The ex-president, CEO and chairman of South Bend Humvee maker AM General will have to go to court to seek cash compensation that the company instead paid in the form of a promissory note, the Indiana Court of Appeals ruled Friday.
James A. Armour retired three years ago, and his employment agreement included a provision that part of his compensation was long-term incentive payments in an amount redacted by the trial court. The promissory note given to Armour in December 2012 said the note was due and payable in December 2015.
After AM General sued seeking a declaratory judgment that the note didn’t breach its obligations to Armour under the contract, Armour prevailed on a counter-claim and won summary judgment in St. Joseph Superior Court.
The Court of Appeals reversed, though, and Judge Melissa May wrote for the majority joined by Judge Ezra Friedlander that summary judgment was improper. They said an affidavit from an AM General human resources officer saying the contract didn’t address how the long-term incentive payments were to be made created a “genuine issue of material fact, including whether the promissory note tendered to Mr. Armour met the criteria for when an assignable promissory note is the equivalent of cash.”
Chief Judge Nancy Vaidik dissented and would have affirmed summary judgment in favor of Armour, writing that the affidavit didn’t create an issue of material fact. “This is because ‘payment’ has a specific meaning, and AM General’s Note to Armour does not qualify as a ‘payment.’”
The case is AM General, LLC v. James A. Armour, 71A03-1402-PL-58.