Huntley v. Tyrex Ore & Minerals Co.
| Docket Number | 1:20-cv-03235-JRS-MJD |
| Decision Date | 06 June 2023 |
| Parties | JAMES E. HUNTLEY, Plaintiff, v. TYREX ORE & MINERALS COMPANY Clerk's Entry of Default entered on 08/06/2021, MAURICE HOO Clerk's Entry of Default entered on 08/06/2021, Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
This is a breach of contract and unpaid wages case. Plaintiff, James Huntley, brought this action against his employer, Tyrex Ore & Minerals Company, and its CEO, Maurice Hoo. Plaintiff had entered into an employment contract with Defendants ("the Employment Agreement") to serve as the Chief Operating Officer of Tyrex, but he was never compensated for any of his work. (See ECF No. 16-1.) Against Tyrex alone, Plaintiff asserted two claims: (1) a breach of contract claim and (2) a failure to pay wages claim under the Indiana Wage Payment Statute, Ind. Code § 22-2-5-1 et seq. (ECF No. 1 at 6.) Against both Tyrex and Hoo, Plaintiff alleged that Defendants were jointly and severally liable for failure to pay a minimum wage under the Fair Labor Standards Act ("FLSA"). (Id. at 7.)
Defendants never appeared in this case, and following proper procedural steps taken by Plaintiff, the Court awarded him a default judgment. (ECF No. 19.) In the Order for Default Judgment, the Court awarded Plaintiff $237,500 against Tyrex for breach of contract. (Id. at 4.) The Court awarded Plaintiff an additional $375,000 against Tyrex in the form of liquidated damages under the Indiana Wage Payment Statute. (Id. at 5-6.) Finally the Court set an evidentiary hearing for November 22, 2022, to determine the value of other damages that were not readily calculable (namely, the benefits designated in the contract including a life insurance policy, profit-sharing benefits, and stock options). (Id. at 6.)
At the evidentiary hearing, the Court raised a choice of law issue as to the liquidated damages award under the Indiana Wage Payment Statute. Specifically, the Court noted that the choice of law provision in the contract between Plaintiff and Defendants stated that the agreement "shall be governed by the laws of the State of Florida." (ECF No. 16-1 at 5.) Accordingly, the Court asked Plaintiff to show cause as to why the $375,000 award originally given under the Indiana Wage Payment statute was warranted. Further, Plaintiff was ordered to specifically show the value of the life insurance policy and the profit shares that he claims he is owed because the evidence provided at the hearing was insufficient. On March 24, 2023, Plaintiff filed a supplemental brief addressing the Court's concerns.
In his brief, Plaintiff concedes that he no longer seeks profit-sharing or life insurance damages. (ECF No. 25 at 2.) Instead, Plaintiff asks the Court for the following: (1) the liquidated damages award under the Indiana Wage Payment Statute; (2) an award compensating Plaintiff for his vacation time (PTO) under the Employment Agreement and the Indiana Wage Payment Statute; and (3) an order of specific performance as to the Tyrex stock options. (Id.) The Court addresses each request in turn.
For organizational purposes, the Court first restates the breach of contract damages awarded to Plaintiff for unpaid salary.[1]
"A term employment contract is enforceable, and the measure of damages for breach, generally, is the contract price for the unexpired term less what the employee has earned, or by reasonable diligence in mitigation of damages[2] could have earned in other employment since the discharge." Pepsi-Cola Gen. Bottlers, Inc. v. Woods, 440 N.E.2d 696, 699 (Ind.Ct.App. 1982). An employee is constructively discharged from his employment "when an employer purposefully creates working conditions, which are so intolerable that an employee has no other option but to resign." Cripe, Inc. v. Clark, 834 N.E.2d 731, 735 (Ind.Ct.App. 2005); see also Fischer v. Heymann, 12 N.E.3d 867, 872 (Ind. 2014) ().
In this case, while Plaintiff was never expressly terminated from his employment, Plaintiff was constructively discharged from his employment when he finally stopped working for Tyrex on December 31, 2020, following six months of working without any compensation (despite Hoo's promises to the contrary). (See ECF No. 16-1 at 12.) Plaintiff's term Employment Agreement shows that he is owed the following salaries: (1) $40,000 from 6/25/2020 to 12/25/2020, (2) $60,000 from 12/25/2020 to 6/25/2021, (3) $150,000 from 6/25/2021 to 6/25/2022, and (4) $157,500 from 6/25/2022 to 6/25/2023, for a combined total of $407,500. (Id. at 4.) Plaintiff also submitted evidence of email correspondence between himself and Defendants that shows the parties agreed on a $50,000 bonus for Plaintiff. (Id. at 8.)
In total then, Plaintiff is entitled to $457,500 in breach of contract damages from Tyrex for unpaid salary.[3]
When the Court first granted default judgment in this case, it also awarded $375,000 in liquidated damages under the Indiana Wage Payment Statute. (ECF No. 19 at 5-6; see also Ind. Code 22-2-5-2.) However, because the Court noted the existence of a choice of law provision in the Employment Agreement, (see ECF No. 16-1 at 5 ()), it asked Plaintiff to show cause why he should still be entitled to the liquidated damages he seeks under Indiana law; Plaintiff has now done so. (See ECF No. 25 at 5-6.)
Choice of law is a waivable issue. McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 685 (7th Cir. 2014) ("The choice of law issue may be waived, however, if a party fails to assert it."). "When no party raises the choice of law issue, the federal court may simply apply the forum state's substantive law." Id. (citation omitted); see also Orgone Capital III, LLC v. Daubenspeck, 912 F.3d 1039, 1044 (7th Cir. 2019) ( that choice of law provisions in contracts do not "automatically foreclose the application of a forum state's laws" because "choice of law issues may be waived or forfeited by declining to assert them in litigation").
Here, by virtue of not appearing in this case at all despite proper service, Defendants have forfeited any arguments as to choice of law, and the Court will apply the law of the forum state: Indiana. However, upon further review of the Indiana Wage Payment Statute, the Court's must adjust the $375,000 liquidated damages award initially given. (See ECF No. 19 at 5-6.) The Indiana Supreme Court has stated that "[t]he purpose of the [Indiana Wage Payment Statute] is to prevent employers from stealing their employees' wages and profiting from their labor." City of Lawrence Utils. Serv. Bd. v. Curry, 68 N.E.3d 581, 587 (Ind. 2017) (emphasis added). Thus, an employee is only entitled to the liquidated damages associated with the unpaid wages for which he actually worked. See id. ( ); see also City of Clinton v. Goldner, 885 N.E.2d 67, 76 (Ind.Ct.App. 2008) (); New Frontiers, Inc. v. Goss, 580 N.E.2d 310, 312 (Ind.Ct.App. 1991) ("[Statutory penalty under Ind. Code 22-2-5-2] applies only to wages which have already been earned and are due and owing at the time of discharge."). The liquidated damages portion of Plaintiff's claim thus must be based on the unpaid wages for his actual labor and not simply for all of his damages associated with his breach of contract claim.
Plaintiff worked for Tyrex for a total of six months from June 2020 through December 2020, a period where his salary was set at $80,000 per year. (ECF No. 161 at 1-2.) Plaintiff never received any compensation for this work from Tyrex; the total "unpaid wage" that Plaintiff is entitled to under the Indiana Wage Payment Statute is thus $40,000. Because Plaintiff is already awarded this $40,000 as a portion of his breach of contract damages, he may not double recover here. However, he is still entitled to the liquidated damages award provided under the Wage Payment Statute because of Defendants' bad faith. Namely, Plaintiff is entitled to be paid "an amount equal to two (2) times the amount of wages due the employee." Ind. Code § 22-2-5-2. In sum, rather than the $375,000 in liquidated damages originally awarded by the Court, Plaintiff is entitled to $80,000 (two times the unpaid wage amount of $40,000 that is representative of Plaintiff's actual labor).
Plaintiff also asks the Court to supplement his damages award for the vacation time he was entitled to under the Employment Agreement. Specifically, Plaintiff first seeks the value of the nine weeks of vacation he was promised over the course of three years, valued at $21,923.10. (ECF No. 25 at 7.) Additionally, he seeks liquidated damages under the Indiana Wage Payment Statute in the sum of $43,846.20 (double the value of the vacation time). The Court addresses these requests in turn.
As discussed above, the measure of damages for breach of a definite term employment contract is the contract price for the unexpired term. Woods, 440 N.E.2d at 699. Additionally, while employers are not required to compensate employees for unused vacation time, if there is no provision in the...
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