Opinion
Civil Action No. 00-1026.
February 26, 2004
MEMORANDUM
I. Introduction
Henry Chmielewski brings this counterclaim against Harry Clark and Clark Capital Management Group, Inc. ("Clark Capital"), seeking damages for the state law claims of wrongful discharge and breach of contract. Before the court is plaintiff's Motion for Summary Judgment pursuant to Fed.R.Civ.Proc. 56(c). For the reasons that follow, the motion is granted and judgment is entered accordingly.
II. Procedural History
This litigation arises from a complaint filed on February 25, 2000 by plaintiffs against Mr. Chmielewski, based on alleged tortuous conduct. On June 20, 2000, Mr. Chmielewski filed an answer as well as a counterclaim against plaintiffs. The counterclaim alleges that Mr. Chmielewski was wrongfully terminated by Clark Capital, when "[i]n early June, 1998, without any explanation, notice, or mention of payment or severance consideration, [Mr. Chmielewski] was officially terminated by [Clark Capital] in breach of their contract for services, express or implied, oral or written." (Def.'s Counterclaim ¶ 24.)
Discovery proceeded in the matter. On May 23, 2001, plaintiffs filed a Praecipe to Mark Action Discontinued and Ended. (See Docket # 59.) This court construed the filing as a Motion to Dismiss the Complaint pursuant to Federal Rule of Civil Procedure 41(a)(2) and, on May 23, 2002, entered an order granting the Motion to Dismiss, without prejudice to Mr. Chmielewski's counterclaim.
Following the May 23, 2002 Order, over a year passed, during which Mr. Chmielewski's counsel of record was changed twice and further discovery occurred. On October 31, 2003, parties entered into a Stipulation Partially Dismissing Claims of Counterclaim Plaintiff, Henry Chmielewski Against Counterclaim Defendants Harry J. Clark and Capital Clark Management, Inc. (Docket # 87.) On November 7, 2003, this court approved the Stipulation of Partial Dismissal. (Docket # 89.) Following the entry of this stipulation, the sole issue remaining for determination by this court is whether Mr. Chmielewski was wrongfully discharged from employment by Clark Capital.
III. Factual Background
The facts in the light most favorable to the non-moving party follow. Clark Capital is an investment management company that oversees mutual funds and individual investment portfolios in the United States and Europe. Harry Clark is the chief executive officer and president of Clark Capital.
In early 1990, Mr. Clark, on behalf of Clark Capital, and Mr. Chmielewski discussed the possibility of Mr. Chmielewski performing work for the benefit of Clark Capital. Clark Capital was seeking to "market the services of Clark Capital Management Group, Inc. to United States citizens residing abroad as well as to local residents of the United Kingdom and Europe." (Pl.'s Ex. E at 1.) Mr. Chmielewski was to work abroad to further this end.
On February 19, 1990, the parties signed a letter of intent. (Pl.'s Ex. E at 3.) This letter details the future formation of a separate corporation, The Clark Capital Management Group Limited ("Clark Limited"). (Id. at 1.) The letter states that all business generated by Mr. Chmielewski would be submitted to Clark Capital through Clark Limited. (Id.) Under the terms in the letter, compensation was to "be paid to [Mr. Chmielewski] or his company as an independent contractor." (Id. at 2.) Payment was to continue as an independent contractor, until Capital Limited was formed and Mr. Chmielewski was appointed vice-president, at which time he would receive payments as an employee of Capital Limited. (Id.) The letter reads, "This payment is intended to provide salary to Mr. Chmielewski and his clerical help as well as expenses incurred for travel and other items in the normal course of conducting a marketing effort." (Id.) The letter sets a term of one year and continues, "Mr. Chmielewski will devote his entire time, attention and energies to the business of the Company and, during his employment, will not engage in any other business activity, and will not represent any other entity, regardless of whether such activity is pursued for profit, gain, or other pecuniary advantage." (Id.) In addition to his salary, upon formation of Clark Limited, Mr. Chmielewski was to be appointed to the Board of Directors and to receive shares of the common stock. (Id.)
Despite its presentation of terms, the letter explicitly states that, "This letter is not intended to create and does not create any legally binding obligations between the parties. The consummation of the proposed transaction and the creation of the legal obligations with respect thereto shall not occur until the parties have executed definite agreements which are mutually satisfactory." (Id.) However, the next sentence continues, "Unless either party advises the other of the desire to withdraw from or alter the terms of this letter of intent, and in the event that a more formal agreement is not concluded between the parties, this document shall be legally binding on both sides at sixty days following the proposed trip to Europe by Mr. Clark." (Id. at 2-3.)
Between 1990 and 1998, Mr. Chmielewski acted to fulfill his primary duty to Clark Capital, developing the European market. Throughout this time he was paid between $5,000 and $13,000 per month, any amount above $5,000 was based upon the performance and sales of Clark Capital products. (Def.'s Resp. in Opp'n at 3.) While the amount of payment is undisputed, Clark Capital alleges that all payments were made to GSR Services, Inc. ("GSR"), a corporation whose principal was Mr. Chmielewski. To support this assertion, Clark Capital has produced five deposit slips from 1997 and 1998 showing payments rendered to GSR. (See Pl.'s Ex. M.) While Mr. Chmielewski argues that these deposit slips provide no explanation with regard to payment, he has failed to produce any evidence to show that he was paid directly by Clark Capital.
Mr. Chmielewski was terminated by Clark Capital in 1998. Clark Capital avers that notification was rendered on May 11, 1998. (Pl.'s Mem. in Supp. of Summ. Jud. at 8.) In his complaint, Mr. Chmielewski stated that he was terminated in early June 1998. (Counterclaim Compl. ¶ 24.) Mr. Clark stated that the relationship was terminated because Mr. Chmielewski was failing to perform adequately and had been insubordinate. (Pl.'s Ex. F, Clark Dep. at 41-44.) Mr. Chmielewski asserts that his termination was the result "of his questioning of Mr. Clark as to the unilateral changes made to his compensation in 1998." (Def.'s Mem. In Opp'n at 4.) Mr. Chmielewski argues that the action was in violation of the terms of the agreement and was without cause. (Id.)
III. Discussion
Summary Judgment StandardUnder Fed.R.Civ.P. 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a summary judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Fed.R.Civ.P. 56(c). In order to avoid summary judgment, disputes must be both 1) material, meaning concerning facts that are relevant and necessary and that might affect the outcome of the action under governing law, and 2) genuine, meaning the evidence must be such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Wrongful Discharge
The tort of wrongful discharge exists only in limited circumstances. An at-will employee generally cannot raise a wrongful discharge claim, as the terminations of such an employee is not reviewable in any judicial forum. Veno v. Meredith, 515 A.2d 571, 577 (Pa.Super. 1986). An employer "may discharge an [at-will] employee with or without cause, at pleasure, unless restrained by some contract." Geary v. United States Steel, 319 A.2d 174, 185 (Pa. 1974); see also McLaughlin v. Gastrointestinal Specialists, Inc., 750 A.2d 283, 313 ( Pa. 2000). This nonreviewability is the essence of the at-will relationship. Veno, 515 A.2d at 577 (non-reviewability is "the sin qua non of the at-will relationship"). However, despite the presumption against reviewing the termination of employee, review will be permitted "when there is sufficient evidence to suggest that [the discharge] was against public policy or was made with the specific intent to harm the employee." Id.; cf. Fraser v. Nationwide Mut. Ins., 352 F.3d 107, 111-13 (3d Cir. 2003) (discussing circumstances where exception applies). These two specific exceptions to the rule that at-will terminations are not reviewable, constitute the circumstances under which the tort of "wrongful discharge" is properly raised.
Further, an employee who is not at-will, meaning his employment relationships are governed by a contract, cannot successfully raise a wrongful discharge claim. Engstrom v. John Nuveen Co., Inc., 668 F. Supp. 953, 958 (E.D. Pa. 1987). Any termination that a contracted employee believed was actionable would need to be raised under a claim for breach of contract. Id.
Statute of Limitations
The Pennsylvania statute of limitations governing claims of wrongful discharge is two years. 42 Pa. C.S.A. § 5524; Kuhn v. Oehme Carrier Corp., 255 F. Supp.2d 458, 467 (E.D. Pa. 2003);Raleigh v. Westinghouse Elec. Corp., 550 A.2d 1013, 1014 ( Pa. Super. 1998). The limitations period is calculated from the day that the cause of action accrues, meaning the date one knows or has reason to know of the injury which is the basis of the action. Kuhn, 255 F. Supp.2d at 467.
Mr. Chmielewski knew about his injury on the date that he was terminated. Construing the facts most favorably to him, this occurred in early June 1998. He therefore had until early June 2000 to file suit regarding his termination. Mr. Chmielewski did not file his counterclaim until June 20, 2000, after the two years had passed. Mr. Chmielewski makes no argument attempting to explain this defect. This court finds there is no basis to equitably toll the statute of limitations in this matter. Mr. Clark and Clark Capital entered the complaint against Mr. Chmielewski on February 25, 2000. (Docket # 1.) Mr. Chmielewski was served via personal service on March 1, 2000. (Docket # 2.) This afforded him three months to timely enter his counterclaims, however, he delayed until June 20, 2004, after default had already been entered against him for failure to appear. (Docket # 12, 14.) Mr. Chmielewski offers no explanation or argument as to why his claims were filed out of time. Rather, with a complaint filed against him, Mr. Chmielewski had a clear awareness that any relevant claims needed to be entered with the court, however, he still delayed. Accordingly, the court sees no reason to apply equitable tolling to the facts at hand, and Mr. Chmielewski's claim of wrongful termination will not be permitted to proceed.
This court notes that Mr. Chmielewski's counterclaim cannot rely on the original action's filing date to avoid the defense of statute of limitations. Under Pennsylvania law, counterclaims that raise new causes of action are bound by the statutory statute of limitations. See Harmer v. Husley, 467 A.2d 867, 869 (Pa.Super. 1983).
At-Will Employment
Even had Mr. Chmielewski timely filed, his claim for wrongful discharge fails on the merits. In Pennsylvania, employees are presumed to be employed at-will. "Great clarity" is necessary to overcome the at-will presumption. Scott v. Extracorporeal, Inc., 545 A.2d 334, 338 (Pa.Super. 1988). The employee bears the burden to produce clear and convincing evidence that the parties intended an employment relationship of a definite length. Burch v. WDAS AM/FM, No. 00-4852, 2002 WL 1471703, *11 (E.D. Pa. June 28, 2002); Green v. Oliver Realty, Inc., 526 A.2d 1192, 1200 (Pa.Super. 1987). In order to overcome such a presumption, an employee must establish the existence of one of the following: (1) an agreement for employment for a finite duration, during which the employee was terminated; (2) an agreement specifying that the employee would be discharged only for cause; (3) sufficient additional consideration; or (4) an applicable recognized public policy. Kennelly v. Pennsylvania Turnpike Com'n, 208 F. Supp.2d 504, 518-19 (E.D. Pa. 2002); Luteran v. Loral Fairchild Corp., 688 A.2d 211, 214 (Pa.Super. 1997).
Here, Mr. Chmielewski relies upon a letter of intent to show that he is not an at-will employee. Generally, Pennsylvania courts have not construed letters of intent as contracts. See Liss v. Liss, No. 2063, June Term 2001, 2002 WL 576510, *12 (Pa.Commw.Ct. Mar. 22, 2002) (compiling cases). However, the more important inquiry is whether the parties "manifested an intention to be bound by [a document's] terms and whether the terms are sufficiently definite to be specifically enforced.ATACS Corp. v. Trans World Communications, Inc., 155 F.3d 659, 665 (3d Cir. 1998). Here, the letter explicitly states that, "Unless either party advises the other of the desire to withdraw from or alter the terms of this letter of intent . . . this document shall be legally binding on both sides at sixty days following the proposed trip to Europe by Mr. Clark." (Pl.'s Ex. E at 2-3.) The letter is signed by both parties. (Id.) The terms of the letter explicitly detailed job responsibilities, salary, stock ownership, dispute resolution, and the contract term. (Id.) Finally, the parties gave consideration in that they acted in reliance upon the contract. It is undisputed that both parties acted in accordance with the terms of the contract. Therefore, this court finds that the letter of intent did form some type of valid contract between the parties.
However, despite finding that a contract was formed, the specific terms must be examined to determine whether it removed the presumption that Mr. Chmielewski was an at-will employee. It is possible for two parties in an employment relationship to form an agreement, for example regarding salary, but for the at-will presumption to remain intact. Here, nothing in the document indicates that the employment relationship with Mr. Chmielewski could not be terminated at any point, for any reason, by Mr. Clark or Clark Capital. In discussing its binding nature, the letter merely states, "[Mr. Chmielewski's salary] will continue for one year from March 1st[, 1990] and may be suspended with sixty days written notice." (Id. at 2.) The letter contains no language stating that Mr. Chmielewski could be terminated only "for cause." The sole indication that there was any restriction on Clark Capital's ability to terminate Mr. Chmielewski was that he must receive sixty days notice. Such language is not sufficient to overcome the strong presumption that Mr. Chmielewski was an at-will employee.
Even had the letter sufficiently created a contractual employment relationship, it was not applicable to the termination of Mr. Chmielewski that occurred in 1998. The letter explicitly states that it governs the time period up until March 1, 1991. There is no language in the document that contemplates the renewal of the terms of the agreement. Renewal is not assumed to be automatic, and would require an addendum or a separate written document. Mr. Chmielewski has not produced any written evidence demonstrating that the agreement reached in the letter was renewed or extended. Without evidence of intent to be bound, the letter created, at best, an employment contract that extended until March 1, 1991. Consequently, the terms in the letter had no application to Mr. Chmielewski's discharge in 1998.
At the point of Mr. Chmielewski's termination, his employment was not governed by any written document. Accordingly, he was an at-will employee that could be discharged at any time by his employer. Mr. Chmielewski has not alleged that his termination falls into one of the narrow exceptions to the general rule that wrongful discharge suits brought by at-will employees are not reviewable in court. Thus, Mr. Chmielewski does not show any issue of material fact concerning his wrongful discharge claim and summary judgment will be granted in favor of movant.
Breach of Contract
The Stipulation signed by the parties stated that the only claim remaining for adjudication was for breach of contract. (Docket # 89.) In order to establish a cause of action for breach of contract under Pennsylvania law, a plaintiff must plead and prove the following elements: (1) the existence of a valid and binding contract to which the plaintiff and defendant were parties; (2) the essential terms of the contract; (3) that the defendant breached a duty imposed by the contract; and (4) that damages resulted from defendant's breach. Penn City Invs., Inc. v. Soltech, Inc., No. 01-5542, 2003 WL 22844210, *12 (E.D. Pa. Nov. 25, 2003); Cottman Transmission Sys., Inc. v. Melody, 851 F. Supp. 660, 672 (E.D. Pa. 1994).
As stated above, at the time of his termination Mr. Chmielewski was an at-will employee and, thus, his employment was not governed by a contract. Absent an employment contract he cannot successfully raise a breach of contract claim.
Conclusion
For all the foregoing reasons, defendant/counterclaim plaintiff has failed to present any evidence to create a genuine issue of material fact. Accordingly, summary judgment is granted in favor of Clark Capital Management Services, Inc. and Harry Clark and against Henry Chmielewski. An appropriate order follows.