Opinion
No. 05-16-00048-CV
05-16-2017
CELANESE CORPORATION, Appellant v. PRESTON MCGLORY, Appellee
On Appeal from the 193rd Judicial District Court Dallas County, Texas
Trial Court Cause No. DC-14-06023-L
MEMORANDUM OPINION
Before Justices Lang, Lang-Miers, and Myers
Opinion by Justice Myers
Celanese Corporation appeals the trial court's judgment awarding Preston McGlory $137,120 plus interest and attorney's fees on his claim for breach of contract. Celanese brings three issues on appeal contending (1) the trial court erred by denying its motion for summary judgment and granting McGlory's motion for summary judgment; (2) the trial court erred by striking certain parts of Celanese's summary judgment evidence; and (3) genuine issues of material fact preclude the trial court's decision to grant McGlory's motion for summary judgment. We reverse the trial court's judgment and render judgment that McGlory take nothing.
BACKGROUND
In March 2008, McGlory began his employment with Celanese as its Director of Tax, International & Planning. In October 2009, 2010, and 2011, Celanese awarded McGlory long-term incentive awards (LTI awards) of restricted stock units (RSUs). The agreements provided that after McGlory's interest in the RSUs vested, they would be converted to shares of Celanese stock. If McGlory was terminated without cause or due to his death or disability, then a pro-rated number of RSUs would vest according to formulas set forth in the award agreements. The agreements provided that if McGlory was terminated "for any other reason," i.e., a reason other than without cause, death, or disability, "the Award shall be forfeited and cancelled without consideration." The agreements' definition of "cause" did not include poor job performance, but "cause" did include violations of Celanese's Business Conduct Policy.
In January 2012, Celanese decided to terminate McGlory effective March 2 due to his lack of leadership and because of two significant errors he made in tax issues in the preceding year. On February 15, the Vice President of Tax and McGlory's supervisor, John Howard, and an officer in the Human Resources Department, Kristina Maxwell, informed McGlory of his pending termination. They presented him with an unsigned severance agreement providing he would be paid severance pay of twenty-six weeks of his salary plus transition pay of $60,000. The severance agreement also stated Celanese would "fulfill its obligations to Employee pursuant to the terms of the signed equity award agreements."
Unless otherwise noted, all dates are from the year 2012.
The next day, February 16, McGlory asked Maxwell to double the amount of the severance pay or the transition pay. McGlory also told Maxwell the company's confidentiality policy may have been violated because he had been told by someone outside the company about his pending termination. Celanese decided to launch an investigation into this breach of confidentiality.
On February 17, McGlory met with Maxwell and with Joseph Fox, Celanese's Vice President of HR Law and Employment Law. They told McGlory his request for additional compensation was denied. They also insisted that McGlory tell them the name of the employee who disclosed McGlory's termination. They told him that if he did not cooperate with the investigation, he would be in violation of the Business Conduct Policy and he would not receive the severance benefits or the RSUs.
On February 18, McGlory signed the Severance Agreement and returned it to Celanese; Celanese had not yet signed the Severance Agreement. McGlory told Fox and Maxwell that Ronnie Berry, Celanese's new Vice President of Tax and McGlory's new supervisor, was the Celanese employee who had disclosed McGlory's pending termination, and he said that Shelly Lamb was the person outside Celanese who told him about it. McGlory said he did not have contact information for Lamb. He said he thought she worked in sales, but he did not know where she worked, and he was not sure how she spelled "Shelly."
Fox and Maxwell's investigation uncovered evidence that McGlory's story that Berry told Lamb about McGlory's pending termination and McGlory's claim of lack of knowledge about Lamb was a fabrication by McGlory. In fact, Lamb was McGlory's ex-girlfriend whom he had dated for over a year and with whom he had broken up in January 2012. Fox and Maxwell searched McGlory's company e-mails and found numerous amorous communications between McGlory and Lamb. Those e-mails included the correct spelling of Lamb's name and showed where she worked. McGlory later admitted that Berry had no reason to know or to have communicated with Lamb and that Lamb did not know of McGlory's termination until McGlory told her about it. Fox and Maxwell tried to communicate with Lamb, but she refused to return their telephone calls.
Celanese's investigation into the breach of confidentiality extended beyond McGlory's termination date. On March 2, McGlory's termination date, the reason for McGlory's termination was listed as "TBD." On March 12, Fox sent McGlory a letter stating McGlory's level of cooperation in the investigation was unacceptable and that the company had concluded McGlory's allegation of a senior leader in the company breaching the company's confidentiality was unfounded. Fox also stated in the letter, "Not cooperating in an investigation and making unfounded allegations of misconduct are violations of the company's Business Conduct Policy. As a result, we have decided to not sign your severance agreement and therefore, we are cancelling it."
McGlory brought suit for breach of contract, promissory estoppel, and unjust enrichment seeking payment for the value of the stocks he alleges he should have received as part of the long-term incentive awards. Both McGlory and Celanese moved for summary judgment. The trial court granted McGlory's motion for summary judgment on his breach-of-contract claim in part and denied Celanese's in part, and the court awarded McGlory damages of $137,120, plus attorney's fees and interest. The court declared that McGlory's alternative claims of promissory estoppel and unjust enrichment were moot, and the court dismissed those claims with prejudice.
McGlory also alleged Celanese breached its contract with him by failing to pay him an annual bonus for 2011. The trial court granted Celanese's motion for summary judgment on McGlory's claims concerning the 2011 annual bonus. The trial court also granted Celanese's motion for summary judgment on McGlory's claim that Celanese breached the 2011 LTI award agreement by not awarding him performance-vesting RSUs for 2011. Celanese asserted the company did not reach the goals necessary for award of performance-vesting RSUs in 2011 and that no employee received performance-vesting RSUs for 2011. McGlory does not appeal the grant of Celanese's motion for summary judgment on these claims.
STANDARD OF REVIEW
The standard for reviewing a traditional summary judgment is well established. See Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985); McAfee, Inc. v. Agilysys, Inc., 316 S.W.3d 820, 825 (Tex. App.—Dallas 2010, no pet.). The movant has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). In deciding whether a disputed material fact issue exists precluding summary judgment, evidence favorable to the nonmovant will be taken as true. Nixon, 690 S.W.2d at 549; In re Estate of Berry, 280 S.W.3d 478, 480 (Tex. App.—Dallas 2009, no pet.). Every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005). We review a summary judgment de novo to determine whether a party's right to prevail is established as a matter of law. Dickey v. Club Corp., 12 S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied).
When, as here, both parties move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law. Guynes v. Galveston Cty., 861 S.W.2d 861, 862 (Tex. 1993); Howard v. INA Cty. Mut. Ins. Co., 933 S.W.2d 212, 216 (Tex. App.—Dallas 1996, writ denied). Neither party can prevail because of the other's failure to discharge its burden. Guynes, 861 S.W.2d at 862; Howard, 933 S.W.2d at 216. When both parties move for summary judgment, we consider all the evidence accompanying both motions in determining whether to grant either party's motion. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). When the trial court grants one motion and denies the other, the reviewing court should determine all questions presented. Id. The reviewing court should render the judgment that the trial court should have rendered. Id. When a trial court's order granting summary judgment does not specify the grounds relied upon, the reviewing court must affirm the summary judgment if any of the summary judgment grounds are meritorious. Id.
CONSTRUCTION OF CONTRACTS
"In construing a contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument." Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). To meet this concern, courts examine and consider the entire contract in an effort to harmonize and give effect to all its provisions without rendering any provision meaningless. Id. If the court can give a contract a definite legal meaning or interpretation, then it is not ambiguous. A contract is ambiguous when its meaning is uncertain and doubtful or it is reasonably susceptible to more than one meaning. Id. Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances present when the contract was entered. Id. A trial court may not grant a motion for summary judgment on an ambiguous contract because the interpretation of an ambiguous contract is a fact issue. Id.
THE LONG-TERM INCENTIVE AWARDS
McGlory received two different types of long-term incentive (LTI) restricted stock unit (RSU) awards: time-vesting RSU awards and performance-vesting RSU awards. Under the LTI award agreements, RSUs that had vested would be converted by Celanese into an equal number of shares of Celanese's stock. McGlory received one set of LTI awards each year for 2009, 2010, and 2011. For the time-vesting RSU awards, thirty percent of the RSUs would vest on October 1 of the first year, thirty percent on October 1 of the second year, and forty percent on October 1 of the third year. For the performance-vesting RSU awards, the RSUs would vest at the end of the third year if the company met certain financial goals. The agreements required Celanese to convert the vested RSU awards to Celanese stock and deliver the shares to McGlory either within thirty days following "the applicable vesting date" (for the 2009 time-vesting RSU award) or "as soon as practicable following the applicable Vesting Date (but in no event later than 2 ½ months after the applicable Vesting Date)" (for the other RSU awards).
The parties' dispute concerns the interpretation of the LTI award agreements' provisions concerning the effect of the employee's termination from employment with Celanese before all the RSUs vested and were converted to Celanese stock. The LTI award agreements provided, "Upon the termination of the Participant's employment by the Company without Cause or due to the Participant's death or Disability, a prorated portion of RSUs will vest in an amount" determined following the formula set forth in the agreements. The agreements stated Celanese "shall deliver" shares of Celanese stock equal to the number of RSUs to the participant either within thirty days of the vesting date, i.e., the participant's termination date, or "as soon as practicable following the Vesting Date (but in no event later than 2 ½ months after the Vesting Date)." The remaining RSUs that did not vest under these provisions would "be forfeited and cancelled without consideration." The agreements also stated that if the employee was terminated for any reason other than without cause or death or disability, "the Award shall be forfeited and cancelled without consideration." The LTI award agreements defined "cause" as including "any material violation of the Company's business conduct policy."
The LTI award agreements used slightly different wording from year to year, and the wording in the time-vesting RSU award agreements varied slightly from the wording in the performance-vesting RSU award agreements. However, the meaning of these and similar phrases, however worded, was the same in all the agreements.
Celanese's business conduct policy required employees to cooperate with investigations and not give false or misleading information to the investigators. The evidence is uncontroverted that McGlory breached Celanese's Business Conduct Policy before his termination took effect on March 2 by providing false and misleading information to the investigators. At the time McGlory's termination took effect on March 2, Celanese had not yet determined whether McGlory's termination would be for cause. It did not make that determination until ten days later on March 12 when it decided his termination was for cause.
McGlory argues he is entitled to judgment as a matter of law because Celanese's decision to terminate him was not based on any of the reasons constituting "cause" in the LTI agreements. Instead, he asserts his termination was because he did not fit the organization's culture and his lack of leadership, and neither of these reasons for termination constituted "cause" under the LTI award agreements. At the time of McGlory's termination on March 2, Celanese had not determined that his termination was "for cause." Therefore, McGlory asserts, his termination was "without Cause" and the prorated RSUs vested on the day of his termination, March 2, and the agreements required Celanese to convert the RSUs into an equal number of shares of Celanese stock.
Celanese argues it is entitled to judgment as a matter of law because McGlory's actions violating Celanese's business conduct policy before his termination on March 2 constituted "Cause" as defined in the LTI award agreements. When McGlory's termination took effect on March 2, the decision of whether McGlory's termination was for cause or without cause remained to be determined. Ten days later, Celanese concluded his termination was for cause. Therefore, Celanese asserts, McGlory's termination was for a reason other than "without Cause" or due to his death or disability, and the RSU awards were "forfeited without consideration."
The LTI award agreements were subject to Celanese's 2009 Global Incentive Plan, which stated that the RSU awards could not be transferred except by will or inheritance. Therefore, the RSUs had no value until they were converted to shares of Celanese's stock. For McGlory to be entitled to summary judgment on his claim for damages, he had to prove Celanese was required by the agreements to convert the vested prorated RSU awards into stock. For Celanese to have been required to convert the RSU awards into stock, McGlory's termination had to have taken effect, his termination had to have been without cause, and the conversion had to be within thirty days or "as soon as practicable," which was defined as within two-and-a-half months of the vesting date. If McGlory is correct that on March 2, his termination was without cause and the prorated RSU awards vested on that day, then Celanese was required to convert the RSU awards into its shares within thirty days or "as soon as practicable," i.e., within two-and-a-half months. However, ten days after McGlory's termination, Celanese made a final determination that it had "Cause" as defined in the agreements to terminate McGlory. At the moment Celanese determined the termination was for "Cause," the RSU awards were "forfeited without consideration." Therefore, well before the end of the thirty-day or the "as soon as practicable" period, the RSU awards were forfeited, and McGlory had no RSU awards to be converted into Celanese stock.
Despite the plain language of the awards that "[u]pon the termination of the Participant's employment by the Company without Cause, a prorated number of . . . RSUs . . . shall immediately vest," McGlory asserts the vesting date for the prorated RSUs was not his termination date of March 2, 2012 but was October 1 of each of the three-year periods. This later vesting date does not help because it means the prorated RSUs were not vested on his termination date or on March 12 when Celanese made the determination that McGlory's termination was for cause.
McGlory argues that the contracts do not expressly allow Celanese to change the reasons for his termination after his termination. The record shows Celanese informed McGlory on February 15 that he would be terminated because of job-performance issues, which did not constitute "cause" as defined in the LTI award agreements. On March 1, the day before McGlory's termination, Kristina Maxwell, the "HR Business Partner" at Celanese, instructed Celanese employees to enter the reason for McGlory's termination as "TBD." The common meaning of "TBD" is "to be determined." See https://www.merriam-webster.com/dictionary/TBD (last visited May 16, 2017). Thus, when McGlory's termination was effective, it was neither for cause nor without cause but was "to be determined." That determination was made ten days later when Celanese decided McGlory's termination should be for cause. Thus, on March 12, when Celanese declared McGlory's termination was for cause, there was no change of the reason for McGlory's termination because no final determination of the reason for his termination had been made at the time of McGlory's termination on March 2.
McGlory also argues that the award agreements did not permit "post-separation factors to be considered in determining whether" McGlory performed under the agreements. However, the summary judgment record does not show that Celanese's determination of "cause" for McGlory's termination was based on "post-separation factors." Instead, the evidence shows the termination for cause was due to McGlory's failure to cooperate and his making false and misleading statements during the investigation. All of these "separation factors" occurred before McGlory's termination.
McGlory also asserts that once the prorated RSU awards had vested, they could not be forfeited. We disagree. The agreements provided that if McGlory's employment was terminated for cause, then "the Award shall be forfeited and cancelled without consideration." The agreements defined "Award" as "time-vesting [or performance-vesting] Restricted Stock Units . . . representing the right to receive [a] . . . number of Common Shares upon vesting." Thus the "Award" subject to being forfeited was the RSUs, which included both the unvested RSUs and the RSUs that had vested but had not been converted to stock. Because McGlory's termination was for cause, his RSU awards were forfeited, and Celanese had no obligation to convert the awards into shares of its stock.
We conclude McGlory did not establish his entitlement to summary judgment and that Celanese did establish its entitlement to summary judgment. Therefore, the trial court erred by granting McGlory's motion for summary judgment and denying Celanese's. We sustain Celanese's first issue. Because of our resolution of Celanese's first issue, we need not address its second and third issues.
CONCLUSION
We reverse the trial court's judgment and render judgment that McGlory take nothing on his claims against Celanese.
/Lana Myers/
LANA MYERS
JUSTICE 160048F.P05
JUDGMENT
On Appeal from the 193rd Judicial District Court, Dallas County, Texas
Trial Court Cause No. DC-14-06023-L.
Opinion delivered by Justice Myers. Justices Lang and Lang-Miers participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is REVERSED and judgment is RENDERED that appellee PRESTON MCGLORY take nothing from appellant CELANESE CORPORATION.
It is ORDERED that appellant CELANESE CORPORATION recover its costs of this appeal from appellee PRESTON MCGLORY. Judgment entered this 16th day of May, 2017.