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Michael Dermo v. Jerry Isaacson

August 21, 2012


The opinion of the court was delivered by: Buckwalter, S. J.


Currently pending before the Court is the Motion of Plaintiff Michael Dermo ("Dermo" or "Plaintiff") for Partial Summary Judgment Against Defendant Spring Creek Holdings LLC. For the following reasons, the Motion is denied.


This matter involves an employment contract dispute between Plaintiff and his former employer, Spring Creek Holdings LLC ("Spring Creek" or "Defendant"). Dermo, a resident of Pennsylvania, is a business executive engaged in sales and marketing consultation in the food industry. (Am. Compl. ¶¶ 32, 33.) Defendant Jerry Issacson, a resident of Illinois, is the sole Chief Executive Officer ("CEO"), President, and controlling Manager-Member of Spring Creek, Dedicated Foods LLC ("Dedicated Foods"), and Target Foods LLC ("Target Foods") (collectively hereinafter "the LLC Defendants"). (Id. ¶¶ 7, 12, 18.) According to Plaintiff, all three companies are financially and operationally intertwined with the same corporate address and employees. (Pl.'s Mot. Partial Summ. J., Ex. F, Aff. of Plaintiff Michael Dermo ("Dermo Aff.") ¶ 5.) Plaintiff avers that, during his term of employment, he performed work for all three corporations as a result of their interconnectedness. (Id.)

Prior to joining any of the LLC Defendants as an employee, Dermo served as the Senior Vice President of the well-known Gerber Foods® baby food line. (Def.'s Resp Opp'n, Ex. A, Decl. of Jerry Isaacson ("Isaacson Decl.") ¶ 1.) In July of 2010, Isaacson hired Dermo to perform full-time consulting services for Target Foods through September of 2010. (Pl.'s Reply ("Reply"), Ex. 2, 07/22/10 Consulting Agreement ("Consulting Agreement") ¶ 5.) The Consulting Agreement was subsequently extended until December 31, 2010. (Reply, Ex. 3, Extension of Consulting Agreement.)

Apparently as a result of Isaacson's satisfaction with Dermo's work for Target Foods, Isaacson hired Dermo for a full-time position as an Executive Employee of Spring Creek in January of 2011. (Pl.'s Mot. Partial Summ. J., Ex. B, Emp't Agreement.) According to the terms of his Employment Agreement with Spring Creek, Dermo was to receive a $264,000 per year base salary, six weeks of annual paid vacation time, a $600 per month car allowance, healthcare benefits, 2% acquired ownership of the company, and a sales-based bonus. (Id. ¶ 4.) The Employment Agreement further guaranteed Dermo an initial employment term of two years, subject to renewal for additional one-year terms upon the mutual written consent of the parties. (Id. ¶ 2.)

In regard to termination, the Employment Agreement stated that: "Executive's employment hereunder may be terminated at any time upon written notice by the Company or Executive, with or without cause." (Id. ¶ 7(a).) The contract defined "cause," in relevant part, as:

[F]ailure by Executive to perform in any manner under this Agreement after being given notice of such failure by the Company, along with an explanation of such failure of performance. (Id. ¶ 7(f)(i).) According to the terms of the Employment Agreement, if Dermo was fired for cause, he was entitled to "written notice of the violation and a reasonable opportunity to cure the same to the Company's satisfaction." (Id.) The Agreement further provided that, in the event of termination without cause, Dermo would nonetheless receive his: (1) accrued but unpaid base salary and vacation/sick pay, (2) severance pay, (3) bonus, and (4) reimbursement for out-of-pocket expenses. (Id. ¶ 7(c).)

Between January and August of 2011, Plaintiff conducted sales and marketing consultation services in Pennsylvania pursuant to the terms of the Employment Agreement. (Dermo Aff. ¶ 8; Am. Compl. ¶ 44.) Specifically, he worked primarily out of his home office in Plymouth Meeting, Pennsylvania to oversee the product development and distribution of the companies' frozen fruit bar and baby food lines during this time. (Id. ¶ 45; Isaacson Decl. ¶ 6.) Plaintiff also conducted weekly Skype*fn1 calls with Isaacson in Illinois to discuss the progress of his work. (Am. Compl. ¶ 47.) According to Dermo, the company's revenues from frozen fruit bar sales doubled in 2011 as a result of his work on the account. (Dermo Aff. ¶ 11.)

Defendant, on the other hand, contends that Plaintiff did not meet his expected job potential during this time. (Isaacson Decl. ¶¶ 10--12.) More specifically, Isaacson, the CEO of Spring Creek, avers that Dermo was hired for the specific purpose of generating revenue in the area of baby foods,but failed to obtain even one baby food account during his eight months with the company. (Id.) Defendant further alleges that Plaintiff had serious performance problems during his term of employment at Spring Creek. (Id. ¶¶ 12, 13.)

Dermo contends that, despite his substantial generation of revenue, the LLC Defendants were inadequately capitalized throughout his employment. (Dermo Aff. ¶ 24.) More specifically, Defendants had outstanding debts, totaling over $115,000, that they owed to several other corporations. (Id. ¶ 33.) In order to raise capital, Isaacson began to negotiate with a private equity firm for a substantial investment. (Id. ¶ 26.) According to Dermo, it was well known that obtaining this investment "was essential to Defendants' ability to finance their ongoing business commitments and debts, and to accomplishing their projected operations in 2012." (Id. ¶ 27.) Unfortunately, the investment deal foundered in August of 2011. (Id. ¶ 28; Pl.'s Mot. Partial Summ. J., Ex. G, 08/15/11 Isaacson E-mail Re: Juggernaut Capital ("Investment E-Mail").) That same day, Isaacson allegedly called Dermo and told him that his investors had advised him that he would need to "cut his payroll" in order for the corporations to stay afloat. (Dermo Aff. ¶¶ 28, 29.)

One day later on August 16, 2011, Isaacson orally terminated Dermo's employment position with Spring Creek. (Id. ¶ 30.) Plaintiff believes that he was terminated without cause. Dermo further alleges that he never received any type of written communication from Spring Creek giving him notice or stating why his position was terminated. (Pl.'s Reply at 6.) Plaintiff also avers that he was never provided with a reasonable opportunity to cure any alleged deficiencies on his part, as was required by his contract. (Pl.'s Mot. Partial Summ. J. at 11.) As such, Plaintiff claims that Defendant owes him the accrued salary, severance pay, and benefits as defined by the Employment Agreement. (Am. Compl. ¶ 49.)

Plaintiff initiated the instant action by filing a Complaint in this Court on October 18, 2011. Plaintiff thereafter filed an Amended Complaint on January 11, 2012, asserting various claims against Isaacson, Spring Creek, Dedicated Foods, and Target Foods. Specifically, the Amended Complaint includes the following seven counts: (1) breach of contract against Isaacson and Spring Creek (Count I); (2) unjust enrichment against Isaacson and Spring Creek (Count II); (3) promissory estoppel against Isaacson and Spring Creek (Count III); (4) promissory estoppel against Isaacson and Dedicated Foods (Count IV); (5) unjust enrichment against Isaacson and Dedicated Foods (Count V); (6) promissory estoppel against Isaacson and Target Foods (Count VI); and (7) unjust enrichment against Isaacson and Target Foods. On July 10, 2012, Plaintiff Dermo filed the instant Motion for Partial Summary Judgment Against Defendant Spring Creek, seeking summary judgment in his favor on Count I of his Amended Complaint on the issue of Spring Creek's alleged breach of ...

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