Marrow v. SSOE, Inc.

599 F.Supp.3d 593

John F. MARROW, Plaintiff,

v.SSOE, INC., Defendant.

Case No. 3:20 CV 1471

United States District Court, N.D. Ohio, Western Division.

Signed April 21, 2022

Corey L. Tomlinson, Amy L.J. Luck, Robison, Curphey & O'Connell, Toledo, OH, for Plaintiff.

Joseph R. Torda, R. Ethan Davis, Barkan & Robon, Maumee, OH, for Defendant.

MEMORANDUM OPINION AND ORDER

James R. Knepp II, UNITED STATES DISTRICT JUDGE

INTRODUCTION

This is a breach of contract case regarding Plaintiff John F. Marrow's resignation from the employment of Defendant SSOE, Inc. Currently pending are fully-briefed cross-motions for summary judgment. Jurisdiction is proper under 28 U.S.C. § 1332. For the reasons discussed below, the Court GRANTS Plaintiff's Motion for Summary Judgment (Doc. 25), and correspondingly DENIES Defendant's Motion for Summary Judgment (Doc. 30).

BACKGROUND

The underlying facts are not in dispute. Plaintiff worked for Defendant, an engineering/architectural firm, from 2005 through his departure in 2012. He became a Principal in 2010. Between 2007 and 2009, Plaintiff purchased 1,995 shares of SSOE common stock, which was governed by a Stock Redemption Agreement. (Doc. 25-2). Plaintiff paid for these shares with $117,934 in cash and a Cognovit Promissory Note dated December 18, 2009 in the amount of $324,933. See Doc. 8 at ¶ 8; Doc. 25-3. The Stock Redemption Agreement provided that in the event of a stockholder's termination of employment, "the Stockholder shall be bound and obligated to sell and the Corporation shall be bound and obligated to purchase all of the stock owned by said Shareholder." (Doc. 25-2, at ¶ 4(a)). The Agreement provided a method for determining the price of the stock, and the terms of payment, including interest. See id. at ¶ 7. As of July 6, 2012, Defendant's stock was valued at $420.37 per share. (Doc. 8, at ¶ 17).¹

Plaintiff's employment as a Principal of Defendant was governed by an Employment Agreement he signed January 1, 2010. (Doc. 25-1). That agreement contained the following provisions:

2.4 Early Retirement or Voluntary Termination – In the event Employee desires to terminate his employment hereunder, or if after attaining the age of fifty-five (55) years he desires to take early retirement, he shall give such advance notice of his intention to do so as is acceptable to the Board of Directors and the date of his intended actual termination of employment, subject, however, to the provision that under no circumstances may the Board of Directors require more than six (6) months’ advance notice. Effective date of termination, for purposes of this Paragraph 2.4, shall be the date finally agreed upon between Employee and the Board of Directors as to Employee's date of termination.

* * *

2.6 Failure to Give Adequate Notice – Under the circumstances described in Paragraph[ ] ... 2.4, Employee is required to give Employer advance notice of Employee's desire to terminate his employment hereunder, or to retire after attaining age 55 years. Employee and Employer agree that these notice requirements are of the utmost importance to Employer, since time will be required for Employer to locate a person to replace Employee and/or it will take Employee time in which to conclude the work which has been assigned to him. It is further agreed that in the event Employee fails to give the required notice, as hereinbefore described, such failure shall be a breach of this Agreement and Employer will be damaged in an amount difficult, if not impossible, to accurately determine. Therefore, Employee agrees that in the event of such a breach, he will pay, as liquidated damages and not as a penalty, an amount equal to twenty five (25%) percent of the amount which Employer is obligated to pay to Employee under the terms and conditions of a certain Stock Redemption Agreement dated March 20, 1970 ... as amended. In the event the provisions of this Paragraph 2.6 are applicable, the amount which Employee owes to Employer shall be offset against the amount which Employer owes to Employee under the Redemption Agreement, with the result that Employer shall pay to Employee seventy five (75%) percent of the amount to which Employee is entitled under the Redemption Agreement.

(Doc. 25-1, at 4-5). Plaintiff also signed a Principals’ Non-Solicitation Agreement. (Doc. 30-3). That agreement lacked a specific penalty provision for non-compliance, but stated "breach of any or all of the provisions ... will result in immediate and irreparable injury to Employer and will allow Employer to have recourse to injunction and/or specific performance to enforce its rights hereunder" and "[t]he obtaining of such equitable relief will not prevent Employer from pursuing any other remedies available to it." Id. at 2.

On June 14, 2012, Plaintiff received an offer to be the Chief Operating Officer of The Harris Group's Seattle, Washington office; he accepted the offer the following day. (Plaintiff Depo., at 17-18)² .

On June 20, 2012, Plaintiff hand-delivered a letter of resignation to Defendant's then-CEO Tony Damon. Id. at 20-21. Therein, Plaintiff stated that he was "keen to work with [Damon] and the Board of Directors to agree [to] appropriate notice period arrangements in order to effect as smooth and proper hand-over and succession of my current projects and duties as possible." (Doc. 30-6). Damon recalls Plaintiff also told him he was leaving on vacation in a couple of weeks, and planned to go to Seattle to look for housing and investigate schools for his children. (Damon Aff., Doc. 30-7, at ¶ 4). Damon says he "reminded John of his Non-Solicitation Agreement, as well as the six months’ notice of resignation requirement of the SSOE Principal Employment Agreement" and that Plaintiff "acknowledged the Non-Solicitation Agreement, and asked if SSOE would waive the six months’ notice of resignation requirement." Id. at ¶ 5. Plaintiff disputes that he made such a waiver request. (Plaintiff Depo., at 24-25). Damon agreed to take the issue to Defendant's Board of Directors. Id. ; Doc. 30-8 (June 26, 2012 email from Damon to Plaintiff stating, inter alia , "I will be calling a special Board meeting for purposes of acting on your request to resign your position and waive the 6 month notice required by our employment agreement.").

On June 25, 2012, Plaintiff emailed board member Craig Bowie summarizing his recommendations for transitioning his responsibilities. (Doc. 25-5). He further described suggested timing for his departure, noting he had vacation planned for July 9 – 26, 2012, and "would suggest a couple more weeks after vacation transitioning and handing over (Possibly to 10th August) but that is your call. I am happy to fit in with whatever works best for SSOE." Id.

Defendant's Board of Directors held a special meeting on June 29, 2012 to consider Plaintiff's resignation and date of termination. See Doc. 30-9. The Board determined they would accept Plaintiff's resignation and "[t]he requirement to provide adequate notice of termination up to 6 months as required by paragraph 2.6 of the Principal Employment Agreement and the associated 25% stock value liquidated damages provision will be deferred and ultimately waived contingent upon [Plaintiff] honoring the terms and conditions of the Principal non-solicitation agreement." Id. at 1. It further determined "Jim Jaros will develop a detailed separation agreement incorporating these terms for John's signature". Id. at 2.

Shortly thereafter, on July 2, 2012, Monica Dugan, Director of Corporate Human Resources for Defendant, wrote Plaintiff a letter stating, inter alia , "[t]he close of the workday on July 6, 2012, is considered the date of termination of employment with SSOE, Inc." (Doc. 25-6); see also Doc. 30-13 (email regarding letter). Plaintiff responded to this email the same day and asked if there was any way he could keep his SSOE medical coverage until the end of the month. See id. ; (Plaintiff Depo., at 48).

On July 5, 2012, Plaintiff met with Damon and Dugan. (Damon Aff., Doc. 30-7, at ¶ 8); see also Jaros Depo., at 109³ . At that meeting, they "discussed that July 6, 2012" would be Plaintiff's last day of employment. (Damon Aff., Doc. 30-7, at ¶ 8). Damon presented Plaintiff with a separation agreement, which he said he would have his attorney look over, and they discussed Plaintiff's current work-in-progress. Id. Plaintiff agreed to provide a report and market analysis regarding Defendant's South Africa expansion project. Id.

The proposed separation agreement, entitled "Agreement to Purchase/Sell Stock and Units and Other Matters Related to Resignation", repeated the part of Paragraph 2.6 of the Employment Agreement regarding adequate notice, and stated Defendant would "hold in escrow the sum of $209,659.64, which is the total amount of the liquidated damages under Paragraph 2.6 of the Employment Agreement", with interest accruing at the Wall Street Journal prime rate as of November 6, 2012. (Doc. 25-7, at 3). The agreement stated that the escrowed amount would be released on July 6, 2016 (four years later) pending compliance with the Employment Agreement, Non-Solicitation Agreement, and Confidentiality Agreement. Id. at 4-5. It further stated that "on June 20, 2012, [Plaintiff] submitted a document to [Defendant] under which he notified [Defendant] that such resignation would be effective as an officer as of June 20, 2012 and as an employee as of July 6, 2012." Id. at 1. Plaintiff refused to sign the agreement. (Marrow Depo., at 41).

Defendant called the Cognovit Note as of July 6, 2012, Plaintiff's termination date, and Plaintiff paid it in full. (Doc. 8, at ¶¶ 18-20); (Marrow Depo., at 64-66). On July 9, 2012, Plaintiff transferred his shares back to Defendant. See Doc. 25-8; Doc. 8, at ¶ 23.

Plaintiff provided an email summary regarding the South Africa project to Damon on July 7, but per Damon it was "insufficient, and not what [they] had discussed". (Doc. 30-7, at ¶ 9). Damon emailed P...