Wengryn et al v. American Business Consultant Group Holding, LLC et al
Filing
107
CORRECTED OPINION AND ORDER. For the reasons set forth in this Corrected Opinion and Order, plaintiffs' motion for partial summary judgment is GRANTED. Within 5 days, plaintiffs should inform the Court as to whether they will voluntarily dismiss the remainder of their claims as redundant and allow for immediate entry of judgment. The Clerk of Court is directed to close the motion at ECF No. 75. (Signed by Judge Katherine B. Forrest on 6/8/2015) (rjm)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------------- X
:
PETER WENGRYN, LAILA SAYAD, and GERRY :
LOUW,
:
:
Plaintiffs,
:
:
-v:
:
AMERICAN BUSINESS CONSULTANT GROUP :
HOLDING, LLC; J. MICHAEL KAFES, in his
:
official and individual capacity; DENNIS LEE, in :
his official and individual capacity; PROVISION :
CONSULTANTS CORPORATION; DBA
:
PROVISION CORPORATION, LLC; ABC CORPS. :
1-10; and JOHN DOES 1-10, in their official and :
individual capacities, jointly and severally,
:
:
Defendants.
:
:
---------------------------------------------------------------------- X
KATHERINE B. FORREST, District Judge:
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: June 8, 2015
13-cv-4556 (KBF)
CORRECTED1
OPINION & ORDER
This action concerns three employment relationships gone sour. Plaintiffs
commenced the action on July 1, 2013 (ECF No. 1), and amended their complaint
twice thereafter (ECF Nos. 21, 38 (“SAC”)). The operative complaint is the Second
Amended Complaint (the “SAC”) filed on February 18, 2014. (SAC.)2 While
In an earlier version of this Opinion & Order, the conclusion mistakenly referred to “defendants’
motion for partial summary judgment.”
1
2 Defendants have not interposed an answer to the SAC, though they answered both the original
complaint as well as the initial amendment. (ECF Nos. 10, 22.) The Court notes that defendants
asserted two counterclaims in connection with the first answer they filed but not in the second—and
they have not answered the SAC at all. As defendants’ counterclaims are boilerplate and depend
upon the assertions of fact stated elsewhere in their answer (i.e., they are not “standalone”
counterclaims), they have arguably been abandoned when not reasserted. Indeed, procedurally it is
difficult to see how they could still be “live” if they rely upon statements made in an answer that has
now been entirely superceded. Nevertheless, as plaintiffs have not raised this argument, and as
these claims fail on the merits in any event, the Court declines to dismiss them for this reason.
plaintiffs have asserted a myriad of claims, their core claim is that defendants
breached each of their employment contracts. This claim is set forth in Count Six.
Defendants asserted three counterclaims when they answered the initial
complaint—cast as claims for breach of employment contracts, “implied indemnity”
and “contribution.” (ECF No. 10.)
Plaintiffs have now moved for summary judgment as to Count Six and both
counterclaims. (ECF No. 75.) For the reasons set forth below, that motion is
GRANTED.
I.
A WORD ON SUBJECT MATTER JURISDICTION
Before addressing the motion that is the principle topic of this Opinion, the
Court notes that it has concerns regarding the allegations in each of the complaints
supporting this Court’s subject matter jurisdiction. As the parties are aware, this
matter was reassigned to the undersigned on February 24, 2015, as part of a
routine, intra-district redistribution of business. The Court therefore cannot know
whether the issues it perceives were addressed and resolved long ago (if so, such
resolution is not reflected on the docket). Needless to say, it would be inefficient to
explore these issues now. The face of the complaint alleges jurisdiction—and that is
sufficient for current purposes.
The issue is this: The initial complaint as well as both amendments have
asserted federal jurisdiction pursuant to the Fair Labor Standards Act (the
“FLSA”)—alleging claims for wage and hour violations as to one of the three
plaintiffs, Peter Wengryn. (E.g., SAC ¶¶ 15, 120-26.) It does not appear that—
based on his employment position and responsibilities—Wengryn can in fact pursue
2
a wage and hour claim under the FLSA. He is the quintessentially exempt
employee pursuant to FLSA’s bona fide executive exception. See 29 U.S.C.
§ 213(a)(1); 29 C.F.R. §§ 541.100(a), 541.102, 541.700(a). In addition, there is no
separate basis for federal jurisdiction alleged as to the other two plaintiffs (though
under appropriate circumstances this Court might be able to assert pendent
jurisdiction). Thus, even assuming that Wengryn does have a cognizable wage and
hour claim, there is no necessary reason why the claims of the other two plaintiffs
must be joined in the same action with his. This appears to be a case in which a
slim reed supporting federal jurisdiction was found as to Wengryn and the claims of
the other two plaintiffs were tacked on.
II.
FACTUAL BACKGROUND3
On September 19, 2012, each of the three plaintiffs agreed to accept
employment with defendants and entered into written employment contracts
effective as of October 1, 2012. (Certification of Valerie Fasolo, ECF No. 96
(“Fasolo”) exs. A-8, A-14, A-15; see also DRSOF ¶ 1.) Wengryn was hired to be the
Chief Executive Officer (“CEO”) of American Business Consultant Group Holding
The following facts are taken from the Local Rule 56.1 statements submitted by the parties in
connection with this motion for summary judgment and their supporting materials. (ECF Nos. 76,
87 (“DRSOF”), 95.) The Court cites to the parties’ factual submissions only when they support a
factual proposition, cite relevant material, and are not contradicted in pertinent part by a counterstatement supported by citation to evidence that would be admissible. See Local Civil Rule 56.1(d);
Chimarev v. TD Waterhouse Investor Servs., Inc., 280 F. Supp. 2d 208, 223 (S.D.N.Y. 2003)
(material facts set forth in a Rule 56.1 statement “are uncontested and may be accepted as true”
where a Rule 56.1 counter-statement was “deficient” because it consisted solely of “blanket denials”
and was “not supported by citation to any evidence”), aff’d, 99 Fed. App’x 259 (2d Cir. 2004).
3
Defendants’ response to plaintiffs’ 56.1 statement repeatedly states that they “deny” certain facts—
but there is a near total absence of any basis for such denial. The law is clear that such unsupported
assertions are insufficient to create a triable issue of fact, and are therefore insufficient to defeat
summary judgment. See Local Civil Rule 56.1(c); Gubitosi v. Kapica, 154 F.3d 30, 31 n.1 (2d Cir.
1998); NAS Elecs., Inc. v. Transtech Elecs. PTE Ltd., 262 F.Supp.2d 134, 139 (S.D.N.Y. 2003).
3
LLC d/b/a ABC Group. (Fasolo ex. A-8.) Plaintiff Laila Sayad was hired to fill the
position of Chief Financial Officer (“CFO”) and Gerry Louw was hired to fill the
position of Chief Technical Officer (“CTO”4). (Fasolo exs. A-14, A-15.)
Each of the employment agreements provides for a base salary, standard
health benefits and eligibility for an incentive bonus. (Fasolo exs. A-8 ¶ 4, A-14 ¶ 4,
A-15 ¶ 4.) Each agreement contains similar termination provisions providing for
termination with or without cause. (Fasolo exs. A-8 ¶ 3, A-14 ¶ 3, A-15 ¶ 3.) In the
event of termination without cause, each plaintiff is entitled to receive certain
compensation including the “remaining amount of salary, benefits and bonuses due
through the end of this six month agreement.” (Fasolo exs. A-8 ¶ 6(c), A-14 ¶ 6(c),
A-15 ¶ 6(c).) “Cause” is defined similarly in each agreement as any material breach
of the employment agreement, any material failure to comply with written company
policies or rules, continued failure to perform material duties after having received
a written warning and 30-day period to cure, a criminal conviction,
misappropriation of funds, or gross or willful misconduct resulting in a material loss
to the company or material damage to the reputation of the company. (See Fasolo
exs. A-8 ¶ 6(e), A-14 ¶ 6(e), A-15 ¶ 6(d).5)
In addition, each employment agreement contains a standard integration
clause providing that:
This Agreement embodies the complete agreement and
understanding among the parties hereto and supercedes
and preempts any prior understandings, agreements or
4
Louws’ agreement states that he “shall serve as the CIO/CTO.” (Fasolo ex. A-15 ¶ 1.)
5
Paragraph 6 of Louws’ employment contract contains two subparagraphs labeled “d.”
4
representations by or among the parties, written or oral,
which may have related to the subject matter of this
Agreement in any way.
(Fasolo exs. A-8 ¶ 12, A-14 ¶ 12, A-15 ¶ 12.) The terms of Wengryn and Luow’s
agreements was six months (renewable), and Sayad’s was for one year. (Fasolo exs.
A-8 ¶ 2, A-14 ¶ 2, A-15 ¶ 2.)
Defendants separately requested that Wengryn pay for certain business
expenses as to which he was promised reimbursement. (DRSOF ¶¶ 9, 11.) In
connection with that arrangement, he paid certain health insurance premiums.
(DRSOF ¶ 10.) Wengryn has set forth additional business expenses for which he
seeks reimbursement—and as to which the President of the ABC Group Board of
Directors, J. Michael Kafes, has conceded payment is owed. (DRSOF ¶¶ 12-13.)
(Kafes was Wengryn’s immediate supervisor. (DRSOF ¶ 67.))
Plaintiffs and defendants agree that funding for the company became an
issue. Whether funding was always an issue or became an issue due to unilateral
action by Kafes is irrelevant to resolution of this motion.
Plaintiffs were employed by defendants for a period of several months.
During that time, Kafes paid the salaries for Sayad and Louw, and Wengryn agreed
to delay his salary payment. (DRSOF ¶¶ 28, 30-31.) As of the close of discovery,
the defendants had paid salary for the discrete pay periods during which plaintiffs
worked at the company. (DRSOF ¶¶ 57-58.)
Following their commencement of employment on October 1, 2012, plaintiffs
prepared a business plan. (DRSOF ¶ 34.) On November 8, 2012, they presented
5
this plan to Kafes. (DRSOF ¶ 34.) Kafes praised plaintiffs’ business plan and
commented that it was “well thought out, well presented and thorough.” (DRSOF ¶
35.) Several days later, plaintiffs presented the business plan to the Board of
Directors of the ABC Group. (DRSOF ¶ 37.) At his deposition in this matter, while
Kafes asserted that the business plan did not ultimately conform to his vision of the
company, he conceded that it did not constitute a violation of plaintiffs’ employment
agreements. (DRSOF ¶ 75.)
On November 15, 2012, Kafes informed plaintiffs that he had decided to
withdraw his promise of funding. (DRSOF ¶ 38.) On or about November 20, 2012,
defendants sent a document entitled “Official Communication” to plaintiffs; this
document contained nineteen conditions to which plaintiffs were required to agree
in order for Kafes to “continue with his intention of funding the operation”—as he
had promised he would do three months earlier. (DRSOF ¶39.) One of the
conditions was that plaintiffs had to agree that they would waive their right to be
paid for the time they had already worked, unless and until Kafes’ funding arrived.
(DRSOF ¶ 40.) Plaintiffs refused to agree to this condition. (DRSOF ¶¶ 43.)
Plaintiffs consulted counsel and informed the company that they might be
compelled to file a wage and hour claim to collect unpaid wages. (DRSOF ¶ 49.)
Defendants terminated Wengryn’s employment on December 5, 2012.
(DRSOF ¶ 54.) At his deposition, Kafes was unable to recall why he fired Wengryn,
though he recalled that it had been for cause. (DRSOF ¶¶ 64-66.) Kafes testified
that a reason for Wengryn’s termination was underperformance. (DRSOF ¶ 53.)
6
Plaintiffs Sayad and Louw were terminated “without cause” as they were laid off.
(DRSOF ¶ 55.) Kafes also testified that “Peter [Wengryn] was fired. Laila [Sayad]
and Gerry [Louw] were laid off.” (DRSOF ¶ 55.)
Defendants concede that they have not paid plaintiffs amounts due for
termination without cause. (DRSOF ¶¶ 55, 59, 61, 79.) Louw has calculated that
he is owed $62,901; Sayad has calculated that she is owed $167,695; and Wengryn
has calculated that he is owed $89,117. (DRSOF ¶¶ 62, 63, 70.)
III.
STANDARD OF REVIEW
Summary judgment may not be granted unless the movant shows, based on
admissible evidence in the record placed before the court, “that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a). The moving party bears the burden of demonstrating
“the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). When the moving party does not bear the ultimate burden on a
particular claim or issue, it need only make a showing that the non-moving party
lacks evidence from which a reasonable jury could find in the non-moving party’s
favor at trial. Id. at 322-23. In making a determination on summary judgment, the
court must “construe all evidence in the light most favorable to the nonmoving
party, drawing all inferences and resolving all ambiguities in its favor.” Dickerson
v. Napolitano, 604 F.3d 732, 740 (2d Cir. 2010).
Once the moving party has asserted facts showing that the non-movant’s
claims cannot be sustained, the opposing party must set out specific facts showing a
genuine issue of material fact for trial. Price v. Cushman & Wakefield, Inc., 808 F.
7
Supp. 2d 670, 685 (S.D.N.Y. 2011); see also Wright v. Goord, 554 F.3d 255, 266 (2d
Cir. 2009). “[A] party may not rely on mere speculation or conjecture as to the true
nature of the facts to overcome a motion for summary judgment,” as “[m]ere
conclusory allegations or denials . . . cannot by themselves create a genuine issue of
material fact where none would otherwise exist.” Hicks v. Baines, 593 F.3d 159,
166 (2d Cir. 2010) (citations omitted); see also Price, 808 F. Supp. 2d at 685 (“In
seeking to show that there is a genuine issue of material fact for trial, the nonmoving party cannot rely on mere allegations, denials, conjectures or conclusory
statements, but must present affirmative and specific evidence showing that there
is a genuine issue for trial.”).
Only disputes relating to material facts—“facts that might affect the outcome
of the suit under the governing law”—will properly preclude the entry of summary
judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)
(the non-moving party “must do more than simply show that there is some
metaphysical doubt as to the material facts”).
IV.
THE LAW OF CONTRACTS
The sole affirmative claim as to which plaintiffs seek summary judgment is
breach of contract. Each of the employment agreements states that it is governed
by the law of New York. (Fasolo exs. A-8 ¶ 14, A-14 ¶ 14, A-15 ¶ 14.) Under New
York law, to establish a breach of contract, a plaintiff bears the burden of
demonstrating (1) the existence of a contract, (2) breach, and (3) damages resulting
8
from that breach. Nat’l Market Share, Inc. v. Sterling Nat’l Bank, 392 F.3d 520,
525 (2d Cir. 2004).
Contracts are enforced according to the plain meaning of their clear terms.
Brad H. v. City of New York, 17 N.Y.3d 180, 185 (2011). In a contract dispute,
summary judgment may be granted when contractual language is unambiguous, or
where there is ambiguity, extrinsic evidence does not raise a triable issue. Topps
Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir. 2008).
V.
DISCUSSION
Defendants concede—as they must in light of the record—the existence of
contracts between the parties. Each plaintiff executed a written employment
contract as described above.
In opposition to this motion, defendants have put forward several arguments,
each of which lacks merit.
First, defendants assert that while the employment contracts may exist,
plaintiffs always knew that the funding to pay them was not in hand. But whether
funding was in hand or not does not relieve defendants of a binding contractual
obligation to make payments as promised. The employment agreements were not
contingent on receipt of funding; they were binding and effective as of October 1,
2012 for the periods stated. Each of the contracts contains an integration clause—
prior conversations, if they occurred, are simply irrelevant in the face of such
clauses. See Primex Int’l Corp. v. Wal-Mart Stores, Inc., 89 N.Y.2d 594, 599 (N.Y.
1997) (“Courts and commentators addressing the substantive and procedural
aspects of New York commercial litigation agree that the purpose of a general
9
merger provision . . . is to require full application of the parol evidence rule in order
to bar the introduction of extrinsic evidence to vary or contradict the terms of the
writing . . . . (citations omitted)).
Second, defendants argue that plaintiffs failed to perform their obligations,
thereby relieving defendants of their need to perform. There is no factual support
for this assertion. The record evidence is clear that plaintiffs were hired effective
October 1, 2012, prepared a business plan, presented that plan to Kafes, and
subsequently presented that plan to the entire Board of Directors. That plaintiffs
worked is confirmed by defendants’ statement in the “Official Communication”
seeking to have plaintiffs waive payment for periods already “worked.” In reality,
defendants’ assertion in this regard amounts to no more than that they were
dissatisfied with the substance of plaintiffs’ work. But dissatisfaction with work
performed undercuts any suggestion that plaintiffs never performed at all. Thus,
while, defendants also assert—without factual citation—that there are questions of
fact as to whether plaintiffs ever performed. But bald and unsupported assertions
are insufficient to avoid summary judgment. See Gubitosi v. Kapica, 154 F.3d 30,
31 n.1 (2d Cir. 1998); NAS Elecs., Inc. v. Transtech Elecs. PTE Ltd., 262 F.Supp.2d
134, 139 (S.D.N.Y. 2003).
Third, defendants assert that plaintiffs have “materially breached” the
contract in other ways—such as Wengryn not reaching out to certain business
contacts sooner, or that the business plan “went against [their] prior mutual
understanding.” (ECF No. 89 (“Mem. in Opp’n”) at 11.) But these are, at most,
10
assertions of underperformance. To the extent that defendants sought to terminate
Wengryn or any plaintiff for performance, the employment agreement provides that
they must provide a written warning and allow for a 30-day cure period. (See
Fasolo exs. A-8 ¶ 6(e), A-14 ¶ 6(e), A-15 ¶ 6(d).) Defendants proffer no facts
suggestive of such notice and cure period. Indeed, the timing of the events
(business plan presentation on November 8 and termination on December 5) run
counter to these provisions. Further, each of these performance-based arguments is
particularly disingenuous as to Sayad and Louw, who Kafes testified had not been
fired for cause but had instead been laid off. (DRSOF ¶ 55.)
Defendants’ final fallback position is that the employment contracts are
unconscionable. (Mem. in Opp’n at 11-12.) There are no facts before the Court
supportive of this theory. Defendants point to the fact that plaintiffs drafted the
agreement. That is of no moment. The cover letter accompanying that draft
indicates that defendants should review the agreement and make whatever changes
they deem appropriate. (Declaration of Eric M. Creizman, ECF No. 88 ex. A.) The
agreements are clearly written in relevant part, and thus there is no issue requiring
construction against the drafter. Moreover, on their face, the terms of the
agreements are eminently reasonable—far from the type of “gross
unreasonableness” required to support unconscionability. See In re Lawrence, 24
N.Y.3d 320, 336-37 (N.Y. 2014).
In sum, each of the plaintiffs is covered by a binding and enforceable
contract, under which he or she rendered performance. Defendants have concededly
11
not fulfilled their obligations. Summary judgment on the breach of contract claim is
therefore entirely appropriate.
Summary judgment on defendants’ counterclaims follows from this
determination. As the Court has not found that there is a triable issue as to “causebased” termination, defendants’ claims premised on a breach of the employment
agreement must fail. The Court notes that defendants’ opposition to this portion of
plaintiffs’ motion is entirely devoid of any factual citations, which as explained
above is insufficient on a motion for summary judgment to raise a triable issue.
VI.
CONCLUSION
For the reasons set forth above, plaintiffs’ motion for partial summary
judgment is GRANTED. Within 5 days, plaintiffs should inform the Court as to
whether they will voluntarily dismiss the remainder of their claims as redundant
and allow for immediate entry of judgment.
The Clerk of Court is directed to close the motion at ECF No. 75.
SO ORDERED.
Dated:
New York, New York
June 8, 2015
KATHERINE B. FORREST
United States District Judge
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?