Cohn v. Guaranteed Rate Inc.

• Decision Date: 10 September 2015
• Docket Number: Case No. 14 C 9369
• Citation: 130 F.Supp.3d 1198
• Parties: Melissa L. Cohn, Plaintiff, v. Guaranteed Rate Inc., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

130 F.Supp.3d 1198

Melissa L. Cohn, Plaintiff,

v.Guaranteed Rate Inc., et al., Defendants.

Case No. 14 C 9369

United States District Court, N.D. Illinois, Eastern Division.

Signed September 10, 2015

Christopher S. Mayer, William D Wallach LLP, McCarter & English, Newark, NJ, Jessica Lynn Heckinger, Michael Scott Elvin, Barack Ferrazano Kirschbaum & Nagelberg LLP, Chicago, IL, for Plaintiff.

Louis S. Chronowski, Jr., Dykema Gossett PLLC, Richard James Cunningham, Guaranteed Rate, Inc., Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

John Robert Blakey, United States District Judge

This matter concerns an employment dispute between PlaintiffMelissa Cohn, her former employer Guaranteed Rate, Inc.("GRI"), and the President of GRI Victor Ciardelli.Plaintiff's general claim is that she was wrongfully forced out of her position as Executive Vice President of Guaranteed Rate.To that end, Plaintiff alleges four causes of action: (1) declaratory judgment against GRI under 28 U.S.C. § 2201(a);(2) breach of contract against GRI; (3) breach of the implied covenant of good faith and fair dealing against GRI; and (4) fraud against Ciardelli.On March 26, 2015, Defendants filed a motion to dismiss Plaintiff's First Amended Complaint("FAC") in its entirety [20].That motion is granted in part and denied in part as explained below.

I.Background¹

Prior to October 2012, Melissa Cohn("Cohn") was the President and sole shareholder of Manhattan Mortgage Co., Inc.("Manhattan Mortgage").[19]FAC at ¶ 5.In 2012, GRI expressed interest in purchasing Manhattan Mortgage so as to expand its presence in New York and increase its related mortgage business.Id.at ¶ 6.To that end, Cohn and Ciardelli conducted negotiations and eventually reached an agreement for GRI to acquire the assets of Manhattan Mortgage and Cohn to work for GRI.Id.The relevant agreements were memorialized in two documents: (1) the August 20, 2012 Asset Purchase Agreement ("APA"); and (2) the October 1, 2012 Branch Manager Agreement ("BMA").Id.at ¶ 7.

The APA is the contract by which GRI acquired Manhattan Mortgage's assets.Id. at Ex. B.It sets out the terms for the asset purchase, including the payment terms and a number of related terms and conditions.The contract is between only GRI and Manhattan Mortgage.Id.While several of the contract's clauses contain language relating to Cohn, Cohn is not a party to the contract.Id.Despite this, there is one section of the APA that may create a limited right for Cohn.Towards the end of Section IA, there is a paragraph that reads: "in the event that Ms. Cohn's employment is terminated due to Ms. Cohn's death or disability in accordance with the Branch Manager Agreement, all Annual Guarantee amounts due hereunder shall be payable to Ms. Cohn (or Ms. Cohn's legal representative) in accordance herewith."Id. at Ex. B, pg. 2.

The BMA is an agreement between Cohn and GRI that sets out the details of Cohn's employment with GRI.Id. at Ex. A.It provides for various types of compensation for Cohn's services and explains the scope of her employment duties.Id. at Ex.A, § 2–3.The term of the BMA is indefinite, but it may be terminated by either party in accordance with its terms.Id. at Ex.A, § 2.In Section 3, which sets out the scope of Cohn's employment duties, the BMA reads as follows:

"GRI agrees that during the term of this Agreement, GRI shall employ Employee as the Executive Vice President of the Manhattan Mortgage Division of GRI.Employee shall perform such duties and exercise such authority in the foregoing capacity as is normally assigned to such an employee of a corporation of the size, stature, and nature of GRI, and shall perform further duties as the Board of Directors of GRI and Chief Executive Officer of GRI may from time to time assign.During the term of this Agreement, Employee shall report directly to the Chief Executive Officer of GRI.Employee understands that the duties expected of her include, without limitation, the following items:"

Id. at Ex.A, § 3.Section 3 then lists 14 different duties expected of Cohn.Id.The BMA is signed by Ciardelli on behalf of GRI, and there is a signature line for Cohn.Id.While the version of the contract in the record lacks Cohn's signature, the parties do not dispute that the contract was validly executed.Id.

After the BMA and APA were executed, the parties' business relationship deteriorated.Id.at ¶ 12.According to Cohn, this included Defendants preventing her from earning all of the money she was entitled to, undermining her position and authority, constructively discharging her, and later threatening to seek post-employment restrictions.Id.In October 2013, Cohn began questioning the computation of her financial package and the lack of information supporting that calculation.Id.at ¶ 13.

Around that same time, Ciardelli began a deliberate pattern of making false statements to Cohn about her job performance and reputation.Id.at ¶ 16.This included blaming Cohn for the departure of GRI's vice presidents and, on November 21, 2013, telling Cohn that he was disappointed in her performance, that she was responsible for the loss of key employees, and that she was not liked by the mortgage market or her staff.Id.at ¶ 17.During this time, the issue of Cohn's responsibilities remained a contested issue—with Cohn seeking to clarify her role within the company.Id.at ¶ 20.Cohn maintains that her request for clarification did not receive a response.Id.at ¶ 22.Also, from the fall of 2013 until the spring of 2014, Cohn continued to seek information related to the payment she felt she was owed by GRI.Id. at ¶ 23–24.

As a result of Cohn's efforts, GRI informed her in March 2014 that she could receive a portion of the bonus available under the APA known as the "Annual Guaranty."Id.at ¶ 27.According to Cohn, however, GRI required her to sign a Confidential Agreement and General Release (the "Release") in order to receive that bonus money.Id.The Release Cohn signed was between herself and GRI.Id.

Cohn signed the Release on March 18, 2014, but it is unclear who signed on behalf of GRI.Id. at ¶ 27–28, Ex. H.

On the first page of the Release, a recital explains, at least in part, the parties' motivation for entering into the agreement.Id.It reads: "The Company [GRI] strongly desires for Cohn's employment with the Company to continue and, has therefore, worked with Cohn to develop a management structure within the Branch to help Cohn succeed as an employee and a regional manager in the organization."Id.The Release also absolves GRI from liability for any improper conduct prior to that point in time, stating: "Cohn hereby fully, finally and unconditionally releases, compromises, waive[s] and forever discharge[s] Guaranteed Rate and the Released Parties from and for any and all claims, allegations, liabilities, lawsuits, personal injuries, demands, debts, liens, damages, costs, grievances, injuries, actions or rights of action of any nature whatsoever."Id. at Ex. H, pp. 3–4.The term "Released Parties" is defined to include GRI and its "officers, members, management, agents, attorneys, [and] employees ... in their individual, fiduciary and corporate capacities."Id. at Ex. H, p.4.

Cohn claims that the language in the Release, specifically the recital concerning her continued employment, was "hollow verbiage."Id.at ¶ 30.A few days after Cohn signed the Release, GRI said it would not sign the Release until Cohn signed another agreement—the Compensation and Branch Manager Addendum/Amendment(the "Addendum").Id.The Addendum modified the Release by limiting Cohn's ability to earn future bonuses.Id.Cohn executed the Addendum on March 26, 2014, and GRI executed both the Release and the Addendum on March 27, 2014.Id. at 31.

In April 2014, GRI allegedly resumed its plan to force Cohn to leave the company by relieving her of all her responsibilities except to originate new business.Id.at ¶ 32.Cohn claims that this violated her rights under the BMA and was done without explanation or justification.Id.at ¶ 33–34.During this time, there were a series of communications between Cohn and GRI regarding her employment status.Id.at ¶ 35–39.Cohn claims that GRI was looking to replace her, and once the company found a suitable replacement it initiated a conference call in which Ciardelli asked Cohn to consider two options: (1) to remain at GRI but with reduced salary and responsibilities; or (2) to separate from GRI.Id. at ¶ 40.Cohn considered the proposal and, on July 17, 2014, there was another conference call.Id.at ¶ 41.During that call, Cohn told the Defendantsshe was amendable to pursuing the terms of a separation.Id.However, she claims that she did not then, or at any other time, agree to leave GRI voluntarily if no agreement could be reached.Id.Discussions between the parties continued throughout July 2014, but were ultimately unsuccessful.Id.at ¶ 42.While the discussions were ongoing, Defendants asked that Cohn not come to the office, and she consented as a sign of good faith.Id.

On July 28, 2014, GRI's legal counsel communicated to Cohn's counsel that the parties had to set a final date for Cohn's employment (whether by resignation or termination) because the situation had become disruptive to the company.Id.at ¶ 43.At that time, Cohn was also told not to return to the office because, if she tried to, GRI would bar her access.Id.While she did not agree that there was a basis for her exclusion, Cohn decided—on the advice of her counsel—not to press the issue.Id.at ¶ 44.

On July 29, 2014, Cohn's counsel sent a letter to GRI stating that GRI had effectively terminated Cohn without cause by taking the following actions: (1) barring her from the office; (2) excluding her access to support functions; and (3) redirecting her phone calls and messages.Id.at ¶ 45.The letter concluded by saying that Cohn awaited GRI's decision as to...