Barker v. The Bancorp, Inc.

Background

John Edward Barker and Alexander John Kamai sued their former employer, The Bancorp, Inc., seeking unpaid bonuses and other compensation for work performed in 2020. Their employment ended on or about October 30, 2020. The opinion states that neither plaintiff claimed Bancorp failed to pay his base salary.

Barker and Kamai’s offer letters described them as eligible for discretionary bonuses for calendar year 2015, subject to Bancorp’s discretion and approval. During their employment, they received bonuses in several earlier years. They claimed that this history, along with statements by Ron Wechsler, created an implied contract requiring continued bonuses when they performed and generated revenue.

Bancorp’s employee handbook was in effect during the relevant period. It stated that incentive compensation was solely at the company’s discretion and could be changed or eliminated at any time. It also stated that company representatives generally lacked authority to make compensation promises without written approval from the chief executive officer or president. Barker and Kamai acknowledged receiving and reviewing the handbook in December 2019. The opinion states that neither knew of a written document guaranteeing a 2020 bonus.

Bancorp exited the real estate securitization business in 2020 and terminated the RECM team’s employment. The team was told that Bancorp would not provide 2020 bonuses. The company did not create a discretionary bonus pool for that team for 2020.

Earlier Proceedings and Motion

In an earlier ruling, the court granted in part and denied in part Bancorp’s motion to dismiss. That ruling left only Barker’s and Kamai’s claims for breach of implied contract concerning their 2020 bonuses. After discovery ended, Bancorp filed a combined motion for summary judgment.

Summary judgment allows a court to resolve a claim without a trial when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. Bancorp argued that the handbook, the offer letters, and testimony established that bonuses were discretionary. Barker and Kamai argued that their repeated bonuses and Wechsler’s oral representations were enough to create an implied contract, and that the handbook should not control because they received it only in 2019 and it stated that it was not itself a contract.

Court’s Analysis

Applying New York law, the court explained that an implied-in-fact contract is an agreement not expressed in words but inferred from the parties’ conduct. Such a contract requires evidence of mutual agreement, among other elements, and cannot be inferred when an express agreement covers the same subject or when the parties’ conduct is inconsistent with an implied promise.

The court held that the handbook’s language clearly reserved Bancorp’s discretion over whether to pay bonuses and in what amount. It found that the handbook’s statement that it was not a contract did not make the discretionary-bonus policy irrelevant. The court also concluded that prior bonus payments did not establish a continuing promise, particularly because Barker and Kamai understood that Wechsler could recommend bonuses but did not have final authority to award them.

The court rejected the argument that the handbook’s 2019 delivery date made it insufficient to defeat the claims. It reasoned that the handbook was in place for the year at issue, 2020, and that the plaintiffs had acknowledged reviewing it. The court further concluded that any expectation of guaranteed bonus compensation was unreasonable in light of the handbook and the plaintiffs’ understanding of the approval process.

Disposition

Judge Katherine Polk Failla granted Bancorp’s combined motion for summary judgment in full. The court held that no implied contract existed requiring payment of 2020 bonuses. It directed the Clerk of Court to terminate all pending motions, adjourn the remaining dates, and close the two cases.