Curtis v. Café Enters., Inc.

JOHN CURTIS, Plaintiff, v. CAFÉ ENTERPRISES, INC. d/b/a FATZ CAFÉ, f/k/a FATZ CAFÉ, INC.(a North Carolina Corporation), Defendant.

CIVIL ACTION NO. 5:15-CV-00032-RLV-DSC

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA STATESVILLE DIVISION

November 21, 2016

ORDER

BEFORE THE COURT is Defendant Café Enterprises, Inc.'s Motion for Summary Judgment and accompanying brief in support. [Doc. 18, 19]. Plaintiff John Curtis filed a response [Doc. 23] to which Defendant replied [Doc. 27].

I. PROCEDURAL HISTORY

On January 16, 2015, Plaintiff filed suit against Defendant in the Superior Court of Lincoln County, North Carolina. [Doc. 1-1] at 6. On February 25, 2015, Defendant removed the action to this Court, asserting diversity jurisdiction. [Doc. 1]; see also 28 U.S.C. § 1332. On the same day, Defendant filed a motion for an extension of time to respond [Doc. 2], which was granted on February 26, 2015. [Doc. 3]. Defendant filed an answer to Plaintiff's complaint on March 23, 2015. [Doc. 5].

On August 1, 2016, Defendant filed a motion for summary judgment (the" Motion") and an accompanying brief in support. [Doc. 18, 19]. On September 2, 2016, Plaintiff filed a response in opposition to the Motion. [Doc. 22]. On September 6, 2016, Plaintiff filed a motion to amend its response in opposition to the Motion and an amended response in opposition to the Motion, [Doc. 23], which was granted on September 7, 2016. [Doc. 24]. On September 9, 2016, Defendant filed a reply memorandum in support of its Motion. [Doc. 27].

II. JURISDICTION AND VENUE

Plaintiff is a citizen and resident of Lincoln County, North Carolina. [Doc. 1-1] at 7. Defendant is a South Carolina corporation with a principal place of business in South Carolina. [Doc. 1 at 2]. Defendant, which is licensed to do business under the laws of North Carolina, conducts business in Lincoln County, North Carolina. [Doc. 1-1] at 7. Defendant does business as "Fatz Café," and is the successor in interest to "Fatz Café, Inc," which is or was a North Carolina corporation. Id. Plaintiff seeks damages in excess of $75,000, exclusive of interest and costs. Id. Because complete diversity exists between the parties and the amount in controversy exceeds $75,000, exclusive of interest and costs, the Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332.

This action was removed from the Superior Court of Lincoln County, North Carolina, which is within this Court's district and division. Therefore, venue is appropriate in this division.

III. STATEMENT OF FACTS

Defendant hired Plaintiff as a "Service Manager" for Fatz Café in Lincolnton, North Carolina in June of 2010. [Doc. 1-1] at 7; [Doc. 5] at 1. Plaintiff was promoted to "General Manager" later that same year. [Doc. 1-1] at 7-8; [Doc. 19] at 2. On or about June 27, 2011, Plaintiff and Defendant entered into a written "Operating Partner and Employment Agreement" (the "Agreement"), designating Plaintiff as "Operating Partner" and Defendant as "Corporation." [Doc. 19-1] at 2. In pertinent part, the Agreement states:

[F]or and in consideration of the foregoing recitals, the payment of Twenty-Five Thousand and No/100 Dollars ($25,000.00) to the Corporation by the Operating Partner (the "Operating Partner Payment"), the continued employment and employment for a term of Operating Partner by the Corporation in the position ofGeneral Manager of the Restaurant, the promises, covenants, terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

. . .

2. Term. The term of the Agreement will commence on [June 27, 2011] and will continue until the fifth (5th) anniversary thereof (the "Termination Date"), unless earlier terminated in accordance with Section 12.

. . .

4. Comprehensive Compensation.

. . .

(a) Base Compensation. The Corporation will pay a gross salary as determined from time to time by the Corporation ("Base Compensation"); provided, however, the Operating Partner's annualized Base Compensation during the time during which the Operating Partner is employed under this Agreement will not be less than Fifty-Two Thousand and No/100 Dollars ($52,000.00) payable in equal weekly installments on the Corporation's regular pay days.

. . .

(c) Incentive Amounts. The Corporation will pay, pursuant to Subsection 4(d) below and less any federal, state and local withholding requirements, a monthly amount (as adjusted, the "Incentive Amount") equal to: (i) four percent (4.0%) of each month's Profit After Controllables (as defined below) for the Restaurant if Profit After Controllables for the Restaurant is greater than or equal to eighteen percent (18%) but less than twenty percent (20%) . . . Notwithstanding the foregoing, the Corporation will not pay, and the Operating Partner will not be entitled to, any such Incentive Amount for months during which the Profit after Controllables for the Restaurant after the deduction of the Incentive Amount is not greater than or equal to eighteen percent (18%) of Total Net Sales for the Restaurant. "Profit After Controllables" means, with respect to the Restaurant for a given time period, an amount equal to the Restaurant's total net sales (including food, beverage and alcoholic beverage sales) ("Total Net Sales") plus other Restaurant income less the cost of goods sold, less payroll and benefits expenses, less unit controllables and less other controllables, each as determined by the Corporation in its sole discretion; provided, however, that the foregoing method of determining Profit After Controllables is subject to revision by the Corporation in its reasonable discretion to reflect the profitability of the Restaurant to the extent such profitability is within the control of the Operating Partner.

. . .(d) Profit After Controllables and Total Net Sales. For purposes of this Agreement, Profit After Controllables for the Restaurant and Total Net Sales for the Restaurant will be determined by the Corporation as reported in the Corporation's final monthly and annual operating statements as prepared by the Corporation's accounting department and distributed to management. Any dispute between the Corporation and Operating Partner will be finally determined by the Corporation's accountants, whose determination will be conclusive. Profit After Controllables will include the then paid and incurred Incentive Amount as calculated for that period.

. . .

(f) No interest in the Corporation. The Operating Partner hereby acknowledges that the Incentive Amount in Subsection 4(b) above does not constitute an ownership interest of any kind in the Corporation or any specific assets of the Corporation.

. . .

12. Termination.

(a) Mutual Consent. The Operating Partner's employment and this Agreement may be terminated by the mutual written agreement of the Operating Partner and the Corporation. The Corporation's Base Compensation and Incentive Amount obligations under Section 4 above will cease as of the effective date of the parties' agreement to terminate, unless otherwise agreed in writing.

. . .

(c) Termination by the Corporation for Cause. The Operating Partner's employment and this Agreement will terminate immediately upon the existence of Cause, defined as the Corporation's reasonable belief of:

. . .

ii. Any commission of fraud by Operating Partner (including, without limitation, "padding" the payroll, allowing unauthorized complimentary meals and altering actual inventory levels, and the like);

iii. Any dishonesty by the Operating Partner in Operating Partner's dealings with the Corporation or its customers, negligence in the performance of the duties of Operating Partner, willful misconduct, or the conviction (or plea of guilty or nolo contendere) of OperatingPartner of any felony or any other crime involving dishonesty or moral turpitude;

. . .

Should the Operating Partner dispute whether s/he was terminated for Cause, then the Corporation and the Operating Partner will enter immediately into binding arbitration pursuant to the Taylors, SC Arbitration Rules of the American Arbitration Association in, South Carolina, the cost of which will be borne by the non-prevailing party.

. . .

18. Governing Law. This Agreement will in all respects be subject to, and governed by, the laws of the State of South Carolina, without reference to choice of law rules.

. . .

22. Amendments. This Agreement may be amended at any time by mutual consent of the parties hereto, with any such amendment to be invalid unless in writing, signed by the Corporation and the Operating Partner.

[Doc. 19-1] at 2-12.

On or about April 24, 2012, The Agreement between Plaintiff and Defendant was amended by replacing Section 13(b)(i), Section 13(b)(ii), Section 13(c), and Section 14(a), none of which have any bearing on the present case. [Doc. 19-2].

When short staffed with Managers to assist in running and managing shifts, Operating Partners were allowed to use hourly employees for "shift management," or as a "shift leader," or in "key hourly" positions. [Doc. 1-1] at 11-13; [Doc. 5] at 3-4. During such times, Plaintiff used an hourly employee named Katrina Russell to perform managerial duties, and she clocked in under administrative hours. [Doc. 1-1] at 13-14; [Doc. 5] at 4-5; [Doc. 19] at 5. When Defendant scheduled a managers' meeting in Columbia, South Carolina, Plaintiff communicated to Defendant that Ms. Russell did not want to travel to the meeting. [Doc. 1-1] at 14; [Doc. 5] at 4.

On August 6, 2014, Defendant gave Plaintiff a "Performance Improvement Plan," which outlined concerns about Plaintiff's performance. [Doc. 19-9]. In the document, Defendant stated, "I am following this up today with written documentation because the trend continued through July. This is a 30 day notice from myself that if improvement is not seen we will be going to a 30 day notification of your Operating Partner Agreement." Id. at 4. The...