| Lawrence v Kennedy |
| 2012 NY Slip Op 03604 [95 AD3d 955] |
| May 8, 2012 |
| Appellate Division, Second Department |
| Lawrence S. Lawrence, Appellant, v Michael F. Kennedyet al., Respondents. |
—[*1] Lawrence & Walsh, P.C., Hempstead, N.Y. (Laura M. Dilimetin of counsel), for respondentMichael F. Kennedy, and Ira Bierman, Syosset, N.Y., for respondent Lawrence and Walsh, P.C.(one brief filed).
In an action, inter alia, to recover damages for breach of an employment agreement,commenced by service of a summons and complaint and by notice of motion for summaryjudgment in lieu of complaint pursuant to CPLR 3213, the plaintiff appeals, as limited by hisbrief, from so much of an order of the Supreme Court, Nassau County (Bucaria, J.), datedSeptember 22, 2011, as denied his motion for summary judgment in lieu of complaint pursuant toCPLR 3213 seeking payment of his "Annual Fixed Salary" pursuant to an employmentagreement, granted that branch of the cross motion of the defendant Lawrence and Walsh, P.C.,which was pursuant to CPLR 3211 (a) (7) to dismiss the third cause of action for an accounting,and granted that branch of the cross motion of the defendant Michael F. Kennedy which waspursuant to CPLR 3211 (a) (1) to dismiss the complaint insofar as asserted against him.
Ordered that the order is modified, on the law, by deleting the provision thereof granting thatbranch of the cross motion of the defendant Lawrence and Walsh, P.C., which was pursuant toCPLR 3211 (a) (7) to dismiss the third cause of action for an accounting and substituting therefora provision denying that branch of the cross motion; as so modified, the order is affirmed insofaras appealed from, without costs or disbursements.
The plaintiff, Lawrence S. Lawrence, was a founding partner of the defendant law firmLawrence and Walsh, P.C. (hereinafter the firm), and had been associated with the firm since1972. In 2008, the plaintiff and the firm agreed that the firm would acquire the plaintiff's interestin the firm, and that the plaintiff would continue his association with the firm as an employee, inan "of counsel" capacity. As a result, they entered into two related agreements, a "Stock andRelated Asset Purchase Agreement" and an "Employment Agreement."
Pursuant to the Employment Agreement, the firm agreed to employ the plaintiff for a term of4½ years, terminating on June 30, 2012. The Employment Agreement also provided thatthe plaintiff would receive two components of annual compensation, an "Annual Fixed Salary"and an "Annual Performance Based Salary." In relevant part, the Employment Agreement furtherprovided that "for purposes of enforcement . . . [the Annual Fixed Salary] shall bedeemed an [*2]instrument for the payment of money, provided,however, that this provision shall not constitute a waiver of any defenses or counterclaims thefirm may have to the enforcement of this provision." In September 2010 the plaintiff suffered astroke after undergoing surgery, which left him unable to work. According to the plaintiff, thefirm failed to make several payments of his Annual Fixed Salary in 2010 and early January 2011,when the firm allegedly terminated his employment in violation of the Employment Agreement.
Thereafter, the plaintiff commenced this action by serving a summons and verifiedcomplaint, and a notice of motion for summary judgment in lieu of complaint pursuant to CPLR3213 seeking payment of the Annual Fixed Salary component of his compensation. In theverified complaint, the plaintiff asserted causes of action against the firm and its managingmember, the defendant Michael F. Kennedy, in his individual capacity, alleging breach ofcontract due to nonpayment of the Annual Fixed Salary, breach of contract due to nonpayment ofthe Annual Performance Based Salary, and for an accounting. The Supreme Court, inter alia,denied the plaintiff's motion for summary judgment in lieu of complaint, granted that branch ofthe firm's cross motion which was pursuant to CPLR 3211 (a) (7) to dismiss the third cause ofaction for an accounting, and granted that branch of Kennedy's cross motion which was pursuantto CPLR 3211 (a) (1) to dismiss the complaint insofar as asserted against him.
Pursuant to CPLR 3213, a party may commence an action by motion for summary judgmentin lieu of complaint when the action is "based upon an instrument for the payment of money onlyor upon any judgment." An instrument is considered to be for the payment of money only if itcontains an unconditional promise to pay a sum certain over a stated period of time (seeWeissman v Sinorm Deli, 88 NY2d 437, 444 [1996]; Bloom v Lugli, 81 AD3d 579, 580 [2011]). "[A] document comeswithin CPLR 3213 if a prima facie case would be made out by the instrument and a failure tomake the payments called for by its terms" (Weissman v Sinorm Deli, 88 NY2d at 444[internal quotation marks omitted]). However, "[t]he instrument does not qualify if outside proofis needed, other than simple proof of nonpayment or a similar de minimis deviation from the faceof the document" (id.; see Ro &Ke, Inc. v Stevens, 61 AD3d 953, 953 [2009]; Stallone v Rostek, 27 AD3d 449, 450 [2006]).
Here, the Supreme Court properly denied the plaintiff's motion for summary judgment in lieuof complaint. With respect to the Annual Fixed Salary, the Employment Agreement provides "forpurposes of enforcement . . . [the Annual Fixed Salary] shall be deemed aninstrument for the payment of money, provided, however, that this provision shall not constitutea waiver of any defenses or counterclaims the firm may have to the enforcement of thisprovision." This provision, which is part of an integrated employment contract, does not containan unconditional promise to pay as the firm did not waive its right to assert defenses andcounterclaims. Additionally, the firm's obligation to pay is interwoven with and subject to theplaintiff's performance of his employment duties in accordance with the terms of theEmployment Agreement. Consequently, outside proof would be required to determine if theplaintiff satisfied his obligations pursuant to the Employment Agreement (see Weissman vSinorm Deli, 88 NY2d at 444; Bloom v Lugli, 81 AD3d at 581; Haug v MetalCity Findings Corp., 47 AD2d 837, 838 [1975]).
The Supreme Court, however, improperly granted that branch of the firm's cross motionwhich was pursuant to CPLR 3211 (a) (7) to dismiss the accounting cause of action assertedagainst it. "The right to an accounting is premised upon the existence of a confidential orfiduciary relationship and a breach of the duty imposed by that relationship respecting property inwhich the party seeking the accounting has an interest" (Palazzo v Palazzo, 121 AD2d261, 265 [1986]; see Chalasani v State Bank of India, N.Y. Branch, 235 AD2d 449, 450[1997]). "A fiduciary relationship[,] 'whether formal or informal, "is one founded upon trust orconfidence reposed by one person in the integrity and fidelity of another . . . [and]might be found to exist, in appropriate circumstances, between close friends . . . oreven where confidence is based upon prior business dealings" ' " (AHA Sales, Inc. v Creative Bath Prods.,Inc., 58 AD3d 6, 21 [2008], quoting Apple Records v Capitol Records, 137AD2d 50, 57 [1988], quoting Penato v George, 52 AD2d 939, 942 [1976]). Although anemployee-employer relationship which only provides for the sharing of profits, but not losses,does not create a fiduciary obligation on the part of the employer (see Vitale v Steinberg,307 AD2d 107, 108 [2003]; Michnick v Parkell Prods., [*3]215 AD2d 462, 462-463 [1995]), here, the plaintiff also alleged thathe was a founding partner of the firm and that his longstanding relationship with the firm datedback to 1972. He further alleged that he transferred his 50% interest in the firm on the conditionthat the firm enter into the Employment Agreement under which the firm agreed to, among otherthings, share with him a percentage of the gross revenues generated from his client base as part ofhis compensation. Moreover, the plaintiff allegedly relied upon the firm to collect and determinethe amount of those revenues. Accordingly, the plaintiff stated a cause of action for anaccounting against the firm (seeLoGerfo v Trustees of Columbia Univ. in City of N.Y., 35 AD3d 395, 397-398 [2006];El-Khoury v Karasik, 265 AD2d 372, 373-374 [1999]).
Contrary to the plaintiff's contentions, the Supreme Court properly granted that branch ofKennedy's cross motion which was pursuant to CPLR 3211 (a) (1) to dismiss the complaintinsofar as asserted against him. In this regard, the Employment Agreement was entered into bythe firm and the plaintiff, and Kennedy executed the agreement on behalf of the firm in hiscapacity as its managing member. Consequently, the plaintiff cannot maintain this action againstKennedy, in his individual capacity, for breach of the Employment Agreement since he had nocontractual relationship with Kennedy, and was not in privity with him (see Crown Assoc., Inc. v Zot, LLC, 83AD3d 765, 769 [2011]; SimplexGrinnell v Ultimate Realty, LLC, 38 AD3d 600, 600 [2007]; M. Paladino, Inc. vLucchese & Son Contr. Corp., 247 AD2d 515, 515 [1998]). Moreover, the EmploymentAgreement contained an exculpatory clause precluding the imposition of personal liability uponKennedy on any legal or equitable grounds based upon the Employment Agreement, whichwould be a bar to the plaintiff's claims against Kennedy (see Colnaghi, U.S.A. v JewelersProtection Servs., 81 NY2d 821, 823 [1993]; Sommer v Federal Signal Corp., 79NY2d 540, 554 [1992]). The plaintiff's allegations of a special relationship with Kennedy, andthat Kennedy was grossly negligent or acted willfully, in bad faith, or with reckless disregard ofhis duties constitute bare legal conclusions, and thus do not warrant denial of that branch ofKennedy's cross motion which was to dismiss the complaint insofar as asserted against him (see Baquerizo v Monasterio, 90 AD3d587, 587-588 [2011]; SNS Bank vCitibank, 7 AD3d 352, 355 [2004]).
The plaintiff's remaining contentions are without merit. Dillon, J.P., Balkin, Eng andChambers, JJ., concur. [Prior Case History: 34 Misc 3d 711.]