Court Opinion

ID: 6826788
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:28:02.193237+00
Date Added: 2024-06-11T16:04:23.798853
License: Public Domain

JUSTICE LACY,
dissenting.
Where the language of an agreement is clear and capable of only one reasonable construction, a court must read the agreement according to its plain meaning, Paramount Termite Control Co. v. Rector, 238 Va. 171, 174, 380 S.E.2d 922, 925 (1989), and may not search for its meaning beyond the instrument itself. Management Enters., Inc. v. Thorncroft Co., 243 Va. 469, 472, 416 S.E.2d 229, 231 (1992). Because I do not agree that the majority’s construction of the relevant provision in the “Long-Term Incentive Plan” (Plan) is the only one reasonable, I respectfully dissent.
The relevant provision of the Plan reads:
*362If a participant leaves the Company before the end of a performance cycle for reasons other than death, disability, or retirement, the units awarded to the incumbent would be forfeited and reclaimed for distribution to other participants.
Contrary to the arguments now offered by both Melton and Pinkerton Tobacco, the trial court was correct in concluding that there is ambiguity in this provision.
Pinkerton contends that the phrase “leaves the Company” unambiguously covers both voluntary quitting and involuntary termination of employment. I do not agree. The ambiguity inherent in this phrase becomes more apparent when it is compared to analogous language in Enstar Corp. v. Bass, 737 S.W.2d 890 (Tex. App. 1987), which case, the majority concedes, is factually similar to the instant case. In Enstar, the employee incentive program provided, in relevant part, that “[i]f you terminated your employment with the Company for any reason ...” you, as a participant, “would forfeit all unpaid incentive units.” Id. at 891-92 (emphasis added). The emphasized language refers unambiguously to a situation in which the participant himself, not the employer, terminates employment. This sharply contrasts with the instant case, where the phrase “leaves the Company” could imply either a voluntary or an involuntary cause for the employee’s leaving.
This ambiguity is not mitigated by placing this phrase in context with the rest of the provision. The enumerated exceptions of “death, disability, or retirement,” for which compensation is granted, do not clarify whether the parties intended to include voluntary acts, involuntary acts, or both. The majority interprets this language to encompass “within its scope concepts of both voluntariness and involuntariness,” and as evidence that the parties intended to include both voluntary and involuntary acts as bases for precluding forfeiture. However, another construction of the provision is equally reasonable. Death, disability, and retirement may all arise involuntarily. A strong argument can therefore be made that the exceptions indicate that the Plan was designed to reward all those participants who “leave[] the Company” involuntarily.
Where it is necessary for a court to consider the meaning of an ambiguous provision, consideration will be given to the relation between the parties, the purpose sought to be accomplished, and the general circumstances attending execution of the instrument. Cary v. Northwestern Mut. Life Ins. Co., 127 Va. 236, 242, 103 S.E. 580, *363582 (1920). The principal rule of construction of ambiguous agreements is that the intent of the parties is the primary consideration. Poindexter v. Molton, 237 Va. 448, 450, 377 S.E.2d 450, 452 (1989).
Perhaps the best indication of the parties’ intent here is that expressly stated in the Plan itself. The express objectives of the Plan can be summarized as follows: First, the Plan aspires to attract and retain motivated personnel. Second, the Plan serves to motivate participants to contribute to making the company successful. Third, the Plan rewards with money those who contribute significantly, in proportion to their contributions. These objectives cannot be attained by simply disbursing an unpredictable bonus as a “thank-you” at the end of a particularly financially successful year. Nor can they be attained by distributing a good-will Christmas bonus that employees expect to receive independent of their performance. Rather, the Pinkerton Plan is an affirmative incentive plan designed to attract, motivate, and reward those who make significant contributions to the success of the company.
In order to construe a contract, a court must place itself in the position of the parties at the time the contract was executed. Cary, 127 Va. at 242, 103 S.E. at 582. Given the intent of the Plan, it is inconceivable that either party would bargain, ex ante, for the agreement as construed by the majority. Neither of the parties to this agreement would bargain, ex ante, to create a plan in which rewards would be forfeited in cases where the employee “leaves the company” involuntarily.* Such a plan would create a strong disincentive to participate in the plan, as the company could fire participants prior to completion of a performance cycle. The result would, contrary to the express objectives of the Plan, neither attract and retain motivated personnel, provide an incentive to contribute to the success of the company, nor reward with money those who contributed significantly, in proportion to their contributions. Such a construction undermines every express objective of the plan and, therefore, cannot represent the intent of the parties.
Melton testified that when he was terminated, Thomas J. Guinan, then Pinkerton’s Executive Vice-President, told Melton that he *364would receive benefits under the Plan. Jerry F. McQuade, administrator of the Plan, testified that an executive employee who was terminated for other than cause would be eligible to receive a pro rata share under the Plan. Furthermore, other executive employees who left the company prior to completion of a performance cycle “for reasons other than death, disability, or retirement” received their pro rata benefits. Such testimony indicates that Pinkerton’s interpretation of the disputed portion of the Plan, as demonstrated by its own conduct, is consistent with the interpretation now urged by Melton.
Finally, there is no evidence of other benefits or plans offered by the company which can be forfeited retroactively when an employee involuntarily “leaves the Company.”
Accordingly, I would affirm the judgment of the trial court.

 While the majority states that the Court should reserve judgment regarding whether its construction of the Plan permits bad-faith firing of employees and therefore creates a perverse incentive, such a consideration is relevant to determining the intent of the parties to the agreement.