Opinion
Civil Action 03-1702.
September 6, 2005
MEMORANDUM ORDER
Plaintiff, PFPC Worldwide, Inc. ("PFPC"), filed a two (2) count complaint seeking damages for the alleged breach of contract by Defendant, Peter Lemay ("Lemay"). Count II was dismissed by the Court. Lemay has filed a motion for summary judgment, and PFPC has filed a motion for judgment on the pleadings.
On or about May 26, 2000, PFPC and Lemay entered into an employment agreement ("Employment Agreement") outlining the terms and conditions of their employment relationship from May 26, 2000, until the third anniversary of the closing date of the merger of Automated Business Development Corporation into a wholly owned subsidiary of PFPC. Complaint ¶¶ 7 9; Exhibit A. The closing date of the merger was May 31, 2000, so the Employment Agreement was to terminate on May 31, 2003. Complaint ¶ 9. Under paragraph 14 of the Employment Agreement, PFPC was entitled to liquidated damages under certain circumstances. Paragraph 14, in relevant part, states:
In the event that, during the Term, either (A) [Lemay] voluntarily resigns his employment with PFPC (other than because of his death or Disability or for Good Reason) or (B) [Lemay's] employment with PFPC is terminated for Cause, he shall pay to PFPC the sum of $800,000.See, Exhibit A, ¶ 14.
PFPC alleges that in or about April of 2003, Lemay wanted to terminate his employment, and the parties entered into a Separation Agreement. Complaint ¶ 10. PFPC further alleges that in consideration for Lemay's obligations under the Separation Agreement, PFPC agreed to forgo its claim for liquidated damages under the Employment Agreement. Complaint ¶ 11. Lemay agreed not to file, or permit to be filed in his name, any lawsuit against PFPC, its officers, directors, employees and shareholders, "based upon any act or event which occurred on or before the effective date of this Agreement." Complaint ¶ 12, Exhibit B, ¶ 23(b). PFPC also agreed to pay Lemay $208,000, and to continue contribution for his medical coverage for up to fifty-two (52) weeks. Complaint ¶ 14. If Lemay breached the Separation Agreement, however, he would be obligated to return to PFPC all amounts provided to him under the agreement except payments he received for unused vacation. Complaint ¶ 13, Exhibit B, ¶ 19.
On or about October 3, 2003, Lemay became a party to and a plaintiff in an action captioned Andolaro, et al. V. PFPC Worldwide, Inc., et al., Civil Action No. 20336-NC, in the Court of Chancery in the State of Delaware, New Castle County. Complaint ¶ 16. PFPC contends that this was a breach of the Separation Agreement entitling it to a return of all sums, excluding vacation payment, provided to him thereunder. Complaint ¶ 21.
Further, paragraph 19 of the Separation Agreement specifically sets forth PFPC's remedies for breach:
You agree that if you breach any of your obligations under this Agreement, including the agreement not to sue . . . you shall return any and all amounts which have been provided to you under this Agreement, excluding the vacation payment, and PFPC will make no further payments to you under this Agreement. You further agree that PFPC may pursue any other relief to which it is or may be entitled to under this Agreement or applicable law, as a result of your breach.See Exhibit B, ¶ 19.
Count I — Breach of Covenant not to Sue
PFPC contends that the Separation Agreement includes a general release and covenant not to sue that is clear and unambiguous. PFPC argues that, in exchange for valuable consideration, Lemay signed a general release of PFPC from "all liability upon claims of any nature whatsoever . . . based on any act or event which occurred on or before the date on which the Agreement is signed or becomes effective, whether known or unknown . . ." See Exhibit B, ¶ 23(a)9 Emphasis added). Therefore, Lemay's filing of a lawsuit against PFPC amounts to a breach of the Separation Agreement.
Lemay, however, argues that the covenant not to sue provision of the Separation Agreement does not include a promise not to sue for minority shareholder relief and was not within the contemplation of the parties at the time the Separation Agreement was executed. Lemay contends that, in construing the release and covenant not to sue, the Court must consider the intent of the parties in entering the Agreement by examining: (1) the language of the release; and (2) the circumstances surrounding the execution of the release. In so doing, Lemay argues that the Court will find that the Separation Agreement dealt with rights between he and PFPC in termination the employment relationship, and in the terms and context of the covenant not to sue provision there was no promise not to sue for minority shareholder relief.
Lemay contends that extrinsic evidence is therefore admissible to determine what the intentions of the parties were in entering the release and covenant not to sue. This is true, however, only if the intent of the parties can not be determined from the face of the agreement.
Under Pennsylvania law, the meaning of an unambiguous written instrument presents a question of law for resolution by the court. Community College of Beaver County v. Community College of Beaver County, Soc. of the Faculty, 739 A.2d 133 (1977). When interpreting a contract, the court's paramount goal is to ascertain and give effect to the intent of the parties as reasonably manifested by the language of their written agreement. Toombs NJ Inc. v. Aetna Casualty Surety Co., 591 A.2d 304, 307 (Pa.Super. 1991); Greene v. Oliver Realty, Inc., 363 Pa.Super. 534, 543, 526 A.2d 1192, 1194, allocatur denied, 517 Pa. 607, 536 A.2d 1331 (1987). Where the language of an agreement is clear and unambiguous, the focus of the court's interpretation must be upon the terms as "manifestly expressed, rather than as, perhaps, silently intended." See Steuart v. McChesney, 444 A.2d 659, 661 (Pa. 1982). Moreover, courts are not to assume that a contract's language was chosen carelessly or that the parties were ignorant of the meaning of the language they utilized. Steuart v. McChesney, 444 A.2d at 662.
Further, Pennsylvania courts have traditionally determined the effect of a release using the ordinary meaning of its language and interpreted a release as covering "only such matters as can fairly be said to have been within the contemplation of the parties when the release was given." Vaughn v. Didizian, 648 A.2d 38, 40 (Pa.Super. 1994) (citations omitted). Moreover, releases are strictly construed so as not to bar the enforcement of a claim which had not accrued at the date of the execution of the release. Restifo v. McDonald, 230 A.2d 199 (Pa. 1967); Henry Shenk Co. v. City of Erie, 43 A.2d 99 (Pa. 1945); Zurich General Acc. Liab. Ins. Co. v. Klein, 121 A.2d 893 (Pa.Super. 1956).
Therefore, under Pennsylvania law, releases must be strictly construed "so as to avoid the ever present possibility" of overreaching. Restifo v. McDonald, 230 A.2d at 201. This does not mean, however, that parties are precluded from contracting for the release of claims which have not accrued, "for `[i]t is well settled that where the terms of a release and the facts and circumstances existing at the time of its execution indicate the parties had in mind a general settlement of accounts, the release will be given effect according to its terms.'" Id. at 202 (quoting Brill's Estate, 12 A.2d 50, 52 (Pa. 1940)); see also Buttermore v. Aliquippa Hospital, 561 A.2d 733, 735 (Pa. 1989) ("Parties with possible claims may settle their differences upon such terms as are suitable to them.").
In interpreting a release, a court must be mindful that Pennsylvania's "general rule . . . is that the intention of the parties must govern, but this intention must be gathered from the language of the release." Three Rivers Motors Co. v. Ford Motor Co., 522 F.2d 885, 892 (3d Cir. 1975). Accordingly, "the effect of a release is to be determined by the ordinary meaning of its language." Republic Ins. Co. v. Davis Systems of Pittsburgh South, Inc., 670 A.2d 614, 615 (Pa. 1995). See also Estate of Bodnar, 372 A.2d 746 (Pa. 1977).
However improvident the release may be or subsequently prove to be for either party, their agreement, absent fraud, accident or mutual mistake, is the law of their case. Taylor v. Solberg, 566 Pa. 150, 155-156 (Pa. 2001), citing Buttermore v. Aliquippa Hospital, 561 A.2d at 735. If such a release can be nullified or circumvented, then every written release and every written agreement of any kind, no matter how clear and pertinent, can be set aside whenever one of the parties changes its mind or the injured party receives an inadequate settlement. Id.
Lemay's argument that the release encompasses only employment claims is without merit. The plain language of the release is clear:
Waiver and Release. In exchange for the payments and benefits offered by PFPC, you (Lemay) hereby:
(a) Fully release and forever discharge PFPC, and each of its officers, directors, employees and shareholders, from all liability upon claims of any nature whatsoever, including claims of negligence, breach of contract, violation of federal, state or local laws which prohibit discrimination on the basis of race, color, national origin, religion, sex, age, veteran status, disability or retaliation, the Age Discrimination in Employment Act of 1967, as amended, and the laws enforced by any other federal, state or local agencies, including claims under the Massachusetts Fair Employment Practices Act, as amended, and including further claims of any other nature whatsoever based upon any act or event which occurred on or before the date on which the Agreement is signed and becomes effective, whether known or unknown, which you now have or could claim to have. . . .
(b) Agee that you will not file, or permit to be filed in your name or on your behalf, any lawsuit in court against any of the persons or entities released in this paragraph (other than for breach of this Agreement or to challenge this waiver and release under the Age Discrimination in Employment Act), based upon any act or event which occurred on or before the effective date, of this Agreement.See Exhibit B, ¶ 23. Obviously, based upon the clear and unambiguous language of the release, the parties contemplated much more that the release of employment claims.
In concluding that an exculpatory clause in a lease was sufficiently precise to release a landlord from negligent acts, the Pennsylvania Supreme Court, noted "the terms are emphatic — the word `all' needs no definition; it includes everything, and excludes nothing. There is no more comprehensive word in the language, and as used here it is obviously broad enough to cover liability for negligence. If it had been the intention of the parties to exclude negligent acts they would have so written in the agreement. This paragraph of the lease is clear and unambiguous. No rules of construction are required to ascertain the intention of the parties." Cannon v. Bresch, 160 A. 595, 596 (Pa. 1932); see also Topp Copy Prods. v. Singletary, 626 A.2d 98, 100 (Pa. 1993). Similarly here, the language of the release and covenant is emphatic, and the terms need no definition. The parties intent was to cover all claims that had accrued at execution of the Separation Agreement.
Further, Lemay's contention that it was his understanding that the waiver and release in the Separation Agreement covered only his status as an employee with PFPC is unconvincing. In February of 2003, Lemay also signed a release that was very specific to claims related to shares of PFPC common stock and/or options owned by or issued to him. See Appendix to Plaintiff's Opposition to Summary Judgment, Lemay Deposition II — Exhibit 8. Approximately one (1) month later, Lemay signed the Separation Agreement which included a very general release and waiver of claims. Lemay was therefore aware of the function of a release and waiver, as well as the differences between a specific and general release. Clearly, Lemay was aware of the consequence of signing a general release, and the Court can find no fraud or mutual mistake in the execution of the Separation Agreement.
Accordingly, Lemay's motion for summary judgment must be denied, and PFPC's motion for judgment on the pleadings regarding liability on the breach of contract claim (Count I) will be granted. An appropriate order follows.
ORDER OF COURT
AND NOW, upon consideration of PFPC Worldwide, Inc.'s Motion for Judgment on the Pleadings on the Issue of Liability (Document No. 21), and upon consideration of Peter Lemay's Motion for Summary Judgment (Document No. 30), the responses, briefs and appendices filed therewith, the arguments in open court, and in accordance with the accompanying memorandum,
IT IS HEREBY ORDERED that Lemay's Motion for Summary Judgment is DENIED, and PFPC Worldwide, Inc.'s Motion for Judgment on the Pleadings on the Issue of Liability is GRANTED.