Stello v. Ark Engineering & Technical Services, Inc. et al
Filing
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Chief Judge Patti B. Saris: MEMORANDUM AND ORDER entered. Defendants Motion to Dismiss Counts 2-4 of Plaintiff's Complaint 9 is ALLOWED IN PART AND DENIED IN PART. Counts 2 and 4 of Stello's complaint are DISMISSED. Defendant's motion to dismiss Count 3 is DENIED.(Geraldino-Karasek, Clarilde)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
JEFFREY STELLO,
Plaintiff,
v.
ARK ENGINEERING & TECHNICAL
SERVICES, INC., ARK FIELD
SERVICES, LLC, ROBERT ALLEN
and MARY ALLEN,
Defendants.
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Civil Action No. 15-10590-PBS
MEMORANDUM AND ORDER
July 14, 2015
Saris, U.S.D.J.
Plaintiff Jeffrey Stello was fired from his position as CEO
of Ark Engineering & Technical Services, Inc. and ARK Field
Services, LLC (collectively “Ark”). Stello responded by filing
this lawsuit, raising claims for (1) breach of contract; (2)
wrongful termination in violation of public policy; (3) breach of
the implied covenant of good faith and fair dealing; (4) tortious
interference with contract; and (5) a declaratory judgment.
Defendants now move to dismiss Counts 2-4 under Federal Rule of
Civil Procedure 12(b)(6), which Stello opposes. (Docket Nos. 9,
12). Defendants’ Motion to Dismiss Counts 2-4 of Plaintiff’s
Complaint (Docket No. 9) is ALLOWED IN PART AND DENIED IN PART.
Counts 2 and 4 of Stello’s complaint are DISMISSED. Defendants’
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motion to dismiss Count 3 is DENIED.
A. Wrongful Termination in Violation of Public Policy (Count 2)
Stello’s wrongful termination claim (Count 2) fails because
he was not an “at-will” employee. A claim for wrongful
termination in violation of public policy is “an exception to the
general rule that an employer may terminate an at-will employee
at any time with or without cause.” King v. Driscoll, 638 N.E.2d
488, 492 (Mass. 1994) (emphasis added). For this reason, only atwill employees can allege that they were wrongfully terminated in
violation of public policy. See Willitts v. Roman Catholic
Archbishop of Boston, 481 N.E.2d 475, 479 (Mass. 1991) (“The
common law doctrine granting an employee a cause of action for
wrongful discharge, if the reason for the discharge is contrary
to public policy, is limited to at-will employees.”); Locke v. US
Airways, Inc., 2013 WL 5441725, at *3 (D. Mass. 2013)
(“Massachusetts law is clear that this cause of action is
available only to ‘at-will’ employees.”). Stello has admitted
that he was not an “at will” employee because his contract
provided severance unless he was terminated for cause. (Docket
No. 12:8 n.1, 14); see also Williston on Contracts § 54:40 (4th
ed. 2010) (explaining that employees who cannot be terminated
without just cause are not at-will employees). Therefore, the
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Court will dismiss Stello’s wrongful termination claim.1
B. Implied Covenant of Good Faith and Fair Dealing (Count 3)
Defendants next argue that Stello’s claim for breach of the
implied covenant of good faith and fair dealing should be
dismissed because his severance package is not compensation for
past services performed. Defendants also argue that the good
faith and fair dealing claim is duplicative of Stello’s breach of
contract claim (Count 1). Both of these arguments fail.
To begin with, the implied covenant of good faith and fair
dealing is broad enough to cover Defendants’ alleged refusal to
pay severance to Stello in bad faith. Under Massachusetts law,
the implied covenant of good faith and fair dealing provides that
“neither party shall do anything that will have the effect of
destroying or injuring the rights of the other party to receive
the fruits of the contract.” Anthony’s Pier Four, Inc. v. HBC
Assocs., 583 N.E.2d 806, 820 (Mass. 1991) (quotation marks
omitted). In the employment context, the implied covenant of good
faith and fair dealing “prevent[s] an employer from being
unjustly enriched by depriving the employee of money that he had
fairly earned and legitimately expected.” King, 673 N.E.2d at
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The Court raised this issue at the hearing, providing
notice and an opportunity for the parties to respond. See CeperoRivera v. Fagundo, 414 F.3d 124, 130 (1st Cir. 2005) (explaining
that sua sponte dismissals are erroneous unless the parties have
been afforded notice and an opportunity to amend the complaint or
otherwise respond).
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862. Employers cannot, for example, deprive sales agents of a
commission by “terminating the contractual relationship when the
agent is on the brink of successfully completing the sale.”
Fortune v. Nat’l Cash Register Co., 364 N.E.2d 1251, 1257 (Mass.
1977). Similarly, in Williams v. B & K Medical Systems, Inc., 732
N.E.2d 300 (Mass. App. Ct. 2000), an employer accused the
plaintiff of wrongdoing, demanded the plaintiff’s immediate
resignation, and threatened to ruin his career. Id. at 302. More
to the point, the employer also offered only two and a half
months of severance, even though plaintiff’s contract called for
twelve months notice with full salary and benefits unless he was
terminated for cause. Id. The Court found that these actions
constituted a breach of the implied covenant of good faith and
fair dealing. Id. at 305.
Under this caselaw, Stello’s complaint states a valid claim
for breach of the implied covenant of good faith and fair
dealing. According to the allegations (which are hotly disputed),
soon after coming aboard as CEO, Stello learned that Ark was
about to sink. Namely, there was a flood of registry, licensing,
and tax laws that Ark was ignoring in numerous states where it
was operating. When Stello refused to stay silent about these
issues, Defendants terminated him. As in Williams, Stello also
says that Defendants falsely claimed that the termination was for
cause, which was a mere ploy to avoid paying his severance
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package. The Court recognizes that the severance package was not
a wage or bonus directly tied to services Stello provided to Ark.
But the complaint nevertheless alleges that Ark dishonestly
deprived Stello of money that was “fairly earned and legitimately
expected” under the contract. King, 673 N.E.2d at 862. As a
result, the Court finds that Stello has stated a viable claim for
breach of the implied covenant of good faith and fair dealing.
C. Tortious Interference (Count 4)
Finally, Defendants Robert and Mary Allen argue that
Stello’s tortious interference claim falls short because they are
Ark’s alter ego. Therefore, the Allens say that they were parties
to the contract and cannot be held liable for tortious
interference. See Harrison v. NetCentric Corp., 744 N.E.2d 622,
632 (Mass. 2001) (“A party to the contract cannot be held liable
for intentional interference.”). The Court agrees. Under
Massachusetts law, corporations and individual defendants are
“indistinguishable” when the individuals are the corporation’s
“sole stockholder.” Id.; see also Schinkel v. Maxi-Holding, Inc.,
565 N.E.2d 1219, 1226 (Mass. App. Ct. 1991) (explaining that a
CEO might be “so closely identified with the corporation itself,
and with its policies, that he should not be treated as a third
person in relation to corporate contracts”); Terespolsky v. Law
Offices of Stephanie K. Meilman, P.C., 2004 WL 333606, at *6
(Mass. Sup. Ct. Feb. 23, 2004) (rejecting tortious interference
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claim where defendant was President, Clerk, Treasurer, sole
director, owner, and sole shareholder and maintained control over
all aspects of the operation). Here, Stello’s complaint alleges
that the Allens collectively own 100% of the shares in Ark, serve
as its directors and officers, and are the sole members of ARK
Field Services. The Allens are indistinguishable from Ark itself.
As a result, they cannot be liable for intentional interference.
IV. ORDER
Defendants’ Motion to Dismiss Counts 2-4 of Plaintiff’s
Complaint (Docket No. 9) is ALLOWED IN PART AND DENIED IN PART.
Counts 2 and 4 of Stello’s complaint are DISMISSED. Defendant’s
motion to dismiss Count 3 is DENIED.
/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge
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