Because we find that we could not conclude that Horizon's compliance was insubstantial, even taking all of the allegations in Melendez's complaint as true, Melendez may not take advantage of the Spiridigliozzi rule.
While we acknowledge that the facts as alleged in Melendez's complaint suggest some failure of consideration, we also note that they do not suggest complete failure, or even substantial failure. Even if Horizon did not live up to its promise to train and support Melendez in his new position, it did promote him to Assistant Controller and increased his salary to $ 36,000.00 in February of 1992, as it had promised in the settlement agreement. Moreover, as Horizon had promised, the company refrained from evaluating him in his new position until two months after his promotion. We also note that there are no allegations that Horizon failed to keep the facts and terms of the settlement strictly confidential as it had promised in paragraph 3(g) of the agreement.
This compliance with the agreement was not insignificant. Absent the agreement, the company had absolutely no obligation to increase Melendez's salary or delay evaluation of his performance for two months. In fact, it had no obligation to retain Melendez as an employee at all. We therefore find that Horizon substantially performed its obligations under the settlement agreement and that, under the Spiridigliozzi substantial performance rule, Melendez may not reinstitute his prior discrimination claims.
The second method by which Melendez could breathe life into his prior discrimination claims is by asserting a valid claim for fraud in the procurement of the contract. As we noted above, Melendez has attempted to state such a claim by alleging in his complaint that Horizon entered the settlement agreement with no intention of upholding its terms. This effort fails to achieve its intended purpose, however, because a party who executes a release allegedly procured by fraud has only two choices of remedies - either disaffirm the release and offer to return the consideration, or affirm the voidable contract and waive the fraud. Nocito v. Lanuitti, 402 Pa. 288, 289, 167 A.2d 262, 263 (1961)(cited in Dempsey v. Assoc. Aviation Underwriters, 141 F.R.D. 248 (E.D. Pa.), aff'd 977 F.2d 567 (3d Cir. 1992)).
Melendez, while seeking to have the agreement rescinded and the release disaffirmed, has failed to return the consideration that he has already received from Horizon. Admittedly, much of the consideration appears to be unreturnable (i.e., the two months of work and the confidentiality), but Melendez certainly could have repaid the difference between the salary he would have received absent the agreement and the salary he received as a result of the agreement. Because he did not do this, we cannot permit him to proceed with his claim of fraud in the procurement of the contract.
Having concluded that (1) Melendez may not invalidate the contract because Horizon substantially performed its obligations under the Negotiated Settlement Agreement and (2) Melendez's fraud claim is infirm, we find that Melendez's only remedy for Horizon's alleged breach of the settlement agreement is a state law breach of contract action. We will therefore dismiss subsections (a), (b) and (c) of Counts I and III, and subsections (a) and (b) of Counts V and VII, the portions of Melendez's claims that attempt to revive the claims he settled in the agreement.
B. Wrongful Discharge with Specific Intent to Harm
Horizon's second argument in his motion to dismiss or, in the alternative, for partial summary judgment is that we should dismiss Count IX of Melendez's complaint, his state law claim for wrongful discharge with specific intent to harm, because Pennsylvania no longer recognizes such a cause of action. Although there is significant disagreement in the courts on this point, after a careful analysis of the relevant Pennsylvania cases, we conclude that if the Pennsylvania Supreme Court were to be faced with the issue today, it would definitively conclude that the tort of wrongful discharge with specific intent to harm no longer exists.
Under Pennsylvania law, an employer is generally permitted to fire an at-will employee for any reason, without explanation. Henry v. Pittsburgh & L. E. R. Co., 139 Pa. 289, 21 A. 157 (1891); Hershberger v. Jersey Shore Steel Co., 394 Pa. Super. 363, 575 A.2d 944, 946 (1990). In 1974, however, the Pennsylvania Supreme Court decided Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974), in which it suggested, although did not explicitly create, two possible exceptions to this general rule, wrongful discharge in violation of public policy and wrongful discharge with the specific intent to harm.
Twelve years later, in Tourville v. Inter-Ocean Insurance Co., 353 Pa. Super. 53, 508 A.2d 1263 (1986), the Superior Court embraced and further defined these two exceptions. Other Superior Court panels followed suit. See, e.g, Mudd v. Hoffman Homes for Youth, Inc., 374 Pa. Super. 522, 543 A.2d 1092, 1096 (1988); Darlington v. General Electric, 350 Pa. Super. 183, 504 A.2d 306, 318 (1986); see also, Veno v. Meredith, 357 Pa. Super. 85, 515 A.2d 571, 577 (1986).
Then, in 1989, the Pennsylvania Supreme Court in Clay v. Advanced Computer Applications, Inc., 522 Pa. 86, 559 A.2d 917 (1989), declined to recognize an exception to the employment at-will doctrine for wrongful discharge with the specific intent to harm. Instead, the Supreme Court stated that:
It should be noted that, as a general rule, there is no common law cause of action against an employer for termination of an at-will employment relationship. Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974). Exceptions to this rule have been recognized in only the most limited of circumstances, where discharges of at-will employees would threaten clear mandates of public policy.
559 A.2d at 918; see also Paul v. Lankenau Hospital, 524 Pa. 90, 569 A.2d 346, 348 (1990). Furthermore, in a concurring opinion in Clay, Chief Justice Nix expressed his belief that "this Court did not announce a cause of action for wrongful discharge in Geary.... Indeed, the language in Geary clearly states that a cause of action for wrongful discharge in an at-will employment relationship does not exist." 559 A.2d at 923.
Panels of the Superior Court have unsurprisingly found since Clay and Paul that there is no cause of action for wrongful discharge with the specific intent to harm. Krajsa v. Keypunch, Inc., 424 Pa. Super. 230, 622 A.2d 355, 358 (1993) ("in order to survive a challenge of failure to state a cause of action [for wrongful discharge], the complaint must establish the violation of public policy"); Rutherfoord v. Presbyterian-University Hosp., 417 Pa. Super. 316, 612 A.2d 500, 506 (1992)("the only exception to the at-will doctrine, absent a genuine contract of employment, is a discharge which impinges matters of public policy"); Yetter v. Ward Trucking Corp., 401 Pa. Super. 467, 585 A.2d 1022, 1026 (1991)("the Clay and Paul cases . . . clearly hold that the only exception to the employment at-will doctrine is where the discharge violates clear mandates of public policy"). But see Booth v. McDonnell Trucking Services, Inc., 401 Pa. Super. 234, 585 A.2d 24, 28 (1991)("if the termination of an employee violates a clear mandate of public policy, or is done with the specific intent to harm the employee, a cause of action will lie.").
In light of the foregoing cases, which document the apparent birth of this exception to the employment at-will doctrine and then its demise before adulthood, we find that the Pennsylvania Supreme Court, if faced with this issue again, would definitively hold that Pennsylvania does not recognize the tort of wrongful discharge with specific intent to harm.
We will therefore dismiss Count IX of Melendez's complaint.
Horizon's third and final argument is that we should dismiss Count X of Melendez's complaint because, having dismissed the claims arising out of the substance of the settlement agreement as well as the wrongful discharge claim, we no longer have jurisdiction over the state law breach of contract claim. According to Horizon, our jurisdiction over the breach of contract claim is premised on supplemental jurisdiction. As we noted above, however, there is a powerful federal interest in enforcing Title VII settlement agreements and, therefore, under that statute, federal courts have jurisdiction over the interpretation and enforcement of such agreements. Safeway, supra, 714 F.2d at 571-573; Eatmon v. Bristol Steel & Iron Works, Inc., 769 F.2d 1503, 1516 (11th Cir. 1985). This is true even when state law governs both the right and the remedy of the contract action. Eatmon, 769 F.2d at 1516. We therefore decline to dismiss Melendez's claim of breach of contract because our jurisdiction under 28 U.S.C. § 1331 continues in view of the federal interest in settlements of Title VII claims. In any event, given this strong federal concern, we alternatively elect to exercise our supplemental jurisdiction under 28 U.S.C. § 1367.
For the foregoing reasons, we will grant Horizon's motion insofar as it seeks the dismissal of subsections (a), (b) and (c) of Counts I and III, subsections (a) and (b) of Counts V and VII, and Count IX, but we will deny it to the extent that it requests that we dismiss Count X.
An appropriate Order follows.
AND NOW, this 13th day of January, 1994, upon consideration of Horizon's motion to dismiss or, in the alternative, motion for partial summary judgment, Melendez's response, Horizon's reply and Melendez's "reply to the reply", it is hereby ORDERED:
1. The motion is GRANTED IN PART and DENIED IN PART;
2. The motion is GRANTED IN PART insofar as it seeks dismissal of subsections (a), (b) and (c) of Counts I and III, subsections (a) and (b) of Counts V and VII, and Count IX;
3. The motion is DENIED IN PART insofar as it seeks dismissal of Count X;
4. A pretrial conference in this matter will be held in chambers (Room 5918) on January 26, 1994 at 9:00 a.m.
BY THE COURT:
Stewart Dalzell, J.