Summary Judgment Practice: When The Deposition Clashes With The Affidavit

 

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A summary judgment motion axiom posits that you can’t contradict prior sworn deposition testimony with a later affidavit in order to create a triable fact dispute. 

A crude example: if in a deposition you say “I didn’t suffer any monetary damages”, you can’t file an affidavit later in the lawsuit where you say “actually, come to think of it, I lost a million dollars” in order to defeat a summary judgment motion.  You’ll be bound to your earlier deposition testimony. 

Otherwise, anyone could contradict his earlier sworn testimony with impunity and undermine summary judgment’s entire evidence testing system.

Kuvedina, LLC v. Pai, 2013 WL 6499696 (N.D.Ill. 2013) examines summary judgment in the context of a conversion suit.

Facts:  Plaintiff management company hired defendant to provide consulting services to one of plaintiff’s clients.  The relationship between plaintiff and defendant soured and plaintiff fired defendant.  When defendant failed to return a company laptop, plaintiff sued in Federal court for conversion, asserting that defendant’s actions caused plaintiff to lose a large corporate client. 

Defendant moved for summary judgment and attached plaintiff’s owner’s deposition testimony as a supporting exhibit.  In the deposition, the owner gave vague, non-responsive answers and couldn’t pinpoint any evidence to support plaintiff’s money damages claim.

Result: Summary judgment entered for defendant on plaintiff’s conversion count. 

Rules/Reasoning:

Conversion is the wrongful possession of another’s property or any act that permanently or indefinitely deprives someone of the use and possession of his property.

To prove civil conversion in Illinois, a plaintiff must establish (1) a right to the property; (2) an absolute and unconditional right to the immediate possession of the property; (3) a demand for possession of the property; and (4) defendant’s wrongful and unauthorized assumed control, dominion or ownership over the property. *4. 

Money can be converted – but it must be a specific, identifiable fund (e.g. the $876 contained in defendant’s checking account at XYZ bank).  It can’t be a general obligation (“you didn’t paint my house like you promised, so you stole that $500 I gave you.)

Siding with defendant on the conversion count, the Court applied Illinois conversion case law which holds that voluntarily paid funds won’t support a conversion claim. 

The Court found that since plaintiff freely paid defendant almost $40,000 without protest,  plaintiff couldn’t show conversion as to those funds. *4.

The court did side with the plaintiff on its breach of contract, tortious interference, and fraud claims. In its summary judgment motion, defendant pointed to a factual clash between plaintiff’s owner’s earlier deposition and later affidavit testimony.

In his deposition, the plaintiff’s owner couldn’t substantiate any money damages when asked.  Yet, in his later affidavit – filed in response to defendant’s summary judgment motion – he calculated damages of over $500,000 based on defendant’s conduct.

In sustaining plaintiff’s claims, the court stated that all summary judgment evidence – be it interrogatories, depositions, or affidavits – is to some extent self-serving.  The question is a matter of degree.  

Here, the Court found that while plaintiff’s affidavit was self-serving, there were still too many factual disputes in connection with plaintiff’s contract, tortious interference and fraud claims that couldn’t be resolved on a summary judgment motion.   *5.

Take-away: Kuvedina presents a good discussion of how differing deposition versus affidavit testimony impacts the court’s summary judgment calculus and that voluntary payments by a plaintiff are unlikely to support a conversion claim.  

The case also clarifies that summary judgment movant must argue and show more than that the opponent’s evidence is self-serving to win the motion.  The moving party must show that the self-serving evidence fails to raise a genuine issue of disputed material fact. 

 

 

 

 

Employee Handbooks: Are They Enforceable Contract Rights?

imagesWhen I hear the perks enjoyed by some corporate employees – the flex time, the telecommuting, bosses who live and work in other states, getting to “work” from home about 310 days a year in jammies, etc. – I can’t help but be a bit mystified and envious.  “I know I went to Starbucks 18 times today and watched early 90s Dallas Cowboys telecasts on a continuous YouTube loop, but, I was working.  Honest!”  Good thing I’m not jealous (cough).  Or projecting (cough cough).

Now add a corporate Home Sale Buyout Program (the Home Sale Program) to the list of fringe amenities I’ve neither heard of nor experienced.  That’s what’s involved in Carpenter v. Sirva Relocation, LLC, 2013 WL 6454253 (N.D.Ill. 2013), a Northern District case where a transferred Office Depot employee sued her employer and its relocation company for not honoring promised relocation benefits.

Facts:

The plaintiff agreed to move to another state to assume a manager position and sought relocation from her employer.

Office Depot offered a three-pronged program that included facilitating the employee’s home sale, providing moving expenses and an additional lump sum payment.  The relocation program was administered by a third-party relocation company -an Office Depot independent contractor.

A salient feature of the relocation package was that if the employee’s house didn’t sell after 90 days market time, The employer would buy the home based on a contractual pricing formula.

After plaintiff accepted the transfer and moved out of state,  The Office Depot told plaintiff that it couldn’t buy plaintiff’s Chicago home since it was a Co-op – a property type outside the scope of the relocation program.

Plaintiff brought contract and tort claims against Office Depot and its independent relocation contractor.  Both defendants moved for summary judgment on all claims.

Held: Plaintiff’s breach of contract claim against Office Depot survives summary judgment.  Plaintiffs’ claims against moving contractor don’t.

Why?

The Court denied Office Depot’s summary judgment motion on plaintiff’s breach of contract claim.

Plaintiff’s claim was premised on an email and written benefits guide that summarized the relocation benefits.  The guide contained profuse boilerplate disclaimers.

An Illinois breach of contract plaintiff must show (1) the existence of a valid contract, (2) substantial performance by the plaintiff, (3) breach by the defendant, and (4) resulting damages.

For an employee handbook to create enforceable contract rights, (1) the handbook must contain a clear promise such that the employee believes an offer has been made, (2) it must be disseminated to the employee such that the employee reasonably believes the handbook consists of an offer, and (3) the employee must accept the offer by starting or continuing to work after he sees the policy/handbook statement.  

An employment contract disclaimer – if clear and direct – is a defense to a breach of contract suit based on an employee handbook.  *5.

Applying these rules, the Court held that the plaintiff offered sufficient breach of contract evidence to defeat Office Depot’s summary judgment motion.  The Court found the e-mail attachment that sketched out the Relocation program was clear and definite enough to support a colorable contract claim.

The plaintiff also offered evidence that she never saw the benefits guide that contained the co-op disclaimer.  She also showed that she accepted the job transfer in reliance on Office Depot’s email that didn’t mention the co-op exclusion.  Taken together, this was enough for plaintiff to go to trial on her breach of contract claim.  *5-6.

The Court did sustain the relocation contractor’s summary judgment motion.  There was no direct contact between plaintiff and the contractor as all talks flowed through Office Depot.

The plaintiff also didn’t show she was a third-party beneficiary of the subcontract agreement between Office Depot and the moving company: there was nothing in the subcontract that reflected an intent to benefit the plaintiff.*6.

Take-aways: Employer handbooks and published policies can create enforceable contract rights if they are specific enough for a reasonable reader to infer that an offer or promise has been made.

The case also solidifies contract law axiom that there must be privity – a connection – between two parties to give rise to contract rights.  Here, since there was no direct contact between plaintiff and the relocation company, the plaintiff couldn’t state a breach of contract claim against the company.

 

12(b)(6) Motions and Fraud Pleading Rules – A Case Note

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Wojcik v. Interarch, Inc., 2013 WL 5904996 (N.D.Ill. 2013), provides a good summary of the factual allegations required to allege fraud and civil conspiracy claims.

The plaintiffs sued a national franchisor and its site development consultant for fraud and other business torts when their Saladworks franchise failed.  Defendants moved to dismiss all claims.

Held: motion granted in part; denied in part.

Reasons:  The Court first recited some key Federal court pleadings and motions rules:

– A 12(b)(6) motion tests whether the complaint state a claim on which relief can be granted;

–  FRCP 8 notice pleading requires a complaint to contain sufficient factual matter that states a claim that is plausible on its face;

– a plaintiff doesn’t have to plead facts in his complaint that anticipate possible affirmative defenses  (FRCP 8(c)(1);

– FRCP 9(b) requires heightened pleading specificity for fraud and civil conspiracy claims including the ‘who, what, where, when and how’ of the fraud and the conspiracy;

– FRCP 9’s pleading specificity rules are designed to discourage a ‘sue first, ask questions later’ mentality and to account for the stigma attached to fraud-based claims;

– a negligent misrepresentation claim is not subject to FRCP 9’s elevated pleading rules;

– FRCP 12(b)(6) generally only looks at a complaint’s four corners except where the complaint either attaches or specifically refers to outside documents;

–  a court may consider exhibits to a 12(b)(6) motion if the exhibit supplements a document attached to the complaint or where the defendant relies on the exhibit for the ‘same purpose’ as a document attached to the complaint

*5-6, 11; FRCP 8, 9, 12.

Applying these rules, the Court struck several of defendants’ motion exhibits that either weren’t attached to or incorporated by reference in plaintiffs’ complaint. *8.

The Court then sustained the plaintiffs’ fraud claims against the franchisor defendants.

While a fraud plaintiff must specifically plead the “who, what, when, where and how” of the fraud, allegations of malice, intent, knowledge of falsity and subjective matters can be alleged generally.  FRCP 9(b).

Here, the plaintiffs fraud claims were detailed.  They specifically pled the defendants knowingly misrepresented and omitted material facts involving the restaurant’s projected profits, build-out and construction costs, and general operating expenses.  Taken together, the allegations satisfied the pleading requirements for a valid fraud claim.  Wojcik, *11.

The plaintiffs’ civil  conspiracy claims failed.

An Illinois civil conspiracy plaintiff must plead and prove: (1) an agreement to accomplish an unlawful purpose or a lawful purpose by unlawful means, (2) a wrongful act in furtherance of the agreement, and (3) injury to the plaintiff.  Wojcik, *11.

The agreement is the foundation of the conspiracy and requires proof of a defendant’s knowing and voluntary participation in a “common scheme” to commit an unlawful act or lawful act in an unlawful manner. 

Accidental, inadvertent, negligent or haphazard conduct is not enough to impose conspiracy liability on a defendant.  The plaintiff must plead the agreement’s critical details – including the “who, what, where, when and how” – to survive a motion to dismiss.  *12.

The Court held that plaintiffs’ conspiracy claims were too conclusory.  The plaintiffs merely parroted the elements of conspiracy and failed to plead critical details of the defendants’ agreement or their “common scheme” to harm the plaintiffs.  At most, plaintiffs pled negligence or breach of contract; not a conspiracy. *12.

Take-aways:

A court can consider external submissions on a 12(b)(6) motion where the challenged complaint incorporates or relies on an external document.  Wojcik also illustrates the required factual allegations that will satisfy Illinois state law fraud and civil conspiracy claims under Federal pleading rules.