Bilow v. Preco, Inc.

966 P.2d 23, 132 Idaho 23, 1998 Ida. LEXIS 117
CourtIdaho Supreme Court
DecidedSeptember 8, 1998
Docket23737
StatusPublished
Cited by21 cases

This text of 966 P.2d 23 (Bilow v. Preco, Inc.) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bilow v. Preco, Inc., 966 P.2d 23, 132 Idaho 23, 1998 Ida. LEXIS 117 (Idaho 1998).

Opinion

SCHROEDER, Justice.

This is an appeal from the district court’s grant of summary judgment in favor of Robert Bilow (Bilow) against Preco, Inc. (Preco). The district court held that sums of deferred incentive compensation payable to Bilow pursuant to an employment contract were (1) “wages” pursuant to section 45-601(4) of the Idaho Code (I.C.), and (2) the Employment Retirement Income Security Act did not preempt Enow’s claim of treble damages. Bilow has cross-appealed the district court’s denial of attorney fees.

I.

BACKGROUND AND PRIOR PROCEEDINGS

In 1983 Bilow became the president of Santa Clara Plastics, a division of Preco. On August 11,1988, he executed an employment agreement with Preco to take effect on December 31, 1988. Under the agreement Bi-low received base compensation of $150,000 per year, paid weekly, and “incentive compensation” 1 of 6.25% of Preco’s monthly “pre-tax profit” as defined in the agreement. Preco paid out 20% of the 6.25% each month (or 1.25% of Preco’s monthly “pre-tax profit”) as a “current incentive compensation payment” for that month. The remaining 80% (or 5% of Preco’s “pre-tax profit”) was allocated to a deferral account. The amount *26 allocated to the deferral account was to be paid to Bilow over a rolling four-year period, with l/48th of the account balance being paid each month, beginning in January of 1990. 2 The purpose of the incentive compensation plan was to average Bilow’s income over a four-year period.

Under the 1988 agreement, if Bilow had died or voluntarily terminated his employment, he would have forfeited the amount allocated to the deferral account. If Preco terminated Bilow’s employment at any time in 1989, he was to receive a cash settlement equal to 150% of the balance of the deferral account, adjusted to present value at a 6% discount rate. If Preco terminated Bilow’s employment on or after January 1, 1990, he was to receive a cash settlement equal to the balance of the deferral account calculated as of the date of termination and adjusted using the same discount factor. If Bilow were disabled, he was to receive 50% of the balance of the deferral account (later amended to 100%) payable monthly during the four-year deferral term.

On June 29, 1990, the parties executed an agreement entitled “Amended and Restated Employment Agreement.” The relevant changes to the 1988 agreement were: (1) Bilow would forfeit the accrued amount in the deferral account if he resigned before July 1, 1995, but if he terminated his employment with Preco on or after that date he would be entitled to the full deferral account balance, paid over as if his employment had continued; (2) if Bilow died, regardless of the date, his estate would receive the amount allocated to the deferral account, paid over four years as if his employment had continued; and (3) Preco agreed not to terminate Bilow’s employment before July 1, 1995, except for “extreme misconduct,” but if Preco terminated Bilow’s employment at any time, he was entitled to a cash settlement equal to the balance of the deferral account, calculated as of the date of termination and adjusted to present value at a 6% discount rate.

For example, in the event that Bilow has been an employee of Preco pursuant to this Agreement through the month of January of 1990, Bilow shall be paid as incentive compensation for the month of January 1990 any positive total of the following positive and/or negative amounts: (a) 1.25% of the January 1990 Preco “pre-tax profit,” (b) l/48th of 5% of the 1989 Preco “pre-tax profit” from the Bilow "deferral account,” (c) l/48th of 5% of the 1988 Preco "pre-tax profit” from the Bilow "deferral account,” (d) l/48th of 5% of the 1987 Preco "pre-tax profit” from the Bilow "deferral account,” and (e) l/48th of 5% of the 1986 Preco "pre-tax profit" from the Bilow “deferral account.”

Early in 1995 the parties agreed that Bi-low would leave his employment with Preco and negotiated an agreement that his resignation would be treated as occurring on July 1, 1995, which meant that he would be entitled to receive the balance accrued in the deferral account as of July 1, 1995, payable ninety days thereafter. He had the option to receive the account balance in a discounted lump sum or paid out as if his employment continued. Bilow informed Preco that he wished to receive the account balance in a lump sum.

On July 27, 1995, Preco advised Bilow that the account balance as of July 1, 1995, was $1,644,295 and stated that this amount would be paid, with some possible adjustments, on September 29, 1995. Bilow disagreed with Preco’s calculation of the account balance, and the parties began an exchange of documents in an attempt to determine the proper amount of payout. On September 29, 1995, Preco informed Bilow that it would only pay him if he executed a release of all present and future claims he had against Preco. Bi-low refused. Preco made no payment on September 29,1995.

In December of 1995, Bilow requested that Preco pay him $1.5 million and that the parties then try to amicably resolve the dispute over a possible remainder due. Preco refused this offer by way of a letter in January 1996 and stated that the July 1995 figure which they had quoted was incorrect. Preco asserted that the properly calculated deferral account balance was $1,127,449 and stated that nothing would be paid to Bilow until the parties came to an agreement regarding the entire amount owed. Bilow filed suit in February 1996, seeking $2,334,778 in damages, trebled to $7,004,334, pursuant to I.C. § 45- *27 617(4), plus interest and attorney fees. On August 19, 1996, Preco paid Bilow $1,733,-068.71, without requiring or obtaining any form of release.

Bilow moved for partial summary judgment, asserting that the amount due and owing him was “wages” as that term is defined in I.C. § 45-601(4), and that he was entitled to treble damages under I.C. § 45-617(4). Preco filed a cross motion for partial summary judgment, arguing that the Employee Retirement Income Security Act of 1974 (ERISA) preempted Show's state law claim for treble damages. Preco also contended that Bilow’s claim was not one for wages. The district court granted summary judgment in favor of Bilow. Preco appeals. Bilow cross-appeals the denial of attorney fees.

II.

STANDARD OF REVIEW

This Court applies the same standard of review as that used by the district court when originally ruling on a motion for summary judgment. Avila v. Wahlquist, 126 Idaho 745, 747, 890 P.2d 331, 333 (1995); Farm Credit Bank of Spokane v. Stevenson, 125 Idaho 270, 272, 869 P.2d 1365, 1367 (1994). The Court must liberally construe the facts in the existing record in favor of the nonmoving party and draw all reasonable inferences from the record in favor of the nonmoving party. Avila, 126 Idaho at 747, 890 P.2d at 333; Bonz v. Sudweeks, 119 Idaho 539, 541, 808 P.2d 876, 878 (1991).

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Bluebook (online)
966 P.2d 23, 132 Idaho 23, 1998 Ida. LEXIS 117, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bilow-v-preco-inc-idaho-1998.