Tyson v. BB&T Corporation

Filing 24

MEMORANDUM OPINION. It is so ORDERED. Signed by District Judge Robert E. Payne on 02/21/2017. (walk, )

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division FEB 2 220l7 Cl.ERK. U.S. DISTRICT COURT RICHMOND VA WILLIAM L. TYSON, Plaintiff, v. Civil Case No. 3:16-cv-814 BB&T CORPORATION, Defendant. MEMORANDUM OPINION This matter is before the Court on BB&T CORPORATION'S MOTION TO DISMISS (ECF No. 7). For the reasons set forth below, the motion will be denied. BACKGROUND In the Complaint (ECF No. 1) , William L. Tyson ("Tyson") alleges a breach of contract in connection with two restricted stock award Defendant, Complaint agreements BB&T seeks ("RSAs") Corporation damages, made between ("BB&T") . declaratory, Tyson (Compl. and , and 1) • injunctive based on three separate but alternatively pled claims. ~, 1, 27, 34) . BB&T CORPORATION'S MOTION TO DISMISS the The relief (Compl. ("Def. Mot.") challenges the legal sufficiency of Counts II and III of the Complaint, and requests dismissal of both. (Def. Mot. 1-2). In evaluating the Defendant's Motion, the Court accepts as true all Complaint, well-pleaded allegations in the and views the facts in the light most favorable to Tyson. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). A. Relevant Facts As alleged in the Complaint, Securities, a wholly-owned Tyson was subsidiary of employed by BB&T BB&T, Manager of Capital Markets from 1997 until 2016. as a Senior (Compl. , S) . Towards the end of his employement, Tyson and BB&T entered into two "substantially identical" RSAs. 1 (Compl. , 6). The first RSA was dated February 24, BB&T common stock; 2014, and awarded Tyson 981 shares of the second RSA was dated February 24, and awarded Tyson 3, 188 shares of BB&T common stock. first RSA provided that the equal portions on February stock award would vest 24 of 2015, 2016, and 2015, Id. The in three 2017; the second RSA provided that its award would vest in three equal portions on February 24 of 2016, 2017, and 2018. Id. The RSAs purportedly provided that, if Tyson were to quit or resign from his position, the stock awards would continue to vest pursuant to their original vesting schedule unless Tyson 1 BB&T attached the RSAs to its motion to dismiss; however, in response to Tyson's conclusory objections based on authenticity, BB&T conceded that the Court could rule "without any reference to the RSA Agreements, because all of the pertinent provisions of the RSA Agreements are included among the allegations in the Complaint." (Def. Reply 5-6). The Court will therefore refrain from deciding the issues of authenticity raised in the parties' briefs, and limit its inquiry to the four corners of the Complaint. 2 gained new employment with a Affiliates." (Compl. "competitor of BB&T or any of its , 8) . The determination of whether any of Tyson's subsequent employers constituted a "competitor" was to be made in the sole and unreviewable discretion of the Administrator, " defined as the BB&T Board of Directors, so designated, the Board's Compensation Committee. In the event that without cause," fully and Tyson's was vest. twice (Comp!. if (Compl. , 9). "involuntary was alleges , 7). terminated "involuntarily and without cause." Tyson or, and the RSAs provided that the stock awards would immediately employment termination "Plan that he in Tyson alleges his February Of 2016 Id. received without cause on or about December 20, notice 2015. of termination (Compl. , 10). He further alleges that he entered into a separation agreement with BB&T Securities January 25, that 2016. was fully That executed agreement by all provided parties that on Tyson's employment would effectively terminate no later than February 5, 2016. (Comp!. , 10) . In the agreement and in exchange for a lump-sum severance payment, Tyson agreed to, among other things, a "release of all Securities and Nevertheless, termination, claims the Tyson related to his employment with BB&T termination alleges of that, that at employment." the time of Id. his he was "assured" by BB&T Securities that his RSAs would be vested in full without any restrictions. 3 (Compl. , 11). At that time, he had received only the first one-third portion of the stock award set out in the first RSA. Id. On or about February 16, 2016 (eleven days after the initially provided "effective termination" date), BB&T presented Tyson with an amended separation agreement, employment to February 29, 2016. (Compl. which extended his , 12). Then, on March 1, 2016, Tyson received an offer of employment by BB&T Scott & Stringfellow, (Compl. a , 13). As signed another separation different a division condition of document agreement, that as within accepting purported amended, to in BB&T the void its Securities. offer, the Tyson previous entirety. Id. Nevertheless, Tyson received the severance called for under the purportedly voided agreement. Id. Sometime after his employment began with BB&T Scott and Stringfellow, Tyson became aware that "BB&T had reneged on its promise fully to vest his shares upon his involuntary termination," and had instead vested only the portions due under the RSAs as if he had remained continuously employed by BB&T. (Compl. , 14) . Effective May 1, 2016, Tyson resigned from his employment, and took a new position with Fifth Third Bank as a Senior Managing Director. Although compete with Tyson BB&T (Compl. alleges Scott 1 that & 15). Fifth Third Stringfellow," Bank BB&T "does not Securities notified Tyson that he had forfeited the outstanding portions of 4 the stock awards (Compl. by joining a , 16-17). Tyson competitor of BB&T Securities. alleges that the determination that Fifth Third Bank was a competitor was made by someone other than the Board of Directors or Compensation Committee. alleges that, at the time of his Id. original He also involuntary termination, the unvested shares promised in the RSAs were worth in excess of $120,000.00. market prices, (Compl. Tyson states that , 19). In terms of current the value of the wrongfully forfeited stock still exceeds $90,000.00. Id. B. Procedural Posture Based on the facts alleged in the Complaint, Tyson asserts three alternative claims for relief. Count I seeks in excess of $100, 000 for breach of contract on the required to both RSAs fully vest terminated on February 5, 2016, when the same award, on Tyson was BB&T was effectively and that BB&T' s obligation was unaffected by the severance agreements. seeks theory that the (Compl. alternative ~ 23). Count II theory that BB&T breached the RSAs when it wrongfully declared the forfeiture of the outstanding stock awards in response to Tyson's employment with Fifth Third Bank. ,~ (Compl. 30-33). Finally, and in the alternative to Counts I and II, Count III seeks both declaratory and injunctive relief. (Compl. ,, 34-43). Specifically, it seeks an order that the provisions of the RSAs restricting employment 5 are overbroad and unenforceable as against public policy, as an alternative to an award of money damages, an and, order granting specific performance of the RSAs-i.e, an order granting Tyson 2,453 shares of unrestricted BB&T common stock. Id. In response to these allegations, BB&T CORPORATION'S MOTION TO DISMISS (ECF No. 7) ("Def. Mot.") II and III under Fed. R. Civ. P. supporting memoranda (ECF No. 8) seeks dismissal of Counts 12(b) (6). Id. at 1. In its ("Def. Memo"), BB&T argues that Tyson has failed to demonstrate an entitlement to the $100, 000 in damages alleged in Count II, and otherwise failed to satisfy the elements required of Count III. Id. at 6-9, OPPOSITION TO DEFENDANT'S Resp.") (ECF No. 11), declaratory 9-11. judgment actions under Tyson has filed a MEMORANDUM IN PARTIAL MOTION TO DISMISS and BB&T has filed a reply (ECF No. ("Pl. 12) ("Def. Reply"). The motion is now ripe. LEGAL STANDARD A motion to dismiss under to Fed. R. Civ. P. 12(b) (6) tests the legal sufficiency of the complaint, assuming that the facts alleged are true. Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). To survive such a motion, the Complaint must provide "only a short and plain statement of the claim showing that the pleader is entitled to relief, fair notice of what in order to give the defendant the . . . claim 6 is and the grounds upon sso U.S. S44, SSS which it rests." Bell Atl. Corp. v. Twombly, (2007) (internal Nevertheless, conclusions, quotation this and a rule marks and "requires formulaic citation more than recitation of omitted) . labels and the elements of a cause of action will not do." Twombly, SSO U.S. at SSS. Instead, a complaint must contain "sufficient factual matter, accepted as true, to face, '" 'state a claim to relief that is plausible on its such that it allows the "court to draw the reasonable inference that the defendant alleged." Ashcroft v. Iqbal, is liable SS6 U.S. for the 678 (2009) 662, misconduct (quoting Twombly, sso U.S. at S70). Notwithstanding likelihood of the requirements recovery is not legal sufficiency of the plausibility, required to avoid dismissal. motion to dismiss under Rule 12 (b) (6) the of a A "invites an inquiry into complaint, not an analysis of potential defenses to the claims set forth therein." Brooks v. City of Winston-Salem, N.C., 8S F.3d 178, 181 (4th Cir. 1996). Indeed, a "well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely." Twombly, U.S. at SS6 (internal quotation omitted). 7 SSO DISCUSSION BB&T CORPORATION'S MOTION TO DISMISS seeks dismissal of Counts II and III of Tyson's Complaint on the grounds that those counts fail to state a claim upon which relief can be granted. For the reasons set forth below, BB&T's Motion will be denied. A. Count II: Breach of Contract Count II of the Complaint is pled in the alternative to Count I. 1 27) . In the event that the Court does not (Compl. find that Tyson was entitled to the full stock award due upon his alleged involuntary termination, Tyson alleges that the RSAs were nonetheless portion of the breached law, BB&T stock award forfeit with Fifth Third Bank. contract when which (Compl. both granted. Therefore, the to Tyson's unvested employment 11 29-31). Under North Carolina parties Tyson has plausibly stated a due declared agree governs this claim upon which relief action, can be BB&T' s motion to dismiss will be denied as to Count II of the Complaint. BB&T argues that Count II fails to state a claim because, even if the facts were true, Tyson "would be entitled only to have his Awards continue to vest" schedule in the RSAs. date has "seek [ ing] not yet (Def. Memo. 8-9). Because the next vesting occurred, monetary as provided by the vesting BB&T damages to 8 characterizes which Count Plaintiff II has as no contractual entitlement, This argument recognizes is [and so] musts be dismissed." Id. at 9. contrary to North Carolina law, the doctrine of anticipatory repudiation, which and thus provides a cause of action for breach of contract when one party to a contract unequivocally repudiates any further obligations under the contract. 2 Pappas v. Crist, 223 N.C. 265, 268 (1943). Accepting the facts alleged in the Complaint as true, it is clear that Tyson has pled a claim for anticipatory breach of contract sufficient to withstand a motion to dismiss under Rule 12(b) (6). Tyson alleges that BB&T notified him that he had "forfeited" any remaining rights in the unvested portions of the stock awards, and further alleges that such a declaration was wrongful contrary ,, 30-32). and Assuming to the the language truth of of these the RSAs. allegations, (Compl. BB&T's statements amount to anticipatory repudiation of the contracts. See Edwards v. Proctor, 173 N.C. 41, 44 (1917); see also Pl. Resp. at 5-7. Under North Carolina law, Tyson was thus entitled to sue for breach, notwithstanding the fact that the time for 2 BB&T' s argument also appears to assume that specific performance is the only possible remedy available to Tyson if he were to prevail on Count II. To the contrary, in North Carolina, "[s] pecif ic performance is available to a party only if that party has alleged and proven that he has performed his obligations under the contract and that his remedy at law is inadequate." Cavenaugh v. Cavenaugh, 317 N.C. 652, 656-57(1986) 9 performance (i.e., vesting of the stock award) has yet to occur. 3 Id. BB&T' s motion to dismiss will therefore be denied as to Count II. B. Count III: Declaratory Judgment Count III of the complaint is pled in the alternative to Counts I and II. (Compl. ~ 34). It seeks a declaratory judgment invalidating the provisions in the RSAs that trigger forfeiture of the unvested competitor of ground that reasonable stock BB&T. Tyson awards in BB&T seeks "has apprehension not of the event to dismiss pled that future Tyson this there litigation is Because BB&T's argument relies on a a claim on the any real related provision in the Restricted Stock Award Agreements.a 9). joins to and this (Def. Memo. mistaken view of alternative pleading, BB&T's motion will be denied. The Federal Rules of Civil Procedure specifically provide for alternative and even inconsistent pleading: Alternative Statements of a Claim or Defense. A party may set out two or more statements of a claim or defense alternatively or hypothetically, either in a single count or defense or in separate ones. If a 3 Rather than exposing a defect in Tyson's claim, BB&T's arguments merely highlight the potential difficulty in assessing damages for the alleged breach at trial. See Restatement (First) of Contracts § 338 (1932) ("If trial is reached before the time fixed for performance has arrived, it may be a little harder to apply the rules of damages to the case, for the value of the promised performance and the extent of future harm must be reached by prediction.") 10 party makes alternative statements, the pleading sufficient if any one of them is sufficient. is Inconsistent Claims or Defenses. A party may state as many separate claims or defenses as it has, regardless of consistency. Fed. R. Civ. P. S(d) (2)-(3). In this case, Tyson seeks a declaratory judgment in the alternative to his claims for breach of contract. In doing so, he has plausibly stated a claim upon which relief could be granted. (Compl. ~~ 34-43) (Pl. Resp. 9- 12) . BB&T argues that the fact that Count III has been plead "in the alternative" to Counts I and II does not change the fact that Plaintiff "is truly seeking only a remedy for alleged past misconduct." (Def. Reply This 9). misunderstands alternative pleading. Although it is true that a declaratory judgment under Count III would be inappropriate if Tyson were to prevail under Count I, the Court does not analyze the sufficiency of Count III assuming that the allegations supporting the alternative counts will be proven. Instead, the Court evaluates Count III independently under the well-settled definitions of the "case or controversy" it cannot be requirement. dismissed If Count III meets this requirement, simply because it is brought in the alternative to other, factually inconsistent claims. See Fed. R. Civ. P. S(d). 11 A "case or controversy" definite and concrete, exists when the dispute "is touching the legal relations of parties having adverse legal interests." Aetna Life Ins. Co. v. Haworth, 300 U.S . .227, .240-41 (1937). The controversy must be "real and substantial, 11 "admitting of specific relief through a decree of a conclusive character," advising what facts. 11 Id.; Pittsburgh, question the and distinguishable law would be upon a see also White v. Pa., 913 F . .2d 165, becomes circumstances, "whether show that Nat 1 l 167 the from hypothetical Union Fire (4th Cir. is between parties having adverse alleged, substantial a legal state Ins. Co. 1990). Thus, facts there "an opinion under interests, all of of the the controversy, of sufficient immediacy and realty to warrant the issuance of a declaratory judgment." Maryland Casualty Co. v. Pacific Coal & Oil Co., 31.2 U.S. 270, .273 (1941). Applying this test to Count III of the Complaint, it is clear that Tyson has sufficiently pled his claim for declaratory judgment. Should the Court find that BB&T's actions are justified by the letter of the "competition" provisions in the RSAs, are Tyson seeks a declaratory judgment that those provisions overbroad, contrary unenforceable penalties. actions to common, and to public and represent (Compl. 11 37-41). Declaratory judgment clarify contractual the that fact policy, a 12 obligations of breach already has this sort are allegedly occurred does not render it non-justiciable. See Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). In Medimmune, question whether a the Supreme Court found it to be a close declaratory judgment action could lie in a contract suit where one party continued to pay as required by the contract, immediate there did liability. ruling that a that but live would Id. so under at 122. protest In in addition controversy did exist, have been "no order to to avoid ultimately the Court that dispute" reasoned case the or controversy requirement was "satisfied if petitioner had taken the final step of refusing to make [the contractually-obligated] payments." Id. at 127. The circumstances contemplated by the Supreme Court in Medimmune mirror those alleged in this case. The dispute in this case centers around the interpretation and application of several provisions in a contract between BB&T and Tyson. And, in contrast to Medimmune, BB&T has "taken the final step" of repudiating the contract and declaring its intent not to make any further payment to Tyson. Id. at 127. Moreover, BB&T has done so based on its belief that Tyson has violated the anti-competition restrictions set forth in the RSAs. Under such circumstances, a judgment declaring those same anti-competition provisions invalid would conclusively resolve a live, immediate, and substantial dispute between the parties. Moreover, remedying "alleged past misconduct, " 13 (Def. Reply 9) , far from such a decree would by its terms resolve a present, of public controversy" policy. Thus, requirement Count III ongoing violation satisfies the "case for declaratory judgment actions, or and it is not otherwise rendered non-justiciable simply because it has been plead in the alternative to Counts I and II. BB&T' s motion will therefore be denied. CONCLUSION For the reasons set forth above, BB&T CORPORATION'S MOTION TO DISMISS (ECF No. 7) will be denied. It is so ORDERED. /s/ Robert E. Payne Senior United States District Judge Richmond, Virginia Date: February~' 2017 14

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