Matter of Sunshine Jr. Stores, Inc.

• Decision Date: 17 November 1994
• Docket Number: Bankruptcy No. 92-16406-8B1.
• Citation: 178 BR 286
• Parties: In the Matter of SUNSHINE JR. STORES, INC., d/b/a Sunshine Supermarkets, d/b/a Jr. Food Stores, Debtor.
• Court: U.S. Bankruptcy Court — Middle District of Florida

178 B.R. 286 (1994)

In the Matter of SUNSHINE JR. STORES, INC., d/b/a Sunshine Supermarkets, d/b/a Jr. Food Stores, Debtor.

Bankruptcy No. 92-16406-8B1.

United States Bankruptcy Court, M.D. Florida, Tampa Division.

November 17, 1994.

Marsha Rydberg, for debtor Sunshine-Jr. Stores, Inc.

William Knight Zewadski, for Lenard J. Miller.

David Epstein, for McLane Co., Inc.

Charles Tatelbaum, for Creditor's Committee.

Mark Wolfson, for Barnett Bank, Inc.

Robert Glenn, for Prudential Capital, Corp.

Paul Martin, Jr., U.S. Trustee.

ORDER ON MOTION FOR SUMMARY JUDGMENT

THOMAS E. BAYNES, Jr., Bankruptcy Judge.

THIS MATTER came on for consideration upon Motion for Summary Judgment filed by Lenard J. Miller on Motion for Allowance of Administrative Expense, and Motion for Summary Judgment of Debtor on Objection to Administrative Claim of Lenard Miller in the above captioned case. This Court has considered all arguments and evidence consistent with a ruling on a motion for summary judgment. See Celotex v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The Court having considered the Motion, together with the record, finds as follows:

Debtor filed its petition on December 18, 1992. A Motion for Administrative Expense has been filed by the former President and Chief Executive Officer, Lenard J. Miller (Movant). Movant was employed by Debtor pre-petition, and continued in his capacity until June 4, 1993. On June 4, 1993, Movant was discharged from employment with Debtor. Movant was not provided with notice, and his termination letter did not set out reason or cause for termination other than job performance was unsatisfactory. Before this Court is the question of wrongful termination and resulting damages under an assumed employment contract.

Debtor made motion to assume existing employment agreements on December 24, 1992.¹ This Court's February 24, 1993, Order assumed the existing employment agreement with respect to Miller, and excepted severance and portions of the agreements not common to all employees.² This Court later held:

"to the extent, any provisions of the Employment Agreements of the Officers were not assumed by the February 24, 1994, including but not limited to, the severance provisions of said Employment Agreements, such provisions shall and hereby are deemed REJECTED. . . . ³

Of a matter of course, Debtor contends the employment agreement was never expressly accepted and therefore deemed rejected. Movant contends Debtor breached the Employment Agreement as approved by Order of this Court, and Movant is entitled to damages.

EMPLOYEE CONTRACT

The employment contract with Movant, with exception to severance pay and all other benefits not provided to other employees, was approved by this Court's Order of February 24, 1994. Under the employment agreement, Movant was to be employed for a period of three years commencing July 1, 1992, and complete the employment agreement period June 30, 1995. Where Employer/Debtor terminated employment, Movant was entitled to compensation for the remaining terms of the agreement. However, Debtor was permitted under the agreement to terminate the agreement upon:

(i) any material breach of any of the terms of this contract by Employee which is not cured to Employer\'s reasonable satisfaction within 30 days after Employer\'s written warning to Employee, or (ii) conduct by Employee that constitutes good cause for termination of employment "for cause" under applicable law. In the event of termination for breach of the agreement or for cause, Employer shall immediately pay to Employee an amount equal to the minimum compensation as set forth in Section IV of this agreement for 60 days plus all accrued vacation time as set forth in Section IV(c), and any bonus and other benefits earned as of the date of notice of termination, which amount(s) shall be considered full compensation to the date of termination. . . .

Section IV, of the Employment Agreement, sets out Movant's compensation package. The assumed contract provides for basic salary requirements, vacation and other employee benefits that are customarily provided Debtor's employees. Therefore, there is no question Movant is entitled to accrued vacation and wages due to him upon his termination of June 4, 1992. Any other damages flowing from the termination of Movant's employment are dependant upon an allegation of wrongful termination.

MOVANT'S MOTION FOR SUMMARY JUDGMENT

Under the Employment Agreement, Debtor was entitled to terminate the Employment Agreement upon 30 days written notice with an opportunity to correct any action deemed unsatisfactory by the Board of Directors, or "for cause." First is the issue of Movant's termination for cause. Movant contends he was fired without cause. To support this contention, Movant offers the Unemployment Compensation Board's record which states Debtor's response to Movant's complaint for unemployment compensation, and that Movant was terminated without cause.⁴ The period for Debtor to appeal the Unemployment Compensation Board's decision has passed. To this administrative holding, Movant asserts Debtor is collaterally estopped from arguing Movant was discharged without cause.

The doctrine of collateral estoppel requires a judicial proceeding be given full faith and credit. 28 U.S.C. § 1738; Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985). The Supreme Court in Marrese, requires federal courts, when considering the application of collateral estoppel to state court judgments, to initially determine whether state law would allow the judgment to have a preclusive effect. In the instant case, Movant maintains a quasi-judicial administrative pronouncement requires full faith and credit.

To overcome the threshold inquiry, Florida law must be considered to determine the state's application of collateral estoppel in quasi-judicial administrative pronouncements. Under Florida law, "collateral estoppel has been used to bar relitigation of issues in a civil proceeding after they have once been adjudicated in an administrative proceeding." Florida Dept. of Transportation v. Gary, 513 So.2d 1338, 1339-40 (Fla. 1st DCA 1987); see also Mike Smith Pontiac v. Mercedes-Benz of North America, 32 F.3d 528 (11th Cir.1994); DeBusk v. Smith, 390 So.2d 327 (Fla.1980); United States Fidelity and Guaranty Co. v. Odoms, 444 So.2d 78 (Fla. 5th DCA 1984); Jet Air Freight v. Jet Air Freight Delivery, Inc., 264 So.2d 35 (Fla. 3d DCA), cert. denied, 267 So.2d 833 (Fla. 1972); Carol City Utilities v. Miami Gardens Shopping Plaza, 165 So.2d 199 (Fla. 3d DCA 1964). "The adjudication and award of compensation boards or commissions, as well as the judgments of courts are generally held to be conclusive on the parties as to matters and issues involved within their jurisdiction." Yovan v. Burdines's, 81 So.2d 555, 557 (Fla. 1955); United States Fidelity and Guaranty Co. v. Odoms, 444 So.2d 78, 79-80 (5th DCA 1984); School Board of Seminole County v. Unemployment Appeals Commission, 225 So.2d 556, 557 (5th DCA 1988); Florida v. Short, 513 So.2d 679 (2nd DCA 1987).

Often the Board's determination has a pivotal basis on issues of breach of contract to make such a determination. Vasquez v. GFC Builders Corporation, 431 So.2d 739, 741 (4th DCA Fla.1983); Williams v. Florida Dept. of Commerce, Industrial Relations Commission, 326 So.2d 237, 238-39 (3rd DCA Fla.1976); Fredericks v. Florida Dept. of Commerce, Industrial Relations Commission, 323 So.2d 286, 287 (2nd DCA Fla.1975). Therefore, it appears the Unemployment Compensation Board may make adjudication on employment contract issues which would be susceptible to collateral estoppel. Full faith and credit may be given an administrative proceeding adjudicated before the Florida Unemployment Compensation Board.

This Court may now consider the Unemployment Compensation Board's Determination and whether it has a preclusive effect on litigation of an issue in the instant case. In order to determine whether this Court may apply collateral estoppel in the instant case, the following criteria must be met under Marrese:

1. the issue at stake must be identical to the one involved in the prior litigation;

2. the issue must have been actually litigated in the prior litigation;

3. the determination of the issue in the prior litigation must have been a critical and necessary part of the judgment in the earlier action; and

4. the standard of proof in the prior litigation must have been at least as stringent as the standard of proof in the later litigation.

See Hoskins v. Yanks (In re Yanks), 931 F.2d 42, 43 n. 1 (11th Cir.1991); Halpern v. First Georgia Bank (In re Halpern), 810...