending Officer under a 3-year employment agreement that promised two years’ base salary as severance if terminated without "cause." The agreement conditioned payments on compliance with FDIA § 1828(k).
- CenTrust (a UCB subsidiary) was subject to a Consent Order and designated "troubled" after OCC review; golden parachute restrictions (12 U.S.C. § 1828(k) and 12 C.F.R. pt. 359) apply to institutions in troubled condition.
- The board’s executive committee issued a Performance Correction Plan (Oct. 15, 2013) requiring weekly progress reports; Rosenberger disputed the plan, offered to cooperate on report format, and wrote a rebuttal on Oct. 30, 2013.
- UCB terminated Rosenberger on Nov. 5, 2013, citing "for cause" in a letter that did not specify reasons; Rosenberger sued for breach of contract seeking the severance payment.
- UCB moved for summary judgment asserting legal impossibility because the severance is a prohibited golden parachute absent FDIC/OCC approval and alternatively that Rosenberger was fired for cause. The trial court granted summary judgment based on legal impossibility; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UCB can invoke legal impossibility under FDIA § 1828(k) to defeat Rosenberger’s contract claim | Rosenberger: he qualifies for the "white knight" exception and either he or UCB could have sought FDIC/OCC approval, so performance was not objectively impossible | UCB: severance is a golden parachute prohibited for troubled institutions absent regulator approval, and no approval was sought, so performance is legally impossible | Reversed trial court: genuine issue of material fact exists whether UCB could have certified and sought regulatory approval (so impossibility not established on summary judgment) |
| Whether Rosenberger was terminated for "cause" under the employment agreement | Rosenberger: he complied or agreed to cooperate with reporting; dispute over reasonableness and whether he failed to follow instructions creates fact issues | UCB: Rosenberger rejected the Performance Correction Plan and failed to provide weekly reports, so termination was for cause precluding severance | Court: genuine issue of material fact exists whether Rosenberger failed to follow reasonable instructions; summary judgment inappropriate on "cause" defense |
| Whether UCB’s failure to seek FDIC/OCC approval breaches covenant of good faith and fair dealing | Rosenberger: UCB had an implied duty to seek necessary regulator approval to permit payment | UCB: no contractual obligation to obtain approval; reliance on impossibility defense | Court: left open—not decided on merits; factual dispute whether UCB could have obtained approval prevents summary judgment for UCB |
| Whether UCB’s cross-appeal may seek alternative grounds to affirm summary judgment | UCB: sought to affirm on "cause" ground | Rosenberger: trial court already granted UCB all relief sought; appellee cannot appeal | Held: cross-appeal dismissed (party who obtained judgment may not cross-appeal), though appellate court considered appellee arguments in support of judgment |
Key Cases Cited
- Material Service Corp. v. Department of Revenue, 98 Ill. 2d 382 (procedural rule that prevailing party cannot appeal)
- Michigan Avenue Nat’l Bank v. State Farm Ins. Cos., 83 Ill. App. 3d 507 (party asserting impossibility bears the burden)
- Mitchell v. Jewel Food Stores, 142 Ill. 2d 152 (whether misconduct justifying termination is a question for the trier of fact)
- Foster v. Springfield Clinic, 88 Ill. App. 3d 459 (burden on employer to prove employee guilty of conduct justifying termination)
- Rohr v. Reliance Bank, 826 F.3d 1046 (summary judgment appropriate where employee fails to rebut bank’s evidence that certification for regulatory exception could not be made)