United States District Court, W.D. New York
June 9, 2005.
VINCENZO DePALMA, Plaintiff,
HOME DEPOT U.S.A., INC., and VICTORIA JUDA, Defendants.
The opinion of the court was delivered by: LESLIE FOSCHIO, Magistrate Judge
DECISION and ORDER
This action was referred to the undersigned by Honorable
Richard J. Arcara on May 25, 2004 for all pretrial matters. The
matter is presently before the court on Plaintiff's motion, filed
November 26, 2004, to remand the action to New York Supreme Court. (Doc. No. 12).*fn1
Plaintiff Vincent DePalma ("Plaintiff"), a New York resident,
commenced this employment action against Defendants Home Depot
U.S.A., Inc. ("Home Depot"), a Delaware corporation with its
principal place of business in Georgia, and Victoria Juda
("Juda"), a New York resident, on April 21, 2004, in New York
Supreme Court, Erie County. Specifically, Plaintiff alleges that
his employment as the plumbing department manager at Defendant
Home Depot's store located at 2065 Niagara Falls Boulevard in
Amherst, New York ("Home Depot's Amherst store"), was wrongfully
terminated based on allegations made by his former supervisor,
Defendant Juda, that Plaintiff had violated company policy in
disregarding Home Depot's markdown policy. Plaintiff asserts
three claims for relief including (1) breach of implied
employment contract; (2) defamation of character per se; and
(3) detrimental reliance.
On May 17, 2004, Defendants removed the action to this court,
asserting complete diversity of the parties as the basis for
federal jurisdiction. Notice of Removal ("Removal Notice") (Doc.
No. 1), ¶¶ 8-12. According to Defendants, although Juda, like Plaintiff, is a New York resident, none of the asserted claims
for relief can be maintained against Juda who was fraudulently
joined as a defendant to defeat diversity jurisdiction. Removal
Notice ¶¶ 13-17.
On November 16, 2004, Plaintiff filed a motion to remand the
matter to New York Supreme Court, Erie County. (Doc. NO.
12).*fn2 The motion is supported by the attached Affirmation
of Howard A. Chetkof, Esq. ("Chetkof Affirmation"), and the
accompanying Memorandum of Law in Support of Plaintiff's Motion
for Removal [sic] (Doc. No. 13) ("Plaintiff's Memorandum"). On
December 9, 2004, Defendants filed in opposition to Plaintiff's
motion Defendants' Opposition to Plaintiff's Motion to Remand
(Doc. No. 15) ("Defendants' Memorandum"), and the Affidavit of
Natalie Sherman in Support of Defendants' Opposition to
Plaintiff's Motion to Remand (Doc. No. 16) ("Sherman Affidavit").
Plaintiff did not file anything in further support of the remand
motion. Oral argument was deemed unnecessary.
Based on the following, Plaintiff's motion to remand is DENIED.
Plaintiff commenced employment with Defendant Home Depot on
September 10, 1994, and worked at various Home Depot stores in
New York, including stores located in Ozone Park, West Seneca, Lockport and, most recently, Amherst,
where Plaintiff worked from March 2002 until January 21, 2003
when he was terminated for violating store policy and
insubordination. In particular, On December 27, 2002, Plaintiff
disposed of "WATTS" packages*fn4 at Home Depot Store # 1233,
allegedly in accordance with Home Depot's policy. Complaint ¶ 20.
Thereafter, on January 21, 2003, Defendant Juda confronted
Plaintiff regarding the disposal of "WATTS" packages, alleging
such disposal was contrary to Home Depot's policy requiring the
return of such "WATTS" packages to the appropriate vendor for
store credit. Complaint ¶ 21. Plaintiff initially denied, but
later admitted, disposing of the WATTS packages. Plaintiff
insisted that in his position as a department manager, he was
authorized to decide what to do with such packages. Juda
considered such statements as insubordination and demonstrated a
lack of "integrity." Because such conduct was inappropriate for a
department supervisor, Juda discharged Plaintiff on January 21,
Following termination of his employment, Plaintiff encountered
difficulty attempting to secure other employment. Plaintiff
attributes his difficulty in obtaining other employment to the
fact that, upon interviewing for another employment position, the
prospective employers would contact Home Depot to inquire as to
Plaintiff's suitability for employment, at which time the person
contacted at Home Depot would advise the prospective employer that Plaintiff had been
terminated for "insubordination" and "lack of integrity."
Complaint ¶ 31.
Removal of a state court proceeding to federal court is
provided for under 28 U.S.C. § 1441(a) which states in pertinent
any civil action brought in a State court of which
the district courts of the United States have
original jurisdiction, may be removed by the
defendant or the defendants, to the district court of
the United States for the district and division
embracing the place where such action is pending.
Because federal courts are courts of limited jurisdiction, and as
removal of a case raises issues of federalism, removal statutes
are narrowly construed and doubts are resolved against removal.
Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043
(2d Cir. 1991). The removal statute is construed according to
federal law. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,
104 (1941); Somlyo, supra, at 1047. Whether an action is
removable based on diversity jurisdiction is determined upon the
pleadings as originally filed. Crucible Materials Corporation v.
Coltec Industries, Inc., 986 F.Supp. 130 131-32 (N.D.N.Y. 1997).
Accordingly, 28 U.S.C. § 1441(a) permits removal of only those
actions which originally could have been filed in federal
district court. Id. Further, it is the removing party's burden
to demonstrate the existence of federal jurisdiction. United
Food & Commercial Workers Union, Local 919, AFL-CIO v. Centermark
Properties Meriden Square, Inc., 30 F.3d 298
, 301 (2d Cir. 1994)
("Where, as here, jurisdiction is asserted by a defendant in a
removal petition, it follows that the defendant has the burden of
establishing that removal is proper. . . ."). "A case is removable when the initial pleading `enables the
defendant to intelligently ascertain removability from the face
of such pleading, so that in its petition for removal, the
defendant can make a short and plain statement of the grounds for
removal as required by 28 U.S.C. § 1446(a).'" Whitacker v.
American Telecasting, Inc., 261 F.3d 196
, 205-06 (2d Cir. 2001)
(quoting Richstone v. Chubb Colonial Life Ins.,
988 F.Supp. 401, 403 (S.D.N.Y. 1997)) (internal citation and bracketed text
omitted). Nevertheless, "a plaintiff may not defeat a federal
court's diversity jurisdiction and a defendant's right of removal
by merely joining as defendants parties with no real connection
with the controversy." Pampillonia v. RJR Nabisco, Inc.,
138 F.3d 459, 460-61 (2d Cir. 1998) (citations omitted). To show that
a non-diverse defendant was improperly joined to defeat
diversity, "a defendant must demonstrate, by clear and convincing
evidence, either that there has been outright fraud committed in
the plaintiff's pleadings, or that there is no possibility, based
on the pleadings, that a plaintiff can state a cause of action
against the non-diverse defendant in state court." Pampillonia,
supra, at 461. "The defendant seeking removal bears a heavy
burden of proving fraudulent joinder, and all factual and legal
issues must be resolved in favor of the plaintiff." Id.
In the instant case, Defendants removed the matter to this
court on the basis of complete diversity, asserting that other
than asserting that Juda is a New York resident, all three of
Plaintiff's causes of action are asserted against both Defendants
collectively, that no particular allegations in the Complaint are
relevant to Juda, that Plaintiff does not allege that Juda
participated in any purported improper acts and fails to allege
any activity by Juda on which any independent cause of action
against Juda is based, and, thus, Juda has been named in the Complaint solely for the purpose
of defeating diversity jurisdiction. Removal Notice ¶¶
11-17.*fn5 Plaintiff argues in support of remand that Juda
is not a nominal party to this action but, rather, played a
"vital role" in terminating Plaintiff's employment with Home
Depot. Plaintiff's Memorandum at 2. As such, Plaintiff maintains
that "there are legitimate and serious direct causes of action
against Victoria Juda individually and she has a direct interest
in the controversy." Plaintiff's Memorandum at 2. Plaintiff
further maintains that Juda initiated Plaintiff's formal
reprimand and subsequent firing to satisfy a personal vendetta
against Plaintiff and, further, defamed Plaintiff allegedly by
making numerous false, slanderous and disparaging statements
about Plaintiff to other Home Depot employees as well as to
prospective employers who contacted Home Depot for a reference to
destroy Plaintiff's good name. Chetkof Affirmation ¶¶ 6-8.
Defendants, in opposition to the remand motion, assert that none
of the Complaint's three Causes of Action sufficiently alleges
facts which, if true, would state a claim as against Defendant's
Juda. Defendants' Memorandum at 2.
With regard to Plaintiff's first cause of action alleging
breach of implied employment contract with Home Depot, Plaintiff
alleges in the Complaint that he was originally hire by Home
Depot on September 10, 1994 and worked at various Home Depot
Stores, including Store # 1233 located in Amherst, New York,
where Plaintiff was employed from March 2002 until his
termination on January 21, 2003. Complaint ¶¶ 12-14. According to
Defendant, upon the commencement of his employment with Home Depot, he was provided with an employee manual, Complaint ¶
15, which provided for, among other things, the procedures for
disciplining and discharging employees, Complaint ¶ 23, which
procedures were confirmed both verbally and in writing during the
course of Plaintiff's employment with Home Depot such that the
employee manual constituted an implied employment contract.
Complaint ¶ 24.
On December 27, 2002, Plaintiff disposed of "WATTS" packages at
Home Depot Store # 1233, allegedly in accordance with Home
Depot's policy. Complaint ¶ 20. Thereafter, on January 21, 2003,
Defendant Juda confronted Plaintiff regarding the disposal of
"WATTS" packages, alleging such disposal was contrary to Home
Depot's policy which required returning "WATTS" packages to the
appropriate vendor for store credit. Complaint ¶ 21. Plaintiff
further alleges that while Juda was inappropriately reprimanding
Plaintiff, Juda "wrongfully and irresponsible determined that
plaintiff lacked integrity and was insubordinate with respect to
the disposition of the "WATTS" packages. As a result, defendant
VICTORIA JUDA immediately and unlawfully terminated plaintiff's
employment." Complaint ¶ 22.
Plaintiff argues in support of remand that because the
Complaint alleged that defendant Juda initiated Plaintiff's
"improper firing," which was contrary to Home Depot's personnel
regulations, the Complaint sufficiently alleges a claim against
Juda, thereby demonstrating that Juda has not been fraudulently
joined as a defendant simply to defeat diversity jurisdiction.
Chetkof Affirmation ¶¶ 5-6. Defendants argue in opposition to
remand that although Plaintiff alleges he entered into an implied
employment contract with Home Depot based on Home Depot'
providing Plaintiff, upon his hiring, with an employee manual and
that the termination of Plaintiff's employment breached that contract, Plaintiff does not allege that Juda was a
party to such contract and, in fact, Juda was not a Home Depot
employee when Plaintiff was hired. Defendants' Memorandum at 3-4.
In support of their argument, Defendants rely on the Affidavit of
Natalie Sherman (Doc. No. 16) ("Sherman Affidavit"), in which
Sherman stated that she is employed by Home Depot as a District
Human Resources manager, that Plaintiff commenced employment with
Home Depot in September 1994, and that Juda commenced employment
with Home Depot in January 2001. Sherman Affidavit ¶¶ 1-3.
It is well-settled New York law that in the absence of an
agreement establishing a fixed duration, an employment
relationship is generally presumed to be a hiring at will,
subject to termination by either party at any time, and for any
reason or even no reason. Poplawski v. Metropolitan Prop. & Cas.
Ins. Co., 692 N.Y.S.2d 438, 439 (App.Div. 2d Dep't 1999). A
cause of action alleging breach of an implied employment contract
may be sustained upon the terminated employee's demonstration
that an express limitation prohibiting the employee's discharge
except for cause was contained in the employee handbook, and that
the employee specifically relied upon such language. Howley v.
Newsday, Inc., 627 N.Y.S.2d 85, 86 (App.Div. 2d Dep't 1995).
See Weiner v. McGraw-Hill, Inc., 443 N.E.2d 441, 442-43 (N.Y.
1982) (holding employee, discharged without cause, stated cause
of action for breach of implied employment contract where
employee demonstrated that he signed and submitted employment
application on employer-printed form providing that employment
would be subject to provisions of employer's handbook on
personnel policies and procedures, which represented that "[t]he
company will resort to dismissal for just and sufficient cause
only, and only after all practical steps toward rehabilitation or salvage of the
employee have been taken and failed."). In the instant case,
Plaintiff likewise maintains that his employment with Home Depot
was subject to the provisions of an employee manual, but that his
termination was not in accordance with the employee manual's
termination procedures. Complaint ¶¶ 15, 23-25.
A claim for breach of an implied employment contract, however,
may only be asserted by a contracting party or third-party
beneficiary against another contracting party.*fn6 See Wein
v. Fensterstock, 2004 WL 2423684 * 1 (S.D.N.Y. Oct. 28, 2004)
(holding plaintiff, who was neither a contracting party nor a
third-party beneficiary lacked standing to sue for breach of
contract); Empire Volkswagen, Inc. v. World-Wide Volkswagen
Corp., 627 F.Supp. 1202, 1212 (S.D.N.Y. 1986) (stating only
contracting parties and third-party beneficiaries have standing
to sue for breach of contract); Sopasis Construction, Inc. v.
Solomon, 650 N.Y.S.2d 13, 14 (App.Div. 2d Dep't 1996) (holding
summary judgment should have been granted in favor of defendant
corporation in breach of contract claim where evidence
established that home renovation contract named only defendant
corporation's sole shareholder as the contractor and made no
mention of the corporation, nor gave any indication that sole
shareholder was corporation's president, such that corporation
was not a party to the contract and, thus, could not be sued for
breach of contract).
In the instant case, the Complaint does not allege that Juda
was a party to the implied employment contract. Moreover, insofar as the implied
employment contract is based on Plaintiff's allegation that his
employment was bound by restrictions contained in the Home Depot
employee manual governing the disciplining and discharging of
employees, Defendants have submitted evidence establishing the
Juda was not an employee of Home Depot when Plaintiff was hired.
Sherman Affidavit ¶¶ 2-3 (stating that although Plaintiff
commenced employment with Home Depot in September 1994, Juda
began working for Home Depot in January 2001). Plaintiff has
submitted nothing contradicting this evidence.
Accordingly, Defendants have established the absence of any
basis upon which Plaintiff's breach of implied employment
contract claim may be maintained against Defendant Juda. As such,
Plaintiff cannot defeat diversity jurisdiction by alleging his
breach of implied employment contract claim against Juda.
As to Plaintiff's second cause of action alleging defamation,
the Complaint alleges that since being wrongfully terminated from
his employment with Home Depot, Plaintiff has been hampered in
his attempts to find other employment as Home Depot employees,
upon being contacted by prospective employers for references
regarding Plaintiff, provided untruthful and defamatory
statements as to Plaintiff, including that Home Depot had
terminated Plaintiff's employment because of Plaintiff's
insubordination and lack of integrity, causing Plaintiff to be
denied "suitable alternative employment" and to suffer financial
and emotional injury. Complaint ¶¶ 28-33. In connection with the
defamation claim, Plaintiff seeks both monetary damages and an
order permanently enjoining Defendants from making further
negative statements about Plaintiff. Complaint ¶¶ 34-35. Defendants maintain that the Complaint fails allege any
activity on which an independent cause of action against Juda can
be based. Removal Notice ¶ 16. Plaintiff argues in support of
remand that "upon information and belief, Juda has made numerous
false, untrue, slanderous and disparaging statements about
[Plaintiff] to other Home Depot Employees, other perspective
[sic] employers who contacted Home Depot for a reference and
other third parties, in an attempt to destroy [Plaintiff's] good
name." Chetkof Affirmation ¶ 6. In opposing the motion to remand,
Defendants respond the Complaint fails to sufficiently plead a
defamation claim against Juda because the alleged defamatory
statements have not been specifically identified as required
under relevant pleading standards, nor does the Complaint
directly assert a defamation claim against Juda. Defendants'
Memorandum at 4.
Under the liberal pleading requirements of Fed.R.Civ.P. 8,
plaintiffs are not required to plead a New York defamation action
in haec verba, i.e., "in these words."*fn7 Kelly v.
Schmidberger, 806 F.2d 44, 46 (2d Cir. 1986). See Law Firm of
Daniel P. Foster v. Turner Broadcasting, 844 F.2d 955, 958 n. 3
(2d Cir. 1988) ("The `in haec verba' requirement, however, is
no longer the rule in this circuit."). Rather,
[t]he test of a complaint's sufficiency is whether it
is detailed and informative enough to enable
defendant to respond and to raise the defense of res
judicata if appropriate. . . . The central concern
is that the complaint afford defendant sufficient
notice of the communication complained of to enable
him to defend himself.
Kelly, supra, at 46 (citations omitted). Pleadings alleging that a particular defendant said "something
bad" about the plaintiff to a client were held as insufficient to
afford the requisite notice to the defendant employer of the
communications complained of to enable the defendant to defend
itself. Reilly v. Natwest Markets Group, Inc., 181 F.3d 253
271 (2d Cir. 1999) (dismissing defamation claim brought by former
employee against employer for failure to state a claim under New
York law). See also Wanamaker v. Columbian Rope Co.,
713 F.Supp. 533, 544-45 (N.D.N.Y. 1989) (dismissing as "woefully
lacking in the requisite specificity even under the most
liberal rules of pleading," New York defamation claim stating, in
its entirety, "[a]ll of the defendants have defamed plaintiff ?
by speaking and/or writing or circulating malicious, untrue and
damaging comments about his job performance."), aff'd,
108 F.3d 462
(2d Cir. 1997). At a minimum, a defamation claim must specify
who made the defamatory comments, when and in what context such
comments were made, and to whom such comments were made.
Wanamaker, supra, at 545.
In the instant case, Plaintiff's only significant allegations
in the Complaint regarding his defamation cause of action state
in their entirety:
31. Upon information and belief defendant HOME DEPOT,
their agents, servants, and/or employees provided
untruthful and defamatory responses concerning
[Plaintiff], specifically relating to his wrongful
termination and claims of `insubordination' and `lack
32. As a result of defendants' defamatory statements,
plaintiff was denied alternative employment and has
suffered financial and emotional injury, and has
incurred actual and special damages thereby.
Complaint ¶¶ 31-32.
As stated, Discussion, supra, at 5, whether an action is
removable based on diversity jurisdiction must be determined
based on the pleadings as originally filed. Crucible Materials Corporation, supra, at 131-32. Here, there is no
possibility, based on the pleadings, that Plaintiff can state a
cause of action against Juda in state court. Pampillonia,
supra, at 461. In particular, the Complaint does not even
specifically allege that Juda was among Home Depot's "agents,
servants, and/or employees" who allegedly made defamatory
statements about Plaintiff. Wanamaker, supra, at 545. Nor does
the Complaint allege the context in which, or to whom, the
alleged defamatory statements were made. Id. Plaintiff's
allegations as to defamation thus fail to afford Juda of the
communications complained of so as to enable Juda to defend
against the claim. Thus, for purposes of the instant motion, no
defamation claim is asserted against Juda and Plaintiff's
defamation claim alleged against Juda fails to defeat diversity
Finally, with regard to Plaintiff's third claim for relief
alleging detrimental alliance, Plaintiff alleges that he relied,
to his detriment, on the alleged implied employment contract, as
contained in the Home Depot employee manual controlling Home
Depot's employee policies and practices, as well as on additional
"representations of defendant HOME DEPOT as to his continuing
employment and/or addition [sic] employment opportunities," in
leaving his former position at another Home Depot store, in order
to work at Home Depot's Store # 1233, from which Plaintiff
maintains he was eventually discharged in violation of Home
Depot's policies and procedures. Complaint ¶¶ 37-40. Defendants
maintain that the Complaint contains no relevant allegations
against Juda as to this claim. Removal Notice ¶ 11. Plaintiff,
arguing in support of remand, does not specifically address the
basis for his detrimental reliance claim against Juda but,
rather, argues in support of remand that Juda "intentionally
improperly reprimanded and subsequently fired" Plaintiff in furtherance of a "personal
vendetta" Juda had against Plaintiff. Chetkof Affirmation ¶ 7.
Defendants, in opposition to remand, assert Plaintiff has not,
and cannot, allege that Juda made any statement prior to
Plaintiff's transfer to Home Depot's Amherst store upon which
Plaintiff relied as required to support a claim for detrimental
reliance. Defendants' Memorandum at 6.
Under New York law, the elements of detrimental reliance
include (1) lack of knowledge of the true facts; (2) good faith
reliance; and (3) a change of position. Securities Settlement
Corp. v. Jachera, 772 F.Supp. 770, 773 (S.D.N.Y. 1991) (citing
Holm v. C.M.P. Sheet Metal, Inc., 455 N.Y.S.2d 429, 433 (App.
Div. 2d Dept. 1982) (citing 21 N.Y. JUR., Estoppel, Ratification,
and Waiver § 60)). Detrimental reliance, however, "does not state
a claim for which relief can be granted given that detrimental
reliance is an element of a fraud claim, rather than a separate
theory for recovery." Anscombe Broadcasting Group, Ltd. v. RJM
Communications, Inc., 2004 WL 2491641, *6 (W.D.N.Y. Nov. 3,
2004) (citing United States v. Wallach, 935 F.2d 445, 468 (2d
Cir. 1991) (basic elements of fraud are misrepresentation and
detrimental reliance); and Stolow v. Greg Manning Auctions,
Inc., 258 F.Supp.2d 236, 248 (S.D.N.Y. 2003) (reasonable,
detrimental reliance upon a misrepresentation is an essential
element of a cause of action for fraud)); see also Dos v. Scelsa
& Villacara, 607 N.Y.S.2d 68, 69 (App.Div. 2d Dep't 1994)
(under New York law, detrimental reliance is an essential element
of a fraud claim). Otherwise, detrimental reliance may also be
raised as an affirmative defense to a mistake of fact claim. See
Jachera, supra, at 773 (a mistake of fact claim will prevail
unless the opposing party can prove that it justifiably relied on
the mistake "and, in consequence, suffered a prejudicial change
in position."). See also Geller v. Prudential Ins. Co. of America, 237 F.Supp.2d 210,
223 (E.D.N.Y. 2002) ("Such detrimental reliance is an affirmative
defense that must be raised in a responsive pleading.") (citing
Jachera, supra); DePinto v. Ashley Scott, Inc.,
635 N.Y.S.2d 215, 216 (App.Div. 1st Dep't 1995) (considering detrimental
reliance element of fraud based affirmative defense and
counterclaim). The court's research, however, reveals no cause of
action for detrimental reliance exists under New York law.
As such, Plaintiff's allegation of detrimental reliance cannot
be asserted as a cause of action against Defendant Juda to defeat
diversity jurisdiction. Alternatively, even if Plaintiff's third
cause of action were construed as a claim for fraud, the elements
of which include "a misrepresentation, known by the defendant to
be false and made for the purpose of inducing the plaintiff to
rely upon it, justifiable reliance and damages," Mora v. RGB,
Inc., 794 N.Y.S.2d 134, 137 (App.Div. 3d Dept. 2005), the facts
as alleged in the Complaint provide no basis for such claim
Specifically, aside from his defamation claim, the only
allegations Plaintiff makes against Defendant Juda are found in
Plaintiff's papers submitted in support of remand and state that
Juda "intentionally improperly reprimanded and subsequently
fired" Plaintiff in furtherance of a "personal vendetta" Juda had
against Plaintiff. Chetkof Affirmation ¶ 7. Significantly,
nowhere within the record is there any indication that Plaintiff
and Defendant Juda worked with each other, or even knew each
other, prior to the time Plaintiff commenced working at Home
Depot's Amherst store. As such allegations refer to Juda's
actions toward Plaintiff after he commenced working at Home
Depot's Amherst store, rather than before, Plaintiff's assertion
that he relied, to his detriment, on representations made to
induce him to leave his job at Home Depot's Lockport store to work at the Amherst store, even if true,
provide no basis for a fraud claim against Juda. Plaintiff's
assertion of liability against Juda in support of Plaintiff's
motion therefore smacks of post facto rationalizing
insufficient to require remand.
Based on the foregoing, Plaintiff's motion to remand (Doc. No.
12) is DENIED.