Free Response to Motion - District Court of Colorado - Colorado

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DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO 1437 Bannock Street Denver, Colorado 80202 Plaintiffs: COMMONWEALTH LAND TITLE INSURANCE COMPANY, a Virginia corporation, and TRANSNATION TITLE INSURANCE COMPANY, an Arizona corporation v. Defendants: UNITED TITLE COMPANY, INC. a Colorado company; SECURITY TITLE GUARANTY COMPANY, a Colorado corporation; TITLE AMERICA, INC., a Colorado corporation; JERROLD HAUPTMAN, an individual; EVONNE PIERCE, an individual; TOM ZIMMERMAN, an individual; SUSAN KURTZ, an individual; CANDICE ANDERFUREN, an individual; SANDRA DAVENPORT FORD, an individual; TAMMY GARAMOV, an individual; DENA LOVING, an individual; CASANDRA METCALF, an individual; LARA NIGRO, an individual; SAMANTHA LACY PARKER, an individual; TINA SHREEVE, an individual; SAMANTHA SOSA, an individual; CECILIA A. TURNER, an individual; JOSEPH BURKS, an individual; DAWN MILLER, an individual; MELONIE CAMPBELL-MEREDITH, an individual; BETH BALTZ, an individual; TERESA CAIN, an individual; and JOLEEN TRUJILLO, an individual.

COURT USE ONLY Case Number: 04CV10299 Div.: 6

Attorneys for Defendants: Name(s):
David D. Powell, Jr., #16152 Meghan W. Martinez, #26295 Janet Stansberry Drake, #27697 Christopher C. Zenisek, #34093

Address:

BROWNSTEIN HYATT & FARBER, P.C. 410 Seventeenth Street Twenty-Second Floor Denver, Colorado 80202-4437
303.223.1100 303.223.1111 [email protected] [email protected] [email protected] [email protected]

Phone Number: FAX Number: E-mail:

RESPONSE IN OPPOSITION TO COMMONWEALTH'S MOTION FOR PARTIAL SUMMARY JUDGMENT CONCERNING BREACH OF CONTRACT

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Defendants Candice Anderfuren, Sandra Davenport Ford, Tammy Garamova, Samantha Lacy (f/k/a Parker), Dena Loving, Casandra Metcalf, Lara Nigro, Tina Kinney (f/k/a Shreeve), Samantha Sosa and Cecilia Turner (collectively "Individual Defendants"), through their counsel, Brownstein Hyatt & Farber, P.C., submit the following Response in Opposition to Plaintiff Commonwealth Land Title Insurance Company's ("Commonwealth") Motion for Partial Summary Judgment Concerning Breach of Contract (the "Motion"). Introduction Commonwealth brings its Motion seeking summary judgment on contract claims against ten individuals who had the temerity to seek employment with another company. Its Motion seeks to enforce ten purported Employment Agreements between the Individual Defendants and Commonwealth's parent company, LandAmerica Financial Services, Inc. ("LandAmerica"). Unfortunately for LandAmerica and Commonwealth, however, LandAmerica and Commonwealth have express policies in favor of "at-will" employment. Those policies only authorize particular individuals to enter into fixed-term agreements. None of the so-called contracts at issue here are signed by any of those individuals. Nor can Commonwealth assert LandAmerica's claims. Commonwealth purportedly inherited the alleged contract under a pre-litigation "assignment." Under Colorado law, however, claims for personal services are not assignable, and LandAmerica must assert its own claims. Finally, Commonwealth's Motion ignores outstanding factual issues such as the waiver of any contractual rights by LandAmerica's Vice President as well as the reduction of duties and compensation that gave several Individual Defendants "Good Reason" to leave Commonwealth. Ultimately, numerous factual issues remain. Summary judgment is inappropriate.

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Statement of Material Facts Precluding Summary Judgment1 1. The alleged employment agreements are between the Individual Defendants and

LandAmerica. See Commonwealth Exhibits A-1 through A-10. 2. 3. LandAmerica is not a party in this case. Tom Zimmerman ("Zimmerman") signed the employment agreements. See

Commonwealth Exhibits A-1 through A-10. 4. None of the Individual Defendants consented to assign to Commonwealth the

alleged employment contracts with LandAmerica. Exhibits A through J (Affidavits of Individual Defendants). 5. According to LandAmerica's at will employment policy, the Individual

Defendants were at will employees, free to leave at any time with or without reason. Likewise, LandAmerica was free to terminate their employment at any time with or without reason. Exhibit L (LandAmerica's At Will Employment Policy). 6. LandAmerica's at will employment policy was effective when the Individual

Defendants and Zimmerman executed the alleged employment agreements. Exhibit K (Zimmerman Affidavit). 7. No one other than the Chief Executive Officer, Vice Chairman, President and

Chief Operating Officer ("Authorized LandAmerica Officers"), and in some cases senior managers with prior approval, were authorized to enter into agreements for employment for a specific period of time or make any agreement contrary to LandAmerica's policy of at-will employment. Exhibits K and L.

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Opposing counsel has been notified that signatures for the Affidavits of Tom Zimmerman and Tammy Garamova (respective Exhibits K and C) could not be obtained as of the filing of this Response. Opposing counsel does not object to the submission of executed signature pages by Wednesday, September 28, 2005.

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8.

Ken Pond ("Pond"), Commonwealth's Senior Vice President and Area Manager

for Oregon and Colorado, was Zimmerman's supervisor at the time the alleged employment agreements were signed. Exhibit K. 9. After Zimmerman signed the alleged employment agreements, Pond told

Zimmerman they must be signed by Charlie Foster, LandAmerica's Chief Executive Officer. Exhibit K. 10. None of the Authorized LandAmerica Officers approved Zimmerman's execution

of the alleged employment agreements, either before or after he signed them. Exhibit K. 11. Commonwealth's Vice President, April Kovari ("Kovari"), told Tina Kinney she

was not worried about the contract and did not want anyone working at Commonwealth who did not want to be there. Based on the representations, Ms. Kinney believed she was free to leave Commonwealth. Exhibit H (Kinney Affidavit). 12. In response to Sandy Davenport-Ford's written notice advising Commonwealth of

her resignation, Kovari told another Commonwealth employee, "Sandy can go then." Relying on Kovari's statement, Sandy Davenport-Ford believed she was free to leave Commonwealth. Exhibit B (Davenport-Ford Affidavit). 13. Kovari also told Dena Loving that Commonwealth would not pursue enforcement

of the contract. As a result, Ms. Loving believed she was free to leave Commonwealth. Exhibit E (Loving Affidavit). 14. The alleged employment agreements contain a termination clause, which provides

employees may terminate their employment prior to expiration of the two-year employment term for "good reason." "Good reason" is defined as "a material reduction in Employee's

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compensation or benefits or a material reduction in Employee's duties or responsibilities or authority." See Commonwealth Exhibits A-1 through A-10. 15. The alleged employment agreements required any employee terminating

employment for "good reason" to provide written notice to the company. Id. 16. Samantha Lacy, Candice Turner, Lara Nigro and Tammy Garamova all provided

written notice of their resignations to Commonwealth. Exhibits C, D, G and J (Affidavits of Garamova, Lacy, Nigro and Turner). 17. Tammy Garamova, Candice Turner and Samantha Lacy experienced a material

reduction in the compensation they expected to receive as employees of Commonwealth because they were not paid certain bonuses and commissions. Exhibits C, D and J. 18. Tammy Garamova was a branch manager at the time she signed the alleged

employment agreement. She experienced a material reduction in her duties, responsibilities or authority when she was demoted to an assistant branch manager before she resigned from Commonwealth. Exhibit C. Legal Argument I. Summary Judgment Standard. Summary judgment "is a drastic remedy to be granted only if there is a complete absence of any genuine issue of fact." Seal v. Hart, 775 P.2d 462, 464 (Colo. App. 1998). It is "appropriate 'only in the clearest of case, where no doubt exists concerning the facts.'" Roderick v. City of Colorado Springs, 563 P.2d 3, 5 (Colo. 1977) (citation omitted). In a summary judgment motion, "the nonmoving party is entitled to all favorable inferences that may be drawn from the undisputed facts, and all doubts as to whether a triable issue of fact exists must be

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resolved against the moving party." Compass Insurance Co. v. City of Littleton, 984 P.2d 606, 613 (Colo. 1999). II. The Individual Defendants Were At-Will Employees. Colorado law presumes employment relationships to be at-will. See, e.g., Jones v. Stevinson's Golden Ford, 36 P.3d 129 (Colo. Ct. App. 2001). "Either the employer or the employee may terminate at-will employment at any time with or without cause . . .." Wisehart v. Meganck, 66 P.3d 124, 126 (Colo. Ct. App. 2002). The at-will doctrine reflects a matter of public policy. [It] promotes flexibility and discretion for employees to seek the best position to suit their talents and for employers to seek the best employees to suit their needs. By removing encumbrances to quitting a job or firing an employee, the at-will doctrine promotes a free market in employment analogous to the free market in goods and services generally. Id. (internal citations omitted.) Land America, like many companies, embraces this Colorado law. Its employment policy states: At-Will Employment You are free to leave LandAmerica at any time, with or without a reason, and with or without notice. The Company also has the right to end your employment at any time, without or without a reason, and with or without notice. Although LandAmerica may choose to end your employment for a cause, cause is not required. The Company's policy is that employment is "at-will." Further, LandAmerica has the right to manage its work force and direct its employees. This includes the right to hire, transfer, promote, demote, reclassify, lay off, terminate or change any term or condition of employment at any time, with or without a reason and with or without notice. (Ex. L (emphasis added).) Because of its adherence to the "at-will" status of employment, LandAmerica only permits certain individuals to enter into binding employment agreements on its behalf: No one other than the Chief Executive Officer, Vice Chairman, President and Chief Operating Officer, and in some cases, senior managers whom they have approved, may enter into an agreement for employment for a specific

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period of time or make any agreement contrary to the policy of at-will employment. In addition, any such agreement must be in writing signed by the Chief Executive Officer, Vice Chairman, President and Chief Operating Officer, or the senior manager whom they have approved. (Id. (emphasis added).) Each of the alleged agreements Commonwealth and LandAmerica seek to enforce is signed by Thomas W. Zimmerman, former Vice President of LandAmerica. (Pl.'s Mot. for Sum. J., Ex. A-1 through A-10; Ex. K.) Mr. Zimmerman, as Vice President, was not authorized to bind LandAmerica. (Ex. L.) He received no authorization or approval to enter into the purported agreements. (Ex. K.) Indeed, his supervisor Ken Pond agreed, and advised Mr. Zimmerman that LandAmerica's Chief Executive Officer would need to sign the purported agreements. (Ex. K.) Even the purported agreements themselves acknowledge their lack of validity: "No amendment to this Agreement will be valid unless in writing signed by Employee and either the Chief Executive Officer or the President of LandAmerica." (Pl.'s Mot. for Summ. J., Ex. A-1 through A-10 at ¶10.) In order for a contract to have formed, "Each party to the contract must have understood and agreed to the essential terms of the claimed contract." CJI 4th 30:2. LandAmerica and Commonwealth never agreed to the terms of these purported contracts. LandAmerica's employment policies create a genuine issue of material fact regarding whether a contract ever formed between Commonwealth and LandAmerica and their employees, and whether ­ by some stretch of the imagination ­ Mr. Zimmerman had authority to bind LandAmerica despite its express policies to the contrary. Commonwealth's Motion for Summary Judgment should be denied.

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III.

LandAmerica's Purported Assignment is Invalid. Commonwealth asserts its Breach of Contract Claims premised upon contracts that it

never entered. Rather, by virtue of a pre-litigation attachment to its Motion, Commonwealth asserts that LandAmerica effectively "assigned" away the Individual Defendants and their agreements. Unfortunately for Commonwealth and LandAmerica, personal service contracts are not assignable. "The only assignments Colorado does not allow are for claims involving matters of personal trust or confidence or for personal services." Brown v. Gray, 227 F.3d 1278, 1294 (10th Cir. 2000) (citing Matson v. White, 220 P.2d 864, 866 (1950) see also Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U.S. 379 (1888).) "While the law favors assignability of rights generally, it does not allow assignments for matters of personal trust or confidence, or for personal services." Roberts v. Holland & Hart, 857 P.2d 492, 495 (Colo. 1993). In Roberts, the Colorado Supreme Court considered the assignability of legal malpractice claims. Id. It concluded, the assignment of legal malpractice claims involve matters of personal trust and personal service and do not lend themselves to assignability because permitting the transfer of such claims would undermine the important relationship between an attorney and client. Roberts, 857 P.2d at 495. Like the relationship at issue in Roberts, the employee-employer relationship fits squarely within the "personal services" exception. See, e.g., Wallis v. B & A Const. Co., Inc., 614 S.E.2d 193, 197 (Ga. App. 2005); Litton v. Maverick Paper Co., 354 F.Supp.2d 1209 (D.Kan.,2005); and DiBello v. Salkowitz , 772 N.Y.S.2d 663 (N.Y.A.D. 2004) see also Roeder v. FerrellDuncan Clinic, Inc., 155 S.W.3d 76, 84 (Mo. App. 2005) (citation omitted). A "personal service" is an,

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act done personally by an individual. In this sense, a personal service is an economic service involving either the intellectual or manual personal effort of an individual, as opposed to the salable product of the person's skills. Black's Law Dictionary 1180 (8th ed. 1999). The alleged employment agreements' pertain to economic services the Individual Defendants provided to LandAmerica. Those services ­ and the rights that flow from those relationships ­ are not assignable. LandAmerica's purported assignment is invalid, and Commonwealth has no standing to bring their breach of contract claims. Again, Commonwealth's Motion for Summary Judgment fails. IV. Questions of Material Fact Remain Regarding Waiver and Abandonment of the Alleged Employment Agreements. Assuming arguendo the Employment Agreements were valid and binding, material issues of disputed fact remain regarding waiver and abandonment. "A contract may be rescinded or discharged by acts or conduct of the parties inconsistent with the continued existence of the contract, and mutual assent to abandon a contract may be inferred from the attendant circumstances and conduct of the parties." Lansdale v. Geerlings, 523 P.2d 133 (Colo. App. 1974). Whether parties waived or abandoned their contractual rights is a question of fact. See Buechner v. Rouse, 538 P.2d 117 (Colo. App. 1975); Southern Colorado MRI, Ltd. v. MedAlliance, Inc., 166 F.3d 1094 (10th Cir. 1999). Some of the alleged employment agreements were waived and/or abandoned by LandAmerica. April Kovari, Vice President of LandAmerica, assured Dena Loving that Commonwealth would not seek to enforce the employment agreement.2 Ms. Kovari told Tina Kinney, that she was "not worried" about the contract because she did not want anyone working at

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As noted above, the purported contracts were ineffective because they did not bind LandAmerica. Ms. Kovari holds the LandAmerica position previously held by Tom Zimmerman. To the extent they did, however, Ms. Kovari had authority to rescind those alleged agreements.

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Commonwealth who did not want to work there. Regarding Sandy Davenport-Ford's resignation, Ms. Kovari told Commonwealth supervisor Bernadette Scholander that "Sandy can go then." Based on Ms. Kovari's representations, each of these defendants believed Commonwealth abandoned any interest it had in LandAmerica's employment contracts, and understood they were free to seek alternative employment. Whether Ms. Kovari's actions constitute waiver and abandonment of LandAmerica's alleged contractual rights is another disputed issue of material fact. On this premise as well, Commonwealth's Motion fails. V. Several Employees Left for "Good Reason." The alleged Employment Agreements allowed employees to terminate their employment for any "Good Reason." (Pl.'s Mot. for Summ. J. at Ex. A-1 through A-11, ¶ 6). The agreements define "Good Reason" as "a material reduction in Employee's compensation or benefits or a material reduction in Employee's duties or responsibilities or authority." (Id) Tammy Garamova (Hayutin) signed the purported Employment Agreement as an Escrow Branch Manager. Shortly thereafter, Commonwealth and LandAmerica closed the branch she managed, and transferred her to work as a Closer in another branch. Even assuming the Employment Agreements to be enforceable ­ which they are not ­ Ms. Garamova's material reduction in duties and responsibilities gave her "Good Reason" to leave. Finally, three Individual Defendants suffered a material reduction in compensation. Shortly after Tammy Garamova, Samantha Lacy and Candice Turner signed the purported Employment Agreements, Commonwealth changed policies to eliminate the bonuses and commission payments they had received in past years. That elimination constituted a material reduction in these employees' compensation, thus permitting their respective written

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resignations. The reduction of their compensation constituted Good Reason, and permitted them to terminate their respective purported Employment Agreements. In summary, and contrary to the unsupported contention of one of Commonwealth's Senior Vice Presidents, Ken Pond (see Ex. "A" to the Motion ­ Pond Affidavit at ¶ 6), disputed issues of material fact exist concerning whether Commonwealth's treatment of these Individual Defendants constitutes "Good Reason" for the termination of their alleged contracts. Such fact issues cannot be resolved on summary judgment but must be decided by a jury. Conclusion Commonwealth's Motion seeks summary judgment against ten former employees, using an Employment Agreement to which it is not bound, and to which it is not a party. Commonwealth ultimately seeks to bind its employees yet remain free to do what it chooses. LandAmerica's initial attempt to enter into the purported agreements was invalid because it did not enter into those agreements by any valid company agent. Likewise, LandAmerica's purported assignment to Commonwealth directly contravenes Colorado law. Further, the actions and statements of Commonwealth's management personnel create material disputed fact issues concerning the enforceability of the agreements at issue in this case. Accordingly, Commonwealth's Motion should be denied.. WHEREFORE, the Individual Defendants respectfully request that the Court deny Commonwealth's Motion for Partial Summary Judgment. The Individual Defendants further request that the Court grant the Individual Defendants an award of the attorneys' fees and costs they incurred to respond to Commonwealth's motion.

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Respectfully submitted this 23rd day of September 2005. BROWNSTEIN HYATT & FARBER, P.C.
Original pleading bearing original signature of David D. Powell, Jr., maintained in the offices of Brownstein Hyatt & Farber, PC, as required by C.R.C.P. 121, §126(9)

//s// By:_______________________________________ David D. Powell, Jr., #16152 Meghan W. Martinez, #26295 Janet Stansberry Drake, #27697 Christopher C. Zenisek, #34093 ATTORNEYS FOR DEFENDANTS

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CERTIFICATE OF SERVICE I hereby certify that on this 23rd day of September 2005, a true and correct copy of the foregoing RESPONSE IN OPPOSITION TO COMMONWEALTH'S MOTION FOR PARTIAL SUMMARY JUDGMENT CONCERNING BREACH OF CONTRACT was served via JusticeLink on the following counsel of record: Christopher H. Toll, Esq. Holland & Hart, LLP 8390 E. Crescent Parkway, Suite 400 Greenwood Village, CO 80111
Original pleading bearing original signature of Linda R. Kerman, maintained in the offices of Brownstein Hyatt & Farber, PC, as required by C.R.C.P. 121, §1-26(9)

//s// Linda R. Kerman

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