IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-30853

GERALD T. (JAY) HENNINGS, JR.,

Plaintiff – Appellant

v.

CDI CORPORATION,

Defendant – Appellee

Appeal from the United States District Court

for the Middle District of Louisiana

No. 3:08-CV-271

Before SMITH, SOUTHWICK, and GRAVES, Circuit Judges.

PER CURIAM:*

FACTS AND PROCEDURAL HISTORY

Gerald T. Hennings, Jr. (“Hennings”), was employed by CDI Corporation

(“CDI”) at its Baton Rouge, Louisiana office until January 2008. While 1

United States Court of Appeals

Fifth Circuit

F I L E D

October 18, 2011

Lyle W. Cayce

Clerk

 Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not *

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

CDI Corporation is a multi-branch professional services company that offers 1

engineering services, technology outsourcing solutions and professional staffing to various

customers. CDI’s Baton Rouge, Louisiana branch services customers such as Shell and

Georgia Gulf Chemicals. 

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employed at CDI, Hennings served as the Director of Business Development. 

Hennings’s immediate supervisor, Paul Hough, was the then Vice President of

Operations at the Baton Rouge office. In August 2007, Hough left CDI, leaving

the Vice President of Operations position open. While CDI was looking for

Hough’s replacement, Hennings served as both Director of Business

Development and Interim Vice President of Operations. As Director of Business 2

Development, Hennings’s duties included “represent[ing] CDI in the designated

markets to promote and sell [its] services . . . and [] maintain[ing] high level

contacts with current customers to ensure that [CDI] meet[s] customer needs

and expectations allowing retention of key accounts.” 

While Hennings was employed at CDI, he participated in four employee

incentive plans. In early 2004, Hennings was given a contract titled “CDI 3

Solutions 2004 Business Development Executive Commission Plan” (“2004

Plan”). According to the 2004 Plan, Hennings would “receive commissions based

on Direct Margin for all accounts that you directly sell resulting in an executed

contract . . . . Commissions will be paid on a monthly basis, within

approximately 45 days following [the] month[’s] end.” The 2004 Plan also

contained a reservation of rights provision that provided: 

[i]f you have any issues regarding monthly incentive payments, they

must be summarized in writing and submitted to the applicable

Branch or Area Manager within 30 days of the payment date. All

claims must then be forwarded to the Vice President of

Compensation and Benefits for review and resolution. All

 In late 2007, CDI hired Ray Crichton to take over full-time as the Vice President of 2

Operations. R. 694.

CDI’s incentive plans are purported “to recognize and reward key employees [] who

3

contribute to the overall financial performance of their area, business unit, and Company. By

rewarding the successful achievement . . . , CDI provides competitive opportunity to enrich

your annual cash compensation while driving the behaviors needed to enhance Company

performance.” Essentially,these plans provide “bonuses” based on a percentage of the amount

of the specific contracts sold. 

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subsequent determinations by CDI Executive Management are

final. 

CDI Executive Management reserves the right to amend the terms

of this plan or make other adjustments as necessary to respond to

specific business conditions. 

Before signing the 2004 Plan, Hennings asked Hough what the

“reservation of rights” provision meant. Hough explained,

I indicated to Mr. Hennings that CDI had not provided to me a list

of conditions that was meant to be included in the “specific business

conditions” phrase. I also indicated that CDI had not provided any

explanation or guidance regarding the meaning of this phrase. 

However, I did indicate to Mr. Hennings that it was my belief that

if there was some major company-wide problem, such as not

meeting any of the objectives in its annual plan, then CDI would

consider that as a condition it might use to modify the 2004

Commission Plan.

On February 27, 2004, Hennings signed the 2004 Plan. Despite the terms

of the 2004 Plan, Hennings did not receive any commission payments on a

monthly basis. Richard Giannone testified that Hennings was not entitled to 4

the commission payments on a monthly basis. Instead, Hennings was entitled

to a lump sum payment on the payout date following the end of the year. 

Hennings continued to work for CDI without objection. On April 29, 2005,

Hennings received a lump sum payment of $13,812.00 under the terms of the

2004 Plan.

On November 29, 2005, Hennings signed another contract, “CDI Solutions

2005 Business Development Executive Commission Plan” (“2005 Plan”), which

was similar to the 2004 Plan. The 2005 Plan contained the same provisions as

the 2004 Plan, including the express reservation of the right to modify the 2005

Richard Giannone was the Executive Vice President of CDI in Baton Rouge, 4

Louisiana.

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Plan and instructions on how to address any issues or complaints dealing with

the 2005 Plan. 

On February 22, 2006, Hennings submitted to Hough a report containing

his calculations of the commission payments that CDI owed to him. These

calculations included payments for the second twelve-month period of contracts

lasting longer than two years from the 2004 Plan and commission payments 5

from the 2005 Plan. Hough forwarded Hennings’s calculations and concerns to

his supervisor, Senior Vice President of the Process and Industrial Division

Keith Clauss. Hough noted to Clauss, “whom ever decided to use [these

percentages] really cost the company a lot of money. The plan itself is not that

bad[,] but to give sales persons 6% and 3% of all D[irect] M[argin] for the sale is

crazy. . . . At least we won’t be dealing with these inequities next year.”

Based on these “inequities,” CDI decided to amend the commission

payment provision. Ultimately, CDI reduced the commission payments for all

employees at the Baton Rouge office by fifteen percent. Based on the percentage

reduction, Hennings received a total of $110,267.00, which represented eighty- 6

five percent of the amount claimed by Hennings under the 2005 Plan. Giannone

testified that the 2005 Plan’s payment provision was amended to respond to

“specific business conditions;” namely, because the Baton Rouge office had failed

to generate enough profit to justify or supportthe claimed commission payments. 

By Giannone’s calculations, the claimed commissions for the entire Baton Rouge

office would have been more than fifteen percent of what that office brought in 7

CDI’s 2004 Plan included a “transition pay plan” which consisted of commission 5

payments based upon a particular formula set out in the plan.

This amount represents roughly forty percent of the total amount of commissions 6

paid to the Baton Rouge branch. 

CDI employed over 300 people at the Baton Rouge office, including administrative 7

executives, management and sales persons. 

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that year. In fact, of the $1,759,000.00 that the Baton Rouge branch brought in,

CDI paid out $269,681.00 in bonuses to Baton Rouge employees.

After Hennings received his reduced payment, he sent a detailed letter to

Hough regarding the fifteen percent reduction. However, Hennings was unsure

whether his letter was forwarded to the Vice President of Compensation, as

required by the terms of the plan. Without following up on his letter, Hennings

continued to work for CDI. 

By early 2006, Hennings learned that CDI was going to reevaluate the

structure of its incentive plan. Hennings was advised that CDI was changing

its incentive plan to a purely discretionary plan. At a dinner meeting for CDI

management, Giannone advised Hennings multiple times that there would be

no carryover payments from the 2005 Plan because the 2005 Plan was being

replaced by the 2006 Plan. The terms of the 2006 Plan make this clear: “[w]hile

you are a participant of this Plan, you cannot participate in any other bonus

program in CDI.” Giannone claimed that this provision eliminated any

obligation CDI owed to Hennings under the 2005 Plan. In February 2006,

Hennings sent Giannone an electronic mail stating that he realized the 2006

Plan would be different and that he included the carryover amount in his

commission payment calculations as a “reference” and would delete them from

the calculations if necessary. Months later, after numerous electronic mail

discussions concerning whether or not there was any carryover from the 2005

Plan, Hennings signed the “CDI Engineering Solutions Discretionary Bonus

Plan” (“2006 Plan”) on December 12, 2006.

The 2006 Plan provides, “[s]ince this is a Discretionary program there is

no guarantee that a reward will be paid out.” Under the terms of the 2006 Plan,

employees would not receive their discretionary payment until April 2007. 

However, if the employee’s employment with the company ended before the

payment date, the employee would not receive any payment. In April 2007,

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Hennings received a bonus payment of $25,000.00. Giannone testified, “[t]his

payment did not include any carryover under the 2005 Incentive Plan; but did

take into consideration the work performed by [Hennings] prior to 2006.”

Shortly after receiving payment under the 2006 Plan, Hennings executed

another incentive plan contract titled 2007 Regional Sales Director Incentive

Plan (“2007 Plan”). The 2007 Plan included a payout date for April 2008, but

stated: 

[s]ubject to termination provisions below, you must be employed by

CDI on the day of incentive payouts to be considered for a[n]

incentive award. 

If you resign or are terminated by the company for cause on or

before the day of incentive payment, you will not be eligible to

receive an incentive award. 

If your employment with the company ends on or before June 30,

2007, you will not be eligible to receive an incentive award for 2007.

If your employment with the company terminates due to retirement,

long-term disability, death or job elimination by the company after

June 30, 2007, an incentive payment will be made considering your

accomplishments and the proportional time of service. 

On December 22, 2007, Hennings notified Crichton that he had decided to

“retire” from CDI and that his last day of employment would be January 13,

2008. On December 26, 2007, Hennings accepted an offer of employment with

Excel. During Hennings’s exit interview with CDI, Hennings stated that he

decided to leave CDI for a “[b]etter [o]pportunity. Advancing to V[ice]

P[resident] of Excel, Construction Maintenance [C]ompany.” Hennings also

indicated that his new position at Excel would offer a higher salary, more

benefits, and more responsibility. CDI claimed that Hennings did not “retire,”

but instead “voluntarily resigned to start a new job.” Because CDI determined

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that Hennings “voluntarily resigned” before the April 2008 payout date, CDI did

not make any bonus payments to Hennings under the 2007 Plan. 

Hennings sued CDI in state court, and CDI removed to federal court based

on diversity of citizenship. Hennings claimed that based on his participation in

CDI's employee incentive plans, he was entitled to certain compensation that he

was wrongfully denied.

CDI filed its motion for summary judgment. Hennings filed his motion for

partial summary judgment. The district court found that the 2006 Plan

constituted “a novation of all prior incentive plans and the facts and

circumstances of this case indicate that the plaintiff consented to this novation

as a matter of law.” The district court further found that Hennings’s claim for

commission payments under the 2007 Plan was without merit because the 2007

Plan was purely discretionary. Based on its findings, the district court granted

CDI’s motion for summary judgment and denied Hennings’s motion for partial

summary judgment. Hennings timely appealed. 

STANDARD OF REVIEW

This court reviews the district court’s grant of summary judgment de novo,

applying the same legal standard as the district court. Comer v. Scott, 610 F.3d

929, 933 (5th Cir. 2010). Summary judgment is appropriate only if the

pleadings, depositions, answers to interrogatories, and admissions,together with

the affidavits show “there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” FED.R.CIV.P. 56(a). In

determining whether a fact issue exists, “the court must view the facts and the

inferences to be drawn therefrom in the light most favorable to the nonmoving

party.” Comer, 610 F.3d at 933 (quoting Daniels v. City of Arlington, Tex., 246

F.3d 500, 502 (5th Cir. 2001)). Furthermore, “if any ambiguity exists in a

contract, a fact issue remains regarding the parties” intent, thus precluding a

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grant of summary judgment. Millennium Petrochemicals, Inc. v. Brown & Root

Holdings, Inc., 390 F.3d 336, 340 (5th Cir. 2004). 

DISCUSSION

On appeal, Hennings takes issue with the district court’s grant of

summary judgment in favor of CDI. Specifically, Hennings contends that the

district court erred in granting summary judgment because a genuine issue of

material fact exists as to: (1) whether the 2006 Plan constituted a novation; (2)

the meaning of the phrase "specific business conditions" under the 2004 and

2005 incentive plans; (3) whether CDI's withholding a portion of the commission

payments under the 2004 and 2005 Plans was an abuse of right; and (4) the

meaning of the phrase "you will receive discretionary payouts" under the 2007

Discretionary Plan. Because we conclude that the 2006 Plan constituted a

novation, we will begin by addressing Hennings’s first and third assignments of

error. 

I. Whether the district court erred in granting summary judgment when it

determined that the 2006 Plan constituted a novation of the 2004 and 2005

Plans.

A "novation is the extinguishment of an existing obligation by the

substitution of a new one." LA. CIV. CODE ANN. art. 1879. "It is foundational,

then, that for a novation to even occur, there must be an existing obligation for

the new one to replace." Langhoff Properties, LLC v. BP Products North

America, Inc., 519 F.3d 256, 261 (5th Cir. 2008). "An obligation is a legal

relationship whereby a person, called the obligor, is bound to render a

performance in favor of another, called the obligee. Performance may consist of

giving, doing, or not doing something." LA. CIV. CODE ANN. art. 1756. 

Moreover, the intentions of the parties "to extinguish the original

obligation must be clear and unequivocal. Novation may not be presumed." LA.

CIV. CODE ANN. art. 1880. The burden of establishing that a novation has

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occurred is on the party who claims it. Langhoff, 519 F.3d at 262 (citing Placid

Oil Co. v. Taylor, 325 So. 2d 313, 316 (La. Ct. App. 1976)). The intention to

novate may be shown by the character of the transaction, and by the facts and

circumstances surrounding it, as well as the terms of the agreement itself. 

Placid Oil Co., 325 So. 2d at 316. 

In this case, the district court noted that the determining factor in

deciding whether a novation had occurred is the intent of the parties. Pursuant

to Fletcher v. Tri-State Mill Supply Co., Inc., 609 F. Supp. 150 (M.D. La. 1985),

the district court found that Hennings’s acceptance of payments under the 2006

Plan for one year constituted consent to extinguish the obligations of the 2004

and 2005 Plans and, therefore, Hennings's actions created a novation. The

district court found that the 2006 Plan was intended as a novation of all prior

incentive plans and that the facts and circumstances indicated that Hennings

had consented to the novation as a matter of law. 

Hennings alleges that the district court erred because an obligation must

exist in order to be the subject of a novation, and that no obligation existed at

the time of the alleged novation. Accordingly, Hennings claims a novation could

not have occurred because the obligation under the terms of the 2004 and 2005

Plans had expired on December 31, 2004 and December 31, 2005, respectively,

and the obligation of the 2006 Plan did not take effect until January 1, 2006. 

Hennings relies on Langhoff, for the proposition that a novation could not occur

when a contract had expired before a new contract took effect. 519 F.3d at 261.

In Langhoff, Langhoff had an existing contract for the lease of certain

property with the defendant, BP Products ("BP"), that was set to expire on

August 14, 1996. Id. On August 12, 1996, Langhoff entered into a new contract

with Star Enterprise ("Star") that would commence on August 15, 1996. Id.

This court found that because the lease between Langhoff and BP had expired

one day before the new lease began with Star there could be no novation because

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there was no obligation existing at the time of the new contract. Id. Hennings,

therefore, claims that based on Langhoff, the 2006 Plan did not constitute a

novation because no obligation existed at the time the 2006 Plan took effect. 

However, there are two significant differences between Langhoff and this

case. First, in Langhoff, the plaintiff argued that the old lease had expired

before the new lease took effect. In this case, Hennings argued at trial that the

2004 and 2005 Plans were still in effect at the time the 2006 Plan was adopted. 

It is only now, on appeal, that Hennings claims that the 2004 and 2005 Plans

had expired before the 2006 Plan commenced. Generally, arguments not raised

in the district court are waived. See, e.g., Great Plains Trust Co. v. Morgan

Stanley Dean Witter & Co., 313 F.3d 305, 317 (5th Cir. 2002). We will consider

an issue for the first time on appeal only if “extraordinary circumstances” exist. 

Id. "We will not allow parties to raise issues for the first time on appeal because

they believe that they might prevail if given the opportunity to try the case again

on a different theory." Joslyn Mfg. Co. v. Koppers Co., Inc., 40 F.3d 750, 759 (5th

Cir. 1994) (citing Holiday Inns, Inc. v. Alberding, 683 F.2d 931, 934 (5th Cir.

1982)). 

Secondly, in Langhoff, the lessor was not told that the new lease provisions

would replace the old provisions in the old lease. Unlike Langhoff, Hennings

was explicitly told that the 2006 Plan replaced the 2004 and 2005 Plans, and

that there would be no carryover of commission payments from either of the old

plans. Thus, Hennings was specifically advised and understood that the 2006

Plan replaced the 2004 and 2005 Plans, and that there would be no carryover of

the amounts remaining from the old plans when he signed the 2006 Plan.

Viewing the facts and the inferences to be drawn therefrom in the light

most favorable to the nonmoving party, the 2006 Plan was a novation of all prior

incentive plans. Comer, 610 F.3d at 933. The district court's reliance on Fletcher

is well placed. In Fletcher, the plaintiff signed a contract on March 29, 1982,

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stating that he would be paid on a commission basis. Fletcher, 609 F. Supp. at

152. Subsequently, Fletcher and his employer, Tri-State Mill Supply Co., Inc.

("Tri-State"), agreed to pay Fletcher $1,800.00 per month beginning on June 1,

1982. Id. The district court found that this agreement "clearly indicate[d] that

the parties intended to extinguish all obligations of Tri-State under the

commission contract of March 29, 1982, and to substitute a new employment

contract in its place." Fletcher, 609 F. Supp. at 155. Importantly, Fletcher found

that the plaintiff's acceptance of payment under the new contract constituted

consent to the new compensation plan. Id.

Like Fletcher, the facts and circumstances surrounding the agreement

between Hennings and CDI clearly indicate that the parties intended the 2006

Plan to be a novation of all previous plans. Here, Hennings was aware that CDI

was going to create a discretionary plan in 2006. Giannone testified that he held

a dinner meeting in January 2006 where "Hennings was asking this question

about the carry-forward payment under his Commission Plan, and I told him

there was none." Hennings persisted in questioning Giannone about the

carry-forward payment, so Giannone ended the conversation by telling Hennings

"you know, if your performance is good in ‘06 because of what you've done in ‘05,

then your discretionary payout would reflect that." Id. Despite Hennings's

persistent questioning early in the year, he subsequently signed the 2006 Plan,

agreeing to discretionary payments excluding any carryover from previous plans. 

Furthermore, Hennings accepted payment of $13,812.00 under the 2004 Plan

and $110,267.00 under the 2005 Plan. In April 2007, Hennings accepted a

payment of $25,000 under the terms of the 2006 Plan. Giannone claims that the

April 2007 payment did not include any amount of carryover under the 2005

Plan, but did take into consideration the work performed by Hennings prior to

2006. Hennings also "signed a purely discretionary plan in 2007 without any

threat to resign if he did not receive commissions due under prior incentive

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plans." According to Fletcher, Hennings's acceptance of the April 2007 payment

indicates his acceptance of the terms of the 2006 Plan and, therefore, constitutes

a novation. See Fletcher, 609 F. Supp. at 155 (finding that plaintiff's agreement

to and acceptance of payment under new contract constituted a novation).

Hennings further argues that "[if] a substantial part of the original

performance is still owed, there is no novation." See LA. CIV. CODE ANN. art.

1881. Here, Hennings claims that CDI had a continuing obligation to pay the

remaining commissions earned under the 2004 and 2005 Plans after the 2006

Plan became effective. Hennings's argument is, however, without merit. Both

the 2004 and 2005 Plan reserve the right to amend the terms of the plan or

make adjustments as necessary . . . ." Under the 2004 Plan, Hennings accepted

payment of $13,812.00. Under the 2005 Plan, Hennings accepted payment of

$110,267.00 with the understanding that there would be no carryover of any

amounts remaining. Based upon the Baton Rouge office's performance, CDI

amended the terms of the plans to provide for payment of eighty-five percent of

the claimed commission amounts. Giannone stated that this amendment to the

terms was based on the fact that the Baton Rouge office was not producing

enough profit to justify the commission payment. Because CDI retained the

right to amend the terms of the plans and paid Hennings the amount owed

pursuant to the amendment, "a substantial part of the original performance" did

not remain. Thus, Hennings's argument is without merit. 

Based on the facts and circumstances surrounding the agreements, the

parties clearly intended the 2006 Plan to constitute a novation of the prior plans. 

Therefore, no genuine issue of material fact exists as to whether the 2006 Plan

constituted a novation of the prior plans. 

In addition, Hennings contends that a genuine issue of material fact exists

as to whether CDI’s withholding of commission payments under the 2004 and

2005 Plans was an abuse of right. Because the 2006 Plan constituted a novation,

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extinguishing the obligations arising from the 2004 and 2005 Plans, we do not

reach the merits of this argument. Accordingly, the district court did not err in

finding the 2006 Plan to be a novation. 

II. Whether the district court erred in granting summary judgment when it

determined that “local office performance” was included in the meaning of

the phrase “specific business conditions.” 

Under the 2004 and 2005 Plans, CDI reserved the right to amend the

terms of the plans or make other adjustments as necessary to respond to

"specific business conditions." Hennings contends that because his

understanding of the meaning "specific business conditions" differed from that

of CDI this court should resolve the meaning in his favor. See LA. CIV. CODE

ANN. art. 2056 (2010). Hennings claims he understood the phrase "specific

business conditions" to include "major company-wide conditions," and only after

Hough indicated such did he sign the 2004 Plan. Hennings contends that Hough

had the apparent authority to interpret the terms of the 2004 Plan as such and,

therefore, a genuine issue of material fact exists as to whether CDI is bound by

Hough's representation of the meaning of "specific business condition."

We have held that where an employer exercises rights reserved in the

contract there can be no breach of contract. Nichols v. Enterasys Networks, Inc.,

495 F.3d 185, 188 (5th Cir. 2005) (plaintiff cannot prove employer breached

contract when employer exercising rights reserved in contract's plain language). 

Here, Hennings's reading ofthe contract and his understanding of Hough's

interpretation are too narrow. The record clearly indicates that CDI did not

want to be limited to a specific set of business conditions in order to reserve its

right to amend the terms of the 2004 Plan. As noted by the district court, "[i]t

would not be feasible for CDI to imagine every business condition where it would

need to alter the terms of the plan." The language granting CDI such broad

discretion to amend the terms of the contract is clear and explicit: "CDI

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Executive Management reserves the right to amend the terms of this plan or

make other adjustments as necessary to respond to specific business conditions." 

In Nichols, whether or not each term of the contract was defined was of little

import; rather, this court was concerned with the contract language explicitly

reserving the right to amend the terms of the contract. 485 F.3d at 188. 

Moreover, Hennings's allegation that "[o]nly after Mr. Hough indicated it

was his understanding this phrase was only meant to include major

company-wide conditions did [Hennings] execute the 2004 [] Plan," is without

merit. A careful reading of the record shows that Hough did not interpret the

meaning of the phrase as Hennings contends. Hough stated,

I indicated to Mr. Hennings that CDI had not provided to me

a list of conditions that was meant to be included in the "specific

business conditions" phrase. I also indicated that CDI had not

provided any explanation or guidance regarding the meaning of this

phrase. However, I did indicate to Mr. Hennings that it was my

belief that if there was some major company-wide problem, such as

not meeting any of the objectives in its annual plan, then CDI would

consider that as a condition it might use to modify the 2004

Commission Plan.

Clearly, Hough did not interpret the phrase "specific business condition"

to include only "major company-wide conditions." The fact that CDI used broad

language, thereby not limiting itself to a specific set of business conditions, is

evinced by Hough's explicit statement that CDI did not provide a list of

conditions to be included in the phrase, and did not provide any explanation as

to the meaning of this phrase.

In addition, Hough stated that "it was his belief" that if there was a

company-wide problem CDI would consider amending the plan, not that it was

the company's belief or CDI's belief. Hough also stated, in referring to "major

company-wide condition," that "CDI would consider that as a condition it might

use to modify the 2004 Plan." (emphasis added). Moreover, if Hough or CDI had

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intended the phrase "specific business conditions" to be limited to only major

company-wide conditions then CDI could have just as easily written the

provision to include "major company-wide conditions" instead of "specific

business conditions." 

Despite Hennings's argument, no genuine issue of material fact exists as

to the meaning of the phrase "specific business condition." 

III. Whether a genuine issue of material fact exists as to the meaning of the

phrase "you will receive discretionary payouts" under the 2007

Discretionary Plan?

In Hennings's final issue on appeal, he alleges that a genuine issue of

material fact exists as to the parties' intent regarding the meaning of the phrase

"you will receive discretionary payouts." Hennings takes issue with the 2007

Plan provision that provides, "[y]ou will receive discretionary payouts based on

accomplishments in the plan year relative to your assigned accounts and/or your

regional top line performance." Hennings emphasizes the phrase "will receive"

in his brief to this court, arguing that if Hennings was eligible to participate in

the 2007 Plan, CDI would be obligated to give Hennings a performance-based

payment for his work in 2007. To be eligible to receive a discretionary bonus

payment, the plan provided:

Subject to termination provisions below, you must be

employed by CDI on the day of incentive payouts to be considered

for a[n] incentive award. 

If you resign or are terminated by the company for cause on

or before the day of incentive payment, you will not be eligible to

receive an incentive award.

If your employment with the company ends on or before June

30, 2007, you will not be eligible to receive an incentive award for

2007.

If your employment with the company terminates due to

retirement, long-term disability, death or job elimination by the

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company after June 30, 2007, an incentive payment will be made

considering your accomplishments and the proportional time of

service.

The plan further provided that "2007 incentive awards are scheduled for

payout in April 2008, subject to completion of CDI's audited year end financial

statements." Hennings claimed, however, that he "retired" in January 2008. 

CDI claims that Hennings did not “retire,” but voluntarily resigned from CDI

because he negotiated employment with Excel before leaving CDI and began

work at Excel in mid-January 2008, only a few weeks after leaving CDI. 

The district court found that although CDI did not have specific guidelines

which set forth the requirements necessary to constitute a "retirement,"

Hennings's claim for a commission bonus under the 2007 Plan was purely

discretionary. By its terms, the 2007 Plan provided for purely discretionary

payments. Relying on Cornet v. Cahn Electric Co., Inc., 434 So. 2d 1052, 1056

(La. 1983), the district court found that an employer is not obligated to pay its

employees a gratuitous bonus. In Cornet, Cahn Electric Company ("Cahn")

developed an optional incentive plan to encourage employees to remain with the

company until retirement. Cahn Electric's principal motive behind the optional

incentive plan was to encourage continued employment through retirement by

promising an additional retirement benefit. Like Hennings, because Cornet

voluntarily terminated his employment before retirement, “it was he who

prevented fulfillment of the principal motive of the plan.” Id.

Additionally, the Cornet court distinguished the payments made in Cahn

from those in Morse v. J. Ray McDermott & Co., Inc., 344 So. 2d 1353 (La. 1977). 

In Morse, the court stated that the payments "were in the nature of delayed

compensation, or pay for performed services during the period for which each

contribution [to the reserve] was made." Id. at 1368. Unlike Morse, the

payments to be made by CDI under the 2007 Plan could not be considered

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Case: 10-30853 Document: 00511636414 Page: 16 Date Filed: 10/18/2011
No. 10-30853

delayed payments for services already performed. Under the 2007 Plan, the

payments were discretionary by the plan's terms and did not automatically

accrue throughout the year for services performed. Like Cornet, however, CDI

developed the optional 2007 Plan, which encouraged employees to work hard and

stay with the company until retirement, and in return the employees may

receive a commission bonus. These commission bonuses under the 2007 Plan

were discretionary and, therefore, constitute gratuitous bonuses. Furthermore,

a plain reading of the phrase at issue explicitly shows the payment is

discretionary and, thus, not mandatory as Hennings contends. Therefore, we

find that no genuine issue of material fact exists as to the meaning of the phrase

"you will receive discretionary payouts."

CONCLUSION

For the foregoing reasons, no genuine issue of material fact exists as to

any of the plaintiff's assignment of errors. Therefore, the district court's grant

of summary judgment is AFFIRMED.

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Case: 10-30853 Document: 00511636414 Page: 17 Date Filed: 10/18/2011