United States District Court, E.D. North Carolina, Northern Division
WILLIAM C. STILLWAGON, Plaintiff,
INNSBROOK GOLF & MARINA, LLC, et al., Defendants.
JAMES C. DEVER, III, Chief District Judge.
On May 4, 2012, William C. Stillwagon ("Stillwagon" or "plaintiff') filed a second amended complaint against Innsbrook Golf & Marina, LLC, also known as Innsbrook Golf & Boat, LLC ("Innsbrook"), Rial Corporation ("Rial"), Richard Rieder, and Alois Rieder (collectively "defendants"), alleging breach of a written contract (count one) or, alternatively, breach of an oral contract (count two) [D.E. 47]. On October 4, 2013, defendants moved for partial summary judgment on count one [D.E. 104] and filed a memorandum in support. See [D.E. 105]. On November 22, 2013, Stillwagon responded in opposition [D.E. 113]. On December 6, 2013, defendants replied [D.E. 114]. As explained below, the court grants defendants' motion for partial summary judgment on count one.
Stillwagon, a resident of Pennsylvania and a licensed Pennsylvania attorney, is Richard Rieder's cousin. See Stillwagon Decl. [D.E. 113-1] ¶¶ 2-3. Defendants Richard Rieder and his son, Alois Rieder, are residents of Austria and the principal owners of two foreign companies, Watersprings Development ("Watersprings") of Switzerland and Nufin Anstalt ("Nufin") of Liechtenstein. See Alois Reider Decl. [D.E. 105-16] ¶ 2; Richard Reider Decl. [D.E. 105-16] ¶ 2; 2d Am. Compl. [D.E. 47] ¶ 9. These companies are shareholder owners of defendant Rial, a North Carolina corporation. See 2d Am. Compl. ¶¶ 3, 10. Rial is the sole shareholder of defendant Innsbrook, a North Carolina limited liability company. See id. ¶¶ 2, 10.
A simple handshake in 1980 marked the beginning of Stillwagon's decades-long business relationship with the Reiders and their companies. See id. ¶ 11; Stillwagon Decl. ¶ 1. The relationship itself was rather complicated-so complicated, in fact, that the parties dispute why it began and what exactly it entailed. Stillwagon claims that Richard Reider retained him "to generally manage and assist him with his business affairs in the United States." Stillwagon Decl. ¶ 1. To that end, Stillwagon served as president of Rial, managed the finances of various Reider enterprises, and managed and supervised the development of multiple North Carolina properties, including a residential community and accompanying golf course in Bertie County, North Carolina ("Innsbrook Project"). See id. ¶¶ 4-12, 16-17. Defendants claim that Richard Reider retained Stillwagon to serve as an attorney, not a businessman, and that although Stillwagon "also served in various positions as an officer and board member for Rial and Innsbrook, as well as other companies used to manage investments in the United States, he... served continuously as legal counsel [for the defendants]." Alois Reider Decl. 6; see id. ¶ 4-5; Richard Reider Decl. ¶ 4-5, 7-8; Scheffauer Decl. [D.E. 105-16] ¶¶ 4-8; Niederkofler Decl. [D.E. 105-14] ¶¶ 5-9.
On August 27, 2009, Stillwagon sent a letter to Wilfried Niederkofler ("Niederkofler"), the Reiders' representative in the United States concerning all Rial and Innsbrook matters, informing the Reiders that he wished to leave Rial and Innsbrook. Niederkofler Decl. ¶¶ 4, 10; see [D.E. 16-8]. Stillwagon claimed that, under an alleged oral agreement with the defendants, formed upon commencing the Innsbrook Project, he was entitled to receive 2.5% of the project's profits, or $3, 250, 000. See [D.E. 16-8] 2. Stillwagon indicated, however, that he "would be willing to consider an alternative, compromise amount" of $1.6 million, coupled with "a release and indemnification [from] all claims both foreign and domestic." Id.
To facilitate Stillwagon's departure, the Reiders asked Stillwagon to draft the necessary legal documents, which would settle the issue of remuneration owed to Stillwagon for his work on the Innsbrook Project and end the parties' business relationship. See Stillwagon Decl. ¶ 39; Mem. Supp. Mot. Summ. J. [D.E. 105] 1. Stillwagon drafted and signed a Severance and Release Agreement ("Severance Agreement"), dated November 9, 2009, in his office in Pennsylvania. See Stillwagon Decl. ¶ 39; Mem. Supp. Mot. Summ. J. 7-8; Severance Agreement [D.E. 11-1]. Alois Rieder signed it in Austria as the "authorized representative" of Richard Reider, Rial, Innsbrook, Watersprings, Nufin, and two other Reider companies, Seg Anstalt ("Seg") and All Seasons Development, Inc. ("All Seasons"), that have since been dissolved. See Severance Agreement 1, 4. The Severance Agreement terminated Stillwagon's employment as manager of Innsbrook and president of Rial, Seg, and All Seasons, but Stillwagon continued to serve as vice president of Rial until May or June 2010. See id. 1; 2d Am. Compl. ¶ 37.
The Severance Agreement called for Stillwagon to receive four annual payments of $300, 000 each, totaling $1.2 million, beginning on April 1, 2010. See Severance Agreement 1. Defendants paid Stillwagon the first installment as agreed, but refused to pay the remaining three after allegedly uncovering "widespread fraud on the Innsbrook Project." Mem. Supp. Mot. Summ. J. 2.
On September 27, 2011, Stillwagon filed suit in the Court of Common Pleas of Westmoreland County, Pennsylvania, asserting breach of contract under the Severance Agreement. See [D.E. 1-2]. On October 20, 2011, defendants removed the case to the United States District Court for the Western District of Pennsylvania [D.E. 1]. On November 14, 2011, Stillwagon filed an amended complaint [D.E. 11]. After Innsbrook and Rial answered and asserted affirmative defenses seeking to void the Severance Agreement [D.E. 38], Stillwagon filed a second amended complaint on May 4, 2012, adding another cause of action for breach of the oral contract he allegedly entered into with defendants upon commencing the Innsbrook Project. See 2d Am. Compl. ¶¶ 56-61. On June 1, 2012, defendants answered Stillwagon's amended complaint and asserted numerous defenses and counterclaims [D.E. 51].
On June 21, 2012, Stillwagon moved to dismiss defendants' counterclaims pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7) [D.E. 54]. On July 27, 2012, the Reiders moved to dismiss for lack of jurisdiction or, alternatively, to transfer venue to this district [D.E. 59]. On August 15, 2012, Innsbrook and Rial moved to join the Reiders' motion [D.E. 63]. On March 20, 2013, the Western District of Pennsylvania granted in part and denied in part Stillwagon's motion to dismiss, granted Innsbrook and Rial's motion for joinder, granted the Reiders' motion to transfer venue, and transferred the case to this district [D.E. 70-74]. On June 20, 2013, defendants filed their answer and counterclaims concerning Stillwagon's second amended complaint [D.E. 96].
On October 4, 2013, defendants moved for partial summary judgment on Stillwagon's breach of written contract claim [D.E. 104]. Defendants contend that the Severance Agreement is unenforceable because Stillwagon negotiated and drafted the agreement as defendants' attorney, failed to advise defendants of the material conflict of interest associated with his dual role as defendants' attorney and party to the agreement, as the Pennsylvania Rules of Professional Conduct required him to do, and essentially "bargain[ed] against his own clients" to craft an unconscionable contract. Reply [D.E. 114] 7; see Mem. Supp. Mot. Summ. J. 9-17; Answer [D.E. 96] ¶¶ 90-96. Moreover, defendants contend that Stillwagon failed to advise them to seek independent review of the Severance Agreement, as the Pennsylvania Rules of Professional Conduct also required him to do, and that no other attorney reviewed the Severance Agreement before Alois Reider signed it. See Mem. Supp. Mot. Summ. J. 8; Suppl. Niederkofler Decl. [D.E. 114-1] ¶¶ 2-12. Stillwagon responds that he had no duty to advise defendants of any alleged conflict of interest because he and defendants shared a business relationship, not an attorney-client relationship. See Mem. Opp'n Mot. Summ. J. [D.E. 113] 6-11. Stillwagon also argues that the Pennsylvania Rules of Professional Conduct have no bearing on the Severance Agreement's enforceability. See id. 14-17. Finally, Stillwagon contends that he believed that the Reiders' attorneys and representatives in Europe reviewed the Severance Agreement, and that Alois Reider signed it "over the objection" of independent counsel. Id . 10; see Stillwagon Decl. ¶¶ 39-40.
Summary judgment is proper if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247-48 (1986). In evaluating a motion for summary judgment, the court views the evidence and the inferences drawn from that evidence in the light most favorable to the nonmoving party. See Tolan v. Cotton , 134 S.Ct. 1861, 1863 (2014) (per curiam); Scott v. Harris , 550 U.S. 372, 378 (2007).
The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex , 477 U.S. at 325. Once the moving party has met its burden, the nonmoving party "must come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986) (emphasis and quotation omitted). The nonmoving party must do more than present a "scintilla of evidence" in its favor. Anderson , 477 U.S. at 252. Rather, the nonmoving party must present "sufficient evidence" such that reasonable jurors could find for it. Id. at 249. Accordingly, a court may grant summary judgment if ...