Manning v. Mercatanti

• Decision Date: 24 August 2012
• Docket Number: Civil Action No.: 11–cv–2964.
• Citation: 898 F.Supp.2d 850
• Parties: Eugene J. MANNING, et al., Plaintiffs, v. Louis F. MERCATANTI, Jr., Defendant.
• Court: U.S. District Court — District of Maryland

898 F.Supp.2d 850

Eugene J. MANNING, et al., Plaintiffs,
v.
Louis F. MERCATANTI, Jr., Defendant.

Civil Action No.: 11–cv–2964.

United States District Court,
D. Maryland.

Aug. 24, 2012.

[898 F.Supp.2d 852]

Jerry Lane Hall, Dania Slim, Pillsbury Winthrop Shaw Pittman LLP, Washington, DC, for Plaintiffs.

Richard L. Costella, Miles and Stockbridge PC, Baltimore, MD, James D. Young, Fox Rothschild LLP, Lawrenceville, NJ, for Defendant.

MEMORANDUM OPINION
ELLEN LIPTON HOLLANDER, District Judge.

Eugene J. Manning and J. Frederick Manning (the “Mannings”) brought suit

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against Louis F. Mercatanti, Jr., complaining that Mercatanti failed to pay them sums due pursuant to a guaranty that he executed on April 13, 2005 (the “Guaranty”), as “security for the repayment” of obligations due to plaintiffs under employment agreements that they concurrently executed with Nassau Broadcasting I, LLC and Nassau Broadcasting Partners, LP. See Complaint (ECF 1).¹ Copies of the Guaranty, as well as each employment agreement, are appended to the Complaint as plaintiffs' Exhibits A, B, and D, respectively. Plaintiffs seek to recover $1,472,000 under the Guaranty, plus interest and attorneys' fees. Id.

Mercatanti has moved to dismiss the Complaint, pursuant to Fed.R.Civ.P. 12(b)(6) (“MTD,” ECF 16). The Mannings have filed an opposition (“Opposition to MTD,” ECF 21), as well as their own motion for summary judgment (“MSJ,” ECF 20). The motions have been fully briefed, and no hearing is necessary to resolve them.²See Local Rule 105.6.

Factual Background³

On December 17, 2004, pursuant to an Asset Purchase Agreement, Manning Broadcasting, Inc. agreed to sell and/or assign to Nassau Broadcasting I, LLC and Nassau Broadcasting III, LLC, “the assets and property used in the operation of two radio stations” in Hagerstown, Maryland. See Guaranty at 1. ⁴ Thereafter, on April 13, 2005, the Mannings each entered into identical employment agreements (the “Employment Agreements”) with Nassau Broadcasting I, LLC and its parent, Nassau Broadcasting Partners, L.P. (collectively, “Nassau”).

The Employment Agreements provide for the Mannings' employment for ten years, commencing in 2005, upon the closing for the transfer of the radio stations. Id. ¶ 1. Paragraph 5 of the Employment Agreements, titled “ Termination,” states: “This contract shall terminate at the Termination Date, unless earlier terminated by written agreement of [Nassau] or [the Mannings].”

Under the Employment Agreements, the Mannings are obligated to provide “advisory services” with respect to both radio stations, although they are not “required to devote any minimum number of hours,” nor are they required to be “physically located at any office of [Nassau] or at the [radio s]tations.” Id. ¶ 2. In exchange for these services, the Mannings are to receive two million dollars each, payable over ten years, ending in July 2015. Complaint

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¶ ¶ 7, 9. And, under Paragraph 3 of the Employment Agreements, their compensation is due “regardless of whether [the Mannings have] resigned” or been “fired, with or without cause.”

Initially, plaintiffs were to be paid in sixteen increments of $50,000 every three months, followed by a lump sum installment of $1,080,000, and then twenty-four incremental payments of $5,000 every three months. Id.; see also id. at Attachment 1. However, by amendments to the Employment Agreements on August 27, 2009 (the “Amendments”), Complaint ¶¶ 8, 10, the compensation schedule was modified; beginning on May 15, 2009, the Mannings were to receive monthly payments of $16,000 for the remainder of the ten year term. See plaintiffs' Ex. C, E ¶ 1; see also id. at Attachment A. The Amendments are appended to the Complaint as plaintiffs' Exhibits C and E.

Nassau did not pay the Mannings the $16,000 payments due on October 15, 2011. Complaint ¶ 15. The Employment Agreements state that, if Nassau “fails to render payment of any amount due hereunder when said payment is due and payable,” it “constitute[s] an event of default.” See plaintiffs' Ex. B, D, ¶ 14. And, the Amendments provide that, in the event of default, the balance due under the Employment Agreements “shall immediately and automatically become due and payable in full....” See plaintiffs' Ex. C, E, ¶ 2(b)(v).

Plaintiffs contend that Nassau is in default because it “ha[s] not paid the Mannings the remaining sums due under the Employment Agreements.” Complaint ¶ 18. They assert that, as of October 15, 2011, each plaintiff was owed $736,000 under the Employment Agreements. See plaintiff's Ex. C, E at Attachment A.

As noted, Mercatanti executed the Guaranty on April 13, 2005, “concurrently with the Employment Agreements as security for the repayment of Nassau's obligations under the Employment Agreements.” Complaint ¶¶ 4, 11. The Guaranty identifies Mercatanti, who “holds all of the ownership interests in Nassau,” as Guarantor, and the Mannings as beneficiaries. Id. By its terms, it “guarantees to [the Mannings] the full and prompt payment” of Nassau's obligations under the Employment Agreements. Id.

It is undisputed that “Mercatanti has not paid the Mannings any amounts under the Guaranty.” Id. ¶ 19. As a result, the Mannings allege breach of contract as their sole claim in the Complaint. They assert: “Mercatanti's failure to pay the Mannings in full all sums due under the Guaranty, including the amounts due (as accelerated) under the Employment Agreements and the amounts representing the Mannings' costs and expenses, constitutes a breach of the Guaranty....” Id. ¶ 22. The Mannings each seek $736,000, for a total of $1,472,000, “together with all interest and other charges due under the Employment Agreements through the date of full satisfaction of the judgment, pursuant to the terms of the Guaranty,” including “costs and expenses, including reasonable attorneys' fees and expenses.” Id. at 5.

Additional facts are included in the Discussion.

I. Defendant's Motion To Dismiss A. Standard of Review

Defendant has moved to dismiss the case pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. When deciding a motion to dismiss pursuant to Rule 12(b)(6), a court “ ‘must accept as true all of the factual allegations contained in the complaint,’ ” and must “ ‘draw all reasonable inferences

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from those facts] in favor of the plaintiff’ ” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir.2011) (quoting Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007), and Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir.2009)). Of import here, the court may properly consider documents “attached or incorporated into the complaint,” E.I. du Pont de Nemours & Co., 637 F.3d at 448, as well as documents attached to the motion, “so long as they are integral to the complaint and authentic.” Philips v. Pitt County Memorial Hosp., 572 F.3d 176, 180 (4th Cir.2009). ⁵

A defendant may test the adequacy of a complaint by way of a motion to dismiss under Rule 12(b)(6). Both Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), make clear that, in order to survive a motion to dismiss under Rule 12(b)(6), a complaint must contain facts sufficient to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955;see Iqbal, 556 U.S. at 684, 129 S.Ct. 1937 (“Our decision in Twombly expounded the pleading standard for ‘all civil actions'...”) (citation omitted); see Simmons v. United Mortgage and Loan Inv., 634 F.3d 754, 768 (4th Cir.2011); Andrew v. Clark, 561 F.3d 261, 266 (4th Cir.2009); Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.2008). If the “well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct,” the complaint has not shown that “ ‘the pleader is entitled to relief.’ ” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (citation omitted).

In resolving a Rule 12(b)(6) motion, the court is not required to accept legal conclusions drawn from the facts. See Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986); Monroe v. City of Charlottesville, Va., 579 F.3d 380, 385–86 (4th Cir.2009), cert. denied,––– U.S. ––––, 130 S.Ct. 1740, 176 L.Ed.2d 214 (2010). Moreover, a motion pursuant to Rule 12(b)(6) “does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999) (internal quotation marks omitted).

B. Contentions

In his motion to dismiss, Mercatanti insists that “the guaranteed promises contained in the underlying employment agreements contain options of non-performance on the part of the Plaintiffs, which render the Plaintiffs' obligations illusory and unenforceable.” MTD at 1. Indeed, defendant maintains that plaintiffs “promise[d] nothing.” MTD Memo at 6. Claiming that the Employment Agreements were not supported by consideration, defendant insists that both the Employment Agreements and the Guaranty are “unenforceable.” Id. at 4.

In support of his position that plaintiffs' obligations were illusory Mercatanti maintains that “[t]here are no allegations in the Complaint concerning any services that the Plaintiffs actually provided for Nassau in exchange for compensation.” Id. at 3. He also focuses on what he terms plaintiffs' “right to resign, without cause, the instant [the Employment Agreements] were signed....” Id. at 5. Mercatanti relies on the interplay of three provisions in the Employment Agreements to establish his claim that the contract is illusory, because the Mannings enjoyed the immediate right to resign, without consequence.

[898 F.Supp.2d 856

Paragraph 2 of the Employment Agreements, titled “Employment,” requires the Mannings to “provide...