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KASS v. WILLIAM NORWITZ CO.

July 31, 1980

David KASS, Plaintiff and Counterclaim Defendant,
v.
WILLIAM NORWITZ CO., and William Norwitz, Defendants and Counterclaim Plaintiffs



The opinion of the court was delivered by: PRATT

Summary

 Plaintiff brings this action against his former employer, William Norwitz, Co., Inc., and its Chairman of the Board, William Norwitz, for breach of his twenty year employment contract. Plaintiff seeks benefits allegedly owed him for calendar year 1978 and for the remaining eleven years of the contract, as well as punitive damages. Defendants counterclaimed against plaintiff for breach of contract and for compensation allegedly overpaid plaintiff. Defendants also joined, and subsequently voluntarily dismissed, plaintiff's present employer as a third-party defendant. This action is now before us on cross-motions for partial summary judgment. For the reasons discussed below, we deny all pending motions for summary judgment.

 The Facts

 Plaintiff David Kass entered a twenty-year executive employment contract with defendant William Norwitz Company, Inc. *fn1" on November 5, 1968, effective January 1, 1969. Despite the 20 year term of the contract, plaintiff was discharged by defendants on March 1, 1979. At issue in the instant action is an interpretation of the contract to determine whether the agreement was breached by any party.

 The following five provisions of the contract, which was drafted by defendants, are relevant to this action:

 (a) Clause 1 ("Term of Agreement") provides that plaintiff shall be employed by the defendant company as an Executive for a term of twenty years, beginning on January 1, 1969.

 (b) Clause 2 ("Compensation") provides that plaintiff shall receive an annual salary of $ 25,000.

 (c) Clause 3 ("Additional Compensation") provides that in addition to his annual salary, plaintiff shall receive a percentage of the "net profits" of the company, after payment of salaries to the Partner or Partners of $ 70,000 per year. The percentage share of the "net profits" plaintiff would receive under the contract ranged from a low of 10% at the close of his first year of employment to a high of 33 and 1/3% for each calendar year after (but not including) his fifth year of employment.

 (d) Clause 3 ("Additional Compensation") also provides that if the defendant company "shall deem that the Executive be disassociated," he shall receive $ 5,000 severance pay in lieu of any further compensation.

 (e) Clause 5 ("Restrictive Covenant") provides that during the life of the contract and for three years thereafter, plaintiff may not engage in or have a financial interest in any business producing, manufacturing, or distributing any product similar to those produced, manufactured, or distributed by the company in or within 40 miles of Washington, D.C.

 This action has its origins in a dispute over the meaning of "net profits" in Clause 3 of the contract, which dispute led to plaintiff's summary discharge by defendants on March 1, 1979. This clause provides in pertinent part: *fn2"

 
3. Additional Compensation. In addition thereto, the Executive shall receive a share of the net profits of the Company, after payment of salaries to the Partner or Partners (of Seventy Thousand Dollars ($ 70,000.00) per year), payable thirty days after the annual audit, on the following schedule:
 
10% for the period ending December 31, 1969
 
15% for the period ending December 31, 1970
 
20% for the period ending December 31, 1971
 
25% for the period ending December 31, 1972
 
30% for the period ending December ...

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