Worldwide Jet Charter, Inc. v. Toulatos

85 Arizona Cases Digest 7

523 P.3d 398

WORLDWIDE JET CHARTER, INC., Plaintiff/Appellant,

v.Gus Christopher TOULATOS, Defendant/Appellee.

Worldwide Jet Charter, Inc., Plaintiff/Appellant,

v.Disapong Silberman, Defendant/Appellee.

Nos. 1 CA-CV 21-0717

1 CA-CV 22-0173 (Consolidated)

Court of Appeals of Arizona, Division 1.

Filed December 15, 2022

Denton Peterson Dunn PLLC, Mesa, By Larry A. Dunn, Dustin D. Romney, Brad A. Denton, Counsel for Plaintiff/Appellant

Yen Pilch Robaina & Kresin PLC, Phoenix, By David C. Kresin, Michael Pang, Counsel for Defendant/Appellee Gus Christopher Toulatos

Vasin & Rocco PLLC, Mesa, By Mitchell A. Vasin, Counsel for Defendant/Appellee Disapong Silberman

Judge Jennifer B. Campbell delivered the opinion of the Court, in which Presiding Judge Brian Y. Furuya and Judge Paul J. McMurdie joined.

CAMPBELL, Judge:

¶1 In three appeals, Worldwide Jet Charter, Inc. (Worldwide) has challenged the dismissal of its complaints against former employee-pilots for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. In the first appeal, Worldwide Jet Charter, Inc. v. Moen (Moen ), 1 CA-CV 21-0614, 2022 WL 2812786 (Ariz. App. July 19, 2022) (mem. decision), we affirmed, finding the one-year statute of limitations applicable to employment contracts barred Worldwide's claims. See A.R.S. § 12-541(3). Finding no reason to distinguish Worldwide's claims in these consolidated appeals, we affirm the dismissals in both cases.

BACKGROUND

¶2 Worldwide provides charter jet services and extended offers to hire the defendants, Gus Christopher Toulatos and Disapong Silberman, as pilots. Worldwide provided the defendants conditional offers of employment (Offer) that were substantively identical, each with two attached exhibits: a promissory note (Note) and a training reimbursement agreement (TRA). Toulatos signed the documents in June 2016, and Silberman signed them in September 2018.

¶3 As outlined in the Offer, the defendants’ employment was contingent upon their completion of the specified flight training.¹ Although each defendant was financially responsible for his training, the Offer stated that Worldwide would advance the training costs in accordance with the terms in the attached Note and TRA. The Note provided for payments over two years, but Worldwide agreed to credit the defendants for these payments if they remained employed. If their employment ended before the two-year period expired, however, the defendants became responsible for any balance due. And, if the defendants did not successfully complete the training or terminated their employment within three months after completing the training, they were responsible for the entire cost.

¶4 Toulatos completed the training in July 2016 and resigned 14 months later. Worldwide did not demand any payment from Toulatos until it sued him more than three years later. Silberman completed his training in October 2018, and Worldwide terminated his employment one year later. Worldwide then waited more than one year to sue Silberman.

¶5 In separate complaints, Worldwide alleged breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment based on the defendants’ failure to repay the training costs after their employment ended. In their respective cases, Toulatos and Silberman moved to dismiss under Arizona Rules of Civil Procedure (Rule) 12(b)(6), arguing Worldwide's complaints were time-barred by the one-year statute of limitations applicable to employment contracts. See A.R.S. § 12-541(3). The superior court agreed and dismissed both complaints, rejecting Worldwide's argument that the Note and the TRA were separate from the Offer and subject to the longer limitations periods applicable to actions to collect a debt and enforce a promissory note. See A.R.S. §§ 12-548(A)(1) (six year limitations period for actions for debt based on a writing); 47-3118(A) (six year limitations period for actions to enforce a promissory note).

¶6 In response to the motions to dismiss, Worldwide sought to amend its complaint, arguing that the superior court dismissed the complaint based on incorrect factual assumptions. Worldwide proposed identical amended complaints in both cases, alleging that the parties intended the Note and the TRA to be separate agreements, severable from the employment agreement, independently enforceable, and subject to longer limitations periods. The superior court denied the motions to amend the complaint as futile.

¶7 The superior court then denied Worldwide's motion for reconsideration and awarded attorneys’ fees and costs to Toulatos ($11,187.50) and Silberman ($3,999.25) based on the fee provision in the Offer. After entry of final judgment, Worldwide timely appealed.

DISCUSSION

¶8 Worldwide challenges the superior court's application of the one-year statute of limitations and its orders denying leave to amend the complaints. The contracts and issues here are substantively identical to those addressed in Moen, involving the same plaintiff and another pilot-defendant, and we agree with and follow that decision.

I. Employment Contract

¶9 As in Moen , Worldwide argues that the parties intended for the Note and the TRA to constitute separate agreements, independent of the Offer. The interpretation of a contract presents a question of law, which we review de novo. Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9, 218 P.3d 1045 (App. 2009).

¶10 "The purpose of contract interpretation is to determine the parties’ intent and enforce that intent." Id. To do so, "we first consider the plain meaning of the words in the context of the contract as a whole." Id. (citing United Cal. Bank v. Prudential Ins. Co. of Am., 140 Ariz. 238, 259, 681 P.2d 390 (App. 1983) ). If the text is unambiguous, we apply the language as written. Grosvenor, 222 Ariz. at 593, ¶ 9, 218 P.3d 1045. The parties’ disagreement about the meaning of the language does not, by itself, constitute an ambiguity. United Cal. Bank, 140 Ariz. at 258, 681 P.2d 390.

¶11 Relying on language in the TRA that states, "WHEREAS, [Worldwide] and Employee acknowledge and agree that this [TRA] is not intended to constitute any type of employment agreement or guarantee of continued employment[,]" Worldwide asserts that the parties did not intend to incorporate the Note and the TRA into the Offer. While this term suggests an intent that the TRA is not a stand-alone employment agreement, it does not negate the requirement that to accept the Offer, the defendants had to accept the TRA secured by the Note. In other words, Worldwide conditioned its offer of employment on the defendants’ acceptance of the Offer, the Note, and the TRA. Thus, the three documents operated together, and the obligations in the three documents were all required to form the employment relationship contemplated by the parties.

¶12 The Offer demonstrates the parties’ intent to incorporate the Note and the TRA as part of the contract, stating in relevant part:

Your employment is contingent upon your successful completion of [various requirements] and your signing of this letter agreement and each of the attached exhibits. The date of your successful completion of all of these items will be your "Effective Hire Date."

The following are some of the more significant benefits, terms and conditions of your conditional offer of employment.

...

[ ] Initial Training. You are required to successfully complete Worldwide Jet Charter's approved initial training and checking program such that you can be added to the Company's Certificate .... The cost of this training and checking program is [$35,378.08 in the Toulatos Offer and $40,448 in the Silberman Offer] (the "Training Costs") and is your responsibility. The Company agrees to finance the Training Costs on your behalf in accordance with the terms contained in the Promissory Note attached hereto as Exhibit A (the "Promissory Note") and the Training Reimbursement Agreement attached hereto as Exhibit B. The Promissory Note provides for payment of the full amount of the Training Costs, plus interest, over a period ending two (2) years after your Effective Hire Date. For so long as you remain employed with the Company during such two (2) year period, the Company agrees to credit you (at no cost to you) with making the payments which are required to be made by you under the terms of the Promissory Note. If you cease to be employed by the Company for any reason whatsoever (whether your employment is terminated voluntarily or involuntarily, or with or without cause) during such two (2) year period, the Company will no longer have any obligation to credit you with making payments under the Promissory Note, your remaining obligations under [the] Promissory Note will be accelerated and become immediately due and payable, and you will be responsible to pay immediately the entire unpaid balance of the Promissory Note.

(Emphasis added.)

¶13 While attaching the Note and the TRA to the Offer does not, by itself, show an intent to incorporate them, the Offer's references to both documents setting forth some of the "terms and conditions" of the employment contract reflects such an intent. See United Cal. Bank, 140 Ariz. at 258, 681 P.2d 390. Simply put, without the Note and the TRA, the "Initial Training" provision in the Offer is meaningless. But taken together, Worldwide made clear it would not hire the defendants unless they completed the training financed under the Note and defined in the TRA terms.

¶14 Despite the Offer's plain language, Worldwide points to Mesa Airlines, Inc. v. Condron, 1 CA-CV 16-0326, 2017 WL 4638171 (Ariz. App. Oct. 17, 2017) (mem. decision), to argue that the Note and the TRA should be interpreted as separate contracts. In Mesa Airlines , the airline and the pilots’ union, of which the defendant pilot was a member, previously entered into a collective bargaining agreement. Id. at *1, ¶ 3. That agreement provided...