Mason v. Amtrust Financial Services, Inc.

Background

Eugene Mason sued AmTrust Financial Services, Inc. and Davis Lewis. Earlier rulings narrowed the case to one breach-of-contract claim concerning two bonuses for Mason’s last full year of employment, 2018: (1) a bonus of more than $1 million allegedly based on three percent of annual net underwriting income, and (2) nearly $77,000 in restricted stock that Mason claimed should have remained available to vest after AmTrust ended his employment.

Mason had been hired in 2013 as Senior Vice President, Professional Liability Leader. AmTrust terminated his employment for cause on July 17, 2019. AmTrust did not pay him a 2018 net-underwriting-income bonus because it calculated that the relevant unit had lost more than $6 million. AmTrust awarded Mason a $25,000 cash discretionary bonus for 2018 but ended his employment before making any restricted-stock award for that year. After the termination, AmTrust cancelled 5,191 unvested long-term-incentive units from earlier discretionary bonuses, which the opinion valued at $76,567.25 as of July 2019.

Net-underwriting-income bonus

AmTrust moved under Federal Rule of Civil Procedure 52(c) for judgment on partial findings concerning damages. That rule permits judgment against a party during a non-jury trial after the party has been fully heard on an issue and cannot prevail without a favorable finding on that issue.

The court granted the motion. Mason’s expert had calculated a bonus of $1,004,082 by adjusting AmTrust’s loss calculation and relying on three revenue figures. The court had excluded the expert’s estimate of incurred losses in an earlier ruling. Mason also offered no supporting evidence for the additional revenue figures on which the expert relied. The court therefore found that Mason had not presented admissible evidence showing that he was entitled to a 2018 net-underwriting-income bonus or establishing the amount of his damages.

Restricted-stock bonus

The employment letter said Mason could receive a discretionary bonus, with no obligation that AmTrust pay one, and that up to half could be paid in restricted stock units or other equity. It also stated that bonuses would be paid in the year after they were earned if Mason’s employment had not ended beforehand.

The separate equity agreements stated that unvested units would not vest after service ended and would be forfeited, and that termination for cause would immediately forfeit vested but undelivered and unvested units. Applying New York contract law, the court read the employment letter and equity agreements together. It concluded that the equity agreements governed the restricted-stock awards’ vesting and forfeiture conditions. The court also relied on the parties’ course of conduct: Mason had signed the equity agreements for several years and offered no evidence that he objected to their forfeiture terms.

The court rejected Mason’s argument that the employment letter superseded the equity agreements or required the discretionary bonus to be paid in full the following year. The court held that AmTrust was permitted to cancel the 5,191 unvested units after Mason’s employment ended, so Mason did not prove that he remained entitled to those units or their value.

Disposition

The court entered judgment for AmTrust on the sole remaining breach-of-contract claim, cancelled the scheduled non-jury trial, and directed the Clerk of Court to close the case. The opinion does not separately state a disposition for Davis Lewis in its conclusion.