Defendants, employer and its subsidiary, sought review of the decision of the Superior Court of Los Angeles County (California), which found in favor of plaintiff employee in the employee’s action for declaratory relief with respect to the rights and duties of the parties regarding an employment contract and contracts for options to purchase stock of the employer.
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Overview
The employee and the employer executed three contacts, an employment contract, and two contracts for stock options. Approximately two years after the execution of the contracts, the then president of the employer sent the employee a letter notifying him that the contract was invalid and unenforceable, that he had performed no services whatever since its inception, that it only obligated the employer to pay for such services as called upon him to perform, and further notifying him that it was terminated and cancelled. The employee then commenced an action for declaratory relief. The employer asked for a declaration that the contract was invalid and unenforceable. The trial court held that the contracts were valid and enforceable and awarded the employee damages or in the alternative, required the employer to offer the employee the options under the contracts. The court affirmed and held that the judgment ordering the extension of the term of the stock options with a choice to the employer to pay damages in lieu of any such extension achieved a “fair result” and was justified under the broad equity powers vested in the trial court.
Outcome
The court affirmed the judgment of the trial court and held that ordering the contracts either enforced or for the employer to pay damages was within its equity power.