Opinion
Civil Action No. 03-3084.
September 30, 2004
MEMORANDUM AND ORDER
Presently before this Court are Plaintiff's Motion for Partial Summary Judgment on Defendant's Counterclaim (Docket No. 47), Defendant's Memorandum of Law in Opposition to Plaintiff's Motion for Partial Summary Judgment and Supporting Exhibits (Docket Nos. 54 55), and Plaintiff's Supplemental Brief in Support of Plaintiff's Motion for Partial Summary Judgment (Docket No. 67).
I. BACKGROUND
This case arises out of four employment contracts between Plaintiff Vincent Naples ("Naples"), a former employee, and Defendant National Seating and Mobility, Inc. ("NSM"), Naples's former employer. Following his termination on February 17, 1999, Naples filed a complaint in Pennsylvania state court alleging that his termination constituted a breach of his employment contracts. The case was removed to this Court on May 13, 2003. On May 28, 2003, NSM filed an Answer, Affirmative Defenses, and a Counterclaim. NSM's Counterclaim accused Naples of breaching his employment contract with NSM for a variety of reasons, including working for other companies while employed by NSM, breaching the non-compete clause of the contract by operating his former business within one year after his termination, and failing to reimburse NSM for expenses involved in winding down Naples's former business. Plaintiff's Partial Summary Judgment Motion on Defendant's Counterclaim asserts that four paragraphs of the Counterclaim are time-barred by the relevant Pennsylvania statute of limitations, 42 Pa. Cons. Stat. Ann § 5525(8).
II. LEGAL STANDARDS
Summary judgment is appropriate only if the record shows that there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); see also 2-J Corp. v. Tice, 126 F.3d 539, 540 (3d Cir. 1997). Specifically, Rule 56(c) provides that summary judgment is properly rendered, "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 judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the burden of proving that there are no genuine issues of material fact in dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-32 (1986); Carter v. Exxon Co., 177 F.3d 197, 202 (3d Cir. 1999). An issue of material fact is said to be genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
When considering a motion for summary judgment, a court must view all facts and inferences in a light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Nonetheless, a party opposing summary judgment must do more than just rest upon mere allegations, general denials, or vague statements. See Trap Rock Indus., Inc. v. Local 825, 982 F.2d 884, 890 (3d Cir. 1992). In determining if summary judgment is appropriate, the court's "function is not to weigh the evidence and determine the truth of the matter," but to determine whether there are genuine issues of material fact in dispute. Carter, 177 F.3d at 202 (citation omitted). The underlying purpose of summary judgment is to avoid a pointless trial in cases where it is unnecessary and would only cause delay and expense. Goodman v. Mead Johnson Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038 (1977).
Under Pennsylvania law, the statute of limitations for an action on a written contract is four years. See 42 Pa. Cons. Stat. Ann. § 5525(8). As a general rule, a statute of limitations begins to run when the plaintiff's cause of action arises or accrues. Leedom v. Spano, 647 A.2d 221, 226 (Pa.Super. 1994). In a contract case the cause of action accrues when there is an existing right to sue based on the breach of contract. Id.
The "discovery rule," an exception to the general rule, arises from the inability of the injured, despite the exercise of due diligence, to know of the injury or its cause. Ciccarelli v. Carey Canadian Mines, Ltd., 757 F.2d 548, 553 (3d. Cir. 1985). A court presented with an assertion of applicability of the "discovery rule" must address the ability of the damaged party, exercising reasonable diligence, to ascertain the fact of a cause of action. Pocono Int'l Raceway, Inc. v. Pocono Produce, Inc., 468 A.2d 468, 471 (Pa. 1983). "Where [the discovery] rule is applied, the statute of limitations will not begin to run until the plaintiff has discovered his injury, or, in the exercise of reasonable diligence, should have discovered his injury."Larthey by Larthey v. Bland, 532 A.2d 456, 458 (Pa.Super. 1987) (quoting Cathcart v. Keene Indus. Insulation, 471 A.2d 493, 500 (Pa.Super. 1984)). "A plaintiff need not have gained `finite knowledge of all operative facts' in order for the statute to run, but rather . . . only in cases of `blameless ignorance,' to wit, in cases where the exercise of due diligence on the part of the plaintiff would not have determined the fact of a cause of action, is the discovery rule to be applied."Pastierik v. Duquesne Light Co., 526 A.2d 323, 327 (1987) (quoting Pocono, 468 A.2d at 471-72).
Whether the statute has run on a claim is usually a question of law for the trial judge, but where the issue involves a factual determination, the determination is for the jury. Melley v. Pioneer Bank, N.A., 834 A.2d 1191, 1201 (Pa.Super. 2003). Specifically, the point at which the complaining party should reasonably be aware that he has suffered an injury is generally an issue of fact to be determined by the jury. Id. Only where the facts are so clear that reasonable minds cannot differ may the commencement of the limitations period be determined as a matter of law. Pearce v. Salvation Army, 674 A.2d 1123, 1125 (Pa.Super. 1996) (citations omitted).
III. DISCUSSION
A. Naples's Motion
Plaintiff's Motion for Partial Summary Judgment asks this Court to hold that the breach of contract claims contained in paragraphs 8, 9, 10, and 15 of NSM's Counterclaim are time-barred. NSM filed its Counterclaim on May 28, 2003, and reasserted its Counterclaim one year later in response to Plaintiff's Second Amended Complaint. The four cited paragraphs of the Counterclaim allege that Naples breached two of the contracts he signed with NSM by failing to: (1) "devote all his business time and services to" NSM's interests, (2) perform the duties of his position "faithfully, to the best of his ability, and in the best interests" of NSM, (3) render exclusive full time service to NSM, and (4) reimburse NSM for various expenses relating to the wind-up of Naples's former business. See Def.'s Ans. To Pl.'s Am. Compl. and Countercl. Against Vincent Naples at ¶¶ 8-10, 15. Other portions of the Counterclaim not at issue here allege that Naples breached a non-compete provision in his employment contract by operating his former company after NSM terminated him. Naples does not assert in its Motion for Partial Summary Judgment that NSM's Counterclaim for breach of the non-compete provision is time-barred.
Naples argues that the conduct described in paragraphs 8-10 and 15 occurred while Naples was employed by NSM. As such, Naples asserts that NSM's cause of action for breach of contract accrued upon Naples's termination date of February 17, 1999. Naples claims that four years from that date — on February 17, 2003 — the statute had run. Therefore, Naples's motion states that the four paragraphs of NSM's Counterclaim alleging breach of contract were time-barred under Pennsylvania law when NSM filed its Counterclaim in May of 2003, three months after the statute of limitations had run. See 42 Pa. Cons. Stat. Ann. § 5525(8).
B. NSM's Reply
As a preliminary matter, NSM argues that this Court should summarily deny Plaintiff's Partial Summary Judgment Motion because it does not "rely on record evidence" pursuant to Rule 56. The issue presently before the Court is whether four paragraphs of NSM's Counterclaim are time-barred. By citing these paragraphs, NSM's Counterclaim, and the applicable law, Naples has properly relied on record evidence in his Partial Summary Judgment Motion, and therefore the Court will not address this argument further.
NSM next argues that it did not become aware of the factual basis for paragraphs 8-10 and 15 until June 14, 2004 — after NSM subpoenaed records showing Naples made sales for his former company while he was employed by NSM. NSM asserts that it did not and could not reasonably have known that Naples was acting on behalf of other companies while he was working for NSM until it was able to examine those records. Under these circumstances, NSM asserts, the discovery rule should apply, tolling the statute of limitations for all four paragraphs at issue in this motion until June 14, 2004, when NSM first learned of Naples's history of working for his former company during his employment.
C. Analysis
This Court holds that there is no issue of material fact as to whether the statute of limitations for paragraphs 8-10 and 15 of NSM's Counterclaim based on Plaintiff's breach of contract expired on February 17, 2003. Although we view all facts and inferences in a light most favorable to the non-moving party,see Matsushita, 475 U.S. at 587, the facts and inferences contained in the Record are so clear that reasonable minds cannot differ as to whether the limitations period began running on February 17, 1999.
While we must assume for purposes of this motion that NSM "did not know and could not reasonably know" that Naples was working for other companies while employed by NSM, this assertion is contradicted by two glaring facts contained in the record. First, NSM filed its Counterclaim before NSM claims it learned of Naples's breach by reviewing the subpoenaed documents. If NSM was not aware of, or could not reasonably learn of, facts to support a breach of contract claim against Naples for this conduct until June of 2004, it presumably could not have filed a Counterclaim alleging a breach of contract in May of 2003 for this conduct.
Second, the Record contains deposition testimony from William M. Ballard, NSM's President, who acknowledges that during Naples's three months of employment he was aware that Naples was working for other companies and he asked him to stop at least once during Naples's employment. See Ballard Dep. at 152. Assuming this fact is true, as we must in deciding this motion, NSM may have had actual knowledge of facts supporting paragraphs 8-10 of NSM's Counterclaim before Naples's termination. This Court holds that, at the very least, by exercising reasonable diligence NSM could have learned of such facts while Naples was working for NSM. As the Pennsylvania Supreme Court has stated, "only in cases where the exercise of due diligence . . . would not have determined the fact of a cause of action[,] is the discovery rule to be applied." Pocono, 468 A.2d at 471.
In this case this Court holds that not only could NSM have learned of facts supporting a breach of contract action against Naples before Naples was terminated, but the Record indicates NSM may have had actual knowledge of these facts. Under these circumstances NSM's cause of action accrued, at the latest, at the time Naples was terminated. NSM cannot seek shelter in the discovery rule for the purpose of paragraphs 8, 9, and 10 of its Counterclaim for breach of contract against Naples. Plaintiff's Motion for Partial Summary Judgment is therefore granted as to paragraphs 8, 9, 10, 15 of NSM's Counterclaim.
An appropriate Order follows.
In its submissions to the Court NSM did not specifically address Naples's argument concerning the running of the statute of limitations as applied to paragraph 15 of NSM's Counterclaim. As explained above, paragraph 15 alleged that Naples breached his employment contract by failing to reimburse NSM for expenses relating to the wind-up of Naples's former business. In his motion, Naples accurately characterizes this paragraph as alleging a breach of contract. NSM does not, however, put forth any argument in its Memorandum of Law in Opposition to Plaintiff's Motion for Partial Summary Judgment as to why the discovery rule should work to toll the statute of limitations for this specific claim. Arguing that NSM did not become aware of Naples's activities on behalf of other companies while he was employed at NSM does not have any bearing on whether NSM could reasonably have learned of an injury from Naples's failure to reimburse NSM for expenses involved in the wind-up of Naples's previous business, as alleged in paragraph 15. On summary judgment a party opposing summary judgment must do more than rest on mere allegations, general denials, or vague statements. See Trap Rock, 982 F.2d at 890. Therefore, the Court grants Plaintiff's Motion for Partial Summary Judgment as to paragraph 15 of Defendant's Counterclaim, in addition to paragraphs 8-10 discussed above.
ORDER
AND NOW, this ____ day of September, 2004, upon consideration of Plaintiff's Motion for Partial Summary Judgment on Defendant's Counterclaim (Docket No. 47); Defendant's Memorandum of Law in Opposition to Plaintiff's Motion for Partial Summary Judgment and Supporting Exhibits (Docket Nos. 54 55); Plaintiff's Supplemental Brief in Support of Plaintiff's Motion for Partial Summary Judgment (Docket No. 67), IT IS HEREBY ORDERED that Plaintiff's Motion is GRANTED and paragraphs 8, 9, 10, 15 of Defendant's Counterclaim are hereby DISMISSED with prejudice.