It is important that contracts between employers and employees are honored in order to avoid disputes in court. However, things can become a little more complicated when a company with preexisting contracts with its employees is acquired by another company. This is what happened with Capital Bank, which is headquartered in Florida, when the bank was acquired by another financial institution. Several breach of contract lawsuits have been filed following the acquisition.
Many of Capital Bank’s employees and its executives had change-in-control clauses that entitled them to severance packages if the acquisition of the bank causes them to lose their jobs. One executive who sued the bank argued that he was forced to surrender his change-in-control clause through coercion. After the man was later terminated, he filed a lawsuit against the bank for the $1.1 million promised in the clause. However, the court ultimately ruled in the bank’s favor.
More recently, two other executives who had refused to surrender their change-in-control clauses are now suing the bank following their dismissals. Their lawsuit alleges that the bank terminated the two executives because they had refused to amend their contracts. The two executives are now asking the court to force the bank to pay their change-in-control severance packages.
Like any other breach of contract lawsuit in Florida or in any other state, the two executives will now have a chance to argue their positions in front of a judge. However, the bank will also have a chance to make its case as well. The judge will ultimately decide which party has the best legal argument based upon the facts and evidence presented in court.
Source: News Observer, “Capital Bank faces second breach-of-contract suit,” David Ranii, May 6, 2013