pension plan. Moreover, there was no requirement to mitigate damages.
When AIG took over in August, 1990, Fischbach was a shell of its former self, emptied of its cash reserves, heavily in debt to its creditors, and involved in many lawsuits which exposed the company to a potential liability of many millions of dollars. AIG sought to reduce Fischbach's exposure through negotiation with Fischbach's creditors and litigants. In handling the merger with Fischbach and in seeking to reduce the company's financial liabilities, AIG engaged people (lawyers and employees) to accomplish this task, without consulting plaintiff, although he was advised of what was going on. While these matters were theoretically Fischbach's business, it was AIG's funds and assets that were to be used to satisfy Fischbach's obligations and the claims against it in the effort to restore the corporation to good health. AIG chose the firm of Kaye, Scholer, which had represented it in the acquisition of Fischbach, to reach agreements with Westinghouse, BAII, Posner and DWG, settling roughly some $ 80 million of Fischbach's indebtedness. Settlement of the Aetna and Travelers lawsuits was reached for about $ 39 million. D'Alessandri worked out a settlement of the lawsuit Wilinski had brought for breach of his employment agreement and negotiated an agreement with Coudert Brothers to keep them from withdrawing as counsel for Fischbach in ongoing anti-trust litigation because of nonpayment of the firm's fees, which had grown to $ 3 million.
Fischbach's survival was at risk, and without the steps AIG took to handle these outstanding matters, the company could not have survived. I am not convinced that these acts, accomplished without Bigda's involvement, constituted breaches of his employment agreement. Indeed, there is only Bigda's word as to the extent and scope of his responsibility and authority as General Counsel prior to the Posner takeover. Nor am I at all certain that Bigda's version of the scope of his authority during that period is reliable or credible. There is some evidence that his authority to appoint outside counsel was subject to Board approval and that his decisions on legal matters were seconded by Wilinski. Moreover, with over a hundred million dollars involved, I seriously doubt that before the Posner takeover Bigda would have had the unfettered authority he claims he had to decide on the selection of people to do what had to be done. However, there has been no effort to seriously challenge him regarding the scope of his duties. Accordingly, the court will assume in deciding the breach of contract issue that Bigda's authority and responsibility were as far-reaching in scope and independence as he asserts.
Bigda points to the following as instances of diminution of his authority in violation of the employment agreement: Brenner's handling of the termination of Robert Niehaus, acting president of Fischbach, without consulting plaintiff, (Tr. 107-11); Bigda's not being consulted about the Aetna, Travelers, BAII, Westinghouse, Posner, and DWG settlements and not being involved in selecting outside counsel to deal with these matters; his not being allowed to handle the delisting on the N.Y.S.E. or the deregistration with the S.E.C.; D'Alessandri's negotiating with Coudert Brothers without consulting or involving Bigda; and D'Alessandri's settling of the Wilinski law suit and the Manville estate claim without consulting or involving plaintiff. (Tr. at 117, 130-140.) Brenner never discussed any of these matters with plaintiff and did not respond when Bigda wrote to him about current legal issues facing the company. (Tr. at 132, 133.) These incidents occurred in August, on the heels of Fischbach becoming a subsidiary of AIG. Bigda also cites as a diminution of his authority the fact that after Fischbach was merged with AIG, new by-laws were prepared for the corporation without his being consulted or otherwise involved in the matter.
In early September, 1990, plaintiff brought to Brenner's attention the threatened withdrawal of Coudert Brothers as counsel in pending anti-trust litigation unless their long overdue legal fees were paid promptly. He received no response and learned subsequently that Brenner had referred the matter to D'Alessandri, who had made direct contact with Coudert Brothers and reached an accommodation about payment of their fees and their continued representation of Fischbach. Bigda regarded Brenner's referral to D'Alessandri and the latter's negotiating with Coudert Brothers on his own as a diminution of his authority and thus a breach of the employment agreement. (Tr. at 133-36, 701, 727.) On September 6, 1990, Bigda wrote to Brenner about overdue fees for outside counsel handling a matter for the company. He received no response. (Tr. at 137.)
On September 11, 1990, plaintiff wrote to Brenner about possible controversy with the Justice Department because of some unresolved litigation. No response was forthcoming. D'Alessandri then called plaintiff to ask him to alert Stephen Hogan of Coudert Brothers to a conference call D'Alessandri intended to have with Hogan, the Justice Department and a fourth party regarding resolving the litigation as desired by the Justice Department. Hogan prevailed on D'Alessandri to not make the call. Plaintiff considered it his responsibility to handle this matter.
On September 13, 1990, Bigda wrote to Brenner seeking direction concerning the potential sale of John Miller Electric company, a wholly owned subsidiary of Fischbach. He received no response. (Tr. at 139.) On September 14, 1990, Bigda wrote to Brenner concerning the possible liquidation of Fischbach and Moore Incorporated ("Fischbach and Moore), another Fischbach subsidiary. Again, he received no response. (Tr. at 140.)
Bigda contends that the way he was treated by Brenner and D'Alessandri during August and September, as indicated above, deprived plaintiff of
his authority to assess the problems, to determine how best they should be handled, to handle them himself, to hire outside counsel of his own choice to handle them, if necessary, to participate in the negotiation of such settlements, to prepare the necessary documentation, and to report to his superiors in connection therewith. It is an obvious curtailing and diminishing of his duties, authorities, responsibilities, position and status . . . .
(Pl.'s Post-Trial Mem. at 31.)
As Secretary of the corporation, Bigda prepared the minutes of the board and shareholders meetings, signed stock certificates, and performed all duties incident to the position of Secretary and whatever other duties were assigned to him by the Board. (Tr. at 96.) After the AIG takeover, he no longer had custody of the minute books of the Board and no longer functioned as Secretary because that role was assumed by D'Alessandri.
III. Election of Remedies
During August and September, 1990, plaintiff did nothing about his grievances concerning the diminution of his responsibilities. He continued to perform his duties and to receive his paychecks until and even after the contract expired on October 24, 1990. (Tr. at 445-49.) In response to Brenner's request that the staff tell him what they believed needed his attention, Bigda listed, among other items, his continued employment. In mid-September, 1990, he raised the issue of his employment status with D'Alessandri, and he consequently met on September 26, 1990, with Brenner, Reagan and D'Alessandri regarding the terms of his employment beyond October 24, 1990, when the employment agreement was scheduled to end. See discussion at 5-6. These acts on plaintiff's part are fatal to his claim of breach of the agreement.
When a party materially breaches a contract, the non-breaching party must choose between two remedies -- he can elect to terminate the contract and recover liquidated damages or he can continue the contract and recover damages solely for the breach. ARP Films, Inc. v. Marvel Entertainment Group, Inc., 952 F.2d 643, 649 (2d Cir. 1991). A party can indicate that he has chosen to continue the contract by continuing to perform under the contract or by accepting the performance of the breaching party. Id.; see also Cities Serv. Helex, Inc. v. United States, 211 Ct. Cl. 222, 543 F.2d 1306, 1313-14 (Ct. Cl. 1976). Once a party elects to continue the contract, he can never thereafter elect to terminate the contract based on that breach, V.S. Int'l, S.A. v. Boyden World Corp., 862 F. Supp. 1188, 1196 (S.D.N.Y. 1994) (Leisure, J.), although he retains the option of terminating the contract based on other, subsequent, breaches. Apex Pool Equip. Corp. v. Lee, 419 F.2d 556, 563 (2d Cir. 1969). Since Bigda continued to collect his paychecks and perform his duties until he left the company in December, 1991, entered into negotiations on September 26, 1990 regarding the continuation of his employment, and indicated to Brenner that he wanted his employment to continue, he elected to continue his contract in the face of all breaches that had occurred.
Underlying the court's previous ruling precluding Bigda from recovering liquidated damages for breaches that occurred during the Posner era but allowing him to present evidence of new breaches that occurred during the AIG era is an assumption that each additional curtailment of Bigda's responsibilities constituted a new breach. The ruling thus rejected the notion, advocated by both Bigda and Fischbach at various points in their arguments, that it was the curtailment of Bigda's responsibilities as a whole that constituted the breach. (See Def.'s Response to Pl.'s Post-Trial Mem. at 16., Pl.'s Reply to Def.'s Post-Trial Mem. at 26.) For example, Bigda argues that the fact that even after some of the alleged breaches he continued to perform his duties as General Counsel and Secretary for Fischbach does not indicate that he elected to continue the contract, because
the breach in question is the curtailing and diminishing of his duties, authorities, responsibilities, position and status, and not the outright total extinguishment thereof. It is only when that curtailing and diminishing reaches a point where it amounts to a material breach that gives rise [sic] to the question of election.