Jenkins v. Akzo Noble Coatings, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
WILLIAM B. JENKINS, 
Plaintiff-Appellant,
v.
 No. 01-2200
AKZO NOBLE COATINGS,
INCORPORATED,
Defendant-Appellee.

Appeal from the United States District Court
for the Western District of North Carolina, at Statesville.
Richard L. Voorhees, District Judge.
(CA-97-124-V)
Argued: April 4, 2002
Decided: May 21, 2002
Before WILKINSON, Chief Judge, and WILLIAMS and
TRAXLER, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Jim D. Cooley, WOMBLE, CARLYLE, SANDRIDGE &
RICE, P.L.L.C., Charlotte, North Carolina, for Appellant. Charles
Matthew Keen, OGLETREE, DEAKINS, NASH, SMOAK & STEW-
ART, P.C., Raleigh, North Carolina, for Appellee. ON BRIEF: Amy
L. Cox Gruendel, WOMBLE, CARLYLE, SANDRIDGE & RICE,
P.L.L.C., Charlotte, North Carolina, for Appellant. Robert A. Sar,
2 JENKINS v. AKZO NOBLE COATINGS
OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C.,
Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
William Jenkins appeals from the district court’s dismissal at the
summary judgment stage of his suit alleging breach of contract and
fraudulent misrepresentation in connection with his departure from
employment with Akzo Nobel Coatings, Inc. Because North Caroli-
na’s employment at will doctrine bars Jenkins’s breach of contract
claim, and because Jenkins failed to make the requisite evidentiary
showing to survive summary judgment as to his fraudulent misrepre-
sentation claim, we affirm.
I.
Akzo and its affiliates manufacture coatings for use on furniture
and other wood products. With the exception of a three-year period
during which he worked for a family business, Jenkins was employed
by Akzo continuously from 1969 until his departure in 1997. In 1990,
Jenkins was asked to accept a position as Director of Sales and Mar-
keting for Akzo’s start-up operation in the Far East, which was to be
headquartered in Singapore. Jenkins accepted the assignment, on the
condition that he would have a job when he returned to the United
States. Akzo promised Jenkins that he would be returned to a position
in the company’s United States operations upon the conclusion of his
foreign assignment. This commitment was memorialized in a docu-
ment entitled "Southeast Asia Expatriate Contract" (the contract), exe-
cuted by both parties in August of 1991 and subsequently modified
in June and October of 1992. (J.A. at 72, 89, 90.) The relevant provi-
sions of the contract provided that Jenkins’s "assignment [would]
JENKINS v. AKZO NOBLE COATINGS 3
extend for approximately two (2) years [until] June 1993," and "any
extension or change in status [would] be at terms and conditions
mutually agreed upon" by Jenkins and Akzo. (J.A. at 72.) Further, the
agreement included a "position guarantee at repatriation," the text of
which was revised twice. The August 1991 contract stated that "as-
suming satisfactory job performance, the position to which [Jenkins]
[would] return upon repatriation to the United States [would] be at a
base compensation package equivalent with the expatriate assignment
. . . [and] such position could be at any USA location where [Akzo]
maintains a manufacturing facility." (J.A. at 73.) By an "addendum"
dated June 16, 1992, which addressed Jenkins’s promotion to South-
east Asia Regional Manager, the parties agreed that "upon completion
of this assignment, Mr. Jenkins [would] be assigned in an available
position within the organization commensurate with his abilities and
training. The salary for this repatriation assignment [would] be in line
with the salary range for the job to which he is assigned." (J.A. at 89.)
By an "addendum" dated October 14, 1992, the language was modi-
fied to state that:
Upon completion of this agreement, Mr. Jenkins [would] be
assigned in an available position within the organization
commensurate with his abilities and training. The salary for
the repatriation assignment [would] be a minimum of
$75,000 base per year plus the normal annual increases for
each year served in the Far East if he is performing his gen-
eral manager function satisfactorily.
(J.A. at 90.) Finally, the original contract stated, in a provision enti-
tled "Termination/Early Discontinuance of Agreement," unmodified
by either the June or October 1992 addenda, that "in the event of [Jen-
kins’s] separation from Akzo . . . the company [would] reimburse all
expenses" related to Jenkins’s return to the United States. (J.A. at 72.)
When the last addendum was executed in October 1992, Jenkins’s
supervisor told him that rather than re-executing the contract when its
term expired, "we’ll just continue under those terms." (J.A. at 285.)
At various times during 1994, 1995, and 1996, Jenkins expressed
to his superiors his desire to leave Singapore. Jenkins was told in
April 1996, by his supervisor, Rad Darby, that he would be repatri-
4 JENKINS v. AKZO NOBLE COATINGS
ated when there was a job available in the United States and a
replacement could be found for him in Singapore.
Citing performance issues,1 however, on January 6, 1997, Akzo ter-
minated Jenkins as director of sales and marketing and regional man-
ager for Southeast Asia and offered him another position — Country
Manager for Indonesia — that both parties considered a demotion. In
the event that Jenkins declined the Indonesia Country Manager posi-
tion, Akzo offered him a severance package. Jenkins decided to leave
Akzo and took a reduced severance package because he did not wish
to release his legal claims against Akzo.
On June 27, 1997, Jenkins filed a complaint in the Superior Court
of Caldwell County, North Carolina against Akzo, seeking relief for
breach of contract and fraudulent misrepresentation. Akzo removed
the action to the district court based on diversity jurisdiction and filed
a Motion to Dismiss as to all claims on August 4, 1997. The case was
assigned to a magistrate judge for a report and recommendation. See
28 U.S.C.A. § 636 (West 1999). On December 8, 1997, the magistrate
judge issued a "memorandum and recommendation" that Akzo’s
motion be denied in its entirety. (J.A. at 197-199.) Jenkins then filed
an amended complaint adding a claim for violation of the Age Dis-
crimination in Employment Act (ADEA), 29 U.S.C.A. §§ 621 et seq.
(West 1999). Akzo filed objections to the recommendation, and after
conducting a de novo review pursuant to 28 U.S.C.A. § 636, the dis-
trict court adopted the magistrate judge’s recommendation and denied
Akzo’s motion to dismiss on September 16, 1998. After completion
1
Akzo contends that Jenkins’s performance was unacceptable because
he helped to develop a product that alienated a major customer when it
did not perform correctly; because he entered into property leases in
China without the proper approvals; because financial goals for the Far
East operation were not met; because embezzlement and arson allegedly
occurred at a Malaysian plant that was ultimately under Jenkins’s man-
agement; because Jenkins allegedly discharged an employee without
documentation, leading to litigation; and because Jenkins allegedly did
not do enough to retain a key saleswoman, Laura Boon. Jenkins contests
these allegations and notes that he received substantial performance-
based bonuses during each year of his employment in Singapore, as well
as increases in base pay of approximately 30%.
JENKINS v. AKZO NOBLE COATINGS 5
of discovery, Akzo moved for summary judgment as to all of Jen-
kins’s claims. The district court referred Akzo’s motion to the magis-
trate judge for discovery and a recommendation.
On March 1, 2000, the magistrate judge issued a "memorandum
and recommendation" that summary judgment be granted in favor of
Akzo as to Jenkins’s ADEA claim but denied as to Jenkins’s claims
for breach of contract and fraudulent misrepresentation. Akzo
objected to the magistrate judge’s recommendation insofar as it
involved denial of summary judgment for Akzo on the contract and
fraud claims. Jenkins did not object to the magistrate judge’s recom-
mendation to grant summary judgment to Akzo on his ADEA claim.2
On September 5, 2001, after conducting a de novo review as required
by 28 U.S.C.A. § 626(b)(1) (West 1999), the district court issued a
"memorandum and order" granting summary judgment in Akzo’s
favor as to the contract and fraud claims. Jenkins timely appealed
from this order.
II.
The district court granted summary judgment to Akzo on Jenkins’s
breach of contract claim, finding that any contract between Jenkins
and Akzo lacked a definite term and thus could not rebut the strong
presumption in favor of at will employment mandated by North Caro-
lina law. This court reviews the district court’s entry of summary
judgment in Akzo’s favor de novo. American Legion Post 7 v. City
of Durham, 239 F.3d 601, 605 (4th Cir. 2001). Summary judgment
is appropriate only "if the pleadings, depositions, answers to interrog-
atories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact." Fed. R.
Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In
deciding whether there is a genuine issue of material fact, "the evi-
dence of the nonmoving party is to be believed and all justifiable
2
Jenkins thus effectively abandoned his ADEA claim, and he does not
challenge the dismissal of that claim in this proceeding. See Thomas v.
Arn, 474 U.S. 140, 145-46 (1985); United States v. Schronce, 727 F.2d
91, 93-94 (4th Cir. 1984) (holding that a failure to timely object to mag-
istrate judge’s recommendations waives any challenge to those recom-
mendations).
6 JENKINS v. AKZO NOBLE COATINGS
inferences must be drawn in its favor." Durham, 239 F.3d at 605. A
mere scintilla of proof will not suffice to prevent summary judgment,
however; the question is "not whether there is literally no evidence,
but whether there is any upon which a jury could properly proceed to
find a verdict for the party" resisting summary judgment. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986) (internal quotation
marks omitted). A failure to produce evidence sufficient to permit a
jury to find for the nonmovant plaintiff as to one of the elements of
his cause of action renders all other issues of fact immaterial. Celotex,
477 U.S. at 323. "As a court sitting in diversity, we have an obligation
to interpret the law in accordance with the [jurisprudence of the North
Carolina Supreme Court], or where the law is unclear, as it appears
that the [North Carolina Supreme Court] would rule." Wells v. Liddy,
186 F.3d 505, 527-28 (4th Cir. 1999). "To forecast a decision of the
state’s highest court we can consider, inter alia: canons of construc-
tion, restatements of the law, treatises, recent pronouncements of gen-
eral rules or policies by the state’s highest court, well considered
dicta, and the state’s trial court decisions." Id.North Carolina is an employment at will state, such that in general,
an employee without a definite term of employment may be dis-
charged for any reason or for no reason. Coman v. Thomas Mfg. Co.,
381 S.E.2d 445, 446 (N.C. 1989). Under the employment at will doc-
trine, the burden of showing that a contract of employment exists and
is sufficiently specific in its terms to rebut the presumption of
employment at will rests with the employee. Rosby v. Gen. Baptist
State Convention, 370 S.E.2d 605 (N.C. Ct. App. 1988). "[I]n the
absence of a contractual agreement between an employer and an
employee establishing a definite term of employment, the relationship
is presumed to be terminable at the will of either party without regard
to the quality of performance of either party." Kurtzman v. Applied
Analytical Indus., Inc., 493 S.E.2d 420, 422 (N.C. 1997). The "lim-
ited" exceptions to the at will rule recognized by the North Carolina
Supreme Court include a contract for a "definite period of employ-
ment," federal and state anti-discrimination statutes, and situations
wherein public policy bars discharge, as when an employee is dis-
charged for refusing to break the law. Id.; Amos v. Oakdale Knitting
Co., 416 S.E.2d 166, 168 (N.C. 1992). Terms such as "a regular per-
manent job" or "if you do your job, you’ll have a job," are "not suffi-
ciently definite to remove the employment relationship from the at-
JENKINS v. AKZO NOBLE COATINGS 7
will presumption." Id. at 422-23; see also Malever v. Kay Jewelry
Co., 25 S.E.2d 436, 437 (N.C. 1943) (holding that a "promise of per-
manent employment simpliciter" implies "an indefinite general hiring,
terminable at will."). Because the employment at will rule serves as
"an incentive to economic development, and any significant erosion
of it could serve as a disincentive," North Carolina courts have been
reluctant to permit the rebuttal of the policy-based at will presump-
tion. Kurtzman, 493 S.E.2d at 423.
It is clear that Jenkins’s employment agreement in this case was
not one for a definite term. While the original agreement was one for
a definite term, the original agreement expired in 1993; the contract
itself provided that "any extension . . . will be at terms and conditions
mutually agreed upon," and the parties agreed to continue under the
terms of the agreement for an indefinite period. (J.A. at 72, 285). Fur-
ther, the contract expressly provided a means for its termination; in
a provision entitled "Termination/Early Discontinuance of Agree-
ment," the contract simply stated that if Jenkins separated from
Akzo’s employ, Akzo would be obligated to pay expenses associated
with Jenkins’s move back to the U.S. (J.A. at 78.) It is undisputed that
Akzo reimbursed Jenkins for those expenses.
There is no contention on appeal that Jenkins was terminated in
violation of any antidiscrimination law or that he was terminated for
reasons of the sort deemed by North Carolina courts to trigger the
public-policy exception to employment at will — e.g., because he
refused to violate the law or to facilitate a violation of the law. Conse-
quently, Jenkins has failed, under the employment at will jurispru-
dence recently reaffirmed in Kurtzman, to rebut the at will
presumption.
Seeking to avoid this result, Jenkins argues that this suit is not one
for wrongful termination, and thus, it is not controlled by Kurtzman
and other North Carolina cases reaffirming the vitality of the employ-
ment at will doctrine. Jenkins argues that this action is unaffected by
North Carolina’s employment at will jurisprudence because Jenkins
seeks recovery for an employer’s failure to provide a benefit — repa-
triation to a comparable job with Akzo — to which he is contractually
entitled. Thus, Jenkins maintains that his action is analogous to a right
of return to a union position in the event that a management promo-
8 JENKINS v. AKZO NOBLE COATINGS
tion did not "work out," which the North Carolina Court of Appeals
has held to be unaffected by employment at will. Bennett v. Eastern
Rebuilders, Inc., 279 S.E.2d 46, 48-50 (N.C. Ct. App. 1981). Simi-
larly, Jenkins contends that his repatriation guarantee is analogous to
an agreement to "bridge" seniority from a previous job in order to
allow for an enhancement of retirement benefits, which is not ren-
dered unenforceable by employment at will. Welsh v. Northern Tele-
com, Inc., 354 S.E.2d 746, 751 (N.C. Ct. App. 1987).
Bennett and Welsh are, however, inapposite. Bennett involved a
promise to terminate the employment agreement only by first return-
ing the employee to a union position. Bennett, 279 S.E.2d at 49. An
employee "is not entitled to recover damages [under the Bennett
approach] beyond the lawful termination" of an employment agree-
ment. Bloch v. Paul Revere Life Ins. Co., 547 S.E.2d 51, 59 (N.C. Ct.
App. 2001). Here, Jenkins’s contract facially provides that termina-
tion is permissible and simply gives Jenkins a right to payment of his
moving expenses in the event of termination of the agreement. Welsh
involved a right to promised pension benefits; North Carolina courts
have "distinguished between issues of benefits or compensation
earned during employment and the issue of an employee[‘s] entitle-
ment to continued employment." Rucker v. First Union Nat’l Bank,
389 S.E.2d 622, 625 (N.C. Ct. App. 1990). Claims for accrued bene-
fits, as distinct from claims for prospective continued employment or
working conditions, are not affected by the employment at will doc-
trine. Jenkins, however, seeks a remedy for Akzo’s failure to continue
to employ him in a certain capacity, not a remedy for any failure to
provide him with accrued benefits for past service.
Assuming that Jenkins’s demotion amounted to a constructive dis-
charge,3 it is clear that North Carolina law permits discharge or demo-
3
Jenkins was not formally terminated by Akzo; instead, he was
demoted and chose to leave the company rather than accept an assign-
ment as Indonesia Country Manager. The parties implicitly treat his
demotion as a constructive discharge under North Carolina law. The
North Carolina Court of Appeals has questioned the existence of the con-
structive discharge doctrine. See Graham v. Hardee’s Food Sys., Inc.,
465 S.E.2d 558, 560 (N.C. Ct. App. 1996) (noting that North Carolina
courts "have yet to adopt the employment tort of constructive discharge,"
JENKINS v. AKZO NOBLE COATINGS 9
tion in cases such as this one, with or without cause. The district
court’s analysis of the North Carolina Supreme Court’s decision in
Kurtzman is cogent and accurate. While in Kurtzman the court did
deny that "a definite term of service is the sole means of contractually
removing the at-will presumption," it gave no hints as to what ele-
ments other than a definite term of service could suffice to rebut the
presumption. Kurtzman, 493 S.E.2d at 421. No cases from the North
Carolina Supreme Court suggest any other means, and this court, sit-
ting in diversity, should not "surmise or suggest . . . expansion" of
state law. Tritle v. Crown Airways, Inc., 928 F.2d 81, 84 (4th Cir.
1990) (internal quotation marks omitted). The district court properly
declined to read into Kurtzman’s vague disclaimer the authority to
craft a wholly novel exception to the employment at will doctrine.
Consequently, the district court correctly found that Jenkins was an
employee at will; it follows that whether he was constructively dis-
charged or demoted, he cannot maintain a claim either for wrongful
discharge or for breach of contract based on Akzo’s failure to provide
him with continued employment in the United States or anywhere else.4
Fidelity to North Carolina’s employment at will doctrine requires that
we affirm the district court’s grant of summary judgment to Akzo on
Jenkins’s breach of contract claim.
and resolving a wrongful discharge claim wherein an employee quit after
a change in working conditions on the assumption that constructive dis-
charge is a viable theory). But see Coman v. Thomas Mfg. Co., Inc., 381
S.E.2d 445, 446 (N.C. 1989) (noting without analysis that a reduction in
pay of "at least fifty percent" is "tantamount to a discharge," and pro-
ceeding to analyze the case before it under a wrongful discharge frame-
work); Doyle v. Asheville Orthopaedic Assoc., P.A., 557 S.E.2d 577, 579
(N.C. Ct. App. 2001) ("evidence establishing constructive discharge
must demonstrate that the employer deliberately made working condi-
tions intolerable and thereby force[d] [the employee] to quit").
4
Accordingly, we do not address Akzo’s argument that under ordinary
contract principles, without regard to the employment at will doctrine, it
is entitled to summary judgment based on a lack of definiteness and con-
sideration.
10 JENKINS v. AKZO NOBLE COATINGS
III.
Jenkins next contends that the district court erred in granting sum-
mary judgment to Akzo on his claim for fraudulent misrepresentation.
The elements of an action for fraudulent misrepresentation in North
Carolina are (1) a false representation or concealment of a material
fact; (2) reasonably calculated to deceive; (3) made with the intent to
deceive (scienter); (4) upon which the injured person reasonably
relied to his detriment. Pearce v. American Defender Life Ins. Co.,
343 S.E.2d 174, 178 (N.C. 1986).
Jenkins failed to create a disputed factual issue as to two of the ele-
ments of a claim for fraudulent misrepresentation: reasonable reliance
and scienter. A fraud claim based on a promise of a future act may
succeed only where there is evidence of scienter tending to show that
the promisor intended to deceive and had no intention of performing
the promise at the time he made it. Johnson v. Phoenix Mut. Life Ins.
Co., 266 S.E.2d 610, 616 (N.C. 1980), overruled on other grounds by
Myers & Chapman, Inc. v. Thomas G. Evans, Inc., 374 S.E.2d 385(N.C. 1988). If Jenkins can show an otherwise actionable misrepre-
sentation, he must show that he relied on this misrepresentation to his
detriment. Id. at 615. In this case, the scienter and reliance elements
are closely related. Jenkins clearly relied on representations that he
would be repatriated that were made in 1991 when he moved to
Singapore and accepted an Akzo position there. No evidence indi-
cates, however, that Akzo knew when it sent Jenkins to Singapore
that it would not repatriate him; Jenkins’s evidence that Akzo failed
to repatriate other Asia employees in the mid-1990s, after the Asian
operation had been up and running for several years, says nothing
about the state of mind of any relevant decisionmaker in 1991, when
the first representations were made to Jenkins regarding repatriation.
In turn, the later statements made by Jenkins’s supervisors in 1995
and 1996, to the effect that he would be repatriated as soon as a posi-
tion was available in the United States, were made when Jenkins was
already living in Singapore. Even if we assume that a reasonable
finder of fact could infer scienter from Jenkins’s allegedly
performance-based demotion shortly after these later statements were
made, Jenkins must nonetheless show that he relied on these state-
ments to his detriment. Johnson, 266 S.E.2d at 616. This he cannot
do on the summary judgment record before us.
JENKINS v. AKZO NOBLE COATINGS 11
At most, Jenkins could claim that he remained in Singapore in reli-
ance on a promise that he would be repatriated to a comparable job.
But the only evidence cited by Jenkins in support of this assertion is
two pages of testimony indicating that Jenkins wanted to come back
to the United States and asked to be repatriated several times. (J.A.
at 261-63.) What is missing is any evidence that, but for the allegedly
fraudulent statements, he would have quit and returned to the United
States or taken any other action. Thus, there is no evidence in the
record that would allow a reasonable finder of fact to determine that
Jenkins detrimentally relied on any statement for which there is any
evidence, even indirect, of scienter. In short, there are statements,
made in 1991, that may have induced reliance but were not made with
scienter; and there are statements made in 1996 that, even assuming
scienter could be inferred, lack evidence of detrimental reliance. What
is missing is a specific representation that a jury could conclude was
made with knowledge that it was false and on which Jenkins relied
to his detriment. Consequently, the district court properly granted
summary judgment in Akzo’s favor as to the fraudulent misrepresen-
tation claim.
Given Jenkins’s failure of proof, we need not decide whether
fraudulent misrepresentations that induce an employee to accept or
continue to hold a position must include a promise of employment for
a definite term in order to be actionable.5
5
The North Carolina Court of Appeals has held that no definite term
is needed in the fraudulent misrepresentation context. Liggett Group, Inc.
v. Sunas, 437 S.E.2d 674, 681 (N.C. Ct. App. 1993). In the absence of
a controlling decision of the North Carolina Supreme Court, the Sunas
decision is entitled to persuasive weight. Food Lion, Inc. v. Capital Cit-
ies/ABC, Inc., 194 F.3d 505, 512 (4th Cir. 1999). North Carolina law is
not without tension on this point, however: the Sunas court found itself
to be constrained by an earlier decision, Walton v. Carolina Tel. & Tel.
Co., 378 S.E.2d 427, 434 (N.C. Ct. App. 1989), which held that fraudu-
lent inducement claims do not allege wrongful termination and are there-
fore not barred by employment at will, and stated that "at first blush, we
are inclined to agree" with a rule contrary to Walton. Sunas, 437 S.E.2d
at 681.
12 JENKINS v. AKZO NOBLE COATINGS
IV.
This case brings into focus difficult policy questions regarding the
strength of the North Carolina employment at will presumption, the
need to protect the bargained-for expectations of employees and
employers, and the importance of bright-line rules governing the
employment relationship. The task of developing rules that strike the
appropriate balance between these sometimes competing objectives
is, however, assigned to the courts of North Carolina; in diversity
cases such as this one, we must apply the rules and principles devel-
oped by the relevant state’s courts. The North Carolina Supreme
Court has made it clear that an agreement for an indefinite term such
as the one in this case does not succeed in removing the presumption
of at will employment, and we are duty-bound to apply that policy-
based rule. Because the employment at will doctrine bars Jenkins’s
breach of contract claims and because Jenkins failed to create a genu-
ine issue of material fact as to the reliance and scienter elements of
his fraudulent misrepresentation claim, the district court’s grant of
summary judgment to Akzo must be affirmed.
AFFIRMED