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16-2737, 16-2788 

In Re: Lehman Brothers

UNITED STATES COURT OF APPEALS 

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER 

FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF 

APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY 

ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX 

OR AN ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY ORDER@). A PARTY CITING A SUMMARY 

ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 

At a stated term of the United States Court of Appeals for 

the Second Circuit, held at the Thurgood Marshall United States 

Courthouse, 40 Foley Square, in the City of New York, on the 

27th day of July, two thousand seventeen. 

PRESENT: DENNIS JACOBS, 

 DEBRA ANN LIVINGSTON, 

Circuit Judges, 

GEORGE B. DANIELS,

District Judge. 

- - - - - - - - - - - - - - - - - - -X 

IN RE: LEHMAN BROTHERS HOLDINGS INC., 

AND LEHMAN BROTHERS INC., 

Debtors. 

- - - - - - - - - - - - - - - - - - - 

1EE LLC, 

Plaintiff-Appellant, 

 -v.- 16-2737 

 



 Judge George B. Daniels, of the United States District Court 

for the Southern District of New York, sitting by designation. 
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JAMES W. GIDDENS, AS TRUSTEE FOR THE 

SIPA LIQUIDATION OF LEHMAN BROTHERS 

INC., 

Defendant-Appellee. 

- - - - - - - - - - - - - - - - - - - 

WAYNE JUDKINS, 

Plaintiff-Appellant, 

 -v.- 16-2788 

JAMES W. GIDDENS, AS TRUSTEE FOR THE 

SIPA LIQUIDATION OF LEHMAN BROTHERS 

INC., 

Defendant-Appellee. 

- - - - - - - - - - - - - - - - - - -X 

FOR APPELLANT 1EE LLC: DOUGLAS P. BAUMSTEIN, White & 

Case LLP, New York, NY. 

FOR APPELLANT WAYNE GREGORY L. REID, Reid 

JUDKINS: Rodriguez & Rouse LLP, New 

York, NY. 

FOR APPELLEE: JAMES C. FITZPATRICK (James 

B. Kobak, Jr., Gregory C. 

Farrell, Karen M. Chau, on the 

brief), Hughes Hubbard & Reed 

LLP, New York, NY. 

Appeal from a judgment of the United States District Court 

for the Southern District of New York (Schofield, J.). 

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND 

DECREED that the judgment of the district court be AFFIRMED in 

part and REVERSED in part. 

In these tandem appeals, which have been consolidated for 

decision, two former employees of Lehman Brothers Inc. (“LBI”) 

-- Jonathan Hoffman (through his entity 1EE LLC) and Wayne 
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Judkins -- appeal from the judgment of the United States 

District Court for the Southern District of New York (Schofield, 

J.), which affirmed that part of the order of the Bankruptcy 

Court for the Southern District of New York (Chapman, J.) 

disallowing Judkins’s claim and most of Hoffman’s claim and 

which reversed that part of the order allowing a portion of 

Hoffman’s claim. We assume the parties’ familiarity with the 

underlying facts, the procedural history, and the issues 

presented for review. 

On September 15, 2008, LBI’s parent company, Lehman 

Brothers Holdings Inc. (“LBHI”), entered bankruptcy. The 

following day, LBHI, LBI, and LB 745 LLC (another Lehman entity) 

entered into an Asset Purchase Agreement (“APA”) with Barclays 

Capital Inc. (“Barclays”) pursuant to which Barclays purchased 

the bulk of LBI’s North American capital markets and investment 

banking businesses. Under the APA, Barclays agreed to offer 

employment to former LBI employees who worked in the acquired 

businesses, and to accept certain compensation obligations with 

respect to those who accepted (referred to as “Transferred 

Employees”). Specifically, Article IX of the APA provided that 

Barclays “shall . . . pay each Transferred Employee an annual 

bonus (‘08 Annual Bonuses’), in respect of the 2008 Fiscal Year 

that, in the aggregate, are equal in amount to 100 percent of 

the bonus pool amounts accrued in respect of amounts payable 

for incentive compensation (but not base salary)[.]” App’x at 

1488. The APA further stated that “[s]uch 08 Annual Bonuses 

shall be awarded on or before March 15, 2009 in such forms and 

proportions as are consistent with [Barclays’s] customary 

practices[.]” App’x at 1488. 

 After the bankruptcy court approved the APA, Barclays made 

employment offers to former LBI employees, including Hoffman 

and Judkins. Both individuals eventually accepted, and began 

working at Barclays in the fall of 2008. 

 Hoffman had been a remarkably successful trader at LBI 

whose compensation was governed by a series of annually 

negotiated contracts. In 2007 and 2008, his contracts provided 

for a base salary of $200,000 plus an annual bonus (payable in 

a combination of cash and equity awards) based on a percentage 

of net profit he generated: twelve percent of the first $25 
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million and fourteen percent of anything beyond that, less his 

base salary. His bonus each year was to be paid in two 

installments: 75 percent in cash and equity awards early the 

following year; the rest in cash early the year after that, 

subject to “clawback” if he lost money for LBI during the 

previous year. 

The bankruptcy court calculated that, under these 

contracts with LBI, Hoffman was owed: (1) approximately $7.7 

million in cash in early 2009 as the second installment of his 

2007 bonus; (2) approximately $62.3 million in some combination 

(at LBI’s discretion) of cash and equity awards in early 2009 

as the first installment of his 2008 bonus; and (3) assuming 

he traded profitably in 2009, approximately $18.9 million in 

cash in early 2010 as the second installment of his 2008 bonus. 

Thus, the parties agree that when LBI entered liquidation, 

Hoffman was owed a total of approximately $83 million in 

bonuses. 

Barclays’s employment contract with Hoffman provides for 

payment (in cash and equity awards) of $83 million on top of 

the same general compensation package he had with LBI ($200,000 

base salary plus twelve/fourteen percent bonus). Of the $83 

million, $70 million was to be paid in three installments 

between February 2009 and February 2011, and $13 million was 

to be paid through increased performance incentives in 2009 and 

2010. Hoffman ultimately received the $83 million, plus an 

additional $100 million in compensation for his trading 

performance at Barclays in 2008 to 2010. 

Unlike Hoffman, Judkins’s time at LBI was brief. He was 

hired as a trader in January 2008 under a contract that entitled 

him to an annual salary of $200,000 plus a minimum bonus of 

$800,000 (to be paid in early 2009 in a combination of cash and 

equity awards). He claims that his managers at LBI also orally 

promised to pay him a performance bonus. 

When Barclays hired Judkins in October 2008, it agreed to 

pay him the same $200,000 base salary plus his guaranteed 2008 

bonus of $800,000. Judkins received the $800,000 bonus, in 

cash, in February 2009. 

 
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 In 2009, Hoffman (through 1EE LLC, an entity he formed for 

the purpose of asserting his bankruptcy claim) and Judkins both 

filed claims against the LBI estate for their bonuses. The 

Trustee for the liquidation of LBI objected. After a three-day 

merits hearing, the bankruptcy court found that Barclays 

ultimately paid appellants the full value of the outstanding 

bonuses they were owed. However, it concluded that because the 

$7.7 million paid to Hoffman for his 2007 bonus was outside the 

scope of the obligations delegated to Barclays under the APA, 

Hoffman could pursue a $7.7 million claim in the bankruptcy. 

The district court affirmed in part and reversed in part. 

It ruled that, regardless of the scope of the delegation in the 

APA, appellants could not claim any part of their bonuses 

because they accepted payment of those bonuses from Barclays. 

On appeal from the district court, we make an independent 

and plenary review of the bankruptcy court’s decision. Celli 

v. First Nat’l Bank (In re Layo), 460 F.3d 289, 292 (2d Cir. 

2006). We review conclusions of law de novo and findings of 

fact for clear error. Id. 

1. Appellants contend that LBI still owes them their 

bonuses. We disagree, except with respect to Hoffman’s $7.7 

million bonus for 2007. 

The bankruptcy court found that appellants and Barclays 

understood that Barclays would pay the bonuses LBI owed 

appellants. This factual finding is supported by the record 

-- including testimony by appellants and several other 

witnesses, numerous exhibits, and contract negotiations 

surreptitiously recorded by Hoffman. It is not clearly 

erroneous.1

 

 

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 The bankruptcy court did not err by looking beyond the 

appellants’ employment contracts for evidence of the parties’ 

intent. Where, as here, contracts are silent on the issue, 

courts may consider extrinsic evidence. See Palmieri v. 

Allstate Ins. Co., 445 F.3d 179, 187 (2d Cir. 2006) (observing 

that “a court should . . . giv[e] due consideration to the 

surrounding circumstances and apparent purpose which the 
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It is undisputed that Barclays paid the $83 million and 

$800,000 that LBI owed Hoffman and Judkins, respectively. The 

entire payment to Judkins and all but $7.7 million of the payment 

to Hoffman were “08 Annual Bonuses” made to “Transferred 

Employees,” App’x at 1488, and so were obligations delegated 

to Barclays under the APA.2

 Although the delegation did not 

extinguish LBI’s obligation to pay these bonuses, Barclays’s 

performance (its payment of the bonuses) did.3

 See 

Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918, 

924 (2d Cir. 1977) (“[M]ost obligations can be delegated – as 

long as performance by the delegate will not vary materially 

from performance by the delegant. . . . If the delegate fails 

to perform, the delegant remains liable.”); Headrick v. 

Rockwell Int’l Corp., 24 F.3d 1272, 1278 (10th Cir. 1994) (“[I]f 

the delegate performs the duty, the duty is discharged, and 

obligor owes obligee nothing.” (internal quotation marks 

omitted)). 

The $7.7 million owed to Hoffman for his 2007 bonus is a 

different matter. The bankruptcy court found that this amount 

lay outside the scope of the delegation in the APA (meaning 

Barclays had no obligation to pay it), and we find no error in 

that determination. Relying on the law governing unjust 

enrichment, the Trustee contends that, although the APA has been 

understood not to cover 2007 bonuses, it would be inequitable 

to allow Hoffman’s claim to the extent of his 2007 bonus in light 

of all Hoffman was paid under his agreement with Barclays. But 

 

parties [to a contract] sought to accomplish” (internal 

quotation marks omitted)). 

2

 Contrary to appellants’ contention, section 365 of the 

Bankruptcy Code, which governs the assumption and assignment 

of executory contracts, did not prohibit LBI from delegating 

its bonus obligations. It is undisputed that LBI did not 

assign, and Barclays did not assume, appellants’ employment 

contracts. 

3

 Hoffman emphasizes that the structure and timing of Barclays’s 

payments varied from the terms of his contract with LBI. 

However, Hoffman agreed to these variations -- which, in any 

event, were, the bankruptcy court found, in this case not so 

material as to invalidate Barclays’s performance -- and he 

received the entire amount owed to him. 
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Hoffman’s employment agreement with Barclays required him to 

generate substantial profits for Barclays before earning the 

full amount promised under that agreement, and we therefore find 

nothing inequitable about allowing him to pursue his liquidated 

and unpaid 2007 bonus claim against LBI in bankruptcy. See 

Georgia Malone & Co., Inc. v. Rieder, 19 N.Y.3d 511, 516 (2012) 

(“An unjust enrichment claim is rooted in the equitable 

principle that a person shall not be allowed to enrich himself 

unjustly at the expense of another.” (internal quotation marks 

omitted)); cf. Mathias v. Jacobs, 238 F.Supp.2d 556, 569 

(S.D.N.Y. 2002) (explaining that the recovery sought by the 

plaintiff would amount to unjust enrichment because, under the 

plaintiff’s theory of the case, “in exchange for no additional 

consideration other than [the plaintiff’s] ‘patience’ in not 

pressing a $1 million debt, Jacobs bestowed upon him interests 

in securities . . . with a cash value exceeding $3.4 million 

and . . . still remains personally liable to [the plaintiff] 

for the full amount of the original debt[,]” or nearly $8 

million). 

2. Judkins contends that Barclays was required to pay 

additional sums orally promised by his LBI managers. This 

argument fails because LBI’s bonus policy made clear that 

employees had no entitlement to bonuses unless guaranteed in 

writing.4

 

3. Hoffman asserts that LBI should be judicially estopped 

from arguing that Barclays satisfied LBI’s 2008 bonus 

obligation to him because LBHI took a contrary position in prior 

litigation. However, judicial estoppel does not apply, 

because this contrary position was taken by LBHI rather than 

by LBI, and because it was not adopted by a court. See Adelphia 

Recovery Tr. v. HSBC Bank USA, Nat’l Ass’n (In re Adelphia 

Recovery Tr.), 634 F.3d 678, 695-96 (2d Cir. 2011) (“Typically, 

 

4

 Because Judkins was not entitled to a bonus beyond the $800,000 

guaranteed in his contract, his attempt to seek relief under 

the New York Labor Law is unavailing. See Tierney v. Capricorn 

Inv’rs, L.P., 189 A.D.2d 629, 632 (1st Dep’t 1993) (holding that 

a “plaintiff cannot assert a statutory claim for wages under 

the Labor Law if he has no enforceable contractual right to those 

wages”). 
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judicial estoppel will apply if: 1) a party’s later position 

is clearly inconsistent with its earlier position; 2) the 

party’s former position has been adopted in some way by the court 

in the earlier proceeding; and 3) the party asserting the two 

positions would derive an unfair advantage against the party 

seeking estoppel.” (internal quotation marks omitted)). 

Accordingly, and finding no merit in appellants’ other 

arguments, we hereby AFFIRM the judgment of the district court 

with respect to the disallowance of Judkins’s claim and 

Hoffman’s claim for his 2008 LBI bonus, and REVERSE with respect 

to the disallowance of Hoffman’s claim for his 2007 LBI bonus. 

FOR THE COURT: 

CATHERINE O’HAGAN WOLFE, CLERK