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Baumann Paper Co., Inc. v. Holland

Supreme Court of Kentucky

June 14, 2018

BAUMANN PAPER CO., INC. APPELLANT
v.
KENNETH HOLLAND APPELLEE

          ON REVIEW FROM COURT OF APPEALS CASE NO. 2015-CA-000910-MR FAYETTE CIRCUIT COURT NO. 14-CI-01619

          COUNSEL FOR APPELLANT: William A. Hoskins III Jackson Kelly PLLC Brent Robert Baughman Bingham Greenebaum Doil, LLP Margaret Jane Brannon Jackson Kelly PLLC Jared Andrew Cox Bingham Greenebaum Doll, LLP.

          COUNSEL FOR APPELLEE: Edwin Clark.

          OPINION

          WRIGHT JUSTICE.

         I. BACKGROUND

         Kenneth Holland began his employment with Baumann Paper in 1971 and worked for the company until his retirement in September 2013. Holland had worked as a warehouse employee arid supervisor until he took a Family Medical Leave Act (FMLA) absence due to heart complications in 2013. . Holland's doctor determined that Holland's heart complications were disabling and he was unable to return to work. Once Holland's FMLA leave expired, the company offered Holland early retirement, which he took. When Holland retired from Baumann, he began receiving money from his 4Ol(k) and profit sharing benefits.

         For the first sixteen years of Holland's tenure at Baumann Paper, the company had a pension plan. However, in 1987, Baumann Paper discontinued the pension plan and provided other retirement options to its employees. Among these options were a 401 (k) plan, a profit sharing plan, and a purported salary continuation agreement (hereinafter known as the SCA). The parties disagree as to whether the SCA was a binding agreement.

         The SCA was discussed in depth with Holland and other Baumann Paper employees by Manfred Benndorf, an insurance agent, and the president of Baumann Paper, Fred Baumann. It was signed by both Holland and Baumann Paper's secretary, Mitchell Baumann.[1] The president of Baumann Paper, Fred Baumann, did not sign the SCA and the company argues, for that reason, the SCA did not bind Baumann Paper. However, Baumann Paper's corporate secretary signed the SCA and a corporate resolution document details the Board of Directors' meeting during which the SCA was approved.

         Holland contributed to the 4Ol(k) and a profit-sharing plan. When Baumann Paper sent Holland a letter offering him early retirement upon the expiration of his FMLA time, the letter stated Holland must retire to rollover his 4Ol(k) and profit sharing benefits. Holland retired and sent Baumann Paper a letter demanding the disability income benefits that were entailed in the SCA. Baumann Paper has maintained that this agreement never became binding. However, as mentioned previously, the corporate secretary had signed the SCA and there is a corporate resolution document that details a Board of Directors' meeting in 1987 which approved the SCA. Further, Baumann Paper took out life insurance policies on the employees who discussed the SCA, including Holland. Fred Baumann, president of Baumann Paper, testified that the reasoning for the life insurance policies was twofold: first, due to the value of the employees to the company, and, secondly, that the insurance was initially an attempt to pay for the projected costs of the SCA benefits.

         Holland brought claims against Baumann Paper for breach of contract, quantum meruit, unjust enrichment, conversion, [2] and fraud. On March 25, 2015, the trial court overruled Holland's and Baumann Paper's motions for summary judgment on the issues of breach of contract, quantum meruit, unjust enrichment, and fraud, but granted Baumann Paper's motion for summary judgment on the issue of conversion. Thereafter, Baumann Paper filed a motion asking the trial court to alter, amend or vacate its opinion and order. The trial court sustained this motion and vacated its original opinion and order. In reconsidering, the trial court held that Baumann Paper was entitled to summary judgment as a matter of law on all claims, and dismissed Holland's complaint with prejudice.

         Holland appealed to the Court of Appeals and that court reversed the circuit court, stating that the agreement constituted a valid contract and remanded to the trial court for further proceedings regarding whether Holland suffered a disability, and, if so, to what damages Holland is entitled. Baumann Paper appealed that decision to this Court. We affirm the Court of Appeals and remand this case to the trial court for further factual determinations regarding the alleged breach of the contract.

         II. ANALYSIS

         This case turns on the issue of contract formation-which is a question of law to be reviewed de novo. For the reasons detailed below, we hold the parties formed a valid contract regarding the SCA. Our inquiry does not end there, however. We must also examine the trial court's entry of summary judgment. This Court has held "summary judgment is proper only where the movant shows that the adverse party cannot prevail under any circumstances." Steelvest, Inc. v. Scansteel Sew. Ctr., Inc., 807. S.W.2d 476, .479 (Ky. 1991). Furthermore, Kentucky Rules of Civil Procedure Rule 5.6.03 states that summary judgment should be granted if the evidence shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. In review of the record, we believe there are sufficient genuine issues of material fact for Holland to withstand a motion for summary judgment. Thus, the trial court erred by entering summary judgment at that stage of the proceedings, and Holland would suffer an injustice by this Court now affirming that summary judgment.

         Specifically, Holland has presented a genuine issue of material fact as to the breach of the SCA contract. Baumann Paper has failed to show that Holland could not prevail under any ...


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