The opinion of the court was delivered by: Roszkowski, District Judge.
Before the court is defendant's motion to dismiss. Jurisdiction
of the court is invoked pursuant to 28 U.S.C. § 1332. For the
reasons stated below, the motion is denied.
The plaintiff in this case is Luther R. Carter, Jr.,
("Carter"), a resident of Illinois. The defendant is the Catamore
Company, Inc. ("Catamore"), a Delaware corporation with its
principal place of business in Rhode Island.
The facts, drawn primarily from the complaint, are alleged to
be as follows: On February 17, 1982, the parties entered into a
written contract which was to be effective as of January 1, 1982,
under which Carter was to be employed for a term of five years.
Carter was to establish and manage a direct mail order division
The contract fixed Carter's compensation at a salary of
$100,000 per year. Carter was to be paid an additional $20,000 in
the first year of the contract term, $10,000 being paid upon the
signing of the contract and $10,000 to be paid at the end of the
first year. Carter was also to receive annual incentive
compensation based on a program to be established by Catamore for
all its executives. Carter allegedly performed his duties until
August 2, 1982, when he alleges Catamore repudiated the contract
and discharged him.
The contract provided that it would be governed by and
interpreted under the laws of the State of Rhode Island.
Carter then brought this breach of contract action, claiming
that he has suffered damages of $459,999.99 — the compensation he
would have received under the remaining 4 1/2 years of the 5-year
term. Carter also claims he is entitled to punitive damages in
the amount of $100,000 because, he alleges, Catamore acted
wilfully, maliciously and tortiously in repudiating the contract.
Catamore contends that the complaint should be dismissed
because: 1) an employee is not entitled to recover full payment
under an employment agreement before the expiration of the term
of that agreement; and 2) punitive damages are not recoverable.
Initially, the motion presents the issue of what law is to be
applied. The contract stipulates that Rhode Island law is to be
applied; and courts will generally enforce choice of law clauses.
See Lauritzen v. Larsen, 345 U.S. 571, 588-89, 73 S.Ct. 921, 931,
97 L.Ed. 1254 (1953); Tele. Controls, Inc. v. Ford Industries,
Inc., 388 F.2d 48 (7th Cir. 1967). Rhode Island law will
therefore govern this controversy.
Unfortunately, Rhode Island law has never considered whether an
employee who brings suit prior to the expiration date of the
employment contract may recover damages for the entire term.
The defendant contends that when a state has not decided a
particular issue, the forum court may apply its own law, it being
assumed that the state law to be applied is probably the same as
the law of the forum, absent proof to the contrary. It appears
that at least one court has employed this doctrine. See Gaines v.
Jacobsen, 308 N.Y. 218, 124 N.E.2d 290 (1954), 16 Am.Jur.2d § 79,
Assuming arguendo that Rhode Island law would mirror Illinois
law, it still would not require dismissal of the action. Under
Illinois law, the defendant maintains that an employee who seeks
to recover damages due to him under a contract whose term has not
yet expired has two alternatives: he can either file a series of
installment suits in an effort to recover the damages he has
actually sustained or he can await the expiration of his contract
term before filing suit. The defendant relies on the Illinois
Supreme Court decision Mt. Hope v. Weidenmann, 139 Ill. 67,
28 N.E. 834 (1891) and on later appellate and federal decisions in
Corby v. 7100 Jeffrey Ave. Building Corp., 325 Ill. App. 442,
60 N.E.2d 236 (1st ...