Kroger v. Legalbill.Com

• Decision Date: 06 July 2006
• Docket Number: Civil Action No. 04-2189(ESH).
• Citation: 436 F.Supp.2d 97
• Parties: Kurt B. KROGER, Plaintiff, v. LEGALBILL.COM LLC, Defendant.
• Court: U.S. District Court — District of Columbia

436 F.Supp.2d 97

Kurt B. KROGER, Plaintiff, v. LEGALBILL.COM LLC, Defendant.

Civil Action No. 04-2189(ESH).

United States District Court, District of Columbia.

July 6, 2006.

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Kurt B. Kroger, San Francisco, CA, Pro se.

Timothy Leonard Keegan, Burzio & McLaughlin, Douglas Kevin Spaulding, Melissa Jane Keppel, Reed Smith, LLP, Washington, DC, Paul H. Duvall, King & Ballow, La Jolla, CA, for Defendant.

MEMORANDUM OPINION AND ORDER

HUVELLE, District Judge.

In this action brought pursuant to 28 U.S.C. § 1332, plaintiff Kurt Kroger ("Kroger"), who is proceeding pro se, has filed suit against his former employer, Legalbill.com, LLC ("Legalbill" or "the Company") for breach of contract, fraud, and negligent misrepresentation. Presently before the Court is defendant's motion for summary judgment.

BACKGROUND

Legalbill.com is a Tennessee company specializing in the auditing and analysis of legal bills submitted to corporate clients by their outside counsel. (Def.'s Stmt. of Undisputed Facts ("Def.Stmt.") ¶ 1.) Stephen French is the managing partner, and Jeff McCandless is the Chief Technology Officer. (Id. ¶¶ 3-4.) Both are owners of the Company. (Id.)

Plaintiff is an American lawyer who has practiced in the District of Columbia and California. Plaintiff has also worked as a salesman for internet start-up companies. (Id. ¶¶ 8-9.) He moved to Paris in late 2001 when his wife was offered a one-year position there. (Pl.'s Opp. to Def.'s Mot. ("Pl.'s Opp.") at 3.)

In early 2002, while Legalbill was contemplating expanding its operations to Europe, plaintiff sent French a letter of introduction and a copy of his resume. (Def.Stmt.¶ 5.) In February 2002, plaintiff met with French and McCandless in London, England to discuss Legalbill's general operations, and in June he met again with French, this time in Paris, to discuss a potential position with Legalbill. (Id. ¶¶ 11-13.) Thereafter, plaintiff flew to Nashville, Tennessee in September to continue discussions at Legalbill's headquarters. (Id. ¶ 14.) Legalbill made plaintiff an offer of employment, and the parties agreed to reduce the terms of employment to writing. (Id. ¶¶ 15-16.)

The parties subsequently negotiated the terms of plaintiffs employment and exchanged drafts of the agreement. (Def.Stmt.¶ 17.) Plaintiff and Legalbill disagreed over whether an "at-will" provision should be included. (Id. ¶¶ 18-19.) Ultimately, Legalbill insisted that the contract contain an "at-will" clause, and plaintiff signed a final version of the contract. The agreement was dated January 9, 2003. (Id. ¶ 18.)

Pursuant to the contract, plaintiffs official title was Managing Director of the Europe, Middle-East, and Africa ("EMEA") region, and according to the first paragraph, plaintiff's employment was to be "at will." (Contract at 1.) Plaintiff was to be responsible for sales of Legalbill's products and services in the EMEA region. (Id.)

Other relevant terms of the contract provided that Legalbill would charter a limited liability company in Switzerland ("Swiss LLC") through which plaintiff was to offer Legalbill's services. (Contract at 1.) No deadline or time frame was set forth in the contract.

Plaintiff was to be provided a base pay: $3000 per month during the period of October through December of 2002, $4000 per month during the period of January through March of 2003, $5000 per month during the period of April through June of 2003, $6000 per month during the period of July through September of 2003, and $7000 per month during the period of October through December 2003. (Contract at 1.) This salary would be paid monthly in accordance with Legalbill's normal payroll practices. (Id.) In addition to plaintiff's salary, starting in January 2003, plaintiff would be entitled to receive a commission of 5% on revenues collected from the Swiss LLC and from Legalbill's EMEA sales. (Id. at 2.) This right to receive commissions would cease after plaintiff became entitled to receive an equity ownership in a yet to be formed company (Swiss LLC), and plaintiff's equity distributions exceeded his commission. (Id. at 3.)

Plaintiff was to become eligible to receive an equitable interest in the Swiss LLC, beginning January 1, 2004. (Contract at 3.) The equitable interest would start at 2% in 2004 and increase on January 1 of each subsequent year until 2007. Eligibility for this ownership interest required that plaintiff be employed with Legalbill as of January 1, 2004 and through each relevant year thereafter. (Id.) Plaintiff could not, however, be "terminated without cause so as to deny [him] forthcoming equity ownership interests." (Id.) "Termination for Cause" was defined to include termination of employment "for (1) failure or refusal without proper cause, to substantially perform [] duties as an employee of [Legalbill] or for material breach of this agreement and the covenants of good faith and fair dealing between the Company and employee . . . ." (Id.) Legalbill promised to buy out plaintiff's ownership in the Swiss LLC, should plaintiff be terminated for "any reason whatsoever." (Id.)

The contract required Legalbill and its executives to act "in good faith and a fair dealing manner, including devoting their best efforts and energy to employee's success and the success of the business and affairs of the Swiss LLC and [Legalbill]." (Contract at 3.) Legalbill was also required to "supply all necessary technology and apply for and obtain any and all insurance, permits, licenses and authorizations necessary for employee's and the Swiss LLC's operation." (Id. at 3.) Plaintiff was to be reimbursed by Legalbill for "any reasonable direct out-of-pocket ordinary and necessary business expenses incurred in the performance of [plaintiff s] services" for Legalbill. (Id.) Legalbill would also reimburse plaintiff's monthly premium payments for medical or dental insurance coverage. (Id.) In addition, Legalbill would provide tax-equalization to assure plaintiff's effective tax rate equaled the rate in the United States. (Id.)

An integration clause stated that the contract constituted the "entire agreement" between the parties, and "all prior agreements or understandings concerning [plaintiff s] employment with the Swiss LLC or [Legalbill were] hereby cancelled and superseded by this [contract]." (Contract at 5.) This clause also stated that the agreement could not be changed orally, but "only by an amendment in writing signed by [plaintiff] and [Legalbill]." (Id.)

Finally, the contract provided that it was to "be governed and interpreted in accordance with the laws of the United States." (Contract at 6.)

Throughout early 2003, plaintiff continued to work in Paris. Several emails were exchanged wherein plaintiff asked defendant to make changes to the Legalbill website and to provide marketing materials for distribution to prospective clients. At some point, plaintiff and Legalbill representatives met with London-based attorney Wendy Paige to discuss whether the Swiss LLC was the best entity through which to conduct Legalbill's business. (Kroger Dep. at 361:15-20.) Paige suggested that a Legalbill Limited company ("Legalbill Ltd.") based in England would have greater tax benefits for plaintiff and Legalbill than the proposed Swiss LLC. (Kroger Dep. at 361:15-20; 354:3-11; 366:6; 364:2-4.) The parties subsequently formed Legalbill Ltd. (Id. at 363:20-364:1.) Plaintiff maintains that, although he did not oppose the creation of Legalbill Ltd., he requested and received assurances that his contract would be amended. (Kroger Decl. ¶¶ 24, 47.)

According to plaintiff, he made contact with some potential clients and set up meetings in late February and early March so that he and French could pitch Legalbill's services. (Kroger Decl. ¶ 37.) In particular, plaintiff arranged a meeting in Germany for himself, French, and Deutsche Lufthansa AG ("Lufthansa"), at which time Lufthansa agreed to submit legal invoices to Legalbill for a free trial period. (See id. 11 51.) A later meeting was scheduled in Washington D.C. with Lufthansa personnel and Lufthansa's United States outside counsel, Wilmer, Cutler, & Pickering ("WPC"). At some point, Kroger signed a service agreement, allowing Lufthansa to make payments to Legalbill U.S.A. (Id. ¶ 46; see also Von Ruckteschell Decl. ¶ 7.)

After the Washington D.C. meeting with WPC, plaintiff had dinner with French. Plaintiff alleges that he sought and received assurances that EMEA operations were proceeding as planned. (Kroger Decl. ¶ 55.) Kroger contends that he explained to French that he and his wife had started the process of selling their house in Seattle and would not finalize a sale if there was any chance that his employment with Legalbill might be discontinued. (Id.) Plaintiff also met with French in Amsterdam in September 2003. At this meeting, plaintiff allegedly had a similar discussion with French and again received the same assurances. (Id.) At some point, Kroger sold his house in Seattle. (Id.)

Plaintiff continued his marketing efforts for Legalbill in Europe through late 2003 when French informed plaintiff that defendants were reconsidering whether to continue to have staff in Europe. According to plaintiff, he was told on December 19, 2003 that defendant was going to terminate him because it had decided not to incur the expense of having an employee in Europe. (Kroger Decl. ¶ 41.) Defendant also sent plaintiff a written termination agreement dated December 31, 2003. (Def.Stmt.¶ 42.) Plaintiff claims he received the document on January 2, 2004. (Kroger Decl. ¶ 41.) He also alleges that when he complained about being terminated, French said that defendant wanted to spend its resources in the United States, not in the EMEA region, and that since plaintiff was an "at will" employee, it was defendant's prerogative to shift its focus. (Id.)

The termination notice stated: plaintiff's employment was to end...