Hosack v. Utopian Wireless Corporation et al, No. 8:2011cv00420 - Document 15 (D. Md. 2011)
Court Description: MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 5/6/11. (sat, Chambers)
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND : DOUGLAS HOSACK : v. : Civil Action No. DKC 11-0420 : UTOPIAN WIRELESS CORPORATION, et al. : MEMORANDUM OPINION Presently pending in this employment dispute is a motion to dismiss filed by Defendants. (ECF No. 8). The issues are fully briefed and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, Defendants motion will be granted. I. Background According to the complaint, Plaintiff Douglas Hosack is a former Executive and Associate corporate defendants in this case: with one or more of the Defendants Utopian Wireless Corporation ( Utopian ), RJGLaw LLC ( RJGLaw ), ITFS Spectrum Advisors LLC ( ISA ), and ITFS Spectrum Consultants LLC ( ISC ).1 (ECF No. 2 ¶ 10). This case concerns several problems that arose during Hosack s employment with the corporate defendants. 1 The remaining defendant, Rudolph Geist, is the Owner/Principal/CEO of the corporate defendants. (ECF No. 2 ¶ 7). First, Hosack alleges that Defendants failed to provide him with certain shares of stock as promised. As part of Hosack s compensation, in Defendants allegedly agreed agreement to transfer stock shares. Defendants were to transfer a (Id.). 50,000 2007 written In particular, shares of Clearwire Corporation stock as soon as the shares became transferable to Hosack without information and restriction. belief, that transferable on January 2008. (Id.). the stock (Id.). Hosack shares alleges, became on freely Nevertheless, Defendants did not transfer him all 40,000 shares; instead, he had received only 16,667 as the time the complaint was filed. (Id.). Had he received the remaining shares in January 2008, Hosack says he could have sold them at roughly $14 a share generating returns of over $450,000. (Id.). Second, Hosack asserts that his May 31, 2007 employment agreement contains an unenforceable non-compete clause. agreement, which covered a term of 3 years, provided: . . . during the term and for 12 months thereafter, you agree that you shall not directly or indirectly have an ownership interest in, provide services for, or otherwise work as an executive officer, employee, director or business consultant for any company engaged in the pursuit of the acquisition of or provision of wireless broadband spectrum in any spectrum band, nor will you solicit any employees of Utopian to work for any such competitor or any other company involved in any other spectrum band. 2 The (Id. ¶ (Id.). 28). The restrictive covenant applied nationwide. It also required Hosack to agree to keep confidential all of Utopian s information for the same period. (Id.). Third, Hosack asserts that he did not receive his promised wages. Sometime in August 2010, Geist allegedly informed all employees including Hosack that Utopian was going to institute a 50% pay deferral retroactive to August 2010 in an effort to conserve cash. given two layoff; options: or (2) (Id. ¶ 11). (1) full acceptance Hosack states he was pay the of in salary Hosack chose to accept the deferral. August, followed deferral. (Id.). by a (Id.). Consequently, he did not receive half his salary in August and September 2010. (Id.). Fourth, and finally, Hosack alleges that that he was terminated after he refused to submit false documentation to a federal agency. appointed On November 2, 2010, Hosack states that he was General Counsel Directors of Utopian. and Secretary (Id. ¶ 12). of the Board of Just one week later, Utopian needed to file certain certifications with the Rural Utility Service ( RUS ) of the United States Department of Agriculture, pursuant to the Broadband Initiatives Program loan and grant program (which was part Recovery Act of 2009). of (Id.). the American Reinvestment and Geist purportedly told Hosack 3 that the appointment was made so that Hosack could execute the certifications that Utopian would submit to RUS. (Id.). He then demanded that Hosack sign certifications stating that the Utopian Board of Directors had taken certain actions that had not in fact been taken. hostile and (Id.). threatening; Geist Hosack refused and Geist became allegedly asked, firing you is the worst thing I can do to you? mother f---r. eight-day Just you wait. campaign of (Id.). hostility and You think Just wait you, Geist then launched an workplace ostracism against Hosack that culminated in Geist firing him on November 18, 2010. Hosack then filed a complaint against Defendants in the Circuit Court for Montgomery County on January 3, 2011. No. 1 ¶ 1). Defendants: (ECF The complaint asserts four counts against all breach of contract, violation of the Maryland Wage Payment and Collection Law, wrongful discharge, and a claim for a declaratory invalid. judgment that the restrictive covenant was Defendants, after accepting service on January 18, removed the case to this court on February 16, 2011. (ECF No. 1). Defendants simultaneously filed a motion to dismiss and an answer on February 23, 2011. on March 18, 2011. (ECF Nos. 8, 9). (ECF No. 14). Hosack responded No reply was filed. 4 II. Standard of Review The purpose of a motion to dismiss pursuant 12(b)(6) is to test the sufficiency of the complaint. to Rule Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). At this stage, the court must consider all well-pleaded allegations in a complaint as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and must construe all factual allegations in the light most favorable to the plaintiff. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). In evaluating the complaint, the court need not accept unsupported legal allegations. Revene v. Charles County Comm rs, 882 F.2d 870, 873 (4th Cir. 1989). agree with legal conclusions couched as factual Nor must it allegations, Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009), or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979); see also Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009). Hosack states that his complaint should not be dismissed unless it appears beyond doubt that Plaintiffs [sic] can prove no set of facts which would entitle him to relief. (ECF No. 14, at 2 (citing Conley v. Gibson, 355 U.S. 41 (1957)). 5 He argues that his complaint suffices [u]nder this standard. The no set of facts standard upon which Hosack relies, however, was retired in Bell Atlantic v. Twombly, 550 U.S. 554, 562-63 (2007); see also Francis, 588 F.3d at 192 & n.1 (noting that the no set of Twombly ). facts standard was explicitly overruled in Instead, the court applies a plausibility standard. [W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged, but it has not show[n] . . . that the pleader is entitled to relief. Iqbal, 129 S.Ct. at 1950 (quoting Fed.R.Civ.P. 8(a)(2)). In addition to the complaint, the court may consider any documents justify referred a cause to of in action the complaint even if and the attached as exhibits to the complaint. relied documents upon to are not Fare Deals Ltd. v. World Choice Travel.com, Inc., 180 F.Supp.2d 678, 683 (D.Md. 2001); accord New Beckley Mining Corp. v. Int l Union, United Mine Workers of Am., 18 F.3d 1161, 1164 (4th Cir. 1994). Of particular relevance here, the court may consider such documents when they are attached to a defendant s motion to dismiss, so long as they are integral to the complaint and authentic. Philips v. Pitt Cnty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009); accord CACI Int l, Inc. v. St. Paul Fire & Marine Ins. 6 Co., 566 F.3d 150, (4th 154 Cir. 2009). When the bare allegations of the complaint conflict with any exhibits or other documents, whether attached or exhibits or documents prevail. adopted by reference, the Fare Deals, 180 F.Supp.2d at 683; accord RaceRedi Motorsports, LLC v. Dart Mach., Ltd., 640 F.Supp.2d 660, 664 (D.Md. 2009). III. Analysis Defendants seek to dismiss parts of counts one, two, and four and all of count three. Specifically, Defendants wish to dismiss (1) count one as to all defendants except ISA, (2) count two as to all defendants except ISA and Utopian, (3) count three in its entirety, and (4) count four as to all defendants except Utopian. Each is addressed in turn. A. Count One: Breach of Contract Hosack first asserts a breach of contract claim, which stems from the alleged breach of an agreement under which he was to receive certain stock shares. Hosack originally brought this claim, like all his others, against all Defendants. As to all Defendants except ISA, however, the claim must be dismissed. Under Maryland law, to establish breach of contract, a plaintiff must prove that the defendant owed the plaintiff a contractual obligation breached that obligation. and that the defendant materially RRC Northeast, LLC v. BAA Maryland, 7 Inc., 413 Md. 638, 658 (2010). It follows then that generally a person cannot be held liable under a contract to which he was not a party. Mowbray v. Zumot, 533 F.Supp.2d 554, 564 (D.Md. 2008) (quoting Snider Bros., Inc. v. Heft, 271 Md. 409, 414 (1974)); accord Residential Warranty Corp. v. Bancroft Homes Greenspring Valley, Inc., 126 Md.App. 294, 316 (1999). Although the complaint might suggest that all Defendants were parties to the stock transfer agreement, the agreement itself which Defendants attached to their motion to dismiss says otherwise.2 (See generally ECF No. 8-3). It is clear from the face of the agreement that the only relevant parties are Hosack and ISA. The only promises found in the agreement are made by ISA to Hosack. The only signatories to the agreement are Hosack and Geist as managing member of ISA. other indications or any allegations There are no suggesting any other parties took any actions with respect to the agreement. Even though Geist signed the agreement, he is not a party to it. Geist signed as Managing Member of ISA. It is now well-established that if an agent fully discloses the identity of his principal to a third party, then, absent agreement to the 2 Hosack s opposition does not deny Defendants contention that only ISA was a party to the agreement. Instead, he merely defers to the court on the issue of whether defendants other than ISA should be dismissed. 8 contrary, he is insulated from liability. Mowbray, 533 F.Supp.2d at 564 n.12 (quotation marks and brackets omitted); accord Curtis G. Testerman Co. v. Buck, 340 Md. 569, 653 (1995). Nor would Geist s mere status as Managing Member of ISA subject him to liability. The complaint alleges that ISA is a Delaware limited company liability (ECF No. 2 ¶ 5); consequently, Delaware law defines his liability. See Md. Code Ann., Corps. & Ass ns provides § 4a-1001. Delaware law that, unless the limited liability company s agreement says otherwise, . . . no member or manager of the limited liability company shall be obligated personally for any . . . debt, obligation or liability of the limited liability company solely by reason of being a member or acting as a manager of the limited liability company. Del. Code Ann. tit. 6, § 18-303; see also Thomas v. Hobbs, No. C.A. 04C-02-010 RFS, 2005 WL 1653947, at *2 (Del.Super.Ct. Apr. 27, 2005) liability ( As with company may a corporation, not be held a member liable obligations and liabilities of the company. ). of for a limited the debts, Therefore, only ISA could be liable for breach of the contract to transfer stock shares. This claim will be dismissed defendants. 9 as to all other B. Count Two: Violation of Maryland Wage Payment and Collection Law In the second count of his complaint, Hosack alleges that Defendants denied him wages he was owed by (1) failing to pay him all of his salary in August and September 2010; and (2) failing to turn over the Clearwire corporation stock he was promised. Defendants contend that the complaint does not state a claim as to RJGLaw, ISC, or Geist. In response, Hosack merely defer[s] to the court. In Maryland, an employee may bring an action against his employer to recover unpaid wages pursuant under the Maryland Wage Payment and Collection Law. § 3-507.2(a). An employer is Md. Code Ann., Lab. & Empl. any person who employs individual in the State or a successor of the person. 501(b). Id. § 3- A wage is all compensation that is due to an employee for employment. The Id. § 3-501(c)(1). complaint employer. work, an does not allege that Geist was Hosack s To employ someone means to engage an individual to which includes allowing an individual to work instructing an individual to be present at a work site. § 3-101(c). otherwise or Id. There is no indication that Geist engaged or employed Hosack here; indeed, the complaint states only that Hosack was employed by one or more of the Corporate Defendants. (ECF No. 2 ¶¶ 2, 19). 10 Geist is described by the complaint as Hosack s supervisor. (Id. ¶ 25). The notion that a supervisor of an employee . . . is somehow responsible for the payment of wages to another employee whom he supervises is inconsistent Watkins v. with Brown, the 173 plain language F.Supp.2d 409, of the 414-416 statute. (D.Md. 2001) (interpreting the Maryland Wage Payment and Collection Law and concluding that the term employer would not encompass a mere supervisor ). This count also does not succeed against RJGLaw and ISC. The only factual allegations in the complaint concerning the unpaid wages provide that Utopian failed to pay Hosack his complete salary and ISA failed to give Clearwire stock. (ECF No. ¶¶ 10, 11). any action taken or not taken him his promised There is no mention of by RJGLaw or ISC. The relevant agreements further buttress the notion that RJGLaw and ISC are not involved. The employment contract (which Defendants attached to their motion to dismiss) is signed by Hosack and Utopian alone. (ECF No. 8-2). concerning Clearwire Hosack. the (ECF No. 8-3). shares As noted above, the agreement was signed only by ISA and Thus, the RJGLaw and ISC do not owe Hosack anything. The fact that Hosack conclusorily alleges corporate defendants employed him is not enough. 11 that all the As has already been explained, overcome on Similarly, a a when complaint s motion a to complaint unsupported allegation dismiss by relevant contains inconsistent contradictory statements, it fails to state a claim. may be exhibits. and self- See, e.g., In re Livent Inc. Noteholders Sec. Litig., 151 F.Supp.2d 371, 406 (S.D.N.Y. 2001) (listing cases). This count will be dismissed as to RJGLaw, ISC, and Geist. C. Count Three: Wrongful Discharge Hosack also advances a wrongful discharge claim wherein he claims he was fired in violation of a public policy expressed in the American Recovery and Reinvestment Act of 1999 (the ARRA ), Pub. L. No. 111-5, § 1553, 123 Stat. 115 (2009). claim for abusive [or wrongful] discharge, an To state a employee must allege: (1) [he] was discharged, (2) [his] discharge violated a clear mandate of public policy, and (3) there is a nexus between the employee s conduct and the employer s decision to fire the employee. Johnson v. MV Transp. Inc., 716 F.Supp.2d 410, 415 (D.Md. 2010); accord Wholey v. Sears Roebuck, 370 Md. 38, 50-51 (2002). Such a claim is unavailable when the statute relied upon as the source of public policy provides its own remedial scheme for vindication of that policy. Glynn v. EDO Corp., 536 F.Supp.2d 595, 615 (D.Md. 2008); accord Wholey, 370 Md. at 5253. 12 The certain provision Hosack non-federal invokes employees who bars retaliation disclose certain against types of misconduct in connection with funds distributed under the ARRA. Employees may not be fired, demoted, or otherwise discriminated against if they disclose: (1) gross mismanagement of an agency contract or grant relating to [ARRA] funds; (2) a gross waste of [ARRA] funds; (3) a substantial and specific danger to public health or safety related to the implementation or use of [ARRA] funds; (4) an abuse of authority related to the implementation or use of [ARRA] funds; or (5) a violation of law, rule, or regulation to an agency contract (including the competition for or negotiation of a contract) or grant, awarded and issued relating to [ARRA] funds. Pub. L. No. 111-5, § 1553(a). Put simply, Section 1553 provides protection to ARRA-related whistleblowers. Section scheme. 1553, however, also provides its own remedial In particular, any person who believes he has been subjected to a reprisal is required to file a complaint with the appropriate inspector inspector general can then general. order Id. § 1553(b)(1). The relief or deny the it; if relief is denied, the employee may pursue a civil action in federal court. Id. §§ 1553(c)(2)-(3). time limit on filing a complaint. 13 There is evidently no In light of this remedial scheme, Hosack now concedes that his wrongful discharge claim was inappropriately brought. He therefore asks that count three be dismissed without prejudice. Because of the ARRA s remedial scheme, however, any subsequent attempt to renew this wrongful discharge claim would be futile. Instead, Hosack will need to bring a civil action in accordance with the requirements found in Section 1553. His wrongful discharge claim will be dismissed with prejudice. D. Count Four: Declaratory Judgment In his final count, Hosack seeks a declaratory judgment that the restrictive covenants imposed on him as part of his employment agreement are unenforceable. Both the Maryland Uniform Declaratory Judgments Act and the (Federal) Declaratory Judgment Act require a genuine, justiciable controversy for a declaratory judgment action to proceed. 527 F.2d 472, 473 (1975) ( [T]he See Brooks v. Cousins, parties must have adverse interests of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. (quotation marks omitted)); 120 West Baltimore Fayette City, Street, 413 Md. LLP v. 309, Mayor 356 & City (2010) Council (stating of that declaratory judgment action requires a justiciable controversy wherein there are interested parties asserting adverse claims upon a state of facts which must have accrued ). 14 As noted above, the only apparent parties to the employment agreement were Hosack and Utopian. Those are the only apparent parties that have any rights under agreement, including the enforcement of the restrictive covenants. As a general rule, a contract cannot be enforced by or against a person who is not a party to it. 3 Cecilia Schwaber Trust Two. v. Hartford Accident & Indem. Co., 437 F.Supp.2d 485, 489 (D.Md. 2006). Thus, the defendants in this case that are not parties to the employment agreement are not adverse to Hosack in any interest in the agreement at all. (9th ed. 2009) (defining adverse sense, as they hold no See Black s Law Dictionary as having contrary interest, concern, or position ). an opposing or Count four will be dismissed as to Defendants RJGLaw, ISA, ISC, and Geist. IV. Conclusion For the foregoing reasons, the motion to dismiss filed by Defendants will be granted. A separate order will follow. /s/ DEBORAH K. CHASANOW United States District Judge 3 There are exceptions to the general rule, the most obvious being the right of a third party beneficiary to a contract to enforce it. There is no suggestion or allegation, however, that any of those exceptions are relevant here. 15
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