Vf Jeanswear Ltd. Partnership v. Molina

• Decision Date: 09 June 2004
• Docket Number: No. CIV.1:03 CV 00487.,CIV.1:03 CV 00487.
• Citation: 320 F.Supp.2d 412
• Parties: VF JEANSWEAR LIMITED PARTNERSHIP, Plaintiff, v. Luis MOLINA, Defendant.
• Court: U.S. District Court — Middle District of North Carolina

Page 412

320 F.Supp.2d 412

VF JEANSWEAR LIMITED PARTNERSHIP, Plaintiff, v. Luis MOLINA, Defendant.

No. CIV.1:03 CV 00487.

United States District Court, M.D. North Carolina.

June 9, 2004.

J. Mark Sampson, Womble Carlyle Sandridge & Rice, Winston-Salem, NC, James M. Powell, Womble Carlyle Sandridge & Rice, Greensboro, NC, for Plaintiff and Counter-Defendant.

Seth R. Cohen, Smith James Rowlett & Cohen, Greensboro, NC, for Defendant and Counter-Claimant.

MEMORANDUM OPINION

BULLOCK, District Judge.

This matter arises from the execution of a severance agreement between Plaintiff VF Jeanswear Limited Partnership ("VF Jeanswear") and Defendant Luis Molina ("Molina"), a former employee of VF Jeanswear. VF Jeanswear brings claims for common law breach of contract as well as for unfair and deceptive trade practices pursuant to North Carolina General Statute § 75-1.1. Molina timely removed the action pursuant to 28 U.S.C. §§ 1332 and 1441 and filed a counterclaim for breach of contract.

The case is now before the court on the parties' cross motions for summary judgment. The court will grant VF Jeanswear's motion for summary judgment on its breach of contract claim and deny Molina's motion for summary judgment on this claim. The court will grant summary judgment for VF Jeanswear on Molina's counterclaim. The court also will grant Molina's motion for summary judgment on VF Jeanswear's unfair and deceptive trade practices claim. Finally, the court will allow VF Jeanswear to recover reasonable attorney's fees in connection with its breach of contract claim but will disallow recovery of punitive damages. VF Jeanswear's damage award remains to be determined.

FACTS

VF Jeanswear manufactures jeans and other apparel.¹ From 1987 to 2001, Molina worked as a general manager in two of VF Jeanswear's manufacturing plants. Molina initially managed a VF Jeanswear facility in Puerto Cortes, Honduras. In 1998, Molina was transferred to another plant in Chihuahua, Mexico. Molina managed the Mexican facility until 2001, when he was terminated as part of a reduction-in-force.

In connection with the reduction-in-force, VF Jeanswear offered Molina a severance agreement. Under the agreement, VF Jeanswear would provide Molina with severance pay, a housing allowance, stock option rights, specific relocation expenses, and other enumerated benefits. In exchange for these benefits, Molina would promise to release any of his potential claims against the company. Specifically, the agreement states:

In partial consideration of the performance by the Company of its obligations under this Agreement and other good and valuable consideration, Employee does hereby for himself, his heirs, executors, administrators and assigns, forever release, remise and discharge the Company, Operadora Lambe, S.A. de C.V., Wrangler de Chihuahua, S.A. de C.V., VF Services, Inc., Blue Bell, Inc., their officers, directors, parents, subsidiaries, affiliates and their officers and directors and their successors and assigns, from and against any claims and causes of action which he has, had or may have had arising out of his employment with the Company or otherwise relating to or arising out of any relationship or status he may have had in the past with the Company, Operadora Lambe, S.A. de C.V., Wrangler de Chihuahua, S.A. de C.V., VF Services Inc., Blue Bell Inc. or any of its affiliates or subsidiaries. The parties specifically contemplate that this release covers ... [claims under] federal, state or local laws or ordinances, Mexican and Honduras laws, and any common law claims under tort, contract or any other theories now or hereafter recognized.

. . . . .

Employee acknowledges that he has received all pay and benefits to which he was entitled in connection with that employment, and that no other monies or benefits are owed to him other than those benefits for which he is eligible under this agreement, agreed in accordance with the terms and provisions thereof. Therefore, Employee grants to the Company, Operadora Lambe, S.A. de C.V., Wrangler de Chihuahua, S.A. de C.V., VF Services Inc., Blue Bell Inc. or any of its affiliates or subsidiaries the fullest and broadest release in accordance with the laws of United States, Mexico, and Honduras, and not reserving any action or right to be exercised against them in the future for any concept.

Employee acknowledges that this agreement is the exclusive agreement for benefits to be paid to Employee by the Company. As a condition of accepting benefits under this agreement, Employee further agrees not to bring legal action in any other forum outside the United States for any payment or other cause of action which Employee may be entitled to pursue under governing law. Should Employee pursue benefits or legal action in another country specially against Operadora Lambe, S.A. de C.V., Wrangler de Chihuahua, S.A. de C.V., VF Services Inc. and Blue Bell Inc. Employee's benefits, including the offer of the Company to move Employee, his family, and his household goods, shall be null and void.

(Compl. Ex. A, Employment Voluntary Termination Agreement & Release at 4.1.)

VF Jeanswear presented the severance agreement to Molina on November 15, 2001, and requested his response within four weeks. A few days later, Molina wrote a letter to VF Jeanswear. He notified the company of his intent to sign the agreement but sought to obtain additional benefits, including meals, car rental, relocation and insurance for two cars, relocation to a country other than Honduras, and an extension of the relocation deadline. Molina inquired about these benefits and concluded his letter with his "hope [that] each clarification to the questions above is favorable to me, because no favorable reply to my questions ... could affect the Company negatively." (Pl.'s Mem. Supp. Mot. Summ. J., Dep. of Luis Molina, Ex. 2, Letter from Molina to Telles, Nov. 19, 2001.)

On November 22, 2001, Molina met with an attorney for VF Jeanswear to discuss his severance package. At this time, Molina expressed his desire to obtain additional severance benefits pursuant to Honduran law.² A few days after the meeting, Molina wrote another letter to VF Jeanswear. Once more he informed the company that he intended to sign the severance agreement. However, Molina reiterated his request to be given additional benefits under Honduran law, stressing his belief that "the Company cannot simply terminate me and leave me and my family unprotected in a foreign country" and that "I provided [the company] with many recommendations on how to proceed before legal situations. It proved that I never gave a wrong recommendation.... I would recommend that what I ask for is granted." (Pl.'s Mem. Supp. Mot. Summ. J., Molina Dep. Ex. 3, Letter from Molina to Telles, Nov. 26, 2001.)

Molina and a VF Jeanswear attorney met again on December 5, 2001, this time with the Human Resources manager. During this meeting, VF Jeanswear representatives addressed Molina's concerns regarding his request for additional benefits. They informed Molina that if he accepted VF Jeanswear's severance offer, he would receive only those benefits enumerated in the severance agreement. VF Jeanswear representatives made clear that if Molina did not accept the offer, he would not receive a severance package or any further remuneration. That day, Molina signed the severance agreement.

After executing the agreement, Molina corresponded with VF Jeanswear regarding the administrative details of his relocation and receipt of benefits. At this time Molina did not express dissatisfaction with his severance package or attempt to rescind the agreement. However, Molina again requested additional benefits, asking that VF Jeanswear pay to transport his car to Honduras and provide insurance for the trip. As an accommodation to Molina, VF Jeanswear agreed to the proposal and also provided Molina with an increased allotment for hotel costs. The company cautioned Molina that "these additional considerations will constitute the limit of our willingness to provide any benefits above and beyond those contained in your severance agreement." (Pl.'s Mem. Supp. Mot. Summ. J., Molina Dep. Ex. 7, E-mail from Tucker to Molina, July 3, 2002.) Molina responded, "Thank you for this effort" and e-mailed VF Jeanswear his bank account number to deposit the funds. (Pl.'s Mem. Supp. Mot. Summ. J., Molina Dep. Ex. 7, E-mail from Molina to Tucker, July 3, 2002.)

Pursuant to the severance agreement, VF Jeanswear provided Molina severance pay totaling $103,857.48. VF Jeanswear also paid to move and insure Molina's household goods and to fly Molina's family from Mexico to Honduras. Consistent with the parties' subsequent negotiations, the company also covered the insurance and transportation costs for Molina's car and provided $1,800.00 for Molina's hotel expenses. In sum, Molina's severance package totaled over $140,000.00. Molina does not dispute that he received and accepted all of the benefits provided in the severance agreement as well as additional funding for his car and hotel costs.

On February 5, 2003, shortly after he had received all benefits under the severance agreement, Molina filed a lawsuit against a VF Jeanswear affiliate, Blue Bell de Honduras S. de R.L., in the Labor Court for Puerto Cortes, Honduras. In that suit, Molina alleged that Blue Bell de Honduras wrongfully terminated him and that he was entitled to additional severance benefits under Honduran law. The Labor Court denied Molina relief, but the Labor Court of Appeals reversed the judgment and entered judgment for Molina in the amount of $89,451.52. The case is currently pending before the Honduran Supreme Court. On April 7, 2003, VF Jeanswear filed the present action against Molina.

DISCUSSION

I. Standard of Review

Summary judgment must be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law....