Opinion
Civil Action No. 02-7735
December 30, 2002
MEMORANDUM
Presently pending before this Court is the Defendant Welex Incorporated's ("Welex") Motion to Dismiss the Complaint Pursuant to FED. R. CIV. P. 12(b)(6), or In the Alternative, For Summary Judgment Pursuant to FED. R. CIV. P. 56. Welex filed this Motion in response to the Plaintiff Frances G. Hull's ("Hull") Complaint alleging violations of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. ("ADEA"), the Pennsylvania Human Relations Act, 43 Pa. C.S.A. § 955(a) et seq. ("PHRA"), and Title VII of the Civil Rights Act of 1991, 42 U.S.C. § 2000e, et seq. ("Title VII"). Hull also alleges intentional infliction of emotional distress. Welex claims that Hull signed a binding general release of all claims in exchange for, among other things, almost $29,000 in severance pay and, therefore, her claims must be dismissed. For the reasons that follow, we will grant the Motion to Dismiss.
I. BACKGROUND
Hull worked for Welex from February 14, 1974 until August 16, 2001 when Welex terminated her employment. Welex offered Hull a severance package in exchange for a general release of all claims against Welex. Specifically, the Severance Agreement and General Release ("Agreement") included twenty-seven weeks of pay, amounting to $28,999.08, and health benefits through the end of October 2001 in exchange for a general release of all claims and causes of action arising out of her employment or termination. The Agreement advised Hull to speak with an attorney prior to signing, gave her forty-five days during which she could consider the Agreement, and allowed Hull to revoke the Agreement within seven days after signing it. Hull consulted with her attorney, Ernest Sasso ("Sasso"), regarding the Agreement. On September 24, 2001, Hull signed the Agreement. Hull did not revoke the agreement during the seven-day revocation period or at any other time.
On October 11, 2001, Welex provided to Hull her severance pay in one lump sum payment of $28,999.08, although the Agreement stated that she would receive her pay in bi-weekly installments. Welex also continued Hull's health benefits through October as required by the Agreement. On February 7, 2002, Hull filed a Charge of Discrimination against Welex with the Equal Employment Opportunity Commission ("EEOC"), which was cross filed with the Pennsylvania Human Relations Commission ("PHRC"). Hull filed the instant Complaint on October 7, 2002. In her Complaint, Hull alleges that she signed the Agreement under duress and that Welex willfully refused to honor the terms of the Agreement. Therefore, Hull argues that the Agreement is void and not a bar to her suit. In the present Motion, Welex argues that because Hull signed a valid general release, her claims must fail and her Complaint must be dismissed.
II. STANDARD
A motion to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6), tests the legal sufficiency of the complaint. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). A court must determine whether the party making the claim would be entitled to relief under any set of facts that could be established in support of his or her claim. Hishon v. King Spalding, 467 U.S. 69, 73 (1984) (citing Conley, 355 U.S. at 45-46); see also Wisniewski v. Johns-Manville Corp., 759 F.2d 271, 273 (3d Cir. 1985). In considering a Motion to Dismiss, all allegations in the complaint must be accepted as true and viewed in the light most favorable to the non-moving party. Rocks v. City of Phila., 868 F.2d 644, 645 (3d Cir. 1989) (citations omitted).
III. DISCUSSION
Because dismissal is proper, as Hull can not establish any set of facts which would support her claim that the Agreement is not binding, it is unnecessary to convert the Motion to Dismiss into a Motion for Summary Judgment. Therefore, we have not considered any of the exhibits attached to the briefs other than the Agreement which was incorporated into the Complaint by reference. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (stating that a document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss into one for summary judgment.); see also Maleski v. DP Realty Trust, 162 F.R.D. 496, 498 (E.D. Pa., 1995) (stating that "`[t]he court has complete discretion to determine whether or not to accept any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion.'") (quoting Wright and Miller, Federal Practice and Procedure § 1366 (2d ed. 1990)).
Welex requests that Hull's claims be dismissed because Hull entered into the Agreement which contained a general release. Hull, in her Complaint, claims that she signed the Agreement while under duress and that Welex has failed to adhere to the terms of the Agreement. Therefore, in Hull's mind, the Agreement is void. Hull, as the party challenging the validity of the release, bears the burden of proof on this issue. Reed v. SmithKline Beckman Corp., 569 F. Supp. 672, 674-75 (E.D. Pa. 1983).
It appears that Hull has abandoned her claim of duress as she does not address Welex's arguments regarding this issue in her Response to the Motion. Nonetheless, we will address and quickly dispatch the duress argument. Under Pennsylvania law it is well established that, "[i]n the absence of threats or actual bodily harm, there can be no duress where the contracting party is free to consult with counsel." Wastak v. Lehigh Valley Health Network, No. 00-4797, 2002 WL 468709, *5 (E.D. Pa. Mar. 27, 2002) (citing Strickland v. Univ. of Scranton, 700 A.2d 979, 986 (Pa.Super. 1997)); Three Rivers Motors Co. v. Ford Motor Co., 522 F.2d 885, 893 (3d Cir. 1975) (stating that "under Pennsylvania law where the contracting party is free to come and go and to consult with counsel, there can be no duress in the absence of threats of actual bodily harm."); Reed, 569 F. Supp. at 675 (stating same). Not only was Hull free to consult with counsel, she in fact did consult with counsel. Furthermore, Hull does not allege that she was threatened with or suffered actual bodily harm. Also, Hull had forty-five days to make her decision, and seven days after her decision to rescind the Agreement, of which she did not take advantage. Moreover, "courts have consistently held that mere financial pressure is insufficient to invalidate a release." Killian v. McCulloch, 873 F. Supp. 938, 943 (E.D. Pa. 1995);see Strickland, 700 A.2d at 986 (stating that the "fact that Appellant was faced with an unpleasant choice does not establish duress."). Therefore, the fact that Hull was required to sign the Agreement in order to receive her severance package is not sufficient to establish duress in the legal sense. Under the facts as alleged by Hull, even if she has not abandoned this argument, her claim of duress fails.
Hull's second argument is that Welex breached the Agreement in three ways and thus the Agreement is void. This is the only argument presented in the Response to the Motion to Dismiss and was formulated without the aid of actual case law. First, Hull argues that Welex breached the agreement by allegedly sending her a letter, shortly after her termination, which stated that her medical benefits would be cancelled as of August, 31, 2001. Hull argues that because the Agreement stated that her benefits would be paid through October 2001, Welex breached the Agreement by sending her this letter. We note that, in fact, Hull's benefits were provided to her through October, 2001, the period specified in the Agreement. Hull received this letter by the end of August 2001 at the latest. Hull did not sign the Agreement until September 24, 2001. It is beyond our comprehension how this letter, received a month before Hull signed the Agreement, could be considered a breach of the Agreement, especially since Welex upheld the Agreement and provided Hull's benefits through October 2001. Second, Hull argues that Welex substantially under-reported her wages to the Pennsylvania Unemployment Compensation Bureau. This allegation has no bearing on Hull's claim that Welex breached the Agreement.
Third, and finally, Hull argues that Welex paid her $28,999.08 in one lump sum, rather than paying her a portion of this amount bi-weekly for twenty-seven weeks as contemplated by the Agreement. Hull argues that Welex's actions impacted her negatively in two ways. First, Hull argues that the lump sum payment prohibited her from receiving Welex's discretionary contribution to her 401(k) plan which was available to all employees active on December 31, 2001. However, the Agreement clearly states that Hull's "employment with [Welex] will terminate on August 16, 2001." (Mot. to Dismiss., Ex. A, Tab 1). Therefore, even if Hull had received bi-weekly payments, she would not have been an active employee on December 31, 2001, and thus it is highly unlikely that she would have been eligible for the 401(k) plan contribution. Second, Hull argues that by paying her in one lump sum, she was placed in a higher tax bracket than she had anticipated.
It is true that Welex did not follow the Agreement to the letter because it paid Hull in one lump sum, rather than in bi-weekly payments. However, Welex did fulfill its two promises under the Agreement as it provided Hull with "[twenty-seven] weeks of salary in the amount of gross wages of ($28,999.08)" and "health benefits through the month of October, 2001." (Id.). Even if Welex can be said to have breached the Agreement at all, Welex substantially performed its obligations under the Agreement and did not commit a material breach. Therefore, Hull's claims must fail.
Under Pennsylvania law, general releases are interpreted by the rules of contract construction. Bickings v. Bethlehem Lukens Plate, 82 F. Supp.2d 402, 405 (E.D. Pa. 2000). Furthermore, "`[i]f the consideration for the release of the prior claim is performance of the settlement agreement . . ., only substantial performance of the obligor's duties under the agreement will extinguish the prior claim.'" Melendez v. Horizon Cellular Tel. Co., 841 F. Supp. 687, 691 n. 7 (E.D. Pa. 1994) (quoting Polish Am. Mach. Corp. v. R.D. D. Corp., 760 F.2d 507, 511 (3d Cir. 1985)). A "presumption arises that substantial performance of a settlement agreement is necessary to extinguish a prior claim if the prior claim involves an undisputed duty." Polish Am. Mach. Corp., 760 F.2d at 511. Here, Welex paid Hull the $28,999.08 and continued her benefits through October 2001. Welex fulfilled both of its obligations under the Agreement. There can be no question that Welex substantially performed its obligations. Therefore, any of Hull's prior claims have been extinguished and released by Hull.
Moreover, Welex has not committed a material breach. An immaterial failure of performance by one party does not discharge the other party from meeting its contractual obligations. Klee v. Lehigh Valley Hosp., No. 97-4642, 1998 WL 995850, *4 (E.D. Pa. Nov. 05, 1998) (citing Sgarlat v. Griffith, 36 A.2d 330, 332 (Pa. 1944)); aff'd 203 F.3d 817 (3d. Cir. 1999). Because Hull received her severance pay and medical benefits, she was not deprived of the benefit of the Agreement which she reasonably expected. See Klee, 1998 WL 995850, *4-5 (discussing the factors used in determining whether a failure of performance is material). Therefore, even if a breach occurred under the facts presented by Hull, the Agreement is not void and Hull may not revive claims in this suit that she released under the Agreement.
IV. CONCLUSION
Hull has failed to establish that the Agreement was not valid and binding. On the pleadings Hull has not alleged facts that would support a claim of duress in this situation nor has she alleged facts which show that Welex materially breached the Agreement. Therefore, Hull may not revive the claims that she released in the Agreement and her Complaint must be dismissed.
An appropriate Order follows.
ORDER
AND NOW, this 30th day of December, 2002, upon consideration of the Defendant's Motion to Dismiss the Complaint Pursuant to Fed.R.Civ.P. 12(b)(6), or In the Alternative, For Summary Judgment Pursuant to Fed.R.Civ.P. 56. (Dkt. No. 2), and the Response and Replies thereto, it is hereby ORDERED that the Motion to Dismiss is GRANTED and the Plaintiff's Complaint is DISMISSED with prejudice. The Clerk of Court is hereby directed to mark this case as closed.