Frymire v. PaineWebber, Inc.

107 B.R. 506, 1989 U.S. Dist. LEXIS 13500, 1989 WL 136796
CourtDistrict Court, E.D. Pennsylvania
DecidedNovember 1, 1989
DocketCiv. A. 89-1943
StatusPublished
Cited by17 cases

This text of 107 B.R. 506 (Frymire v. PaineWebber, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Frymire v. PaineWebber, Inc., 107 B.R. 506, 1989 U.S. Dist. LEXIS 13500, 1989 WL 136796 (E.D. Pa. 1989).

Opinion

MEMORANDUM

GILES, District Judge.

A. Factual and Procedural Background

This is an appeal from a final order of the bankruptcy court entered on February 10, 1989. 96 B.R. 525. This court has jurisdiction to hear such appeals pursuant to 28 U.S.C. § 158(a) and Bankruptcy Rule 8001(a).

In 1984, while a stockbroker at Merrill Lynch in Philadelphia, Tobin Frymire began negotiating with PaineWebber regarding the possibility of employment as a broker. Negotiations were had with Lee Love-joy, the manager of PaineWebber’s Philadelphia office. Plaintiff received a memorandum from Lovejoy with the heading “Terms of Employment.” Thereafter, plaintiff resigned from Merrill Lynch, and began working for PaineWebber in September of 1984.

Plaintiff performed training duties for which he received no additional compensation. In December, he and Lovejoy discussed the compensation to be paid for those training duties. Frymire told Love-joy that at Merrill Lynch he had been paid between ten and twenty thousand dollars for such training activities. Lovejoy then told plaintiff that he would attempt to get a salary of ten to twenty thousand dollars approved in the budget. However, the salary proposal was not approved. In April, plaintiff received $1300 as compensation for his training duties. Lovejoy explained that, instead of a salary, a production credit formula had been devised. Displeased by the amount of compensation, Frymire stopped accepting the training assignments.

In 1985, plaintiffs production as a broker totaled $95,647, which was far below the production expected. In 1986, his production declined further, dropping to $1,041 in June. In that month, Lovejoy asked plaintiff to resign. Plaintiff refused. Lovejoy terminated Frymire’s employment at the end of July. Although PaineWebber made several attempts to place him elsewhere in the company, those efforts were unsuccessful.

In the fall of 1986, plaintiff returned to his previous position at Merrill Lynch. He authorized PaineWebber to dispatch an “Employment Verification Form” to Merrill Lynch. In completing the form, Lovejoy stated that Frymire had been discharged by PaineWebber and would not be rehired because of his “poor attitude and less than satisfactory production.” Appellant’s Brief on Appeal, Exhibit A, at 32.

On July 24, 1987, Frymire filed a petition for bankruptcy under Chapter 13. Pai-neWebber filed a proof of claim, contending that it was owed $30,000 by plaintiff. Plaintiff counterclaimed, asserting claims based on theories of breach of contract, fraud, defamation, and intentional infliction of emotional distress. Upon motion by Pai-neWebber, the bankruptcy court directed that Edward Sparkman, the trustee in bankruptcy, be made a party to the suit. *509 See 11 U.S.C. § 323(b) (the bankruptcy “trustee ... has capacity to ■ sue.”)

Because plaintiffs action was in the form of a “counterclaim[ ] by the estate against persons filing claims against the estate,” 28 U.S.C. § 157(b)(2)(C), the action fell within the definition of a “core proceeding,” see id,., and the bankruptcy court retained jurisdiction. See Granfinanciera v. Nordberg, — U.S. -, -, 109 S.Ct. 2782, 2799, 106 L.Ed.2d 26 (1989). Plaintiff filed an amended complaint, in which he joined Lovejoy as a defendant. Upon motion, the claim for intentional infliction of emotional distress was dismissed. During September and October of 1988, the bankruptcy court held a trial and, thereafter, issued findings of fact and conclusions of law. In its final opinion and order, the bankruptcy court entered judgment for plaintiff on one of the contract claims and on PaineWebber’s proof of claim. The court entered judgment for defendants on the remaining claims.

Plaintiff has appealed, contesting that portion of the judgment which was entered in favor of defendants and the amount of the judgment on the contract claim entered in his favor. Defendants have cross-appealed, contesting the judgment entered on the aforementioned contract claim and the judgment entered denying Painewebber’s proof of claim. Plaintiff has moved to strike. For the reasons discussed below, the bankruptcy court’s order is affirmed in part and reversed in part, and plaintiff’s motion to strike the cross-appeal is granted.

B. Discussion

1. Standard of Review

When reviewing the factual findings of the bankruptcy court, this court must adhere to the “clearly erroneous” standard. The standard of review is stated in Bankruptcy Rule 8013, as follows:

On an appeal, the district court ... may affirm, modify, or reverse a bankruptcy judge’s judgment, order or decree, or remand with instructions for further proceedings. Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.

The third circuit has stated that district courts must follow this very restrictive standard of review, even if it is inconsistent with a local district court standard. In re Morrissey, 717 F.2d 100 (3d Cir.1983). The bankruptcy court’s findings of fact must stand unless “the court is left with the definite and firm conviction that a mistake has been committed.” Brager v. Blum, 49 B.R. 626 (E.D.Pa.1985).

However, “the ‘clearly erroneous standard’ does not apply to questions of law. Thus, where the question presented is solely one of law, no presumption of correctness applies. The bankruptcy court’s legal conclusions, therefore, may not be approved without our independent determination of the legal questions.” In re Gilchrist Co., 410 F.Supp. 1070, 1074 (E.D.Pa.1976) (citations omitted). See Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101-03 (3d Cir.1981) (district court’s review of legal questions is plenary).

2. Breach of Contract and Wrongful Discharge

The bankruptcy court construed plaintiff’s complaint as stating claims for termination of contract without just cause and wrongful discharge. The latter claim sounds in tort, and is entirely distinct from the former claim, which sounds in contract. See Novosel v. Nationwide Insurance Co., 721 F.2d 894 (3d Cir.1983). The bankruptcy court failed to note this distinction, and analyzed both the contractual and tort claims under the rubric of “wrongful discharge.” However, despite this error in terminology, the bankruptcy court correctly identified and applied the legal standards governing the contractual and tort claims,

a. Contractual Claim

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Bluebook (online)
107 B.R. 506, 1989 U.S. Dist. LEXIS 13500, 1989 WL 136796, Counsel Stack Legal Research, https://law.counselstack.com/opinion/frymire-v-painewebber-inc-paed-1989.