In 2008, Optimus Corp. terminated a non-qualified deferred compensation plan. At that time, the calculated value of the benefits under the plan was approximately $6.4 million. Optimus informed participants in the plan that it did not have sufficient funds to pay the entire amount of the benefits. The participants were given the offer of receiving an amount equal to half of the benefit in 2008 or waiting until the year 2017 for payment of the full amount. The participants signed releases accepting payment in half.
Shortly thereafter, the majority owner of Optimus died and Optimus’s assets were appraised for estate tax purposes. It was then discovered that Optimus owned unencumbered artwork with an appraised value of approximately $26.8 million. The artwork was shown on Optimus’ financial statements with a book value of $2.2 million. The participants sued to collect the full value of the benefit owing under the plan. Optimus claimed that the participants were barred from bringing the action because they executed releases. The district court for the District of Nebraska ruled that these releases were invalid because the participants were induced to sign the release by improperly omitting the value of Optimus’ artwork. (Edelstein v. Optimus Corp., D. Neb., 2011)