Crane v. Rave Rest. Grp., Inc.
| Decision Date | 04 August 2021 |
| Docket Number | Civil Action No. 4:20-CV-0013 |
| Citation | 552 F.Supp.3d 692 |
| Parties | Scott CRANE, Plaintiff, v. RAVE RESTAURANT GROUP, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Texas |
Brian Patrick Shaw, Jr., Carrington Coleman Sloman & Blumenthal LLP, Greg Patrick McAllister, Joshua Joseph Iacuone, Rogge Dunn, Rogge Dunn Group, PC, Dallas, TX, for Plaintiff.
Jamie Lauren Strickler, Shelby Kay Taylor, John F. McCarthy, Jr., Michael Scott McDonald, Littler Mendelson, P.C., Scott Masur McElhaney, Jackson Walker LLP, William Gary Fowler, JAMS Inc., Dallas, TX, for Defendant.
Pending before the Court is Defendant's Motion for Summary Judgment on Threshold Contractual Issues (Dkt. #36). Having considered the motion and the relevant pleadings, the Court finds that the motion should be granted in part and denied in part.
In 2016, Rave Restaurant Group, Inc., ("Rave") was searching for a chief executive officer ("CEO") for two of its pizza restaurant brands: Pizza Inn and Pie Five Pizza. Rave decided to interview Scott Crane ("Crane") for the position. Crane interviewed with Mark E. Schwarz ("Schwarz") and another member of the board of directors, Clinton Coleman. Schwarz offered Crane a salary with potential bonuses and shares in Rave based on certain performance metrics (Dkt. #36, Exhibit 1 ¶ 4; Exhibits 2–4). Crane is a signatory to his employment agreement (the "Employment Agreement") and multiple Restricted Stock Unit Awards ("RSUA") Agreements.
Crane claims he was instrumental in fixing Rave's balance sheets and that he met the benchmarks set by Rave's board of directors, thus entitling him to approximately 328,000 shares for the 2016 fiscal year; 300,000 shares for the 2017 fiscal year; and 300,000 shares for the 2018 fiscal year (Dkt. #41, Exhibit 1 ¶¶ 16–18).
In July 2019, approximately one month after Crane claims he reached the benchmarks for fiscal year 2018, Schwarz terminated Crane and cited no reason for the termination (Dkt. #41, Exhibit 1 ¶¶ 18–19).1 Rave notes that it terminated Crane without invoking the termination for cause provision of Crane's Employment Agreement, but Rave also stated the termination came after Crane proposed becoming a part-time CEO at a reduced pay (Dkt. #37 at. p. 15). Crane refused to sign the severance agreement that did not include the stock transfer he claims to have earned. Crane claims Rave failed to transfer the shares he earned, refused to pay his bonus, refused to compensate him for his earned but unpaid vacation, did not pay him $300,000 in severance pursuant to the employment contract, and did not pay his COBRA premium payments.
On January 6, 2020, Crane brought this suit bringing claims for breach of contract, fraudulent inducement, and seeking a declaratory judgement (Dkt. #1).2 On November 27, 2020, Rave filed this Motion for Summary Judgment (Dkt. #36), and Crane filed his Response on December 23, 2020 (Dkt. #41). On January 7, 2021, Rave filed its Reply (Dkt. #44), and Crane filed a Sur-Reply on January 12, 2021 (Dkt. #46).
The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. Celotex Corp. v. Catrett , 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is proper under Rule 56(a) of the Federal Rules of Civil Procedure "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A dispute about a material fact is genuine when "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, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Substantive law identifies which facts are material. Id. The trial court "must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment." Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co. , 655 F.2d 598, 602 (5th Cir. 1981).
The party seeking summary judgment bears the initial burden of informing the court of its motion and identifying "depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials" that demonstrate the absence of a genuine issue of material fact. FED. R. CIV. P. 56(c)(1)(A) ; Celotex , 477 U.S. at 323, 106 S.Ct. 2548. If the movant bears the burden of proof on a claim or defense for which it is moving for summary judgment, it must come forward with evidence that establishes "beyond peradventure all of the essential elements of the claim or defense." Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant bears the burden of proof, the movant may discharge the burden by showing that there is an absence of evidence to support the nonmovant's case. Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ; Byers v. Dall. Morning News, Inc. , 209 F.3d 419, 424 (5th Cir. 2000).
Once the movant has carried its burden, the nonmovant must "respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial." Byers , 209 F.3d at 424 (citing Anderson , 477 U.S. at 248–49, 106 S.Ct. 2505 ). A nonmovant must present affirmative evidence to defeat a properly supported motion for summary judgment. Anderson , 477 U.S. at 257, 106 S.Ct. 2505. Mere denials of material facts, unsworn allegations, or arguments and assertions in briefs or legal memoranda will not suffice to carry this burden. Rather, the Court requires "significant probative evidence" from the nonmovant to dismiss a request for summary judgment. In re Mun. Bond Reporting Antitrust Litig. , 672 F.2d 436, 440 (5th Cir. 1982) (quoting Ferguson v. Nat'l Broad. Co. , 584 F.2d 111, 114 (5th Cir. 1978) ). The Court must consider all of the evidence but "refrain from making any credibility determinations or weighing the evidence." Turner v. Baylor Richardson Med. Ctr. , 476 F.3d 337, 343 (5th Cir. 2007).
As a threshold matter, Crane begins his Response with a discussion of conflicts of laws. He claims that Rave bears the burden of establishing which law applies but does not provide any briefing on why he thinks Missouri or Kansas law should be applied. Crane argues Rave failed to establish the law that applies to the RSUA Agreements and the 2015 Long Term Incentive Plan ("LTIP"), and thus the Court may dismiss the Motion (Dkt. #41 at p. 8).
Crane notes that unlike the Employment Agreement, neither the RSUA Agreements nor the 2015 LTIP contain a choice of law provision (Dkt. #41 at p. 7). In Crane's view, either Missouri law or Kansas law should apply to the RSUA Agreements and the 2015 LTIP because Rave is a Missouri corporation and Crane is a resident of Kansas. Crane alleges that Missouri and Kansas impose a duty of good faith on contractual parties whereas Texas does not (Dkt. #41 at p. 8).3
In supporting his position that the Court should dismiss the Motion in its entirety, Crane cites to IntelliGender, LLC v. Soriano , which is an unpublished case from this District. 2:10-cv-125-TJW, 2011 WL 903342 (E.D. Tex. Mar. 15, 2011). Soriano is not binding on this Court, and the facts of the case are distinguishable. Further, Crane has not pointed the Court to—and the Court has not found—any Fifth Circuit precedent that would require the Court to dismiss the Motion in its entirety when Rave—the movant—did not brief the Court on which law should apply in its Motion. Consequently, the Court will not dismiss the Motion in its entirety as Crane requests.
Here, neither Rave nor Crane properly or fully brief the conflict of law issue.4 But even without the issue properly and fully briefed, the Court does not believe there is a conflict of laws issue. Rave argues there is no conflict of laws issue because both Missouri and Kansas hold that a duty of good faith cannot be used to contradict the express terms of the agreement (Dkt. #44 at p. 6). The Court agrees. See Bishop & Associates, LLC v. Ameren Corp., 520 S.W.3d 463, 471 (Mo. 2017) () (internal quotation omitted); First Nat. Bank of Omaha v. Centennial Park, LLC, 48 Kan.App.2d 714, 303 P.3d 705, 716 (2013) () (citing Estate of Draper v. Bank of Am., N.A., 288 Kan. 510, 205 P.3d 698, 710 (2009) ). The contracts at issue here—as discussed below—contains express provisions allowing the Parties to take specific action in accordance with the provisions. Further, the Parties entered into an at-will employment relationship with a clause permitting termination at will for any reason.5 Because the relevant contracts contain express provisions, and based on the Court's independent research, the Court does not believe there is a conflict of law issue.
Even if Missouri or Kansas law were to apply instead of Texas law, the Court does not see how this would dictate a different outcome. The facts of this case indicate that the implied duty of good faith would not be applicable to the RSUA Agreements or the 2015 LTIP, which lack a choice of law provision. And without the implied duty of good faith, the result would not differ from applying Texas law. Consequently, the Court does not find that there is a conflict of laws issue, and the Court will proceed with its analysis under the assumption that Texas law is applicable.6
The parties disagree on whether there was a breach of the contract. Generally, the Employment Agreement...
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