Facts

Plaintiffs Don McCasland and Dale Dembrow were hired by the founder of defendant Chemicon International. In order to keep plaintiffs with the company, defendant signed plaintiffs to Buy/Sell Bonus Agreements whereby defendant promised plaintiffs percentages of the net sale price of the company if plaintiffs continued working for defendant. Defendant was sold to Serologicals Corporation in April 2003. Defendant refused to pay the bonuses or tell plaintiffs the sale price, contending that bonuses were not due.

CONTENTIONS:
Plaintiffs sued defendant for breach of contract. Defendant asserted that $16 million in debt and $19 million of the purchase price held in escrow to protect Serologicals against potential liabilities should be deducted in establishing the net sales price on which the bonuses were based.

Damages

Plaintiffs claimed damages of $8 to 9 million plus statutory interest accrued since the bonuses were due. Plaintiffs also sought attorney fees.

Result

Just before trial, defendant paid $4.2 million based on a net sale price with a deduction of the $16 million in debt and $19 million held in escrow. The court found that plaintiffs were owed bonuses under the agreements, and that the debt and held escrow amounts were not deductible in determining the net sale price as defined in the agreements. The court determined the founder of defendant induced the company not to pay the bonuses but did not impose liability based on alter ego or intentional interference with contract. The court concluded that no injustice would result from the failure to impose alter ego liability. It also concluded that the founder was not a stranger to the contract so as to permit a finding of third-party interference. The award to plaintiffs was $5.6 million in addition to the $4.2 million Chemicon paid just before trial. In addition, the court award plaintiffs attorney fees.

Length

one month