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Hutson, Inc. v. Windsor

United States District Court, W.D. Kentucky, Paducah Division

July 8, 2015

HUTSON, INC., Plaintiff,
v.
WALTER C. WINDSOR, Defendant.

MEMORANDUM OPINION AND ORDER

GREG N. STIVERS, District Judge.

This matter is before the Court upon the Motion for Partial Summary Judgment of Plaintiff Hutson, Inc. ("Hutson"), on Counts I, II, and IV of Defendant's Counterclaim (DN 52). The motion is fully briefed, and is ripe for decision. For the reasons outlined below, the motion is GRANTED on Counts I and II, but DENIED on Count IV.

I. STATEMENT OF FACTS AND CLAIMS

This dispute arises out of a series of agreements by which Hutson acquired assets and inventory from Premier Development Company, Inc. ("Premier"), an international agricultural equipment and parts corporation. As part of the agreements, Walter Windsor ("Windsor"), who served as president and shareholder of Premier until late 2010, became an employee of Hutson. Additionally, there is a dispute as to Hutson's liability for comments made by Patrick Lewis ("Lewis") to a third party after Windsor was terminated by Hutson.

Prior to Hutson's acquisition of some of the company's assets, Premier had been a customer of Hutson and had accumulated nearly $100, 000 in debt on past due invoices. According to Hutson, the agreements at issue were entered into after discussions with Windsor relating to Premier's past-due accounts. Ultimately, Hutson agreed to purchase certain articles of Premier's inventory, hire Windsor as an employee, and provide him with a $250, 000 loan to assist him with paying off debts he had at that time. (Mem. in Supp. of Pl.'s Mot. for Partial Summ. J. 2-3, DN 52-1). The agreements were consummated on August 19, 2011, in the form of an Inventory Sales Agreement, an Employment Agreement, and a Promissory Note. (Am. Compl. Exs. 1-3, DN 36-1 to 36-3). The Employment Agreement set forth the term of Windsor's employment, including a covenant not to compete, an agreement to work exclusively for Hutson, and a clause defining the employment relationship as "at will." (Am. Compl. Ex. 2, DN 36-2).

Windsor, however, asserts that he was approached by Hutson about purchasing the business of Premier because of Hutson's desire to become involved in the sale of agricultural equipment and parts internationally, and to have Windsor take charge of developing business in Europe and Latin America. (Def.'s Resp. to Pl.'s Mot. for Partial Summ. J. 2-3, DN 57). According to Windsor, he agreed to the business relationship solely because of representations by Barry Carson, Hutson's president, that the partnership would provide Windsor with a "nearly limitless environment" and that the partnership would "exceed [Windsor's] projections by 25% minimum by year 2013." (Def.'s Decl. I Ex. 1 at 1, DN 43). Windsor contends that Carson made additional promises that Hutson would provide credit terms that were more favorable to customers than Premier could offer and that Windsor's earned commissions at Hutson would far exceed his income at Premier. (Def.'s Decl. I ¶ 14).

According to Windsor, he entered into the promissory note and Employment Agreement in reliance on these representations, believing that the proceeds of the sale and his commissions would be "more than sufficient to pay off the note, " and that the partnership would be "economically advantageous." (Def.'s Decl. I ¶ 17). After starting with Hutson, however, Windsor contends that the company did not provide credit terms "equal to or better than what Premier had provided customers, " (Def.'s Decl. I ¶ 21), and it did not provide Windsor with "independence to operate and manage the international operations." (Def.'s Decl. I ¶ 24). Windsor asserts that because of Hutson's actions he was unable to "make anywhere close to the sales [he] had projected." (Def.'s Decl. I ¶ 26). Windsor contends that the representations made by Carson amount to fraud, and that Hutson's failure to provide favorable credit terms, sufficient resources, and independence was a breach of the Employment Agreement. (Countercl. 19, DN 42).

Finally, Windsor asserts that during his tenure he introduced Hutson to a prominent Romanian farmer, Mihai Anghel ("Anghel"), to whom Hutson sold nearly $1, 000, 000 in equipment and parts shortly after Windsor was terminated. (Def.'s Resp. to Pl.'s Mot. for Partial Summ. J. 5). According to Windsor, as a part of the negotiations for this sale, Lewis, acting as an agent of Hutson, made defamatory statements about Windsor to Anghel, as well as to Hutson employees Andrew Ellison ("Ellison") and Andrei Costea. (Def.'s Resp. to Pl.'s Mot. for Partial Summ. J. 5). While Hutson asserts Lewis's legal status was that of an independent contractor and not an employee, Windsor states that Lewis was "actively involved and engaged in the day to day operations associated with international sales of agricultural equipment and parts;" traveled to trade shows with Hutson employees; distributed business cards to customers for Global Ag Solutions, a sister company of Hutson; and represented himself to customers as "someone who was a representative of the international sales operation/Global Ag Solutions and could speak for the company"; and that this conduct was indicative of Lewis acting as an agent of Hutson. (Def.'s Decl. II ¶ 12, DN 58).

Plaintiff, Hutson, filed its Motion for Partial Summary Judgment on March 6, 2015. Hutson cites the Court's order granting summary judgment as to Count I in the Amended Complaint, ordered on November 4, 2014, as foreclosing Windsor's claim of fraud. Hutson further claims that Windsor has failed to produce evidence that Hutson's conduct was a breach of the terms of the Employment Agreement. (Mem. in Supp. of Pl.'s Mot. for Partial Summ. J. 3-4). Finally, Hutson asserts Windsor has failed to provide sufficient evidence to raise a genuine dispute of material fact as to Lewis's status as an agent of Hutson at the time of the allegedly defamatory comments as grounds for summary judgment. (Mem. in Supp. of Pl.'s Mot. for Partial Summ. J. 4).

II. STANDARD OF REVIEW

Summary judgment is appropriate if the moving party can establish that the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, "show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

"[N]ot every issue of fact or conflicting inference presents a genuine issue of material fact...." Street v. J.C. Bradford & Co., 886 F.2d 1472, 1477 (6th Cir. 1989) (citation omitted). The burden initially falls on the moving party to inform the district court of the basis of its motion, either by identifying those portions of the record supporting its position or by demonstrating the absence of evidence to support one of the essential elements of the nonmoving party's claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986). The nonmoving party in this action must present more than a "mere scintilla of evidence" in support of his position; he must present evidence on which the trier of fact could reasonably find for him. Hartsel v. Keys, 87 F.3d 795, 799 (6th Cir. 1996) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). Finally, the party opposing summary judgment "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586.

III. DISCUSSION

A. Count I: Breach of Employment Agreement

Windsor's claim of breach of the Employment Agreement is predicated on Hutson's alleged failure to, among other things, "provide Windsor with the financial resources and support necessary to develop business, provide [Windsor] with the level of independence and responsibility promised for his role, " and to "provide customers of Windsor with the credit and service terms and support facilities [Windsor] had been promised would be available." (Countercl. 10). None of these obligations on the part of Hutson, however, are contained within the language of the contract. (Am. Compl. Ex. 2, DN 36-2). Instead, the explicit terms of the Employment Agreement oblige Hutson to employ Windsor on an at-will basis, compensate Windsor on a pure commission basis, allow Windsor to participate in various benefit plans available to Hutson employees, and pay reasonable business travel expenses. (Am. Compl. Ex. 2, DN 36-2). Windsor ...


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