The firm successfully defended a corporate defendant and its principals against allegations of, inter alia, unpaid severance pay and wrongful termination in an action filed in the Supreme Court of the State of New York, County of New York. The firm secured a favorable and speedy resolution for the client by dismissing the action in the pre-pleading stage.
This memorandum of law is submitted in support of the defendants' motion for(1) an order pursuant to CPLR 3211(a)(1),(5),(7) dismissing each and every cause of action in the plaintiff's complaint; and(2) an order pursuant to 22 N.Y.C.R.R. 1200.0, Rule 3.7, disqualifying Stropheus Law LLC, as counsel for the plaintiff in this action;together with such other and further relief that the Court may deem just and proper. The defendants refer to and incorporate here in the Complaint (Doc. No.2) and its exhibits, and the Affirmation of("VA ff.") submitted in support of the instant motion.
The plaintiff ("plaintiff" or " brings this action against the defendants to collect severance pay and damages under theories of breach of an employment agreement and violation of New York State Labor Law sections 190-200. The complaint claims that the plaintiff is entitled to severance pay under the terms of an Employment Agreement ("Agreement" or "Contract") allegedly made by and between him and the defendant Inc. ("R and that the failure of to remit such payment is a breach of the Contract and a violation of the Labor Law. The plaintiff also seeks damages premised upon claims of employment discrimination based on religion and promissory estoppel.
The claims, which are premised upon the Agreement and upon a violation of the Labor Law, should be dismissed for failure to state a cause of action. Moreover, the claims should be dismissed based upon documentary evidence. The allegations in the complaint, as well the documentary evidence, establish that the parties had not agreed to the essential terms of the purported Employment Agreement. Consequently, no enforceable contract exists between the parties. Absent an employment agreement, which the plaintiff alleges entitles him to severance pay upon his termination without cause, there is no contractual obligation for the defendants to remit severance pay to the plaintiff. Because the plaintiffs Labor Law claims are dependent upon a contractual obligation to receive severance pay, the Labor Law claim falls within the breach of contract claim.
Assuming, without conceding, that an Employment Agreement does exist, each and every cause of action should nevertheless be dismissed. Under an enforceable agreement the plaintiffs claims would be barred by the broad arbitration provisions of the Agreement, which require the plaintiff to submit and to settle these claims by arbitration with the American Arbitration Association. Moreover, since the purported contract was made between the defendant corporation and the plaintiff, no cause of action for breach of contract has been stated against the individual defendants. As for the plaintiffs Labor Law claims, the plaintiff, as an executive officer of the defendant corporation, has no standing to seek enforcement of severance pay under the statute. Under the Agreement, the plaintiff would be an executive officer of the defendant corporation. The applicable statute expressly excludes executives from the protection of its provisions.
Lastly, the plaintiffs attorney Stuart Weichsel, Esq. should be disqualified as counsel for the plaintiff in this action, as he is likely to be called as a witness.
On a motion to dismiss made pursuant to CPLR § 3211, a court should construe the pleadings liberally, accept the allegations as true, and afford the party opposing the motion the benefit of every possible inference to determine whether the facts alleged fit within a cognizable legal theory. See T. Lemme Mech., Inc. v. Schalmont Cent. School Dist., 52 A.D.3d 1006, 1008 (3d Dep't 2008). The Court may not resolve the merits of a claim by making factual determinations. Id. Pursuant to CPLR § 3211(a)(7), a party may move for judgment dismissing one or more causes of action asserted against him on the ground that the pleading fails to state a cause of action. See CPLR § 3211(a)(7) (emphasis added)
In determining whether a complaint is sufficient to withstand a motion to dismiss, the sole criterion is whether the pleading states a cause of action. See Cooper v. 620 Props. Assocs., 242 A.D.2d 359 (2d Dep't 1997) citing Weiss v. Cuddy & Feder, 200 A.D.2d 665 (2d Dep't 1994). If, from the four corners of the complaint, factual allegations are discerned which, taken together, manifest any cause of action cognizable at law, a motion to dismiss will fail. See 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 152 (2002); Cooper, 242 A.D.2d at 360. The court's function is to "'accept ... each and every allegation forwarded by the plaintiff without expressing any opinion as to the plaintiff's ability ultimately to establish the truth of these averments before the trier of the facts.'" See 219 Broadway Corp. v. Alexander's, Inc., 46 N.Y.2d 506, 509 (1979).
CPLR § 3211 (a)(1) allows a defendant to move for judgment dismissing one or more causes of action asserted against him on the ground that a defense is founded upon documentary evidence. See CPLR § 3211(a)(1). To prevail on a CPLR § 3211(a)(1) motion to dismiss, a defendant has the "burden of showing that the relied-upon documentary evidence 'resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim.'" See Fortis Fin. Servs. v. Fimat Futures USA, Inc., 290 A.D.2d 383, 383 (1st Dep't 2002) (emphasis added); accord Goshen v. Mutual Life Ins. Co. of N.Y, 98 N.Y.2d 314, 326 (2002); Leon v. Martinez, 84 N.Y.2d 83, 88 (1994); Blonder & Co. v. Citibank, N.A., 28 A.D.3d 180, 182 (1st Dep't 2006). Where documentary evidence definitively contradicts the plaintiff's factual allegations and conclusively disposes of the plaintiff's claim, dismissal pursuant to CPLR § 3211(a)(1) is warranted. See Prudential Wykagyl/Rittenberg Realty v. Calabria-Maher, 1 A.D.3d 422 (2d Dep't 2003); New York Community Bank v. Snug Harbor Sq. Venture, 299 A.D.2d 329 (2d Dep't 2002); see also Berardino v. Ochlan, 2 A.D.3d 556 (2d Dep't 2003) (concluding documentary evidence sufficiently defeated claim of nondisclosure).
A liberal interpretation is given to the term "documentary evidence" under CPLR § 3211 (a)(1). Gauthier v. Gabel, 44 Misc. 2d 887, 255 N.Y.S.2d 200 (N.Y. Sup. Ct. 1964), affd, 16 N.Y.2d 720 (1965); see also Bishop v. Maurer, 33 A.D.3d 497, 498 (1st Dep't 2006), aff'd on other grounds, 9 N.Y.3d 910 (2007) ("The (" court,  is not required to accept factual allegations, or accord favorable inferences, where the factual assertions are plainly contradicted by documentary evidence.") (emphasis added); see Stuart Lipsky, P.C. v. Price, 215 A.D.2d 102, 103 (1st Dep't 1995) allegations (" consisting of bare legal conclusions as well as factual claims either inherently or flatly contradicted by the documentary evidence are not entitled to [the benefit of every favorable inference]"); see also Suburban Broadcasting Corp. v. RCA Corp., 51 A.D.2d 785 (2d Dep't 1976) (finding documentary evidence in action to recover damages for breach of contract and negligence was a complete defense to several causes of action in complaint and complaint was properly dismissed).
To be considered "documentary," the evidence must be unambiguous and of undisputed authenticity. See Amsterdam Hosp. Grp., LLC v. Marshall-Alan Assocs., Inc., 120 A.D.3d 431, 432 (1st Dep't 2014). Documentary evidence may be in the form of emails. E.g. Langer v. Dadabhoy, 44 A.D.3d 425, 426, 843 N.Y.S.2d 262 (1st Dep't 2007).
This memorandum of law begins by addressing the complaint's Third Cause of Action for breach of the purported Employment Agreement, since the plaintiffs labor law claims for severance pay are dependent upon the existence of a valid contract and a breach thereof. The Third Cause of Action is premised upon a contractual claim for severance pay. As set forth below, this claim should be dismissed because it fails to state a cause of action and because the claim is definitively contradicted by documentary evidence. The allegations in the complaint, its exhibits, and the documentary evidence submitted with the instant motion, all demonstrate that an enforceable contract did not exist between the parties because none of contract's essential elements were agreed upon.
The elements of a cause of action for breach of contract are the existence of a contract, the plaintiffs performance under the contract, the defendant's breach of the contract, and resulting damage. See Elisa Dreier Reporting Corp. v. Global NAPs Networks, Inc., 84 A.D.3d 122, 127, 921 N.Y.S.2d 329 (2d Dept. 2011). Hence, central to a claim for breach of contract is the existence of a contract.
"In determining whether a contract exists, the inquiry centers upon the parties' intent to be bound, i.e. whether .t.here there was a 'meeting of the minds' regarding the material terms of the transaction." Cent. Fed. Sav., F.S.B. v. Nat'l Westminster Bank, U.S.A., 176 A.D.2d 131, 132, 574 N.Y.S.2d 18 (1st Dept. 1991). "[A]n enforceable contract requires mutual consent to its essential terms and conditions. If an agreement is not reasonably certain in its material terms, there can be no legally enforceable contract." Edelman v. Poster, 72 A.D.3d 182, 184, 894 N.Y.S.2d 398 (1st Dept 2010). In the case at bar, the parties did not agree to the material terms of the purported Employment Agreement, therefore, no enforceable contract exists
his Complaint, admits that material terms of the agreement were outstanding. Paragraph 10 of the Complaint alleges that "[t]he primary missing terms of the contract were stock options and revenue targets . . . targets...." ." [emphasis added] NYSCEF Dkt. No. 2, Complaint at 10. In paragraph 11, the Complaint alleges that "final terms regarding commissions and equity / stock options" were left "outstanding." Stock options, revenue targets, commissions and equity / stock options are all essential terms of the Agreement. And, in fact, the proposed Employment Agreement was never signed by the parties. Complaint at 2.
The revenue targets are essential terms of the Agreement because the failure of the plaintiff to meet these targets gives cause under the Agreement for the defendant to terminate its employment of the plaintiff. If the plaintiff is dismissed for cause, he is not entitled to severance pay.1 In relevant part, Section 8(c)(i) of the Employment Agreement provides that "[t]he company may terminate [plaintiffs] employment at any time with Cause . . . " (Dkt. No. 5). Included in the definition of Cause is an "Employee's failure to meet Revenue Targets as set out in Schedule A hereto." Dkt. No. 5, Section 1(d)(viii).
In an email exchanged between the attorneys who were negotiating the contract on behalf of the parties, the plaintiff 's attorney acknowledges and cautions the plaintiff that the structure of the Revenue Targets is a material term because it can give cause to the termination of the plaintiffs employment. The email from Mr. to plaintiff reads;
Paul - New comments ---- V2 added this provision - the Revenue Targets, and how they are structured is key. Schedule A must be reviewed closely. "or (viii) Employee's failure to meet the Revenue Targets as set out is Schedule A hereto." [emphasis added]
As explained in POINT V below, in a text to the plaintiff dated March 6, 2017 (Complaint at Exh. D), the defendants merely expressed their desire to agree on commissions and their willingness to sign the contract in its present form if the plaintiff would likewise do so, leaving the commission details to be added later. Id. The defendants did not expressly agree to all of the terms of the Contract as the plaintiff mistakenly alleges. Complaint at 11. Nevertheless, the Plaintiff did not sign the Agreement but stated that "commission & equity are the biggest pieces of this Contract and the reason I took the job." Id. A clear indication that commissions and equity were essential terms for the Agreement and that the plaintiff would defer signing the Agreement until these terms are negotiated. With these material terms "outstanding" (Complaint at 11), the Contract remained unsigned by both parties. Complaint at 2. Because there was no meeting of the minds on the material terms of the transaction, an enforceable contract did not exist. E.g., Nat'l Westminster Bank, U.S.A., 176 A.D.2d at 132.
Should this Court find that an Employment Agreement exists, then each and every cause of action is barred by the broad arbitration provision in the Agreement. In relevant part, Section 15 of the Agreement requires:
Any claim, controversy or dispute between [the parties] and the Company . . . arising out of or relating to [ employment, the cessation of said employment, or any matter relating to the foregoing (any "Controversy"), shall be submitted to and settled by arbitration before a single arbitrator in a form of the American Arbitration Associations . . . .
Complaint at Exh. C. Based upon this provision, the plaintiffs claims are barred and the plaintiff should be compelled to arbitrate them.
The plaintiff's First, Second and Sixth Cause of Action seek the recovery of unpaid wages, attorney fees, damages and pre-judgment interest under sections 190, 198 and 198 1-A of the New York State Labor Law. These claims should be dismissed for failure to state a cause of action because the applicable sections of the Labor Law expressly exclude corporate executives, such as the plaintiff, from the wage enforcement provisions of the statute.
Assuming, arguendo, an employment agreement exists whereby the plaintiff is entitled to severance pay, the provisions of the alleged agreement clearly demonstrates that the plaintiff was employed in an executive capacity with an annual base salary of $150,000. Complaint at Exhs. B and C. First, the agreement is titled as an "Executive Employment Agreement." Id. Moreover, Section 3(a) of the Agreement states that the plaintiff is to be employed by the defendant corporation as its "Head of Sales" whose responsibilities and duties include "managing the Company's sales." Id. Section 4(c) of the Agreement further establishes a "Quarterly Executive Gross Revenue Bonus Pool" to be equally divided amongst the defendant corporation's "'CLevel' executive team" which includes the plaintiff. Id.
The Court is reminded that the plaintiff does not seek recovery of regular pay. Instead, the plaintiff claims he is entitled to severance pay under the provisions of the alleged Employment Agreement and that the defendant has withheld the severance pay in violation of Article 6 of the Labor Law. Complaint at 34, 35, 37. Severance pay, or separation pay, is a wage supplement as defined in section 198-c of the Labor Law. Labor Law §§ 190 (1), 198-c(2).
It is well settled that where, as here, a plaintiff is employed in an executive, administrative, or professional capacity and earned in excess of $900 per week the Labor Law does not afford the Plaintiff any protection regarding his "wage supplement" claims. Fraiberg v. 4Kids Entertainment, Inc., 75 A.D.3d 580 (2d Dept., 2010); J.K. Dental Lab Servs., Inc. v. Manno, 38 Misc.3d 1227(A), 967 N.Y.S.2d 867 (Sup. Ct. 2013); Rosenfeld v. Tuleh LLC, 2009 N.Y. Misc. LEXIS 4128 (Sup. Ct. 2009); Garg v. Wyckoff Hghts. Med. Ctr., Inc., 42 Misc.3d 1211(A), 984 N.Y.S.2d 631 (Sup. Ct. 2013). Accordingly, all of the plaintiffs claims for severance pay, attorney fees, damages and pre-judgment interest which are premised upon Article 6 of the Labor Law should be dismissed.
The plaintiffs Fourth Cause of Action seeks damages premised upon the theory of Promissory Estoppel. To state a cause of action for promissory estoppel,the complaint must allege a clear and unambiguous promise,reasonable and foreseeable reliance by the party to whom the promise was made, and an injury sustained in reliance on the promise. Rogers v. Town of Islip, 230 A.D.2d 727, 727, 646 N.Y.S.2d 158 (2d Dept. 1996). In the case at bar,the allegations in the complaint and documentary evidence show that there were no clear and unambiguous promises made by the defendants or that the plaintiff relied on any promise.
The Complaint alleges that the plaintiff began working for on February 14, 2017 (Complaint at 13) and that the defendants had promised severance pay as affirmed by a text from the defendants saying that all is agreed upon except revenue targets and stock options/equity (Complaint at 52). Filed with the Complaint, as Exhibit D, is a string of text messages, purportedly exchanged between the defendants and the plaintiff. These text messages plainly contradict the plaintiffs allegations that the defendants promised severance pay.
First, a reading of the text message dated March 6, 2017 shows that there was no clear and unambiguous promise for severance pay made by the defendants. Rather, the defendants merely expressed their desire to agree on commissions and their willingness to sign the contract at that time if the plaintiff also wanted to do so, with the details of the commissions being added later. The relevant March 6 text reads:
[retracted] wants to agree on the commission. We can sign the contract now and add commission details later if you want.
Complaint at Exh. D. In response, the Plaintiff did not express a willingness to sign the contract at that time. Id. Instead the plaintiff abstained from signing the agreement with the explanation that "commission & equity are the biggest pieces of this contract and the reason I took the job." Id. Clearly, the plaintiffs response and failure to sign the agreement shows that he was not willing to be bound by the employment agreement until he was assured a satisfactory share of commission and equity.
Moreover, as alleged in the Complaint, the Plaintiff continued to work for up to the date of his dismissal on April 13, 2017 without either party signing the contract and while the essential terms of commissions, equity/stock options and revenue targets remained "missing" or "outstanding." Complaint at 2, 16, 10, 11, 12. The plaintiff should not and cannot be permitted to invoke the severance pay provision of the agreement when, having the opportunity to sign the contract with its severance pay provision, he failed to do so; instead he withheld his acceptance of the agreement in its present form until the terms of commission and equity are settled.
Further, the allegations in the complaint and the exhibits submitted therewith clearly contradict the plaintiffs allegation that he relied upon the defendants' defendants promise for severance pay. As mentioned above, the plaintiff began working for on February 14, 2017 approximately one month before the aforementioned March 6 text in which the plaintiff claims the defendants affirmed their promise for severance pay
Moreover, the plaintiffs claim that he left his job based upon his reliance on the defendant's promise of severance pay is clearly contradicted by the purported agreement. Complaint at 53. Section 3(b) of the Employment Agreement permits the plaintiff to remain an employee of Inc. Dkt. No. 5; Complaint. The plaintiff required the insertion of this provision in the contract so that he may continue to work for Inc. without breaching any duty of loyalty or fiduciary duty owed to Id
In light of the foregoing, the plaintiff's claim for promissory estoppel should be dismissed because the allegations of promise, reliance and damages are clearly contradicted by the complaint and documentary evidence.
The plaintiffs Fifth Cause of Action seeks recovery under the New York State and New York City Human Rights Act for employment discrimination based on religion. These claims should be dismissed for failure to state a cause of action. The plaintiff has failed to set forth any facts to demonstrate that he suffered any adverse employment action or that any adverse employment action occurred under circumstances giving rise to an inference of discrimination on the basis of his religion. Robbins v. City of New York, 2017 N.Y. Misc. LEXIS 4415 at *3, 2017 Slip Op 32422(U) (Sup Ct. 2017) [citing Forrest v. Jewish Guild for the Blind, 3 N.Y.3d 295, 786 N.Y.S.2d 382 (2004)]. Bare conclusory statements are insufficient to state a cause of action for discrimination under either the New York State Human Rights Law or the New York City Human Rights Law. Robbins at *3.
The defendants' motion for an order disqualifying the plaintiffs attorney Stuart Weichsel should be granted. Mr. Weichsel has played a significant role in the negotiation and drafting of the subject Employment Agreement on behalf of the plaintiff and was an active participant in the disputed transaction. Aff. Therefore, it is likely that he will be a witness on significant issues of fact. Rule 3.7 of the Rules of Professional Conduct prohibits a lawyer from acting "as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact" with few exceptions that are not applicable. 22 NYCRR 1200.0, Rule 3.7(b). Zaccaro v. Bowers, 2 Misc.3d 733, 771 N.Y.S.2d 332 (Civ. Ct. 2003); Matter of Coleman, 22 Misc.3d 830 (Sur. Ct 2006); 16 Maujer St. HDFC v. Titus, 2007 N.Y. Misc. LEXIS 477 at *10 (Civ. Ct. Kings Cty 2007)
The defendants' motion should be granted in whole or in part.
Joshua Levin-Epstein, Esq.
1 Penn Plaza, Suite 2527
New York, NY 10119
Attorney for Defendants