Ellingson v. T. Michael Riggs and Sarah Riggs Amico
- Donovan Frank
- 0:26-cv-01671
- U.S. District Court · District of Minnesota
- 12
In Ellingson v. Riggs, Judge Frank dismissed a breach-of-contract claim against two corporate executives for unpaid severance, finding they never personally agreed to be bound.
Employees who have signed severance agreements with companies that later file for bankruptcy, and who may consider suing corporate officers or directors personally for unpaid severance. Also relevant to directors and officers of companies facing bankruptcy who may be sued individually on corporate contracts.
What happened
In Ellingson v. Riggs and Amico, James Ellingson sued two executives of Jack Cooper Investments, Inc. — T. Michael Riggs and Sarah Riggs Amico — personally for failing to pay severance benefits he claimed were owed under a severance agreement he signed when his employment was terminated. Ellingson argued that because the agreement's definition of 'Company' included officers and directors, Riggs and Amico were parties to the contract and personally liable for the unpaid payments. Jack Cooper subsequently filed for bankruptcy, which triggered an automatic pause on collections from the company, but Ellingson pursued Riggs and Amico individually since neither filed for bankruptcy personally.
The court first addressed whether it had authority to hear the case at all, given the ongoing bankruptcy. The defendants argued the bankruptcy court had exclusive control, but the court found otherwise: a separate insurance policy — a Directors and Officers policy issued by Argonaut Insurance Company — would cover any judgment against Riggs and Amico, and the bankruptcy court had already ruled that this insurance money was not part of the bankrupt company's assets. Because any payment would come from Argonaut rather than the bankruptcy estate, the court found it had jurisdiction to proceed.
On the merits, Judge Frank applied Delaware contract law and dismissed Ellingson's claim. Under Delaware law, only parties who clearly agree to be bound can be held to a contract. The court found that Riggs and Amico never signed the agreement, were never named in it individually, and never acted as though they considered themselves personally responsible — for instance, they did not make any of the severance payments. The court also noted that reading the 'Company' definition to bind all officers and directors personally would lead to absurd results, such as holding Ellingson himself personally liable for his own severance. The complaint was dismissed without prejudice, meaning Ellingson may attempt to refile if he can allege facts showing the executives intended to be personally bound.
The detailed version
- Ellingson v. T. Michael Riggs and Sarah Riggs Amico · No. 0:26-cv-01671
- Donovan Frank
- Sept. 1, 2026
Background
James Ellingson worked as a logistics manager for a trucking company operating under the name Jack Cooper Investments, Inc. ("Jack Cooper"). T. Michael Riggs held a controlling interest in Jack Cooper beginning around 2009 and became CEO in 2014. Sarah Riggs Amico was named Executive Chairperson of Jack Cooper's Board of Directors in 2014 and became CEO in 2024.
On January 6, 2025, Ellingson was notified his employment would be terminated. On January 14, 2025, Jack Cooper's Vice President of Human Resources sent Ellingson a Confidential Severance Agreement and General Release and Waiver of All Claims (the "Agreement"). The Agreement promised twenty-six weeks of severance pay. The "Company" was defined in the Agreement to include "Jack Cooper Investments, Inc. and/or any of its parents, subsidiaries, affiliates, related companies, successors, assigns, officers, directors, agents, attorneys, employees, former employees, and benefit plans." Davis, on behalf of Jack Cooper, and Ellingson signed the Agreement. Neither Riggs nor Amico signed it.
Ellingson received only one severance payment before being told payments would stop. The payments ceased because Jack Cooper filed a Chapter 7 bankruptcy petition on March 8, 2025, in the Bankruptcy Court for the District of Delaware. Related companies also filed for bankruptcy. Ellingson filed a creditor claim in the bankruptcy proceedings. Riggs and Amico also filed creditor claims but did not file for personal bankruptcy.
Ellingson filed this action in state court on January 27, 2026, arguing that Riggs and Amico were personally liable under the Agreement as "officers, directors, agents, employees or former employees" of Jack Cooper. Defendants removed the case to federal court and moved to dismiss.
The D&O Insurance Policy
A parent company of Jack Cooper, JC TopCo, Inc. ("JC TopCo"), held a Directors and Officers liability insurance policy (the "D&O Policy") issued by Argonaut Insurance Company ("Argonaut"), covering the period December 3, 2024, to December 3, 2025. The policy covered losses of "Insured Persons" — defined to include directors, officers, and employees — for claims arising from "Wrongful Acts" committed while acting in their capacity as such. Argonaut considered Riggs and Amico to be covered "Insured Persons."
On April 7, 2026, Argonaut moved in the bankruptcy proceedings for relief from the automatic stay (the automatic legal pause on collection actions that arises when a bankruptcy is filed) so that it could pay defense costs in this action. The Delaware bankruptcy court granted that motion on April 24, 2026, finding that the D&O Policy proceeds were not property of the bankruptcy estate and that the automatic stay under 11 U.S.C. § 362(a) did not apply. The bankruptcy court authorized Argonaut to make payments under the D&O Policy for costs connected to this case.
Jurisdiction — Rule 12(b)(1)
Defendants argued the bankruptcy court had exclusive jurisdiction because the claim involved property of the debtor's estate. The court rejected this argument. Bankruptcy courts have exclusive jurisdiction over the debtor's estate property, and the automatic stay generally bars collection efforts outside bankruptcy. However, the court noted that bankruptcy and non-bankruptcy courts share concurrent jurisdiction to determine whether a stay applies.
Here, the Delaware bankruptcy court already ruled that the D&O Policy proceeds were not part of the estate and expressly permitted Argonaut to pay costs arising from this action. Because any judgment would be satisfied by Argonaut — not from Jack Cooper's estate — and because neither Riggs nor Amico are parties to the bankruptcy proceedings, the court concluded that the automatic stay did not apply. The court found it had subject matter jurisdiction and denied the Rule 12(b)(1) motion.
Breach of Contract — Rule 12(b)(6)
Legal Standard
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests whether the complaint states a legally valid claim. The court accepts all factual allegations as true and draws all reasonable inferences in the plaintiff's favor, but does not credit bare legal conclusions. To survive, the complaint must allege enough facts to make the claim plausible — not just possible — on its face. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009).
Delaware Contract Law
The Agreement's choice-of-law clause selected Delaware law. Under Delaware law, a breach-of-contract claim requires: (1) existence of a contract, (2) a breach of that contract, and (3) resulting damages. A valid contract requires that the parties intended to be bound, that the terms are sufficiently definite, and that there is legal consideration (something of value exchanged by both sides).
Delaware law also requires that a party overtly manifest — meaning clearly show — assent to be bound. Generally, only formal signatories are bound. Directors and officers are not automatically parties to a contract merely because their corporation is a party. However, contractual obligations can extend to non-signatory directors if the surrounding facts show they intended to be personally bound.
Application of In re Shorenstein
Ellingson relied heavily on the Delaware Supreme Court's decision in In re Shorenstein Hays-Nederlander Theatres LLC Appeals, 213 A.3d 39 (Del. 2019), which held that non-signatory affiliates of companies could be personally bound by a contract when the contract's plain language included them and the context showed they believed themselves to be bound. In that case, the entire purpose of the agreement was to prevent competition harmful to the partnership, and the non-signatories acted as though they were bound.
The court distinguished Shorenstein. Unlike in that case, Ellingson did not allege any facts showing that Riggs or Amico intended to be personally bound. They did not sign the Agreement, were not named in it individually, did not pay even the first severance installment, and did not otherwise act as though they accepted personal responsibility. The court also found it illogical to treat the broad definition of "Company" — which included all officers, directors, employees, and former employees — as imposing personal liability on each, because by that reasoning Ellingson himself would be personally liable for his own severance payments.
Disposition
The court granted Defendants' motion to dismiss under Rule 12(b)(6) and dismissed Ellingson's complaint without prejudice. The court noted that dismissal without prejudice was appropriate because Ellingson could conceivably amend his complaint to allege facts showing that Riggs and Amico actually intended to be personally bound by the Agreement.
Order
The court ordered: 1. Defendants' motion to dismiss (Doc. No. 10) is GRANTED. 2. Plaintiff's complaint (Doc. No. 1-1) is DISMISSED WITHOUT PREJUDICE.
Read the full 12-page opinion on CourtListener, the free public archive maintained by the Free Law Project.