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Dixon v. Pro Image Inc.9/14/1999
This opinion is subject to revision before final publication in the Pacific Reporter.
No. 981661
FILED
Second District, Layton Dep't The Honorable Darwin C. Hansen
Plaintiff Daniel E. Dixon appeals from the district court's grant of partial summary judgment in favor of defendants Pro Image Inc., Transition Sports Inc., and Rentrak Corporation. Dixon filed suit against defendants, alleging various breaches of both a consulting agreement and an employment agreement and asserting that defendants wrongfully terminated him. Defendants moved for partial summary judgment, arguing that certain of Dixon's claims failed as a matter of law. The district court granted the motion. We affirm in part and reverse in part.
FACTS
In early 1996, Rentrak Corporation became concerned about the financial well-being of its subsidiary, Pro Image Inc., a sports apparel retail company and franchisor. Rentrak decided to either sell Pro Image or consummate a "spin-off" transaction in which Pro Image stock would be distributed to Rentrak shareholders as dividends. To accomplish either objective, Rentrak believed it needed to improve the financial performance of Pro Image. With that aim, on May 1, 1996, Rentrak entered into both a "Consulting Agreement" and an "Employment Agreement" with plaintiff Daniel E. Dixon.
Under the consulting agreement, Dixon agreed to provide consulting services to Pro Image for a period of two months in exchange for $5,000 per month. As additional consideration, Dixon received an option, exercisable within five years, to purchase 25,000 shares of Rentrak common stock.
On July 1, 1996, the consulting agreement expired and Rentrak activated the employment agreement, thereby installing Dixon as president of Pro Image. The employment agreement stated that Dixon would be employed until October 31, 1996, or until otherwise terminated. It guaranteed Dixon a base salary of nearly $12,000 per month and provided that if, during his employment, Rentrak entered into a "definitive agreement" to sell Pro Image, he would also be entitled to a "Sale Bonus" equal to the greater of $50,000 or one percent of the net sale proceeds.
Dixon functioned as president of Pro Image until December 3, 1996, on which date Rentrak informed him that he would no longer be employed by Pro Image. The following day, pursuant to the employment agreement, Dixon received $9,333.33, which represented the first of six monthly installments comprising Dixon's severance pay.
Prior to the date Dixon took over as president, Pro Image consisted of approximately 63 corporate stores and 175 franchise stores. When Dixon's employment was terminated on December 3, 1996, Pro Image still consisted of 39 corporate stores and 155 franchise stores, having sold one corporate store and 18 franchise stores in October of that year and 7 more corporate stores in November. On December 6, 1996, three days after Dixon's employment was terminated, Rentrak executed an asset purchase agreement whereby a group of former and then-current employees of Pro Image known as "P.I. Acquisitions" purchased the remaining 155 franchise stores of Pro Image.
In a letter dated January 13, 1997, Dixon formally demanded payment of the sale bonus under the employment agreement. Dixon contended that although a sale of the entire Pro Image business had not been consummated while he served as president, he was nevertheless entitled to the sale bonus by virtue of the sales and agreements to sell that occurred during his employment. Rentrak, however, refused to pay Dixon the sale bonus.
On or about March 19, 1997, Dixon attem
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