Opinion
C.A. No. N15C-05-034 FWW
02-25-2016
JEFFREY B. KRALOVEC, Plaintiff, v. RIVER TOWER OF CHRISTINA LANDING CONDOMINIUM ASSOCIATION, Defendant.
"J" Jackson Shrum, Esquire, Werb & Sullivan, 300 Delaware Avenue, Suite 1300, Wilmington, Delaware, 19801; Attorney for Plaintiff. Charles A. McCauley III, Esquire, Obermayer, Rebmann, Maxwell & Hippel, LLP, 1000 N. West Street, Suite 1200, Wilmington, Delaware 19801, Tricia A. Swann, Esquire and Jacqueline K. Gallagher, Esquire, Obermayer, Rebmann, Maxwell & Hippel, LLP, 1617 J.F.K. Boulevard, 19th Floor, Philadelphia, Pennsylvania 19103; Attorneys for Defendant.
Amended: February 29, 2016 (Cover page only - Decided Date) Upon Defendant's Motion to Dismiss
GRANTED, in part, and DENIED, in part. OPINION AND ORDER "J" Jackson Shrum, Esquire, Werb & Sullivan, 300 Delaware Avenue, Suite 1300, Wilmington, Delaware, 19801; Attorney for Plaintiff. Charles A. McCauley III, Esquire, Obermayer, Rebmann, Maxwell & Hippel, LLP, 1000 N. West Street, Suite 1200, Wilmington, Delaware 19801, Tricia A. Swann, Esquire and Jacqueline K. Gallagher, Esquire, Obermayer, Rebmann, Maxwell & Hippel, LLP, 1617 J.F.K. Boulevard, 19th Floor, Philadelphia, Pennsylvania 19103; Attorneys for Defendant. WHARTON, J.
I. INTRODUCTION
In this breach of contract and defamation action, Jeffery B. Kralovec ("Plaintiff") filed suit to recover damages from River Tower of Christina Landing Condominium Association ("Defendant"). Plaintiff claims that Defendant breached the Services Agreement when Defendant wrongfully terminated Plaintiff ("Count I"). Plaintiff also claims that certain members of the Defendant's Council defamed Plaintiff by distributing to the River Tower of Christina Landing Condominium Owners ("Owners") a dossier which contained allegedly false statements about Plaintiff ("Count II"). Defendant filed a Motion to Dismiss seeking dismissal of both counts of Plaintiff's Complaint.
The Court applies Super. Ct. Civ. R. 12(b)(6) to Defendant's Motion to Dismiss. The Court finds that Plaintiff has sufficiently alleged a claim for breach of contract but the damages are limited under the contract. The Court also finds that Plaintiff has failed to establish a prima facie claim for defamation. Therefore, Defendant's Motion is DENIED as to Count I and GRANTED as to Count II.
II. FACTUAL AND PROCEDURAL CONTEXT
On March 26, 2013, Plaintiff and Defendant entered into a Services Agreement in which Plaintiff contracted to act as the property manager for Defendant. The term of the Services Agreement was four years from 2013 through 2017. The Services Agreement provides, in part,
Services Agreement, D.I. 18 at Ex. A, § 1.A.
Id. at § 2.
[n]otwithstanding the termination date set forth herein, [Defendant] through the Council may cancel this Agreement, through written notice, in its sole discretion without cause, upon sixty (60) days prior written notice to [Plaintiff]. If [Defendant] wishes to terminate this Agreement with cause, [Defendant] shall first send written notice of a breach of this Agreement. If [Plaintiff] does not cure the breach within ten (10) business days, then [Defendant] may terminate this agreement with cause...In the event of termination, [Plaintiff's] compensation shall be determined on a pro-rata basis for the portion of the month worked before termination. ("Termination Provision")
Id. at § 3.
Plaintiff alleges that in a letter ("May 29, 2013 Letter") from Defendant to Plaintiff, Defendant wrote that Defendant had learned that Plaintiff violated the Services Agreement by managing several condominium units in violation of the Agreement. The May 29, 2013 Letter further provides that "[a]s a result, pursuant to section 3, the Agreement is hereby canceled with cause. Furthermore, since this breach of the Agreement is not-curable, [Defendant] expect[s] [Plaintiff] to return all records, papers and documents...within two days."
May 29, 2013 Letter, D.I. 18 at Ex. B.
Id.
Plaintiff also alleges that, in a dossier dated May 10, 2013, members of the condominium association distributed a document to Owners titled "Reasons to Replace Current Association Council President and Treasurer." The dossier contained statements that Plaintiff:
Compl., D.I. 1, at ¶ 11.
1. Was rude, demanding and antagonistic at Council meetings and was requested not to attend;
2. Was delinquent by not conducting daily inspections of the property and garage as required by his contract;
3. Was not attentive to the requests of Association committees, specifically BEES, to the point of being rude during building walk-throughs;
4. Was not reporting building incidents to Council, after repeated attempts by Council for information;
5. Was antagonistic at meetings with City of Wilmington Fire Marshall when requested to inform residents and guests to vacate the pool deck during the July 4, 2012, fireworks display due to safety concerns;
6. Was antagonistic to Association vendors, to the point of using profanity; and
7. Was not adept in using building equipment - damaged the ceiling on the 25th floor when using the scissor lift.
Upon his termination of his contract on October 19, 2012, Mr. Kralovec refused to turn in Association building keys, took items from the business office, which included the Standard Operating Procedure manual, and damaged the Association's building automation system. The Association had to subsequently contract with the system's vendor, Siemens to rebuild the system at a cost of nearly $9,000.
Dossier, D.I. 18 at Ex. G.
Plaintiff brought actions against Defendant for breach of contract (Count I) for terminating the Services Agreement and for defamation (Count II) based upon the statements contained in the dossier. On August 14, 2015, Defendant filed a Motion to Dismiss for failure to state a claim upon which relief can be granted. The parties appeared before the Court for oral argument on November 12, 2015.
III. THE PARTIES' CONTENTIONS
Defendant asserts that the Complaint fails to state a claim upon which relief can be granted because Plaintiff has neither stated a claim for breach of contract nor for defamation. Defendant argues that the May 29, 2013 Letter shows that Plaintiff was terminated for cause because the letter states that he allegedly breached the Services Agreement and the breach was incurable. Alternatively, Defendant argues that the May 29, 2013 Letter provided notice that Plaintiff was being terminated without cause pursuant to the Termination Provision in the Services Agreement. Defendant contends that Plaintiff's damages are limited by the contract to the compensation Plaintiff would have received during the sixty day notice period for termination without cause, or $10,400.
Def.'s Opening Br., D.I. 10, at 4.
Id. at 5.
Id. at 7.
Defendant also asserts that Plaintiff has failed to state a claim for defamation. Defendant contends that the allegedly defamatory statements contained in the dossier are protected expressions of opinion and are not capable of a defamatory meaning. Additionally, Defendant claims that Plaintiff's claim that an "[a]ssociation member or members distributed a dossier" is too vague to attribute the allegedly defamatory statements to Defendant.
Id. at 8.
Id. at 9.
Plaintiff argues that even if Plaintiff had violated terms of the Services Agreement, Defendant wrongfully terminated the Agreement in the May 29, 2013 Letter. Plaintiff contends that Plaintiff should be compensated for the entire term of the Agreement because Defendant did not allow Plaintiff ten days to cure any alleged breach and unilaterally deemed the alleged breach incurable. Plaintiff asserts that the contract provides that Plaintiff is entitled to, at a minimum, sixty days notice of termination and pay for those two months of work.
Pl.'s Answering Br., D.I. 15, at 6.
Id.
Plaintiff also argues that the dossier was sent to the Owners to ruin Plaintiff's business reputation. Plaintiff contends that "the ideas expressed in the dossier about the Plaintiff were not merely opinions that someone holds privately; they were factual misrepresentations about the Plaintiff." Plaintiff asserts that the dossier falsely discusses events that transpired during Plaintiff's term as property manager. Plaintiff requests leave to file an amended complaint should the Motion to Dismiss be granted.
Id.
Id.
Id. at 7.
IV. STANDARD OF REVIEW
When reviewing a Motion to Dismiss pursuant to Super. Ct. Civ. R. 12(b)(6), the Court must determine whether the Plaintiff has alleged a claim upon which relief can be granted. The Court accepts as true all well-pleaded, non-conclusory allegations. Additionally, the Court draws all reasonable inferences in the light most favorable to the non-moving party. If the Court finds that the "plaintiff may recover under any reasonably conceivable set of circumstances susceptible of proof under the complaint," the motion will be denied. However, if the plaintiff fails to allege facts to support each element of a cause of action then the plaintiff has not established a prima facie claim and the motion will be granted.
Spence v. Funk, 396 A.2d 967, 968 (Del. 1978).
Savor, Inc. v. FMR Corp., 2001 WL 541484, at *1 (Del. Super. Apr. 24, 2001).
Spence, 396 A.2d at 968.
Abbott v. Gordon, 2008 WL 821522, at *24 (Del. Super. Mar. 27, 2008).
V. DISCUSSION
A. Plaintiff Has Sufficiently Pleaded that Defendant Breached the Services Agreement in Count I of the Complaint.
To establish a claim for breach of contract, a plaintiff must plead that a contract existed, that the contract obligation was breached and that the plaintiff suffered damages as a result of the breach. Plaintiff has pleaded that the parties entered into a contract by executing the Services Agreement pursuant to which Plaintiff acted as the property manager for Defendant and Defendant compensated Plaintiff for his services as property manager. Plaintiff has also pleaded that Defendant breached its obligation under the Services Agreement when Defendant attempted to terminate Plaintiff via the May 29, 2013 Letter. Plaintiff has pleaded that Defendant's breach resulted in the loss of $274,760.09, Plaintiff's expectation under the Services Agreement.
Interim Healthcare, Inc. v. Spherion Corp., 884 A.2d 513, 548 (Del. Super. 2005).
Compl., at ¶¶ 3-4; see also Services Agreement.
Id. at ¶¶ 6; 19-21.
Id. at ¶¶ 19-23.
However, the Services Agreement attached to the Complaint does not support Plaintiff's claim for $274,760.09. The Termination Provision in the Services Agreement provides:
[n]otwithstanding the termination date set forth herein, [Defendant] through the Council may cancel this Agreement, through written notice, in its sole discretion without cause, upon sixty (60) days prior written notice to [Plaintiff]. If [Defendant] wishes to terminate this Agreement with cause, [Defendant] shall first send written notice of a breach of this Agreement. If [Plaintiff] does not cure the breach within ten (10) business days, then [Defendant] may terminate this agreement with cause...In the event of termination, [Plaintiff's] compensation shall be determined on a pro-rata basis for the portion of the month worked before termination.
Services Agreement, at 3.
The interpretation of contract language is a question of law. Where the words contained in the contract provision are unambiguous, the court applies their plain meaning. The Termination Provision is unambiguous. The Termination Provision provides that the Services Agreement can be cancelled "with cause" or "without cause." Under the Termination Provision, if Plaintiff is terminated "with cause," he is entitled to compensation for the portion of the month worked before termination. If Plaintiff is terminated "without cause," Plaintiff is entitled to compensation for sixty days following the date on which he receives written notice. Therefore, Plaintiff's damages under the Services Agreement are limited to compensation for sixty days following Plaintiff's receipt of notification that he is being terminated "without cause."
Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742, 745 (Del. 1997).
Hallowell v. State Farm Mut. Auto. Ins. Co., 443 A.2d 925, 926 (Del. 1982).
The Court declines to address whether or not the May 29, 2013 Letter placed Plaintiff on notice of his termination. Although the same document may effectuate notice for "with cause" and "without cause" termination, a letter of termination purporting to terminate an employee "for cause" does not automatically trigger the notice provision for "without cause" termination. Reiver v. Murdoch & Walsh, P.A., 625 F.Supp. 998, 1009 (D. Del. 1985). The question of when the plaintiff was placed on notice for "without cause" termination is appropriate for resolution by the ultimate factfinder. Id.; see also Velocity Express, Inc. v. Office Depot, Inc., 2009 WL 2415482, at *11 (Del. Super. Aug. 7, 2009)(On a motion for summary judgment, the Court noted that "[b]ecause this dispute is set for resolution at a bench trial, comment is appropriate on whether notice was sufficient for 'without cause' termination" before decided that a letter put the plaintiff on notice of "without cause" termination because "one thing was clear from the letter. The relationship between the parties was over.").
B. Plaintiff Has Not Established a Prima Facie Claim for Defamation in Count II.
A plaintiff must plead five elements to establish a prima facie claim in a defamation action: 1) the defamatory character of the communication; 2) publication; 3) that the communication refers to the plaintiff; 4) the third party's understanding of the communication's defamatory character; and 5) injury." Plaintiff has pleaded that the allegedly defamatory statements refer to Plaintiff and were published because the Complaint provides that "...a certain Association member or members distributed a dossier with the subject heading 'Reasons to Replace Current Association Council President and Treasurer' to the River Tower at Christina Landing Condominium Association Owners" and that "...the Dossier falsely stated the following about Plaintiff..." followed by a list of the allegedly defamatory statements. Additionally, the Complaint alleges that Plaintiff suffered an injury as a result of the allegedly defamatory statements. The Court must consider whether Plaintiff has pleaded sufficient facts to support the remaining elements.
Read v. Carpenter, 1995 WL 945544, at *2 (Del. Super. June 8, 1995).
Compl., at ¶ 11.
Id. at ¶ 12.
Id. at ¶ 30.
1. Plaintiff has Pleaded that the Statements are Defamatory.
Whether or not a statement is defamatory is a question of law. The Court must determine "first, whether alleged defamatory statements are expressions of fact or protected expressions of opinion; and [second], whether the challenged statements are capable of a defamatory meaning." If the Court determines that the statements are protected expressions of opinion or that they are not capable of a defamatory meaning, Plaintiff cannot maintain an action for defamation.
Riley v. Moyed, 529 A.2d 248, 251 (Del. 1987).
Id.
Id.
The First Amendment to the United States Constitution protects "pure" expressions of opinion. In Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974), the Supreme Court noted:
Gertz v. Robert Welch, Inc., 418 U.S. 323, 339-40 (1974).
Under the First Amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas. But there is no constitutional value in false statements of facts."A pure opinion is one that is based on stated facts or facts that are known to the parties or assumed by them to exist." An opinion that is "not based on facts that are stated or assumed by the parties to exist" is a "mixed" opinion. Thus, a defamatory communication may contain an opinion, "but a statement of this nature is actionable only if it implies the allegation of undisclosed defamatory facts as the basis for the opinion."
Id.
Riley, 529 A.2d at 251.
Id.
Id.; see, e.g., Ramunno v. Cawley, 705 A.2d 1029, 1037 (Del. 1998)("With respect to Cawley's statement that Ramunno has 'done well through poorly maintained' properties, we hold that the grant of defendants' 12(b)(6) motion was in error...[W]e find that the statement may suggest a defamatory factual basis not disclosed by the speaker. For instance, the phrase in question could imply that Ramunno has prospered from rents gleaned from dilapidated, sub-standard buildings, or that he has failed to observe governing building and health codes. What is crucial is that the average reader is unable to discern the source of the statement. Nothing in the letter signals to the audience that Cawley is surmising or reasoning from facts made explicit in the letter. Readers are simply left to wonder what facts underlie Cawley's derogation of Ramunno's real estate portfolio."); Kanaga v. Gannett Co., Inc., 687 A.2d 173, 179 (Del. 1996)("We find that a reasonable jury could conclude from the entire context of that article that there is an undisclosed defamatory factual basis alleged by Ms. Kane's opinion that Dr. Kanaga's recommendation that Ms. Kane have a hysterectomy was motivated by Dr. Kanaga's desire to profit from an unnecessary and expensive hysterectomy.").
In deciding whether a statement is a fact or opinion, the Court considers the statement from the perspective of an ordinary reader. Additionally, the Court has adopted the four-part test set forth in Oilman v. Evans, D.C.Cir., 750 F.2d 970, 979 n. 16 (1984), for determining whether an ordinary reader would view a statement as fact or opinion:
Id.
First, the Court should analyze the common usage or meaning of the challenged language. Second, the Court should determine whether the statement can be objectively verified as true or false. Third, the Court should consider the full context of the statement. Fourth, the Court should consider the broader social context into which the statement fits.
Id. at 251-52.
The following are the statements at issue, "that Plaintiff:
1. Was rude, demanding and antagonistic at Council meetings and was requested not to attend;
2. Was delinquent by not conducting daily inspections of the property and garage as required by his contract;
3. Was not attentive to the requests of Association committees, specifically BEES, to the point of being rude during building walk-throughs;
4. Was not reporting building incidents to Council, after repeated attempts by Council for information;
5. Was antagonistic at meetings with City of Wilmington Fire Marshall when requested to inform residents and guests to vacate the pool deck during the July 4, 2012, fireworks display due to safety concerns;
6. Was antagonistic to Association vendors, to the point of using profanity; and
7. Was not adept in using building equipment - damaged the ceiling on the 25th floor when using the scissor lift.
Upon his termination of his contract on October 19, 2012, Mr. Kralovec refused to turn in Association building keys, took items from the business office, which included the Standard Operating Procedure manual, and damaged the Association's building automation system. The Association had to subsequently contract with the system's vendor, Siemens to rebuild the system at a cost of nearly $9,000.
Dossier, at 3.
Applying the Oilman test, the Court finds that all of the allegedly defamatory statements are protected expressions of opinion with the exception of statements 2, 4, 7 and the final paragraph. First, the common usage or meaning of the challenged language is to describe the writer's personal perception of Plaintiff's demeanor. For example, the words "rude," "demanding," "antagonistic," and "not adept" are commonly understood to express the subjective opinion of the writer and are not facts. Second, with the exception of statements 2, 4, 7 and the final paragraph, the statements cannot be objectively verified as true or false. Third, the statements appear in a dossier that primarily detailed reasons to replace the Council President and Treasurer. References to Plaintiff were for the purpose of explaining why the Association President and Treasurer acted inappropriately by unilaterally entering into a new contract with Plaintiff. Finally, the dossier was an internal document distributed to Owners. It purports to be information relevant to electing a new Council for the Condominium Owners' Association. For these reasons, with the exceptions listed above, the Court finds that the statements are protected expressions of opinion.
Next, the Court must determine whether statements 2, 4, 7 and the final paragraph are capable of defamatory meaning. The Court applies the plain meaning of the words and interprets the statements as would a person of average intelligence and perception. "[A] statement is not defamatory unless it 'tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him.'" Statements that criticize a plaintiff or disparage his performance but neither "lower him...in the estimation of the community or to deter third persons from associating or dealing with him" nor injure his reputation, are not defamatory.
Danias v. Fakis, 261 A.2d 529, 531 (Del. Super. 1969).
Ramunno, 705 A.2d at 1035 (quoting Spence v. Funk, 396 A.2d 967, 969 (Del. 1978)).
Andres v. Williams, 405 A.2d 121, 122 (Del. Super. 1979). --------
Statements 2, 4, 7 and the final paragraph may harm the reputation of Plaintiff or deter others from dealing with him. Drawing all inferences in favor of Plaintiff, the Court finds that the statements, if false, may prevent Plaintiff from being hired as a property manager because the statements concern Plaintiff's competence in his trade or profession. Therefore, the Court finds that statements 2, 4, 7 and the final paragraph are defamatory in character.
2. Plaintiff Failed to Plead the Third Party's Understanding of the Defamatory Nature of the Statements.
Despite the finding that statements 2, 4, 7 and the final paragraph are defamatory, the Complaint is deficient because it does not allege that the third party - the Owners - understood the defamatory character of the statements. The Complaint is silent as to the effect the dossier had on the Owners. Without this element, Plaintiff cannot establish a prima facie claim for defamation. Therefore, Count II must be dismissed.
VI. CONCLUSION
The Court finds that Plaintiff has sufficiently alleged a claim for breach of contract but the damages are limited under the contract. The Court also finds that Plaintiff has failed to establish a prima facie claim for defamation. Therefore, Defendant's Motion to Dismiss is DENIED as to Count I and GRANTED as to Count II.
IT IS SO ORDERED.
/s/_________
Ferris W. Wharton, Judge