Justia Contracts Opinion SummariesArticles Posted in Employment Law
Failla v. FixtureOne Corp.
In 2009, Kristine Failla, a Washington resident and experienced salesperson, was looking for a job she could perform from her Gig Harbor home. She e-mailed Kenneth Schutz looking for such a position. Schutz was the founder and chief executive officer (CEO) of FixtureOne Corporation, which sells fixtures, casework, and displays for use in retail stores. Both FixtureOne and Schutz are based in Pennsylvania, and at the time of Failla's email, FixtureOne had no physical presence or customers in Washington. FixtureOne hired Failla as an account executive. In December 2010, Failla requested a promotion and a raise. Schutz agreed and promoted her to FixtureOne's vice president of sales, increased her yearly salary. Although there were outstanding commissions owed, Failla accepted the promotion and salary increase based on the assurances that the commissions would be paid. Schutz provided a draft employment agreement for Failla to sign in connection with the promotion. Among other things, the agreement contained a provision that it would be interpreted in accordance with Pennsylvania law. Failla proposed revisions to the agreement, but for reasons unknown neither Failla nor Schutz ever signed it. Failla continued working for FixtureOne from her Washington home until May 2011. She received regular paychecks, and the only issue in this case was the sales commissions owed to her that were not paid. In May 2011, Schutz emailed Failla to tell her that FixtureOne was "clos[ing] its doors" and ended her employment the following day. He assured Failla that FixtureOne would "pay your commissions and expenses asap in the next several weeks." For two months following her termination, Schutz returned Failla's requests for payment with various explanations as to why the commissions remained unpaid. Schutz eventually advised Failla that she would not receive a commission check and for the first time disputed whether such commissions were even owed. Failla filed suit against FixtureOne and Schutz for the wilfull withholding of wages, including an allegation that Schutz was individually liable under Washington's wage laws. Failla served Schutz in Pennsylvania but was unable to serve FixtureOne. Consequently the suit proceeded against Schutz alone. Failla and Schutz cross moved for summary judgment. Schutz argued that the trial court lacked personal jurisdiction because he did not have the requisite minimum contacts with the state, and even if Washington could exercise jurisdiction over him, there were genuine issues of material fact preventing the entry of summary judgment. The trial court concluded it had personal jurisdiction and denied Schutz's summary judgment motion. The court granted summary judgment to Failla, awarding double damages. The Court of Appeals reversed, holding that Washington's long-arm statute did not reach Schutz because the employment relationship between Failla and FixtureOne was inadequate to confer jurisdiction over Schutz. The Washington Supreme Court disagreed with the appellate court, and reversed. View "Failla v. FixtureOne Corp." on Justia Law
Dekalb County Sch. Dist. v. Butler
Appellee Yvonne Butler was a principal at a DeKalb County elementary school. Appellant DeKalb County School District notified appellee it would be terminating her employment for: (1) incompetency; (2) insubordination; (3) wilful neglect of duties; and (4)for other good and sufficient cause. Appellee was placed on suspension while the charges were pending. A hearing was scheduled pursuant to the Fair Dismissal Act (FDA), but the parties agreed to a continuance. The record revealed the hearing never took place. Appellant offered appellee, in lieu of termination, a contract for a classroom teaching position for the 2011- 2012 school year and required that she sign and return the contract before May 19, 2011, if she chose to accept the offer. On May 31, 2011, appellee responded to the May 11 letter by asserting that she had a right to an FDA hearing. In her May 31 response, appellee never indicated she would be accepting the offered position of classroom teacher. On June 30, 2011, upon hiring new counsel, appellee returned the signed teaching contract "under protest." In July, appellant issued appellee a separation notice indicating appellee’s employment had ended as of June 30, 2011. The following March, appellee filed this mandamus action, requesting an FDA hearing, a name-clearing hearing, and damages for breach of an implied covenant of good faith and fair dealing in regard to the proffered 2011-2012 teaching contract. Both parties moved for summary judgment and the trial court granted and denied in part both parties’ motions: the decision effectively granted appellee’s petition for a writ of mandamus and held that appellee was entitled to an FDA hearing because she was a tenured employee and had been demoted from an administrator to a teacher. In addition, the trial court held that the request for a separate name-clearing hearing was moot as appellee could clear her name at the FDA hearing. Finally, the trial court denied appellee’s claim of damages for breach because it found that appellee had not timely accepted the contract to be a classroom teacher for the 2011-2012 school year. Upon review, the Supreme Court found that since appellee had earned tenure as a teacher, at the time of her suspension from the position as principal in 2010, the only right she had under the FDA was continued employment as a teacher. Therefore, the School District complied with the FDA when it offered appellee a teaching position for the 2011-2012 school year rather than insisting upon her termination. At that point, the FDA did not require any additional action by appellant. Thus, it was error for the trial court to conclude that appellant was required to hold a demotion hearing pursuant to the FDA in addition to offering appellee continued employment as a teacher. The Supreme Court affirmed the Superior Court in all other respects. View "Dekalb County Sch. Dist. v. Butler" on Justia Law
Cedar Fair, L.P. v. Falfas
Plaintiff and Defendant, his employer, signed a written employment agreement detailing the terms of Plaintiff’s relationship with Defendant. Plaintiff later ceased working for Defendant, believing he had been fired. Defendant, however, believed that Plaintiff had resigned. Plaintiff’s termination became the subject of binding arbitration. The arbitration panel concluded that Plaintiff had been terminated for reasons other than cause and ordered Defendant to reinstate Plaintiff “to the position he held prior to his wrongful termination.” The Supreme Court reversed, holding (1) specific performance is not an available remedy for breach of an employment contract unless it is explicitly provided for in the contract or by an applicable statute; and (2) the arbitration panel in this case exceeded its authority by holding otherwise, as the contract clearly did not entitle Plaintiff to reinstatement. Remanded.View "Cedar Fair, L.P. v. Falfas" on Justia Law
Smith v. B2K Systems, LLC et al
Petitioners B2K Systems, LLC, a Delaware limited-liability company; Ingenuity International, LLC, a foreign corporation; and Robert A. Przybysz, sought a writ of mandamus seeking enforcement of an outbound forum-selection clause and the reversal of a preliminary injunction entered by an Alabama Circuit Court. This matter arose out of a business dispute. Respondent Nannette Smith, was the founder and president of, and the sole shareholder in, B2K Systems, Inc., a Birmingham-based Alabama corporation that developed specialized software for point-of-sale retailers. In 2012, B2K, Inc. sold its assets to B2K Systems, LLC (a corporation set up for the purpose of acquiring B2K Inc's assets). Przybysz, the managing member and CEO of B2K LLC and Ingenuity, executed the promissory note on behalf of B2K LLC and the guaranty agreement on behalf of Ingenuity. That same day, B2K LLC and Smith entered into the employment agreement, pursuant to which Smith became president of B2K LLC. Each agreement (an asset-purchase agreement, employment agreement, promissory note, and guaranty agreement) contained a forum-selection clause. All the agreements provided that the law of the State of Delaware would govern (the forum selection clauses in each lie at the heart of this appeal). Following the purchase, relations between Smith and B2K LLC deteriorated. In 2014, Przybysz acted to terminate Smith's employment with B2K LLC, "for cause." The same day, B2K LLC filed for and received a temporary restraining order ("TRO") from a Kent, Michigan Circuit Court. Along with its request for the TRO, B2K LLC filed a lawsuit against Smith alleging breach of Smith's employment agreement with B2K LLC, breach of fiduciary duty, and breach of the asset-purchase agreement. The day after the Michigan TRO was issued, Smith filed a complaint and a petition for a TRO in Alabama ("the trial court"), seeking her own TRO against the petitioners and also seeking monetary damages for breach of the employment contract and the promissory note. The Alabama court issued the TRO. Petitioners then moved to dissolve the TRO and to dismiss Smith's lawsuit, arguing, in part, that under the various forum-selection clauses contained in the parties' agreements, either the Kent, Michigan Circuit Court or the United States District Court for the Western District of Michigan were the exclusive forums for Smith's lawsuit. Smith argued that venue in the Alabama court was proper, that the forum-selection clauses were permissive rather than mandatory, and that Michigan was a seriously inconvenient forum. The trial court noted that the forum-selection clauses were "inartful" and concluded that venue was proper in both Alabama and Michigan. The petitioners filed this petition for a writ of mandamus 13 days after the entry of the preliminary injunction. Because the Alabama Supreme Court was presented "with no viable argument or citation of authority regarding the proper standards for interpreting or enforcing the forum-selection clauses at issue," it declined "to disturb the trial court's determination that its exercise of authority in this case was not prohibited by those clauses." As such, petitioners failed to establish a clear legal right to the dismissal of Smith's action based on the forum-selection clauses. As to the venue issue, the petition for the writ of mandamus was also denied: Smith failed to convince the Court that, without the injunction, she would suffer irreparable injury. View "Smith v. B2K Systems, LLC et al" on Justia Law
Exxon Mobil Corp. v. Drennen
William Drennan worked as an executive with Exxon Mobil Corporation (ExxonMobil), a Texas-based corporation. During his employment, Drennan received several forms of compensation through the corporation’s executive bonus-compensation Incentive Programs. The Incentive Programs included choice-of-law provisions providing for application of New York Law and allowed forfeiture of an executive’s bonus awards for engaging in “detrimental activity.” After Drennan retired he accepted a position at Hess Corporation, another large energy company. Drennan’s incentive awards were subsequently forfeited on the grounds that “there was a material conflict of interest, constituting detrimental activity” under the Incentive Programs. Drennan sued. The trial court entered judgment for ExxonMobil. The court of appeals reversed, holding that the choice-of-law provisions were unenforceable, that Texas law applied, and that the detrimental-activity provisions, as forfeiture conditions, were unenforceable covenants not to compete under Texas law. The Supreme Court reversed, holding that the New York choice-of-law provisions in the executive compensation plan were enforceable and that the detrimental-activity provisions were enforceable under New York law.View "Exxon Mobil Corp. v. Drennen" on Justia Law
Spacesaver Sys., Inc. v. Adam
After Respondent’s employment with a corporation was terminated, she sued the corporation and her sibling business partner, alleging that she was terminated without cause in violation of her employment agreement. The written agreement contained a for-cause provision but no definite term of employment. The trial judge found a breach of the employment agreement, concluding that the agreement transformed what had previously been an “at-will relationship” to a “lifetime contract,” and therefore, Respondent could only be terminated for cause, death, or disability. The court of special appeals affirmed in part and reversed in part, holding that the contract was a for-cause contract of continuous duration rather than a lifetime contract, obviating the need for “special consideration.” The corporation appealed. The Court of Appeals affirmed, holding that the employment agreement was not at-will employment nor an oral lifetime employment contract that has been consistently rejected by Maryland courts, but this type of contract was “continuous for-cause” employment.View "Spacesaver Sys., Inc. v. Adam" on Justia Law
Furtula v. Univ. of Ky.
Appellants, former employees of the University of Kentucky, filed suit against the University alleging that, by rejecting their applications for disability status, the University breached a written contract consisting of a staff handbook and associated personnel policy documents defining the disability compensation programs. The court of appeals dismissed Appellants’ claims on the basis of governmental immunity, concluding that the documents establishing the University’s employee disability compensation did not constitute a written contract, and therefore, the University was shielded from Appellants’ claims by the doctrine of governmental immunity. The Supreme Court affirmed, holding (1) Appellants did not establish that the General Assembly expressly waived sovereign immunity in claims based upon implied contracts arising from a state university’s employee handbooks and personnel policies, and the relevant University personnel documents specifically disclaimed the creation of a contract; and (2) therefore, sovereign immunity remained a valid affirmative defense under the circumstances presented.View "Furtula v. Univ. of Ky." on Justia Law
Baker v. Bristol Care, Inc.
When Respondent was promoted from her position was an hourly employee to a salaried managerial position at one of Appellants’ long-term care facilities, the parties signed an employment agreement and arbitration agreement. Appellants later terminated Respondent from her position. Respondent filed a class action lawsuit against Appellants seeking compensation for allegedly unpaid overtime hours. Appellants filed a motion to compel arbitration, but the circuit court overruled the motion. The Supreme Court affirmed, holding that Respondent’s continued at-will employment and Appellants’ promise to resolve claims through arbitration did not provide valid consideration to support the arbitration agreement. View "Baker v. Bristol Care, Inc." on Justia Law
Serv. Employees Int’l Union, Local 509 v. Dep’t Mental Health
The Service Employees International Union, Local 509 (Union) filed a complaint seeking a declaratory judgment that the Department of Mental Health (DMH) violated the Massachusetts privatization statute by entering into contracts with private entities without adhering to the requirements set forth in Mass. Gen. Laws ch. 7, 52-55. The superior court judge allowed DMH’s motion for judgment on the pleadings, which she treated as a motion to dismiss for lack of subject matter jurisdiction, determining that the Union lacked both direct and associational standing to pursue its claim and, additionally, that the superior court lacked jurisdiction because the Union failed to join necessary parties to the action. The Supreme Judicial Court vacated and set aside the judgment of dismissal, holding (1) the judge did not err in dismissing the complaint on the basis of its failure to name all necessary parties; but (2) the Union had direct standing to seek a declaratory judgment that would invalidate the contracts at issue. Remanded for the limited purpose of allowing the Union to seek leave to amend its complaint by adding all necessary parties.View "Serv. Employees Int’l Union, Local 509 v. Dep’t Mental Health" on Justia Law
McCormick v. Chippewa, Inc.
In 2007, appellant Brent McCormick suffered a back injury while pushing a net reel aboard the F/V CHIPPEWA, owned by Chippewa, Inc. The day after his injury McCormick was treated with ibuprofen. Later that night rough seas caused him to fall out of his bunk and hit his head. McCormick continued to suffer back pain and dizziness and later was treated by medical specialists. In 2010, McCormick filed a complaint against Chippewa, Inc. and Louis Olsen (the vessel’s captain), alleging “unseaworth[i]ness” of the F/V CHIPPEWA and negligence in failing to ensure workplace safety and provide proper medical care. Chippewa had a liability insurance policy with a $500,000 per occurrence limit, including a “cannibalizing” provision specifying that costs and expenses spent “investigating and/or defending any claim” would be deducted from the policy limit. The parties ultimately agreed to settle the case for the "policy limit," but were unable to agree on what "policy limit" meant. Each side sought to enforce the agreement based on their respective understandings of the term. During summary judgment proceedings, one party asked for time to conduct discovery regarding the parties’ intent. The superior court granted summary judgment to the other party and denied the discovery request as moot. Because it was an abuse of discretion not to allow discovery before ruling on the summary judgment motion, the Supreme Court vacated the summary judgment order and remanded the case so that appropriate discovery could be conducted. View "McCormick v. Chippewa, Inc." on Justia Law