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Breon v. Waypoint Insurance Group

March 31, 2008


The opinion of the court was delivered by: Judge Conner


Plaintiff Toby G. Breon ("Breon") brings this action pursuant to Section 510 of the Employee Retirement Income Security Act ("ERISA"), claiming that defendants Waypoint Insurance Group, Inc. and Sovereign Bancorp, Inc. (collectively "the Waypoint defendants") intentionally deprived him of benefits arising under an ERISA plan. Breon also asserts various state law claims against defendants Clair Odell Insurance Agency, LLC and HUB International Pennsylvania, LLC (collectively "the Odell defendants")*fn1 and the Waypoint defendants. Presently before the court are: (1) the Waypoint defendants' motion for summary judgment (Doc. 35), and (2) the Odell defendants' motion for summary judgment (Doc. 39). For the reasons that follow, the court will grant the Waypoint defendants' motion with respect to the ERISA claim asserted against them and will decline to exercise supplemental jurisdiction over the remaining state law claims.

I. Statement of Facts*fn2

Beginning in 2000, Breon was employed by the property and casualty division of defendant Waypoint Insurance Group, Inc. ("Waypoint Insurance"). (Doc. 37 ¶¶ 2-3; Doc. 48 ¶¶ 2-3.) Breon was "an extremely successful insurance producer" and was "personally responsible for generating approximately 30 percent" of Waypoint Insurance's revenue in 2004. (Doc. 1 ¶ 10; Doc. 10 ¶ 10.) As a Waypoint Insurance employee, Breon was a participant in the Waypoint Employee Stock Ownership Plan ("ESOP"), which qualifies as an "employee welfare benefit plan" pursuant to ERISA. See 29 U.S.C. § 1002(1); (see also Doc. 1 ¶ 18; Doc. 10 ¶ 18.)

In January of 2005, Waypoint Financial Corporation ("Waypoint Financial"), the parent company of Waypoint Insurance, merged with defendant Sovereign Bancorp, Inc. (Doc. 37 ¶¶ 1, 85; Doc. 48 ¶¶ 1, 85.) As a consequence of the merger, Waypoint Financial elected to terminate the ESOP on the merger's effective date of January 21, 2005. (Doc. 37 ¶ 85; Doc. 48 ¶ 85.) Waypoint Financial also agreed to sell the property and casualty division of Waypoint Insurance to a third party before the merger's effective date. (Doc. 1 ¶ 13; Doc. 10 ¶ 13.) By the end of October 2004, Waypoint Financial had chosen Odell as that third party. (Doc. 1 ¶ 14; Doc. 10 ¶ 14.) Odell's original purchase price for the property and casualty division was $2.3 million,*fn3 and the target closing date for the sale was December 1, 2004. (Doc. 37 ¶¶ 6, 34; Doc. 48 ¶¶ 6, 34.) The $2.3 million purchase price was conditioned upon all insurance producers, including Breon, entering into employment agreements with Odell. (Doc. 37 ¶ 8; Doc. 48 ¶ 8.) Given Breon's role as the "highest volume insurance producer" for Waypoint Insurance, the sales agreement between Waypoint Financial and Odell "was subject to a substantial reduction in sales price" if Breon did not agree to sign an employment contract with Odell. (Doc. 1 ¶ 14; Doc. 10 ¶ 14.)

On October 28, 2004, Odell's Chief Operating Officer Robert Hill ("Hill") provided Breon with a draft employment agreement, and the two entered into a period of negotiations. (Doc. 37 ¶ 17; Doc. 48 ¶ 17.) On November 3, 2004, Hill informed Waypoint representatives that Breon was not "ready to sign" the employment agreement and was "considering going out on his own opening an agency." (Doc. 42, Ex. B App. 3.) Internal Waypoint emails from November 3, 2004 indicate that, upon learning of the problems in the Breon negotiations, the company began discussing the option of offering Odell a purchase price adjustment if Breon refused to sign. (Doc. 51-17 at 11.) Another internal Waypoint email concluded that if Breon refused to sign with Odell, Waypoint would "need to terminate him and begin ASAP migrating his business to another producer so that [Waypoint] can continue with the sale process." (Doc. 42, Ex. B App. 2.)

At some point, Breon informed Hill that "time [wa]s of the essence" in their negotiations as Breon would be out of the country from November 10, 2004 until November 19, 2004. (Doc. 41-10 at 9.) On November 8, 2004, Breon identified specific changes that he desired to make to the draft employment agreement with Odell. (Doc. 37 ¶ 19; Doc. 48 ¶ 19.) Amongst these was a request for a $60,000 signing bonus, which Waypoint eventually agreed to finance as an aid to the negotiations between Odell and Breon. (Doc. 37 ¶¶ 31-32; Doc. 48 ¶¶ 31-32.) Hill acceded to the majority of Breon's alterations and returned a revised contract to Breon. On the morning of November 9, 2004, Breon proposed several additional corrections to the revised contract and told Hill that he planned to meet with his attorney at 2:00 p.m. to execute the contract. At a meeting with Waypoint representatives later the same day, Breon stated that several outstanding issues remained before he could sign an employment agreement with Odell. The Waypoint representatives informed Breon that he must have a signed agreement in place before he left the country the following day. (Doc. 37 ¶¶ 40-41; Doc. 48 ¶¶ 40-41.)

On November 10, 2004, Breon informed Hill that his attorney was planning to deliver additional contract modifications later that day and that Breon hoped to provide a signed agreement to Waypoint by 5:00 p.m. that evening. (Doc. 42, Ex. B Att. 7.) Hill received and reviewed the proposed amendments. Hill assented to making several of the proposed changes but stated that a number of the other proposals signaled a "major disagreement" between the parties. (Id. at Att. 8.) Hill went on to state that he saw "no further need for discussion" if the proposed terms were essential to Breon and that he would "advice [sic] Waypoint that [the parties] could not reach a deal." (Id.) At 12:51 p.m., Hill advised several Waypoint officials that the negotiations had reached an impasse. (Doc. 37 ¶ 44; Doc. 48 ¶ 44.) Upon receiving this information, Waypoint Financial Senior Executive Vice President James B. Moss ("Moss") promptly informed Breon that if he did not sign an employment agreement with Odell by 4:00 p.m. that day, he would "suffer immediate loss" of his employment. (Doc. 1 ¶ 25; Doc. 10 ¶ 25.) Moss testified that he gave Breon this ultimatum because he wanted to impart upon Breon "a sense of urgency" to solidify the agreement before he left the country. (Doc. 37 ¶ 49; Doc. 48 ¶ 39.) Breon concedes that he had not reached an agreement with Hill by the 4:00 p.m. deadline. (Doc. 1 ¶ 26; Doc. 10 ¶ 26.) At approximately 4:10 p.m., Moss terminated Breon's employment. (Doc. 1 ¶ 27; Doc. 10 ¶ 27.) According to Breon, Moss informed him that the termination was "based on the information that [Moss] had that negotiations have come to a standstill."*fn4 (Doc. 37 ¶ 53; Doc. 48 ¶ 53.)

Following Breon's termination, Waypoint and Odell renegotiated the purchase price for the property and casualty division and agreed to lower the purchase price from $2.3 million to $2.1 million. (Doc. 37 ¶ 76; Doc. 48 ¶ 76.) In addition, the escrow amount was increased from $100,000 to $700,000. (Doc. 37 ¶ 80; Doc. 48 ¶ 80.) Following payment of this reduced price, Odell took control of the property and casualty division on December 1, 2004. (Doc. 37 ¶ 81; Doc. 48 ¶ 81.)

The December 1, 2004 sale affected the former Waypoint Insurance employees' rights to their 2004 ESOP allocations because the ESOP required an employee to work through the end of a calendar year to receive his or her annual ESOP allocation. (Doc. 37 ¶ 91; Doc. 48 ¶ 91.) Cognizant of this unintended consequence of the sale, Waypoint Financial arrived at a solution. The company placed each Waypoint Insurance employee in one of two categories. Those who received an offer of employment from Odell and accepted such an offer, as well as those who did not receive such an offer, would remain Waypoint Insurance employees through the end of the calendar year and receive their 2004 ESOP allocations. Those who received and rejected an offer of employment from Odell would be terminated on the effective date of the rejection and would not receive their 2004 ESOP allocations. (Doc. 37 ¶¶ 87-89; Doc. 48 ¶¶ 87-89.) Because Breon was not employed by Waypoint at the end of the calendar year, he did not receive his 2004 ESOP allocation. (Doc. 37 ¶ 92; Doc. 48 ¶ 92.)

On November 9, 2006, Breon commenced the above-captioned action. (See Doc. 1.) Breon claims that the Waypoint defendants intentionally interfered with his ESOP benefits in violation of Section 510 of ERISA, 29 U.S.C. § 1140, and deprived him of his annual bonus and right to exercise his vested stock options. (Id. at 5-13.) Breon also claims that the Odell defendants tortiously interfered with his business relationship with Waypoint. (Id. ¶ 57.) Defendants filed two motions for summary judgment (Docs. 35, 39), which have been fully briefed and are ripe for disposition.

II. Standard of Review

Through summary adjudication the court may dispose of those claims that do not present a "genuine issue as to any material fact," and for which a jury trial would be an empty and unnecessary formality. See FED. R. CIV. P. 56(c). It places the burden on the non-moving party to come forth with "affirmative evidence, beyond the allegations of the pleadings," in support of its right to relief. Pappas v. City of Lebanon, 331 F. Supp. 2d 311, 315 (M.D. Pa. 2004); FED. R. CIV. P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This evidence must be adequate, as a matter of law, to sustain a judgment in favor of the non-moving party on the claims. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita Elec. ...

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