The opinion of the court was delivered by: HECKMAN
In accordance with 28 U.S.C. § 636(c), the parties have consented to have the undersigned conduct all further proceedings in this case, including entry of final judgment. Both parties have moved for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons that follow, plaintiff's motion is denied, and defendant's motion is granted.
On September 14, 1996, plaintiff filed a summons and complaint in New York State Supreme Court seeking money damages in the amount of $ 94,627.00 as the difference between the value of Pratt & Lambert stock option rights exercised by plaintiff prior to Pratt & Lambert's November, 1995 merger with defendant Sherwin-Williams Company, and the value of those rights after the merger. On October 15, 1996, defendant (an Ohio Corporation with its principal place of business in Cleveland, Ohio) removed the case to this court pursuant to 28 U.S.C. § 1441(a) on the basis of diversity jurisdiction. Plaintiff is a New York citizen and resides in Erie County.
The following facts are not in dispute. Plaintiff's husband Geary B. Quinn was an employee of Pratt & Lambert, Inc. at the time of his death on November 18, 1992. On December 15, 1987, Mr. Geary entered into an "Option Agreement" (Item 8, Ex. A) under which he was granted an "Incentive Stock Option" to purchase 2,000 shares of Pratt & Lambert's common stock, in accordance with that company's "1980 Stock Option/Stock Appreciation Rights Plan," as amended and restated as of May 7, 1987 (Item 8, Ex. B)(collectively referred to herein as the "Plan"). During the course of his employment, Mr. Quinn was granted option rights for a total of 6,000 shares of Pratt & Lambert common stock.
The general provisions of the Plan set forth the "Purpose" of Pratt & Lambert's incentive stock option program as follows:
To advance the interests of the Corporation . . . by (i) providing certain . . . key employees with additional incentive to promote continued success and profitable growth of the Corporation and the best interests of its shareholders and (ii) enabling the Corporation to compete effectively with others in attracting and retaining key personnel.
(Item 8, Ex. B, p. 4, see also id. at p. 17). The Plan also set forth certain general requirements governing the exercise of stock options, as follows:
The Board [of Directors of Pratt & Lambert] will determine when an option will be exercisable, except that (i) an option cannot be exercised until 12 months after the date of the grant, (ii) an incentive stock option cannot be exercised after 10 years from the date of grant and (iii) a nonqualified stock option cannot be exercised after 10 years and one day from the date of grant. Options will become immediately exercisable in the event of death, retirement or permanent disability and will remain so for a period of one year; however, options will be canceled upon any other termination of employment, Options shall not be transferable by the participant other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the participant only by the participant and after death only [by] the participant's legal representative.
Section 2 of the Plan defined "Successor" as "the legal representative of the estate of a deceased Grantee or the person or persons who shall acquire the right to exercise an Option or an SAR [stock appreciation right] by bequest or inheritance or by reason of the death of the Grantee, as provided in Section 10(c) hereof" (id., pp. 19-20).
Section 9 of the Plan, entitled "TERM AND INSTALLMENTS OF OPTIONS; EXERCISE OF OPTION DURING LIFE OF GRANTEE," provided as follows:
(a) Each Option granted under this Plan shall be exercisable only during a Term commencing twelve months after the date the Option was granted or during such twelve-month period as provided in Section 10(b and c) in the event of death, retirement or permanent disability of a Grantee and ending (unless the Option shall have been terminated earlier under other provisions of this Plan) on a date to be fixed by the Board, which date shall not be more than ten years after the date of grant of the Option; provided, however, that for an Option which is not intended to be an incentive Stock Option, the expiration date shall not be more than ten years and one day after the date of grant of the Option.
(Item 8, Ex. B, p. 28).
Section 10 of the Plan, entitled "EXERCISE OF OPTION OR STOCK APPRECIATION RIGHT BY GRANTEE ON CESSATION OF EMPLOYMENT," provided as follows: