## Facts

- Thomas Frey worked for Workhorse Custom Chassis, LLC (Workhorse) and claimed Workhorse’s principal/CEO, Andrew Taitz, made compensation promises that included a 2002 bonus if Workhorse’s 2002 earnings before interest, taxes, depreciation, and amortization (EBITDA) exceeded about \$39.1 million.
- In January 2003, Frey resigned from Workhorse.
- In spring 2003, Frey asked about the 2002 bonus. Taitz responded by letter stating that Frey forfeited eligibility by leaving Workhorse before the bonus was paid; the letter did not take a position on whether the EBITDA target had been met.
- Workhorse later completed audited 2002 financial statements reporting EBITDA of roughly \$37.6 million, below the stated target. The audit was finished many months after Frey left.
- At trial, a Workhorse witness conceded the audited EBITDA figure could carry a margin of error up to 5%, which could be enough—if the number moved upward—to exceed the \$39.1 million threshold (and would have affected bonuses for other employees as well).
- Frey sued Workhorse and related defendants, including Grand Vehicle Works Holdings Corporation (a related entity) and Taitz, asserting (among other theories) breach of contract for the unpaid bonus and promissory estoppel based on promises that induced him to leave his prior position at SPX/DeZurik.
- A jury returned verdicts for Frey, awarding \$225,000 on the bonus-based contract claim and \$648,220 on promissory estoppel as reliance damages tied primarily to benefits and stock-option value Frey claimed he gave up by leaving SPX/DeZurik.
- Defendants moved for judgment as a matter of law under Federal Rule of Civil Procedure 50, challenging the sufficiency of the evidence on both verdicts and seeking an additional set-off based on Frey’s severance arrangements with his former employer.
- Frey moved for prejudgment interest on both awards under Indiana law.

## Issues

1. Whether defendants were entitled to judgment as a matter of law on the \$225,000 breach-of-contract verdict on the ground that Frey did not present legally sufficient evidence that Workhorse’s 2002 EBITDA exceeded the \$39.1 million threshold.
2. Whether defendants were entitled to judgment as a matter of law on the \$648,220 promissory-estoppel verdict, including challenges to actual and reasonable reliance, the certainty of reliance damages, and requests for an additional set-off based on Frey’s severance with SPX/DeZurik.
3. Whether Indiana law allowed prejudgment interest on (a) the fixed bonus award and (b) the promissory-estoppel reliance-damages award.

## Decision

- The court denied defendants’ Rule 50 motion in full, leaving intact the jury’s verdicts for \$225,000 (contract) and \$648,220 (promissory estoppel).
- The court rejected defendants’ request for any further set-off beyond what the jury could have accounted for under the instructions and arguments at trial.
- The court granted Frey prejudgment interest on the \$225,000 bonus award at 8% simple interest per year from April 30, 2003 through the date of judgment.
- The court denied prejudgment interest on the \$648,220 promissory-estoppel award because those damages were not determinable by fixed standards at the time they accrued.
- Final judgment was entered for Frey and against Workhorse Custom Chassis, LLC and Grand Vehicle Works Holdings Corporation for \$873,220, plus the awarded prejudgment interest on \$225,000 and costs; Frey’s claims against Taitz individually were dismissed with prejudice.

## Legal Principles

- A court may grant judgment as a matter of law only if, viewing the evidence and reasonable inferences in favor of the nonmovant, no reasonable jury could have found for that party.
- Even without direct testimony that a numeric financial condition was satisfied, a jury may draw reasonable inferences from circumstantial proof, including evidence calling into question the timing, reliability, or credibility of the opposing party’s proof.
- Under Indiana law, promissory estoppel requires proof of: (1) a promise, (2) made with the expectation the promisee will rely, (3) actual reliance, (4) reliance of a definite and substantial nature, and (5) enforcement necessary to avoid injustice; the remedy is typically reliance damages intended to place the promisee in the position as if the promise had not been made.
- A severance agreement with a former employer does not, without supporting law or facts, operate as a release of claims against later third parties; and a defendant is not entitled to a second credit when the jury was instructed to account for amounts already received.
- Indiana prejudgment interest is available when damages are ascertainable by fixed rules of evidence and accepted standards of valuation; a fixed contractual bonus can qualify, while reliance damages requiring jury estimation and contingent assumptions generally do not.

## Conclusion

The court upheld the jury’s awards for Frey on both the EBITDA-based bonus contract claim and promissory estoppel, finding sufficient evidence for a reasonable jury to conclude the bonus condition was met and that Frey reasonably relied on promises when leaving his prior job, while awarding prejudgment interest only on the fixed \$225,000 bonus and denying it on the more variable promissory-estoppel damages.


Frey v. Workhorse Custom Chassis, LLC, 2007 WL 647495 (2007)