Mr. Bernard Bayer has won the right to receive a salary from his former employer until March 1, 2012. Unfortunately, Bernard died on April 23, 2005.
In this most unusual case, Bernard's estate will be entitled to receive payment equal to Bernard’s salary until 2012, notwithstanding Bernard's death.
The case turns on the peculiar wording of Bernard's employment agreement with his employer, the Blue Button Club. Pursuant to this agreement, which was entered into on March 1, 2002, Bernard was employed as the Executive Manager of the Club. The agreement had a 10 year term. The agreement described Bernard's duties at the Club. It provided that he was to be paid at least $60,000 per year.
An unusual provision of the employment agreement provided that the Club was to maintain insurance on the life of Bernard, naming the Club as beneficiary, so that the Club could comply with the termination provisions of the agreement. The termination provisions provided that the employment agreement could be terminated in the event that Bernard failed repeatedly and demonstrably to perform his duties, and failed to remedy this problem after receiving reasonable notice; for just cause; or upon his death, in which case, the Club was to collect the insurance proceeds and pay these to Bernard's estate. Apparently, the Club did not take out such a policy of insurance.
In resisting the claim by Bernard’s estate, the Club argued that, prior to his death, Bernard failed to fill his duties. The court rejected this submission, holding that the Club did not provide the required written warning to Bernard.
The Club also submitted that the agreement was not enforceable, and that neither of the parties expected the agreement to be enforceable. The court easily rejected this submission.
As the agreement clearly contemplated Bernard’s death, it was not frustrated by his death.
The court found that Bernard's estate was entitled to the payments due until the end of the agreement. These damages totalled $410,000.
In this case, the employment agreement was drafted by or on behalf of the Club. The court held the Club to its agreement, notwithstanding its unusual provisions, or the fact that it produced, at least at first blush, an unusual result.