Salerno, Jr. v. Steel Plate LLC

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

RONALD SALERNO, JR, ) CASE NO. 5:20-cv-1598

)

)

PLAINTIFF, ) JUDGE SARA LIOI

)

vs. )

) MEMORANDUM OPINION

)

STEEL PLATE, LLC, )

)

)

DEFENDANT. )

The present dispute arises out of an employment agreement entered into between plaintiff

Ronald Salerno, Jr. (“Salerno”) and defendant Steel Plate, LLC (“Steel Plate”). Now before the

Court is Steel Plate’s motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6). (Doc.

No. 11 [“MTD”].) Salerno opposes the motion (Doc. No. 15 “[Opp’n”]), and Steel Plate has filed

a reply.1 (Doc. No. 18 [“Reply”].) For the reasons that follow, the motion to dismiss is denied.

I. BACKGROUND

Salerno began his employment with Steel Plate in Tallmadge, Ohio in 2009. (Doc. No. 1-

1 (Complaint [“Compl.”]) ¶ 6.) At the request of Steel Plate, Salerno relocated and began

1 Salerno also moved for leave to file a sur-reply instanter, suggesting that Steel Plate has impermissibly raised

“entirely new arguments” and made “material misstates of law” in its reply. (Doc. No. 19 at 135; see Doc. No. 19-1

(Proposed Sur-reply).) Steel Plate opposes the motion. (Doc. No. 20.) The Court finds that the issues addressed in

the proposed sur-reply were first raised in Steel Plate’s dispositive motion or in the memorandum in opposition.

Further, contrary to Salerno’s suggestion, citing additional authority in a reply to support of an argument previously

raised in a motion or to counter an argument raised in an opposition brief does not constitute a new argument

otherwise justify a sur-reply. See William F. Shea, LLC v. Bonutti Research, Inc., No. 2:10-cv-615, 2011 WL

1256670, at *2 (S.D. Ohio Mar. 31, 2011) (offering additional authority in reply is not tantamount to raising a new

argument); Power Marketing Direct, Inc. v. Wilburn Moy, No. 2:08-cv-826, 2008 WL 4949289, at *2 (S.D. Ohio

Nov. 6, 2008) (denying motion for leave to file sur-reply because plaintiff was “responding in the reply

memorandum to the argument Steel Plates raised in the memorandum in opposition”). For these reasons, Salerno’s

motion to file a sur-reply is denied.

working in the company’s newly opened Pendergrass, Georgia facility in late 2015. (Id. ¶ 7.)

The parties entered into an employment agreement on April 11, 2016. (Doc. No. 1-2

(Employment Agreement [“Agreement”]).) While the Agreement recognized that Salerno’s

employment with Steel Plate remained at-will, it provided for certain specified compensation and

benefits Salerno would receive in exchange for his efforts on behalf of Steel Plate. (Agreement at

20–22.2) Relevant to the present action, the Agreement also provided that Salerno would receive

severance if his employment was terminated for reasons other than for cause. (Id. at 21–22.)

In July 2018, “due to serious and life threatening illnesses suffered by [his] son and wife,

[Salerno] decided it would be in the best interests of his family to return to Northeast Ohio to live

and continue to work for [Steel Plate].” (Compl. ¶ 21.) Eighteen months later, in December of

2019, Steel Plate reorganized Salerno’s division. Salerno contends that this reorganization was

the result of his decision to relocate his family to Ohio. (Id. ¶ 22.) He claims that, as a result of

the reorganization, he had no choice but to quit. (Id. ¶ 24.) He levels several contentions in

support of this assertion: that the compensation offered was insufficient to support his family,

that many of his prior duties were reassigned to a recently-hired younger employee, and that the

new role would have damaged his professional reputation. (Id. ¶¶ 22–24.)

When Steel Plate refused to pay him severance, Salerno filed suit in state court on June

12, 2020, raising four claims: breach of contract (Count I), unjust enrichment (Count II),

quantum meruit (Count III), and constructive discharge (Count IV). This action was removed by

Steel Plate to federal court on July 20, 2020 on grounds of complete diversity of citizenship. (See

2 All page numbers refer to the page identification number generated by the Court’s electronic docketing system.

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Doc. No. 1 (Notice of Removal) at 1 (citing 28 U.S.C. § 1332(a).)

In his complaint, Salerno asserts that Steel Plate’s refusal to provide him with a release

agreement and pay him severance is a breach of the Agreement. (Compl. ¶¶ 30–31.) Further, it is

Salerno’s contention that—even if the Agreement does not entitle him to severance in the event

of his resignation—he can still show that he was terminated under the law by demonstrating that

he was constructively discharged. (Id. ¶¶ 44–46.) Salerno also maintains that he is entitled to

severance under theories of unjust enrichment and quantum meruit. Steel Plate denies that it

breached the Agreement and raises counterclaims for breach of contract and misappropriation of

trade secrets. (Doc. No. 12 (Answer and Counterclaims).)

II. STANDARDS OF REVIEW

A. Motion to Dismiss Standard

Steel Plate moves for dismissal of Salerno’s claims under Rule 12(b)(6) of the Federal

Rules of Civil Procedure. A Rule 12(b)(6) motion tests the sufficiency of the pleading. Davis H.

Elliot Co., Inc. v. Caribbean Util. Co., Ltd., 513 F.2d 1176, 1182 (6th Cir. 1975). All allegations

of fact by the nonmoving party are accepted as true and construed in the light most favorable to

that party. See Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998) (citing Meador v. Cabinet

for Human Res., 902 F.2d 474, 475 (6th Cir. 1990)). The Court, however, “need not accept as

true legal conclusions or unwarranted factual inferences.” Mixon v. Ohio, 193 F.3d 389, 400 (6th

Cir. 1999) (citing Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)). Nor is

the Court required to accept as true complaint allegations that are contradicted by public records

and other evidentiary materials of which the Court may take judicial notice. See Moody v.

CitiMortgage, Inc., 32 F. Supp. 3d 869, 874–75 (W.D. Mich. 2014) (“court may disregard

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allegations in the complaint if contradicted by facts established by exhibits attached to the

complaint[]”); see also Williams v. CitiMortgage, Inc., 498 F. App’x 532, 536 (6th Cir. 2012)

(“if a factual assertion in the pleadings is inconsistent with a document attached for support, the

Court is to accept the facts as stated in the attached document[]”).

The sufficiency of the pleading is tested against the notice pleading requirements of Fed.

R. Civ. P. 8(a)(2), which provides that a complaint must contain “a short and plain statement of

the claim showing that the pleader is entitled to relief[.]” Although this standard is liberal, “[t]o

survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,

to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129

S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570,

127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). A claim is facially plausible “when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). If the plaintiff has not

“nudged [his] claims across the line from conceivable to plausible, [the] complaint must be

dismissed.” Twombly, 550 U.S. at 570.

In deciding a motion to dismiss under Rule 12(b)(6), the Court generally may not

consider matters outside of the pleadings without converting the motion into a motion for

summary judgment under Rule 56. As the Sixth Circuit has held, however, there are a number of

exceptions to this rule. Indeed, it is well settled that, in ruling on a Rule 12 dispositive motion, a

district court “may consider the [c]omplaint and any exhibits attached thereto, public records,

items appearing in the record of the case and exhibits attached to defendant’s motion to dismiss

so long as they are referred to in the Complaint and are central to the claims contained therein.”

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Bassett v. Nat’l Coll. Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (citation omitted); see

also Comm. Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007) (court

may consider documents that govern a party’s rights and are necessarily incorporated by

reference in the complaint on a motion to dismiss) (citations omitted).

B. Breach of Contract Standard

“Under Ohio law, the interpretation of written contract terms, including the determination

of whether those terms are ambiguous, is a matter of law for initial determination by the court.”

Savedoff v. Access Grp., Inc., 524 F.3d 754, 763 (6th Cir. 2008) (citations omitted); see Ohio

Historical Soc’y v. Gen. Maint. & Eng’g Co., 583 N.E.2d 340, 345 (Ohio Ct. App. 1989). It is

the role of the court to discern the intent of the parties, which is “presumed to reside in the

language they choose to use in their agreement.” Savedoff, 524 F.3d at 763 (quoting Graham v.

Drydock Coal Co., 667 N.E. 2d 949, 952 (Ohio 1996)); see United States Fid. & Guar. Co. v. St.

Elizabeth Med. Ctr., 716 N.E.2d 1201, 1208 (Ohio Ct. App. 1998).

“Contractual language is ‘ambiguous’ only where its meaning cannot be determined from

the four corners of the agreement or where the language is susceptible of two or more reasonable

interpretations.” Covington v. Lucia, 784 N.E.2d 186, 190 (Ohio Ct. App. 2003) (citation

omitted); see Sec’y of USAF v. Commemorative Air Force, 585 F.3d 895, 900 (6th Cir. 2009).

When both parties offer “plausible interpretations of the agreement drawn from the contractual

language itself [this] demonstrates that the provision is ambiguous.” Int’l Union UAW Local 91

v. Park-Ohio Indus., Inc., 876 F.2d 894, at *6 (6th Cir. 1989) (table decision).

In determining whether contractual language is ambiguous, the contract “must be

construed as a whole.” Tri-State Grp., Inc. v. Ohio Edison Co., 782 N.E.2d 1240, 1246 (Ohio Ct.

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App. 2002) (internal citation and quotation marks omitted). Further, “courts should give effect, if

possible, to every provision therein contained, and if one construction of a doubtful condition

written in a contract would make that condition meaningless, and it is possible to give it another

construction that would give it meaning and purpose, then the latter construction must obtain.”

Foster Wheeler Enviresponse, Inc. v. Franklin Cnty. Convention Facilities Auth., 678 N.E.2d

519, 526 (Ohio 1997) (internal citation and quotation marks omitted).

“The Court must look to the plain language of the contract, and only go beyond the plain

language of the agreement to determine the rights and obligations of the parties if it is

ambiguous.” Airlink Commc’ns, Inc. v. Owl Wireless, LLC, No. 3:10 CV 2296, 2011 WL

4376123, at *2 (N.D. Ohio Sept. 20, 2011) (internal citations omitted). “‘If ambiguity exists . . .

the meaning of a contract [becomes] a question of fact.’” In re Fifth Third Early Access Cash

Advance Litig., 925 F.3d 265, 276 (6th Cir. 2019) (quoting Books a Million, Inc. v. H & N

Enters., Inc., 140 Supp. 2d 846, 854 (S.D. Ohio 2001) (further citation omitted)).

III. ANALYSIS

A. First Cause of Action: Breach of Contract

“A party breaches a contract if he fails to perform according to the terms of the contract

or acts in a manner that is contrary to its provisions.” Savedoff v. Access Grp., Inc., 524 F.3d 754,

762 (6th Cir. 2008) (citation omitted). To succeed on his breach of contract claim under Ohio

law, Salerno must establish that: (1) the parties had an employment contract, (2) that Salerno

performed on the contract, (3) that Steel Plate breached the contract by not paying Salerno

severance, and (4) that there are damages (here, the unpaid severance pay) from the breach. See

In re Fifth Third Early Access Cash Advance Litig., 925 F.3d at 276 (citing Claris Ltd. v. Home

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Dev. Servs., LLC, 104 N.E.3d 1076, 1083 (Ohio Ct. App. 2018)). The parties disagree on the

third and fourth elements—whether not paying Salerno severance after he voluntarily terminated

his employment is a breach of the Agreement, and as such whether Salerno is entitled to

damages.

Turning to the Agreement, Section 5 reads as follows:

5. Severance Payment. In the event Employee’s employment with the Company is

terminated without Cause, as defined herein, Company shall pay to Employee a

severance payment equal to the average of the annual W-2 compensation earned

by the Employee in the previous (3) completed calendar years within (30) days of

said termination . . . , provided, however, in order for Employee to receive said

severance payment, Employee must enter into a Severance and Release

Agreement presented by the Company. For purposes of this Section “Cause” shall

be determined by the Company and shall mean: (1) conviction of or a plea of

guilty, or no contest, by Employee to a felony or misdemeanor involving fraud,

embezzlement, theft, dishonesty, or other criminal conduct involving the

Company; (2) neglect of Employee’s duties or failure by Employee to perform or

observe any material obligation of such employment; (3) commission by

Employee of any act of fraud or theft with respect to the Company; (4) any

material breach by the Employee of this Agreement or any other agreement

between Employee and Company; (5) unsatisfactory performance by the

Employee that is not remedied within thirty (30) days after written notice thereof

from the Company; and (6) Employee’s engagement in activities or course of

conduct material and demonstrably detrimental to the best interests of the

Company.

(Agreement at 21–22.) Because the Court must, if possible, give effect to every provision, the

Court also considers Section 2 of the Agreement, which defines “at-will employment” and

provides:

2. At-will Employment. Employee’s employment with Company is “at-will”. “At-

will” is defined as allowing either Employee or Company to terminate the

Agreement at any time, for any reason permitted by law, with or without cause

and with or without notice.

(Id. at 20.)

Salerno argues that the plain language of Section 2 defines “terminate” as an event that

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can be initiated by either party. He asserts that the section of the Agreement discussing severance

(Section 5), in turn, fails to limit by whom the termination of employment must be initiated in

order to trigger the section’s rights and obligations. (Opp’n at 108.) Accordingly, he concludes

that he was entitled to severance upon a termination of his employment by either party, so long

as that termination was without cause. Salerno’s interpretation seems to account for the language

chosen by the parties.

But Steel Plate offers a contrary interpretation. While it acknowledges that either side

may terminate the Agreement under Section 2, it insists that Section 5 clearly limits the right to

severance to an event that happens to Salerno—when Salerno “is terminated without Cause, as

defined herein[.]” (Agreement at 21.) According to Steel Plate, its interpretation is bolstered by

the fact that each delineated circumstance describing a discharge for cause involves acts or

misconduct by Salerno.3 These restrictions on “with cause” only qualify Steel Plate’s reasons to

dismiss Salerno; they do not mention or restrict Salerno’s possible reasons for leaving Steel

Plate’s employ or address any actions by Steel Plate that might precipitate Salerno’s decision to

leave. It is clear, Steel Plate argues, that Section 5 is limited to a discharge without cause by Steel

Plate.

But the language of the Agreement does not explicitly contain such a limitation. As

Salerno notes, Section 5 of the Agreement could have included the language “by the Employer”

3 Specifically, under the severance provision, cause was defined as “(1) conviction of or a plea of guilty, or no

contest, by Employee to a felony or misdemeanor involving fraud, embezzlement, theft, or dishonesty, or other

criminal conduct involving the Company; (2) neglect of Employee’s duties or failure by Employee to perform or

observe any material obligation of such employment; (3) commission by Employee of any act of fraud or theft with

respect to the Company; (4) any material breach by the Employee of this Agreement or any other agreement

between Employee and Company; (5) unsatisfactory performance by the Employee that is not remedied within thirty

(30) days after written notice thereof from the Company; and (6) Employee’s engagement in activities or course of

conduct material and demonstrably detrimental to the best interests of the Company.” (Id. (emphasis added).)

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after “terminate,” but it did not. Although the limitations on “for cause” are certainly consistent

with an intent to only permit severance in the event Steel Plate involuntarily separated Salerno

from its employ, the Agreement, as written, also allows for the competing interpretation that

severance was available upon a “without cause” termination by either party.

The Court finds that the Agreement is a poor candidate for resolution at this stage of the

proceedings, where discovery has not taken place and the parties have not offered extrinsic

evidence that might shed light on the parties’ intent. See Ajuba Int’l, L.L.C. v. Saharia, 871 F.

Supp. 2d 671, 689 (E.D. Mich. 2012) (“A court should not choose between reasonable

interpretations of ambiguous contract provisions when considering a motion to dismiss under

Rule 12(b)(6).”) (citation omitted); see, e.g., N. Frozen Foods, Inc. v. Picciotti, No. 95493, 2011

WL 1935816, at *3 (Ohio Ct. App. May 19, 2011) (ambiguities in contract precluded a

determination of the intent of the parties pursuant to a motion for judgment on the pleadings); see

also Allason v. Gailey, 939 N.E.2d 206, 212 (Ohio Ct. App. 2010) (holding that the trial court

properly considered parol evidence where a contract term was susceptible to more than one

reasonable interpretation). Accordingly, Steel Plate is not entitled to a Rule 12(6)(b) dismissal of

Salerno’s breach of contract claim.

B. Fourth Cause of Action: Constructive Discharge

Steel Plate also seeks dismissal of the complaint’s remaining claims. Court IV purports to

raise a claim for constructive discharge. (Compl. ¶¶ 43–47.) It is Salerno’s position that, even if

he is only entitled to severance under the Agreement upon his termination, his voluntary

resignation was, by law, a termination. He claims that, as a proximate result of his decision to

relocate his family back to Ohio in 2018, Steel Plate reorganized his sales group in 2019. (Id. ¶

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22.) According to the complaint, the terms of the reorganization resulted in “intolerable”

conditions that “compelled [Salerno] to resign”. (Id. ¶ 44.)

The Court has serious doubts as to whether Salerno can maintain a stand-alone

constructive discharge claim under Ohio law. Allegations of constructive discharge are generally

anchored to an underlying cause of action for employment discrimination or some other claim

rising to the level of discrimination, such as a discharge in violation of public policy. See Stark v.

New Par, 181 F.3d 103 (table), 1999 WL 357757, at *5 (6th Cir. May 11, 1999) (citing Kroll v.

The Disney Store, 899 F. Supp. 344, 347 (E.D. Mich. 1995)); Lucarell v. Nationwide Mut. Ins.

Co., 44 N.E.3d 319, 330–31 (Ohio Ct. App. 2015), rev'd on other grounds, 97 N.E.3d 458 (Ohio

2018)); see also Blackwell v. Prod. Action Int’l, Inc., No. 04-cv-231, 2006 WL 3747519, at *15

(E.D. Ky. Dec. 18, 2006) (noting that “[c]onstructive discharge is not a separate cause of action;

there must be an underlying action for employment discrimination”) (quotation marks and

citation omitted); see, e.g., Guy v. Bd. of Educ. Rock Hill Local Sch. Dist., No. 1:18-cv-893, 2020

WL 2838508, at *8 (S.D. Ohio May 31, 2020) (dismissing constructive discharge claim that did

not raise a claim for discrimination).

Salerno has not alleged discrimination, nor has he alleged that he was forced to resign in

violation of a clear public policy manifested in federal or state law. While he makes passing

reference to a younger employee who assumed some of his previous duties, he does raise an age

discrimination claim or otherwise allege that the restructuring was the result of age

discrimination. Rather, Salerno affirmatively asserts that his decision to relocate his family was

the proximate cause of Steel Plate’s decision to restructure. (See Compl. ¶ 22.)

Salerno notes that some courts have applied constructive discharge in the context of a

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breach of an employment agreement, but those cases generally involve employment contracts

that altered the terms of the employment relationship in such a way that the employee was no

longer considered at-will.4 See, e.g., Fleming v. Kent State Univ., 17 N.E.3d 620, 622 (Ohio Ct.

App. 2014) (employment contract specifying a 28-month term and a guaranteed annual salary of

$71,500.00 supported a breach of contract claim based on constructive discharge). In contrast,

the parties’ Agreement is clear that Salerno remained an “at-will” employee and appears to

provide that Steel Plate retained the right alter the terms of his employment including

compensation. (See Agreement ¶¶ 1–3.)

Nevertheless, because this case is continuing with discovery, the Court will permit the

constructive discharge claim to remain for the time being. As with the contract claim, the parties

are free to revisit the viability of the constructive discharge claim on summary judgment.

C. Second/Third Causes of Action: Unjust Enrichment/Quantum Meruit

The second and third causes of action purport to raise claims of unjust enrichment and

quantum meruit, respectively. (Compl. ¶¶ 33–42.) Both claims are premised on the terms of the

Agreement and allege that:

Plaintiff conferred a benefit upon [d]efendant, to wit, devoting his best efforts and

entire working time, skill and experience to advancing and rendering profitable

the interests of [d]efendant at a contractually agreed upon price, including the

compensation set forth in Exhibit A of the Agreement and, in the absence of

cause, the severance payment set forth in Section 5 of the Agreement regardless

of how [p]laintiff’s employment was terminated or by whom.

(Compl. ¶ 34; see id. ¶ 39.)

4 The distinction is important as at-will employees can generally be discharged “for good cause, bad cause, or no

cause at all. . . . The act of terminating an at-will employee’s relationship with an employer generally does not give

rise to an action for damages.” See Lucarell, 44 N.E.3d at 330–31 (requiring allegations of constructive discharge by

at-will employees to be tied to employer conduct tantamount to a violation of public policy).

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Steel Plate seeks dismissal of these claims on the theory that Salerno cannot obtain

equitable relief on a claim based on an express contract. “Under Ohio law, absent fraud,

illegality, or bad faith, a party to an express contract may not bring a claim for equitable relief,

particularly when the agreement contains a provision governing the allegedly inequitable

conduct at issue.” Comtide Holdings, LLC v. Booth Creek Mgmt. Corp., 554 F. Supp. 2d 821,

827 (S.D. Ohio 2008), rev'd and remanded on other grounds, 335 F. App'x 587 (6th Cir. 2009);

see Son v. Coal Equity, Inc., 122 F. App'x 797, 801 (6th Cir. 2004) (“Quantum meruit is an

equitable doctrine that, in the absence of an express contract between the parties, “requires a

defendant to pay a plaintiff the reasonable value of services performed for the

defendant.”) (quoting United States v. Snider, 779 F.2d 1151, 1159 (6th Cir. 1985)); see also

Berger Enters. v. Zurich Am. Ins. Co., 845 F. Supp. 2d 809, 821–22 (E.D. Mich. 2012) (noting

that “under Ohio law a party may not generally maintain claims based on there being an implied

contract [such as quantum meruit] at the same time it maintains claims based on an expressed

contract”).

In this case, the right to severance is derived from Section 5 of the Agreement, and the

tort claims rely exclusively on this contractual provision as the basis for tort relief. Under these

circumstances, it appears likely that any remedy Salerno has lies in contract law and not in

equity. However, given the uncertainty surrounding the contract claim, the Court finds that the

better course is to permit the alternatively pled tort claims to remain in play for now. See, e.g.,

Son of Coal, 122 F. App’x at 801 (allowing alternatively pled tort claims to proceed on remand

where it was unclear whether there existed a binding contract between the parties).

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TV. CONCLUSION

For the foregoing reasons, defendant’s motion to dismiss is denied. By separate order, the

Court will set this matter for a case management conference.

IT IS SO ORDERED.

Dated: March 19, 2021 i me

HONORABLE S LIOI

UNITED STATES DISTRICT JUDGE

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