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McCowan v. Williams Industrial Services Group, Inc.

United States District Court, N.D. Oklahoma

October 3, 2019

JEFFERY MCCOWAN, Plaintiff,
v.
WILLIAMS INDUSTRIAL SERVICES GROUP, INC., formerly known as GLOBAL POWER EQUIPMENT GROUP, INC., Defendant.

          OPINIONANDORDER

          CLAIRE V. EAGAN UNITED STATES DISTRICT JUDGE

         Now before the Court are plaintiff Jeffery McCowan's motion for partial summary judgment (Dkt. # 30), and defendant Williams Industrial Services Group, Inc.'s motion for summary judgment (Dkt. # 34). On October 22, 2018, plaintiff filed this suit based on two employment contracts, alleging claims of breach of contract and fraud in the inducement. Dkt. # 3-1. Plaintiff now moves for summary judgment on his breach of contract claim only. Defendant moves for summary judgment on the breach of contract and fraud in the inducement claims.

         I.

         The following facts are undisputed: Plaintiff was employed in Tulsa, Oklahoma as a General Accounting/Transactional Accounting Manager by defendant until his termination on July 31, 2018. Dkt. # 30-1, at 1. Defendant, formerly known as Global Power Equipment Group, Inc., had two businesses that it called its “Product Division.” Dkt. # 34, at 5. Plaintiff provided services to one of those businesses, Braden Manufacturing USA (Braden), also known as defendant's “Mechanical Solutions” business, which defendant attempted to, and ultimately did, divest. Dkt # 34-1, at 4. This divestiture was part of a larger plan to divest another subsidiary, defendant's “Electrical Solutions” business, and closing or a transfer of defendant's headquarters, a transaction that ultimately failed to occur. Dkt. # 34-2, at 5. While defendant was contemplating this transaction, it asked plaintiff to sign a retention agreement (Agreement) on November 8, 2017, to incentivize plaintiff to continue to work for defendant. The Agreement states in part:

As you know, the Board of Directors of Global Power Equipment Group Inc. (the “Company”) is considering a range of strategic alternatives for the Company, one of which may entail the sale of the Company's Electrical Solutions segment and the closing of the Company's corporate headquarters (collectively, the “Transaction”). No. formal decisions have been made by the Board of Directors of the Company or any Committee of the Board of Directors regarding the consummation of the Transaction described herein and each of the potential sales and headquarters closing are separate, independent steps.
In order to encourage your full attention and dedication to the Company, and in light of the potential Transaction described above, the Company hereby provides you with the following compensation opportunities upon the terms, and subject to the conditions, set forth in this letter agreement.
1. 2017 Annual Incentive Bonus.
Your annual incentive bonus for the Company's 2017 fiscal year generally will be paid to you in the ordinary course under the Company's Short-Term Incentive Plan, at the same time that 2017 annual incentive bonuses are paid to other similarly situated Company executives. However, provided that you (a) remain continuously employed by the Company or an affiliate and (b) you assist with the consummation of the Transaction (including the closing, or the substantial completion of the closing, of the Company's corporate headquarters) and you comply with the directions of your supervisor in connection with the Transaction; until the closing (the “Closing”) of the Transaction, or your employment is terminated prior to the Closing by the Company or an affiliate without “Cause” (as defined below), the Company hereby agrees that the amount of your 2017 annual incentive bonus, if not previously paid to you, will not be less than your “target” annual incentive bonus opportunity. . . .
2. Cash Severance Benefit.
If (a) you continue to remain employed by the Company or an affiliate through the Closing of the Transaction and (b) you assist with the consummation of the Transaction (including the closing, or the substantial completion of the closing, of the Company's corporate headquarters) and you comply with the directions of your supervisor in connection with the Transaction; then, upon any termination of your employment with the Company 90 calendar days prior to, or two (2) years following the Closing of the Transaction (other than a termination of your employment by the Company or an affiliate for Cause) and subject to your timely execution of a waiver and release agreement on a form provided by the Company (the “Release”), the Company will pay to you in cash (in satisfaction of any cash severance amounts to which you might otherwise be entitled), base for 4 months after your termination of employment. . . .

Dkt. # 34-3, at 3-4 (emphasis added). The contract defines “Cause”:

For purposes of this letter agreement, “Cause” as a reason for termination of your employment means (a) your continued failure to meet deadlines or perform substantially your duties with the Company or any of its affiliates or your disregard of the directives of your supervisor (in each case other than any such failure resulting from any medically determined physical or mental impairment) that is not cured by you within 20 days after a written demand for substantial performance is delivered to you by the Company which specifically identifies the manner in which the Company believes that you have not substantially performed your duties or disregarded a directive of your supervisor; (b) willful material misrepresentation at any time by you to the Company or an affiliate; (c) your commission of any act of fraud, misappropriation or embezzlement against or in connection with the Company or any of its affiliates or their respective businesses or operations; (d) your conviction, guilty plea or plea of nolo contendere for any crime involving dishonesty or for any felony; (e) your material breach of any fiduciary duties of loyalty or care to the Company or any of its affiliates or your material violation of the Company's Code of Business Conduct and Ethics or any other Company policy, as the same may be amended from time to time; (f) your illegal conduct, gross misconduct, gross insubordination or gross negligence that is materially and demonstrably injurious to the Company's business or financial condition; (g) excessive absenteeism; or (h) your breach of your obligations under the provisions of any separately executed agreements with the Company or an affiliate, the terms of which restrict (i) your ability to solicit customers of the Company or an affiliate, (ii) your ability to solicit employees of the Company or an affiliate, (iii) your ability to use or disclose confidential information or trade secrets of the Company or an affiliate, or (iv) the ownership of works.

Id. at 4-5. The Agreement states that it “will be interpreted, enforced and governed under the laws of the State of Texas, without regard to any applicable state's choice of law provisions.” Id. at 5.

         To continue to incentivize plaintiff to provide accounting services during the sale of Braden, defendant asked plaintiff to sign an amendment to the Agreement on May 18, 2018 (the Amendment). Dkt. # 34, at 6-7. The Amendment contains, in part, the following terms:

As you are aware, Global Power Equipment Group Inc. (the “Company”) is currently in the process of entertaining the sale of the Electrical Solutions business segment and is also pursuing other corporate restructuring initiates. In addition to the terms of the Retention Agreement, in order to encourage your continued full attention and dedication to the Company through October 31, 2018, the Company hereby provides you with the following compensation opportunities upon the terms, and subject to the conditions, set forth in this letter agreement and the Retention Agreement.
Accordingly, provided that during your continued employment with the Company you comply with the directions of your supervisor and either (a) you remain continuously employed by the Company or an affiliate until October 31, 2018, or (b) your employment is terminated by the Company or an affiliate without “Cause, ” the Company hereby agrees that you will be provided with two weeks' notice prior to the termination of your employment and you will be awarded:
1. A Monthly Retainer
You will be awarded $1, 000 per month beginning with the month of July 2018 (the “Monthly Retainer”) in addition to your regular pay. The Monthly Retainer shall be payable to you in monthly installments on the first paycheck following each month you are ...

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