Donna Manwaring v. Erick Martinez

527 F. App'x 390
CourtCourt of Appeals for the Sixth Circuit
DecidedMay 31, 2013
Docket12-3835
StatusUnpublished
Cited by3 cases

This text of 527 F. App'x 390 (Donna Manwaring v. Erick Martinez) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Donna Manwaring v. Erick Martinez, 527 F. App'x 390 (6th Cir. 2013).

Opinion

OPINION

McKEAGUE, Circuit Judge.

Donna Manwaring claims that Erick Martinez breached an agreement under which the two of them were to become co-owners in two companies created to own and operate Denny’s Restaurant franchises. She asserts claims for breach of contract and promissory estoppel. The district court granted summary judgment in favor of the defendants (Erick and the two companies). It found that the alleged agreement was unenforceable because it fell within the one-year provision of Ohio’s Statute of Frauds and was not memorialized in a sufficient writing. It further found that Donna had not identified the detrimental reliance necessary to create a genuine issue of material fact on her promissory estoppel claim. We vacate the district court’s grant of summary judgment on the breach of contract claim and affirm the grant of summary judgment on the promissory estoppel claim.

I. BACKGROUND

As alleged by Donna, the pertinent facts are these:

Donna and Erick both worked as executives for Denny’s Corporation. In 2006, Donna and Erick began an intimate personal relationship during a business trip, although both were married to other people at the time. A month later, Donna was promoted and began reporting directly to Erick.

In the spring of 2007, Denny’s informed some of its executives, including Donna *392 and Erick, that it was developing a “franchise growth initiative” designed to shift ownership of a number of restaurants from the company to franchisees. The plan involved laying off employees and giving them the option of purchasing restaurants and becoming franchisees. Donna’s responsibilities at Denny’s included rolling out the franchise growth initiative and facilitating the transition process. Donna received a bonus for each restaurant she helped convert to a franchise.

As a result of the franchise growth initiative, Erick was laid off in September 2007. Donna learned that she also would eventually be laid off.

Sometime after learning about the franchise growth initiative, Donna and Erick met in Dallas, Texas, where Erick resided, and stayed together at a hotel. During their stay, they discussed their post-Denny’s future. They talked about teaming up to take advantage of the franchise growth initiative and become Denny’s franchisees. They decided to purchase restaurants in northern Ohio, because Donna had been supervising those restaurants and was familiar with them. They contemplated each owning 50% of any companies they would form to own and operate the restaurants. They contemplated sharing profits equally as equal co-owners. Due to Donna’s continued employment with Denny’s (and the corresponding conflict of interest), they decided that her name would not be listed on any franchise proposals or operating agreements until after Donna ended her employment with Denny’s.

Within a month of their Dallas rendezvous, Donna and Erick decided to implement their plan. As they had discussed in Dallas, they agreed that they would each own 50% of an entity set up to own and operate the restaurants. Erick would finance the undertaking while Donna would handle the day-to-day operations of the restaurants. They decided to retain as much of the earnings from the venture as possible to repay Erick’s capital contributions and other debt and further agreed that until Erick recovered these contributions, Donna would not receive any compensation except as necessary to cover her living expenses. Erick promised to add Donna as an equal co-owner of the business after her employment with Denny’s ended.

In October 2007, Donna and Erick met with an attorney to discuss forming a limited liability company. They explained that Donna’s employment with Denny’s precluded including her name on the operating agreement. A short time later, Donna and Erick returned to the attorney’s office and formed NELDA, LLC.

Erick and Donna worked together to select restaurants, prepare franchise applications, and obtain financing. By the end of the year, the first four Denny’s restaurants were transferred to NELDA. During the next six months, Donna managed the operations of the NELDA franchises while also working for Denny’s. She communicated with the restaurant managers and vendors and made all operational decisions.

In June 2008, Donna was laid off. She did not look for another job because of her role with NELDA. After her layoff, Donna received substantial severance pay. She also received unemployment benefits, which continued until February 2009. At first NELDA did not pay Donna a salary, but Erick covered some of her living expenses, and she had access to NELDA accounts for other personal expenses.

Shortly after Donna was laid off, she and Erick discussed acquiring an additional restaurant in Ohio and jointly developed a pro forma for the unit. Erick submitted the application individually on behalf of *393 NELDA after insisting the acquisition process would proceed more efficiently this way. He promised to add Donna’s name to NELDA’s operating agreement as soon as the acquisition process was complete.

By May 2008, Donna and her husband had separated and planned to seek a divorce. Erick continued to delay adding Donna’s name to NELDA’s operating agreement, now expressing his concern that Donna’s husband might pursue part of her interest were she listed as an owner. Purportedly based on similar concerns, Erick also removed Donna’s name from NELDA’s bank account and replaced it with the name of his wife, Ana Martinez, also telling Donna that he wanted his wife to have sufficient means to care for their daughter in the event of his death.

Donna’s divorce was finalized in February 2009, and NELDA gave her $25,000 so she could pay off her husband’s interest in their marital home. NELDA also began paying Donna a salary at this time.

In September 2009, Donna and Erick decided to acquire a new group of Denny’s restaurants located in Flying J truck stops and, after consulting with NELDA’s accountants, decided to form a new LLC to pursue this venture. They agreed that they would each own half of this new company. Erick contacted their attorney and set up a meeting to form Northern Ohio Restaurant Group (“NORG”), LLC. Because Donna could not make the meeting, Erick met alone with the attorney and individually formed NORG, promising Donna that he would amend the operating agreement to include her 50% interest and at the same time amend NELDA’s operating agreement.

Toward the end of 2009, the parties’ professional relationship was deteriorating, although they continued their intimate relationship. Donna had begun to suspect that Erick was lying about a number of aspects of their professional and personal relationships, including his purported separation from his wife. They had several heated arguments, which culminated in a three-person telephone call in January 2010 between Donna, Erick, and Ana. During this call, Erick told Donna she was “fired.”

After this fallout, Erick continued to assist Donna financially from NELDA funds. But the money dried up once Erick learned that Donna had hired an attorney to pursue legal recourse.

In January 2011, Donna sued Erick, NELDA, and NORG in Ohio state court.

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527 F. App'x 390, Counsel Stack Legal Research, https://law.counselstack.com/opinion/donna-manwaring-v-erick-martinez-ca6-2013.