Messina v. North Central Distributing, Inc.

Filing 103

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Yosemite's Motion for Summary Judgment is DENIED 90 . (Written Opinion) Signed by The Hon. Paul A. Magnuson on 05/30/2017. (LLM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Richard A. Messina,

Case No. 14-cv-3101 (PAM/KMM)
Plaintiff,

v.

MEMORANDUM AND ORDER

North Central Distributing, Inc.,
d/b/a Yosemite Home Décor,
Defendant.
__________________________________________________________
This matter is before the Court on Defendant’s Motion for Summary Judgment.
For the following reasons, the Motion is denied.
BACKGROUND
The facts of this case would make an excellent law school final exam. Defendant
North Central Distributing, Inc., doing business as Yosemite Home Décor (“Yosemite”),
is a national home fixture retailer and supplier headquartered in Fresno, California.
Plaintiff Richard Messina is a senior sales and marketing executive with over 20 years of
experience in the sales and marketing industry. (Koligian Decl. (Docket No. 92) Ex. 1 at
Ex. 3.)
After viewing Yosemite’s products at a tradeshow in early August 2012, Messina
applied for a position as Yosemite’s vice president of sales. (Messina Dep. (Docket No.
98-1) at 76.) Yosemite’s Vice President Rockie Bogenschutz called Messina to discuss
potential employment after receiving his resume. (Id. at 76-77.) Messina followed up

that call with an email stating, among other things, that he would “need an initial contract
that gives [him] a specific timeline guaranteed.” (Reed Decl. (Docket No. 98) Ex. 3 at 2.)
On August 10, 2012, Messina interviewed with Yosemite in California. (Id. at
116.) Messina alleges that Bogenschutz provided Messina with a document during the
interview as “a negotiation starting point.” (Messina Dep. at 136.) Messina objected to
the document’s at-will employment provision and asked Yosemite to replace it with a
provision guaranteeing him a two-year employment term. (Id. at 61, 137, 138, 147-48.)
Bogenschutz’s son made the requested change and provided Messina with a revised
version that Messina intended to review later with his attorney. (Id. at 131, 137, 143.)
The revised document is titled “Memo of Understanding” and first states, “In follow-up
to recent conversations and meetings, outlined below is an initial draft for your
consideration as to what your role will be with Yosemite Home Décor, and a proposed
compensation plan.”

(Reed Aff. Ex. 6 (Docket No. 98-6) at 1.)

The “Memo of

Understanding” detailed the job’s title (Vice President of Sales), responsibilities, work
schedule, compensation ($120,000 annual salary), expectations, and term (2 years). (Id.)
The only difference between the revised document and the original was that the two-year
employment provision replaced the at-will employment provision. (Messina Dep. at 141;
see also Reed Aff. Ex. 6 at 1.)
Later that night, Bogenschutz emailed Messina, expressed his interest in hiring
Messina either part- or full-time, and stated, “I am willing to make you an offer either
way. If you work with us full time we would want a contract in writing that you will

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dedicate your entire time and attention to promoting Yosemite products.” (Reed Decl.
Ex. 4 at 2.)
The next day, Bogenschutz called Messina, offered him the job, and Messina
accepted.

(Id. at 144, 149.)

Messina started working for Yosemite the following

Monday, August 13. (Id. at 62, 149.) During his first week of employment, Messina and
Yosemite continued to negotiate the terms of his employment, including commission
rates.

(Id. at 154-56, 159-60, 168.)

On Tuesday, August 14, Messina signed an

“Employee Handbook Acknowledgment” that stated, among other things, “[Messina’s]
employment and compensation can be terminated, with or without cause, and with or
without notice, at any time, at the option of either [Yosemite] or [Messina].” (Reed Decl.
Ex. 5; Messina Dep. at 177-78, 283-84.)

It went on to state that “this agreement

supersedes all prior agreements, understandings and representations concerning
[Messina’s] employment.” (Reed Decl. Ex. 5.) Messina back dated the “Employee
Handbook Acknowledgment” to August 13. (Messina Dep. at 284.)
On August 18, Messina signed the “Memo of Understanding” and also back dated
it to August 13. (Messina Dep. at 179, 286; Reed Decl. Ex. 6.) Messina’s wife wrote
“Rick Contract 8/18/12 Mailed out original” on the document and mailed it to Yosemite
at that time. (Reed Decl. Ex. 6; Messina Dep. at 164.) The space where Bogenschutz
was supposed to sign is left blank.

(Reed. Decl. Ex. 6.)

Messina also emailed

Bogenschutz that day, informing him that he mailed a signed copy of what he referred to
as a “contract.”

(Reed Decl. Ex. 7.)

Bogenschutz responded with excitement and

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thanked Messina, but did not specifically refer to a 2-year term, a “contract,” or the
“Memo of Understanding.” (Id.)
During his employment, Messina’s title was Vice President of Sales and Yosemite
paid him a base salary of $10,000 per month. (Messina Dep. at 186, 281.) In early
February 2013, Yosemite fired Messina. (Id. at 20.)
On July 1, 2014, Messina filed this lawsuit in Minnesota state court alleging
breach of contract, breach of the covenant of good faith and fair dealing, wrongful
termination, unjust enrichment, promissory estoppel, and a violation of Minn. Stat.
§ 325E.37. (Compl. (Docket No. 1-1) ¶¶ 8-30.) Yosemite removed the case to this
Court. (Notice of Removal (Docket No. 1).) Yosemite subsequently filed a motion to
transfer venue and a motion to compel arbitration. (Docket Nos. 9, 37.) The Court
denied both motions (Docket Nos. 31, 53), but granted a motion to stay pending
Yosemite’s appeal of the Court’s denial of its motion to compel arbitration. (Docket No.
72.) The Eighth Circuit affirmed. Messina v. N. Cent. Distrib., Inc., 821 F.3d 1047 (8th
Cir. 2016). On February 7, 2016, the parties’ filed a stipulation of partial dismissal of
Messina’s claims for breach of the covenant of good faith and fair dealing, wrongful
termination, promissory estoppel, and a violation of Minn. Stat. § 325E.37. (Docket No.
86.) Yosemite now seeks summary judgment on Messina’s breach-of-contract and unjust
enrichment claims.
DISCUSSION
Summary judgment is proper if there are no disputed issues of material fact and
the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The
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Court must view the evidence and inferences that may be reasonably drawn from the
evidence in the light most favorable to the nonmoving party. Enter. Bank v. Magna
Bank, 92 F.3d 743, 747 (8th Cir. 1996). The moving party bears the burden of showing
that there is no genuine issue of material fact and that it is entitled to judgment as a matter
of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A party opposing a properly
supported motion for summary judgment may not rest on mere allegations or denials, but
must set forth specific facts in the record showing that there is a genuine issue for trial.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
A.

Breach of Contract, Statute of Frauds, and Equitable Estoppel
To establish a breach-of-contract claim under Minnesota law, 1 a plaintiff must

show that (1) a contract was formed; (2) the plaintiff performed any conditions precedent;
and (3) the defendant breached the contract. Carlsen v. GameStop, Inc., 833 F.3d 903,
911 (8th Cir. 2016) (quoting Park Nicollet Clinic v. Hamann, 808 N.W.2d 828, 833
(Minn. 2011)). The existence and terms of a contract are ordinarily questions of fact to
be determined by the jury. Watkins Inc. v. Chilkoot Distrib., Inc., 655 F.3d 802, 805 (8th
Cir. 2011) (citing Morrisette v. Harrison Int’l Corp., 486 N.W.2d 424, 427 (Minn. 1992).
The parties dispute the existence and terms of Messina’s employment contract.
Messina argues that the parties formed a 2-year employment contract on August 18 when
he signed and mailed the “Memo of Understanding” to Yosemite. Yosemite argues that
Messina mailing the “Memo of Understanding” constitutes a counteroffer that Yosemite
never accepted. If the analysis ended here, summary judgment would be inappropriate.
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The parties do not dispute that Minnesota law applies.
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But Yosemite also argues that the statute of frauds bars Messina’s claim. When a
contract cannot be fully performed within one year, Minnesota law requires that contract
to be in writing and signed. Minn. Stat. § 513.01(1). Even assuming that the parties
formed a two-year employment contract on August 18, the statute of frauds bars
Messina’s claim because Yosemite did not sign the “Memo of Understanding.”
Messina counters that Yosemite should be estopped from asserting the statute of
frauds. “Estoppel is an equitable doctrine addressed to the discretion of the court and is
intended to prevent a party from taking unconscionable advantage of his own wrong by
asserting his strict legal rights.” N. Petrochem. Co. v. U. S. Fire Ins. Co., 277 N.W.2d
408, 410 (Minn. 1979). A party seeking to assert the doctrine of equitable estoppel “must
prove three elements: (1) that representations were made; (2) that the party reasonably
relied on such representations; and (3) that it will be harmed if estoppel is not applied.”
EEP Workers’ Comp. Fund v. Fun & Sun, Inc., 794 N.W.2d 126, 134-35 (Minn. Ct. App.
2011). A representation “may consist of silence.” Id. (citation and quotations omitted).
“While estoppel is ordinarily a question of fact for the jury, when only one inference can
be drawn from the facts, the question is one of law.” Highway Sales, Inc. v. Blue Bird
Corp., 559 F.3d 782, 790 (8th Cir. 2009) (citing L & H Transport, Inc. v. Drew Agency,
Inc., 403 N.W.2d 223, 227 (Minn. 1987)).
On the one hand, Messina argues that Yosemite made an affirmative
representation to him when Bogenschutz told him that Yosemite would want a contract in
writing before hiring him, and a representation by silence when Bogenschutz emailed
Messina, thanked him for mailing the alleged contract, and gave him a title and paid him
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according to the alleged contract’s terms. Based on these facts, a reasonable juror could
infer that Yosemite should be estopped from raising the statute of frauds.
On the other hand, Yosemite argues that it made an affirmative representation that
Messina was an at-will employee through the “Employee Handbook Acknowledgment,”
and Messina could not have reasonably relied on a two-year employment contract
because he signed the “Employee Handbook Acknowledgment.” Based on these facts, a
reasonable juror could infer that Yosemite should not be estopped from raising the statute
of frauds.
Because more than one equitable estoppel inference can be drawn from the facts
here, summary judgment is inappropriate.
B.

Unjust Enrichment
“To establish an unjust enrichment claim, the claimant must show that the

defendant has knowingly received or obtained something of value for which the
defendant ‘in equity and good conscience’ should pay.” ServiceMaster of St. Cloud v.
GAB Bus. Servs., Inc., 544 N.W.2d 302, 306 (Minn. 1996) (citation omitted). An unjust
enrichment claim may lie when “the defendants’ conduct in retaining the benefit is
morally wrong.” Schumacher v. Schumacher, 627 N.W.2d 725, 729-30 (Minn. Ct. App.
2001) (citations omitted). Unjust enrichment is an equitable remedy that is only available
when a plaintiff lacks an adequate remedy at law. United States v. Bame, 721 F.3d 1025,
1030 (8th Cir. 2013).
Yosemite first argues that Messina’s unjust enrichment claim fails as a matter of
law because Messina’s breach-of-contract claim and the parties’ arbitration agreement
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constitute adequate remedies at law.

Yosemite, however, fails to cite any caselaw

supporting the proposition that arbitration constitutes an adequate remedy at law, and the
Court did not find any such precedent. Moreover, a plaintiff is entitled to plead equitable
causes of action in the alternative to legal causes of action. See Spectro Alloys Corp. v.
Fire Brick Eng’rs Co., 52 F. Supp. 3d 918, 932 (D. Minn. 2014) (Montgomery, J.)
(“Where a plaintiff’s primary contract claim may fail to provide a legal remedy, equitable
claims may be appropriate . . . . Thus, a party may simultaneously pursue equitable
remedies despite the fact that it is barred from ultimately recovering at both law and
equity.”).

Here, Messina alleges that Yosemite breached his two-year employment

contract. In the alternative, if a jury determines that the parties did not form a contract,
Messina alleges that Yosemite was unjustly enriched. Such an alternative theory is
proper.
Finally, Yosemite argues that, regardless whether Messina has an adequate remedy
at law, there is no evidence in the record that Yosemite received anything of value
because Messina did not make any sales. Although Yosemite is correct that Messina was
unable to identify any sales or profits attributable to him or his sales representatives
during his deposition (Messina Dep. at 124-28), there is evidence in the record that
Messina and his sales representatives established a relationship with Menard’s Inc., that
Yosemite eventually sold products to Menard’s, and that Messina did not receive a
commission on those sales. (Reed Decl. Ex. 9 at 53-54.) A genuine issue of material fact
therefore exists regarding whether Yosemite was unjustly enriched by not paying
Messina any commissions that he deserved.
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CONCLUSION
Because genuine issues of material fact exist regarding contract formation,
equitable estoppel, and unjust enrichment, summary judgment is inappropriate.
Accordingly, IT IS HEREBY ORDERED that Yosemite’s Motion for Summary
Judgment (Docket No. 90) is DENIED.
Dated: May 30, 2017

s/ Paul A. Magnuson
Paul A. Magnuson
United States District Court Judge

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