Facts

Universal Broadband Networks (UBN) was struggling financially. It hired Michael Sternberg, a past CEO of multiple start-up telecom companies, as its CEO. It offered him a $1 million upfront signing bonus, which was to be earned over the course of two years. After he was unsuccessful obtaining the financing needed to keep UBN afloat, Sternberg voted with UBN's board of directors to place the company in bankruptcy. In October 2000, UBN voluntarily petitioned for Chapter 11 bankruptcy relief. During the bankruptcy proceedings, the creditors' committee pressured UBN to retract Sternberg's $315,000 salary and company-financed apartment. Sternberg left UBN in January 2001, after about seven months of employment. UBN filed suit against Sternberg.

PLAINTIFF'S CONTENTIONS:
The plaintiff claimed that defendant had breached his employment agreement by not returning the signing bonus upon his resignation. Plaintiff argued that defendant had left without "good reason," as defined by the employment contract, and that the employment contract required that defendant remain with the company for at least one year in order to retain the money. Thus, it contended that defendant was obligated to return the money.

DEFENDANT'S CONTENTIONS:
The defendant claimed that he left with "good reason," as defined by the contract, because plaintiff had breached various provisions of the agreement. Specifically, he argued that the company had breached the agreement by reducing and then terminating his salary, and by evicting him from his apartment.

Damages

The plaintiff sought $416,400, which represented $1 million pro-rated over a 12-month period, minus four months.

Result

The plaintiff was awarded $416,400 plus $113,877 in prejudgment interest.

Other Information

The plaintiff filed a motion for $295,000 in attorney fees and $10,000 in costs.

Deliberation

two days

Poll

8-0

Length

four days