Ellis v. Kaye-Kibbey
| Citation | 581 F.Supp.2d 861 |
| Decision Date | 10 October 2008 |
| Docket Number | No. 1:07-cv-910.,1:07-cv-910. |
| Parties | Rodney D. ELLIS, Plaintiff, v. Marilyn A. KAYE-KIBBEY, Defendant. |
| Court | United States District Courts. 6th Circuit. United States District Court (Western District Michigan) |
Karen B. Jewell, Lawrence Jude Fossi, Fossi & Jewell, LLP, Houston, TX, Sean P. Fitzgerald, McShane & Bowie, PLC, Grand Rapids, MI, for Plaintiff.
Derek Sebastian Witte, Robert William O'Brien, Sara Grey Lachman, Miller Johnson PLC, Grand Rapids, MI, for Defendant.
Granting in Part and Denying in Part the Defendant's Motion for Summary Judgment:
Permitting Plaintiff to Proceed as to Defendant's October 2003—April 13, 2004 Communications; Permitting Plaintiff to Proceed as to Defendant's April 7, 2004 Affidavit
Dismissing Claim as to Documents Produced by Defendant in Response to Enslen 2004 Subpoena; Dismissing Claim as to Testimony by Defendant at April 2007 NASD Hearing;
Plaintiff Rodney D. Ellis ("Ellis") claims that defendant Marilyn A. Kaye-Kibbey ("Kaye") violated a written release agreement ("the agreement") by making disparaging statements about Ellis and his corporation. It is undisputed that Kaye did the following after the execution of that agreement: filed an affidavit and testified on behalf of Ellis's adversary in a National Association of Securities Dealers ("NASD") arbitration proceeding. Kaye moves to dismiss the second amended complaint on two independent grounds. First, Kaye contends that the original non-disparagement agreement was no longer in effect when she made any of her arguably disparaging communications about Ellis. Kaye alleges that later on the same day that the parties executed the agreement, she exercised her explicit contractual right to revoke that agreement. She further alleges that the next day, the parties signed a new release agreement (a one-page handwritten document) that expressly revoked and superseded all previous release agreements. Second, Kaye contends that even if the original release agreement was not revoked, as a matter of law she "cannot be liable for breach of a non-disparagement agreement relating to statements she made as a third-party witness in another lawsuit."
For the reasons that follow, the court will grant in part and deny in part the defendant's motion to dismiss the second amended complaint or for summary judgment.
First, Ellis has shown a genuine dispute as to two material facts: (1) whether Kaye actually gave her purported August 27, 2003 revocation letter to Ellis or his attorney, see Kaye Aff. Ex. A, or whether that letter was a "back-dated fabrication" as Ellis alleges; and (2) whether the parties actually executed the August 28, 2003 agreement that purported to supersede the original release agreement they had executed the previous day, or whether that document was a fake containing Ellis's forged signature.
On the current record, a reasonable jury could find that Kaye never exercised her contractual right to revoke the August 27 agreement—i.e., that she did not handdeliver the revocation letter to Ellis or fax it to Ellis's attorney—and that the parties never entered into the purported August 28 superseding agreement. If the jury made those two findings, it could then find that the original agreement's non-disparagement provision was still in effect when Kaye communicated orally to Lincoln pre-litigation, produced documents to Lincoln pursuant to a federal-court subpoena during litigation, signed an affidavit critical of Ellis that Lincoln filed in federal court, and testified adversely to Ellis before an NASD arbitration panel. A reasonable jury could certainly find that Kaye's communications were "negative", "critical", or "disparag[ing]" remarks of the type prohibited by the August 27 release.
Second, as a matter of law, the court holds that if Kaye was subject to, and violated, the non-disparagement provision in the August 27, 2003 agreement, the Michigan common law accords absolute quasi-judicial immunity to some—but not all—of her communications.
The court breaks Kaye's arguably-disparaging communications into four categories:
1. Not Privileged. Communications that Kaye made before Lincoln and Ellis were in litigation or arbitration, from October 2003 into April 2004. Such communications could not have been made to comply with any subpoena, as neither federal nor state court had yet issued any subpoenas, so quasi-judicial immunity does not protect Kaye.
2. Covered by Privilege. Documents that Kaye produced that were covered by U.S. District Judge Enslen's April 2004 subpoena in Lincoln's federal lawsuit against Ellis. The court holds that, as a matter of law, this second set of communications may not lead to the imposition of breach-of-contract liability on Kaye, because of Michigan's paramount and well-established public policy favoring obedience to valid subpoenas and freedom to participate with absolute immunity in judicial proceedings without fear of retaliation or adverse consequence.
3. Not Privileged. The affidavit that Kaye signed on April 7, 2004 at Lincoln's behest. Such communications could not have been made to comply with any subpoena or order, as neither federal nor state court had yet issued any subpoenas or orders, so quasi-judicial immunity does not protect Kaye.
4. Privileged. Kaye's live testimony at the April 2007 hearing before the panel in the Lincoln-Ellis NASD arbitration proceeding, which she was commanded to give by a Michigan state court's November 2006 subpoena ad testificandum. Ellis contends that the subpoena itself was not directly enforceable in Florida, where Kaye then resided, but the parties agree that Kaye could have been compelled to give the same testimony by deposition in Florida.
Beginning in 1975, Kaye worked for Ellis at Ellis's insurance agency. Kaye's Motion to Dismiss the Second Amended Complaint ("MTD"), Ex. 1, Affidavit of Marilyn A. Kaye-Kibbey dated December 5, 2007 ("Kaye Aff.") ¶ 2. For most of that time, Ellis's company was an agent of Lincoln. See MTD at 1-2 (citing no source). In 2001, Ellis, while still a Lincoln agent, formed a brokerage/insurance agency called Summit Managed Investments, LLC ("Summit"), asked Kaye to manage the company, gave Kaye the funds needed to operate the company, and made Kaye the nominal owner even though Ellis allegedly "retained control" of Summit. See Kaye Aff. ¶¶ 3-4.
By August 2003, Kaye had come to believe that Ellis, while still working for his company and serving as a Lincoln agent, was using Summit to transfer business from Lincoln to Raymond James Financial Services ("Raymond James"), which Kaye believed was a violation of his duties to Lincoln. Kaye's MTD at 2 (citing no source). Kaye further alleges that Ellis asked her several times to act in an inappropriate manner, and that their relationship therefore deteriorated. Id. According to Kaye, the parties "went back and forth on the terms of their separation, issuing and revoking multiple agreements." Kaye's MTD at 2 (citing Kaye Aff. ¶ 6). Under Kaye's version of events,
On August 27, 2003, Mr. Ellis and I executed the Release Agreement which is attached to Mr. Ellis's complaint.
On August 27, 2003, after I executed the Release Agreement, I hand delivered an original and a copy of a letter to Mr. Ellis revoking the Release Agreement I had executed earlier. * * * I also faxed a copy of the letter to Mr. Ellis's attorney1 ....
On August 28, 3003, and because the Release Agreement had been revoked, Mr. Ellis and I executed another agreement concerning the separation of our business interests. * * *
The release agreement dated August 27, 2003, provides, in pertinent part,
Comments. Neither Marilyn [defendant Kaye] nor Summit will initiate or join in negative or critical comments, discussions or other discussions about, or otherwise disparage Rod or Lucasse [Ellis, LLC], their affiliates, or their services, employees, clients, agents, attorneys, accountants, banks, or any other person or entity associated with Rod [plaintiff Ellis] or Lucasse. Neither Rod nor Lucasse will initiate or join in negative or critical comments, discussions or other communications about, or otherwise disparage Marilyn or Summit, their affiliates, or their services, employees, clients, agents, attorneys, accountants, banks, or any other person or entity associated with Marilyn or Summit.
* * *
Marilyn reserves the right to revoke this Agreement for a period of (7) days following the date of execution. This agreement shall not become effective or enforceable until this revocation period has expired.
Declaration of Rodney Ellis dated ("Ellis Dec"), Ex. 1. Kaye alleges that she exercised her contractual right to revoke the August 27 release agreement before it took effect:
It never became enforceable, because, later that day, and well within the sevenday revocation period, Kibbey revoked the agreement in a handwritten note, which she signed and sent to both Ellis and his counsel, Timothy Hillegonds at Warner, Norcross and Judd LLP. * * * Thus, there is no genuine issue of material fact as to whether the non-disparagement agreement upon which Ellis's claims are based is enforceable; it is not.
The purported superseding release agreement, dated August 28, 2003, consists of one handwritten page bearing what appears to be the signatures of Ellis and Kaye. (There are no typewritten names below the signatures to confirm the signatories' identity.) See Kaye Aff., Ex. B. The August 28, 2003 purported release agreement states, in its entirety:
Marilyn [Kaye-Kibbey] & Rod [Ellis] agree that all previous signed agreements are void & this is the final agreement to settle Marilyn leaving Raymond James & Summit Managed Investments.
Rod wants all RJ/Summit files. He has all on scanned disk, so Marilyn will give him personal files for him & L-E [?]. RJ may want the files.
Marilyn keeps the approx 88k-103k ...
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