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Court correctly ruled man with terminated employment contract could retire

August 6, 2014

An employment contract between a certified public accountant and his employer did not prohibit the CPA from retiring from his position after the company announced it would not be renewing his contract, the Indiana Court of Appeals concluded Wednesday.

Bruce Buchan, who worked as a CPA for an independent accounting firm, had performed services for Dennis Tippmann Sr. and his son. Later, the Tippmanns decided to hire Buchan to work for Cherokee Family Limited, various business entities owned by the Tippmann family.

Buchan began working in 2005 for the company, but an employment contract wasn’t signed until December 2007. The terms of the contract said Buchan would work for five-year periods, with either party able to not renew the contract by providing a 90-day written notice prior to the expiration of the current term. The contract was made retroactive so that Buchan’s first five-year term would expire Dec. 31, 2010. In September 2010, Cherokee informed Buchan it would not renew his contract. Buchan in October informed the company he would be retiring effective Dec. 31, 2010. Cherokee sent a letter to him saying it did not recognize his ability to retire after receipt of the notice of non-renewal and the company considered him to be employed on Dec. 31, 2010.

Buchan sued, alleging he did not receive timely compensation for accrued paid vacation days and the company breached the contract by not paying him the remaining portion of his bonus upon retirement. Cherokee counterclaimed alleging, among other things, breach of duty of loyalty and  breach of contract. Buchan filed for partial summary judgment on the issue of whether he could retire; the trial court ruled in his favor.

On interlocutory appeal in Cherokee Air Products, Inc., Cherokee Family Limited Partnership, Tippmann Industrial Products, Inc., Dennis Tippmann, Sr. Family Partnership, LLP, and Tippmann Farms, LLC v. Bruce E. Buchan, 02A05-1312-PL-635, the Court of Appeals affirmed.

“The trial court correctly concluded that Buchan was entitled to retire. …According to the terms of the contract, that notice merely notified Buchan that his contract would not be renewed at the end of the year for an additional term. The notice of non-renewal did not affect Buchan’s employment status for the remainder of the contract term. He remained employed under the contract, with all its rights and obligations until the term expired. Had Cherokee wished to terminate Buchan’s employment, Paragraph 4 was the appropriate provision in that circumstance. It is uncontradicted that Buchan was still employed and continued to work for Cherokee until the end of business on December 30, 2010,” Senior Judge William Garrard wrote.
 

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