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Nelson v. Frank

United States District Court, D. Arizona

December 7, 2018

Wade Nelson, Plaintiff,
Newmark Knight Frank, et al., Defendants.


          Douglas L. Rayes United States District Judge

         Before the Court is Defendants' motion to dismiss Plaintiff's first amended complaint.[1] (Doc. 38.) The motion is fully briefed and neither party requests oral argument. Also before the Court is Plaintiff's motion for leave to file a second amended complaint. (Doc. 59.) For the following reasons, Defendants' motion to dismiss is granted in part and denied in part, and Plaintiff's motion for leave to amend is denied.[2]

         I. Background

         For the purposes of this motion, the Court accepts the facts alleged in the complaint as true. In early 2015, Plaintiff developed a business concept whereby real estate services companies perform property tax appeals and consulting on behalf of their commercial customers. Beginning in April 2015, Plaintiff presented his business plan to several commercial real estate services companies, recommending that the companies hire him to develop an in-house Tax Appeal Group (“TAG”). By July 2015, Plaintiff had received multiple employment offers, including from Defendants.

         Plaintiff and Defendants negotiated terms of employment throughout June and July 2015. Plaintiff alleges that, as part of these negotiations, Defendants agreed to provide Plaintiff with an administrative assistant and five producers for the first year, and four additional producers in the second.[3] Based on Defendants' assurances about their commitment to TAG and the underlying business plan, Plaintiff accepted their offer. On August 6, 2015, Plaintiff accepted Defendants' terms of employment, specifying a 3-year employment agreement. Plaintiff subsequently was furnished with the formal Employment Agreement, which did not include the specific promises about the number of producers to be hired.

         Plaintiff began work with Defendants on September 1, 2015. By April 2016, Plaintiff still had not received approval to hire any producers. Unable to get approval, Plaintiff met with Defendants' Chief Executive Officer, Barry Gosin, in early April 2016 to discuss delays in the new hire process. During this meeting, Gosin informed Plaintiff that his immediate supervisor, Randy Buddemeyer, would soon be replaced.

         Shortly after Plaintiff's meeting with Gosin, Buddemeyer traveled to Arizona to meet with Plaintiff. During this meeting Buddemeyer directed Plaintiff to fabricate the TAG revenue forecast to reflect an inflated, fictitious revenue figure, and threatened to fire him if he did not. Buddemeyer also informed Plaintiff that the forecast would be passed on to potential investors. On April 11, 2016, Plaintiff produced the fictitious revenue forecast.

         In June 2016, Plaintiff began to express concerns about his fictitious forecast to other employees. On June 15, 2016, Plaintiff reached out to Kathy Keeley, Defendants' regional head of human resources. Before agreeing to report on the fictitious forecast, Plaintiff sought assurances from Keeley that his complaint would be kept confidential and that he would not be fired in retaliation for coming forward. Keeley offered these assurances, and Plaintiff reported his concerns.

         Still without approval to hire producers, Plaintiff complained to Buddemeyer on June 20, 2016, and again on July 8, 2016. Soon after, on July 12, 2016, Buddemeyer informed Plaintiff that it was too late in the fiscal year to get approval for new hires; Plaintiff would not be able to hire any producers in 2016.

         On July 14, 2016, Plaintiff again reported to Keeley his concerns about the fabricated revenue forecast. Keeley, in turn, reassured him that he would not be retaliated against. Keeley also instructed Plaintiff that he should report his allegations to Gosin.

         On September 1, 2016, Plaintiff reported his allegations to Gosin. During this conversation, Plaintiff also informed Gosin that he still was unable to hire any producers. Two weeks later, on September 14, 2016, Defendants fired Plaintiff, ostensibly due to TAG's unprofitability.

         Plaintiff thereafter filed this suit, asserting claims for promissory estoppel based on alleged pre-employment promises (Count I); wrongful termination in violation of the Arizona Employment Protection Act (“AEPA”), A.R.S. § 23-1501 et seq. (Count II); and promissory estoppel and breach of contract based on promises by Defendants' human resources department to protect Plaintiff from retaliation (Counts III and IV). (Doc. 37.)

         II. Motion to Dismiss

         A. ...

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