Summary
denying Defendant's motion to dismiss on breach of contract claim because Plaintiff sufficiently pled existence of contractual right to bonus payments, which he accepted by continuing performance of his duties
Summary of this case from Knapp v. Susquehanna Vill. Facility Operations, LLCOpinion
Civil Action No. 03-CV-1674.
October 25, 2004
MEMORANDUM AND ORDER
Plaintiff James Ryan ("Plaintiff") brings this breach of contract, Wage Payment and Collection Law, ERISA and defamation action against Defendants Prudential Insurance Co. of America, et al. ("Defendants"). Now before the Court is Defendants' Motion to Dismiss Count I of the Second Amended Complaint for failure to state a claim on which relief can be granted. For the reasons stated below, the Court will deny the Motion.
The other Defendants are Prudential Investments Management Services, L.L.C.; Claims Committee, In Its Capacity as Administrator of the Prudential Severance Plan for Executives; and the Prudential Severance Plan for Executives.
I. FACTUAL BACKGROUND
Construed in the light most favorable to Plaintiff, the facts are as follows. From April 10, 2001 until approximately December 14, 2002, Plaintiff was employed by Defendants as a National Sales Manager. Second Amended Complaint ("Compl.") ¶¶ 9, 13. Defendants terminated Plaintiff on the grounds that he had failed to obtain a Pennsylvania Resident Insurance License. Id. ¶ 14. Plaintiff claims, however, that he held a valid Pennsylvania license at the time of his termination. Id. ¶ 15.
Plaintiff contends that the true motivation for his termination was to avoid paying him earned bonuses and severance. Moreover, just days after he was terminated, Defendants announced their acquisition of a company called American Skandia. Id. ¶ 22. Plaintiff claims that this acquisition made his position as National Sales Manager obsolete. Id. ¶ 23. If Plaintiff had been terminated due to the elimination of his position, he would have been entitled to a $175,000 severance payment. Id. ¶¶ 10, 24.
The Complaint alleges that Defendants owe Plaintiff $53,502.25 in unpaid bonuses earned prior to termination. Id. ¶ 26.
The Second Amended Complaint includes counts for breach of contract (Count I), violation of Pennsylvania's Wage Payment and Collection Law (Count II), violation of ERISA (Counts III and IV), and Defamation (Count V). Defendants seek dismissal of Count I pursuant to Fed.R.Civ.P. 12(b)(6).
II. LEGAL STANDARD
When deciding a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the Court may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). The Court must accept as true all well-pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985). A Rule 12(b)(6) motion will be granted only when it is certain that no relief could be granted under any set of facts that could be proved by the plaintiff. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988).
III. ANALYSIS
Plaintiff alleges that he had a contractual right to bonus payments as set forth in the Sales Compensation Plan (the "Plan"), which explains the system of incentive bonuses available to National Sales Managers. Compl. ¶¶ 9-12, 40-43, Ex. B. He claims that he accepted this offer by performing his obligations, and that Defendants breached by refusing to pay his incentive bonuses upon his termination. Id. ¶¶ 44-45, 48.
Defendants argue that Plaintiff has not pled the existence of a contract because the Plan expressly stated that it was not an employment contract. Id. Ex. B at p. 7. They further allege that Plaintiff was an at-will employee who could be discharged at any time, for any reason, or for no reason at all. Defendant's Motion to Dismiss Count I at p. 11-15. While Plaintiff admits he was an at-will employee, he contends that the Plan was a unilateral contract to pay him certain bonuses upon the completion of his work obligations. Plaintiff's Response to Defendants' Motion to Dismiss Count I at p. 6-7.
"A unilateral contract is a contract wherein one party makes a promissory offer which calls for the other party to accept by rendering a performance. In the employment context, the communication to employees of certain rights, policies and procedures may constitute an offer of an employment contract with those terms. The employee signifies acceptance of the terms and conditions by continuing to perform the duties of his or her job; no additional or special consideration is required." Bauer v. Pottsville Area Emergency Med. Services, Inc., 758 A.2d 1265, 1269 (Pa.Super.Ct. 2000) (quoting Darlington v. Gen. Elec., 504 A.2d 306, 320 (Pa.Super.Ct. 1986).
Pennsylvania courts have held that "[p]rovisions in a handbook or manual can constitute a unilateral offer of employment which the employee accepts by the continuing performance of his or her duties." Bauer v. Pottsville Area Emergency Med. Services, Inc., 758 A.2d 1265, 1269 (Pa.Super.Ct. 2000) (quoting Darlington v. Gen. Elec., 504 A.2d 306, 320 (Pa.Super.Ct. 1986); see also Caucci v. Prison Health Services, Inc., 153 F. Supp. 2d 605, 611 (E.D. Pa. 2001) (stating that an employer who offers rewards to employees who achieve a particular result "may be obligated to provide those awards to qualifying employees although retaining the right to terminate them for any or no reason"). Similarly, a retention plan that includes bonus payments contingent on continued employment can be construed as a separate contract supplementing an at-will employment arrangement. See Pilkington v. CGU Ins. Co., 2000 WL 33159253, at *6-7 (E.D. Pa. Fe. 9, 2001) (noting that an employer can create a unilateral contract by offering additional terms of employment conditioned upon the employee's continued performance of his job);Kemmerer v. ICI Americas Inc., 70 F.3d 281, 287 (3d Cir. 1995) (finding a deferred compensation plan created a unilateral contract which could be accepted by an employee's continued employment with the company). The Complaint alleges that the Plan was an offer to pay bonuses for Plaintiff's continued performance and that he accepted this offer by performing his obligations. Compl. ¶¶ 40-45. Accordingly, Plaintiff has sufficiently pled the existence of a contract.
Defendants further argue that even if there were a contract for the bonuses, the Plan includes the condition that "[e]mployees who resign or are terminated for cause will not be eligible for any incentive payments." Id. Ex. B at p. 6. Because Plaintiff allegedly was terminated for failing to maintain an insurance license, Defendants claim that they were under no obligation to pay bonuses to him. Plaintiff, however, disputes the allegation that his termination was for cause. Id. ¶¶ 14-15. There is thus a factual issue about the nature of the termination.
Plaintiff sufficiently pleads the existence of a contract, its breach, and damages resulting therefrom. Accordingly, the Court cannot conclude at this stage of the proceedings that no set of facts would support that claim, and Count I will not be dismissed.
IV. CONCLUSION
For the foregoing reasons, the Court will deny Defendants' Motion to Dismiss. An appropriate Order follows.