O'Toole v. Lawlogix, Case No. 1:16-CV-00494-TSB

Decision Date27 February 2017
Docket NumberCase No. 1:16-CV-00494-TSB
PartiesJOHN O'TOOLE, Plaintiff, v. LAWLOGIX, Defendant.
CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio

Judge Timothy S. Black


This case is before the Court regarding Defendant Lawlogix's motion to dismiss (Doc. 8). For the reasons set forth below, the motion will be granted in part.


Plaintiff, John O'Toole, was employed by Defendant Lawlogix from on or about May 13, 2013 to July 31, 2014 as a sales executive. (Doc. 1, at 2-4). Plaintiff's employment was secured through an "Employment and Proprietary Information and Invention Agreement" signed by both parties. (Doc. 8-1). That agreement called for Plaintiff to receive a "base salary" of $100,000.00 per year. (Id. at 1). The agreement also contained the following paragraph in section 3, which outlined "compensation and benefits":

b. Commission: In addition to the salary enumerated in paragraph 3(a), Employee shall be paid a Commission as reasonably agreed upon by the parties and executed in writing through a commission addendum to this employment.

(Id. at 2).

Plaintiff and Defendant never executed a commission addendum during Plaintiff's tenue as an employee, and Plaintiff was never paid any commissions for the sales he secured on Defendant's behalf. (Doc. 1, at 4). On July 31, 2014, Plaintiff was terminated. Defendant did not give Plaintiff a reason for his termination.

Plaintiff filed the current civil action against Defendant on April 25, 2016, bringing claims of age discrimination, breach of contract, promissory estoppel, quantum meruit, and unjust enrichment. (Doc. 1). Plaintiff has completed the required administrative process with the Equal Opportunity Employment Commission and a notice of right to sue was mailed on or after January 26, 2016. Defendant's motion to dismiss seeks dismissal of all claims, except Plaintiff's claim for age discrimination. (Doc. 8).


A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) operates to test the sufficiency of the complaint and permits dismissal of a complaint for "failure to state a claim upon which relief can be granted." To show grounds for relief, Fed. R. Civ. P. 8(a) requires that the complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief."

While Fed. R. Civ. P. 8 "does not require 'detailed factual allegations,' . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)). Pleadings offering mere "'labels and conclusions' or 'a formulaic recitationof the elements of a cause of action will not do.'" Id. (citing Twombly, 550 U.S. at 555). In fact, in determining a motion to dismiss, "courts 'are not bound to accept as true a legal conclusion couched as a factual allegation[.]'" Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265 (1986)). Further, "[f]actual allegations must be enough to raise a right to relief above the speculative level[.]" Id.

Accordingly, "[t]o 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.'" Iqbal, 556 U.S. at 678. A claim is plausible where "plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Plausibility "is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]''that the pleader is entitled to relief,'" and the case shall be dismissed. Id. (citing Fed. Rule Civ. P. 8(a)(2)).

A. Choice of law

As an initial matter, the Court must determine which law governs Plaintiff's various claims. Defendant claims that Arizona law governs all the claims in the complaint, while Plaintiff alleges that Arizona law only governs his breach of contract claim, while his quasi-contractual claims are governed by Ohio law.

The employment contract signed by the parties includes a choice of law provision which states: "[t]he validity, construction, interpretation, and performance of th[e] Agreement shall be governed by the law of the State of Arizona." (Doc. 8-1, at 6.) Plaintiff concedes that his breach of contract claim (Count II of the complaint) is accordingly governed by Arizona law, but argues that his quasi-contractual claims are not related to the "validity, construction, interpretation, [or] performance" of the contract and should therefore be governed by Ohio law. Plaintiff cites no legal authority in support of this position. In contrast, Defendant's reply to its motion cites a number of cases from this district and others holding that choice of law provisions similar to the one at issue here frequently extend to claims of promissory estoppel, quantum meruit, and unjust enrichment. See e.g., Opportunity Fund, LLC v. Epitome Sys., Inc., 912 F. Supp. 2d 531, 548 (S.D. Ohio 2012); Enters. v. Zurich Am. Ins. Co., 845 F.Supp.2d 809, 813 (E.D. Mich. 2012); SJ Properties Suites v. Specialty Fin. Group, LLC, 864 F. Supp. 2d 776, 794 (E.D. Wis. 2012); PAE Gov't Services, Inc. v. MPRI, Inc., 514 F.3d 856, 860 (9th Cir. 2007); In re Lois/USA, Inc., 264 B.R. 69, 104 (Bankr. S.D.N.Y. 2001).

Having reviewed Defendant's cited authorities, the Court agrees that Arizona law should govern Plaintiff's contractual and quasi-contractual claims.

B. Plaintiff has sufficiently alleged the existence of a contract

In its motion to dismiss, Defendant argues that Plaintiff's claim for breach of contract must be dismissed per Federal Rule of Civil Procedure 12(b)(6) because Plaintiff "has not pled (and certainly cannot prove) the prerequisite prima facie elements of his cause of action," those being (1) the existence of a valid contract; (2) breach; and(3) damages. (Doc. 8, at 4 (citing Graham v. Ashbury, 112 Ariz. 184, 185 (1975)). Defendant claims that Plaintiff "has not alleged the existence of a valid contract" in his complaint. (Id.).

The Court notes at the outset that there was undoubtedly a contract between the parties outlining the terms of employment. That contract, which was entered into the record for the first time by Defendant in its motion to dismiss, is the "Employment and Proprietary Information and Invention Agreement" referenced by Plaintiff in his complaint. (Doc. 8-1). The document memorializes the essential elements of a contract—the acceptance of an offer in exchange for consideration.

Despite the fact that Defendant was clearly able to ascertain from Plaintiff's complaint the contract Plaintiff was referring to in his breach of contract claim, Defendant would have this Court dismiss the claim because, allegedly, "Plaintiff belatedly attempts to rely on Defendant's motion to dismiss to fill the gaps of his inadequate pleading." (Doc. 12, at 3). Defendant argues that "the Court is only permitted to look within the four corners of the complaint in determining the adequacy of the Plaintiff's pleading." (Id. (citing Trustees of Detroit Carpenters Fringe Benefit Funds v. Patrie Const. Co., 618 F. App'x 246, 255 (6th Cir. 2015)). Accordingly, Defendants assert that the Court in this case cannot consider the actual contract between the parties to determine whether Plaintiffs have adequately alleged the existence of a contract sufficiently to survive a 12(b)(6) motion to dismiss.

Defendant's argument regarding Plaintiff's failure to allege the existence of a contract is without merit. The Court may properly consider Doc. 8-1 in determiningwhether the existence of a contract has been adequately alleged. In Patrie Const. Co., the Court of Appeals for the Sixth Circuit held that "a district court cannot consider matters beyond the complaint." Patrie Const. Co, 618 F. App'x at 255. However, that opinion went on to explain a district court's ability to consider record evidence during a 12(b)(6) motion in greater detail:

This Court has recognized that it may consider items appearing in the record of the case, including exhibits, without converting a Rule 12(b)(6) motion into a motion for summary judgment, but only "so long as they are referred to in the complaint and are central to the claims contained therein." Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d 673, 681 (6th Cir.2011) (emphasis added) (quoting Bassett v. NCAA, 528 F.3d 426, 430 (6th Cir.2008)) (internal quotation marks omitted). Here, the amended complaint did not refer to any of the record evidence cited by the Trustees in their briefing on appeal. Thus, the district court appropriately limited its Rule 12(b)(6) inquiry to the four corners of the amended complaint.

Id. Unlike in Patrie Const. Co., the complaint in this case explicitly referenced the "Employment and Proprietary Information and Invention Agreement" contained at Doc. 8-1. It is accordingly appropriate for the Court to look to the document in determining that the document referenced by the complaint contained the necessary elements of a contract between the parties.

When the employment agreement between the parties is properly considered in the context in which it is referenced by the complaint, it is clear that the complaint alleges all the necessary elements of a contract between the parties. Accordingly, Plaintiff's breach of contract claim does not fail for want of properly alleging the existence of a contract.

C. Plaintiff's breach of contract claim fails as a matter of law

Although Plaintiff has adequately alleged the existence of a contract between the parties in this case, when viewing the facts in the case as alleged by the Plaintiff, no reasonable juror...

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