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Effyis, Inc. v. Kelly

United States District Court, E.D. Michigan, Southern Division

October 31, 2019

EFFYIS, INC. and HOTTOLINK, INC., Plaintiffs,
v.
DARREN KELLY, Defendant.

          OPINION AND ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING AS MOOT PLAINTIFFS' MOTION TO FILE AMENDED DEFENSES

          ROBERT H. CLELAND, UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Plaintiffs Effyis, Inc. and Hottolink, Inc. sue their former employee, Defendant Darren Kelly. Plaintiffs seek declaratory judgment as to the existence of a valid settlement agreement between the parties for Kelly to waive any claims he could bring against Plaintiffs related to his termination. In the alternative, Plaintiffs also bring claim for declaratory judgment on the issue of cause for Kelly's termination and for breach of fiduciary duty. Kelly contends that the parties never reached an agreement and brings a counterclaim for breach of his employment contract based on his termination. Pending before the court is Plaintiffs' motion to file an amended answer to Kelly's counterclaim in order to add additional affirmative defenses. Also pending before the court is Plaintiffs' motion for summary judgment on its declaratory judgment claim to enforce the settlement agreement (Count I) and Kelly's breach of contract counterclaim. Both motions have been fully briefed, and the court concludes that a hearing is not necessary. See E.D. Mich. 7.1(f)(2). For the reasons stated below, the court will grant Plaintiffs' motion for summary judgment and will deny as moot Plaintiffs' motion to file amended affirmative defenses.

         II. BACKGROUND

         A. Factual History

         Plaintiff Effyis was co-founded by Scott Purdon, who is not a party to this suit. In 2012, Defendant Darren Kelly became an owner of Effyis. Both Purdon and Kelly arranged to sell their ownership interest in Effyis to Plaintiff Hottolink in early 2015 as part of an acquisition deal. As part of this sale, Kelly entered into an employment contract to become the President of Effyis. In 2017, Plaintiffs terminated Kelly's employment. The parties dispute the basis for Kelly's termination.

         The parties, joined by Purdon, attempted to negotiate a settlement for claims arising from Kelly's termination. According to Plaintiffs, Kelly and Purdon directly negotiated the terms of a settlement during a phone conversation on April 12, 2017. (ECF No. 30, PageID.386.) Kelly admits that he spoke with Purdon about a settlement on that day but denies that they agreed to any terms of settlement. (ECF No. 30-5, PageID.497-98; ECF No. 35, PageID.562.) Following the call, Purdon sent Kelly an email which Plaintiffs contend memorialized the terms of the settlement to which Kelly agreed over the phone. Plaintiffs assert that the terms of the settlement include that: (1) Hottolink would fully repay Kelly for a loan he made during Effyis's acquisition by Hottolink, (2) Kelly would receive $15, 000 for his incurred legal fees related to the settlement negotiations, and (3) Kelly and Effyis/Hottolink would sign waivers and releases of “any and all claims” the parties had against each other. (ECF No. 30, PageID.386-87.) The April 12, 2017 email from Purdon to Kelly reads as follows:

         DK,

Thank you for all your participation and support during this very difficult situation! Please respond to this email with your confirmation (YES I CONFIRM). Once I have your confirmation, we can get the attorneys to finalize the necessary legal paperwork so that HL can process your payments.
1) Full Loan Repayment
2) $15, 000 USD Payment
3) Signed waivers (US and Japan)
Best, Scott

(ECF No. 30-2, PageID.418.) In response to the email, ...


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