Dilek v. Watson Enters., Inc.

• Decision Date: 10 August 2012
• Docket Number: No. 11 Civ. 2980 (JPO).,11 Civ. 2980 (JPO).
• Citation: 885 F.Supp.2d 632
• Parties: Emel DILEK, Plaintiff, v. WATSON ENTERPRISES, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

885 F.Supp.2d 632

Emel DILEK, Plaintiff,

v.WATSON ENTERPRISES, INC., Defendant.

No. 11 Civ. 2980 (JPO).

United States District Court, S.D. New York.

Aug. 10, 2012.

Elissa Paulette Fudim, Michael Scott Simon, New York, NY, for Plaintiff.

Michael J. Volpe, Nicholas Marco Reiter, Venable LLP, New York, NY, for Defendant.

MEMORANDUM AND ORDER

J. PAUL OETKEN, District Judge:

“As you will see, it's not all about the money in life: it's about health, love, respect, happiness and then at some point about the money, which is the only thing that will survive all of us.”

—Plaintiff Emel Dilek ¹

This is a contract case. It concerns a Connecticut company and one of the company's employees. That employee worked for a number of years at-will, but she then signed, along with the company's chief operating officer, an employment agreement guaranteeing her four years in her position at the company. She and the COO were also lovers. When the COO passed away a year and a half into the agreement's four-year term, the company fired the employee, and she now sues for breach of contract. The company argues that the agreement is invalid and countersues, asserting that the employee contributed no value to the corporate enterprise but instead spent her days shopping on the company credit card in Manhattan and travelling the world on frequent vacations.

The employee is Plaintiff Emel Dilek, who filed her complaint in this action on May 3, 2011. (Dkt. No. 1. (“Compl.”).) She alleges breaches of contract and of the duty of good faith and fair dealing by the company, her former employer, Defendant Watson Enterprises, Inc. (“Defendant” or “WEI” or the “Company”). ( Id.) WEI's two counterclaims against Dilek allege unjust enrichment and civil theft and were filed on July 29, 2011. (Defendant's Amended Answer and Counterclaims, Dkt. No. 10 (“Ans.”).) Currently before the Court are three motions: WEI's motion for summary judgment as to Dilek's claims (Dkt. No. 21); Dilek's motion for summary judgment as to her contract claim and WEI's counterclaims (Dkt. No. 36); and Dilek's motion for sanctions against WEI and its counsel on the ground that their counterclaims against Dilek are frivolous (Dkt. No. 41). For the reasons discussed below, WEI's motion for summary judgment is denied; Dilek's motion for summary judgment is denied in part and granted in part; and Dilek's motion for sanctions is denied.

I. Background

This background statement of facts is drawn primarily from the four Rule 56.1 statements submitted by the parties.

A. Watson Enterprises, Inc.

Beginning in 1983, Defendant Watson Enterprises, Inc. operated a car dealership under the trade name Mercedes–Benz of Greenwich. (Watson's Statement Pursuant to Local Civil Rule 56.1 in Support of Its Motion for Summary Judgment, Dkt. No. 48 (“WEI 56.1 Statement”), ¶¶ 1, 3; Plaintiff's Response to Defendant's Statement Pursuant to Local Civil Rule 56.1, Dkt. No. 60 (“Dilek 56.1 Counterstatement”), ¶¶ 1, 3.) In 1995, the sole shareholder of WEI, Arthur “Kitt” Watson (“Watson”), sold a twenty-five percent share in the Company to Ronald Pecunies, who became WEI's chief operating officer (“COO”). (WEI 56.1 Statement ¶¶ 4, 7; Dilek 56.1 Counterstatement ¶¶ 4, 7; Stock Purchase Agreement including Shareholders' Agreement, Dkt. No. 10–1 (“Stock Purchase Agreement”), § 8.3, appended as Ex. 1 to Watson's Amended Answer and Counterclaims, Dkt. No. 10). Their agreement provided that “except as otherwise provided herein, decisions relating to day-to-day operations of the Corporation shall be determined by the holder(s) of the majority of the shares of the Corporation” and further provided that “[i]t [is] of the essence of this Agreement that [Pecunies] be active in the day to day management of the Corporation, and that [he] use due diligence and his best efforts and make the Corporation financially successful....” (Stock Purchase Agreement §§ 7.6(e), 8.3.)

In practice, Watson's responsibilities at WEI included speaking to his accountant, signing payroll checks, and checking the books of the Company. (Deposition Transcript of Arthur Watson (“Watson Tr.”) at 14:21–15:14, appended as Ex. 11 to Declarationof Elissa Fudim in Support of Plaintiff's Motion for Summary Judgment (“Fudim Decl.”).) In the last five years of his presidency at WEI's Mercedes dealership (which ended July 18, 2011), Watson traveled to the dealership three or four times per month. ( Id. at 8:13–20, 15:15–23.)

B. Enter Emel Dilek

Dilek and Pecunies first met on January 28, 2004, and they began a romantic relationship shortly thereafter. (WEI 56.1 Statement ¶ 16; Dilek 56.1 Counterstatement ¶ 16.) On October 3, 2005, Plaintiff began living together with Pecunies at an apartment he leased at 220 Central Park South in New York City. (WEI 56.1 Statement ¶ 17; Dilek 56.1 Counterstatement ¶ 17.) On or about October 10, 2005, WEI hired Dilek as its Business Development Center Manager with a starting salary of $60,000. (WEI 56.1 Statement ¶ 18–19; Dilek 56.1 Counterstatement ¶ 18–19; Notice of Wages and Benefits, Dkt. No. 23–4 (“Employment Letter Agreement”), appended as Ex. 4 to Reiter Decl.) Dilek asserts that it was Pecunies who hired her. (Declaration of Emel Dilek, Dkt. No. 39 (“Dilek Decl.”), ¶ 3.) Plaintiff's Employment Letter Agreement provided that WEI

adheres to a policy of employment-at-will. Either the employee or the Company is at will to terminate the employment relationship at any time, with or without cause. Upon termination for any reason the Company will not pay accrued but unearned benefits.

(Employment Letter Agreement at 2 (emphasis in original).) The letter agreement also delineated WEI's vacation and personal time policy, which allowed Plaintiff certain limited amounts of paid time off. ( Id. at 1.) The letter agreement provided that its “terms ... may be changed at any time, with or without notice, at the sole discretion of the management of Watson Enterprises Incorporated.” ( Id. at 2.)

C. Dilek's Accolades, Recognition, and Compensation

In 2006, Dilek's salary was raised from $60,000 to $100,000 per year. (Dilek's Statement of Material Facts Pursuant to Local Rule 56.1, Dkt. No. 38 (“Dilek 56.1 Statement”), ¶ 12; Watson's Counterstatement of Facts Pursuant to Local Civil Rule 56.1 in Opposition to Plaintiff's Motion for Summary Judgment, Dkt. No. 53 (“WEI 56.1 Counterstatement”), ¶ 12.) In 2007, her salary was raised again to $120,000 per year plus additional benefits. (Dilek 56.1 Statement ¶ 14; WEI 56.1 Counterstatement ¶ 14.) Dilek was informed of these raises by Pecunies and the dealership's general manager, Russ Baird. (Declaration of Emel Dilek, Dkt. No. 39 (“Dilek Decl.”), ¶¶ 5, 6; Dilek 56.1 Statement ¶¶ 13, 15; WEI 56.1 Counterstatement ¶¶ 13, 15.) Also in 2007, Dilek was promoted from Business Development Center Manager to Business Development and Marketing Manager. (Dilek 56.1 Statement ¶ 16; WEI 56.1 Counterstatement ¶ 16.) She was informed of that promotion by Pecunies. (Dilek Decl. ¶ 6; Dilek 56.1 Statement ¶ 17; WEI 56.1 Counterstatement ¶ 17.)

During her tenure at WEI, Dilek received numerous certifications in the Mercedes–Benz Standards of Excellence Program. (Dilek Decl., Exs. 1–4; Dilek Decl. ¶ 6; Dilek 56.1 Statement ¶¶ 18–22; WEI 56.1 Counterstatement ¶¶ 18–22.) On June 27, 2008, she received an email message from WEI's president, Watson, telling her “[t]hank you Emel for doing a bang up job two thumbs up.” (Email from Watson to Dilek, dated June 27, 2008, appended as Ex. 6 to Dilek Decl.) She received another email from Watson on November 18, 2008, which concluded, “Keep up the good work.” (Email from Watson to Dilek, dated November 18, 2008, appended as Ex. 5 to Dilek Decl.; Watson Tr. 54:17.) During her employment at WEI, Dilek never received notice that there was any problem with her job performance. (Dilek 56.1 Statement ¶ 44; WEI 56.1 Counterstatement ¶ 44.) WEI paid Dilek her salary without complaint or reservation from January 2005 to August 2010. (Watson Tr. 69:20–70:10, 57:10–12, 66:20–67:5; Dilek 56.1 Statement ¶ 52; WEI 56.1 Counterstatement ¶ 52.)

D. Dilek's Dereliction

During her employment with the Company, Dilek and Pecunies took numerous vacations together throughout the world. (Deposition Transcript of Emel Dilek (“Dilek Tr.”) at 85:19–91:24, 94:13–99:20, appended as Ex. 2 to Reiter Decl.)

With Pecunies's permission, Dilek used his company credit card, and then her own company credit card, from 2007 until Pecunies's death in May 2010. (Dilek 56.1 Statement ¶¶ 54–56; WEI 56.1 Counterstatement ¶¶ 54–56.) The Company deducted from Pecunies's earnings amounts that Pecunies or Plaintiff identified as personal charges to those cards. (Dilek 56.1 Statement ¶¶ 57–59; WEI 56.1 Counterstatement ¶ 58.) WEI asserts that Pecunies had not repaid WEI for all of Dilek's personal credit card expenses before the time he died. (WEI 56.1 Counterstatement ¶ 61–62; Dilek 56.1 Statement ¶ 62 (partially agreeing).) Watson testified that WEI sought reimbursement for those charges in an arbitration against Pecunies's estate. (Watson Tr. 75:2–8, 76:3–9.) WEI and Pecunies's estate reached a confidential settlement of that arbitration in December 2011. (Declaration of Nicholas M. Reiter in Further Support of Watson's Motion for Summary Judgment and in Opposition to Plaintiff's Motion for Summary Judgment, Dkt. No. 50 (“2d Reiter Decl.”), ¶ 20.)

Watson asserts that Dilek's company credit card use was improper. His deposition testimony includes the following exchange:

Q: When did you first become aware that Ms. Dilek was, in your words, misusing the company credit card?

A: Pretty near from the start.

Q: So from around 2005?

A: Yes.

(Watson Tr. at 69:20–25.) In a declaration submitted with WEI's motion papers, Watson has asserted that, although he “was aware during Plaintiff's employment that she, on occasion, used Mr. Pecunies's corporate credit card,” he “did not learn until shortly before Mr....