SHAWN W. BAILEY, Plaintiff-Appellant,
PERITUS I ASSETS MANAGEMENT, LLC, Defendant-Respondent, and AMERICAN MEDICAL FILE, INC., a California Corporation; RONALD J. HELLER, an individual; DAVID J. DESMOND, an individual; and WILLIAM R. ESPINOSA, Defendants.
Opinion No. 89
from the District Court of the Fourth Judicial District,
State of Idaho, Ada County. Hon. Melissa Moody, District
court judgment dismissing breach of contract claim, vacated
Jeffrey J. Hepworth & Associates, Boise, for appellant.
Jeffrey J. Hepworth argued.
Troxell Ennis & Hawley, LLP, Boise, for respondent. John
BURDICK, CHIEF JUSTICE.
W. Bailey brings this appeal from the Ada County district
court. In October 2014, Bailey sued several parties,
including Peritus 1 Assets Management, LLC (Peritus), for
claims allegedly arising out of his employment at American
Medical File, Inc. (AMF), doing business as OnFile. Bailey
alleged claims for breach of his employment contract and
intentional infliction of emotional distress. Peritus moved
to dismiss Bailey's claim for intentional infliction of
emotional distress, and the district court granted the motion
on the basis that Bailey had not alleged conduct that was
extreme and outrageous. Peritus thereafter moved for summary
judgment on Bailey's breach of contract claim, contending
the statute of frauds rendered it unenforceable. In response,
Bailey moved to amend his complaint in an effort to bypass
the statute of frauds. The district court denied Bailey leave
to amend and granted Peritus summary judgment, finding the
statute of frauds dispositive. Bailey timely appeals the
denial of leave to amend and grant of summary judgment in
favor of Peritus. We vacate the district court's judgment
dismissing Bailey's breach of contract claim against
Peritus and remand.
FACTUAL AND PROCEDURAL BACKGROUND
incorporated in California in 2001. AMF was a startup company
that provided medical records management software to entities
in the healthcare industry. Bailey was hired as AMF's
Vice President of Product Development in April 2006 under an
oral contract of employment entitling Bailey to an annual
salary of $110, 000 plus several fringe benefits. Bailey
maintains that Peritus, an investment advisory company
involved with AMF, recruited him to work at AMF and agreed it
would be responsible for paying his compensation.
became involved with AMF in 2004, when some Peritus clients
took an interest in investing in AMF. To that end, Peritus
formed the Peritus Global Opportunity Fund, LLP (PGO Fund), a
hedge fund, as a vehicle for interested clients to invest in
AMF. Between September 2004 and November 2006, the PGO Fund
invested approximately $6, 450, 000 in AMF. Moreover, the PGO
Fund extended a bridge loan to AMF, which was secured by
AMF's founders' shares of AMF stock. After AMF
defaulted on the bridge loan in 2005, the PGO Fund foreclosed
on the AMF shares securing its loan and became the owner of
ninety percent of AMF's outstanding stock. The PGO Fund
dissolved in 2008, at which time the AMF shares were
distributed to the Peritus clients who formerly comprised the
PGO Fund. Peritus then began loaning funds to AMF. As a
condition of the loans, Peritus required AMF to allow
Peritus's Chief Operating Officer, David J. Desmond, and
its Founder and Managing Member, Ronald J. Heller, to be on
AMF's Board of Directors so as to "monitor the
operation of AMF."
pre-employment discussions, Bailey became aware of
Peritus's ties to AMF. He became aware also that AMF was
underfunded and generating only $2, 500 per month in revenue.
When Bailey recalled those discussions, he indicated that
Peritus representatives made several promises that Peritus
would pay Bailey's compensation because AMF could not.
Nevertheless, Bailey did not receive all compensation to
which he was entitled under his oral contract of employment.
By August 2011, Bailey was allegedly owed $95, 000 in back
pay. When he threatened to resign, he was provided with a
written contract of employment. The written contract recites
that Bailey was entitled to an annual salary of $150, 000
plus several fringe benefits. The written contract says
nothing of back pay, but Bailey maintains that Peritus made
several promises to pay his back pay in full.
with the written contract, Bailey still did not receive all
compensation to which he was entitled. He resigned from AMF
in March 2013 and sued in October 2014, alleging claims for
breach of employment contract and intentional infliction of
emotional distress. As defendants, Bailey named AMF, Peritus,
and three individuals associated with AMF and
Peritus. All defendants moved to
dismiss. In March 2015, the district court dismissed both
claims against the defendants who Bailey had named
individually and also dismissed the emotional distress claim
against all defendants, leaving only the breach of contract
claim against AMF and Peritus. In May 2015, AMF filed for
bankruptcy, and Bailey's contract claim against AMF was
stayed. Peritus moved for summary judgment, contending the
statute of frauds barred Bailey's breach of contract
claim. Bailey responded by requesting leave to amend his
complaint in an effort to bypass the statute of frauds. The
district court denied Bailey's motion to amend and
granted Peritus's motion for summary judgment. Bailey
timely appeals the denial of leave to amend and grant of
summary judgment in favor of Peritus.
ISSUES ON APPEAL
the district court err by granting summary judgment to
Peritus on Bailey's claim for ...