DuSesoi v. United Refining Co., Civ. A. No. 81-93 ERIE.

• Decision Date: 09 June 1982
• Docket Number: Civ. A. No. 81-93 ERIE.
• Citation: 540 F. Supp. 1260
• Parties: Edmond J. DuSESOI, Plaintiff, v. UNITED REFINING COMPANY, a Pennsylvania corporation, and Harry A. Logan, Jr., an individual, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

540 F. Supp. 1260

Edmond J. DuSESOI, Plaintiff, v. UNITED REFINING COMPANY, a Pennsylvania corporation, and Harry A. Logan, Jr., an individual, Defendants.

Civ. A. No. 81-93 ERIE.

United States District Court, W. D. Pennsylvania.

June 9, 1982.

COPYRIGHT MATERIAL OMITTED

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H. Yale Gutnick, Thomas M. Zwilling, Pittsburgh, Pa., for plaintiff.

Frederick M. Lowther, Washington, D. C., Robert S. Whitehill, Pittsburgh, Pa., for defendants.

OPINION

WEBER, Chief Judge.

In January of 1981 the plaintiff in this action, Edmond J. DuSesoi, was employed as the Vice-President of United Refining International, a wholly-owned subsidiary of United Refining Company. One month later DuSesoi was unemployed, his position with International having been terminated effective January 31, 1981 because of a corporate take-over of United. It is this abrupt change in Mr. DuSesoi's employment status which forms the basis of this lawsuit.

On May 5, 1981, DuSesoi filed a five count complaint in this court. In this complaint DuSesoi named United Refining Company and its President, Harry Logan, as defendants. The complaint alleged that United breached a written three year employment contract with the plaintiff (Count I); that United breached a three year oral employment contract (Count II); that Logan breached his warranty of authority to contract on behalf of United (Count III); that United and Logan fraudulently misrepresented the terms of the plaintiff's employment contract (Count IV); and that Logan tortiously interfered with the plaintiff's employment relationship (Count V). Presently this case is before us on defendants' motion for summary judgment. In this motion the defendants raise six separate contentions, each of which is directed to one or more counts of plaintiff's complaint. First, the defendants allege that any contract the plaintiff had was with United Refining International (International) and not with United Refining Company (United). Since International and United are separate corporate entities defendants urge us to dismiss all of the plaintiff's breach of contract claims against United. Second, defendants contend that the written contract between the parties was one of indefinite duration and, as such, terminable at will. Third, defendants argue that any oral agreement between the parties is unenforceable under the applicable statute of frauds. Fourth, defendants assert that Logan did not breach any warranty of authority during his negotiations with DuSesoi. Fifth, defendants contend that, as a matter of law, the statements made to DuSesoi do not constitute fraudulent misrepresentations. Sixth, the defendants argue that Logan, as President of United Refining Company, was privileged in any action he took with respect to DuSesoi's employment with United. Some of these questions involve solely matters of law, some require the consideration of factual matters where our function is to determine the existence of a dispute as to a genuine issue of material fact. The parties have filed affidavits and documents sufficient under the standards of Fed.R.Civ.P. 56 on the issues of fact. The legal contentions have been fully briefed by both parties and are, therefore, now ripe for our disposition.

I. FACTS

The business dealings which ultimately led to this lawsuit began in January of 1980, approximately one year prior to DuSesoi's discharge. At that time the plaintiff was living in Kansas City, Missouri, where he was employed as a Senior Vice-President for Hudson Refining Company. In January or February of 1980, DuSesoi was approached regarding the possibility of employment with the United Refining Company.

At this time United was engaged in efforts to develop a crude oil trading capacity in Houston, Texas. As part of its plans United, through its President Logan, began negotiations with DuSesoi. These negotiations were aimed at securing DuSesoi's employment as head of this crude oil trading operation.

Logan and DuSesoi met four times between February and June of 1980 to negotiate an employment contract. These meetings were held in Chicago, New York City, New Orleans and Warren, Pennsylvania.

At these meetings a principal point for discussion was the plaintiff's salary demand. Ultimately Logan and DuSesoi agreed upon an annual salary of $85,000. Because this salary exceeded the salary scale paid by United to its employees it was agreed that DuSesoi would not work directly for United. Rather DuSesoi would be employed by United Refining International, a wholly-owned subsidiary of United Refining.

On June 25, 1980, Logan wrote to DuSesoi confirming the terms of the agreement reached by the parties. In this letter Logan explained that DuSesoi would be employed through International; outlined DuSesoi's duties; and described the salary and benefits to which he would be entitled. The letter was silent with respect to the term of DuSesoi's employment.

Two weeks later, on July 11, 1980, DuSesoi responded by letter to this communication from Logan. In his letter DuSesoi indicated that he intended to accept Logan's offer of employment with United Refining International. DuSesoi stated, however, that "several topics in Logan's letter ... seemed to require clarification." Included among these topics was the proposed term of DuSesoi's employment. With respect to this topic DuSesoi noted that the parties "had talked of three years and severance of one year." DuSesoi pointed out that the June 25th letter from Logan was "silent on this subject." Four days later, on July 15, 1980, Logan responded to this letter from DuSesoi. In his letter Logan indicated that he was pleased that the plaintiff had decided to accept employment with United Refining International. Logan went on to point out that "your letter also indicates that there may be some misunderstandings between us. It was my intention that you would receive a salary commensurate with the responsibilities of this subsidiary and also to participate in such other employment benefits as are granted to executive employees of the parent company. An employment contract with a severance agreement goes beyond this. You may wish to discuss this and other matters with me and I am available during regular business hours to do so."

DuSesoi subsequently accepted this position when United Refining International moved from Kansas City to Houston and in August of 1980 began work.

In the latter part of 1980, United Refining was acquired by Coral Energy, Inc., a subsidiary of Coral Petroleum, Inc. Coral already maintained a large crude oil trading department in Houston, Texas. Because Coral already had an established crude oil trading department the services previously provided for United by International were no longer needed. Therefore, on December 29, 1980 Logan instructed DuSesoi to terminate all of International's operations in Houston. Shortly thereafter DuSesoi was informed that his services were no longer required by United or International. This lawsuit followed.

II. DISCUSSION

As we have previously noted the plaintiff in this case has filed a multi-count complaint. This has evoked a response from the defendants in the form of a multi-faceted motion for summary judgment. This motion raises six separate defenses; each of which attacks one or more of the plaintiff's claims.

The parties have briefed this motion extensively, devoting particular attention to the choice-of-law problems presented by the business dealings of DuSesoi and Logan. For its part the plaintiff attempts to use these choice-of-law considerations as a shield, arguing that uncertainty as to the applicable law precludes summary judgment at this time. We believe that the plaintiff's reliance on this issue as a bar to summary judgment is misplaced. On most of the issues raised by the defendants' motion the law of the relevant jurisdictions is essentially the same.¹ Therefore, as to these issues the question of choice-of-law presents little difficulty. Moreover where there are significant differences in state law we feel that the record is sufficiently developed to enable us to determine which jurisdiction's law applies. Therefore, we would reject the plaintiff's contention that uncertainty regarding the applicable law completely precludes consideration of this motion. Accordingly, we will proceed with a consideration of the individual defenses presented by that motion.

The first defense raised in this motion addresses counts I and II of the plaintiff's complaint. In these counts asserted against Defendant United the plaintiff alleges that his termination after only five months violated written and oral tree year employment contracts. In their motion for summary judgment the defendants point out that the plaintiff's employment agreement was with International and not United. Since United is not a party to this employment contract, defendants argue that they cannot be held liable for any alleged breach of this agreement.

The plaintiff has responded by conceding that his nominal employer was International and not United. The plaintiff asserts, however, that this arrangement was made solely to conceal the plaintiff's salary from United's payroll department. The plaintiff also states that he understood that he was working directly for United and that his job was in no way dependent upon the continuing existence of International as a separate entity. (Affidavit of Edmond DuSesoi, paragraph 24). According to the plaintiff International was used simply "as a style for United to do business in Houston." Therefore, plaintiff urges that we disregard the corporate form of International and hold United directly responsible for the contractual defaults of its wholly-owned subsidiary.

The power of a court to "pierce the corporate veil" and hold a parent company liable for the contractual defaults of its subsidiary is clearly recognized in both Pennsylvania and Texas law. Ashley v. Ashley, 482 Pa. 228, 393...