UBS Sec. LLC v RAE Sys. Inc.

UBS Sec. LLC v RAE Sys. Inc. 2012 NY Slip Op 08652 Decided on December 13, 2012 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on December 13, 2012
Tom, J.P., Sweeny, Moskowitz, Renwick, Clark, JJ.
8800 652606/11

[*1]UBS Securities LLC, Plaintiff-Respondent-Appellant,

v

RAE Systems Inc., Defendant-Appellant-Respondent.




Kaplan Rice LLP, New York (Justin M. Garbaccio of counsel),
for appellant-respondent.
Miller & Wrubel P.C., New York (Joel M. Miller of counsel),
for respondent-appellant.

Order, Supreme Court, New York County (Jeffery K. Oing, J.), entered on or about February 28, 2012 which denied defendant-appellant's motion to dismiss pursuant to CPLR 3211, and granted plaintiff's cross motion for summary judgment insofar as finding that the parties' agreement included a right to indemnification of plaintiff for its attorney's fees, but denied the cross motion insofar as it sought pay of a discretionary bonus, unanimously modified, on the law, to grant the motion to dismiss the complaint, and otherwise affirmed, without costs. The Clerk is directed to enter judgment dismissing the complaint.

Contrary to the finding of the IAS court, the clause at issue, which provides that defendant "may" in its "sole discretion" pay plaintiff a bonus based on an assessment of its performance, was not a conditional promise, but an entirely discretionary clause that imposed no obligation on defendant to pay (Hunter v Deutsche Bank AG, N.Y. Branch, 56 AD3d 274 [1st Dept 2008]). Nor did the "approval" of the bonus by defendant's special committee create some obligation on defendant to make the wholly discretionary payment (id.; see generally Matter of Cosmopolitan Mut. Cas. Co. of N.Y. v Monarch Concrete Corp., 6 AD2d 163, 166 [1st Dept 1958], revd 6 NY2d 383, 388 [1959]).

While the parties' amended agreement was properly read by the court to include a right to indemnification of plaintiff's attorney's fees in a direct party action (see Breed, Abbott & Morgan [*2]v Hulko, 74 NY2d 686 [1989]), because plaintiff had no right to enforce payment of the aforementioned discretionary bonus sought herein, the cause of action for attorney's fees should also have been dismissed.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: DECEMBER 13, 2012

CLERK