Hampton v. Kohler
- Donovan Frank
- 0:18-cv-00541
- U.S. District Court · District of Minnesota
- 18
In Hampton v. Kohler, Judge Frank granted Kohler summary judgment, ruling Hampton voluntarily separated and was not entitled to post-closing payment.
Bruce Hampton’s remaining breach-of-contract claim was resolved against him; Michael Kohler received summary judgment, and Hampton was not entitled to the disputed post-closing payment.
What happened
Hampton v. Kohler involved a dispute over whether Michael Kohler had to pay Bruce Hampton a share of money held in escrow after Milestone Systems was sold to Kudelski Security. The agreement required Hampton to be employed when the money was distributed, unless the company had terminated him without cause.
Hampton argued that Kudelski had ended his employment without cause. Kohler argued that Hampton had negotiated a mutual separation and therefore had not met the payment condition. The court concluded that the agreements distinguished a termination without cause from a mutually agreed separation, and that Hampton voluntarily left before the payment date.
Judge Frank ruled that Hampton was not entitled to the payment because he was no longer employed by Kudelski and had not been terminated without cause. The court granted Kohler’s motion for summary judgment on Hampton’s remaining breach-of-contract claim.
The detailed version
- Hampton v. Kohler · No. 0:18-cv-00541
- Donovan Frank
- July 25, 2019
Background
Bruce Hampton sued Michael Kohler for breach of contract. The dispute concerned an Agreement with Respect to Post-Closing Amounts, under which Kohler agreed to pay Hampton his pro-rata share of post-closing amounts connected to the sale of Milestone Systems to Kudelski Security, Inc.
The agreement stated that an employee had to be employed by the company when payment was made to receive the employee’s pro-rata share. It created an exception if the company terminated the employee without cause, as described in the employee’s employment agreement.
Hampton’s employment ended effective September 30, 2016, under a Separation Agreement with Kudelski. That agreement described the separation as being “without cause by either party.” It also provided Hampton severance, continued salary and bonuses through separation, certain benefits, and consulting opportunities. Hampton acknowledged that Kudelski did not require his employment to end in 2016 and that he was not forced to sign the Separation Agreement.
Kohler later determined that Hampton did not satisfy the payment condition because he was not employed by Kudelski when the post-closing funds were distributed and had negotiated his separation. Hampton did not receive his pro-rata payment and sued. The court had previously dismissed his unjust-enrichment and implied-covenant claims, leaving only the breach-of-contract claim. Kohler moved for summary judgment under Federal Rule of Civil Procedure 56.
Contract Interpretation
Because the case was based on diversity jurisdiction, the court applied Minnesota substantive law. Under Minnesota law, a breach-of-contract claim requires a contract, the plaintiff’s performance of conditions required before the defendant had to perform, the defendant’s breach, and damages.
The court held that the phrase “termination without cause” had to be interpreted in the context of the agreements. The Employment Agreement used “termination” broadly, including termination by mutual consent, termination after an uncured breach, and termination for cause. But the provision concerning “termination without cause” referred to one party initiating the end of employment by giving notice to the other. The court concluded that, in the Post-Closing Agreement, termination without cause meant that one party ended the employment and that Hampton was not the party who made that decision. In practical terms, the exception covered being fired or laid off, but not quitting or mutually agreeing to separate.
The court also found that the employment condition was material to the Post-Closing Agreement. The agreement was intended to provide protections and predictability during the transition after Kudelski acquired Milestone, while encouraging employees to remain through that period. Hampton’s early departure went to the heart of that bargain. Because the condition was material, the court did not apply a proportionality analysis concerning the amount Hampton would have forfeited.
Voluntary Separation
The court rejected Hampton’s argument that he had been forced to leave. Although Hampton objected to reassignment, travel, and changed responsibilities, the court found that these circumstances were not objectively intolerable. The record showed that Hampton and Kudelski negotiated the terms of his departure, and that Kudelski sought to keep him involved in some capacity during the transition.
The court viewed the Separation Agreement’s wording—“the parties’ separation . . . without cause by either party”—as showing a mutual agreement rather than a termination without cause under the Post-Closing Agreement. The court therefore held that the negotiated agreement controlled.
Disposition
The court held that Hampton was not entitled to a pro-rata share of the post-closing amounts because he was not employed by Kudelski when the funds were distributed and was not terminated without cause. The court found no genuine dispute of material fact on the remaining breach-of-contract claim and granted Kohler’s Motion for Summary Judgment. Judgment was ordered to be entered accordingly.
Read the full 18-page opinion on CourtListener, the free public archive maintained by the Free Law Project.