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Fenzel v. Group 2 Software, LLC

United States District Court, D. Maryland

March 7, 2016



DEBORAH K. CHASANOW United States District Judge

Presently pending and ready for review in this breach of contract action are motions for summary judgment filed by: (1) Defendant Group 2 Software, LLC (“Group 2”) (ECF No. 87); (2) Defendant Deven Software, LLC (“Deven”) (ECF No. 88); and (3) Defendant Thomas C. Bowen (ECF No. 89). Also pending are cross-motions for partial summary judgment filed by Plaintiff Harry J. (“Jerry”) Fenzel (“Plaintiff”). (ECF Nos. 92; 93). The relevant issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motion for summary judgment filed by Group 2 will be granted in part and denied in part. The motions for summary judgment filed by Deven and Mr. Bowen will be granted, and the cross-motions for partial summary judgment filed by Plaintiff will be denied.

I. Background

A. Factual Background

This case involves several contract, fraud, and equitable claims. Plaintiff provided consulting services to Group 2, a company that develops, promotes, and sells software packages for use in merger and acquisition transactions (the “EMA software”). According to Plaintiff, he learned about an opening for a CEO position at Group 2 in November 2010. Plaintiff met with Mr. Bowen, the owner or managing member of Group 2, on November 12, 2010. (ECF No. 92, at 1). Plaintiff alleges that, between January and April 2011, without a formal contractual or employment relationship, he assisted Mr. Bowen in building a website for Group 2, securing office space, and discussing business strategies. Plaintiff did not request or receive any compensation for this work. (Id. at 2). In early 2011, Plaintiff negotiated the terms for his consulting contract with Group 2 and Group 2’s lawyers. (Id.; see ECF No. 92-4). Plaintiff alleges that on May 19, “[Mr.] Bowen, on behalf of Group 2, and Plaintiff executed Plaintiff’s employment contract dated May 1, 2011 [(the ‘May 1 Agreement’)].” (ECF No. 92, at 2). The May 1 Agreement provides that, “[c]ommencing May 1, 2011[, Plaintiff] will become a consultant to Group 2, assuming the role of CEO, and will devote such time as shall be necessary to further the business of Group 2.” (Id. ¶ 1).

Under the May 1 Agreement:

Commencing on May 1, 2011, and for 52 consecutive weeks thereafter, [Plaintiff’s] compensation will be $2, 000 per week. Unless agreed to otherwise by the Parties, [Plaintiff] will be paid $1, 000 per week with the difference of $1, 000 to be deferred and recognized as an obligation of Group 2 until paid by Group 2. The deferred compensation shall be paid to [Plaintiff] upon the earliest of the following to occur: (i) Group 2 raises $300, 000 in outside investment and/or debt capital (excluding any investment by [Mr. Bowen]), or (ii) Group 2’s cumulative gross revenues exceed $1, 000, 000, or (iii) a change in control occurs whereby another party (or parties) owns 50% or more of the equity in Group 2, or (iv) the Parties agree to pay [Plaintiff] the outstanding balance of the amount of the liability to [Plaintiff].

(Id. ¶ 2). The next paragraph reads, in its entirety:

Upon the one year anniversary of this Agreement if [Plaintiff] is still acting in a consulting capacity, or as an employee of Group 2, or earlier if either event occurs: (i) a change in control occurs whereby another party (or parties) owns 50% or more of the equity in Group 2, or (ii) the Parties agree to award [Plaintiff] a non-contingent membership interest in Group 2 which shall represent a 15% ownership interest in Group 2, subject to [Plaintiff] executing an operating agreement or joinder to an operating agreement with Group 2.

(Id. ¶ 3).

In addition, the parties agreed that “[u]pon the one year anniversary of this Agreement, provided that Group 2 is experiencing positive cash flow and growth, Group 2 and [Plaintiff] will negotiate in good faith terms for” a future business relationship. (Id. ¶ 5). The May 1 Agreement also contains provisions concerning the nondisclosure of confidential information and noninterference with clients that ran for the life of the contract and for one or two years thereafter. (Id. ¶¶ 6-8).

On or about June 1, 2011, a lawyer for Group 2, Don Rogers, requested that Plaintiff execute another contract. According to Plaintiff, “[t]he purpose of the meeting . . . was to sign a copy of the [May 1 Agreement] for Mr. Rogers’ files.” (ECF No. 92, at 3). Plaintiff signed the new document, which was dated June 2, 2011. The language of the second contract (the “June 2 Agreement”) is virtually identical to that of the May 1 Agreement. (See ECF No. 92-7).[1]

Plaintiff asserts that he worked as CEO for Group 2 for 56 weeks from May 1, 2011, through May 24, 2012. (ECF No. 92, at 2). During this time, according to Plaintiff, he hired a team of software developers, developed marketing strategy for the EMA software, networked and travelled to meet with potential customers, and hired business students to assist him in fulfilling his responsibilities. (Id. at 2-3). Plaintiff took a month-long vacation to Italy from July 25 to August 25, 2011. He wrote in an e-mail to Mr. Bowen on July 11, “I do not ask for any comp for the month of August, even though I’ll be in regular contact.” (ECF No. 92-9). According to Group 2, Plaintiff’s Italy trip constituted roughly five missed weeks of work. (ECF No. 87-1, at 13).

On April 24, 2012, Mr. Bowen sent Plaintiff a letter terminating the consulting contract:

Pursuant to the terms of the consulting agreement dated June 2, 2011, Group 2 Software LLC, is hereby terminating the consulting agreement effective May 24, 2012 (“Termination Date”).
Thus, as of May 24, 2012, [Plaintiff’s] position with Group 2 is terminated and absent a new agreement, [Plaintiff] may not act for Group 2. The above being said, Group 2 would have an interest in negotiating a new consulting agreement with you, if that is of interest to you.

(ECF No. 92-8). Plaintiff received $47, 333.00 in compensation while working for Group 2 over the course of 56 weeks. Because the consulting contract called for Plaintiff to be paid $1, 000.00 per week, plus an equal amount in deferred compensation, Plaintiff asserts that he is owed the difference of $8, 667.00.[2] Furthermore, Plaintiff alleges that Group 2 did not record the deferred compensation as a liability, and that Plaintiff is entitled to a 15% ownership interest in Group 2. After Group 2 terminated the consulting relationship, Plaintiff applied for and received unemployment benefits. On September 6, 2012, the Maryland Department of Labor, Licensing and Regulation (“MDLLR”) determined that Plaintiff was eligible for unemployment benefits. (ECF No. 92-14).

B. Procedural History

Plaintiff filed his original complaint in the Circuit Court for Prince George’s County asserting claims against Group 2 and Mr. Bowen. On February 4, 2013, Defendants removed this case to the United States District Court for the District of Maryland on the basis of diversity jurisdiction. (ECF No. 1). Shortly thereafter, Group 2 filed a counterclaim (ECF No. 20), which Plaintiff answered (ECF No. 21). On December 23, 2013, Group 2 moved for a preliminary injunction (ECF No. 33), and Mr. Bowen moved to dismiss Plaintiff’s claims. A hearing was held on February 12, 2014, at which the motion for a preliminary injunction was denied and the motion to dismiss was deferred. (ECF No. 38). Also on February 12, a scheduling order was entered. (ECF No. 39). Plaintiff then filed an amended complaint (ECF No. 41), and Defendants answered (ECF No. 42). Group 2 did not reassert the counterclaim. Plaintiff’s motion for leave to file a second amended complaint was granted on June 24, 2014. (ECF No. 57). The second amended complaint added Deven as a party. In granting leave, however, the court noted that “the intracorporate conspiracy doctrine bars Plaintiff’s claim [in Count IX] and his motion to amend to add this claim will be denied.” (ECF No. 57, at 4). Accordingly, Count IX was stricken. Again, Defendants’ answer did not reassert any counterclaim. (ECF No. 64).[3]

The second amended complaint asserts the following claims: breach of contract against Group 2 requesting unpaid wages, deferred compensation, and a 15% ownership interest in Group 2 (Count I); breach of contract against Mr. Bowen requesting a 15% ownership interest in Group 2 (Count II); breach of the Maryland Wage Payment and Collection Act (“MWPCA”), Md. Code Ann., Lab. & Emp. § 3-505, against Group 2 and Mr. Bowen (Count III); accounting (Count IV); unjust enrichment (Count V); specific performance (Count VI); intentional interference with contractual relations against Mr. Bowen (Count VII); and fraudulent conveyance (Count VIII).[4]

Group 2 moved for summary judgment on counts I, III, IV, V, and VI, to which Plaintiff responded and filed a cross-motion for partial summary judgment, seeking, inter alia, a judgment for $64, 667.00 in wages. (ECF Nos. 87; 92). The motions are fully briefed. (ECF Nos. 99; 103). Deven moved for summary judgment on Count VIII (ECF No. 88), Plaintiff responded and withdrew Count VIII against Deven (ECF No. 94), and Deven replied (ECF No. 97). Mr. Bowen also moved for summary judgment on Counts II, III, V, VI, and VII. (ECF No. 89). Plaintiff responded and filed a cross-motion for partial summary judgment (ECF No. 93), Mr. Bowen replied and responded (ECF No. 98), and Plaintiff replied (ECF No. 104).

II. Cross-Motions for Summary Judgment

A. Standard of Review

A motion for summary judgment will be granted only if there exists no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). Summary judgment is inappropriate if any material factual issue “may reasonably be resolved in favor of either party.” Liberty Lobby, 477 U.S. at 250; JKC Holding Co. LLC v. Wash. Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).

The moving party bears the burden of showing that there is no genuine dispute as to any material fact. However, no genuine dispute of material fact exists if the nonmoving party fails to make a sufficient showing on an essential element of his or her case as to which he or she would have the burden of proof. Celotex, 477 U.S. at 322-23. Therefore, on those issues on which the nonmoving party has the burden of proof, it is his or her responsibility to confront the summary judgment motion with an “affidavit or other evidentiary showing” demonstrating that there is a genuine issue for trial. See Ross v. Early, 899 F.Supp.2d 415, 420 (D.Md. 2012), aff’d, 746 F.3d 546 (4th Cir. 2014). “A mere scintilla of proof . . . will not suffice to prevent summary judgment.” Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Liberty Lobby, 477 U.S. at 249-50 (citations omitted). Although pro se litigants are to be given some latitude, the above standards apply to everyone. Thus, as courts have recognized repeatedly, even a pro se party may not avoid summary judgment by relying on bald assertions and speculative arguments. See Smith v. Vilsack, 832 F.Supp.2d 573, 580 (D.Md. 2011) (citing cases).

“When cross-motions for summary judgment are before a court, the court examines each motion separately, employing the familiar standard under Rule 56 of the Federal Rules of Civil Procedure.” Desmond v. PNGI Charles Town Gaming, LLC, 630 F.3d 351, 354 (4th Cir. 2011). The court must deny both motions if it finds there is a genuine dispute of material fact, “[b]ut if there is no genuine issue and one or the other party is entitled to prevail as a matter of law, the court will render judgment.” 10A Charles A. Wright, et al., Federal Practice & Procedure § 2720 (3d ed. 1998).

B. Analysis[5]

1. Breach of Contract Claim Against Group 2 (Count I)

Plaintiff seeks $64, 667.00 from Group 2: $8, 667.00 for unpaid wages and $56, 000.00 in deferred compensation. Plaintiff also requests that the court award him a 15% ownership interest in Group 2, or fair market value of such an equity stake.

a. Plaintiff’s Claim for Unpaid Wages

Plaintiff seeks $8, 667.00 in unpaid compensation based on work completed before Group 2 terminated the consulting relationship. (ECF No. 58 ¶ 14). Under Maryland law, to establish breach of contract, a plaintiff must prove that the defendant owed the plaintiff a contractual obligation and that the defendant materially breached that obligation. RRC Northeast, LLC v. BAA Maryland, Inc., 413 Md. 638, 658 (2010).

The thrust of Plaintiff’s argument is that he worked for Group 2 through May 24, 2012 - when the contractual relationship was terminated - and is owed compensation for all of his consulting work, including that which occurred beyond the initial 52-week period for which a particular payment is specified. In short, Plaintiff asserts that he worked for 56 weeks but was compensated for only 47 1/3 weeks, and that Group 2 ...

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