Douglas Miller v. Lanzo Holding Company

The Hon. W illiam W Schwarzer, United States District Judge for the Northern District of California,
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sitting by designation.
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0635n.06
Filed: August 29, 2007
Nos. 06-1695/1696
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
DOUGLAS MILLER,
Plaintiff-Appellee/Cross-Appellant,
v.
LANZO HOLDING COMPANY; LANZO
CONSTRUCTION COMPANY; LANZO
CONSTRUCTION COMPANY, FLORIDA;
LANZO LINING COMPANY, MICHIGAN;
LANZO LINING COMPANY, FLORIDA;
and MOON ROOF CORPORATION OF
AMERICA,
Defendants-Appellants/Cross-
Appellees.
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ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF MICHIGAN
Before: MARTIN and DAUGHTREY, Circuit Judges, and SCHWARZER, District*
Judge.
PER CURIAM. In this action for breach of contract, plaintiff Douglas Miller appeals
from the district court’s orders of summary judgment in favor of the defendants, a group
of family-owned businesses collectively referred to in this opinion as Lanzo. In January
2000, Miller was employed by Lanzo as chief financial officer at a time when Lanzo’s
finances were in a state of some disarray. His compensation and benefits were set out in

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an employment contract and, shortly thereafter, the parties to that contract negotiated a
severance agreement. The expectation was that Miller would reorganize all the economic
and tax aspects of the Lanzo companies and put the businesses back on a sound financial
track. After about six months, however, it became apparent to the owners that under
Miller’s guidance, the companies’ financial affairs were continuing to deteriorate, and within
two years Miller’s employment was terminated for “poor performance.” When the
defendants refused to pay Miller the amounts that he believed were due under the terms
of his employment and severance agreements, he brought this action for breach of
contract. The defendants counterclaimed for fraud and silent fraud, claiming that Miller had
misrepresented himself on his resume and in his interviews at the time he was hired.
The procedural history of litigation in this case is lengthy, although the legal issues
on appeal are relatively straightforward. Prior to trial, the plaintiff filed a motion for
summary judgment on the counterclaims and a motion for partial summary judgment for
certain benefits under the agreements, including a 25 percent bonus payment for 2001,
deferred compensation, payment for unused vacation days, and severance pay. The
district court granted summary judgment to the plaintiff on the counterclaims but denied
summary judgment on the other issues and, in fact, later granted summary judgment to the
defendants on the claims for payment of the bonus and unused vacation days. That left
only two issues as the case proceeded to trial: the plaintiff’s claims for breach of the
employment agreement with regard to unpaid deferred compensation and unpaid salary
and the plaintiff’s claim for breach of the severance agreement with regard to severance

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benefits in “an amount equal to [his] earnings during the twelve month period” prior to
termination.
After the close of evidence, the plaintiff made a motion for a partial “directed verdict”
with respect to the defendant’s liability on the severance agreement (but not the calculation
of the amount due). After argument, the court granted the motion, ruling that the
defendants had failed to establish the occurrence of any of the severance agreement’s four
forfeiture events that would have prevented the plaintiff from collecting severance benefits.
The jury was therefore charged with determining, first, whether the defendants were liable
for breach of the employment agreement regarding deferred compensation payments and
unpaid salary and, if so, in what amounts and, second, the amount due to Miller under the
severance agreement. The jury found that the defendants had not breached the
employment agreement in either respect and awarded the plaintiff $242,680 plus interest,
as the amount due under the severance agreement.
After the verdict, the plaintiff brought a partial motion for judgment not withstanding
the verdict and an alternative motion for a new trial, arguing that a verdict should be
directed in his favor regarding liability on the employment contract. The district court
denied this motion, ruling that the plaintiff had failed to make a Rule 50(a) motion at the
close of evidence and, therefore, had waived this argument and, in any event, that the
motion would fail on its merits.

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The plaintiff appealed, contending that (1) the district court erred in granting the
defendants summary judgment on their liability for unused vacation time pursuant to the
employment agreement; (2) the district court erred in granting the defendants summary
judgment on the issue of the 25 percent year-end bonus for 2001, pursuant to the
employment agreement; and (3) the district court erred in denying the plaintiff’s motion for
partial judgment notwithstanding the verdict and his alternative motion for new trial
regarding liability for unpaid salary and deferred compensation pursuant to the employment
agreement.
The defendants cross-appealed, arguing that (1) the district court erred in granting
summary judgment to the plaintiff on the defendants’ counterclaims for fraud and silent
fraud; (2) the district court erred in limiting testimony concerning the alleged fraudulent
misrepresentations in the plaintiff’s resume and at his interviews; (3) the district court erred
in excluding testimony of the plaintiff‘s job performance as irrelevant; and (4) the district
court erred in directing a verdict for the plaintiff with regard to liability for breach of the
severance agreement.
Having had the benefit of oral argument, and having studied the record on appeal
and the briefs of the parties, we are not persuaded that the district court erred in dismissing
the defendants’ counterclaims and in entering judgment on the jury’s verdict. Nor do we
find any basis for reversing the district court’s determination that the payment of a bonus
was entirely discretionary on the part of the employer, and we decline to disturb the grant

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of summary judgment on this issue. Because the reasons for those rulings have been fully
and correctly articulated by the district court in its orders dated April 29, 2005, June 16,
2005, and March 23, 2006, we conclude that a detailed re-analysis is unnecessary and
affirm on the basis of the reasoning set out by the district court on each of those issues.
We find fault with the district court’s decision only as to the one remaining issue.
On appeal, Miller contends that the district court erred when it denied his motion for
summary judgment with regard to compensation for 17 unused vacation days. We agree.
Under paragraph 11 of Miller’s employment agreement, he was entitled to “4 weeks
of vacation per year,” at least some of which, he alleged, was unused in his second and
last year at Lanzo. In addition, paragraph 10 of the contract provides that Miller was
entitled to “participat[e] in all company benefit programs.” Those benefit programs are
listed in the Lanzo companies’ employee handbook, section 3.15 of which includes a “paid
time off” policy that provides as follows: “In the event that available [vacation days are] not
used by the end of the benefit year, employees will be paid for the unused time bringing
the benefit balance to zero.” The district court nonetheless found that “the Lanzo
Companies’ business policies and Employee Handbook . . . do not provide compensation
for unused vacation days.” This ruling, however, contradicts the plain language of the
relevant documents and is, therefore, incorrect.
The defendants do not contend that the employee handbook and its paid-time-off
policy are inapplicable to Miller and, in fact, do not address Miller’s argument on this issue

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directly. Instead, they cite case law for the general proposition that under Michigan law,
unused vacation days are not included in a determination of an at-will employee’s “annual
compensation.” We conclude that this argument simply misses the mark. The
employment agreement governed the parties’ relationship and gave Miller the right to a
certain amount of vacation time. In addition, the plain language of paragraphs 10 and 11
of his employment contract, which incorporated the companies’ paid-time-off policy,
entitled Miller to compensation for his unused vacation days. In the absence of a genuine
issue of material fact regarding the applicability of that policy to Miller, we conclude that he
is entitled to recover on this claim.
For the reasons set out above, we REVERSE that portion of the district court’s
judgment granting summary judgment to the defendants on the plaintiff’s claim regarding
compensation for unused vacation days and REMAND the case to the district court for
calculation of the amount due the plaintiff on that claim. We AFFIRM the remainder of the
district court’s judgment.

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