Opinion
Civil Action No. 20-cv-03137-CMA-KLM
04-08-2021
DAVIS BUTLER, Plaintiff, v. INTERNATIONAL BANK, d/b/a InBank, a New Mexico State Chartered Bank, Defendant.
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This matter is before the Court on Defendant's Motion to Dismiss Claim [#12] (the "Motion"). The Court has reviewed the Motion [#12], the Response [#16], the Reply [#17], the entire case file and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the court respectfully RECOMMENDS that the Motion [#12] be GRANTED.
"[#12]" is an example of the convention the Court uses to identify the docket number assigned to a specific document by the Court's case management and electronic case filing system (CM/ECF). This convention is used throughout this Recommendation, and the Court cite the page numbers as indicated on the CM/ECF document.
The Motion [#12] has been referred to the undersigned pursuant to 28 U.S.C. § 636(b)(1) and D.C.COLO.LCivR 72. See [#6].
I. Background
Plaintiff alleges the following facts as the basis for his claim. Plaintiff was employed as a Senior Vice President for Citywide Banks ("Citywide") until May 2018. Compl. [#4] ¶ 10. During this time, Plaintiff received regular raises and bonuses "based on his work performance[.]" Id. ¶ 11. While Plaintiff was employed at Citywide, the President and Chief Executive Officer of Defendant International Bank ("InBank"), Edward Francis ("Francis"), "actively recruited" Plaintiff to leave Plaintiff's position at Citywide for a role at InBank. Id. ¶¶ 12-13. During this recruitment, Plaintiff claims that Francis made the following promises to him:
For the purposes of resolving the Motion [#12], the Court accepts as true all well-pled, as opposed to conclusory, allegations made in Plaintiff's Complaint [#4]. See Shero v. City of Grove, Okla., 510 F.3d 1196, 1200 (10th Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
1. "[I]f he left Citywide to join InBank, he would become an owner and, as a co-founder of InBank, would be one of InBank's highest-level decisionmakers[,]"Id. ¶¶ 18, 20-22, 24.
2. Plaintiff "would have a career with InBank for the rest of his life, which Plaintiff took to mean until he was retired[,]"
3. Plaintiff "would not have to make another career move after joining InBank[,]"
4. Plaintiff "would receive annual bonuses of stock, and would easily make half a million dollars a year[,]" and
5. Plaintiff would receive "a base salary of $165,000 annually, with annual incentive compensation targeted at 30% of this salary."
In May 2018, Plaintiff was hired as Senior Vice President, Senior Commercial Group Leader by InBank, and received an equity award of Restricted Stock Units valued at $50,000.00. Compl. [#4] ¶¶ 27-28. Plaintiff asserts that he did become a co-owner of InBank, and also received a $165,000.00 base salary. See Response [#16] at 3. However, he asserts that he did not receive the promised annual incentive compensation, targeted at 30% of his base salary, nor did he receive his stock award compensation pursuant to InBank's alleged promises. Id. Thus, in July 2019, Plaintiff was required to sign an unexpected three-year vesting scheduling to receive the additional shares of InBank. Id.; Compl. [#4] ¶ 29. Plaintiff did not receive compensation in the form of stock in 2020. Compl. [#4] ¶ 30.
Plaintiff claims that despite consistently meeting performance goals during his employment, he was "purposely excluded from key decisions and meetings shortly after joining[.]" Compl. [#4] ¶¶ 35-36, 39. Additionally, in June 2020, InBank asked Plaintiff to "either resign his employment or be fired based on 'trumped up' alleged performance issues which did not justify advancing to the termination of his employment." Id. ¶ 40. Plaintiff claims that he was not given any warnings or afforded the opportunity to correct any deficiencies per the InBank Employee Handbook. Id. ¶ 41.
Plaintiff asserts one claim of promissory estoppel against Defendant InBank, asserting that he "acted and justifiably relied on [InBank's] promises to his detriment, and consequently suffered damages." Id. ¶ 52. InBank seeks dismissal of this claim in its entirety pursuant to Fed. R. Civ. P. 12(b)(6). Motion [#12] at 1.
II. Standard of Review
The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test "the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true." Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994); Fed. R. Civ. P. 12(b)(6) (stating that a complaint may be dismissed for "failure to state a claim upon which relief can be granted"). "The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Sutton v. Utah State Sch. For the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999) (citation omitted). To withstand a motion to dismiss pursuant to Rule 12(b)(6), "a complaint must contain enough allegations of fact to state a claim for relief that is plausible on its face." Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Shero v. City of Grove, Okla., 510 F.3d 1196, 1200 (10th Cir. 2007) ("The complaint must plead sufficient facts, taken as true, to provide 'plausible grounds' that discovery will reveal evidence to support the plaintiff's allegations.") (quoting Twombly, 550 U.S. at 570)).
"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement." Id. (brackets in original; internal quotation marks omitted).
To survive a motion to dismiss pursuant to Rule 12(b)(6), the factual allegations in the complaint "must be enough to raise a right to relief above the speculative level." Christy Sports, LLC v. Deer Valley Resort Co., 555 F.3d 1188, 1191 (10th Cir. 2009). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct," a factual allegation has been stated, "but it has not show[n] [ ] that the pleader is entitled to relief," as required by Fed. R. Civ. P. 8(a). Iqbal, 556 U.S. at 679 (second brackets added; citation and internal quotation marks omitted).
III. Analysis
InBank argues that Plaintiff's claim for promissory estoppel is insufficient as a matter of law because "[t]he unsubstantiated oral Promises alleged in the Complaint do nothing to advance [Plaintiff]'s claim and fail to put InBank on notice of the specific obligations and duties it violated." Motion [#12] at 6-7. The Court first addresses the legal framework for Plaintiff's claim and then turns to the argument that Plaintiff's promissory estoppel claim fails as a matter of law. A. Legal Framework
Because the Court's jurisdiction in this lawsuit is based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a), the Court applies federal procedural law and Colorado substantive law. See Notice of Removal ¶ 5; 4 Essex Ins. Co. v. Vincent, 52 F.3d 894, 896 (10th Cir. 1995); Trierweiler v. Croxton & Trench Holding Corp, 90 F.3 1523, 1539 (10th Cir. 1996).
Under Colorado law, an employee is rebuttably presumed to have been hired on an at-will basis absent an express contract for a definite period of time. Burrill v. GTE Gov't Sys. Corp., 804 F. Supp. 1356, 1358 (D. Colo. 1992). An at-will employee may be terminated at any time without notice or cause. Id. Such termination will not give rise to a cause of action. Id.
A claimant may overcome this presumption with a valid claim for promissory estoppel or breach of implied contract. Winkler v. Bowlmor AMF, 207 F. Supp. 3d 1185, 1189-90 (D. Colo. 2016). The presumption of at-will employment can also be rebutted by evidence that policies and procedures contained in a written employee handbook constitute an express or implied employment contract. Burrill, 804 F. Supp. at 1358; Continental Air Lines, Inc. v Keenan, 731 P.2d 708, 711-12 (Colo. 1987). When the handbook contains a clear and conspicuous disclaimer abrogating an intent to create such an employment agreement, however, claims of promissory estoppel or breach of implied contract fail. See, e.g., Therrien v. United Air Lines, Inc., 670 F. Supp. 1517, 1523 (D. Colo. 1987); Ferrera v. Nielsen, 799 P.2d 458, 461 (Colo. App. 1990). Whether a disclaimer is conspicuous is a question of law. Sanchez v. Life Care Centers of Am., Inc., 855 P.2d 1256, 1258 (Wyo. 1993).
The elements of a promissory estoppel claim are: (1) the promisor made a promise to the promisee; (2) the promisor should reasonably have expected that the promise would induce action or forbearance by the promisee; (3) the promisee in fact reasonably relied on the promise to the promisee's detriment; and (4) the promise must be enforced to prevent injustice. Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo. App. 2008). "Promissory estoppel is an extension of the basic contract principle that one who makes a promise must be required to keep it." Id.
B. Whether Plaintiff States a Viable Promissory Estoppel Claim
1. The Enforceability of the Alleged Promises
The first element of a promissory estoppel claim requires Plaintiff to allege a promise that: (1) discloses promissory intent or constitutes "a commitment by the employer," and (2) is "sufficiently specific so that the judiciary can understand the obligation assumed and enforce the promise according to its terms." Jones v. Denver Pub. Sch., 427 F.3d 1315, 1325 (10th Cir. 2005) (citation and emphasis omitted). The basis of this claim cannot be mere "vague assurances." Id. Courts "have consistently held that vague and indefinite statements made by an employer to a prospective or present employee do not rebut the presumption of at-will employment." Hughes v. Titan Tech. Partners, Ltd., No. 2009 WL 5210133, at *4 (D. Colo. Dec. 23, 2009); Snoey v. Advanced Forming Tech., Inc., 844 F. Supp. 1394 (D. Colo. 1994); see also Meacham v. General Elec. Corp., No. 86-1128, slip op. at 9 (10th Cir. Feb. 23, 1988) ("A hope, or expectation, or anticipation that [employment] will be long-term, or is an 'opportunity' for four or five years" is not enough to establish a contract for a fixed term of employment). Additionally, when an employer's statements are merely a description of policies or a "forecast of [an] employee's likely career progression," such statements are not promises that can reasonably be relied upon as a commitment. Soderlun v. Pub. Serv. Co. of Colo., 944 P.2d 616, 620 (Colo. App. 1997); see Snyder v. Ag Trucking, Inc., 57 F.3d 484, 489 (6th Cir. 1995) (statements that employee would have job until he retired are not promises, they are "general comments about career growth and company policy").
Here, as to the promises that Plaintiff would become an owner and receive a salary of $165,000 a year, Plaintiff asserts that these promises were satisfied. See Response [#16] at 3. To the extent that he alleges he was promised that he would be one of the "highest-level decisionmakers" at InBank, "would have a career . . . for the rest of his life (or until he retired)" and "would not have to make another career move[,]" those statements are merely a forecast of Plaintiff's likely career progression and potential for success at InBank. As such, they are unenforceable under Soderlun and Snyder. Moreover, Plaintiff has not provided sufficient details about the nature of InBank's alleged obligations with respect to the statements for them to be enforceable. Hughes, 2009 WL 5210133, at *4. Plaintiff has not, for example, averred how or when he was to become a "decisionmaker" or what the scope of such authority would mean. Accordingly, these statements are too vague to enforce. Id.
Similarly, the statements that Plaintiff "would receive annual bonuses of stock and would easily make half a million dollars a year" and that he would receive incentive compensation targeted at 30% of his salary are not sufficiently specific to be enforced. The alleged promises do not specify the amount of stock that would be provided in bonuses, how or when such stock would be issued, whether that stock would be subject to conditions like a vesting schedule, or that the half a million dollars a year in compensation (or incentive compensation targeted at 30% of his salary) was guaranteed. In fact, the Complaint [#4] alleges that "[a]nnual incentive compensation was to be based on Plaintiff meeting financial performance goals, his team's satisfactory overall performance, and achievement of individual production and compliance-related goals." Id. ¶ 25. Thus, fulfilment of the alleged "promises" is not something that could be determined by, or enforced by, the Court.
Plaintiff argues, however, that his allegations are "typical" of those pled in a promissory estoppel claim, and that discovery will provide more evidence to support his allegations. Response [#16] at 7. Plaintiff's cited authority does not support his position. The first case, Shero v. City of Grove, Oklahoma, 510 F.3d 1196, 1198 (10th Cir. 2007), concerns a First Amendment claim and the qualified immunity defense, with no reference to a promissory estoppel claim or employment. It has no applicability to this action.
The second case, PayoutOne v. Coral Mortgage Bankers, 602 F. Supp. 2d 1219 (D. Colo. 2009), addressed a promissory estoppel claim in a lender and borrower context. The court applied Colorado's credit agreement statute of frauds and determined that the complaint's reference to emails that may contain the alleged written promise satisfied the writing requirement in the statute. Id. at 1226. The case did not involve promises made in the employment context, and in no way supports Plaintiff's contention that the promises he relies on are "typical" of promissory estoppel claims.
The third case relied on by Plaintiff, Chidester v. Eastern Gas and Fuel Associates, 859 P.2d 222 (Colo. App. 1992), does address promissory estoppel in the employment context. Id. at 223-24. However, the case is distinguishable. In Chidester, plaintiffs alleged that "defendants' executives offered and induced them to take key positions[,]" plaintiffs would be employed for at least five years, and plaintiffs would receive a specific percentage of the company revenues and special bonuses according to an Incentive Participation Plan. Id. The Tenth Circuit made no findings regarding the sufficiency of the promises, focusing only on the third element of promissory estoppel. Id. at 225. In addition, it is apparent that the promises were much more detailed than in this case. Id. at 224. Thus, the promises were specific as to length of employment (the plaintiffs would "have a minimum of five years. . . to make the division viable[,]") and as to the agreed-upon plan for compensation (the plaintiffs would receive "a percentage (20% and 50%) of the revenues (credits) from oil and gas wells and bonuses" upon the sale of any such well.) Id. at 224.
Plaintiff also argues that the determination of whether the alleged promises were a forecast of Plaintiff's likely career progression "is more appropriate for the merits stage of litigation[,]" citing Enriques v. Noffsinger Manufacturing Co., 412 F. Supp. 2d 1180, 1183 (D. Colo. 2006). Response [#16] at 7. However, the Enriques court denied a motion to dismiss due to an ambiguity in a written contract referenced in the alleged promise and determined that the ambiguity must be determined by a fact finder. Id. at 1183. The Enriques court made no findings regarding the level of detail needed to succeed on a promissory estoppel claim and the holding does not support Plaintiff's claim. See id. In addition, discovery will not assist Plaintiff, as the promises he relies on are not enforceable as a matter of law.
2. The Employee Handbook
The Court further finds that to the extent Plaintiff is arguing that InBank wrongfully terminated him when it had promised him a career for the rest of his life, this claim is barred by the Employee Handbook. The Handbook expressly provides a disclaimer at the beginning of the Handbook with a bolded, large-font, all-capitalized title: DISCLAIMER NOTICE. Immediately under this conspicuous title, the Handbook states that "InBank adheres to the policy of employment at will, which permits the Company or the employee to end the employment relationship at any time, for any reason, with or without cause or notice." Motion [#12], Ex. 3. at 004, see also 041 ("Note that all employees are employed at-will, and InBank reserves the right to impose whatever discipline it chooses, or none at all, in a particular instance. [InBank] will deal with each situation individually and nothing in this handbook should be construed as a promise of specific treatment in a given situation").
InBank attaches the Employee Handbook to its Motion [#12]. While the sufficiency of a complaint must generally rest on its contents alone in connection with a Rule 12(b)(6) motion, Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010), the Court may consider outside documents that are both central to Plaintiff's claims and to which Plaintiff refers in his complaint. See GFF Corp. v. Associated Wholesale Grocers, 130 F.3d 1381, 1384 (10th Cir. 1997). The Employee Handbook is referenced in the Complaint [#4], ¶ 41, and appears to be central to the claims. Thus, the Court will consider this document in resolving the Motion [#12].
Based on the foregoing, InBank provided a specific conspicuous disclaimer that the employment was at-will, and that Plaintiff could be terminated "at any time for any reason." In addition, the Handbook expressly provides that in the event InBank intends to alter an employee's at-will status, such modification "must be in a signed writing." Motion [#12], Ex. 3. at 004. Accordingly, the Court finds that the Employee Handbook also supports dismissal of Plaintiff's claim of promissory estoppel. See Winkler v. Bowlmor AMF, 207 F. Supp. 3d 1185, 1191 (D. Colo. 2016); Healion v. Great-W. Life Assur. Co., 830 F. Supp. 1372, 1375-76 (D. Colo. 1993).
While Plaintiff argues that the alleged promises are not barred by the Employee Handbook because this document was given to him after he left Citywide and became employed by InBank and after the detrimental reliance had already occurred (Response [#16] at 9), this argument is rejected. The Handbook makes clear in connection with its discussion of at-will employment that any verbal or written communications by a management representative are not "an agreement, contract of employment, express or implied, or a promise of treatment in any particular manner." Moreover, Plaintiff has not alleged duress or any other reason to invalidate the Employee Handbook. See Conagra Trade Group, Inc. v. Fuel Expl.ation, LLC, 636 F. Supp. 2d 1166, 1175-76 (D. Colo. 2009).
In light of the Court's findings that Plaintiff's promissory estoppel claim fails as a matter of law, the Court need not address InBank's argument that some of the promises are also barred by stock award agreements.
IV. Conclusion
Based on the foregoing reasons,
IT IS HEREBY RECOMMENDED that the Motion [#12] be GRANTED and that this case be dismissed.
IT IS HEREBY ORDERED that pursuant to Fed. R. Civ. P. 72, the parties shall have fourteen (14) days after service of this Recommendation to serve and file any written objections in order to obtain reconsideration by the District Judge to whom this case is assigned. A party's failure to serve and file specific, written objections waives de novo review of the Recommendation by the District Judge, Fed. R. Civ. P. 72(b); Thomas v. Arn, 474 U.S. 140, 147-48 (1985), and also waives appellate review of both factual and legal questions. Makin v. Colo. Dep't of Corr., 183 F.3d 1205, 1210 (10th Cir. 1999); Talley v. Hesse, 91 F.3d 1411, 1412-13 (10th Cir. 1996). A party's objections to this Recommendation must be both timely and specific to preserve an issue for de novo review by the District Court or for appellate review. United States v. One Parcel of Real Prop., 73 F.3d 1057, 1060 (10th Cir. 1996).
Dated: April 8, 2021
BY THE COURT:
/s/
Kristen L Mix
United States Magistrate Judge