Reiver v. MURDOCH & WALSH, PA,

• Decision Date: 07 January 1985
• Docket Number: Civ. A. No. 83-560 CMW.
• Citation: 625 F. Supp. 998
• Court: U.S. District Court — District of Delaware
• Parties: Joanna REIVER, Plaintiff, v. MURDOCH & WALSH, P.A., Defendant.

625 F. Supp. 998

Joanna REIVER, Plaintiff, v. MURDOCH & WALSH, P.A., Defendant.

Civ. A. No. 83-560 CMW.

United States District Court, D. Delaware.

January 7, 1985.

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Carl Schnee and James P. Dalle Pazze of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del. (Alice Ballard of Samuel & Ballard, Philadelphia, Pa., of counsel), for plaintiff.

Sheldon N. Sandler of Young, Conaway, Stargatt & Taylor, Wilmington, Del., for defendant.

OPINION

CALEB M. WRIGHT, Senior District Judge.

This is an action brought by a former employee, an attorney, against her employer, a professional corporation providing legal services. The plaintiff alleges that the defendant breached its written employment contract with the plaintiff in failing to pay her a mandatory bonus and in terminating her employment "for cause" when no cause for termination in fact existed. The plaintiff also claims her removal from the board of directors and her subsequent termination were discriminatory practices based on plaintiff's sex and her condition of pregnancy.

The defendant has moved for partial summary judgment on several grounds. With respect to the discrimination claim under federal law, defendant contends that plaintiff was not an employee within the meaning of Title VII at the time of her removal from the board of directors, and thus, is not entitled to protection under federal law for that aspect of her discrimination claim. The defendant also seeks summary judgment with respect to certain parts of the contract claims which are before the Court based on diversity of citizenship among the parties. Defendant challenges three different aspects of the contract claims: plaintiff's measure of damages, her entitlement to recover the bonus she was originally due but that was purportedly surrendered under duress, and the plaintiff's right to recover punitive and general compensatory damages for breach of contract.

FACTS

Given the acrimonious events that led to this lawsuit, it is remarkable, to say the least, that the underlying facts are relatively free from dispute. To be sure, each party has its own interpretation of these facts and discovery is not complete, but both the depositions of the plaintiff and her husband and the defendant's response to interrogatories form a coherent narrative, agreeing as to basic events and conversations among the parties. Thus, the ultimate resolution of this case will depend on the inferences to be drawn from facts already known and on evidence that is derived from any remaining discovery. Against this background, the Court offers the following summary of facts, not as a definitive interpretation of events, but as a necessary predicate to evaluating defendant's Motion for Partial Summary Judgment.

Joanna Reiver began her career as an attorney working for Murdoch & Walsh, P.A. in May of 1976. Four years later, she was invited to become a shareholder, director and officer of the professional corporation. Shortly thereafter, the plaintiff began to experience personality clashes with one of two senior directors, Converse Murdoch, with whom she shared the same area of legal specialization, estate administration and planning. Converse Murdoch, as a senior attorney and as the attorney whose name appears in the corporation's masthead, brought in much, if not most, of the work generated in the estates area. Reiver was disappointed that she did not receive more estate planning work from Murdoch rather than the estate administration work she did receive. Reiver on several occasions confronted Murdoch with her dissatisfaction. By the end of 1981, the tension between Murdoch and Reiver had become apparent to other directors. The Executive Committee of the firm, consisting of three other directors, intervened to mediate the situation. But as so often happens in such situations, the effect of the meeting was only to intensify Reiver's feelings of dissatisfaction.

Shortly thereafter, another crisis broke out among the directorship that was to lead to Reiver's estrangement with other directors. In the summer of 1981, the corporation had adopted a mandatory compensation scheme that provided a rigid formula for calculating bonuses. By the beginning of 1982, it was apparent that Reiver would receive a larger bonus than any of her colleagues, and that some directors of comparable seniority would receive no bonus at all. Her colleagues, including her soon to be husband, whether with or without justification, felt that the mandatory compensation scheme had produced an unfair distortion in earnings among directors.

By March of 1982, all of the partners except Reiver announced they would willingly scrap the bonus system. About this time, Reiver and another director, Bob Schlusser, announced they were to be married in July. Matters came to a head in the last week of March when Thomas, one of the junior directors, suggested to Reiver that looking for another job might be useful whether or not she intended to leave the firm, and Walsh, a senior director, informed Schlusser that the situation with respect to Reiver had become almost "irretrievable." Finally, Reiver consented to opt out of the mandatory compensation scheme and was given a reduced but nevertheless substantial bonus of $25,000.

The situation appeared to cool down until after Reiver's and Schlusser's marriage. By late summer of 1982, the firm began to experience a significant cash flow problem with three directors' billings down substantially: Schlusser, Reiver and Walsh. At a meeting in mid-September, Walsh agreed to forego his salary temporarily, but Schlusser and Reiver maintained that they were receiving inadequate amounts of work. Some directors did not feel Reiver was being forthright because of her failure to attend to matters they had referred to her.

On October 4, 1982, the directors, with the exceptions of Reiver and Schlusser, gathered to consider the removal of Reiver from the board of directors. It was at this time, that the directors as a whole were apprised of the fact that Reiver was pregnant. The motion to remove did not carry. An unsuccessful effort was made to enlist the aid of Schlusser, who was then Reiver's husband, to get Reiver to resign. Within two days, another meeting was held for the same purpose with the same participants and once again, the meeting reached an inconclusive result. Immediately following the meeting, Murdoch submitted his resignation to the firm's other senior director, Walsh, with the clear meaning that either Reiver would be removed or he would leave. The letter of resignation was followed a short time later with a memorandum written by Murdoch, circulated to the directors who had attended the previous meeting. The letter presented various proposals for managing the firm.

On October 11, 1982, events moved into the final phase. Reiver and Schlusser were informed of a meeting. The meeting, to their surprise, was procedurally characterized as a shareholders meeting rather than the more common format for meetings, namely, a directors' meeting.¹ A new slate of directors for the corporation was proposed that retained the existing directors with the exception of Reiver. The new slate was elected and, thus, Reiver was removed from the board of directors.

During the next month, the directors held additional meetings concerning Reiver's employment status. Early in November, Reiver submitted a memorandum to the Executive Committee demanding additional compensation in accordance with her interpretation of an earlier compensation agreement. The next day, November 9th, Schlusser resigned from Murdoch & Walsh. Within ten days, the directors of Murdoch & Walsh decided to terminate Reiver. Late in the afternoon on November 19, Reiver was confronted in her office and given a note informing her that Murdoch & Walsh was terminating her employment with the firm effective immediately. The note was signed by all the directors. She was told to vacate the premises and the locks to all the offices were immediately changed.

DISCUSSION

I. THE APPLICABLE STANDARD FOR SUMMARY JUDGMENT

Summary judgment offers a method to avoid the costly and cumbersome procedure of a trial whenever a formal trial is unnecessary or useless because there is no genuine issue of material fact among the parties. Thus, the principal inquiry made by the Court on a motion for summary judgment is into the existence of a genuine issue of material fact. Peterson v. Lehigh Valley District Council, United Brotherhood of Carpenters and Joiners, 676 F.2d 81, 84 (3d Cir.1982). No issue of material fact exists, if after drawing all inferences from the existing record in a light most favorable to the non-moving party, either the moving party is entitled to judgment as a matter of law, Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977), or alternatively, the non-moving party's claims fail to establish a prima facie claim or defense. See In re Japanese Electronic Products Antitrust Litigation, 723 F.2d 238, 258 (3d Cir.1983).

Attempts to rely solely on allegations contained in the formal pleadings to raise a disputed issue of material fact will not be sufficient to withstand summary judgment, see Sound Ship Building Co. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir.), cert. denied, 429 U.S. 860, 97 S.Ct. 161, 50 L.Ed.2d 137 (1976), unless the moving party fails to carry its burden demonstrating the non-existence of a disputed issue of material fact. See Spirides v. Reinhardt, 613 F.2d 826, 833 (D.C.Cir. 1979). The "slightest doubt," however, as to a material fact precludes summary judgment. Brown v. Caterpillar Tractor Co., 696 F.2d 246, 255 n. 19 (3d Cir.1982) (citing Tomalewski v. State Farm Life Insurance Co., 494 F.2d 882, 884 (3d Cir.1974)).

Consideration of defendant's Motion for Summary Judgment is complicated in this instance by the...