IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY
EILEEN MASTERSON-CARR, ) ) Plaintiff, ) ) v. ) C.A. No. N12C-11-107 MJB ) ANESTHESIA SERVICES, P.A., ) MARK SCHNEIDER, M.D., and ) KEN SILVERSTEIN, M.D., ) ) Defendants. )
Submitted: June 18, 2014 Decided: September 25, 2014
DECISION AFTER TRIAL
Michele D. Allen, Esq., Law Offices of Michele D. Allen, LLC, Attorney for Plaintiff
Laurence V. Cronin, Esq., Smith, Katzenstein & Jenkins LLP, Attorney for Defendant
BRADY, J.
1 I. INTRODUCTION
Eileen Masterson-Carr (“Plaintiff”) filed the instant case against Anesthesia Services
P.A. (“ASPA”), Mark Schneider M.D. (“Schneider”), and Ken Silverstein M.D.
(“Silverstein”) (collectively “Defendants”) on November 13, 2012, alleging the following
claims: (1) ASPA breached her Employment Contract; (2) ASPA breached the implied
covenant of good faith and fair dealing; (3) Plaintiff was defamed by members of ASPA,
including Silverstein and Schneider; (4) ASPA violated the Delaware Wage Payment and
Collection Act by failing to pay Plaintiff her 6.5% bonus for time worked in 2012; (5)
Silverstein and Schneider tortuously interfered with Plaintiff’s Employment Contract; and (6)
ASPA acted in a way justifying promissory estoppel. On March 21, 2013, upon Defendant’s
motion, the Court dismissed Plaintiff’s promissory estoppel claim. Subsequently, on March
18, 2014, Plaintiff stipulated to the dismissal of her claim for breach of the implied covenant
of good faith and fair dealing. Plaintiff also agreed to withdraw her request for punitive
damages.
The parties elected to have a bench trial. 1 Trial began on April 3, 2014 and ended on
April 7, 2014. Following closing arguments, the Court ruled that Plaintiff was entitled to her
6.5% bonus for time worked in 2012 but reserved decision regarding the specific amount to
which Plaintiff is entitled. The trial transcript was produced on May 20, 2014. 2 Post-trial
submissions were received and the matter was submitted to the Court for decision on June 18,
2014.
1 The parties submitted a Joint Exhibit Binder. Exhibits from the Joint Exhibit Binder shall be cited as “Ex.” 2 The transcript of April 3, 2014 will be cited as “T1.” The transcript of April 4, 2014 will be cited as “T2.” The transcript of April 7, 2014 will be cited as “T3.”
2 As explained at the conclusion of trial, the Court will now issue a ruling on the issues
of whether Plaintiff was terminated or resigned and Plaintiff’s entitlement to her 6.5% bonus. 3
The Court finds that Plaintiff was not terminated. As a result, Plaintiff’s claim for Breach of
Contract based on ASPA’s alleged failure to follow proper termination protocol is MOOT.
At trial, Plaintiff suggested that even if the Court were to find that Plaintiff technically
resigned, Plaintiff could still be found to have been “constructive[ly] discharged.” 4 The Court
reserved judgment on the constructive discharge issue until after the Court’s finding of fact on
the issue of whether Plaintiff was discharged or resigned. 5 As the Court now finds that
Plaintiff resigned, the Court will allow the parties additional briefing on the issue of
constructive termination. Because the Court finds that the issue of Plaintiff’s alleged
constructive termination is intertwined with the remaining claims for tortious interference and
defamation, the Court will also reserve decision on those issues until the parties have
submitted additional briefing.
II. BACKGROUND
A. Parties
ASPA is a professional services corporation, organized under the laws of Delaware,
that is involved in the practice of medicine. 6 ASPA is comprised of approximately thirty-one
physicians, some of whom are shareholders, as well as other medical personnel, including
nurses. The company’s Board of Directors (“Board”) is composed of shareholder-members of
3 T3 at 235. 4 T3 at 197. 5 T3 at 234. 6 Ex. 4, Employment Agreement, at 1.
3 ASPA. 7 ASPA’s governance structure initially included a Chief Executive Officer (“CEO”),
Chief Financial Officer (“CFO”), and Chief Clinical Officer (“CCO”). 8 However, in
approximately 2011, ASPA modified its governance structure, changing the executive
positions. 9 The CEO became the Chairman of the Board (“Chairman”), the CCO remained,
the CFO became the Treasurer, and ASPA created a new position, the Chief People Officer
(“CPO”). 10 Like under the former structure, all executive members were elected by the 11 Board.
ASPA’s corporate structure also includes an Executive Committee. 12 The Executive
Committee has the responsibility, on behalf of the Board, “for managing the business and
affairs of [ASPA] between meetings of the Board in order to provide an efficient,
expeditiously assembled forum to investigate, discuss, analyze, oversee and make decisions
regarding day-to-day operations of the Corporation.” 13 Additionally, a critical part of the
Executive Committee’s function is to “make recommendations to the Board with respect to
corporate policies and practices and on all matters requiring Board action.” 14 At all times
relevant to the instant matter, the Executive Committee was comprised of the Chairman,
CCO, CPO, Treasurer, two at-large members, who were elected by the Board, and the
Executive Director, who, as discussed below, was responsible for overseeing ASPA’s
administration. 15
7 Ex. 5, ASPA Bylaws, at 2. 8 Ex. 5, ASPA Bylaws, at 42. 9 Ex. 5, ASPA Bylaws, at 7. 10 Ex. 5, ASPA Bylaws, at 7. 11 Ex.5, ASPA Bylaws, at 7. 12 Ex. 5, ASPA Bylaws, at 5. 13 Ex. 5, ASPA Bylaws, at 5. 14 Ex. 5, ASPA Bylaws, at 7. 15 Ex. 5, ASPA Bylaws, at 7.
4 Dr. Schneider joined ASPA in 1988 and has served as a Board member since 1989. 16
Schneider became CEO (later titled Chairman) in 2010 and was integral to managing
ASPA. 17 Dr. Silverstein currently serves as ASPA’s CCO and, like Schneider, is a
shareholder-Board member. 18 Because he is the CCO, Silverstein also sits on the Executive
Committee.
In 2008, Plaintiff, who was then employed with Blue Cross Blue Shield, was
contacted by ASPA because ASPA was seeking to hire a new Executive Director. 19 Plaintiff
was interviewed by ASPA and ultimately selected to be the Executive Director. 20 As the
Executive Director, Plaintiff was responsible for overseeing the corporation’s business
operation. 21 Under her employment contract, Plaintiff’s primary duties included “overseeing
billing and collection by [ASPA’s] third party billing company, assisting with billing
compliance issues, negotiating managed care contracts, monitoring the performance of
vendors providing services to [ASPA], overseeing [ASPA’s] malpractice and other insurance
carriers, and addressing health and benefit plan administration.” 22
B. Plaintiff’s Employment Contract with ASPA
Because Plaintiff was leaving a position at Blue Cross that she enjoyed and also was
considering competing offers, she negotiated certain aspects of her Employment Contract
with ASPA. 23 Specifically, Plaintiff testified that she negotiated provisions of her
16 T2 at 38-39. Schneider left ASPA for a few years around 1999 to 2001 but subsequently returned to the practice. T2 at 38-39. 17 T2 at 41-44. 18 T2 at 142. 19 T1 at 23-24. 20 T1 at 25. 21 Ex. 4, Employment Agreement, at 1. 22 Ex. 4, Employment Agreement, at 1. 23 T1 at 25.
5 Employment Contract concerning (1) base salary, (2) annual increases to base salary, (3)
bonuses, (4) pension contributions, and (5) paid time off (“PTO”), which could be used for
vacation or for sick days. 24 Plaintiff executed an Employment Contract with ASPA effective
September 29, 2008. 25 Certain provisions of Plaintiff’s Employment Contract are central to
the instant case, including provisions relating to Plaintiff’s entitlement to a bonus, the parties’
ability to terminate the Agreement, and Plaintiff’s entitlement to severance.
i. Bonus
Section 4(c) of Plaintiff’s Employment Contract states that Plaintiff “shall be eligible
for a bonus in an amount equal to six and one-half percent (6 1/2%) of total Compensation . . .
paid to Senior Board Member Anesthesiologists employed by [ASPA] on a full time basis.”26
Section 4(c) provides that the “[b]onus shall be prorated for any partial calendar year at the
termination of this Agreement upon Compensation paid for such calendar year, unless such
termination is for cause by [ASPA].” 27
On September 28, 2011, Schneider, in his capacity as ASPA’s Chief Executive
Officer, agreed to give Plaintiff a “[b]onus increase from 6.5% to 8% with the additional 1.5%
[being] tied to [Plaintiff’s] 2011 Goals.” 28 The parties agree that the additional 1.5% was
intended to be discretionary. 29 The dispute is over whether the original 6.5% was
discretionary or not. According to testimony by Schneider, Plaintiff received her 6.5% bonus
in 2009 and 2010, as well as her bonus in 2011, which presumably included both the 6.5%
24 T1 at 25-26. 25 Ex. 4, Employment Agreement, at 1. 26 Ex. 4, Employment Agreement, at 3. 27 Ex. 4, Employment Agreement, at 3. 28 Ex. 6, 2011 Employment Agreement Amendment. 29 Ex. 30, Masterson-Carr Deposition, at 16.
6 and the additional 1.5%. 30 All parties questioned testified that no goals, whether in 2011 or
otherwise, were ever created pursuant to which Plaintiff’s performance was evaluated for
either bonus.
ii. Termination
Terms relating to termination of Plaintiff’s Employment Contract are within Section 3
of the contract. Section 3(d) permits either party to terminate the Employment Contract
“without stated cause by giving the other party at least ninety (90) days’ advance written
notice of intent to terminate.” 31 Additionally, pursuant to subsection (b) of Section 3, either
party is permitted to terminate the Employment Contract “for cause.” 32 The Agreement
defines “for cause” as including, inter alia, “(i) Breach by a party of any material term of th[e]
Employment Agreement . . . ; [and] (ii) [Plaintiff’s] failure to adhere to any of [ASPA’s]
policies or written directive or instruction . . .” 33
iii. Severance
Pursuant to Section 11(a) of her Employment Contract, Plaintiff “shall also be eligible
to receive severance compensation” in the event of termination of the Employment Contract
“(i) by [ASPA] without cause . . . ; or (ii) by [Plaintiff] with cause (but only if [Plaintiff] has
properly fulfilled all other contractual obligations).” 34
30 T2 at 123-24. Schneider was not precise in his testimony as to the percentage of the 2011 bonus that Plaintiff received. However, he testified that, to the best of his knowledge, Plaintiff had received her “bonus” in 2011. Since Schneider previously spoke about the 2009 and 2010 bonuses simply as Plaintiff’s “bonus” for the respective years, it is reasonable for the Court to infer that Schneider meant “entire bonus” when he testified that Plaintiff received her bonus in 2011. 31 Ex. 5, ASPA Bylaws, at 3. 32 Ex. 5, ASPA Bylaws, at 2. 33 Ex. 5, ASPA Bylaws, at 2. 34 Ex. 4, Employment Agreement, at 7.
7 Section 11(b) explains that, after the first year of Plaintiff’s employment with ASPA,
“a sum equal to ninety (90) days salary shall be payable to [Plaintiff] as severance.” 35 All
parties agree that, pursuant to Section 11, Plaintiff would not be entitled to severance if she (i)
was terminated by ASPA with cause or (ii) resigned from ASPA without cause.
C. Plaintiff’s Departure from ASPA
On April 16, 2012, Plaintiff’s employment with ASPA ended. The parties dispute
whether Plaintiff was terminated with cause by the Executive Committee or whether Plaintiff
voluntarily resigned when she was told that the Executive Committee would recommend her
termination to the Board. Both parties agree, and it is clear from the record, that the
relationship between Plaintiff and ASPA had been eroding for some time before Plaintiff’s
employment ended. Defendants allege that the erosion was caused by Plaintiff’s labor law
violations and other misconduct including gossiping about doctors’ personal lives. 36 Plaintiff
denies any misconduct and attributes the erosion of the relationship to disagreement
concerning the direction that the company was taking and alleged personal animus from Dr.
Schneider and Dr. Silverman. 37
III. STANDARD OF REVIEW
The Court is the finder of fact in a bench trial. 38 The plaintiff must prove each
element of her claim by a preponderance of the evidence, meaning that the Court shall find in
35 Ex. 4, Employment Agreement, at 7. 36 T2 at 90-91, T2 at 126. 37 Plaintiff suggests that this animus originated from an incident in March 2012. Dr. Schneider allegedly altered the attachments to the meeting minutes of the Executive Committee. Plaintiff allegedly reported the alleged incident to nonexecutive committee members, which allegedly angered Schneider and Silverstein. T2 at 45-50. 38 Pencader Associates, LLC v. Synergy Direct Mortg. Inc., 2010 WL 2681862, at *2 (Del. Super. June 30, 2010).
8 favor of the party upon whose side “the greater weight of the evidence is found.” 39 Because
the Court is the finder of fact, it is up to the Court to weigh the credibility of witnesses and
resolve conflicts in witness testimony. 40
IV. TERMINATION CLAIM
A. The Parties’ Testimony at Trial
As stated above, both parties agree that the relationship between ASPA and Plaintiff
had deteriorated before Plaintiff’s employment with ASPA ended on April 16, 2012. Plaintiff
testified that she had a “confrontation” with Dr. Silverstein in late March 2012. 41 Plaintiff
testified that after this confrontation, she texted her husband to tell him that she thought that
she had just lost her job. 42 Dr. Silverstein confirmed that he had had a hostile interaction with
Plaintiff in late March. 43 Dr. Silverstein testified that he apologized two days after the
incident, but he did not feel like the issue was completely resolved. 44 Nonetheless, Silverstein
testified that “so far as [he] knew, that was the end of it.” 45
Plaintiff testified that the week before her employment with ASPA ended, on April 11,
2012, she received a phone call from Dr. Nick Gagliano, who was one of the ASPA
partners. 46 According to Plaintiff, Dr. Gagliano, who did not testify at trial, asked Plaintiff if
she was aware that Dr. Schneider, who was then Chairman of the Board, and Dr. Lucente,
who was then HR Officer, had been meeting behind closed doors. 47 Dr. Schneider confirmed
39 Id. (quoting Pouls v. Windmill Estates, LLC, 2010 WL 2348648, at *4 (Del. Super. June 10, 2010)). 40 Id. at *3. 41 T1 at 50-51. 42 T1 at 51. 43 T3 at 149-152. 44 T3 at 151. 45 T3 at 151. 46 T1 at 52 47 T1 at 52.
9 in his trial testimony that he had a private conversation with Dr. Lucente on April 10, 2012,
concerning alleged misconduct by Plaintiff. 48 Plaintiff testified that she told Dr. Gagliano that
she was not aware of these meetings. 49 Plaintiff testified that Dr. Gagliano expressed concern
that Plaintiff, as Executive Director, was unaware of these meetings between the Chairman
and the HR Officer. 50 Plaintiff testified that she concluded that she had been excluded from
these meetings because they concerned her. 51
Plaintiff testified that, a couple days later, on Friday, April 13, 2012, Plaintiff heard
that “a serious HR issue was going to be announced next week.” 52 Plaintiff also testified that
she received a “very odd text [message]” from Tina Smith, who handled general HR issues,
saying that she would not be in that day and would not be available by phone. 53 Plaintiff
testified that, under these circumstances, she further concluded that the HR announcement
would involve her. 54
Plaintiff testified that, on Monday, April 16, 2012, she contacted Schneider and Dr.
Lucente in two separate phone calls to ask them what was going on. 55 Plaintiff maintains that
she confronted both Schneider and Lucente, telling both of them that Plaintiff knew
something was going on that involved her. 56 Plaintiff alleges that neither Schneider nor
Lucente would provide her with any details, but Lucente finally told Plaintiff that Mary
Quinn, an HR consultant who had been working with ASPA, was scheduling a meeting
48 T3 at 56-57. 49 T1 at 52. 50 T1 at 52. 51 T1 at 53. 52 T1 at 54. 53 T1 at 54. Tina Smith also did not testify at trial. 54 T1 at 54. 55 T1 at 55. 56 T1 at 55.
10 concerning the issue. 57 In his trial testimony, Dr. Lucente confirmed that he did speak by
phone with Plaintiff that morning and that he told Plaintiff that he could not discuss the details
of the upcoming meeting. 58 Plaintiff testified that she then asked Mary Quinn, who told her
that the meeting was scheduled for around 11:30 a.m. that morning. 59 Plaintiff testified that
she thought that she was being terminated and began to pack up her office. 60
It is undisputed that sometime after 11:00 a.m., Dr. Schneider, Dr. Lucente, Mary
Quinn, and Dr. Chua 61 came into Plaintiff’s office. Plaintiff alleges that Schneider opened the
meeting by telling her that the Executive Committee had made a unanimous decision to
terminate Plaintiff for cause. 62 Schneider, Lucente, and Quinn allege that Schneider only told
Plaintiff that the Committee was recommending termination with cause. 63
Plaintiff testified that she asked Schneider what the cause was, and he would not go
into detail, but told her that the cause was related to a comment Plaintiff made about other
physicians in the group in front of staff as well as Plaintiff’s speaking about employee health
issues in front of the staff. 64 Plaintiff testified that at the time she did not know what the
comment was. 65 In his trial testimony, Schneider confirmed that he gave Plaintiff “a couple
of examples” of the issues that were the basis for the Executive Committee’s decision, but
Schneider did not confirm what these examples were. 66
57 T1 at 55. 58 T3 at 17. 59 T1 at 55. The issue of this conversation confirming the meeting time was not explored in Mary Quinn’s trial testimony. 60 T1 at 56. 61 Dr. Chua was another member of the Executive Committee. 62 T1 at 56. 63 T1 at 70-71; T3 at 17-18; T3 at 79. 64 T1 at 57. 65 T1 at 57. 66 T2 at 71.
11 Schneider alleges that he explicitly told Plaintiff that she was not being terminated. 67
According to Schneider’s testimony, they told her, “We’re not terminating you. We’re
recommending this termination. But the issues are significant, and we don’t think they’re
recoverable.” 68 Schneider testified that he then told Plaintiff that she could resign instead. 69
Schneider, Lucente, and Quinn all testified that there was some additional discussion
after which Plaintiff said, “I resign.” 70 Schneider testified that Plaintiff agreed to follow up
with a written letter confirming her resignation. 71 Plaintiff does not dispute that she said the
words “I resign.” However, Plaintiff alleges that she only said these words in response to the
question of what she wanted to tell the staff. 72
The parties agree that, at some point in the meeting, Schneider recommended that
Plaintiff leave the office. Plaintiff said that she wanted to say goodbye to the staff. Plaintiff
testified that Schneider asked her what she was going to tell the staff. 73 Plaintiff testified that
because she did not know why she was being terminated and because she did not want to
place the administrative staff in an uncomfortable position, Plaintiff told Schneider, “I will tell
them that I resigned.” 74 Plaintiff testified that she then proceeded to go out and say goodbye
to the administrative staff. Plaintiff told some of them that she had resigned. 75
67 T2 at 70-71. 68 T2 at 70-71. 69 T2 at 70. 70 T2 at 71; T3 at 18 ; T3 at 79. 71 T2 At 71. 72 T1 at 59. 73 T1 at 59. 74 T1 at 59. 75 T1 at 59. However, according to Plaintiff’s testimony, she told all of the physicians that she had been terminated. TI at 60.
12 It is undisputed that Plaintiff received a follow-up letter from ASPA on April 30,
2012, stating that Plaintiff had resigned and presenting a proposed severance agreement. 76 It
is undisputed that Plaintiff never submitted a written termination letter and never signed a
separation agreement. 77 On May 3, 2012, Plaintiff sent a letter to the Executive Committee as
well as to numerous members of the Board. 78 In the May 3 letter, Plaintiff stated that she had
been terminated “for cause” but that she did not understand what the cause was. 79 Plaintiff
testified that she sent this letter in response to the correspondence she had received from
ASPA saying that she had resigned, and she wanted to make clear that this was untrue. 80
B. The Court Finds that Plaintiff Resigned from ASPA
Plaintiff’s first claim is for breach of contract. 81 An actionable breach of contract
claim requires the plaintiff to prove: (1) the existence of the contract, (2) a breach of that
contract, and (3) damages resulting from breach. 82
Plaintiff maintains that ASPA breached her Employment Contract by “failing to
follow [the company’s] policies and procedures by terminating Plaintiff in a sudden manner
without the benefit of an opportunity to cure any alleged deficiencies.” 83 Plaintiff argues that
the failure to allow Plaintiff an opportunity to cure the alleged deficiencies was in violation of
her Employment Contract and usual company practice. 84 However, in order to prove that
76 The April 30, 2012 letter stated, “[a]s you stated on Monday, April 16, 2012, and as we discussed, you have voluntarily resigned your employment with Anesthesia Services, P.A., (“ASPA”) effective April 16, 2012.” Ex. 29, Letter to Masterson-Carr. Plaintiff acknowledged receipt of this letter in her testimony at trial. T1 at 60-61. 77 T1 at 60. 78 Ex. 7, Masterson-Carr Letter. 79 Ex. 7, Masterson-Carr Letter, at 1. 80 T1 at 63. 81 Ex. 1, Complaint, at 7. 82 Pencader Associates, 2010 WL 2681862, at *2. 83 Ex. 1, Complaint, at 7. 84 T1 at 65-66.
13 ASPA breached by failing to follow proper procedure in terminating Plaintiff, Plaintiff must
first establish that she was in fact terminated.
Considering the evidence that has been presented, the Court finds it more likely than
not that Plaintiff voluntarily resigned when she was confronted with the recommendation of
the Executive Committee. In keeping with the legal standard that Plaintiff must prove that she
was terminated by a preponderance of the evidence, the Court finds that Plaintiff has failed to
satisfy this burden. In arriving at this conclusion, the Court finds the following facts
particularly compelling.
i. Plaintiff’s Deposition Testimony
The Court finds that Plaintiff admitted in her deposition testimony that she resigned.
Although Plaintiff tried to explain away this testimony at trial (by saying that the “I resigned”
statements were only in regards to what she planned to tell her coworkers), this explanation is
not supported by Plaintiff’s statements in her original deposition testimony.
In her deposition, Plaintiff testified as follows in response to questioning by Defense
Counsel:
Q: Did you say, I resign?
A: No.
Q: If there were four other people in the room and one has testified and three others
will testify that you said, I resign, they’re not telling the truth?
A: They gave me a choice, you have a choice to resign or be terminated and because I
didn’t know what the termination was, what the cause was, I said, I’ll resign.
Q: So, you said, I’ll resign, is that correct?
A: Yes.
14 Q: And then did you say, “I will tell the staff I’m leaving”?
A: No. They said, What are you going to tell the staff? I said, I’m going to tell them I
resigned. I couldn’t tell them I was terminated because they would say for what and I
didn’t know.
Q: But you, in fact, said, I’ll resign.
[Plaintiff’s Counsel]: Objection to form, mischaracterizes her statement.
A: I was given a choice and I chose that choice. It was a voluntary resignation. It was
something I had a choice to do.
Q: You thought while you were sitting there that your choice was you were being
terminated for cause or you could resign, is that correct?
Q: What you then in response chose was to resign?
[Plaintiff’s Counsel]: Objection to form. You can answer.
Q: Is that correct?
A: I did. 85
When Plaintiff was questioned about her deposition testimony at trial, specifically the
passages excerpted above, Plaintiff maintained that her deposition testimony that she had said
“I resign” concerned only what she planned to tell her coworkers. 86 The Court finds that this
is an implausible interpretation of Plaintiff’s deposition statements. Plaintiff makes it clear
that she saw herself as having “a choice” to resign and that she “chose that choice [i.e., to
85 Ex. 30, Masterson-Carr Deposition, at 97-98. 86 T1 at 140.
15 resign].” 87 When asked the clarificatory question, “What you then in response chose was to
resign?”, Plaintiff answered, “I did.” 88
While it is true that this passage also addresses the issue of what Plaintiff would tell
her coworkers, the portions concerning Plaintiff’s resignation and the portions concerning
what she would tell her coworkers are logically separated. It is not plausible, contrary to what
Plaintiff suggests in her testimony at trial, that everything Plaintiff said in this portion of her
deposition testimony was simply a recitation of what she planned to tell her coworkers.
Plaintiff’s description of her “choice” to resign comes in direct response to the question of
how Plaintiff would explain the testimony of the four other people present at the meeting who
would testify that she resigned, not in response to a question about what she would tell her
coworkers. 89
ii. Plaintiff’s Subsequent Correspondence with ASPA
Plaintiff’s subsequent correspondence with members and representatives of ASPA
after the April 16, 2012 meeting also suggests that she was not terminated. Plaintiff testified
that, the day after the April 16 meeting, she received an email from Dr. Schneider, stating that
“As discussed with you on Monday with Drs. Chua and Lucente present, ASPA’s executive
committee has agreed unanimously to recommend to the board of directors the termination of
your employment for cause.” 90 The email stated that Plaintiff had been given the option to
resign during the meeting and that “[Plaintiff] verbally stated during the meeting that
[Plaintiff is] resigning [Plaintiff’s] employment with ASPA.” 91 Plaintiff testified that this
email was at odds with her understanding of what had happened at the April 16 meeting (i.e.,
87 Ex. 30, Masterson-Carr Deposition, at 97-98. 88 Ex. 30, Masterson-Carr Deposition at 98. 89 Ex. 30, Masterson-Carr Deposition, at 97. 90 Ex. 34, Schneider Email; T1 at 132-133. 91 Ex. 34, Schneider Email.
16 that Plaintiff thought she had been terminated, not that the Executive Committee was merely
recommending termination), yet Plaintiff made no attempt to contact Dr. Schneider to clarify
or challenge this alleged discrepancy. 92 It is implausible that a sophisticated party such as
Plaintiff, who had worked in Human Resources and who had been involved in the termination
process for other employees, would not request clarification. 93
Further, when Dr. Schneider subsequently sent Plaintiff an April 23, 2012 letter
confirming her oral resignation and asking for a written resignation letter, 94 Plaintiff did not
reply at all. 95 If Plaintiff believed that she had not resigned but had been terminated, it would
have been reasonable for her to respond to this letter disputing its characterization of her
separation from ASPA. Instead, Plaintiff did not communicate with ASPA or any of its
members concerning her alleged termination until May 3, 2012, when she sent a letter to
various ASPA Board members stating that she had been terminated. 96 Of particular note is
the fact that the letter was dated the day after Plaintiff had retained counsel in this matter. 97
The reasonable inference is that Plaintiff wrote the letter asserting that she had been
terminated in anticipation of the present litigation rather than as a good faith attempt to set the
record straight regarding the events of April 16.
iii. Plaintiff’s Previous Indications of her Willingness to Resign
The Court also finds notable Plaintiff’s testimony concerning her general willingness
to leave ASPA in the event of certain sorts of disagreement. First, Plaintiff testified that she
said she “would resign” if the Board chose to bring the issue of hiring her brother’s
92 T1 at 134. 93 T1 at 65. 94 Ex. 14, Schneider Letter. 95 T1 at 138-139. 96 Ex. 7, Masterson-Carr Letter. 97 T1 at 148.
17 company98 before the full Board because she believed that “a decision at this level should not
have to go to the full board.” 99 Similarly, Plaintiff testified that she would “walk away
graciously” from ASPA “if there was ever a time that anyone did not think [Plaintiff] was
right for the job.” 100
It is clear from Plaintiff’s testimony that she took great pride in her career and her job
with ASPA. 101 Plaintiff took her position as Executive Director very seriously and considered
it her personal duty to act in the best interest of the organization. 102 Not only was Plaintiff in
fact very devoted to her job, but it was also important to Plaintiff that others saw her as such.
Plaintiff was very concerned about her professional image. 103 Given these facts, the Court
makes the reasonable inference that, when confronted with the judgment of the Executive
Committee that she was no longer fit for her position, Plaintiff acted to preserve her future
employment options as well as her self-image by resigning her position.
V. BONUS CLAIM
Plaintiff alleges that ASPA violated the Delaware Wage Payment and Collection Act
in failing to pay her the 6.5% bonus for the time she worked at ASPA in 2012. 104 Plaintiff
98 ASPA hired Plaintiff’s brother’s company to do marketing work. Ex. 30 at 44. According to Plaintiff, Dr. Schneider and another ASPA partner, Dr. Tolpin, both expressed concern over the choice to hire Plaintiff’s brother. 99 Ex. 30, Masterson-Carr Deposition, at 146. 100 Ex. 30, Masterson-Carr Deposition, at 147. Although Plaintiff refused to say that “walk away graciously” meant “resign,” the Court finds that this is the most plausible interpretation of Plaintiff’s comment. 101 T1 at 77-79. 102 T1 at 107, 115. 103 T1 at 77-79. 104 The Delaware Wage Payment and Collection Act, 19 Del. C. §1101 et seq., provides for a civil action to recover unpaid wages. When an employee is separated from her employment (whether she quits, resigns, is discharged, suspended, or laid off), the wages earned become due and payable on the next regularly scheduled payday. 19 Del. C. §1103. A yearly bonus is considered “wages” under the Act. SCOA Indus., Inc. v. Bracken, 374 A.2d 263 (Del. 1977).
18 testified that the 6.5% bonus in her Employment Contract is non-discretionary. 105 Plaintiff
testified that were never any goals that Plaintiff needed to meet in order to be entitled to the
6.5% bonus. 106 Plaintiff concedes that the additional 1.5% bonus that Plaintiff negotiated in
2011 was discretionary. 107
Defendants maintain that both the 6.5% and 1.5% bonuses were discretionary. At
trial, Schneider testified that both bonuses were intended to be tied to specific yearly goals.108
However, Schneider also testified that there were never any such goals articulated for any
bonus, and that Plaintiff’s compensation included the 6.5% bonus in 2009, 2010, and 2011.109
Schneider maintains that Plaintiff arranged for the bonus to be paid; as Plaintiff was required
to provide, and then meet, yearly goals before she would be entitled to her bonus. 110 Dr.
Stern, who was CFO at the relevant times, testified that he approved the disbursements of the
bonus money to Plaintiff; although he, too, testified that he considered the 6.5% to be a
discretionary bonus. 111 Stern said that he gave Plaintiff the bonus because he “couldn’t think
of a reason why not at that time,” but he “also probably said” in a conversation to the CEO at
some point “we really ought to have some criteria for [the bonus].” 112
B. The Court Finds that Plaintiff is Entitled
to the 6.5% Bonus
105 T1 at 31. 106 T1 at 35. 107 T3 at 171. 108 T2 at 122. 109 T2 at 123. 110 T2 at 123. 111 T1 at 210 112 T1 at 210.
19 A contract is ambiguous “when the provisions in controversy are reasonably or fairly
susceptible of different interpretations or may have two or more different meanings.”113
Ambiguous contracts are generally construed against the drafter. 114 Further, when construing
an ambiguous contract, “the court will consider all relevant objective evidence, including:
overt statements and acts of the parties, the business context, prior dealings between the
parties, and business customs and usage in the industry.” 115 “Courts use such evidence to
construe the ambiguous contract language in a way that best carries out the reasonable
expectations of the parties who contracted in those circumstances.” 116
The Court finds that the terms in Plaintiff’s Employment Contract and the 2011
Employment Agreement Amendment are ambiguous. The Employment Contract states,
“Employee shall be eligible for a bonus in an amount equal to six and one-half percent.” 117
There are two reasonable interpretations of this language: (1) that Employee eligibility is
contingent only on the availability of sufficient funds, or (2) that Employee eligibility is
contingent on her performance as determined by Employer. The language in the 2011
Amendment is similarly ambiguous. The 2011 Agreement states that Plaintiff would receive
a “[b]onus increase from 6.5% to 8% with the additional 1.5% tied to [Employee’s] 2011
Goals.” 118 This provision could reasonably be interpreted to mean either: (1) that the entire
bonus would be tied to some goals, but the 1.5% would be specifically tied to the 2011
goals, 119 or (2) that only the 1.5% would be tied to goals.
113 Rhone-Poulenc Basic Chems. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. Super. 1992). 114 Twin City Fire Ins. Co. v. Delaware Racing Ass’n, 840 A.2d 624, 630 (Del. 2003). 115 Zimmerman v. Crothall, 62 A.3d 676, 690-91 (Del. Ch. 2013). 116 Id. at 691. 117 Ex. 4, Employment Agreement, at 3. 118 Ex. 6, 2011 Employment Agreement Amendment. 119 In other words, perhaps the 6.5% was tied to set of goals that had been previously articulated or that would be articulated in the future.
20 ASPA is the drafter of both agreements. For this reason, the presumption is that the
ambiguous contractual provisions will be construed against ASPA. Further, looking to the
past practices of the parties, the Court finds that Plaintiff reasonably expected her 6.5% bonus
for the year 2012 to be nondiscretionary. Since the beginning of Plaintiff’s employment,
ASPA’s practice had been to allow Plaintiff the 6.5% bonus irrespective of any performance
goals. Dr. Stern, who had been CFO at the time, testified that he approved payment of the
6.5% bonus to Plaintiff in 2009, 2010, and 2011. 120 At the time, there were no performance
goals that Plaintiff had to meet in order to receive that bonus, although Stern testified that he
“probably said” at some point that there probably should be some criteria for the bonus. 121 In
his trial testimony, Dr. Schneider, who had been CEO beginning in 2010, confirmed that
Plaintiff had received her 6.5% bonus in 2009, 2010, and 2011 even though no goals had ever
been established. 122 While Defendants now dispute whether Plaintiff was entitled to 6.5%
bonus in 2009-2011, the Court finds that ASPA knowingly permitted Plaintiff to take the
bonus in these years without having to meet any particular goals. The Court finds that
ASPA’s practice was to treat the 6.5% bonus as nondiscretionary.
The Court has found that Plaintiff resigned and was not terminated. Because
Plaintiff’s contract clearly states that 6.5% bonus shall be prorated upon termination of
employment unless termination was by the employer for cause, Plaintiff is now entitled to the
pro rata amount of the 6.5% bonus for portion of the year 2012 during which she was
employed at ASPA.
VI. CONCLUSION
120 T1 at 209-210. 121 T1 at 210. 122 T2 at 122-124.
21 For the foregoing reasons, the Court finds that Plaintiff was not terminated. Since
Plaintiff’s claim for Breach of Contract is predicated on the claim that Plaintiff was
terminated, this claim is now MOOT. Plaintiff is entitled to the pro rata amount of her 6.5%
bonus for the portion of 2012 that she was employed at ASPA.
The Plaintiff shall notify the Court within 20 days if she wishes to pursue the issue of
constructive termination. If Plaintiff so elects, the parties shall have 60 days from the date of
the notification to submit simultaneous briefs on the issue.
IT IS SO ORDERED.
/ S/ M. JANE BRADY Superior Court Judge