United States District Court, N.D. Oklahoma
OPINION AND ORDER
GREGORY K. FRIZZELL, CHIEF JUDGE.
the court is the Motion to Dismiss Counts II and III of
Plaintiff's Amended Complaint [Doc. #32] of defendant
Hogan Assessment Systems, Inc. (HAS). For the reasons set
forth below, the motion is granted.
Allegations of the Amended Complaint
Amended Complaint alleges the following facts. HAS is a
personality-test publisher and assessment consulting firm
headquartered in Tulsa, Oklahoma. [Doc. #26, p. 4, ¶
15-16]. At the time of HAS's incorporation, husband and
wife Robert and Joyce Hogan owned 100% of the company's
stock. [Id., ¶ 15]. On July 31, 2000, the
Hogans and Rodney Warrenfeltz entered into a
stockholders' agreement (“2000 Stockholders'
Agreement”), pursuant to which Warrenfeltz purchased
20% of HAS's stock, leaving Robert and Joyce Hogan owning
40% each. [Id., p. 5, ¶ 19]. The 2000
Stockholders' Agreement required HAS to purchase a
shareholder's shares if the shareholder should
“cease to be employed” by HAS and set the
purchase price at $4, 000 per share. [Id., ¶
20]. On that same date, Warrenfeltz entered into an
employment agreement (“2000 Employment
Agreement”) to serve as HAS's Managing Partner.
[Id., p. 6, ¶ 22]. Pursuant to paragraph 8 of
the 2000 Employment Agreement, HAS could not terminate
Warrenfeltz for “breach of his obligations, duties or
responsibilities, ” unless it provided him thirty-days
written notice of the breach with an opportunity to cure.
31, 2000, HAS also adopted the Amended By-Laws that remain in
effect. [Id., ¶ 24]. The Amended By-Laws
prohibit shareholder actions that conflict with the
Stockholders' Agreement. [Id., p. 7, ¶ 25].
Further, the Amended By-Laws govern the authority of the
company's Board of Directors, and provide that the Board
of Directors “may, by affirmative vote of a majority of
the members of the Board then in office, remove any officer
elected or appointed by the Board.” [Id.,
October 7, 2010, HAS altered the term and renewal provisions
of the 2000 Employment Agreement. [Id., p. 11,
¶ 45-46]. The amendment extended the period of the 2000
Employment Agreement for a period of five years, unless
earlier termination was provided as under the 2000 Employment
Agreement, after which the 2000 Employment Agreement would
automatically extend for successive additional one year
terms, unless either party gave written notice to the other
party at least ninety days prior to the end of the term.
[Id., ¶ 46].
September 2012, Joyce Hogan suddenly passed away, resulting
in the transference of her HAS stock to Robert Hogan.
[Id., p. 12, ¶ 51-52]. After Joyce Hogan's
death, Robert Hogan's business relationship with
Warrenfeltz began to deteriorate, and Warrenfeltz expressed
his desire to sell his equity interest in HAS in 5%
increments. [Id., p. 13-14, ¶ 55 and 57].
connection with Robert Hogan's interest in making other
HAS employees stockholders, the 2000 Stockholders'
Agreement was revised effective as of January 1, 2013
(“2013 Stockholders' Agreement). [Id., p.
14, ¶ 58 and 60]. The 2013 Stockholders' Agreement
identified Warrenfeltz and Robert Hogan as having
“Founders' Rights, ” special rights not
shared by other shareholders. [Id., p. 14-15, ¶
61]. Pursuant to the “Founders Rights, ” certain
actions required the affirmative vote of both Warrenfeltz and
Robert Hogan, including: any material change of the bylaws,
the expenditure of any funds or the incurrence of any
indebtedness in excess of $50, 000.00, and any change in the
governance provisions of paragraph 9. [Id., ¶
October 1, 2014, the 2013 Stockholders' Agreement was
amended to accelerate Warrenfeltz's redemption of his
shares to HAS. [Id., p. 15-16, ¶ 63-64].
Pursuant to the amendment, HAS was required to purchase 500
shares from Warrenfeltz on October 1, 2014 and another 500
shares from him on June 1, 2017. [Id., p. 16, ¶
1, 2016, Robert Hogan sent a letter to Warrenfeltz stating
that Hogan had unilaterally made the decision not to renew
Warrenfeltz's employment agreement, and that Warrenfeltz
would become an “at will” employee effective
October 7, 2016. [Id., p. 20-21, ¶ 82-83]. Some
ten months later, Hogan sent Warrenfeltz a letter stating
that HAS terminated Warrenfeltz's employment effective
May 8, 2017 because Warrenfeltz had engaged in “conduct
that constitutes grounds for the termination of [his]
employment with [HAS] for cause.” [Id., p.
21-22, ¶ 88]. The letter also asserted that the
termination of Warrenfeltz for cause permitted HAS to
purchase Warrenfeltz's remaining stock for
“twenty-five percent (25%) of Base Value, with payments
to be made in one hundred and twenty (120) equal installments
with no downpayment.” [Id., p. 23, ¶ 92].
The termination letter enclosed two purported Consents of
Shareholders of HAS and a purported Unanimous Consent of the
Directors of HAS. [Id., ¶ 93].
on these factual allegations, the Amended Complaint asserts
three counts: (I) breach of contract, (II) breach of the
implied covenant of good faith and fair dealing, and (III)
Motion to Dismiss Standard
survive a Rule 12(b)(6) motion to dismiss, “[a]
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Id. “‘Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements' are not sufficient to state a claim for
relief.” Pyle v. Woods, 874 F.3d 1257, 1266
(10th Cir. 2017) (quoting Iqbal, 556 U.S. at 678).