Summary
holding no reliance when plaintiff continued to act as he had "prior to any written contract negotiations"
Summary of this case from Coyne's Company, Inc. v. Enesco, LLCOpinion
Civil No. 03-6110 (DWF/SRN).
February 9, 2005
Thomas H. Gunther, Esq., Gunther Law Office, Minneapolis, MN, counsel for Plaintiff.
David P. Thatcher, Esq., Chamberlain Hrdlicka White Williams Martin, Atlanta, GA, Howard B. Tarkow, Esq., Jason A. Lien, Esq., and Justin H. Perl, Esq., Maslon Edelman Borman Brand, Minneapolis, MN, counsel for Defendant.
MEMORANDUM OPINION AND ORDER
Introduction
The above-entitled matter came on for hearing before the undersigned United States District Judge on January 14, 2005, pursuant to Defendant Genuia Garment International, Inc.'s First Motion for Summary Judgment. By his Complaint, Plaintiff Dennis Lappen asserts causes of action for breach of contract and promissory estoppel. For the reasons set forth below, GGI's Motion for Summary Judgment is granted.
Background
This matter arose from a dispute about the outcome of employment contract negotiations that took place between Genuia Garment International, Inc. ("GGI") and Plaintiff Dennis Lappen. Many of the facts related to the contract negotiations are undisputed.GGI is a company that imports and distributes blue jeans in the United States. Lappen, a wholesale clothing manufacturer's representative who was in business for himself at the time, became acquainted with GGI through another GGI employee in mid-2001.
Lappen initially met with GGI's president, Eugenia Chang, in Georgia sometime in late 2001 or early 2002 to discuss Lappen's potential employment with GGI. It is unclear exactly what terms of employment were discussed at this time; however, it is undisputed that Lappen told Chang that he required $10,000 per month in salary in order to join GGI. Lappen also contends that Chang told him that she knew it would take at least two years to get the business started and that he understood that they had "a two-year deal." (Affidavit of David P. Thatcher in Support of First Motion for Summary Judgment ("Thatcher Aff."), Ex. 17, Deposition of Dennis D. Lappen ("Lappen Dep.") at 96-98.) After this meeting, Lappen sent Chang a list of retailers and accounts that he would target in order to expand GGI's business. Chang informed Lappen that she was drawing up a contract and that Dale Liu, the employee who was running the GGI office in Georgia, would send the contract to Lappen as soon as it was completed.
In January 2002, Lappen began working as head of sales and marketing for GGI in the United States with no written employment agreement in place. Although Lappen had requested $10,000 per month in salary, his initial salary was $5,000 per month. From the beginning of his employment, Lappen reported to Liu regarding travel and expenses and to Chris Wynne-Potts concerning merchandising and pricing issues.
In March 2002, Lappen sent a signed proposed employment agreement to Chang that Lappen himself had prepared. ( See Thatcher Aff. at Ex. 1.) Sometime in late June 2002, GGI sent its own written proposal (the "GGI Proposal") to Lappen as a counteroffer. ( See id., Ex. 2.) The GGI Proposal was signed and initialed by Chang and the signature line was left blank for Lappen to sign. Lappen's attorney crossed out several portions of the GGI Proposal and returned it, unsigned, to GGI. ( See Lappen Dep. at 74.)
On July 5, 2002, Lappen sent an email to Liu and to Wynne-Potts detailing 25 changes that Lappen wanted to see made to the GGI Proposal. ( See Thatcher Aff. at Ex. 3.) Specifically, Lappen requested that the GGI Proposal be changed from allowing automatic renewal of the same contract to allowing Lappen to negotiate a new, commission-based contract after the first year. ( Id. at item 8.) In addition, Lappen requested that the GGI Proposal's restrictive covenant not to compete apply only during, not after, his employment with GGI. ( Id. at Item 22.)
On July 19, 2002, Lappen sent another email to Wynne-Potts that stated, "Other than the firing without cause and the non compete clause for three years, I can live with the contract this year and will negotiate new contract next year on commission basis." (Thatcher Aff. at Ex. 4.) It appears that later that day, Wynne-Potts responded to Lappen and Liu as follows:
Can you please both discuss the points that are contentious for you Dennis.Lets [sic] see if we can resolve the areas that you cannot accept so that we can finally get this contract signed and the outstanding money you are owed Dennis can then be paid (in fact I assume it can be paid anyway, can it not) Dennis as the revised contract says next March we can talk about salary or comm % earning or a combination of both, but lets get the contract signed and let's get the customers through the door and buying.
( Id.) At that time, Lappen believed that all of the points in his July 5, 2002, email were still in negotiation. ( See Lappen Dep. at 127.)
On July 23, 2002, Lappen sent a memo to Liu that stated:
Here are the two major issues we would like removed from the contract: "termination by the company "without cause" "covenant not to solict [sic] or compete". [sic] I will go along with everything else in the contract and at the end of the year, we can determine what we will do for the next season.
(Thatcher Aff. at Ex. 5.)
On August 11, 2002, Liu emailed Lappen and stated that any negotiation must be put in writing to be approved by Chang. ( Id. at Ex. 6.)
On August 20, 2002, Liu emailed Lappen and stated that Chang would agree to remove these two provisions from the contract. ( Id. at Ex. 7.) Liu asked Lappen to initial the changes and to send them back for Chang to initial her signature. ( Id.) Later that day, Wynne-Potts emailed Lappen and Liu, stating:
I have spoken to Eugenia [Chang] today about your contract and we will take out the 2 points you had issue with namely (a) termination without cause and (b) not able to carry on in the same business should you leave us. Dale can we proceed along these lines now and get the contract signed. Dale please can we indicate when the contract was retro-active from i.e what was the start date that we have on the contract.
( Id. at Ex. 7.)
Sometime between August 24, 2002, and September 7, 2002, Lappen sent the GGI Proposal back to Liu. ( See id. at Exs. 8, 9.) Lappen had crossed out the termination without cause provision and the entire covenant not to compete section. In addition, Lappen had not initialed his changes to the GGI Proposal. ( See id. at Ex. 2.) At this point, Lappen believed that the contract had been finalized and contends that there were no further negotiations between the parties regarding the written contract. Around this same time, GGI began paying Lappen $10,000 per month and also paid him $5,000 per month in arrears for the previous months' salary. GGI contends that it began paying Lappen the higher salary even before Lappen had returned the GGI Proposal.
On September 7, 2002, GGI alleges that Liu emailed Lappen, stating, "I noted the agreement you sent back to me you did not initial on some changes. I think we can make it all right when Mrs. Eugenia [Chang] is here." ( See id. at Ex. 9.)
On September 9, 2002, GGI asserts that Liu faxed the GGI Proposal that Lappen had sent to Chang's secretary. Liu noted, " PLEASE FIND THE ATTACHMENT FOR DENNIS LAPPEN'S SIGNED BACK. I NOTICED THAT THERE IS NO INITIAL ON SOME CHANGES. . . . I WOULD LIKE TO THIS COMPLETED WHEN MRS. EUGENIA AND DENNIS BOTH IN ATL OFFICE." ( Id. at Ex. 10.)
GGI contends that Lappen never responded to Liu's September 7, 2002, email. No further action was taken as to the written employment agreement by either party.
The parties dispute whether Lappen performed his job duties appropriately while employed by GGI. Due to the nature of the Court's disposition of this motion, the Court need not address the detailed assertions related to Lappen's alleged inadequate performance. Briefly, GGI contends that Lappen did not generate enough new business, his expenses were excessive in light of the activities that he was performing, and he did not follow prescribed GGI requirements regarding travel, customer visits, reporting, and email and fax correspondence.
In March 2003, GGI notified Lappen that he was going to be terminated. GGI asserts that this was due to Lappen's performance deficiencies. Lappen requested that GGI allow him to continue working for an additional three months, but GGI rejected this proposal and Lappen ceased working for GGI.
Lappen initially filed a Complaint in this matter in Hennepin County District Court. The case was removed to this Court on November 7, 2003. The Complaint alleges claims for breach of contract and promissory estoppel. GGI has moved for summary judgment on the grounds that no employment contract existed between the parties and, in the alternative, that even if a contract existed between the parties, GGI terminated Lappen's performance for "cause" and thus is not subject to liability. In addition, GGI asserts that it is entitled to summary judgment on Lappen's promissory estoppel claim.
Discussion
I. Standard of Review
Summary judgment is proper if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). The court must view the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the nonmoving party. See Enter. Bank v. Magna Bank of Missouri, 92 F.3d 743, 747 (8th Cir. 1996). However, as the Supreme Court has stated, "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed 'to secure the just, speedy, and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Fed.R.Civ.P. 1).
The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See Enter. Bank, 92 F.3d at 747. The nonmoving party must demonstrate the existence of specific facts in the record which create a genuine issue for trial. See Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Krenik, 47 F.3d at 957.
II. Breach of Contract
The essential question here is whether GGI and Lappen formed a valid written employment contract. A binding contract requires an offer, acceptance, and consideration. Cederstrand v. Lutheran Bhd., 263 Minn. 520, 529-32, 117 N.W.2d 213, 219-21 (1962). Furthermore, "[a] contract requires a meeting of the minds concerning its essential elements." Minneapolis Cablesystems v. City of Minneapolis, 299 N.W.2d 121, 122 (Minn. 1980). GGI asserts that the negotiations between Lappen and GGI never resulted in a valid employment agreement because there was no meeting of the minds as to its essential terms. Lappen, on the other hand, contends that the parties agreed to the written employment agreement that Lappen last sent to GGI in late August or early September 2002.
The Court finds that no enforceable written employment contract existed between Lappen and GGI. Throughout the parties' exchange of offers and counteroffers, Lappen consistently attempted to strike more from the GGI Proposal than GGI had agreed upon. During this negotiation, the two main points of contention were the termination without cause provision and the restrictive covenant not to compete. When Lappen returned the GGI Proposal to Liu in late August or early September 2002, he had stricken the entire restrictive covenant not to compete. Wynne-Potts's email, however, made clear that GGI only intended to alter the GGI Proposal to allow Lappen to "carry on in the same business" after Lappen left GGI. ( See Thatcher Aff. at Ex. 8.) Thus, Lappen and GGI never came to an agreement regarding the restrictive covenant not to compete at the time the GGI Proposal was last exchanged. Without a meeting of the minds as to this essential term of the contract, no contract existed.
Lappen contends that GGI's conduct implies that GGI accepted the GGI Proposal as Lappen last altered it. However, Lappen essentially continued working in the same manner as he had been prior to any negotiations for a written employment agreement. Lappen is misdirected in his contention that GGI's payment of the $5,000 monthly salary in arrears suggests that GGI believed that the GGI Proposal, as altered by Lappen, had been accepted by GGI. The emails exchanged between the parties suggest otherwise. In Wynne-Potts's July 19, 2002, email to Lappen, Wynne Potts stated, "Lets [sic] see if we can resolve the areas that you cannot accept so that we can finally get this contract signed and the outstanding money you are owed Dennis can then be paid (in fact I assume it can be paid anyway, can it not)" [sic]. ( Id. at Ex. 4.) Based on this email, it is clear to the Court that GGI believed that Lappen would be paid $10,000 monthly regardless of whether the written employment agreement was in place.
Based on this analysis, the Court finds that summary judgment is appropriate on Lappen's breach of contract claim. Because the Court has determined that no valid written employment agreement existed between the parties, the Court need not address GGI's arguments as to whether Lappen was terminated for cause.
III. Promissory Estoppel
GGI also moves for summary judgment on Lappen's claim of promissory estoppel. Lappen's promissory estoppel claim rests on the alleged promises for employment that were included in the written GGI Proposal, absent the provision regarding termination without cause and the restrictive covenant not to compete. "Promissory estoppel is an equitable doctrine that 'implies a contract in law where none exists in fact.'" Martens v. Minn. Mining Mfg. Co., 616 N.W.2d 732, 746 (Minn. 2000) (quoting Grouse v. Group Health Plan, Inc., 306 N.W.2d 114, 116 (Minn. 1981)). The elements of a promissory estoppel claim are: (1) that a clear and definite promise was made; (2) the promisor intended to induce the promisee to rely on the promise and the promisee did in fact rely to his or her detriment; and (3) the promise must be enforced to prevent injustice. See id. (citing Cohen v. Cowles Media Co., 479 N.W.2d 387, 391 (Minn. 1992)). In order to survive GGI's motion for summary judgment, Lappen must direct the Court to some evidence that would support each element.
Lappen's claim for promissory estoppel fails primarily on the second prong of the analysis. Even if the Court were to determine that a definite promise was made as to the terms of the GGI Proposal, as altered by Lappen, such an alleged "promise" did not induce any reliance by Lappen. From the record before the Court, Lappen continued working and performed the same duties as he had performed even prior to any written contract negotiations. Absent any induced reliance, summary judgment is appropriate on Lappen's promissory estoppel claim.
Based on the files, records, and proceedings herein, and for the reasons set forth above, IT IS HEREBY ORDERED that:
1. Defendant Genuia Garment International, Inc.'s First Motion for Summary Judgment (Doc. No. 13) is GRANTED on all counts of Plaintiff's Complaint.
2. Plaintiff's Complaint is DISMISSED WITH PREJUDICE.
LET JUDGMENT BE ENTERED ACCORDINGLY.