Opinion
C.A. No. N11C-02-115 CLS.
Date Submitted: July 18, 2011.
Date Decided: July 21, 2011.
On the Defendants' Motion to Dismiss.
Denied.
Herbert W. Mondros, Esq., Wilmington, DE., Attorney for Plaintiff.
James D. Taylor, Jr., Esq., Wilmington, DE; Jennifer M. Becnel-Guzzo, Saul Ewing, LLP, Wilmington, DE., Attorneys for Defendants.
ORDER
Introduction
Before the Court is the Defendants' motion to dismiss part of the complaint. The Court has reviewed the parties' submissions. For the reasons that follow, the motion to dismiss is DENIED.
Background
Plaintiff T. Bradley Conger ("Plaintiff") was employed by the Defendants from July 1, 2008 through December 3, 2010. Defendant Legg Mason, Inc. ("Legg Mason") is a Maryland public company and sole equity owner of Defendant Global Currents Investment Management, LLC ("GCIM"). As of July 2008, Defendant GCIM is the successor entity to Brandywine Global Investment Management, LLC ("BGIM"). Both BGIM and GCIM are Delaware limited liability companies. As of July 2010, Defendant ClearBridge Advisors, LLC ("ClearBridge") is the successor entity to GCIM. At this time all the employees of Defendant GCIM became employees of Defendant ClearBridge, including Chief Executive Officer, Chief Compliance Officer, Chief Operating Officer, and Chief Investment Officer. Defendant Michael Dieschbourg ("Dieschbourg") was the Chief Executive Officer of Defendant GCIM before he was discharged from the company. Defendant Paul Ehrlichman ("Ehrlichman") is a Managing Director and the Head of Global Equity for GCIM.According to the complaint, Plaintiff received his annual salary of $200,000. He contends he did not receive the entire quarterly distributions he was entitled to receive pursuant to his employment contract with Defendant GCIM; the quarterly distributions were alleged to be a minimum of $100,000. Exhibit C to the complaint indicates Defendant GCIM sent a letter to Plaintiff and his mortgage lender on June 11, 2008, stating Plaintiff's guaranteed annual compensation package was $600,000, a $200,000 as a base salary with $400,000 in minimum quarterly payments. Plaintiff also contends GCIM's Chief Operating Officer, Lisa Lenza, assured the mortgage company that it could rely on the terms provided in the June 11, 2008 letter.
Beginning in November of 2008 through November of 2010, Plaintiff alleges the Defendants failed to pay the minimum quarterly payments in their entirety. He is seeking to recover the $705,000 quarterly payment deficit. Plaintiff asserts Defendant GCIM continued to honor its other contractual obligations during this time frame. He further asserts that "GCIM intentionally discriminated against [him] in its refusal to honor its commitment to him, for the sole reason that they believed him to be in such a precarious financial situation as to be unable and unwilling to fully assert his rights."
Complaint ¶ 18.
In the fall of 2009, Plaintiff began to suspect an executive officer of Defendant GCIM, Defendant Dieschbourg, was engaging in illegal self-dealing transactions. On April 20, 2010, Plaintiff sent an anonymous letter to David R. Odenath and Charles Daley, Jr., outside directors of Defendant GCIM and executive officers of Defendant Legg Mason. Defendant Legg Mason subsequently conducted an investigation and Defendant Dieschbourg was relieved of his executive role and terminated in October of 2010 for ethical violations. Despite writing the letter anonymously, Plaintiff contends the Defendant GCIM managers believed he was the writer of the letter and began retaliating against him. Plaintiff began searching for different employment in late fall of 2010 and resigned from Defendant GCIM on December 3, 2010.
Standard of Review
The Defendants' filed this motion to dismiss pursuant to Super. Ct. Civ. R. 12(b)(6) for "failure to state a claim upon which relief can be granted." The motion will be denied when the Plaintiff is able to prove any set of facts entitling him to relief. For purposes of this motion, all facts pled in the complaint are accepted as true. "Conclusory allegations will not be accepted as true without specific supporting factual allegations."
Spence v. Funk, 396 A.2d 967, 968 (Del. 1978) (citations omitted).
Highland Capital Management, L.P. v. T.C. Group, LLC, 2006 WL 2128677, *2 (Del. Super. Ct.) ( citing Plant v. Catalytic Constr. Co., 287 A.2d 682, 686 (Del. Super. 1972), aff'd, 297 A.2d 37 (Del. 1972).
In re Santa Fe Pac. Corp. S'holder Litig., 669 A.2d 59, 65-66 (Del. 1995) (citations omitted).
Discussion
I. Plaintiff May Be Able to Recover All of His Lost Wages.The Plaintiff may be able to prove a set of facts entitling him to the entire amount of lost wages sought. Even though a breach of an employment contract is subject to a one year statute of limitations, if the Plaintiff is able to establish economic duress then he may be able to recover the entire amount of lost wages. Economic duress will toll the statute of limitations. Generally, there are three elements necessary to establish economic duress: "(1) a `wrongful' act, which (2) overcomes the will of the person (3) who has no adequate legal remedy to protect his interest."
10 Del. C. § 8111.
Reiver v. Murdoch Walsh, P.A., 625 F. Supp. 998, 1014 (D. Del. 1985); Way Road Development Co. v. Snavely, 1992 WL 19969, *4 (Del. Super. Ct.).
W. Natural Gas Co. v. Cities Serv. Gas Co., 201 A.2d 164, 170 (1964).
Way Road Development Co., 1992 WL 19969, at *3.
Accepting all the facts in the complaint as true, Plaintiff has alleged economic duress, tolling the statute of limitations on his lost wages claim. Plaintiff contends his mandatory bonuses were withheld in retaliation for writing an anonymous letter to two directors of Defendant GCIM, also executive officers of Defendant Legg Mason, informing them of alleged illegal self-dealing by Defendant Dieschbourg of Defendant GCIM. From the first disbursement below the contracted amount, Plaintiff made a demand to Defendant Dieschbourg that he be paid the minimum mandatory distribution. According to Plaintiff, this threatened his ability to pay his mortgage, placing him in a distressed financial situation. The Defendants were aware of his financial situation because they verified his salary and distribution amounts so Plaintiff could obtain a mortgage. Out of fear of retaliation or termination, Plaintiff did not continue to object to the below contract distributions. If proven, the wrongful act of not paying the contract distributions and knowing this put Plaintiff in a precarious financial position so as to overcome his will and prevent him from asserting his interest could amount to economic duress, tolling the statute of limitations on his wage recovery claim.
II. Plaintiff Has Successfully Pled Breach of the Implied Covenant of Good Faith and Fair Dealing.
The implied covenant of good faith and fair dealing exists in employment contracts. In order to establish a claim for breach of the implied covenant of good faith and fair dealing Plaintiff must establish he was constructively discharged since he resigned. "To establish a constructive discharge, the plaintiff [is] required to show working conditions so intolerable that a reasonable person would have felt compelled to resign." In his complaint, the Plaintiff alleges failing to pay the contracted minimum quarterly payments and retaliating against him for blowing the whistle on Defendant Dieschbourg's self-dealing transactions and misappropriation of funds constitute a breach of the implied covenant. Accepting all facts as true, Plaintiff has successfully pled a breach of the implied covenant of good faith because he may be able to prove constructive discharge entitling him to relief.
See Town of Cheswold v. Vann, 9 A.3d 467 (Del. 2010).
Meltzer v. City of Wilmington, 2008 WL 4899230, *2 (Del. Super. Ct.) (citation omitted).
Rizzitiello v. McDonald's Corp., 868 A.2d 825, 832 (Del. 2005) (internal quotations and citation omitted).
Conclusion
Based on the forgoing, the Defendants' motion to dismiss is DENIED. IT IS SO ORDERED.