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O'NEILL v. ARA SERVS.

August 8, 1978

Peter L. O'NEILL
v.
ARA SERVICES, INC., William S. Fishman, Lee F. Driscoll, Jr., Marvin D. Heaps and William M. Siegel



The opinion of the court was delivered by: NEWCOMER

MEMORANDUM AND ORDER

This is a diversity action brought by Peter L. O'Neill, a former employee of ARA Services, Inc., for breach of a contract to employ plaintiff in a management position in ARA, for wrongful discharge from his employment, and for conspiracy to deprive plaintiff of his rightful occupation. Defendants are ARA Services, Inc.; William S. Fishman, President of ARA; and several corporate officers of ARA. Defendants have moved to dismiss all three complaints for failure to state a claim upon which relief can be granted under F.R.Civ.P. 12(b)(6). The motion to dismiss is denied as to the first claim. As to the second and third claims, the motion is granted.

 On such a motion, the Court must construe all well-pleaded facts as true. According to the complaint, plaintiff was employed as a vice-president of a security corporation when, in May, 1974, he was offered a job to establish a corporate security department for ARA. O'Neill rejected this offer saying he would consider employment with ARA only if it would lead to an executive position in operations within two years and only if the salary were $ 50,000 a year. At a subsequent meeting, President Fishman offered plaintiff employment with ARA at $ 50,000 a year plus fringe benefits to establish a security department to insure ARA compliance with federal regulatory statutes and to explore possible acquisition by ARA of security companies. President Fishman assured O'Neill that he would be entitled to leave security in two years and take a position in management of operations or as head of any security companies acquired by ARA. Later, plaintiff met with defendant Driscoll and again said that he would accept employment as security manager only if ARA promised him a position in operations within two years. Defendants Driscoll and Fishman assured plaintiff that should he accept employment with ARA as corporate security director, he would be entitled to a management position with ARA. The tenor of these offers was confirmed in a letter from defendant Driscoll. After describing plaintiff's broad security responsibilities and role in exploring purchase or internal development of a security business by ARA, Driscoll wrote: "We also contemplate that if this program (security business) bore fruit, you would be the line head of this operation." He continued,

 
"After (two years) we would anticipate that you would relinquish that responsibility (in security) . . . and either spend full time running what security business we had developed to serve others during the two years or you would be free to move laterally into any ARA component in an operational capacity where it seemed appropriate for you to do so. I wouldn't think that there would be any shortage of such positions available."

 In reliance on these assurances, plaintiff accepted ARA's offer and went to work for ARA as corporate security director on July 1, 1974.

 Shortly after starting work, plaintiff was asked to investigate rumors of organized crime infiltration of an ARA subsidiary. He expressed concern that an extensive investigation would interfere with his broader security duties and might impede his advancement to an executive position in operations. Defendants Fishman and Driscoll told plaintiff that this investigation should take precedence over his other duties and they assured him that the investigation would not prevent ARA from honoring its commitment to place plaintiff in management of operations. According to the complaint, defendants repeated these assurances throughout the next two years.

 Plaintiff spent the bulk of this time investigating illegal acts by ARA personnel. His investigations disclosed evidence that ARA subsidiaries were infiltrated by organized crime, that ARA funds were being used to finance loan-shark operations and to bribe public officials, and that certain executives were defrauding ARA of money. As a result, several key executives were terminated or asked to resign, including a member of the board of directors.

 In the fall of 1976, plaintiff asked to begin formal training in operations. He was told that he would have to withdraw from his investigative work before beginning formal training. O'Neill was assured by all defendants that he would be guaranteed a position as regional vice-president at a salary commensurate with what he was then earning (about $ 64,000). He helped locate a replacement, left the investigation, and in February, 1977, began training in operations. During the next two months plaintiff was by-passed for three regional executive openings without being given an opportunity to interview for the positions. Plaintiff complained. On May 2, 1977, he was fired without explanation.

 Plaintiff alleges that defendant ARA breached its contract to employ plaintiff in management of operations after two years. As a result, plaintiff seeks damages for loss of earnings, loss of earning capacity, and damages to his professional reputation. The motion to dismiss will be denied as to the first count because the plaintiff should have the opportunity to prove at trial any facts and circumstances from which a jury could infer that defendants entered into a definite agreement to employ plaintiff in a management position for a reasonable period of time.

 Defendants contend that plaintiff has not stated a claim for breach of contract because the employment agreement does not specify employment for a definite time period and is therefore terminable at will by either party for any reason. A contract of employment which does not specify a definite duration is presumed to be terminable at will by either party. The plaintiff may overcome this presumption by showing the intent of the parties that the contract last for some definite period of time or for a reasonable time. See Cummings v. Kelling Nut Company, 368 Pa. 448, 84 A.2d 323 (1951).

 
" . . . In order to ascertain that intention, the court may take into consideration the surrounding circumstances, the situation of the parties, the objects they apparently have in view, and the nature of the subject-matter of the agreement. Thus contracts which do not fix a definite time for the duration of the relationship which they create are sometimes construed as providing for a reasonable time or some particular period inferred from the nature and circumstances of the undertaking." Slonaker v. P. G. Publishing Company, 338 Pa. 292, 13 A.2d 48 (1940).

 The intent of the parties to a contract with regard to the duration of the employment relationship in the absence of a specific provision has been treated by Pennsylvania courts as a factual matter to be decided by the jury. See, e.g., Lubrecht v. Laurel Stripping Company, 387 Pa. 393, 127 A.2d 687 (1956). *fn1"

 In the present case, plaintiff O'Neill alleges that he left his former employment and worked for ARA for two years in reliance on the promise that he would be transferred to a management position after two years. He further alleges that he left his position as security director for ARA to train for management on the assurance that he would be promoted to regional vice president. If these allegations were established at trial, it would not be unreasonable for a trier of fact to conclude that the parties intended plaintiff's employment in management to extend for a reasonable period of time.

 The defendants also contend that the first count should be dismissed because the alleged agreement is too vague to be enforced under Pennsylvania law. For the purposes of pleading, plaintiff's allegations contain a sufficiently definite oral agreement to allow him the opportunity of proving a definite agreement to a jury. Pennsylvania cases have held that whether the parties formed a complete contract is a question for the jury. Under Pennsylvania law, the determination of the terms of a disputed oral contract is the exclusive function of the jury as a question of fact; the legal effect of the agreement is the province of the courts as a matter of law. McCormack v. Jermyn, 351 Pa. 161, 40 A.2d 477 (1945). Plaintiff here has alleged an oral agreement, various assurances and commitments, a letter of confirmation, various modifications, a rate ...


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