Meehan v. Amax Oil & Gas, Inc.

• Decision Date: 10 August 1992
• Docket Number: Civ. A. No. 91-B-773.
• Citation: 796 F. Supp. 461
• Parties: William M. MEEHAN, Plaintiff, v. AMAX OIL & GAS, INC., a Delaware Corporation, Ladd Petroleum Corporation, a Delaware Corporation, and Lloyd L. Parks, as President and Chief Executive Officer of Amax and Ladd, and Individually, Defendants.
• Court: U.S. District Court — District of Colorado

796 F. Supp. 461

William M. MEEHAN, Plaintiff, v. AMAX OIL & GAS, INC., a Delaware Corporation, Ladd Petroleum Corporation, a Delaware Corporation, and Lloyd L. Parks, as President and Chief Executive Officer of Amax and Ladd, and Individually, Defendants.

Civ. A. No. 91-B-773.

United States District Court, D. Colorado.

August 10, 1992.

COPYRIGHT MATERIAL OMITTED

Milo N. Gonser, Mara A. Pawlowski, Gonser, Pawlowski & Associates, P.C., Lakewood, Colo., for plaintiff.

Walter V. Siebert, Elizabeth I. Kiovsky, Sherman & Howard, Denver, Colo., for defendants.

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

Defendants move for summary judgment contending that there are no genuine disputes of material fact and they are entitled to judgment as a matter of law. The issues are adequately briefed and oral argument will not materially aid in their resolution. For the reasons set out below, the motion is granted in part and denied in part.

This diversity action arises out of an employment agreement between plaintiff and General Electric Holdings, Inc. (GE). Plaintiff was employed by GE for more than 20 years until approximately 1984 when he became controller of Ladd Petroleum Corporation (Ladd), a wholly owned subsidiary of GE. In 1990, GE announced that it was considering the sale of Ladd and offered plaintiff the opportunity to sign an employment agreement, which he signed on September 14, 1990.

The agreement was for a term of 24 months, beginning on the date of sale of Ladd to any entity. The agreement provided that the purchaser of Ladd would provide plaintiff with a "comparable position" to the position then held by plaintiff with Ladd. If plaintiff refused the offer, he would be entitled only to his severance benefits. The agreement also provided that plaintiff could be terminated without cause, in which case he would be entitled to his full salary and benefits for the entire 24 months. Ladd was eventually purchased by Amax Oil & Gas, Inc. (Amax) on December 21, 1990, and Amax expressly agreed to honor plaintiff's employment agreement.

Amax planned to consolidate Ladd into its Houston headquarters and close the Denver office by May 31, 1991. On January 28, 1991, Amax offered plaintiff the position of assistant controller in its Houston office and told him that his employment would otherwise end when the Denver office closed. Because he felt that the offer was not comparable to his present position, plaintiff declined. Four days later, on February 26, 1991, defendants terminated plaintiff's employment and paid him his severance benefits.

Plaintiff now brings five claims for relief. First, he alleges that defendants breached the employment agreement and that their breach was willful and wanton so as to entitle him to non-economic damages. Second, plaintiff claims that Amax's president, Lloyd Parks, tortiously interfered with his employment contract. Third, plaintiff contends that Parks made defamatory statements to officials of GE, Ladd, and Amax in connection with his termination. Fourth, plaintiff alleges that Parks tortiously interfered with his prospective employment opportunities. Finally, plaintiff claims that his termination violated public policy. Defendant moves for summary judgment on all of these claims except the breach of contract claim.

I.

Fed.R.Civ.P. 56 provides that summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions, or affidavits show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The non-moving party has the burden of showing that there are issues of material fact to be determined. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is appropriate when the court can conclude that no reasonable juror could find for the non-moving party on the basis of the evidence present in the motion and response. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

In reviewing a motion for summary judgment, the court must view the evidence in the light most favorable to the non-moving party and all doubts must be resolved in favor of the existence of triable issues of fact. Boren v. Southwestern Bell Tel. Co., 933 F.2d 891, 892 (10th Cir. 1991). However, the non-moving party cannot rest on conclusory allegations contained in its pleadings or affidavits. McVay v. Western Plains Serv. Corp., 823 F.2d 1395, 1398 (10th Cir.1987). The non-moving party must go beyond the pleadings and designate specific facts showing that there are genuine issues for trial on every element challenged by the motion. Tillett v. Lujan, 931 F.2d 636, 639 (10th Cir.1991).

II.

Defendants move for summary judgment on plaintiff's first claim for breach of contract only to the extent that the claim seeks non-economic damages for a willful and wanton breach. Plaintiff's employment agreement expressly provided that "This agreement shall be governed in all respects by and in accordance with the laws of the State of New York." Defendant asserts, and plaintiff concedes, that the laws of New York do not permit the recovery of non-economic damages on a breach of contract claim. See, e.g., Zahler v. Niagra County Chapter, 112 A.D.2d 707, 491 N.Y.S.2d 880, 881 (N.Y.App.Div.1985).

In a diversity action, district courts use the choice of law rules of the forum state. Klaxon v. Stentor Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Colorado has expressly adopted the Restatement (Second) of Conflict of Laws (1971) for contract actions. Wood Bros. Homes, Inc. v. Walker Adjustment Bureau, 198 Colo. 444, 601 P.2d 1369 (1979). The Restatement § 207 provides that the measure of recovery for a breach of contract is determined by the local law of the state selected by application of §§ 187-188. In turn, section 187(1) provides that "The law of the state chosen by the parties ... will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue."

Here, the parties chose to apply the law of New York to control disputes over the employment agreement. Clearly, they could have addressed the issue of non-economic damages in that agreement. Therefore, the parties choice of law is effective under § 187(1) and the law of New York will govern plaintiff's breach of contract claim. Because New York does not allow recovery of non-economic damages for a willful and wanton breach of contract, defendants' motion is granted as to that claim.

Plaintiff's claim that defendants' waived their contractual right to assert the choice of law provision is factually groundless and without merit.

III.

Plaintiff's remaining claims all sound in tort. Using Colorado's choice of law rules, the parties do not dispute that these claims are governed by Colorado law.

Defendant asserts that plaintiff's second claim for intentional interference with contractual relations fails because plaintiff has no evidence that Parks was a "third party" or acted improperly. I disagree.

A defendant who intentionally and improperly interferes with the performance of a contract between the plaintiff and a third party is subject to liability. Trimble v. City and County of Denver, 697 P.2d 716, 726 (Colo.1985). Here, Parks argues that there is no "third party" because he is an officer of Amax, the party with which plaintiff contracted. However, in Trimble, the Colorado Supreme Court held that a corporate officer is a third party to a contract between the corporation and an employee of that corporation. Id. See also, Zappa v. Seiver, 706 P.2d 440, 442 (Colo.App.1985).

Parks also argues that plaintiff has no evidence that he acted improperly. An officer of a corporation generally will not be held personally liable for inducing the corporation's breach of its contract with another if the officer is acting within the scope of his official duties. Cronk v. Intermountain Rural Electric Ass'n, 765 P.2d 619, 623 (Colo.App.1988); Zappa, 706 P.2d at 442. "However, if the officer or director is motivated solely be a desire to induce the corporation to breach its contract with the plaintiff or to interfere with the contractual relations between the corporation and the plaintiff, the interference is improper." Zappa, 706 P.2d at 442; Trimble, 697 P.2d at 726. In applying this test, Colorado courts have looked to whether the defendant acted in good faith to serve the corporation's interests and whether the defendant acted with malice towards the plaintiff or was motivated by a desire to harass or retaliate against the plaintiff.

Defendant argues that his conduct cannot be improper because he was acting within the scope of his official duties when he terminated plaintiff. However, this argument begs the question. If defendant was motivated solely by malice or a desire to induce the corporation to breach its contract, his actions are, by definition, outside the scope of his official duties and are improper.

Motivation is a question of fact. Cronk, 765 P.2d at 623. Here, plaintiff has evidence that his termination was not in the best interests of Amax because he was a "key employee" needed to make a smooth integration of Ladd into Amax. Indeed, one of plaintiff's superiors at Ladd, Phillip Carr, testified in his deposition that plaintiff's termination was detrimental to employee morale and not in the best interests of Amax. Further, plaintiff has some proof that Parks was motivated by malice. Carr testified that Parks wanted to terminate plaintiff because he did not trust him and he did not need enemies on the inside. Another of plaintiff's superiors at Ladd, Ronald Spence, testified that Parks said "I'm going to have my way on this one.... If Bill doesn't think our offer is comparable, he can stick it." Moreover, plaintiff had received above average performance reviews for his more...