Melton v. Precision Laser & Instrument, Inc., Civil Action No. 2:12-cv-1697

CourtUnited States District Courts. 4th Circuit. Southern District of West Virginia
Writing for the CourtJohn T. Copenhaver
Docket NumberCivil Action No. 2:12-cv-1697
Decision Date18 January 2013

RANDY MELTON, Plaintiff,

Civil Action No. 2:12-cv-1697


ENTER: January 18, 2013


Pending is the motion to dismiss for failure to state a claim by defendant Precision Laser & Instruments ("Precision"), filed June 1, 2012.

I. Background

Plaintiff Randy Melton ("Melton") commenced this action in the Circuit Court of Kanawha County, West Virginia on April 24, 2012. He is a resident of Kanawha County, West Virginia. Compl. ¶ 1. Precision is a Pennsylvania corporation with a principal place of business in Ambridge, Pennsylvania. Id. ¶ 2.

Precision hired Melton as "Survey/Mapping Sales and Support Manager" of its Charleston, West Virginia office in June 2009. Id. ¶ 5. On June 16, 2009, the parties signed an

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Employment Agreement which provided that Melton would receive a yearly salary of $55,000. Id. ¶¶ 6-7. Additionally, the Employment Agreement provided for commissions, including a 5% commission on "all sales from existing 'Special Project Contract' Sales that have existing contracts with GPS Innovations." Employment Agreement 1.

Melton's relationship to GPS Innovations ("GPSI") and the meaning of "Special Project Contract Sales" are unclear from the record. The complaint describes GPSI as "Melton's former company." Compl. ¶ 6. On June 29, 2009, Melton, acting on behalf of GPSI as its president, signed an Asset Purchase Agreement with Precision, pursuant to which Precision appears to have acquired assets of GPSI. Asset Purchase Agreement 7. These factors and the nature of the contracts, claims, and parties' briefing suggest to the court that Melton owned GPSI, although the record does not expressly state that to be the case. The term "Special Project Contract Sales" is not defined, but the Employment Agreement indicates that any such contract would be "transferred over to [Precision] ownership" from GPSI. Employment Agreement 1. The court surmises that the term refers to any Precision contract that originated with GPSI, although it is possible that the true meaning is limited to some subset thereof. The Employment Contract does specify that the Special

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Project Contracts "include . . . West Virginia Highway Contract, NASA GIST, Navy Research Lab, Weeks Marine and Marine MC (NZ)." Id.

The Asset Purchase Agreement transferred to Precision "all of Seller's right, title, and interest in and to all the assets, property rights (tangible and intangible), used in the operation of GPS Innovations." Asset Purchase Agreement 1. In consideration, Precision paid to GPSI $215,000, with $100,000 of the purchase price allocated toward "Fixed Assets and Inventory" and the remaining $115,000 allocated to "Intangible Assets." Id. at 3. It is those Intangible Assets which presumably give rise to the Special Project Contracts. Accordingly, in his complaint, Melton claims that he transferred the "'Special Project Contract' sales" to Precision ownership "[a]s a result of" his promised 5% commission on all sales therefrom. Compl. ¶ 23.

On June 30, 2009, Melton and Precision entered into a Confidentiality and Non-Competition Agreement ("CNC Agreement"). The CNC Agreement stated that Melton's employment could be terminated "at any time, with or without cause," and it "d[id] not create any obligations on the part of [Precision] to employ Melton for a fixed period of time." Id. ¶¶ 8-9, 33. The agreement, nonetheless, indicated Precision's "intention" to

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retain Melton for at least five years. Id. ¶ 9. Also on June 30, 2012, Melton and Precision entered into an Addendum to the Employment Agreement ("Addendum"). Id. ¶ 10. The Addendum reiterated Precision's intent to retain Melton for five years and provided for a severance payment of one year's salary if Precision terminated Melton's employment within the first nine months. Id. ¶¶ 11-12. Precision terminated Melton's employment on May 14, 2010, nearly eleven months after his hiring. Id. ¶ 16.

The complaint contends that Precision's intentions, as represented in the CNC Agreement and the Addendum, altered Melton's at-will status to that of an employee with an employment term of no less than five years. Id. ¶ 38. Melton entered into the agreements "under the assumption" that his employment would last for that term. Id. ¶ 13. The complaint further states that Precision "did not intend" to employ Melton for five years, but rather made such representations to "induce Melton to enter into the [Asset Purchase] Agreement." Id. ¶ 15. Melton asserts that he relied on Precision's false representations and that his reliance "was justified" due to "the large amount of GPSI's assets" sold under the Asset Purchase Agreement. Id. ¶ 45. The Asset Purchase Agreement is itself a source of contention, as Melton alleges that Precision

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has refused to pay him for certain assets or to remove the items from his storage facility. Id. ¶ 18.

Melton also claims that Precision has refused to pay him the 5% commission on sales from the Special Project Contracts. Id. ¶ 19. No commission payments have been made since May 14, 2010. Id. ¶ 29. The complaint asserts that payments should have been made for "all sales to any customer or client referenced as a former GPSI customer or client, not just for those sales made by Melton." Id. ¶ 26. It states that Precision "ignored many of the types of sales" which would have resulted in commissions and consequently "failed to pay Melton everything due to him under the Employment Agreement." Id. ¶¶ 24-25.

Melton adds that Precision "interfered with Melton's right to receive the 5% commission" by selling the "West Virginia-based [Precision] Machine Control Business." Id. ¶ 27. The record does not make clear what the Machine Control Business is or how it relates to "Melton's right" to receive commissions. Presumably, Melton means that the Machine Control Business generated Special Projects Contract sales and that Precision improperly interfered with his contractual rights by selling it. Along these lines, in an allegation that is rather inscrutable, he asserts that he is owed a commission for the "anticipated

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sales from the lost business to the [Precision] Machine Control Business." Id. ¶ 28.

Melton's five-count complaint sets forth the following claims: Count One, "Breach of Employment Contract"; Count Two, "Breach of Confidentiality and Non-Competition Agreement and Breach of Addendum to Employment Agreement"; Count Three, "Fraudulent Inducement"; Count Four, "Violation of the Wage Payment and Collection Act"; and Count Five, "Negligence."

On May 25, 2012, Precision removed, invoking the court's diversity jurisdiction, pursuant to 28 U.S.C. § 1332(a)(1). On June 1, 2012, Precision filed a motion to dismiss Counts One, Two, Three, and Five and to dismiss Count Four in part, all for failing to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6).

II. The Governing Standard

Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Rule 12(b)(6) correspondingly permits a defendant to challenge a complaint when it "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6).

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The required "short and plain statement" must provide "fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007) (alternation in original) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570); see also Monroe v. City of Charlottesville, 579 F.3d 380, 386 (4th Cir. 2009). Facial plausibility exists when the court is able "to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 566 U.S. at 678 (quoting Twombly, 550 U.S. at 556). The plausibility standard "is not akin to a 'probability requirement,'" but it requires more than a "sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556).

In assessing plausibility, the court must accept as true the factual allegations contained in the complaint, but not the legal conclusions. Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. The determination is

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"context-specific" and requires "the reviewing court to draw on its judicial experience and common sense." Id. at 679.

III. Discussion

A. Choice of Law

Precision and Melton dispute what law should govern their contracts and related claims. Precision asserts that the CNC Agreement and Asset Purchase Agreement must be construed in accordance with Pennsylvania law due to choice-of-law provisions within the agreements. Def.'s Mem. Supp. Mot. Dismiss 6. Precision asserts that the fraud and negligence counts, which arise from those contracts, should likewise fall under Pennsylvania law. Melton responds that "[w]hile some of the contractual claims may be governed by Pennsylvania law, any tort claims are not." Pl.'s Resp. Opp'n. to...

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