United States District Court, D. New Hampshire
ORDER
Joseph
DiClerico, Jr. United States District Judge.
Christopher
Campbell, brings this action against his former employer,
CGM, LLC, asserting claims for breach of contract; fraud,
deceit and misrepresentation; violation of the New Hampshire
Consumer Protection Act, RSA Chapter 358-A; and unpaid wages
under RSA chapter 275. CGM brought counterclaims against
Campbell for breach of contract; conversion; violation of the
Computer Fraud and Abuse Act, 18 U.S.C. § 1030; tortious
interference with contract; punitive damages; and injunctive
relief. Both Campbell and CGM have filed motions for summary
judgment.
Standard
of Review
Summary
judgment is appropriate when the moving party “shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). “A genuine dispute is one that a
reasonable fact-finder could resolve in favor of either party
and a material fact is one that could affect the outcome of
the case.” Flood v. Bank of Am. Corp., 780
F.3d 1, 7 (1st Cir. 2015). Reasonable inferences are taken in
the light most favorable to the nonmoving party, but
unsupported speculation and evidence that “is less than
significantly probative” are not sufficient to avoid
summary judgment. Planadeball v. Wyndham Vacation
Resorts, Inc., 793 F.3d 169, 174 (1st Cir. 2015)
(internal quotation marks omitted).
When
considering cross motions for summary judgment, the court
must “determine whether either of the parties deserves
judgment as a matter of law on facts that are not
disputed.” Barnes v. Fleet Nat'l Bank,
N.A., 370 F.3d 164, 170 (1st Cir. 2004) (internal
quotation marks omitted). To do that, the court views each
motion separately, taking the facts in the light most
favorable to the nonmoving party and drawing inferences in
the nonmoving party's favor. OneBeacon Am. Ins. Co.
v. Commercial Union Assurance Co. of Canada, 684 F.3d
237, 241 (1st Cir. 2012).
Evidentiary
Issues
Campbell
previously moved to strike the declaration of Duane Szarek
submitted by CGM in support of its objection to
Campbell's motion for summary judgment. Campbell asserted
that the declaration impermissibly provided expert opinions
when Szarek had not been disclosed as an expert witness. The
court granted the motion to strike, and Szarek's
declaration is not considered for purposes of the motions for
summary judgment.
CGM
challenges statements made by Campbell in his affidavits as
presenting “sham” affidavits. Specifically, CGM
states that Campbell's statements in his affidavit dated
June 1, 2015, that his company, Intellinet, had billings of
“approximately $250, 000” and that the subject
line on the check to Campbell from CGM for $5, 000
“indicated that this was the bonus [he] had earned on
annual earnings from 2001 - 2004” are contradicted by
deposition testimony given almost a year later on April 25,
2016. CGM also asserts that most of Campbell's October
24, 2016, affidavit is a sham because Campbell
“attempts to contradict his clear deposition answers to
unambiguous questions without explanation.”
In the
First Circuit, “‘[w]hen an interested witness has
given clear answers to unambiguous questions, he cannot
create a conflict and resist summary judgment with an
affidavit that is clearly contradictory' without
providing ‘a clear satisfactory explanation of why the
testimony is changed.'” Colburn v. Parker
Hanninfin/Nichols Portland Div., 429 F.3d 325, 332 (1st
Cir. 2005) (quoting Colantuoni v. Alfred Calcagni &
Sons, Inc., 44 F.3d 1, 4-5 (1st Cir. 1994)). That is,
“a party opposing summary judgment may not manufacture
a dispute of fact by contradicting his earlier sworn
testimony without a satisfactory explanation of why the
testimony has changed.” Abreu-Guzman v. Ford,
241 F.3d 69, 74 (1st Cir. 2001). “A subsequent
affidavit that merely explains, or amplifies upon, opaque
testimony given in a previous deposition is entitled to
consideration in opposition to a motion for summary
judgment.” Gillen v. Fallon Ambulance Serv.,
Inc., 283 F.3d 11, 26 (1st Cir. 2002)
The
sham affidavit rule does not apply to the challenged
statements from the June 1, 2015, affidavit. The affidavit
was prepared before Campbell was deposed, not after. The
affidavit was prepared in support of Campbell's objection
to CGM's motion to dismiss and was filed as additional
support for Campbell's later motion for summary judgment.
Therefore, the affidavit was not prepared to manufacture a
factual dispute for purposes of opposing summary judgment.
In
addition, the challenged statements do not clearly contradict
Campbell's deposition testimony. The affidavit says
Intellinet had “billings of approximately $250,
000” and Campbell's deposition testimony was that
he did not know the most Intellinet had ever grossed in a
year. Further, Campbell provided an adequate explanation of
the differences in his Reply Affidavit, dated October 24,
2016. The statement about the bonus check is merely
Campbell's interpretation of the subject line on the
check.
The
Reply Affidavit, dated October 24, 2016, provides an
explanation of Campbell's statements about
Intellinet's revenue and addresses statements made by
CGM's founders in their declarations and deposition
testimony. Because CGM asserts only that “most”
of Campbell's affidavit is a sham, without explaining
what statements clearly contradict Campbell's deposition
testimony, CGM has not provided a sufficient explanation of
the sham affidavit charge to permit review.
Therefore,
none of the statements in Chris Campbell's affidavits are
precluded as shams.
Background
The
background information is summarized from the parties'
factual statements, with disputed facts noted as
necessary.[1]
This
case involves claims between Christopher “Chris”
Campbell, the plaintiff, and CGM, LLC, which was founded and
is operated by Chris's twin brother, Charles
“Chuck” Campbell, and Chuck's business
partner, Kevin Murphy. Hereafter, to avoid confusion between
the Campbells, the individuals will be referred to by their
first names as Chris, Chuck, and Kevin.
Chris
is an electrical engineer who founded Intellinet, Inc., a
telecommunications business, that operated in Massachusetts
and New Hampshire. CGM was founded by Chuck, Kevin, and a
third partner who is no longer with the company, and operates
in Georgia. CGM originally provided consulting services to
telecommunications companies and now provides data processing
and software development compliance services to telephone
companies. Kevin is responsible for CGM's administrative
and financial functions, and Chuck is responsible for
business development.
Intellinet
did contract work for CGM in 2000. In early 2001, Chuck
proposed that Chris become an employee of CGM. Chris was
interested in Chuck's proposal. At the same time, another
company, CCG Consulting, was considering acquiring CGM.
On
March 27, 2001, Chuck sent Chris an email with the subject of
“New Christo Proposal.” In the email, Chuck said
that the previous deal they had discussed was an “$180K
annual package plus 10% of EBITDA.”[2] The new proposal
was “$160K annual package plus 6% of EBITDA plus 10% of
CCG stock.” Chuck noted that he was concerned about
Chris's monthly cash flow and the EBITDA payout in the
first year. He explained the differences between the proposal
if CGM were acquired by CCG and if it were not
acquired.[3] In closing Chuck wrote: “If the deal
with CCG doesn't go through, we'll move right back to
the previous deal. Please give me a buzz after you've
looked it over and let's get something inked.”
Chuck
attached a spreadsheet to the email that is titled
“Christo CGM deal” and is dated
“3/26/2001.” The spreadsheet provided projections
for four years of annual salary and “EO” for each
year. The projections were for “Previously Discussed
Christo Deal” and “Proposed Christo Deal w/ CGM
Acquisition.” Chuck stated: “Previous proposal
was to give you 10% of the companies [sic] bottom line
earnings, going forward, plus $180K package (salary plus
bennies). We figured cost of bennies were [sic] approximately
1K/mo and your monthly pretax check would be $14K.”
Chuck also provided a projected stock value and explanation
of the calculations. Chuck wrote: “We think we are a
better company with you on board and want to craft a deal
that works for all of us.”
In the
course of the negotiations, Chris was given an employment
agreement. CGM represents that the employment agreement
originated with CCG Consulting and was then modified by CGM
and its attorneys. CGM also states that the employment
agreement was required by CCG as part of the proposed
acquisition that was being considered at that time. Chuck
testified during his deposition that there were different
versions of the employment agreement. The acquisition by CCG
did not go through.
Chris
signed the employment agreement, which is dated May 24, 2001,
but has an effective date of April 23, 2001.[4] He testified that
he gave the signed original of the agreement to Chuck. No one
signed the agreement on behalf of CGM. Chris began to work at
CGM on June 1, 2001.
The
copy of the employment agreement that Chris produced is seven
pages long and jumps from Section 8 to Section 13, which is
the last section. The agreement states that it is effective
as of April 23, 2001, and is between Chris and CGM, LLC. The
agreement provides that Chris will be paid an annual salary
of $170, 000 in monthly installments as the base salary. In
addition, Chris will “receive 10% of the annual
earnings of Company (prorated in year one), to be calculated
on a calendar year basis, and to be paid upon formal closure
of the Company's [CGM's] annual books.”
The
agreement further provided that if the acquisition by CCG
went through, Chris's annual salary would be reduced to
$150, 000 and the bonus would be transferred “to an
identical percentage of Company's stock in the acquiring
entity.” It also provided for a closing bonus after the
acquisition. CGM agreed to pay the cost of Chris's
existing medical benefits plan. The agreement included
provisions for termination, nondisclosure of trade secrets
and confidential information, non-solicitation and
non-recruitment covenants, CGM's right to materials and
the return of materials, and compliance with policies and
laws. The last section, titled “Miscellaneous”,
includes clauses for severability, waiver, governing law, and
merger.
Chris's
initial annual salary at CGM was $180, 000. At the end of
2001, no bonus was paid. Chris represents that he asked about
the bonus, and Chuck told him that CGM had no earnings so no
bonus could be paid. Chris asked to review CGM's books,
but Chuck refused. The same thing happened in 2002 and 2003
with Chuck representing that the company was operating
without earnings.
In
2005, Chris again asked about his bonus. CGM gave Chris a
check for $5, 000. The subject line on the check said:
“2001-2004 (Thanks!).” Chris understood that the
check was for his bonuses for those years.[5] Chuck prepared a
spreadsheet to show that CGM was not as profitable as Chris
thought it was.
As the
economy generally began to decline in 2006, CGM experienced
financial difficulties. For that reason, CGM reduced
salaries. On October 1, 2006, Chris's salary was reduced
to $125, 000 and his medical benefit plan was also changed.
He understood that the reduction was temporary until business
improved.
Chuck
told Chris that he and Kevin were making personal financial
contributions to CGM and were hoping that the company's
finances would improve in the future. Chris understood that
everyone was making sacrifices for the good of the company.
Chuck said that Chris was the highest paid person at CGM and
that Chuck and Kevin were only being paid approximately $86,
000 each. Chris represents that CGM's financial
documents, which he has reviewed as part of this suit, show
that CGM's annual earnings were much greater than Chuck
and Kevin represented them to be.
In late
2008 or early 2009, Chris thought that CGM's financial
status had improved and asked about returning his salary to
its former amount. Chuck and Kevin denied Chris's request
on the ground that Chris was not maximizing his potential at
CGM. In the spring of 2009, Chuck told Chris that he could
increase his income by earning commissions. CGM offered
commissions to be paid on amounts received from Verizon and
FairPoint. During his deposition, Chris agreed that the
commissions were a change in his compensation.[6] CGM paid Chris
commissions from 2009 through 2015, with some changes in the
commission plan.
CGM's
bookkeeper from 2009 to 2011 testified during her deposition
that Kevin told her not to pay Chris his commissions unless
he asked for them. When Chris asked for his commissions, he
was paid but received them late because of that restriction.
In June
2012, Kevin informed Chris during a meeting in Georgia that
he was an at-will employee. Chris responded that he was not
an at-will employee because he had an employment agreement
with CGM that provided for $170, 000 in salary, health
insurance, and 10% of “annual CGM profit.” Kevin
asked Chris to produce the agreement. When Chris returned
home, he found the agreement in his files and mailed a copy
of the employment agreement to Kevin.[7] Kevin and Chuck deny that
they ever had an employment agreement with Chris.
In late
2012, Chris asked Kevin for a raise. Chris's salary was
raised to $140, 000, but in exchange, his commission
percentage was reduced. Chris did not raise the issue of his
bonus during the compensation discussions.
By July
of 2014, Chris was dissatisfied with CGM's payment of his
commissions. In October of 2014, Chris met with Chuck and
Kevin in Georgia. Chuck and Kevin gave Chris options for his
compensation and employment at CGM, which involved
significant changes in both. A second meeting was scheduled
for November 17, 2014.
Chris
states that he was having financial difficulties because of
the reduction in his salary and his family's
unanticipated medical expenses and that he had
“difficulty coming to the conclusion that Kevin and
Chuck were lying to me about CGM's finances.” Chris
suffered a breakdown in November of 2014. CGM approved a
medical leave of absence for him. CGM terminated Chris's
employment effective January 31, 2015.
After
his termination, Chris kept the laptop computer that CGM had
provided to him, which he had used for both business and
personal purposes, and other items related to his work for
CGM. Chris understood that the laptop was his, provided as a
benefit.[8]On May 1, 2015, CGM asked Chris to return
the laptop and other CGM property. Chris returned other items
but did not return the laptop because it held personal
confidential information.
Chris
agreed to return the laptop after he removed his personal
information, but CGM rejected that proposal. Chris then
removed CGM's software and data from the laptop and
proposed to keep the laptop with his personal
information.[9] CGM was disappointed that Chris had
removed files from the laptop and did not agree to let him
keep the laptop.
Chris
and CGM decided to have a company in Boston, Evidox, generate
an index of the programs on the laptop. Chris contends that
the index was not helpful because it showed hundreds of
thousands of programs without sufficient analysis. Chris
believed that additional analysis would be expensive and not
necessarily productive.
CGM
contends that the Evidox index was extremely revealing
because it showed that Chris had opened dozens of CGM files
after his termination. Kevin asserts in his declaration that
Chris did not have permission to use the laptop after his
termination. He reviewed the index and identified
thirty-eight files that he believed Chris opened, created, or
modified after November of 2014. The files Kevin cites
include employment applications and downloads from corporate
websites for companies outside of New
Hampshire. Kevin does not identify specific
CGM files in his declaration. The computer is being stored at
Evidox for a monthly fee.
CGM
states in an interrogatory answer that it needs to have
Chris's laptop to check and maintain software that was
developed or compiled by Chris because that computer is
“native to the software.” CGM also states that it
had to redirect and educate staff and hire external resources
to “rewrite and work around the issues caused by
Plaintiff's retention of CGM physical and intellectual
property, ” which has cost and continues to cost about
$10, 000 to $15, 000 per month. One example CGM provides is
that an issue exists for a customer that cannot be resolved
without access to Chris's laptop.
Chris
contacted employees at FairPoint Communications, Inc., a CGM
customer, to maintain his relationship with FairPoint after
he was terminated by CGM. Chris's counsel contacted one
of the employees at FairPoint about this lawsuit,
specifically seeking information related to CGM's motion
to dismiss for lack of personal jurisdiction or to transfer
the case to Georgia. FairPoint's attorney contacted CGM,
told Chris's counsel he did not want the employee to be
deposed, and then told the parties to agree on an affidavit
for that employee, which they did. CGM has lost revenue from
FairPoint since Chris left.
For
purposes of this suit, Chris retained Paul E. Hendrickson,
C.P.A., to calculate the bonus Chris should have received
from CGM under the employment agreement. Hendrickson reviewed
CGM's financial records, including tax returns, and
calculated bonuses for each year from 2001 through 2014.
Discussion
Chris
seeks summary judgment on his breach of contract claim and on
the counterclaims brought against him by CGM. CGM moves for
summary judgment in its favor on Chris's claims against
it.
A.
Breach of Contract
“The
elements of a breach of contract claim in Georgia are: (1) a
valid contract; (2) material breach of its terms; and (3)
resultant damages to the party having the right to complain
that the contract has been broken.” Fed. Nat'l
Mortg. Ass'n v. Prowant, ___ F.Supp.3d ___, 2016
WL 5243409, at *9 (N.D.Ga. Sept. 21, 2016).[10] Chris alleges
that CGM breached Section 2, paragraph 2, of the employment
agreement by failing to pay him bonuses. CGM brought a
counterclaim for breach of contract against Chris based on an
implied contractual duty to deliver to CGM all intellectual
property that he developed or modified during his employment
and, alternatively, on Section 7 of the employment agreement
pertaining to the return of CGM's property.
1.
Chris's Motion for Summary Judgment on his Breach of
Contract Claim
In his
breach of contract claim, Chris contends that CGM breached
the employment agreement he Dated: May 24, 2001, by failing
to pay him bonuses as provided in Section 2, paragraph 2 of
the employment agreement. Chris seeks summary judgment in his
favor on his breach of contract claim. CGM asserts that Chris
cannot prove his breach of contract claim because there was
no employment agreement, he suffered no damages, the claim is
untimely, ...