Court Opinion

ID: 1003844
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:32:27.75187+00
Date Added: 2024-06-11T15:37:43.325261
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
               FOR THE FOURTH CIRCUIT

BRIAN P. FROELICH,                         
                     Plaintiff-Appellee,
                v.
SENIOR CAMPUS LIVING, LLC,
              Defendant-Appellant,
               and
JOHN C. ERICKSON; NANCY ERICKSON;
                                              No. 00-1859

SCL, INCORPORATED; ERICKSON
RESOURCE TRUST; SCL
CONSTRUCTION, INCORPORATED;
SUBCO, INCORPORATED; SENIOR
CAMPUS LIVING HOLDINGS LLC,
                       Defendants.
                                           
BRIAN P. FROELICH,                         
                     Plaintiff-Appellee,
                v.
JOHN C. ERICKSON; NANCY ERICKSON;
SCL, INCORPORATED; ERICKSON
RESOURCE TRUST; SCL                           No. 00-1908
CONSTRUCTION, INCORPORATED; SENIOR
CAMPUS LIVING LLC; SUBCO,
INCORPORATED; SENIOR CAMPUS
LIVING HOLDINGS LLC,
             Defendants-Appellants.
                                           
2                FROELICH v. SENIOR CAMPUS LIVING

BRIAN P. FROELICH,                      
                 Plaintiff-Appellant,
                 v.
JOHN C. ERICKSON; NANCY ERICKSON;
SCL, INCORPORATED; ERICKSON
RESOURCE TRUST; SCL                              No. 00-1919
CONSTRUCTION, INCORPORATED; SENIOR
CAMPUS LIVING LLC; SUBCO,
INCORPORATED; SENIOR CAMPUS
LIVING HOLDINGS LLC,
              Defendants-Appellees.
                                        
           Appeals from the United States District Court
            for the District of Maryland, at Baltimore.
                  Benson E. Legg, District Judge.
                           (CA-98-694-L)

                      Argued: February 28, 2001

                      Decided: March 15, 2001

    Before MICHAEL, MOTZ, and TRAXLER, Circuit Judges.

Affirmedy by unpublished per curiam opinion.

                             COUNSEL

ARGUED: James David Mathias, PIPER, MARBURY, RUDNICK
& WOLFE, L.L.P., Baltimore, Maryland, for Appellants. Michael
John Collins, THOMAS & LIBOWITZ, P.A., Baltimore, Maryland,
for Appellees. ON BRIEF: Glen K. Allen, John R. Wellschlager,
PIPER, MARBURY, RUDNICK & WOLFE, L.L.P., Baltimore,
                  FROELICH v. SENIOR CAMPUS LIVING                     3
Maryland, for Appellants. John P. Beyel, MCELROY, DEUTSCH &
MULVANEY, Morristown, New Jersey, for Appellees.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

PER CURIAM:

  Brian P. Froelich, a former chief executive officer and director of
Senior Campus Living, LCC (SCL) brought this action against the
company, its founder, John Erickson, his wife, Nancy Erickson, and
various related entities.

                                   I.

   Erickson recruited Froelich to take over management of SCL so
that Erickson might pursue other interests. However, after several
years, when faced with corporate liquidity problems, SCL removed
Froelich as chief executive officer and replaced him with Erickson.
A few weeks later, Erickson proposed that he would provide a per-
sonal $35 million guarantee for the company’s loans if SCL agreed
to a restructuring. Pursuant to the proposal, the company’s member-
ship interests would be reclassified. If the total value of the reclassi-
fied interests was less than or equal to Erickson’s preferred interests,
which totaled approximately $160 million, Erickson would own virtu-
ally 100% of the company, but any value that exceeded $160 million
would be held by those owning the remaining preferred and common
interests in the company.

   Except for Froelich, all sixteen members of SCL’s Board of Direc-
tors (which included all those with membership interests in the com-
pany) agreed to this proposal. The Board retained Coopers & Lybrand
to appraise the company; Coopers valued SCL at $155 million.
Accordingly, Erickson received more than 99.9% of the reclassified
4                 FROELICH v. SENIOR CAMPUS LIVING
common interests and the remaining members, including Froelich,
received the fractional balance. A month later, the members of SCL,
as a housekeeping matter, voted to approve a squeeze-out merger that
eliminated the remaining fractional interests in exchange for cash.

   In response to these actions, Froelich filed the instant suit, seeking
relief in a fourteen count complaint, which included tort, contract, and
statutory claims. After extensive discovery, exhaustive briefing, and
eight hours of oral argument, the district court granted the defendants
summary judgment on most counts, but granted Froelich summary
judgment on his employment contract claim and his request for a stat-
utory appraisal. SCL and Froelich appeal.

                                   II.

   We have carefully considered the oral arguments and briefs of the
parties, the record in the case, and the applicable law. We believe that
the district court reached the correct result and affirm, essentially on
its rationale. See Froelich v. Erickson, 96 F. Supp. 2d. 507 (D. Md.
2000).

   One issue requires brief further explanation. SCL maintains that the
district court’s rejection of its interpretation of Froelich’s employment
contract rested on a misunderstanding of that contract. Perhaps so.
But on de novo review we agree with the district court that the
employment contract entitles Froelich to separation pay.

   The contract provides that Froelich is entitled to separation pay of
a year’s base salary and a "targeted bonus" if he is "terminated by the
Company without cause during the Employment Period." The con-
tract further provides that, "[t]he Employment Period shall commence
on April 1, 1995, and shall continue for an initial period of six
months. Thereafter, the Employment Period shall continue until ter-
minated by the Company or the Executive upon 60 days advance,
written notice."

   Applying the objective theory of contract interpretation, as required
by Maryland law, a court must determine how a reasonable person in
the position of the parties would interpret this contract. SCL contends
                  FROELICH v. SENIOR CAMPUS LIVING                    5
that the contract only requires separation pay if the company termi-
nates Froelich’s employment without cause during the initial six
month employment period or thereafter if the company fails to pro-
vide 60 days’ advance written notice of his termination. In other
words, SCL argues that it can end the "Employment Period" and thus
deprive Froelich of all separation pay, simply by providing him 60
days’ written notice of his termination. We disagree.

   Like the district court, we believe a reasonable person would con-
clude that the contract provides that Froelich is entitled to separation
pay because the company terminated him without cause during the
employment period, which ended when Froelich’s actual employment
ended. Conversely, if the company had terminated him for cause or
prior to the commencement of the employment period, or if Froelich
had terminated his own employment, he would not have been entitled
to separation pay. The "60 days advance, written notice" provision,
most sensibly read, applies only to Froelich — requiring him to give
advance notice to the company of his resignation and ensuring him a
salary for those 60 days if he does so; it has nothing to do with sepa-
ration pay.

   To adopt SCL’s interpretation would permit the company to avoid
its obligation to provide separation pay any time after the initial six-
month period, simply by notifying Froelich of his impending termina-
tion 60 days in advance. Such an interpretation would all but read the
separation pay provision out of the contract, as we can envision few,
if any, scenarios in which SCL would choose to pay Froelich a year’s
salary rather than 60 days’ wages. Moreover, under SCL’s reading,
the company could terminate Froelich’s "Employment Period" for the
purpose of denying separation pay, even though Froelich’s actual
period of employment would continue for an additional 60 days.
Without clear contractual language to that effect, we are unprepared
to adopt such a counter-intuitive reading or believe that reasonable
persons in the position of the parties would so interpret the contract.

                                                           AFFIRMED