Boyle v. Petrie Stores Corp.

Michael Boyle (plaintiff) entered into a contract, negotiated by attorneys for both parties, with Petrie Stores Corporation (Petrie Stores) (defendant). Under the contract, Boyle would become Petrie Stores’ president and chief executive officer (CEO) on November 1, 1982. Boyle would remain in this position for five years and was giving up a well-paid position elsewhere to take this job. As president and CEO, Boyle would be subject to the control of the board of directors (Board) but have general supervision over the business. The contract provided that in the event of a breach by Petrie Stores, including termination other than for a material breach or just cause, Boyle would be entitled to over $2,100,000, excluding stock options, in liquidated damages. This amount did not exceed the total compensation provided for in the five-year contract. Milton Petrie, who was the Board chairman and prior CEO, had a reputation for being temperamental. On January 13, 1983, after Boyle had served two months of his five-year contract, the Board acceded to Milton’s demand that Boyle be fired after Milton and Boyle had a heated argument. Boyle then took up another position elsewhere but sued Petrie Stores, seeking liquidated damages per the contract. Petrie Stores countered that the liquidated damages sought by Boyle were an unconscionable penalty and therefore inappropriate.