An interesting breach of contract case occurred after Marsh Supermarkets, which is owned by Florida-based Sun Capital, fired its one-time CEO. The employment agreement between Marsh and the supermarket chain provided that if the chain fired Marsh “without cause” it owed him severance benefits. In 2006, it did just that.
The board of directors apparently decided in 2008 that Marsh’s behavior when he was CEO, which included “millions of dollars in questionable spending on personal trips and gifts for himself, family members, friends and several mistresses,” meant they did not need to continue paying his severance.
His activity was describe by the federal judge in the breach of contract case as “cavalier, irresponsible, greedy, and deceitful,” but commented that there was blame enough to go around, and she award him $2.17 million in benefits. The board, she noted was “asleep at the wheel,” in its supervision of Marsh during his tenure a CEO.
Because contract law is rather dispassionate, in many circumstances, it really doesn’t matter if someone is wrong, or mistaken or any one of a number of emotional states. What matters is whether they failed to comply with the terms of the contract.
Absence special circumstances, even if the conduct is questionable or reprehensible, if it was not a condition of the contract, you breach the contract if you fail to perform according to the terms of the contract.
This award was from one of Mr. Marsh’s counterclaims, so don’t feel too bad for Marsh Supermarkets. They received $2.2 million in the underlying case back in February. Mr. Marsh is also entitled to his attorney’s fees for the counterclaim, so the result may be a wash for both sides.
Source: Indianapolis Star, “Don Marsh wins $2.17M in supermarket counter-claim,” Jeff Swiatek, July 30, 2013