Penick v. Frank E. Basil, Inc. of Delaware

• Citation: 579 F. Supp. 160
• Decision Date: 30 January 1984
• Docket Number: Civ. A. No. 82-1413.
• Parties: Norman D. PENICK, et al., Plaintiffs, v. FRANK E. BASIL, INC. OF DELAWARE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

579 F. Supp. 160

Norman D. PENICK, et al., Plaintiffs, v. FRANK E. BASIL, INC. OF DELAWARE, et al., Defendants.

Civ. A. No. 82-1413.

United States District Court, District of Columbia.

January 30, 1984.

Jamie L. Whitten, Wyatt, Saltzstein, Lipsen & Hamberger, Washington, D.C., for plaintiffs.

Patricia H. Wittie, Kirkpatrick, Lockhart, Hill, Christopher & Phillips, Washington, D.C., for defendants.

JOHN LEWIS SMITH, Jr., District Judge.

Plaintiffs Norman D. and Marlene J. Penick bring this action for breach of contract against defendants Frank E. Basil, Inc., and David Descoteau, an employee of the corporate defendant. Plaintiffs allege that defendant Basil offered a two-year contract to plaintiffs regarding employment in its Saudi Arabian operation, that defendant Descoteau personally guaranteed the contract, that plaintiffs accepted and began performance, and that defendants subsequently terminated the contract after only five months. Defendants contend that a Saudi corporation, and not Basil, is the party to plaintiffs' alleged contract, that no personal guarantee was ever made, that enforcement of the contract or the guarantee is barred by the Statute of Frauds, that Norman Penick abandoned his employment, and that plaintiffs failed to satisfactorily prove damages. The case was tried before the Court on November 15-18, 1983. Upon consideration of the testimony of the witnesses, evaluation of the credibility of the witnesses, the exhibits, and the entire record, the Court, pursuant to Fed.R.Civ.P. 52, enters the following findings of fact and conclusions of law.

FINDINGS OF FACT

1) Plaintiffs Norman D. and Marlene J. Penick, husband and wife, are citizens of the State of California.

2) Defendant Frank E. Basil, Inc. ("Basil") is a Delaware corporation, with its principal place of business in the District of Columbia.

3) Defendant David Descoteau ("Descoteau") is, and at all times relevant has been, employed by Basil as Director of Basil Health Systems, an unincorporated division of Basil.

4) Saudi Maintenance Co. ("Siyanco") is a Saudi Arabian limited liability company. Frank E. Basil, Inc., a Liberian corporation, owns 50% of Siyanco, and the remaining 50% is owned by a Saudi prince, Abdul Rahman bin Abdul Aziz Al-Saud. A document prepared by Descoteau in December 1980, entitled "The Basil Group of Companies-Capability Statement-Siyanco-Basil Health Systems" describes Siyanco as a Basil "subsidiary," founded in 1968 to "provide an extension of corporate capability and services" in Saudi Arabia. The document states that Siyanco performs "life support, logistics management, facilities maintenance and operations and training projects and programs in Saudi Arabia."

5) In late 1980, Basil and Siyanco maintained an ongoing business relationship of some duration. Basil provided employment recruiting and procurement services for Siyanco, including assistance in obtaining official papers for Siyanco employees from the United States. Basil periodically billed for and Siyanco paid for these services.

6) In late 1980, Siyanco was party to a contract with the United States Army Corps of Engineers to provide operation, maintenance, and medical services at King Khalid Military City, Hafar Al-Batin, Saudi Arabia ("KKMC"). Siyanco intended to terminate its medical services subcontract with Hospital Corporation International, Ltd., and begin performance of those services itself. Consequently, Siyanco sought to hire qualified health services personnel, including an administrator for the KKMC project.

7) In late 1980, Descoteau traveled to Saudi Arabia and began recruiting efforts. Descoteau contacted Michael J. Hurd, who declined an offer of employment at the Siyanco project but provided Descoteau with several names, including that of plaintiff Norman Penick. Descoteau contacted several other candidates regarding the KKMC position, and offered it to Gary Bell, who declined.

8) In late November and early December 1980, Descoteau contacted Norman Penick, the Health Systems Administrator for Saudi Arabian Parsons, Ltd. ("SAPL"), Yanbu, Saudi Arabia, and discussed the KKMC position.

9) On December 10, 1980, Penick traveled to the Siyanco compound in Riyadh, Saudi Arabia, to meet with Descoteau. Marlene Penick was not present. Numerous signs throughout the compound displayed the name "Siyanco;" there were no signs displaying the name "Basil."

10) On December 10 and 11, 1980, Penick and Descoteau discussed Penick's employment experience and the KKMC position in great detail. Descoteau and Penick discussed the terms of the Siyanco form employment contract, its employee benefits provisions, and the possibility of employment for Marlene Penick.

11) On December 11, 1980, Descoteau, after receiving the approval of Arthur Stephens, Deputy General Manager of Siyanco, prepared a typewritten letter offering employment to Penick.

12) The letter offer was prepared on Siyanco letterhead, offered a position with "our Company," and described the position as "Hospital Executive Director—KKMC-Siyanco." Item 6 of the letter makes reference to the Siyanco form employment contract discussed by Descoteau and Penick. Item 7 refers to a "verbal offer regarding contract deletions," a reference to Penick's insistence in negotiations that a standard 90-day probationary period be waived. The letter conditioned the offer on Penick's obtaining a letter of release from his present employer. The letter concluded:

"Very truly yours SAUDI MAINTENANCE COMPANY LTD. (SIYANCO) /s/ David A. Descoteau David Descoteau Director, Basil Health Systems."

13) The letter offers employment to Norman Penick only; it does not mention or refer to any employment opportunities for Marlene Penick with either Siyanco or Basil. The letter offer makes no reference to any performance bonuses, retirement benefits, or use of a company car.

14) Negotiation and execution of the letter agreement occurred under some time pressure; Penick was in a hurry to catch an airplane for his return to Yanbu. On December 11, 1980, Penick signed the offer and immediately left the Siyanco compound.

15) In late December 1980, Descoteau contacted Penick regarding the status of Penick's efforts to obtain a letter of release from SAPL, his present employer. Penick requested assurances from Descoteau that the employment offer would be honored even if Penick could not obtain the letter of release.

16) On December 23, 1980, Descoteau, after consulting with Stephens, drafted and dispatched a telex to Penick. After identifying Penick as a "consultant to Siyanco," the telex continued: "this is to inform you that Siyanco will honor its commitment to you without your letter of release. See you early January. Regards, David Descoteau, Siyanco Office, Riyadh." Penick picked up the telex at the Athens office of Basil, a site selected by Penick and Descoteau because Penick was vacationing in southern Europe at the time.

17) On January 8, 1981, Penick traveled to the KKMC facility, and met with Rodney Basil, General Manager of Siyanco. Basil and Penick discussed Penick's new position and the status of the KKMC project.

18) On January 10, 1980, the Corps of Engineers issued a cease and desist order to Siyanco to prevent its takeover of medical services at KKMC. On the same day, Penick resigned from his employment at SAPL. Descoteau informed Penick of the Corps' action, and instructed Penick to report to KKMC.

19) On January 16, 1981, Penick and his wife arrived at the Siyanco compound in Riyadh, and Penick commenced employment. In late January and early February 1981, Penick participated in the development of a plan detailing Siyanco's proposed takeover of medical services at KKMC. Penick also participated in several matters relating to Siyanco activities at the Saudi Arabian National Guard Hospital.

20) Penick was paid by Siyanco at least $21,851 (cash) in salary between January and May 1981. Marlene Penick never received any salary, nor did she ever attempt to secure pay or bring the matter to Siyanco or Basil's attention.

21) In March 1981, Penick met his wife and children in the United States, and completed new visa applications. An employee of Basil, Sonia Akar, processed the applications and submitted, over her signature, visa requests on Siyanco letterhead; the requests make no reference to Basil. Akar, in accordance with an apparent common practice, requested a work visa for Marlene Penick because it allowed her to return to Saudi Arabia immediately with her husband. During this visit, Norman Penick met with representatives of an American accounting firm regarding a proposed audit of Siyanco's operations at KKMC.

22) In late March 1981, the Penicks returned to Saudi Arabia. In early April, Norman Penick prepared two documents, an "agenda" for a proposed meeting between Penick and Rodney Basil, and a "memorandum" addressed to "All Siyanco Employees." The agenda indicates Penick's interest in speaking with Rodney Basil about "SIYANCO honoring previous commitments." The memorandum states in part that its purpose "is to announce that Norman D. Penick is the Siyanco Director of Health Services."

23) In late May, in anticipation of a return to the United States to attend his son's high school graduation, Penick submitted a Siyanco "application for leave," stating that he would be out of Saudi Arabia from May 27 to June 9, 1981. The Penicks returned to the United States on May 27.

24) On June 4, 1981, Gary Witte, Director of Marketing for Siyanco, telephoned Descoteau, who was then at the Basil office in Columbia, MD., and asked Descoteau to contact Norman Penick and instruct him to delay his return to Saudi Arabia because of a housing shortage at the Siyanco compound.

25) On June 4, 1981, Penick and Descoteau spoke by telephone. Penick was then at his parents' home in Shadyside, Ohio. Descoteau told Penick that Penick should remain in the United States indefinitely. Penick...