Keystone Automotive Industries, Inc. v. Montalvo et al

Filing 50

ORDER granting 37 Motion to Dismiss for Failure to State a Claim. For the reasons set forth herein, the Court grants plaintiff's motion to dismiss in its entirety. SO ORDERED. Ordered by Judge Joseph F. Bianco on 7/24/2014. (Gibaldi, Michael)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 14-cv-1637(JFB)(AKT)
_____________________

KEYSTONE AUTOMOTIVE INDUSTRIES, INC.,
Plaintiff,
VERSUS

FELIX MONTALVO, WHEELXCHANGE, LLC,
Defendants.
___________________
MEMORANDUM AND ORDER
July 24, 2014
___________________

JOSEPH F. BIANCO, District Judge:

“at-will” employee who may be fired with
or without cause.

Plaintiff
Keystone
Automotive
Industries (“plaintiff”) has sued defendants
Felix
Montalvo
(“Montalvo”)
and
Wheelxchange1 alleging that Montalvo
breached a restrictive covenant and other
provisions of an Asset Purchase Agreement
(“the APA”) under which Montalvo sold a
wheel repair business to plaintiff. Montalvo
remained in the business and became
plaintiff’s employee, though the parties
dispute whether his employment was “atwill.” Plaintiff fired Montalvo in March
2014, and Montalvo now counter-claims that
the termination was done in bad faith and in
violation of the APA, which he argues
required termination to be “for cause.”
Plaintiff has moved to dismiss all counterclaims,
arguing
that
the
APA
unambiguously states that Montalvo is an

Having
reviewed
the
parties’
submissions and the text of the APA, and
heard oral argument, the Court concludes
that the APA unambiguously creates an “atwill” relationship between Montalvo and
plaintiff, such that plaintiff could lawfully
terminate him for any reason, either “for
Cause” or “without Cause,” in the words of
paragraph 10.9 of the APA. Under New
York law, an at-will employee has no cause
of action based on breach of an employment
contract or the implied covenant of good
faith and fair dealing, and accordingly, those
counter-claims are dismissed. The Court
grants plaintiff’s motion in its entirety,
because all of plaintiff’s counter-claims are
dependent on the breach of contract and
implied covenant claims.

1

Wheelxchange filed no counter-claims and has not
participated in the litigation of this motion.

I. BACKGROUND

1, 2016, then the rental amount
payable to the landlord under the
Lease shall be reduced . . . .
Between November 1, 2013 and
November 1, 2016, . . .
[Montalvo’s] salary shall [not] be
reduced, nor shall [he] be placed in
a lesser position of status and
authority, and [he] shall . . . be
eligible for merit-based salary
increases consistent with such
increases provided to similarly
situated management personnel.
Nothing contained in this
paragraph is intended to alter the
at-will employment relationship
between
[plaintiff]
and
[Montalvo]. In the event . . .
[Montalvo’s]
employment
is
terminated . . . without Cause . . .
the right of [plaintiff] as “Tenant”
under the Lease to exercise the
Rent Reduction shall terminate and
be of no force or effect.

A. Factual Background
The following facts are taken from the
counter-claims, or were admitted in
Montalvo’s answer. The Court assumes
these facts to be true for the purpose of
deciding this motion, and construes them in
the light most favorable to Montalvo, the
non-moving party.
Before November 1, 2013, Montalvo
was a partial owner of a wheel repair and
refurbishing business known as “Wheel Fix
It,” located in Freeport, New York. (Compl.
¶ 10; Def. Ans. ¶ 10.) The complaint and
the counter-claims allege that Montalvo and
other parties sold Wheel Fix It to plaintiff
via the APA on November 1, 2013. (Compl.
¶ 14; Def. Ans. ¶ 14; Def. Counter-Cl. ¶ 5.)
The parties agree that plaintiff purchased
Wheel Fix It and a related entity for
$7,764,000, but they dispute what if any
portion of this amount went to Montalvo.

(Ex. A to Compl. ¶ 10.9 (emphasis added).)

As part of the APA, Montalvo remained
employed by plaintiff, in the role of
Operations Manager. (Compl. ¶ 17; Def.
Ans. ¶ 17.) Paragraph 10.9 of the APA is
entitled “Employment Matters” and, with
references to non-parties removed, reads in
pertinent part:

The other APA provision relevant to this
motion is paragraph 11.3.6, which is
specifically referenced in paragraph 10.9
(above) and defines “Cause” for termination.
It lists such conduct as “a felony or other
crime involving moral turpitude” and
“willful misconduct or fraud,” but nowhere
states that these are the only permissible
grounds for termination, or that termination
may only be for cause. Paragraph 11.3.6
does not address termination “without
Cause,” which is explicitly included in
paragraph 10.9, as shown above.

As of the Closing, [plaintiff] will
employ the Shareholders on an atwill basis at the following annual
starting salaries: . . . [Montalvo] at
$80,000
as
Operations
Manager . . . . The Shareholders
will be eligible for an annual bonus
. . . . In the event that . . .
[Montalvo] (a) resigns from
employment . . . , or (b) is
terminated for Cause (as defined in
Section
11.3.6
of
this
Agreement) . . . prior to November

According to Montalvo, he was
terminated by plaintiff on March 11, 2014.
(Def. Counter-Cl. ¶ 13.) Previously, he
alleges that plaintiff terminated the
employment of approximately 30 other
2

Wheel Fix It workers in order to save
money, but this only caused revenues to
decline even further.
(Id. ¶¶ 8, 10.)
Montalvo contends that his firing was
another attempt by plaintiff to “reduce its
remaining monetary obligations.” (Id. ¶ 13.)
Plaintiff’s underlying suit against Montalvo
alleges that he breached a restrictive
covenant and other provisions of the APA.

than conclusions, are not entitled to the
assumption of truth.” Id. at 679 (explaining
that though “legal conclusions can provide
the framework of a complaint, they must be
supported by factual allegations”). Second,
if a complaint contains “well-pleaded factual
allegations, a court should assume their
veracity and then determine whether they
plausibly give rise to an entitlement to
relief.” Id. A claim has “facial plausibility
when the plaintiff pleads factual content that
allows the court to draw the reasonable
inference that the defendant is liable for the
misconduct alleged. The plausibility
standard is not akin to a ‘probability
requirement,’ but it asks for more than a
sheer possibility that a defendant has acted
unlawfully.” Id. at 678 (quoting and citing
Twombly, 550 U.S. at 556-57 (internal
citation omitted)).

B. Procedural History
Plaintiff filed its complaint on March 12,
2014. Montalvo answered and filed several
counter-claims on April 10, 2014. Plaintiff
moved to dismiss all counter-claims on May
13, 2014, and Montalvo responded in
opposition on June 13, 2014. Plaintiff
replied in further support of its motion on
June 27, 2014, and the Court heard oral
argument on July 17, 2014.

Where a motion to dismiss presents itself
before the court, a court may examine the
following: “(1) facts alleged in the
complaint and documents attached to it or
incorporated in it by reference, (2)
documents ‘integral’ to the complaint and
relied upon in it, even if not attached or
incorporated by reference, [and] (3)
documents or information contained in
defendant’s motion papers if plaintiff has
knowledge or possession of the material and
relied on it in framing the complaint.” Nasso
v. Bio Reference Labs., 892 F. Supp. 2d 439,
446 (E.D.N.Y. 2012) (internal quotation
marks and citation omitted). The parties do
not dispute that the Court may consider the
text of the APA, which plaintiff attached as
an exhibit to the complaint and which
Montalvo cited throughout his counterclaims.

II. STANDARD OF REVIEW
In reviewing a motion to dismiss
pursuant to Rule 12(b)(6), the Court must
accept the factual allegations set forth in the
complaint as true and draw all reasonable
inferences in favor of the plaintiff.
Operating Local 649 Annuity Trust Fund v.
Smith Barney Fund Mgmt. LLC, 595 F.3d
86, 91 (2d Cir. 2010). “In order to survive a
motion to dismiss under Rule 12(b)(6), a
complaint must allege a plausible set of facts
sufficient ‘to raise a right to relief above the
speculative level.’” Id. (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555
(2007)).
The Supreme Court clarified the
appropriate pleading standard in Ashcroft v.
Iqbal, setting forth two important
considerations for courts deciding a motion
to dismiss. 556 U.S. 662 (2009). The Court
instructed district courts to first “identify[ ]
pleadings that, because they are no more

III. DISCUSSION
Montalvo asserted seven counter-claims,
but has since withdrawn his fifth and sixth
3

causes of action. The parties agree that
Montalvo’s fourth and seventh claims—
which seek a declaratory judgment and
attorney’s fees—are dependent on his first
three claims, based upon breach of contract
and the implied covenant of good faith and
fair dealing.

intended to alter the at-will employment
relationship.”
Notwithstanding this disclaimer, in
Montalvo’s view, the three-year term
mentioned in the salary and status
guarantees makes the APA ambiguous
concerning whether he was employed atwill, and makes dismissal inappropriate
because the trier of fact must determine the
meaning of the APA by examining the
totality of the circumstances. However,
Montalvo’s argument fails for two reasons.
First, the APA unambiguously provides that
Montalvo was an at-will employee. Second,
even in the absence of that language, the
APA presumptively provides for at-will
employment, and Montalvo has not rebutted
that presumption.

Thus, the discussion turns initially to
Montalvo’s first three claims, the sufficiency
of which rest on the question whether
Montalvo was an at-will employee. If
Montalvo was an at-will employee, then his
employment was “‘terminable at any time
by either party,’” Baron v. Port Auth. of N.Y.
& N.J., 271 F.3d 81, 85 (2d Cir. 2001)
(quoting Sabetay v. Sterling Drug, Inc., 69
N.Y.2d 329, 333 (1987)), and his breach of
contract claim must fail as a matter of law.
Gencarelli v. Cablevision Sys. Corp., No.
10-cv-04092 (JFB)(ARL), 2012 WL
1031441, at *3 (E.D.N.Y. Mar. 27, 2012)
(collecting cases). Ultimately, the Court
concludes that the plain language of the
APA, as well as the presumption of at-will
employment under New York law, which
Montalvo failed to rebut, made him an atwill employee.

1. Contract language
“Under New York law, which the parties
agree is controlling here, the initial question
for the court . . . with respect to a contract
claim is whether the contract is
unambiguous with respect to the question
disputed by the parties.” Law Debenture
Trust Co. of N.Y. v. Maverick Tube Corp.,
595 F.3d 458, 465 (2d Cir. 2010) (internal
quotation marks and citation omitted). “The
matter of whether the contract is ambiguous
is a question of law for the court.” Id. Thus,
to the extent that Defendant argues that the
meaning of “at-will” is one for resolution by
the trier of fact, that argument misses the
prior question whether the term is
ambiguous in the first place.2

A. Breach of Contract
Montalvo’s first counter-claim, for
breach of contract, alleges that the APA
guaranteed him a three-year term of
employment. (Def. Counter-Cl. ¶ 15.) This
allegation is based on the sentence in
paragraph 10.9, quoted above, which states
that Montalvo’s status and salary would not
be reduced from November 1, 2013, until
November 1, 2016, and that he would be
eligible for merit-based salary increases. (Id.
¶ 16.) This sentence does not explicitly
purport
to
guarantee
Montalvo’s
employment during that time period, and in
fact, the very next sentence states that
“[n]othing contained in this paragraph is

The Second Circuit’s decision in Jones v. Dunkirk
Radiator Corp., on which defendant relies, is not to
the contrary. There, the Second Circuit cited New
York law for the proposition that in at-will cases, the
trier of fact must consider “the totality of the
circumstances, including the writings, the situation,
the course of conduct of the parties and their
objectives.” 21 F.3d 18, 22 (2d Cir. 1994). Later,
however, in Baron, the Second Circuit clarified that
2

4

“No ambiguity exists where the contract
language has a definite and precise meaning,
unattended by danger of misconception . . .
and concerning which there is no reasonable
basis for a difference of opinion.” Id. at 467
(internal quotation marks and citations
omitted). Here, the words used in the
APA’s employment provision have a
definite and precise meaning: that Montalvo
was an employee who could be fired at the
will of his employer, either for cause or
without it. Not only does the employment
provision’s opening sentence state that
Montalvo would be employed “on an at-will
basis,” it also includes the disclaimer that
“[n]othing contained in this paragraph is
intended to alter the at-will employment
relationship.” The same paragraph also
notes that Montalvo could be terminated
either “for Cause” or “without Cause.” The
Court concludes that this explicit language
leaves no reasonable basis for a difference
of opinion about its meaning.3

Montalvo argues that “at-will” is not a
term understood by laymen, and that it
would only have been unambiguous if the
APA specified that “at-will” meant
termination “at any time and for any
reason.”
Although many cases have
involved clauses that amplify the meaning of
“at-will” in this manner, see, e.g., Lobosco
v. N.Y. Telephone Co./NYNEX, 96 N.Y.2d
312, 315 (2001), Montalvo has not cited a
single case suggesting that the absence of
such language renders an explicit at-will
provision (including those with references to
termination “for Cause” and “without
Cause”) ambiguous.4 See Law Debenture
Trust Co., 595 F.3d at 467 (“Language
whose meaning is otherwise plain does not
become ambiguous merely because the
parties urge different interpretations in the
litigation.” (internal quotation marks and
citation omitted)). The Court has identified
no New York case addressing this point, but
courts around the country have upheld
similar at-will disclaimers which did not
include the “at any time and for any reason”
language. See, e.g., Neung Kang v. PB
Fasteners, 268 F. App’x 545, 547 (9th Cir.
2008) (concluding that employment
remained at will where disclaimer stated that

“[a]lthough this remains the case generally, where a
sufficiently unambiguous disclaimer, conspicuously
placed . . . such that the employee reasonably could
be expected to read it is at issue, the totality of the
circumstances inquiry is unnecessary; the implied
contract claim may be dismissed as a matter of law.”
271 F.3d at 85. In other words, the Court’s
conclusion that the at-will employment provision is
unambiguous means that dismissal is appropriate
without consideration of circumstances beyond the
four corners of the APA.

Ellicott Sq. Ct. Corp. v. Mountain Valley Indem. Co.,
634 F.3d 112, 120 (2d Cir. 2011) (quoting Mazzola v.
Cnty. of Suffolk, 533 N.Y.S.2d 297, 297 (N.Y. App.
Div. 1988) (further citation omitted)).
These
definitions support the Court’s conclusion that “atwill” as used in paragraph 10.9, combined with the
contextual references to termination for and without
cause, unambiguously meant that plaintiff could fire
Montalvo for any reason.

Defendant has not supported his argument that “atwill” is susceptible to multiple meanings, while
plaintiff has cited the Merriam-Webster definition,
which states that “at will” means “as one wishes; as
or when it pleases or suits oneself.” MerriamWebster.com (July 15, 2014, 2:40 p.m.),
http://www.merriam-webster.com/dictionary/at%20
will; see also Cambridge Dictionaries Online (July
15,
2014,
2:42
p.m.),
http://dictionary.
cambridge.org/us/dictionary/american-english/at-will
(defining “at will” as “when you want to”). “‘[I]t is
common practice for the courts of [New York] State
to refer to the dictionary to determine the plain and
ordinary meaning of words to a contract.’” 10
3

4

The three cases cited by Montalvo in this section of
his brief merely suggest that New York courts
sometimes find employment contracts ambiguous as
to duration. None of these cases involved an explicit
“at-will” provision. See TSR Consulting Servs. v.
Steinhouse, 699 N.Y.S.2d 375 (N.Y. App. Div.
1999); Levey v. Leventhal & Sons, 647 N.Y.S.2d 597
(N.Y. App. Div. 1996); Myers v. Coradian Corp.,
459 N.Y.S.2d 929 (N.Y. App. Div. 1983).

5

employer was “an at will employer” and that
“an employee may be terminated without
cause”); Cutter v. Lincoln Nat’l Life Ins.
Co., 794 F.2d 352, 355 (8th Cir. 1986)
(“The ‘with or without cause’ provision
essentially
makes
the
employment
agreement an ‘at will’ employment
contract.”); Grove v. Loomis Sayles & Co.,
L.P., 810 F. Supp. 2d 146, 149-50 (D.D.C.
2011) (concluding that employment
remained at will where disclaimer stated
“your employment with Loomis Sayles is
‘at-will’” and “all employment relationships
with Loomis Sayles are on an at-will
basis”); Schlichtig v. Inacom Corp., 271 F.
Supp. 2d 597, 604 (D.N.J. 2003) (“[W]here
an employee has executed a separate written
contract in which he has expressly agreed
that his employment can be terminated ‘at
will,’ it is that agreement . . . which
establishes the employee’s ‘reasonable
expectations’ concerning the nature of his
employment relationship.”); Bowser v.
McDonald’s Corp., 714 F. Supp. 839, 84142 (S.D. Tex. 1989) (concluding that
employment remained at will where
disclaimer in “the employee handbook at
issue expressly state[d] that employment
[was] ‘at-will’”); Abney v. Baptist Med.
Ctrs., 597 So.2d 682, 683 (Ala. 1992)
(concluding that employment remained at
will where disclaimer stated “I understand
that my employment is terminable at will by
me or by the employer”).

337 F.3d 237, 250 (2d Cir. 2003), and
Montalvo has not offered an interpretation
that could reasonably give effect to these
terms. His argument that “at-will” should be
construed to mean at his will only, while
binding plaintiff to termination for-cause,
has absolutely no support in the text of the
APA, and interpreting the APA in that
manner would be completely inconsistent
with its plain meaning, and with the
remaining language in the APA provision at
issue. Accord Law Debenture Trust Co.,
595 F.3d at 467 (“[T]he court should not
find the contract ambiguous where the
interpretation urged by one party would
strain [ ] the contract language beyond its
reasonable and ordinary meaning.” (internal
quotation marks and citation omitted)).
Montalvo has not identified a single contract
provision
suggesting
that
at-will
employment was his right alone, and
therefore the Court concludes that it applied
to both parties and is unambiguous.5
2. Presumption
Montalvo’s argument also fails because
“[i]n New York, it has long been settled that
an employment relationship is presumed to
be a hiring at will, terminable at any time by
either party.” Baron, 271 F.3d at 85

5

The sole case on which Montalvo relies to support
this interpretation of the APA is readily
distinguishable. In Abady v. Interco Inc., the profitsharing agreement stated (as summarized by the
court) that plaintiff would “continue as such
employee for the earning period which is three
years.” 430 N.Y.S.2d 799, 801 (N.Y. App. Div.
1980). The court concluded that the same document
granted voluntary termination at-will to the employee
only. Id. at 804. Montalvo has neither cited a similar
provision in the APA nor identified any other
analogous circumstances in this case, and the Court
has detected none. Paragraph 10.9 does not assign
the at-will right to either party on its face, and the
reference to termination “without Cause” would be
rendered superfluous by Montalvo’s interpretation.

The Court finds these cases persuasive
on the plain meaning of the phrase “at-will,”
and concludes that the APA’s explicit
references to at-will employment are
unambiguous.
Finding them to be
ambiguous would, in effect, render them
superfluous, as well as the reference to
termination “without Cause.” However,
“New York law . . . disfavors interpretations
that render contract provisions meaningless
or superfluous,” Manley v. AmBase Corp.,
6

to terminate defendant at will.7 See Baron,
271 F.3d at 88 (holding that dismissal of
breach of contract claim is appropriate
“where
a
sufficiently
unambiguous
disclaimer . . . [is] conspicuously placed . . .
such that the employee reasonably could be
expected to read it”).

(internal quotation marks and citations
omitted); see also Horn v. N.Y. Times, 100
N.Y.2d 85, 90-91 (2003) (noting long
history and force of presumption in New
York). In other words, the Court’s starting
point is to assume that the APA provides for
at-will employment (which is of course only
strengthened by its explicit language to that
effect). Montalvo may only rebut this
presumption “by establishing an ‘express
limitation in the individual contract of
employment’ curtailing an employer’s right
to terminate at will.” Id. (internal quotation
marks and citation omitted). Establishing an
express limitation is an “explicit and
difficult pleading burden.” Sabetay, 69
N.Y.2d at 334.

Furthermore, New York courts have
considered provisions similar to those cited
by defendant, and “have repeatedly held that
temporal references to compensation do not
create employment for a fixed duration and
they do not limit an employer’s right to
terminate an employee at will.” Heuler v.
Decision Economics, Inc., No. 06 Civ. 4039,
2007 WL 844671, at *3 (S.D.N.Y. Mar. 19,
2007) (granting motion to dismiss); see also
Lamb v. Money Transfer Sys., Inc., No. 12CV-6584 CJS, 2013 WL 5216442, at *6
(W.D.N.Y. Sept. 16, 2013) (“[T]he law of
New York State . . . holds that such a
compensation provision does not establish a

The language identified by Montalvo as
an “express limitation” is the status and
salary guarantee in paragraph 10.9.6 This
language does not purport to guarantee any
defined term of employment to Montalvo,
and if there was any doubt that it did, it is
foreclosed by the disclaimer (“Nothing
contained in this paragraph is intended to
alter the at-will employment relationship”).
Thus, the language of the APA itself makes
clear that the salary and status guarantees
are not express limitations of plaintiff’s right

7

In comparison, where courts have found express
limitations of an employer’s right to terminate an
employee at will, the language cited by the employee
typically addresses the issue of termination, and
limits the employer’s rights in a clear and direct
manner. See, e.g., Mycak v. Honeywell, Inc., 953
F.2d 798, 799 (2d Cir. 1992) (“Mycak was also given
a copy of a Honeywell employee handbook . . . .
[which] contained a job security policy that provided
specific procedures to be followed if a work force
reduction should become necessary.”); Gorrill v.
Icelandair/Flugleidir, 761 F.2d 847, 852 (2d Cir.
1985) (“The Operations Manual . . . expressly
provides that seniority be the sole factor where
terminations stemming from job elimination or force
reduction must be made, and that employees with
appellees’ seniority obtain a conditional entitlement
to defer retirement past the age of sixty.”); Weiner v.
McGraw-Hill, Inc., 57 N.Y.2d 458, 460-61 (1982)
(“[T]he company will resort to dismissal for just and
sufficient cause only, and only after all practical steps
toward rehabilitation or salvage of the employee have
been taken and failed.”). Defendant has neither
identified any analogous language in the APA or any
other document, nor pled that he received any similar
assurance.

6

To the extent that Montalvo separately argues that
the existence of termination “for Cause” as defined in
paragraph 11.3.6 means that he can only be
terminated for cause, the plain text of the APA does
not support that view, because it explicitly mentions
at-will employment and termination “without Cause.”
Cf. Bernhardt v. Tradition N.A., 676 F. Supp. 2d 301,
305-06 (S.D.N.Y. 2009) (rejecting argument that
because policy of termination for violating rules
existed, such policy limited employer’s ability to
terminate for other reasons); Matagorda Cnty. Hosp.
Dist. v. Burwell, 189 S.W.3d 738, 739 (Tex. 2006)
(“[A] statement that an employee may be dismissed
for cause is not a specific agreement that an
employee may be dismissed only for cause.”).

7

definite term of employment. Specifically, a
writing setting forth an employee’s salary
for a specific period does not bind the
employer to retain the employee for any
length of time.”); In re Vasu, 129 F. Supp.
2d 113, 118 (D. Conn. 2001) (“The two-year
references in the Letter are limited to
creating a schedule for the timing of the
vesting of options of shares and equity
interests. Nothing in the Letter or in the
factual allegations of Vasu’s complaint
indicates the two-year references are
connected in any way to the duration of
Vasu’s employment.”). Thus, even if the
APA’s employment provision did not
contain the above-quoted disclaimer, the
references to three years of salary and status
protection would not entitle defendant to
employment for a fixed term. Cf. Mycak,
953 F.2d at 802 (noting that express
limitations featured “mandatory and
unqualified terms”). Of course, the presence
of the disclaimer makes the at-will nature of
defendant’s employment that much clearer,
and defendant has not carried his “explicit
and difficult pleading burden” to show
otherwise. Sabetay, 69 N.Y.2d at 334.

of other terms of the agreement of
the parties. No obligation can be
implied, however, which would be
inconsistent with other terms of the
contractual relationship.
Murphy v. Am. Home Prods. Corp., 58
N.Y.2d 293, 304 (1983).
In Murphy, the Court of Appeals held
that it would be inconsistent with an at-will
employee’s contract to allow him, once
terminated, to pursue a claim based on the
implied covenant.
Id.
The at-will
relationship affords the employer “an
unfettered right to terminate the employment
at any time.” Id. “In the context of such an
employment it would be incongruous to say
that an inference may be drawn that the
employer impliedly agreed to a provision
which would be destructive of his right of
termination.”
Id. at 304-05; see also
Kendall v. Fisse, No. 00 CV 5154SJ, 2004
WL 1196811, at *6 (E.D.N.Y. May 25,
2004) (“No implied obligation of good faith
and fair dealing exists with respect to an atwill employment contract.”).8
In Murphy, the employee’s contract was
informal, and did not contain the explicit
terms found in the APA, which
unambiguously provide for an at-will
employment relationship. Thus, it would be
even more inconsistent here to imply a duty
not to fire Montalvo for a bad-faith reason,
where the contract allows plaintiff to fire
him for any reason at all, and even explicitly
mentions both “for Cause” and “without

B. Implied Covenant
Montalvo’s second and third causes of
action allege that plaintiff terminated him in
bad faith, and in doing so violated the
implied covenant of good faith and fair
dealing. The New York Court of Appeals
has addressed this argument before, in the
context of at-will employment:
New York does recognize that in
appropriate
circumstances
an
obligation of good faith and fair
dealing on the part of a party to a
contract may be implied and, if
implied will be enforced. . . . In
such
instances
the
implied
obligation is in aid and furtherance

8

Montalvo cites Pernet v. Peabody Engineering
Corp. to suggest that an employer breaches the
implied covenant by taking action in order to deprive
the employee of his benefit under the contract, but
Pernet is distinguished by the fact that the plaintiff
there, unlike Montalvo, plausibly alleged that his
contract provided a five-year employment guarantee.
See 248 N.Y.S.2d 132 (N.Y. App. Div. 1964).

8

Cause” situations. See Ingle v. Glamore
Motor Sales, Inc., 73 N.Y.2d 183, 190
(1989) (“If there was no protection against
discharge of an at-will employee in Murphy
. . . and Sabetay . . ., where there was no
contractual arrangement at all, there surely
can be none here where the related contract
expressly confirms the unavailability of that
protection.”).

faith and fair dealing cannot negate
defendant’s express right to terminate the
revised agreement without cause at any
time.”); accord Murphy, 58 N.Y.2d at 305
(“[U]nder New York law as it now stands,
absent a constitutionally impermissible
purpose, a statutory proscription, or an
express limitation in the individual contract
of employment, an employer’s right at any
time to terminate an employment at will
remains.”). Therefore, the Court grants
plaintiff’s motion to dismiss the second and
third counter-claims.

In other words, even if, as Montalvo
alleges, plaintiff harbored the bad-faith
motive of avoiding its obligation to pay him,
the APA would still allow plaintiff to
terminate Montalvo.9 Cf. Berzin v. W.P.
Carey & Co., Inc., 740 N.Y.S.2d 63, 64
(N.Y. App. Div. 2002) (“[P]laintiff claims
that defendant’s sole motivation in
terminating him was to prevent the vesting
of additional stock options and other
compensation benefits, and that his
termination therefore violated the covenant
of good faith and fair dealing implied in
every contract. Even if defendant were so
motivated, plaintiff has no cause of action
for breach of contract. The covenant of good

C. Remaining Claims, Leave to Amend
The parties agree (and, in any event, the
Court independently concludes) that the
remaining claims—the fourth and seventh
causes of action, for a declaratory judgment
and
attorney’s
fees—were
entirely
dependent on Montalvo’s first three causes
of action. The dismissal of the first three
causes of action, therefore, requires the
dismissal of the fourth and seventh causes of
action as well.
Montalvo did not request leave to amend
and, in any event, it is clear that any
proposed amendment would be futile given
the unambiguous language in the APA. See
AEP Energy Servs. Gas Holding Co. v. Bank
of Am., N.A., 626 F.3d 699, 726 (2d Cir.
2010) (“Leave to amend may be denied on
grounds of futility if the proposed
amendment fails to state a legally cognizable
claim or fails to raise triable issues of fact.”).

Montalvo’s argument to the contrary relies on
inapposite cases involving “earn-out” payments
which do not address the question of at-will
employment. See generally Keene Corp. v. Bogan,
No. 88 CIV. 0217 (MBM), 1990 WL 1864 (S.D.N.Y.
Jan. 11, 1990); Wagner v. JP Morgan Chase Bank,
No. 06 Civ. 3126 (RJS), 2011 WL 856262 (S.D.N.Y.
Mar. 9, 2011). Montalvo’s status as an at-will
employee distinguishes him from those plaintiffs,
because even if, construing the APA most favorably
to him, he could normally claim the protection of the
implied covenant in a similar manner to the plaintiffs
claiming earn-out payments in the above cases,
Montalvo bargained away that protection by agreeing
to become an at-will employee. See Ingle, 73 N.Y.2d
at 188-89 (rejecting argument that minority
shareholder who is also employee gains protection
from at-will discharge simply because termination
allowed defendant to acquire his stock); accord
Gallagher v. Lambert, 74 N.Y.2d 562, 566-67 (1989)
(holding the same with respect to shareholder’s
fiduciary duty claim).
9

IV. CONCLUSION
Both the APA’s explicit language and
the presumption under New York law,
which Montalvo failed to rebut, make
Montalvo an at-will employee whom
plaintiff could terminate for any reason.
Because termination without cause was
9

plaintiff’s right under the contract, and
because the Court may not imply a duty
inconsistent with that contractual right,
Montalvo’s claims for breach of contract
and the implied convent of good faith and
fair dealing fail as a matter of law. The
other two counter-claims were dependent on
the breach of contract and implied covenant
claims, and therefore the Court grants
plaintiff’s motion to dismiss in its entirety.
SO ORDERED.

______________________
JOSEPH F. BIANCO
United States District Judge
Dated: July 24, 2014
Central Islip, NY

*

*

*

Plaintiff is represented by Craig
Annunziata, James M. Hux, and Joel W.
Rice, Fisher & Phillips LLP, 10 South
Wacker Drive, Suite 3450, Chicago, IL
60606. Montalvo is represented by David
Bolton, Suite 509, 666 Old Country Road,
Garden City, NY 11530.

10