Opinion ID: 3163407
Heading Depth: 2
Heading Rank: 1

Heading: Payment Due Under the Employment Agreement

Text: Armour argues that the form of payment due under the Employment Agreement presents a question of law, not fact. Moreover, Armour contends that no genuine issue of material fact was created based upon an affidavit submitted by the Vice President of Human Resources at AM General, which provided that, “unlike bonus payments, which the contract expressly stated must be paid in cash, the contract did not address the issue of how LTIP payments were to be made.” (Pet Tr. at 6-7; App. at 224.) AM General contends, among other things, that because the form of payment was not specified in the Employment Agreement, the term “pay” was ambiguous and subject to interpretation based upon extrinsic evidence, such as the Redemption Agreement. The Redemption Agreement was executed on the same day as the Employment Agreement and did allow for specified payments to be made with a subordinate note under some circumstances. First and foremost, we agree with Armour that the meaning of “pay” within the Employment Agreement presents a question of law. If ambiguity in a contract “arises because of the language used in the contract and not because of extrinsic facts then its construction is purely a question of law to be determined by the trial court.” First Federal Sav. Bank of Indiana v. Key Markets, Inc., 559 N.E.2d 600, 604 (Ind. 1990) (internal citation omitted); See also Holiday Hospitality Franchising, Inc. v. AMCO Insurance Co., 983 N.E.2d 574, 577 (Ind. 2013) (explaining that contract construction “is particularly well-suited for de novo appellate review, because it generally presents questions purely of law”) (emphasis added) (citation omitted). In the 6 present case, only the meaning of the word “pay” is disputed, which “has a well-understood meaning, and in legal contemplation payment is the discharge in money or its equivalent of an obligation or debt owing by one person to another.” Egbert v. Egbert, 235 Ind. 405, 418, 132 N.E.2d 910, 917 (Ind. 1956) (internal quotation and citation omitted). Additionally, “the law declares that payment shall be made in money, unless there is an enforceable contract providing for payment in something of value other than money.” Vansickle v. Ferguson, 122 Ind. 450, 23 N.E. 858 (1890). The affidavit submitted by AM General only demonstrates that the form of payment was not specified in the Employment Agreement. However, as stated above, where the form of payment is not specified, Indiana law mandates that either cash or its equivalent is required. The parties do not dispute that AM General attempted to “pay” Armour with a promissory note, nor do they dispute that various conditions were placed upon the receipt of payment under the terms of the Note. Thus, the primary issue is whether the Note was a cash equivalent, which would be necessary to satisfy AM General’s contractual obligation to pay Armour the LTIP amounts. By looking to the Note itself, it is apparent that the Note is not the equivalent to cash. Rather, various limitations are placed upon receiving payment of the principal amount, which makes the Note starkly distinguishable from a cash payment. First, the principal of the Note was not due until three years after the LTIP payments were due under the Employment Agreement. Second, the Note was unsecured and subordinate to large bank debts that AM General owed. Finally, the Note could only be transferred under specific conditions. Thus, these conditions create the possibility that Armour may never receive actual payment, and even if payment were obtained, it would be delayed years beyond when it was due under the Employment Agreement. Moreover, the very definition of a promissory note demonstrates that the Note itself is not payment, but is merely a promise to pay some amount in the future. See Black’s Law Dictionary 9th Ed., p.1162 (defining “promissory note” as “[a]n unconditional written promise . . . to pay absolutely and in any event a certain sum of money either to, or to the order of, the bearer or a designated person”) 7 (emphasis added). Thus, AM General’s tender of the Note, while it was a promise to pay, was not “payment” as demanded by the Employment Agreement. AM General accurately recites that summary judgment may “be precluded by as little as a non-movant’s mere designation of a self-serving affidavit.” Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014) (internal quotation and citation omitted). However, upon review of Hughley, it is clear that a self-serving affidavit may only preclude summary judgment when it establishes that material facts are in dispute, and not when an affidavit merely disputes a legal issue. Here, AM General designated an affidavit which provided that the form of payment under the Employment Agreement was not specified. Yet, the affidavit in Hughley is distinguishable from that submitted by AM General because the affidavit in Hughley went to a disputed issue of fact. In Hughley, the parties disputed what property may be subject to forfeiture, which required the parties to present evidence of how the property was used. Id. at 1004. Because the parties offered affidavits which supported conflicting inferences on how the property was used, the “trier of fact [was] required to resolve the parties’ differing accounts of the truth.” Id. (internal citations omitted). The use of property was a disputed issue of fact. Nothing within the language of Hughley indicates a change to the established understanding that when addressing a motion for summary judgment, “[t]he averment of facts which create only an issue of law, rather than an issue of fact, will not defeat the motion.” Babchuck v. Heinold Elevator, Co., 246 N.E.2d 211, 216 (Ind. Ct. App. 1969) (emphasis added). The language within Hughley even maintains the distinction between questions of law and questions of fact by reiterating that “[s]ummary judgment ‘is a desirable tool to allow the trial court to dispose of cases where only legal issues exist.’” Hughley, 15 N.E.3d at 1003 (quoting Clipp v. Weaver, 451 N.E.2d 1092, 1093 (Ind. 1983)) (emphasis added). In the present case, the affidavit only solidifies what is apparent from the face of the Employment Agreement and what the parties already agree; the Employment Agreement does not specify a particular form in which the LTIP payments are to be made. To the extent that AM 8 General contends that the affidavit creates a genuine issue as to the permissible form of payment of the LTIP, the affidavit would only go to a legal issue, which can properly be decided on summary judgment. As explained above, the word pay is unambiguous and requires payment to be made in cash or its equivalent. All of the facts necessary to determine whether the Note is the equivalent to a cash payment is represented on the face of the Note. The parties do not dispute that the Note was not due until three years after it was delivered, was unsecured and subordinate to other AM General debts, and had limitations placed upon transfer.2 As such, granting summary judgment in this context does not run contrary to our holding in Hughley because the affidavit submitted by AM General did not create a genuine issue of material fact, as the affidavits in Hughley did. “When a court finds a contract to be clear in its terms and the intentions of the parties apparent, the court will require the parties to perform consistently with the bargain they made.” Key Markets, Inc., 559 N.E.2d at 604. Because the promissory Note did not constitute “payment” under Armour’s Employment Agreement, AM General breached its contract with Armour. Accordingly, we affirm the trial court’s grant of summary judgment in favor of Armour.