Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02682/USCOURTS-caed-2_09-cv-02682-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

STEVEN KOSS, )

)

Plaintiff, ) 2:09-cv-02682-GEB-GGH

)

v. ) ORDER

)

AGRESSO AMERICAS CORPORATION, )

)

Defendant. )

)

On November 4, 2009 Defendant filed a motion for judgment 

on the pleadings under Federal Rule of Civil Procedure 12(c) on all

claims in Plaintiff’s complaint. Plaintiff alleges the following

claims in his complaint: breach of contract, breach of the California

Labor Code for failure to pay all wages at the termination of

employment, and promissory estoppel.

I. BACKGROUND

 The issue is whether under the employment contract entered

between Plaintiff and Defendant, Defendant was authorized to pay

Plaintiff the equivalent of two weeks pay in lieu of providing

Plaintiff two weeks notice prior to termination, or was required to

pay Plaintiff his entire $90,000 base salary. 

Plaintiff entered an employment contract with Defendant

“[o]n or about September 24, 2007.” (Compl. ¶ 6.) Plaintiff alleges

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in his complaint he was employed as an “‘at-will’” “‘IMPLEMENTATION

CONSULTANT’” and under the terms of the employment contract, renewal

of his employment was allowed for “‘additional consecutive one year

terms (‘Renewal Terms’) unless either party [gave] the other written

notice prior to the end of the Term or any Renewal Term . . . not 

. . . to renew this Agreement.’” (Id. ¶ 8 a-c.) 

Plaintiff alleges he “understood the above contract 

. . . to mean that he had assurance that as long as his contract was

renewed at the end of its term, he had a job, unless the company

choose to terminate his employment on an at-will basis, in which case

he would be given his base salary unless he was given notice.” (Id. 

¶ 9.) Plaintiff alleges his base salary was ninety thousand dollars

($ “90,000") and the appropriate notice, if terminated, “was defined

by the . . . ‘applicable term of the Employment Standards Act’ . . . .

[which] required that Plaintiff be given two weeks notice prior to

being terminated ‘at-will.’” (Id.) “Plaintiff alleges and believes

that since he did not receive two weeks notice, he was to receive his

[full $90,000] base salary . . . ” (Id. ¶ 12)

Plaintiff began work for Defendant on October 1, 2007. One 

one year later, on October 1, 2008, “Plaintiff’s contract was

automatically renewed at the end of its term.” (Id. ¶ 10.) “On or

about April 30, 2009,” however, Plaintiff was terminated. “On or

about May 2, 2009, Plaintiff received via mail his final paycheck and

instructions regarding the shipment of his laptop to Defendant. Also,

included in the package was a letter entitled ‘Termination of

Employment - Steve Koss[,]’ [which] stated that ‘[t]his letter

confirms termination of your employment as Implementation Consultant

with Agresso, effective April 30, 2009. Your period of employment was

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between October 1, 2007 and April 30, 2009. You will be paid 2 weeks

in lieu of notice . . . [.]’” (Id. ¶ 11.)

II. LEGAL STANDARD

When deciding a Rule 12(c) motion for judgment on the 

pleadings, “all factual allegations in the complaint [are accepted] as

true and construe[d] . . . in the light most favorable to the

non-moving party.” Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir.

2009) (internal reference omitted). “However, conclusory allegations

and unwarranted inferences are insufficient to defeat a motion for

judgment on the pleadings.” Butler v. Resurgence Financial, LLC, 521

F.Supp.2d 1093, 1095 (C.D.Cal. 2007) (referencing In re Syntex Corp.

Sec. Litig., 95 F.3d 922, 926 (9th Cir. 1996)). “Judgment on the

pleadings is properly granted when there is no issue of material fact

in dispute, and the moving party is entitled to judgment as a matter

of law.” Fleming, 581 F.3d at 925 (internal reference omitted).

Defendant requests the Court take judicial notice of the 

employment contract at issue, which is attached to Defendant’s motion

as Exhibit A. Plaintiff references the employment contract in his

complaint and does not dispute the authenticity of Exhibit A. The

“incorporation by reference doctrine . . . permits a district court to

consider documents [, such as the employment contract,] whose contents

are alleged in [the] complaint and whose authenticity no party

questions, but which are not physically attached to the [plaintiff's]

pleading.” In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986

(9th Cir. 1999) (internal citation and quotations omitted). Further,

consideration of “documents incorporated by reference in the

complaint” does not “convert[] the motion [for judgment on the

pleadings] into a motion for summary judgment.” U.S. v. Ritchie, 342

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F.3d 903, 908 (9th Cir. 2003). Therefore, the employment contract

attached as Exhibit A to Defendant’s motion is considered under the

incorporated by reference doctrine.

The relevant contract provisions are the following:

Section 4: Salary Compensation. The Company shall

pay the Employee a base salary (the “Base Salary”)

at the rate of NINETY THOUSAND Dollars ($90,000)

per calendar year. The Base Salary shall be paid

in such installments and at such times as the

Company pays it regularly salaried employees. The

Base Salary will be subject to annual adjustment by

the Company, in its sole discretion.

[ . . . ]

Section 7: Termination. This Agreement shall be

terminated at the end of the Term of any Renewal

Term, or earlier as follows: 

[ . . . ]

Section 7.03: By The Company. The Company

shall employ the Employee “at-will.” As such,

the Company may terminate the Employee at any

time with or without any notice, reason or

cause, provided that the Company shall provide

prior written notice of such termination

consistent with the applicable term of

Employment Standards Act as it applies as of

the date of termination. The Company may

elect, however, to provide the employee

payment of his base salary in lieu of notice.

[ . . . ]

Section 13.04: Governing Law Jurisdiction: This

Agreement shall be construed under and enforced in

accordance with the laws of the State of

Massachusetts and the parties hereto consent to the

jurisdiction of the United States of America.

(Def’s Request for Judicial Notice, Ex. A)(emphasis added.)

III. ANALYSIS

Plaintiff argues the language in section 7.03, which 

provides Defendant the discretion to pay Plaintiff “his base salary in

lieu of notice,” means Plaintiff was to be paid his full $90,000 base

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salary rather than the equivalent of two weeks of that salary. When

deciding state contract claims, “[a] federal district court must apply

the state law that would be applied by the state court of the state in

which it sits.” Shannon-Vail Five Inc. v. Bunch, 270 F.3d 1207, 1210

(9th Cir. 2001). “To determine the law governing a contract,

California courts look to the relevant statute and, for further

guidance, to the choice-of-law principles outlined in the

Restatement.” Id. (referencing Henderson v. Superior Court, 77

Cal.App.3d 583, 592 (1978)). Here, Section 13.04 of the employment

contract states the contract is to “be construed under and enforced in

accordance with the laws of the State of Massachusetts.” “Section 187

of the Restatement” provides guidance on this point and states that

the “‘law of the state chosen by the parties’ will govern. Parties

can indicate this choice . . . through an express provision in the

contract . . . .’” Id. (referencing RESTATEMENT (SECOND) OF CONFLICTS OF

LAWS § 187, cmt. a.) Since the parties have chosen Massachusetts law

to govern construction and enforcement of the contract, Massachusetts

law is used to decide the motion. 

A. Breach of Contract

Defendant argues Plaintiff’s breach of contract claim fails

as a matter of law because the only reasonable interpretation of the

contract entitled Plaintiff to receive two weeks of his $90,000 base

salary as a result of being terminated without notice. (Def’s Mot.

5:6-7:21). Defendant cites to Section 4 of the contract in support of

its argument, which states Plaintiff’s base salary shall be paid “at

the rate of NINETY THOUSAND Dollars ($90,000) per calendar year,” and

to the Employment Standards Act, which states Plaintiff was entitled

to two weeks termination notice. (Def’s Mot. 5:6-7:21.) 

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Under Massachusetts law, “[t]he interpretation of a 

contract presents a question of law for the court, except to the

extent disputed facts bear upon such interpretation.” USM Corp. v.

Arthur D. Little Systems, Inc., 546 N.E. 2d 888, 893 (Mass.App.Ct.

1989). Since the parties do not dispute facts surrounding the

contract, and the only dispute is their interpretation of the contract

terms, interpretation of the contract is a question of law. “The

object of the court is to construe the contract as a whole, in a

reasonable and practical way, consistent with its language,

background, and purpose.” Id. The Court must put itself “in the

place of the parties to the instrument and give its words their plain

and ordinary meaning in the light of the circumstances and in view of

the subject matter.” Polito v. School Committee of Peabody, 69

Mass.App.Ct. 393, 396 (2007) (internal citation and quotations

omitted). 

Plaintiff argues the disputed provisions of the contract are

ambiguous and that “any ambiguity in the contract language should be

construed against [Defendant,] the drafter.” (Pl’s Opp’n 6:9-11.)

“Contract language is ambiguous where the phraseology can support

reasonable difference of opinion as to the meaning of the words

employed and the obligations undertaken.” President and Fellows of

Harvard College v. PECO Energy Co., 57 Mass.App.Ct. 888, 896 (2003)

(internal citation and quotations omitted). However, “t]he mere fact

that parties disagree on the proper construction of a document’s

language does not necessarily establish an ambiguity.” Hoppe v. CMGI,

Inc., No. 033809BLS, 2005 WL 3489865, at *4 (Mass.Supp. November 14,

2005)(internal reference omitted). The Court “must interpret the

words in a contract according to their plain meaning . . . . [and]

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determine the objective intent of the parties,” not the subjective

intent of the parties, even if the parties interpret the contract

differently. Polito , 69 Mass.App.Ct. at 396 (internal citation and

quotations omitted). Reading the contract this way “may enable a

Court to see whether [the contract’s] words can be understood or are

actually ambiguous.” Hoppe, 2005 WL 3489865, at *5 (internal

reference omitted). The Court will now turn to the contract

provisions at issue.

Section 4 of the contract defines “base salary,” as a salary 

paid “at the rate of NINETY THOUSAND Dollars ($90,000) per calendar

year,” stating “[t]he Base Salary shall be paid in such installments 

. . . . [and] will be subject to annual adjustment by the Company, in

its sole discretion.” “Giv[ing the] words their plain and ordinary

meaning in the light of the circumstances [of an annual at-will

employment contract,]” “base salary” is an annual salary of ninety

thousand dollars paid in installments over the course of a year. 

Polito, 69 Mass.App.Ct. at 396. Section 7.03 of the contract states:

“[t]he Company may elect . . . to provide the employee payment of his

base salary in lieu of notice.” Based on the plain meaning of this

language, the contract terms are not ambiguous; Plaintiff was to

receive the portion of his $90,000 base salary he would have received

had he worked following receipt of two weeks notice prior to his

termination. Since Plaintiff alleges he was entitled to a notice

period of two weeks prior to termination and that he received two

weeks pay of his base salary in lieu of receiving two weeks notice,

Plaintiff received what he was entitled to under the contract. 

Therefore, Defendant’s motion is granted on Plaintiff’s breach of

contract claim.

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B. Breach of the California Labor Code for failure to pay all wages at

the termination of employment

Since Plaintiff’s breach of contract claim is not viable, 

Plaintiff’s California Labor Code claim, which is dependent on a

viable breach of contract claim, is also not viable. Therefore,

Defendant’s motion is also granted on this claim.

C. Promissory Estoppel

Plaintiff also alleges a promissory estoppel claim, in which 

he asserts he “performed all covenants and conditions” under the

contract and that Defendant has been “unjustly enriched by [his]

valuable services rendered for Defendant.” (Id. ¶¶ 21-24.) Plaintiff

argues this claim is stated “in case there was some legal issue

regarding the viability of the employment contract.” (Pl’s Opp’n

7:20-22.) However, since Plaintiff’s allegations do not support this

claim, Defendant’s motion is granted on this claim.

IV. CONCLUSION

Since Defendant has shown it is entitled to judgment on the

pleadings, judgment shall be entered in favor of Defendant.

Dated: January 4, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

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