Kenyon v. Union Home Mortg. Corp.
| Decision Date | 21 January 2022 |
| Docket Number | Case No. 1:21-cv-01426 |
| Citation | 581 F.Supp.3d 951 |
| Parties | Michael KENYON, Plaintiff, v. UNION HOME MORTGAGE CORP., Defendant. |
| Court | U.S. District Court — Northern District of Ohio |
Christopher P. Gordon, Bricker & Eckler, Christopher T. Page, Epstein Becker & Green, David C. Roper, Jill K. Bigler, David K. Stein, Taft Stettinius & Hollister, Columbus, OH, for Plaintiff.
Jason T. Clagg, Barnes & Thornburg, Fort Wayne, IN, Paul N. Garinger, Barnes & Thornburg, Columbus, OH, for Defendant.
Plaintiff Michael Kenyon is a former employee of Union Home Mortgage Corporation, which seeks a judgment on the pleadings on five of the six counts Plaintiff brings. For the reasons that follow, the Court GRANTS IN PART and DENIES IN PART Defendant's motion for partial judgment on the pleadings.
On Defendant's motion for judgment on the pleadings, the Court takes the following allegations in the complaint as true and construes them in favor of Plaintiff as the non-moving party.
On July 29, 2019, Mr. Kenyon, a mortgage loan originator, accepted employment with Union Home Mortgage as a branch manager in Leesburg, Virginia. (ECF No. 1, ¶¶ 1, 7, 9, PageID #1–2.) He signed an offer letter, which stated that Union Home Mortgage would require Mr. Kenyon to sign an employment agreement with a covenant not to compete for one year. (Id. , ¶¶ 7–9, PageID #2.) In addition, regarding the covenant not to compete, the offer letter stated, "[u]pon execution of a lease in Leesburg, VA a six-month extension beyond the lease termination will be required." (Id. , ¶ 8, PageID #2.) On the same day, Mr. Kenyon signed an employment agreement with a one-year non-compete provision. (Id. , ¶¶ 10–14, PageID #2–3.)
On August 28, 2019, Mr. Kenyon signed an addendum to the employment agreement. The addendum extended the covenant not to compete to March 30, 2023, the date that is "six months beyond the expiration of the Leesburg, VA office lease expiration of 9/30/22." (Id. , ¶¶ 15–16, PageID #3.) At the time Union Home Mortgage presented the addendum to Mr. Kenyon for execution, it represented that the Leesburg office lease had been finalized. (Id. , ¶ 21, PageID #4.) In fact, Union Home Mortgage did not execute the Leesburg office lease until September 9, 2019. (Id. , ¶ 18, PageID #3.)
On August 27, 2020, Mr. Kenyon resigned from his employment with Union Home Mortgage. (Id. , ¶ 23, PageID #4.) Shortly later, Union Home Mortgage sought (1) a declaratory judgment that the covenant not to compete was enforceable and (2) a permanent injunction enforcing its terms. (Id. , ¶ 25, PageID #4.) The parties executed a settlement agreement, in which Mr. Kenyon agreed to return to Union Home Mortgage's employment. (Id. , ¶ 26, PageID #5.) The settlement agreement provided that all the terms of the employment agreement, including the covenant not to compete, remained in full force and effect. (Id. , ¶ 27, PageID #5.)
On returning to Union Home, Plaintiff alleges that he experienced retaliation and hostile working conditions. (Id. , ¶¶ 28, 36, PageID #5–6.) Specifically, Plaintiff alleges that Union Home Mortgage failed to repost Mr. Kenyon's personal biography to its website for at least twenty-seven days (id. , ¶ 29, PageID #5), failed to reactive Mr. Kenyon's office phone for thirty days (id. , ¶ 30, PageID #5), and allowed the parking lease at the Leesburg office to expire (id. , ¶ 35, PageID #6). In addition, Union Home Mortgage reassigned or redirected to other mortgage loan originators Mr. Kenyon's customers and business contacts, most of whom Mr. Kenyon had obtained in his career before his employment with Union Home Mortgage. (Id. , ¶¶ 31 & 53, PageID #5 & 9.)
Despite his complaints about his business prospects being improperly reassigned, including a written complaint to Union Home Mortgage's human resources department, Mr. Kenyon's concerns were never addressed or resolved. (Id. , ¶ 32–33, PageID #6.) Plaintiff alleges Union Home Mortgage continued to interfere with Mr. Kenyon's customer relationships as late as July 2021. (Id. , ¶ 34, PageID #6.) As a result of these actions, Plaintiff alleges he was constructively discharged from its employment. (Id. , ¶ 38, PageID #7.)
Based on these allegations, Plaintiff seeks a declaratory judgment that the covenant not to compete in the employment agreement is unenforceable. (Id. , ¶¶ 41–51, PageID #7–9.) Also, Plaintiff brings claims for tortious interference with business relationships, breach of contract, retaliation in violation of public policy, constructive discharge, and fraudulent inducement. (Id. , ¶ 52–97, PageID #9–14.) Defendant answered and counterclaimed, seeking preliminary and permanent injunctive relief to enforce the covenant not to compete. (ECF No. 19, ¶¶ 37–50, PageID #247–48.)
Defendant moves for judgment on the pleadings on Plaintiff's claim of tortious interference with business relationships (Count II), breach of contract (Count III), retaliation in violation of public policy (Count IV), constructive discharge (Count V), and fraudulent inducement (Count VI). (ECF No. 14.) Contending that Plaintiff filed his complaint for improper purposes, it also argues for sanctions under Rule 11. (ECF No. 14, PageID #146.) Plaintiff concedes that he cannot sustain the claims contained in Counts III through VI and opposes the imposition of sanctions. (ECF No. 21, PageID #277 & #279.) Accordingly, the parties dispute only the claim for tortious inference with business relationships (Count II). (ECF No. 21, PageID #273–77.)
"After the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). A motion for judgment on the pleadings essentially constitutes a delayed motion under Rule 12(b)(6) and is evaluated under the same standard. See, e.g. , Holland v. FCA US LLC , 656 F. App'x 232, 236 (6th Cir. 2016). In other words, judgment on the pleadings is appropriate where, construing the material allegations of the pleadings and all reasonable inferences in the light most favorable to the non-moving party, the Court concludes that the moving party is entitled to judgment as a matter of law. Anders v. Cuevas , 984 F.3d 1166, 1174 (6th Cir. 2021). In construing the pleadings, the Court accepts the factual allegations of the non-movant as true, but not unwarranted inferences or legal conclusions. Holland , 656 F. App'x at 236–37 (citing Gregory v. Shelby Cnty. , 220 F.3d 433, 446 (6th Cir. 2000) ).
On a motion under Rule 12(c), courts "must follow the Supreme Court's changes to the pleading standards in Ashcroft v. Iqbal , 556 U.S. 662 [129 S.Ct. 1937, 173 L.Ed.2d 868] (2009), and Bell Atl. Corp. v. Twombly , 550 U.S. 544 [127 S.Ct. 1955, 167 L.Ed.2d 929] (2007)." Bates v. Green Farms Condo. Assoc. , 958 F.3d 470, 480 (6th Cir. 2020) (citing Engler v. Arnold , 862 F.3d 571, 575 (6th Cir. 2017) ). Only "well-pleaded factual allegations" that "plausibly give rise to an entitlement of relief" and "allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged" will survive. Id. (quotation and citation omitted). Conversely, "[m]ere labels and conclusions are not enough[.]" Engler , 862 F.3d at 575. Nor are facts that are "merely consistent with" liability. Bates , 958 F.3d at 480 (quotation omitted).
Under Ohio law, which governs the parties’ dispute, the tort of interference with a business relationship occurs where "a person, without a privilege to do so, induces or otherwise purposely causes a third person not to enter into or continue a business relationship with another."
A & B–Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Constr. Trades Council , 73 Ohio St.3d 1, 14, 1995-Ohio-66, 651 N.E.2d 1283 (1995). "The elements of tortious interference with a business relationship are (1) a business relationship, (2) the wrongdoer's knowledge thereof, (3) an intentional interference causing a breach or termination of the relationship, and (4) damages resulting therefrom." Geo-Pro Serv., Inc. v. Solar Testing Labs., Inc. , 145 Ohio App. 3d 514, 525, 763 N.E.2d 664 (Ohio Ct. App. 2001) (citation omitted). The intentional interference must be improper. Dryden v. Cincinnati Bell Tel. Co. , 135 Ohio App. 3d 394, 400, 734 N.E.2d 409 (Ohio Ct. App. 1999).
Plaintiff brings a claim for tortious interference with his business relationships with customers, potential customers, and business referral sources. (ECF No. 1, ¶¶ 53 & 55, PageID #9.) Defendant contends that it was a party, or third-party beneficiary, of all of Plaintiff's business relationships and that, as a matter of law, it cannot interfere with its own relationships. (ECF No. 14-1, PageID #135–36.) In the alternative, Defendant maintains that Plaintiff has not plead sufficient facts to make a plausible claim. (ECF No. 14-1, PageID #135.) In reply, Plaintiff argues that the business relationships are Mr. Kenyon's, not Union Home Mortgage's, because they predated Mr. Kenyon's employment with Union Home Mortgage. (ECF No. 21, PageID #274.) Therefore, Defendant cannot claim Mr. Kenyon's prospective clients as its own unless Union Home Mortgage had an independent relationship with those individuals. (Id. )
When applying State law, the Court must "anticipate how the relevant state's highest court would rule in the case and are bound by controlling decisions of that court." Vance v. Amazon.com , 852 F.3d 601, 610 (6th Cir. 2017) (quoting In re Dow Corning Corp. , 419 F.3d 543, 549 (6th Cir. 2005) ). If, as here, "the state supreme court has not yet addressed the issue," this Court must render a prediction "by looking to all the available data." Allstate Ins. Co. v....
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