Jurisdiction Amount in Controversy Non-competition Agreement Unjust Enrichment
Liberty Fencing Club, LLC v. Fernandez-Prada, PICS Case No. 17-1230 (E.D. Pa. July 14, 2017) Kelly, J. (27 pages).
The court found that it could not determine to a legal certainty that fencing club could not meet the $75,000 amount in controversy requirement in fencing club's breach of contract and unjust enrichment action against fencing coach and club pled sufficient facts to form the elements of breach of contract and breach of the non-compete agreement because coach's argument that he had no obligation to schedule any classes at all was an "evasion of the spirit of the bargain." Motion to dismiss denied.
Fencing club and coach contracted for coach to provide lessons to students at the club and elsewhere on an independent contractor basis and to share the profits. The contract also contained non-competition and non-disclosure clauses. Coach terminated the contract three years early because he was planning to take a job opportunity in England but instead remained in the area and affiliated himself with academy that was club's direct competitor. Club sued for breach of contract and unjust enrichment and coach moved to dismiss for lack of subject matter jurisdiction.
Coach asserted that club could not meet the $75,000 jurisdictional amount in controversy requirement. He contended that the alleged lost profits from his termination of the coaching agreement were not recoverable because club did not have an "unconditional right" to future income. He argued that since he scheduled the lessons, he could have scheduled zero lessons and club would have been owed nothing. The court noted that the amended complaint alleged multiple counts, with each count containing ad damnum clauses of damages in excess of $150,000 and asserted loss of customers, coach's use of and disclosure of confidential information and coach's solicitation of current and former customers to join competitor. The court found no bad faith in club's claims and there was no legal certainty that the jurisdictional floor could not be met.
Coach asserted that the claims in the complaint failed as a matter of law because he was under no obligation to schedule any fencing lessons, club failed to provide evidence of a breach of the noncompetition and nondisclosure provisions, there was no unjust enrichment and the alleged strip coaching policy was never signed by the parties. The court found that club adequately pleaded the elements of breach of contract and the manner in which the contract was breached. While coach contended that the agreement left him free to schedule no classes, club argued that there was an implied covenant of good faith and fair dealing in every contract. The court noted that courts had found that "evasion of the spirit of the bargain" constituted bad faith in the context of a contract and that coach's argument was a claim that he could have acted in bad faith. That argument eviscerated the central purpose of the agreement.
The court also found that the complaint alleged sufficient facts to show a breach of the non-compete agreement where it contained exhibits of Facebook pictures coach posted of former club students dressed in competitor's apparel and an email from coach to club students soliciting students to fence with him away from the club. Additionally, club's unjust enrichment claim survived under the strip coaching policy which coach alleged was not a valid contract.