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Employment agreements ‘ambiguous’

An employee contract clause calling for a $100,000 annual benefit for a surviving spouse is ambiguous, prompting the 4th Circuit to vacate judgment against the employee’s widow and send the case back for another look.

When Hampton Roads music promoter David Williams went to work for Cellar Door Management, or CDP Inc., in 1994, he signed an employment agreement and a deferred compensation agreement. The deferred compensation agreement gave Williams’ wife Sharon an annual benefit of $100,000 after David’s death.

David Williams died on Jan. 27, 1999, while still employed by CDP, and for nearly nine years, CDP provided his widow with $100,000 per year. When the payments stopped in 2008, Sharon Williams sued. A Newport News U.S. District Court sided with CDP, and held that the deferred compensation agreement unambiguously required David to retire as a condition precedent to payment of the benefit. Judge Raymond Jackson dismissed Sharon’s suit on the pleadings.

But a panel of the 4th U.S. Circuit Court of Appeals disagreed. In its unpublished opinion released March 22, the court said Jackson’s interpretation of the contract language was certainly reasonable under Virginia law, but there was another equally reasonable interpretation of the contract language.

On appeal, CDP, now called Live Nation, argued the employment agreement governed the relationship between Williams and CDP during the term of his employment, while the deferred compensation agreement controlled following his retirement or termination.

After reviewing the agreements together, the panel said the spousal death benefit provision was susceptible to multiple meanings. It remanded the case for further proceedings.
–Deborah Elkins

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