Filed: Mar. 22, 2012
Latest Update: Feb. 22, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1396 SHARON WILLIAMS, Plaintiff – Appellant, v. CDP, INCORPORATED; CELLAR DOOR MANAGEMENT, INCORPORATED; JJJ MANAGEMENT, INCORPORATED; CELLAR DOOR AMPHITHEATER, INCORPORATED; SFX ENTERTAINMENT, INCORPORATED, A Wholly Owned Subsidiary of Clear Channel Communications, Incorporated, Successor in Interest to CDP, Incorporated and Cellar Door Amphitheater, Incorporated; CLEAR CHANNEL COMMUNICATIONS, INCORPORATED, Successor in In
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1396 SHARON WILLIAMS, Plaintiff – Appellant, v. CDP, INCORPORATED; CELLAR DOOR MANAGEMENT, INCORPORATED; JJJ MANAGEMENT, INCORPORATED; CELLAR DOOR AMPHITHEATER, INCORPORATED; SFX ENTERTAINMENT, INCORPORATED, A Wholly Owned Subsidiary of Clear Channel Communications, Incorporated, Successor in Interest to CDP, Incorporated and Cellar Door Amphitheater, Incorporated; CLEAR CHANNEL COMMUNICATIONS, INCORPORATED, Successor in Int..
More
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1396
SHARON WILLIAMS,
Plaintiff – Appellant,
v.
CDP, INCORPORATED; CELLAR DOOR MANAGEMENT, INCORPORATED;
JJJ MANAGEMENT, INCORPORATED; CELLAR DOOR AMPHITHEATER,
INCORPORATED; SFX ENTERTAINMENT, INCORPORATED, A Wholly
Owned Subsidiary of Clear Channel Communications,
Incorporated, Successor in Interest to CDP, Incorporated
and Cellar Door Amphitheater, Incorporated; CLEAR CHANNEL
COMMUNICATIONS, INCORPORATED, Successor in Interest to SFX
Entertainment, Incorporated d/b/a Clear Channel
Entertainment; LIVE NATION WORLDWIDE, INCORPORATED,
Successor in Interest to CDP, Incorporated; JOHN J. BOYLE,
Defendants – Appellees.
Appeal from the United States District Court for the Eastern
District of Virginia, at Newport News. Raymond A. Jackson,
District Judge. (4:09-cv-00084-RAJ-TEM)
Argued: December 8, 2011 Decided: March 22, 2012
Before TRAXLER, Chief Judge, and AGEE and DIAZ, Circuit Judges.
Vacated and remanded by unpublished opinion. Judge Diaz wrote
the opinion, in which Chief Judge Traxler and Judge Agee joined.
ARGUED: Harris D. Butler, BUTLER ROYALS, PLC, Richmond,
Virginia, for Appellant. Susan Childers North, LECLAIRRYAN, PC,
Williamsburg, Virginia; Scott William Kezman, KAUFMAN & CANOLES,
PC, Norfolk, Virginia, for Appellees. ON BRIEF: Charles L.
Williams, BUTLER WILLIAMS & SKILLING, PC, Richmond, Virginia,
for Appellant. Brian G. Muse, LECLAIRRYAN, PC, Williamsburg,
Virginia, for Appellees CDP, Incorporated, Cellar Door
Amphitheater, Incorporated, SFX Entertainment, Incorporated,
Clear Channel Communications, Incorporated, and Live Nation
Worldwide, Incorporated; Marc E. Darnell, KAUFMAN & CANOLES, PC,
Norfolk, Virginia, for Appellees Cellar Door Management,
Incorporated, JJJ Management, Incorporated, and John J. Boyle.
Unpublished opinions are not binding precedent in this circuit.
2
DIAZ, Circuit Judge:
David Williams and his employer CDP, Inc. entered into a
Deferred Compensation Agreement that provided in part for a
$100,000 annual benefit payable to his spouse, Sharon Williams,
after his death. David Williams died while still employed by
CDP. Following her husband’s death, Sharon Williams began
receiving monthly payments totaling $100,000 per year from David
Williams’s former employer. Nearly nine years later, the
payments stopped. Sharon Williams sued CDP and several
affiliated companies, seeking to enforce the spousal death
benefit provision.
CDP and the other defendants moved for judgment on the
pleadings, contending that the Deferred Compensation Agreement
unambiguously required David Williams to retire as a condition
precedent to payment of the benefit. The district court agreed
and granted the defendants’ motion. Because the provision at
issue is susceptible to more than one meaning, we hold that the
agreement is ambiguous and therefore vacate the judgment of the
district court.
I.
David Williams, a music and theater promoter, and his
employer CDP, Inc. entered into a Deferred Compensation
Agreement dated December 1, 1994. That same day, the parties
3
also signed a separate Employment Agreement. The Deferred
Compensation Agreement states that the Employment Agreement
governs the employment relationship between the parties,
references the restrictive covenants contained in that
agreement, and adopts its defined terms where applicable. The
term of the Deferred Compensation Agreement began on the date of
the agreement and continued through David Williams’s death. The
term of the Employment Agreement also began on the date of the
agreement but, unlike the Deferred Compensation Agreement, ended
upon David Williams’s termination. Both contracts were
guaranteed by Cellar Door Management, Inc.; Cellar Door
Amphitheater, Inc.; and John J. Boyle or any entity in which he
owned an interest.
The Deferred Compensation Agreement contains a paragraph
that defines both the deferred compensation payable to David
Williams as well as the death benefit payable to his spouse.
The paragraph first states that, commencing upon his retirement
and termination, David Williams is entitled to annual payments
equal to the greater of $100,000 or the sum of thirty-three
percent of available cash and amounts paid out from business
operations. The next sentence of the paragraph describes the
spousal death benefit and provides for a $100,000 annual payment
to Sharon Williams if she and her husband are still married when
he dies.
4
David Williams died on January 27, 1999 while still
employed by CDP. Following his death, CDP and Cellar Door
Management began making monthly payments to Sharon Williams
totaling $100,000 per year. In June 2008, the payments stopped.
Thereafter, Sharon Williams filed suit in Virginia Circuit
Court, alleging (1) breach of contract against CDP; Cellar Door
Management; JJJ Management, Inc.; SFX Entertainment, Inc.; Clear
Channel Communications, Inc.; Live Nation Worldwide, Inc.; and
Boyle; (2) breach of guaranty against Cellar Door Management,
Cellar Door Amphitheater, SFX, Clear Channel, and Live Nation;
(3) a third-party beneficiary claim against Boyle; and (4) a
third-party beneficiary claim against all defendants. Each of
the claims stemmed from the alleged breach of the spousal death
benefit provision in the Deferred Compensation Agreement.
The defendants removed the case to federal district court,
asserting diversity among the real parties in interest. As of
the date of the lawsuit, Cellar Door Management had changed its
name to JJJ Management. Similarly, through dissolutions and
corporate successions, CDP, SFX Entertainment, and Clear Channel
had all been combined into Live Nation. Following removal, Live
Nation filed an answer on behalf of CDP, SFX, and Clear Channel
(collectively “Live Nation”), while Boyle and JJJ Management—as
successor in interest to Cellar Door Management—each filed
responses to the complaint.
5
Live Nation moved for judgment on the pleadings pursuant to
Federal Rule of Civil Procedure 12(c). JJJ Management later
moved to adopt Live Nation’s motion. The district court granted
the defendants’ motion, holding as a matter of law that the
Deferred Compensation Agreement unambiguously requires that
David Williams be retired as a condition precedent to payment of
the spousal death benefit. Because David Williams was still
employed when he died, the district court concluded that Sharon
Williams failed to state a claim upon which relief could be
granted and ordered the case dismissed. Sharon Williams
appealed.
II.
We review a district court’s dismissal under Rule 12(c) de
novo, applying the same standard we would to a Rule 12(b)(6)
motion to dismiss for failure to state a claim. Volvo Constr.
Equip. N. Am., Inc. v. CLM Equip. Co., 386 F.3d 581, 591 (4th
Cir. 2004) (citing Burbach Broadcasting Co. of Del. v. Elkins
Radio Corp.,
278 F.3d 401, 405–06 (4th Cir. 2002)).
Accordingly, we assume all facts alleged are true and draw all
reasonable inferences in favor of the plaintiff,
id., to
determine whether the complaint alleges a set of facts
sufficient to state a claim that is “plausible on its face,”
Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007).
6
The issue of whether a contract is ambiguous presents a
question of law that we review de novo. Moore Bros. Co. v.
Brown & Root, Inc., 207 F.3d 717, 726 (4th Cir. 2000); Video
Zone, Inc. v. KF & F Props., L.C.,
594 S.E.2d 921, 923 (Va.
2004). In a contract dispute, judgment on the pleadings may be
appropriate “ ‘where an agreement is complete on its face and is
plain and unambiguous in its terms.’ ” Pac. Ins. Co. v. Am.
Nat’l Fire Ins. Co.,
148 F.3d 396, 405 (4th Cir. 1998) (quoting
Lerner v. Gudelsky Co.,
334 S.E.2d 579, 584 (Va. 1985)). If a
particular term is ambiguous, however, the meaning of that term
presents an issue of fact that precludes dismissal on a motion
for judgment on the pleadings. Martin Marietta Corp. v. Int’l
Telecomms. Satellite Org.,
991 F.2d 94, 97 (4th Cir. 1992).
Under Virginia law, 1 “[t]he language of a contract is
ambiguous if ‘it may be understood in more than one way or when
it refers to two or more things at the same time.’ ” Video
Zone, 594 S.E.2d at 923 (quoting Eure v. Norfolk Shipbuilding &
Drydock Corp.,
561 S.E.2d 663, 668 (Va. 2002)). “[A]n
ambiguity, if it exists, must appear on the face of the
instrument.” Id.; see also Westmoreland-LG&E Partners v. Va.
Elec. & Power Co.,
486 S.E.2d 289, 294 (Va. 1997) (explaining
1
Both agreements specify that Virginia law governs issues
of interpretation.
7
that courts will resort to extrinsic evidence of intent only if
the terms are ambiguous). “In determining whether disputed
contractual terms are ambiguous, we consider the words employed
by the parties in accordance with their usual, ordinary, and
popular meaning.” Pocahontas Mining LLC v. CNX Gas Co., 666
S.E.2d 527, 531 (Va. 2008). Courts treat the omission of a
particular term from a contract as evidence that the parties
intended to exclude that term.
Id.
In determining whether ambiguity exists, “ ‘[a] contract
must be construed as a whole to determine the parties’ intent
with respect to specific provisions.’ ” Va.
Elec., 486 S.E.2d at
294 (quoting Hooper v. Musolino,
364 S.E.2d 207, 212 (Va.
1988)). When parties enter into multiple agreements related to
the same subject matter on the same day, courts will construe
the documents together to ascertain the meaning. Countryside
Orthopaedics, P.C. v. Peyton,
541 S.E.2d 279, 284 (Va. 2001).
III.
In this case, the disputed provision appears in paragraph 3
of the Deferred Compensation Agreement and states as follows:
3. Deferred Compensation; Death Benefit; and
Payments for Restrictive Covenants. Commencing upon
the Employee’s retirement from the Employer and the
termination of his employment under the Employment
Agreement and continuing for the remaining Term of
this Agreement, the Employee shall be paid an amount
per annum equal to the greater of (i) $100,000 or (ii)
8
the sum of (a) 33 percent of Available Cash 2 and (b)
the CDA Amount. 3 If, at the time of Employee’s death,
Employee is survived by, and is still married to, his
current spouse (i.e., his spouse as of the date this
Agreement is executed), then the Employer shall either
(i) pay to such spouse $100,000 per annum for her life
or (ii) purchase a commercial annuity that will pay
her $100,000 per annum for her life.
J.A. 31 (emphasis added). The dispute in this case turns on
whether the opening clause of the first sentence in paragraph 3
also modifies the second sentence, thus requiring that David
Williams be retired as a condition precedent to the obligation
to pay the spousal death benefit.
Although the district court’s view of the paragraph is
certainly reasonable, we conclude that there is another equally
reasonable interpretation of the words employed by the parties.
As an initial matter, the agreement employs a full stop after
describing deferred compensation in the first sentence before
2
The Employment Agreement defines “Available Cash” as “the
excess of cash receipts of the Company . . . during such
calendar year over the sum of (i) all costs and expenses
incident to the operation and management of the Company . . .
and (ii) amounts actually allocated during such year in the
discretion of the Board of Directors of the Company as reserves
to pay taxes, insurance, debt service and/or other costs,
expenses and liabilities of the Company.” J.A. 22. The
Deferred Compensation Agreement expressly adopts the definitions
contained in the Employment Agreement.
3
For purposes of the agreements, “CDA Amount” means “an
amount equal to the amount of any distribution made to John J.
Boyle or any member of his immediate family from the operation
of Cellar Door Amphitheater, Inc.” J.A. 23.
9
turning to the spousal death benefit in the second sentence. As
a result, the language stating “[c]ommencing upon Employee’s
retirement” appears in a sentence separate from the description
of the spousal death benefit. Moreover, the second sentence
does not repeat or refer to the condition contained in the
opening clause of the first sentence. See Pocahontas, 666
S.E.2d at 531 (“[T]he omission of a particular term from a
contract is evidence that the parties intended to exclude that
term.”). In fact, the only condition contained in the sentence
describing the spousal death benefit is that David Williams must
be “survived by, and . . . still married to, his current spouse
(i.e., his spouse as of the date this Agreement is executed)” at
the time of his death. J.A. 31. Given this structure and the
omission of the retirement condition from the sentence
describing the spousal death benefit, the issue of whether the
requirement that David Williams retire modifies the entire
paragraph is at the very least susceptible to multiple
interpretations. 4
4
While not controlling, we also note that the title of
paragraph 3 indicates that the paragraph relates to three
distinct benefits. The title lists three items, each separated
by a semicolon: “Deferred Compensation; Death Benefit; and
Payments for Restrictive Covenants.” J.A. 31. Based on this
structure, it does not follow that a condition imposed with
respect to one of these benefits necessarily applies to all
three.
10
Live Nation offers two primary arguments in support of the
district court’s conclusion that David Williams’s retirement was
an unambiguous condition precedent to payment of the spousal
death benefit. First, Live Nation contends that the meaning of
the disputed language in the Deferred Compensation Agreement is
clear when read in conjunction with the death benefit described
in the separate but related Employment Agreement. Second, Live
Nation suggests that, when read as a whole, the Deferred
Compensation Agreement compels the conclusion that retirement
was a condition precedent because the contract states elsewhere
that postretirement advisory services were part of the
consideration. We are not persuaded.
According to Live Nation, when the Deferred Compensation
Agreement and the Employment Agreement are read together, it is
clear that David Williams’s retirement was a condition precedent
to payment of the spousal death benefit. In support, Live
Nation points to the following language from paragraph 5.3 of
the Employment Agreement:
Death. In the event of the death of the Executive
during the term of his employment hereunder, the
Company shall (i) pay to the estate of the deceased
Executive any unpaid Base Salary through the
Executive’s date of death, (ii) pay to the estate of
the deceased Executive the Bonus, if any, not yet paid
to the Executive for any year prior to the date of
death, at such time as the Bonus would otherwise have
been payable to the Executive, and (iii) pay to the
estate of the deceased Executive a portion of the
Bonus, if any, for the year in which such death
11
occurs, at such time as the Bonus would otherwise have
been payable to the Executive, equal to the product of
(x) the quotient obtained by dividing (A) the number
of months in the year that the Executive was employed
by the Company prior to his death (including the month
in which the death occurs if the death occurred on or
after the fifteenth of such month), by (B) 12, times
(y) the Bonus for the year in which the death occurs
. . . . The Company shall have no further liability
hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of the
Executive’s death. . . .).
Id. 24 (emphasis added). Live Nation contends that this
separate death benefit cannot be reconciled with the spousal
death benefit in the Deferred Compensation Agreement if both
were payable regardless of whether David Williams retired prior
to his death.
According to Live Nation, the only plausible construction
is that the Employment Agreement governed the relationship
between David Williams and CDP during the term of his
employment, while the Deferred Compensation Agreement controlled
following his retirement or termination. As such, Live Nation
urges that paragraph 5.3 of the Employment Agreement establishes
the exclusive benefits payable should David Williams die during
the course of his employment, while paragraph 3 of the Deferred
Compensation Agreement establishes the benefits payable if he
dies following his retirement. Live Nation contends that this
interpretation avoids the creation of two inconsistent death
12
benefit obligations should David Williams die while still
employed by CDP.
Although Live Nation is correct that we construe the
meaning of the two agreements together, see Countryside, 541
S.E.2d at 284, its argument ignores the term specified in the
Deferred Compensation Agreement and mischaracterizes the benefit
provided in each agreement. Contrary to Live Nation’s
assertion, the term of the Deferred Compensation Agreement did
not begin following David Williams’s retirement but instead
began as of the date of the agreement. Thus it does not follow,
as Live Nation suggests, that the Employment Agreement
exclusively controlled during David Williams’s employment, while
the Deferred Compensation Agreement governed during his
retirement.
Instead, the agreements describe two distinct benefits
payable to two different beneficiaries. The death benefit in
the Deferred Compensation Agreement was payable to David
Williams’s “current spouse” and provided an annual payment for
her support following his death. The death provisions of the
Employment Agreement, on the other hand, describe payments to
David Williams’s “estate,” to include reimbursement for his
unpaid salary, prior year’s bonus, and the portion of the bonus
earned during the year of his death. This latter benefit serves
a purpose different than the spousal death benefit in the
13
Deferred Compensation Agreement and thus is not an inconsistent
obligation, as Live Nation contends.
Live Nation also seeks support for its view from paragraph
4 of the Deferred Compensation Agreement, which provides in
relevant part as follows:
In consideration of the payments to be made hereunder
during the Term of this Agreement, Employee agrees to
perform such advisory and consultative services as may
be reasonably requested by Employer, in order that the
Employer may continue to benefit from the Employee’s
experience, knowledge, reputation and contacts in the
industry.
J.A. 31–32. Live Nation contends that because David Williams
could not perform these advisory services while still employed,
the Deferred Compensation Agreement necessarily applies only
during David Williams’s retirement. Because paragraph 4
characterizes the advisory services as consideration for
payments made under the agreement, Live Nation reasons that to
interpret the agreement otherwise would mean that it fails for
lack of consideration.
Live Nation’s argument again ignores the language of the
Deferred Compensation Agreement, which specifies that “[t]he
term of this Agreement shall begin on the date of this Agreement
and shall terminate upon the death of the Employee.” Id. 31
(emphasis added). Live Nation was not obligated to pay spousal
death benefits until after David Williams’s death, meaning that
all such payments were due after the term of the Deferred
14
Compensation Agreement. Given that the “payments” that were to
serve as “consideration” under paragraph 4 of the Deferred
Compensation Agreement were to be made “during the term of this
Agreement,” id. (emphasis added), plainly such payments could
not include the spousal death benefit. 5
Furthermore, the provision of advisory services was not the
sole consideration specified in the agreement. For example,
both agreements summarize David Williams’s past service and the
desire that he continue his “attention and dedication to the
Company” as part of the consideration. Id. 21, 31. The
agreements also refer to the mutual covenants contained therein,
including the noncompetition provisions, as additional
consideration for the payments. Accordingly, we hold that the
Deferred Compensation Agreement was supported by adequate
consideration and reject Live Nation’s argument that failure to
provide the advisory services renders the agreement, including
the promise to pay the spousal death benefit, gratuitous.
5
Our interpretation does not render the phrase “[i]n
consideration of the payments to be made . . . during the term
of this agreement” obsolete. The Deferred Compensation
Agreement provides that David Williams was to receive deferred
compensation payments following his retirement. These payments
were due “during the term of the agreement,” which expired upon
his death. Accordingly, a reasonable view of the language of
paragraph 4 is that the parties contemplated that the advisory
services would serve as consideration for those payments.
15
In sum, after considering the words and phrases employed in
paragraph 3 of the Deferred Compensation Agreement, we find that
the spousal death benefit provision is susceptible to multiple
meanings. Furthermore, after reviewing the agreement as a whole
and construing it together with the Employment Agreement, we
find nothing that clarifies the ambiguity or renders the
provision subject to only one plausible interpretation. We
therefore hold, contrary to the district court’s conclusion,
that the meaning of the spousal death benefit in the Deferred
Compensation Agreement is ambiguous.
IV.
For the foregoing reasons, we vacate the district court’s
judgment and remand for further proceedings consistent with this
opinion.
VACATED AND REMANDED
16
