| Realtime Data, LLC v Melone |
| 2013 NY Slip Op 01540 [104 AD3d 748] |
| March 13, 2013 |
| Appellate Division, Second Department |
| Realtime Data, LLC, Respondent, v Carl W.Melone, Appellant. |
—[*1] Venable LLP, New York, N.Y. (Michael J. Volpe, Michael C. Hartmere, and SumitSom of counsel), for respondent.
In an action for a judgment declaring, inter alia, that the defendant is not entitled to ashare of certain distributions made to unit holders of the plaintiff, in which the defendantcounterclaimed to recover damages for breach of contract and for a judgment declaringthat the defendant is entitled to 5% of the net distributions which the plaintiff makes toits unit holders, whether or not the distributions are related to a sale of some or all of theplaintiff's assets, the defendant appeals from stated portions of an order and judgment(one paper) of the Supreme Court, Westchester County (Scheinkman, J.), enteredDecember 8, 2011, which, inter alia, denied those branches of his motion which were for(a) summary judgment dismissing the second and third causes of action with prejudice,(b) summary judgment on his first counterclaim to recover damages for breach ofcontract, and (c) summary judgment on his second counterclaim for a judgment declaringthat he is entitled to 5% of the net distributions which the plaintiff makes to its unitholders, and granted those branches of the plaintiff's cross motion which were for (a)summary judgment dismissing the defendant's first and second counterclaims and (b)summary judgment on the third cause of action to the extent of declaring that "in theevent that said Plaintiff makes any net distributions to its unit holders, whichdistributions are based either upon the sale of all the assets of said Plaintiff or upon thesale of some of the assets of said Plaintiff, said Defendant would be entitled to thepayment of Bonus Compensation, subject to the other applicable terms and provisions"of the parties' agreement dated June 20, 2002.
Ordered that the order and judgment is modified, on the law, by deleting so much ofthe eighth decretal paragraph thereof as granted that branch of the plaintiff's cross motionwhich was for summary judgment dismissing so much of the defendant's secondcounterclaim as was for a judgment declaring that the defendant's bonus compensation is5% of certain distributions made by the plaintiff, and substituting therefor a provisiondenying that branch of the cross motion; as so modified, the order and judgment isaffirmed insofar as appealed from, without costs or disbursements, and the matter isremitted to the Supreme Court, Westchester County, for a trial on the issue of whetherthe defendant's share of any future distributions based upon the sale of all or some of theassets of the plaintiff would be 5% on the ground that he was discharged without cause,[*2]or would be limited to 3% on the ground that heresigned.
In March 2000, the plaintiff, Realtime Data, LLC (hereinafter RDL), hired thedefendant. The defendant entered into a series of written employment agreements withRDL, culminating in the agreement at issue dated June 20, 2002, which "supersede[d]and replace[d] any and all prior understandings, agreements or correspondence betweenthe parties relating thereto." Paragraph 4.2 of the agreement provided, in pertinent part:"Bonus Compensation: Upon the sale of all of the assets of the Company (a'Transaction'), the Company shall pay a bonus to the Employee . . . in anamount equal to 5.00% . . . of the net proceeds of the sale thereof. . . In the event of any net distributions to unit holders not based upon thesale of all the assets of the company, the bonus compensation of 5.00% of the totaldistribution will be paid to the Employee."
The agreement also contained "vesting" provisions, which provided, in pertinentpart, that the defendant's right to 3% of any amount distributed was "already fully vestedas of January 31, 2002," but the defendant's "right to the remaining 2% . . .shall only become vested . . . [i]n the event the Employee continues in theemployment of the Company until November 15, 2002 or is earlier terminated by theCompany without cause."
The defendant's employment was terminated on October 31, 2002. The defendantclaims that he was discharged without cause, because RDL was suffering financialdifficulties. RDL claims that he resigned.
In November 2010, RDL commenced the instant action, inter alia, for a judgmentdeclaring that the defendant was not entitled to any bonus compensation. The third causeof action sought, in the alternative, a judgment declaring that the defendant was onlyentitled to bonus compensation if a distribution is made based upon the sale of RDL'sassets. RDL further claimed that "[a]s of today's date, there has not been any sale" of itsassets.
The defendant, in his first counterclaim, sought to recover damages for breach ofcontract, alleging that he was entitled to 5% of all distributions to RDL's unit holders,whether or not based upon the sale of RDL's assets, including 5% of a distribution ofproceeds of a settlement of a specific patent infringement suit. The second counterclaimsought a judgment declaring that the defendant was entitled to 5% of all distributions toRDL's unit holders, whether or not based upon the sale of RDL's assets.
The defendant moved for summary judgment dismissing the complaint and on hiscounterclaims. RDL cross-moved for summary judgment on the complaint. In the orderand judgment appealed from, the Supreme Court granted that branch of RDL's crossmotion which was for summary judgment on its third cause of action to the extent ofdeclaring that the defendant was entitled to bonus compensation of an unspecified shareof distributions to unit holders of the net proceeds of the sale of either all or some ofRDL's assets, and dismissed the remaining causes of action without prejudice. The courtalso determined that the issue of whether the defendant was entitled to 3% of suchdistributions or 5% of such distributions was not a justiciable controversy, since no saleof all or part of RDL's assets had occurred.
The defendant acknowledges that if the language of a written contract is free ofambiguity, the court must determine its meaning as a matter of law based upon thewriting alone, without resort to extrinsic evidence (see W.W.W. Assoc. vGiancontieri, 77 NY2d 157, 163 [1990]; Yellow Book of N.Y., Inc. v Shelley, 74 AD3d 1333, 1335[2010]). Contrary to the defendant's contention, the language of paragraph 4.2 clearlylimits bonus compensation to a share of distributions based upon either the sale of all ofRDL's assets, or some of RDL's assets. Pursuant to the doctrine of "expressio unius estexclusio alterious," which means that the expression of one thing is the exclusion of theother (see Matter of Petersen vIncorporated Vil. of Saltaire, 77 AD3d 954 [2010]), the references to the sale ofassets implies that bonus compensation does not apply to distributions based uponsomething other than the sale of assets. If the parties had intended for bonuscompensation to be based upon all distributions, these references to the sale of assetswould have been unnecessary.[*3]
If the defendant was discharged without cause,once there is a distribution based upon a sale of assets, he is entitled to bonuscompensation of 5% of the net proceeds of the sale. However, if he resigned, once thereis a distribution based upon a sale of assets, he is entitled to bonus compensation of only3% of the distribution. The Supreme Court concluded that there was no justiciablecontroversy over whether the defendant was discharged without cause or resigned,because RDL had made no distributions based upon the sale of assets.
The courts may issue declaratory judgments declaring the rights of the parties onlywhere there is a justiciable controversy (see CPLR 3001; see e.g. Employers'Fire Ins. Co. v Klemons, 229 AD2d 513, 514 [1996]). There is no justiciablecontroversy warranting declaratory relief if the controversy is over a future event"beyond the control of the parties and may never occur" (New York Pub. InterestResearch Group v Carey, 42 NY2d 527, 531 [1977]; see Cuomo v Long Is.Light. Co., 71 NY2d 349, 354 [1988]). However, in the instant case, the future eventis in the control of RDL (seeJones v Town of Carroll, 57 AD3d 1379 [2008]), and is likely to occur (see Ford v CardiovascularSpecialists, P.C., 71 AD3d 1429 [2010]; Remsen Apts. v Nayman, 89AD2d 1014 [1982], affd 58 NY2d 1083 [1983]; Perdomo v Morgenthau, 18Misc 3d 709, 712 [2007], affd on other grounds 60 AD3d 435 [2009]).Therefore, the question of whether the defendant was discharged without cause orresigned constitutes a justiciable controversy, which must be resolved by the SupremeCourt after a trial.
The defendant's contention that RDL's causes of action for declaratory relief shouldbe dismissed with prejudice is without merit (see Lanza v Wagner, 11 NY2d 317,340 [1962], appeal dismissed 371 US 74 [1962], cert denied 371 US 901[1962]). The defendant's remaining contentions are without merit, or need not beaddressed in light of our determination. Skelos, J.P., Balkin, Dickerson and Hinds-Radix,JJ., concur.