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Hampton v. Kohler

United States District Court, D. Minnesota

June 21, 2018

Bruce Hampton, Plaintiff,
v.
Michael Kohler, Defendant.

          David K. Snyder, Esq., Johnson & Turner, counsel for Plaintiff.

          Christopher J. Harristhal, Esq., and John Anders Kvinge, Esq., Larkin Hoffman Daly & Lindgren, Ltd., counsel for Defendant.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         This matter is before the Court on a Motion to Dismiss Counts Two and Three of the Complaint brought by Defendant Michael Kohler. (Doc. No. 4.) For the reasons set forth below, the Court grants in part and denies in part the motion.

         BACKGROUND

         In this case Plaintiff alleges three counts: Breach of Contract (Count One), Breach of the Implied Covenant of Good Faith and Fair Dealing (Count Two), and Unjust Enrichment (Count Three). (Doc. No. 1, Ex. 1 (Compl.).)[1] The basis of the lawsuit involves an Employment Agreement and Restricted Stock Agreement Under the Milestone Systems, Inc. Stock Incentive Plan, that was signed in 2002 by Plaintiff and Defendant, who was the President of Milestone Systems, Inc. at the time. (Compl. ¶ 5.) The Restricted Stock Agreement awarded 760 shares of restricted Series B stock in Milestone to Plaintiff. (Id. ¶ 6.) In 2005, a First Amendment to the Restricted Stock Agreement increased Plaintiff's shares to 1, 465. (Id. ¶ 8.) On or around April 29, 2016, Plaintiff and Milestone, along with other employees, executed a Termination and Release, which was signed by Plaintiff and Mark Greer, Milestone's President at the time. (Id. ¶ 9.) Plaintiff alleges that on or around April 28, 2016, Defendant received $4, 000, 000 in escrow and that Plaintiff is owed $164, 903 based on the 1, 465 unvested shares of the incentive stock plan. (Id. ¶¶ 9-10.) On or around April 29, 2016, Plaintiff and Defendant executed an Agreement with Respect to Post-Closing Amounts (“Post-Closing Agreement”), pursuant to which Defendant would pay Plaintiff his respective pro-rata portion of all Post-Closing Amounts. (Id. ¶¶ 11, 12.)

         Paragraph 3 of the Post-Closing Agreement provides:

In order for an Employee to receive its pro rata portion of any Post-Closing Amounts, the Employee must be employed by the Company at the time of payment. Notwithstanding the foregoing, however, an Employee remains eligible to receive its pro rata portion of Post-Closing Amounts (if any) if the Company terminates the Employee's employment without cause (as described in the Employee's employment agreement).

(Id. ¶ 13.)

         On May 3, 2016, Milestone was acquired by Kudelski Group. (Id. ¶ 14.) In late August 2016, Kudelski Security, Inc. and Plaintiff executed a Confidential Separation Agreement and General Release, by which Plaintiff's employment ended as of September 30, 2016 without cause by either party. (Id. ¶ 15.) Defendant received the escrow funds in November 2017 and made disbursements to various employees, but not to Plaintiff. (Id. ¶ 16.) Plaintiff alleges that Defendant refuses to pay Plaintiff his pro-rata share of the Post-Closing amounts in breach of the Post-Closing Agreement. (Id. ¶ 18.)

         Defendant now moves to dismiss Plaintiff's claims for unjust enrichment and implied covenant of good faith and fair dealing under Federal Rule of Civil Procedure 12(b)(6).

         DISCUSSION

         I. ...


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