Robert Reiser & Co. v. Scriven
| Decision Date | 17 September 2015 |
| Docket Number | Civil Action No. 15-11746-FDS |
| Citation | 130 F.Supp.3d 488 |
| Parties | Robert Reiser & Company, Plaintiff/Counterclaim-Defendant, v. Scott Scriven, Defendant/Counterclaim-Plaintiff. |
| Court | U.S. District Court — District of Massachusetts |
Robert A. Fisher, Matthew C. Steinberg, Foley Hoag LLP, Rebecca J. Sivitz, Proskauer Rose, LLP, Boston, MA, for Plaintiff/Counterclaim-Defendant.
Brandon S. Bell, Fontaine, Decarvalho & Bell, LLP, Providence, RI, for Defendant/Counterclaim-Plaintiff.
This is a contract dispute arising out of an employment termination. Jurisdiction is based on diversity of citizenship. Plaintiff Robert Reiser & Company (the "Reiser Company") has brought suit against defendant Scott Scriven, a former employee, alleging claims for breach of contract, conversion, and breach of the implied covenant of good faith and fair dealing. Scriven has brought counterclaims against the company, alleging claims for intentional misrepresentation, breach of contract, breach of the implied covenant of good faith and fair dealing, usury, undue influence, unconscionability, breach of fiduciary duty, and retaliation.
The Reiser Company has moved to dismiss seven of the eight counterclaims by Scriven. It has also moved for judgment on the pleadings on all of its claims. For the following reasons, the motion to dismiss will be granted in part and denied in part, and the motion for judgment on the pleadings will be denied.
Roger Reiser is the President and Chief Executive Officer of the Reiser Company, a supplier of food processing and packaging equipment located in Canton, Massachusetts. (Countercl. ¶ 1). According to the counterclaims, at some point, the "the Board of Directors of the [c]ompany, with Jack Derby ... serving as Chairman of the Board, implemented a plan to replace" Roger as President and CEO. (Id. ¶ 3). During 2012 and 2013, it had experienced difficulty recruiting senior executive candidates to join the company because Roger "had a reputation as [being] difficult to work with, and abusive." (Id. ¶ 4). The counterclaims allege that he "created a hostile work environment for women, minorities and others that promoted a culture and climate of intimidation and verbal abuse." (Id. ¶ 5).
Scott Scriven was President and Chief Executive Officer at Weber, Inc., in Kansas City, Missouri. (Id. ¶ 8). He had held that position for nearly 14 years. (Id. ). In February 2013, Roger Reiser contacted him to see if he was interested in working for the Reiser Company. (Id. ). The counterclaims allege that Scriven learned from George Reiser and Roger Reiser "that they wanted a succession plan to insure the continuation of the [c]ompany for the ‘next 50 years and beyond.’ " (Id. ¶ 9).
Over the course of several weeks, Scriven received calls from Roger Reiser, George Reiser, and Jack Derby. (Id. ¶ 10). During these calls, they reinforced the message that the board wanted a succession plan that resulted in the retirement of Roger. (Id. ). George Reiser and Derby also told Scriven that Roger had "mellowed" and "wanted to step back." (Id. ). The counterclaims allege that in "July 2013, Derby made certain representations and assured ... Scriven that if he joined the [c]ompany that [Roger] Reiser would ‘step back from the business' and step down as President [and] CEO by mid-2015." (Id. ¶ 12).
On July 12, 2013, Scriven received an offer letter from the company. (Id. ¶ 13). He was offered the position of Senior Vice-President of Sales and Marketing, "reporting directly to Roger as CEO and President." . The offer letter stated that should Scriven accept the position, his employment would be "at will," and the company could terminate his employment "at any time, for any reason, with or without notice." (Id. ). The offer letter included a reference to a proposed "Long Term Incentive Plan" that aimed to provide long term incentive for two "Value Factors." (Id. ). Because the long-term incentive plan was "a new compensation component for Reiser," the offer letter stated that "the specific legal language will need to be worked through, and [it] agree[d] to have this completed no later than 60 days after [Scriven's] initial start date." (Id. ). The proposed plan would not, however, vest during the "initial five years." .
The offer letter included a relocation package. As part of that package, the company offered Scriven a "$300,000 interest-free loan for the purchase of a new house." (Id. ). The terms stated that "[i]t would be a note to Reiser secured by the property"; "[i]t would be a 20 year note"; "[p]ayments would begin in [y]ear 6"; and "[i]f [Scriven] were to leave Reiser, this note would be due." (Id. ).
On July 22, 2013, Scriven accepted the offer from the company and submitted his resignation to his former employer. (Countercl. ¶ 14).
In late 2013, Scriven accepted a $400,000 loan from the company, which he used toward purchasing a townhome in Massachusetts for $405,000. (Id. ¶ 17). The terms of the additional $100,000 that were loaned to Scriven were set forth in e-mail correspondence. (Compl. ¶¶ 11-12). The $100,000 was also interest-free, and it was to be paid back with the proceeds from the sale of Scriven's home in Kansas City. (Def. Mem. Ex. B). During his employment, he never received a note or mortgage document. (Countercl. ¶ 19).
According to the counterclaim, in August 2013, Scriven learned that the company did not pay overtime to non-exempt hourly employees, including service technicians. (Id. ¶ 20). He attempted to address that issue without success. (Id. ¶ 21). In January 2014, Scriven allegedly learned that the company "routinely over invoiced customers on machine purchases." (Id. ¶ 22). When he confronted George Reiser about the issue, he was told to mind his own business. (Id. ¶ 23). The counterclaim also alleges that Roger Reiser continued to create a hostile work environment. (Id. ¶ 25).
On February 2, 2015, Scriven's employment was terminated. (Id. ¶ 26).
On February 3, he received a letter from the company that allegedly made certain demands on him, "including the demand for a general release of the [c]ompany, [and] a quit claim deed conveying the subject [t]ownhome to Robert Reiser & Co." (Id. ¶ 28). The counterclaims allege that upon termination, Scriven was entitled to six-month severance pay if the company were to recommend a separation without cause. (Id. ¶ 29). "However, severance pay was suspended pending ... Scriven['s] signing a general release in favor of Robert Reiser & Co. and to deed the subject real property to the [c]ompany[.]" (Id. ). According to the counterclaims, on February 27, 2015, the company allegedly demanded that Scriven execute a 6-month promissory note "that was usurious on its face in violation of civil and criminal usury statutes." (Id. ¶ 30).
When his employment ended, Scriven returned to his home in Kansas City. (Compl. ¶ 2). On June 12, 2015, Scriven sold the townhouse for $455,000. (Countercl. ¶ 33). At present, $400,000 in funds from the sale are being held in escrow. (Id. ).
During his employment, Scriven was provided a company-owned laptop by the Reiser Company. (Compl. ¶ 15). He is still in possession of the laptop. (Id. ¶ 21).
On April 29, 2015, the Reiser Company filed the complaint in this action. It alleges claims for (1) breach of contract, (2) conversion, and (3) breach of the implied covenant of good faith and fair dealing.
On June 23, 2015, Scriven answered and filed counterclaims. The counterclaims allege claims for (1) intentional misrepresentation, (2) breach of contract, (3) breach of the implied covenant of good faith and fair dealing, (4) usury, (5) undue influence, (6) unconscionability, (7) breach of fiduciary duty, and (8) retaliation.
On July 14, 2015, the Reiser Company filed a motion to dismiss all of Scriven's counterclaims, with the exception of the one for breach of contract. On July 30, 2015, it filed a motion for judgment on the pleadings on all of its claims against Scriven.
On a motion to dismiss, the Court "must assume the truth of all well-plead[ed] facts and give ... plaintiff the benefit of all reasonable inferences therefrom." Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir.2007)
(citing Rogan v. Menino, 175 F.3d 75, 77 (1st Cir.1999) ). To survive a motion to dismiss, the complaint must state a claim that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). That is, "[f]actual allegations must be enough to raise a right to relief above the speculative level, ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. at 555, 127 S.Ct. 1955 (citations omitted). "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ). Dismissal is appropriate if the facts as alleged do not "possess enough heft to show that plaintiff is entitled to relief." Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 84 (1st Cir.2008) (alterations omitted) (internal quotation marks omitted).
Count One of the counterclaim alleges a claim for intentional misrepresentation. To establish intentional (or fraudulent) misrepresentation, Scriven "must show that [Robert Reiser & Co.] [1] ‘made a false representation of a material fact [2] with knowledge of its falsity [3] for the purpose of inducing [him] to act thereon, and [4] that [he] reasonably relied upon the representation as true and acted upon it [5] to his damage." Eureka Broadband Corp. v....
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