Opinion ID: 2982692
Heading Depth: 1
Heading Rank: 3

Heading: Statutory Wage Payment Claim

Text: Vogel argues that Bullard’s failure to pay him short-term and long-term incentive compensation, vacation and holiday pay, and living expenses violated Ky. Rev. Stat. § 337.055, which provides that “[a]ny employee who leaves or is discharged from his employment shall be paid in full all wages or salary earned . . . not later than the next normal pay period following the date of dismissal or voluntary leaving or fourteen (14) days following such date of dismissal or voluntary leaving whichever last occurs.” Ky. Rev. Stat. § 337.055. “Wages” includes “any compensation due to an employee by reason of his . . . employment, including . . . vested vacation pay, . . . earned bonuses, and any other similar advantages agreed upon by the employer and the employee . . . .” Ky. Rev. Stat. § 337.010. The district court concluded that Bullard paid Vogel all monies owed to him as of July 6, 2011, the date his employment terminated. Vogel, 949 F. Supp. 2d at 708–09. For the reasons discussed in Section II.(D), Vogel’s claims for short-term and long-term incentive compensation and vacation and holiday pay fail. And, because Vogel’s temporary-living-expenses claim is connected to his relocation, not his continued employment, it does not fall within the meaning of “wages.” Thus, dismissal of Vogel’s statutory wage payment claim was proper. 5 The district court later entered an order granting Vogel relief on the signing-bonus claim, allowing Vogel to keep the $20,000 bonus, and denying Bullard relief on its counterclaim for repayment of the bonus. PID 1946, 48-49. -9- Case No. 14-5574 Vogel v. E.D. Bullard Co. IV. Fraud, Negligent Misrepresentation and Promissory and Equitable Estoppel Claims Counts three, four, and five of Vogel’s amended complaint allege that Bullard made material representations, both active and by omission, that induced him to accept its offer of employment and resign from his former position in Minnesota; that Bullard negligently misrepresented information on which Vogel justifiably relied; and promissory and equitable estoppel. PID 364-71, 72-74. The district court granted Bullard summary judgment, determining that Bullard’s representations were inactionable puffing, sales talk, opinions, or future opinions and that Vogel did not identify a material representation6 as necessary for his fraud, negligent misrepresentation, and equitable estoppel claims. See Flegles, Inc. v. TruServ Corp., 289 S.W.3d 544, 553–54 (Ky. 2009).
To establish fraud, a plaintiff must prove by clear and convincing evidence “a) material representation b) which is false c) known to be false or made recklessly d) made with inducement to be acted upon e) acted in reliance thereon and f) causing injury.” United Parcel Serv. Co. v. Rickert, 996 S.W.2d 464, 468 (Ky. 1999). A declarant’s misrepresentation must relate to an existing or past fact; if it relates to a future promise or an opinion of a future event it is not actionable. Radioshack Corp. v. ComSmart, Inc., 222 S.W.3d 256, 262 (Ky. Ct. App. 2007). “Fraud may be committed either by intentionally asserting false information or by willfully failing to disclose the truth.” Rickert, 996 S.W.2d at 469. Fraud by omission requires proof of four elements: that the defendant 1) had a duty to disclose a material fact, 2) failed to 6 PID 1577-82. - 10 - Case No. 14-5574 Vogel v. E.D. Bullard Co. disclose that fact, 3) that the defendant’s failure to disclose the fact induced the plaintiff to act, and 4) that the plaintiff suffered actual damages. See Republic Bank & Trust Co. v. Bear, Stearns & Co., Inc., 707 F. Supp. 2d 702, 710 (W.D. Ky. 2010). The district court correctly determined that the statements by Bullard executives Pasch and Miller to the effect that Bullard had a “supportive and positive atmosphere” are subjective opinions and cannot serve as the basis for a fraud action. See McHargue v. Fayette Coal & Feed Co., 283 S.W.2d 170, 172 (Ky. 1955). The executives’ statements that they would do everything possible to make Vogel’s transition to Bullard as smooth as possible and help Vogel become “debt free” in a few years, and predicting only positive outcomes should Vogel join Bullard referred to future predictions and conduct. See Radioshack Corp., 222 S.W.3d at 262. So too with Bullard’s representation to Vogel that the global duties of his position would include international responsibility over time. Id. Finally, as the district court noted, Vogel conceded that he could have asked more questions regarding Bullard’s corporate culture and the expectations of him and could have spoken further with Bullard employees and former employees, including the former Vice President he replaced. See e.g., Republic Bank & Trust Co., 707 F. Supp. 2d at 710 (“[I]f a party could have learned of the basis of the fraud, or if he could have uncovered it by ordinary vigilance or attention, his failure to do so deprives him of a remedy.”) (internal quotations and citation omitted).
A plaintiff establishes negligent misrepresentation by showing that “[o]ne who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance - 11 - Case No. 14-5574 Vogel v. E.D. Bullard Co. upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.” Presnell Constr. Managers, Inc. v. E.H. Const., LLC, 134 S.W.3d 575, 580 (Ky. 2004) (adopting tort of negligent misrepresentation set forth at Restatement (Second) of Torts § 552). The district court correctly determined that this claim fails because Vogel presented no evidence that Bullard supplied false information to him for guidance in business transactions such that he suffered a loss by justifiable reliance on the information. Vogel, 949 F. Supp. 2d at 710–11 (citing Presnell, 134 S.W.3d at 580).
Equitable estoppel requires both a fraudulent misrepresentation as to a material fact by one party and reliance by the other party. Fluke Corp. v. LeMaster, 306 S.W.3d 55, 62 (Ky. 2010). Summary judgment on this claim was proper because, as the district court determined, Vogel presented no evidence of a fraudulent representation.
Under Kentucky law, the doctrine of promissory estoppel provides that “[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee . . . and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” Sawyer v. Mills, 295 S.W.3d 79, 89 (Ky. 2009) (citation omitted). “The whole theory of a promissory estoppel action is that detrimental reliance becomes a substitute for consideration under the facts of a given case.” McCarthy v. Louisville Cartage Co., Inc., 796 S.W.2d 10, 12 (Ky. Ct. App. 1990) (quoting Calamari and Perillo, The Law of Contracts, Hornbook Series § 105 (1970)). - 12 - Case No. 14-5574 Vogel v. E.D. Bullard Co. To survive summary judgment, Vogel needed to demonstrate a genuine issue regarding two material facts: (1) that he reasonably relied, in good faith, upon the conduct or statements of the party to be estopped, and (2) that he materially changed his position in reliance on the statements. See Rivermont Inn, Inc. v. Bass Hotels & Resorts, Inc., 113 S.W.3d 636, 642 (Ky. App. 2003). Vogel testified that during the interview process (i.e., before he accepted Bullard’s offer of employment and resigned from his employment in Minnesota), CEO Miller and President and COO Pasch informed him that it would take six to twelve months to get to know the business and that he would need to absorb the business, products, and culture before making appropriate changes in marketing and sales. Vogel also testified that Edward “Jed” Bullard, Chairman of the Board and Owner of Bullard, said during his interview that Vogel would spend the first six to twelve months at Bullard assessing and analyzing the organization, processes, strategies and staff issues, PID 634 (Vogel affidavit), 726, 729-30, Vogel dep; PID 386 par. 9 (Answer to amended complaint). These statements related to the perceived complexity of the business and the expectation that Vogel would need time to learn the business and culture. They included no promises or representations that Vogel would be given six to twelve months to prove his value, during which period Bullard would forego any assessment of him unless his conduct was worthy of just cause termination. Although one can certainly perceive the unfairness in making a decision that Vogel was a bad fit during this period of acknowledged acclimation, the statements cannot fairly be viewed as a promise that Bullard would suspend judgment on Vogel’s performance or suitability during his initial six to twelve months of employment. - 13 - Case No. 14-5574 Vogel v. E.D. Bullard Co.