Greystone Staffing, Inc. v Vincenzi
Annotate this CaseDecided on May 12, 2005
Supreme Court, Nassau County
Greystone Staffing, Inc., Plaintiff,
against
Jennifer Vincenzi, Winston Resources, LLC, Winston Staffing Services, LLC, and Winston Support Services, LLC, Defendants.
4778-04
Counsel for Plaintiff
Littler, Mendelson, P.C.
885 Third Avenue
New York, New York 10022-4843
Counsel for Defendant
(for Vincenzi)
Steven Cohn, P.C.
One Old Country Road
Carle Place, New York 11514
(for Winston)
Berger & Webb, LLP
900 Third Avenue
New York, New York 10022-4775
Leonard B. Austin, J.
BACKGROUND
Plaintiff Greystone Staffing, Inc. ("Greystone"), moves for an order vacating the parties' Stipulation of Settlement dated April 27, 2004 in its entirety and reinstating this action in full; imposing financial sanctions on Defendants and awarding Greystone its costs and attorneys' fees; directing expedited discovery; and appointing a Special Master at Defendants' expense.
In this action commenced on or about April 7, 2004, Greystone sought to recover, among other things, for the breach of her employment contract and fiduciary duties as well as for unfair competition, trade secret violations and tortious interference with actual and prospective contractual and business relations by its former employee, Defendant Jennifer Vincenzi ("Vincenzi"). The action is predicated upon the alleged misappropriation of Greystone's confidential information by Vincenzi and her current employer, Defendant Winston Staffing Services, LLC ("Winston Staffing").
By Order to Show Cause dated April 14, 2004, Greystone sought a preliminary injunction enjoining Vincenzi and Winston from utilizing Greystone's documents and confidential information in her new employment. Defendants categorically denied any misconduct and, via counsel, represented to this Court that they did not have any Greystone documents or confidential information. Based upon such representation, a Stipulation of Settlement was entered into on or about April 27, 2004 whereby the Defendants agreed to a permanent injunction enjoining them from using or disclosing Greystone's financial information and data. The injunction enjoined Vincenzi from using or disclosing either directly or indirectly through a third party Greystone's information and data and from communicating with Greystone's clients except for those existing customers of Winston whose identity could be readily ascertained by public sources or those whose contacts are a result of her memory. [*2]Vincenzi agreed to cease and desist from making negative or derogatory statements about Greystone and all Defendants agreed to immediately return Greystone's confidential information.
The Stipulation of Settlement stated that "each Defendant severally represents and warrants . . . that they do not have in their possession any documents or records belonging to Plaintiff." Vincenzi specifically represented "that her Affidavit sworn to on April 12, 2004, is true and correct in all material respects." In that affidavit, Vincenzi stated that since she left her employment with Winston Staffing, she attempted to obtain business utilizing only publicly available resources and her own memory. While she admitted to sending letters to former clients of Greystone, she attested that the names of those companies were all based on her recollection and that she did not refer to any documents other than the Super Yellow Pages to obtain their addresses. She stated "I did not retain nor did I ever have financial information concerning the fees generated or charged by Greystone to any of [those] clients." She further represented "[t]here is nothing that I need from Greystone in order to compete fairly. But more importantly,
however, I did not take anything with me when I started at my new job. Nor did I retain any files of Greystone's. I simply have nothing." (Emphasis added.)
The Stipulation of Settlement provided that "In the event that any of the Defendants have made any misrepresentations to Greystone herein or commit any other breach of this Stipulation or injunction, Greystone may file a motion seeking the entry of a judgment for actual damages against the offending Defendants incurred as a result of those misrepresentations or breach of the injunction, which may include 100% of the gross profits with respect to each breach, and if successful in such motion, including reasonable attorneys' fees in making such motion."
In seeking vacatur of the Stipulation of Settlement, Greystone relies on the affidavit of Jennifer Toomey ("Toomey"), a former employee of Winston Staffing, who contacted Greystone's President and CEO on or about August 25, 2004, to inform him of conduct which she found offensive and believed to be unethical.
Toomey attests that she was employed by Winston Staffing when Vincenzi was hired and that she learned that Vincenzi was using Greystone's proprietary information on Winston Staffing's behalf. In fact, she specifically identified computer-generated reports consisting of (i) "Greystone New York Currently Filled Work Order Reports", (ii) "Greystone New York Customer Rep Reports", and (iii) "Computer Contact" lists, all of which contain a list of Greystone's clients with names, addresses and telephone numbers; and (iv) Greystone New York Summary Gross Profit Reports, which contains clients, bill rates and gross profits. In all, Toomey identified 40 pages of Greystone documents dated October through December, 2004, which she says she saw Vincenzi utilizing while working at Winston Staffing. Toomey further states that she "firmly believes" that Winston Staffing's President Gregg Kaye ("Kaye") was made aware of this. She claims that she was at meetings with Kaye and Vincenzi and "voiced [her] opinion with respect to Jennifer Vincenzi's actions," but no action was taken. The relationship between Toomey and Vincenzi soured. Kaye told her if she could not get over Vincenzi's behavior, then she could not work for Winston Staffing. Toomey was ultimately fired.
In her affidavit in opposition to the vacatur of the Stipulation, Vincenzi states that "it was never made clear to me that by signing the stipulation I was confirming the representations made in the April 12, 2004 affidavit. I believed that I was representing that I no longer possessed the Greystone documents." [*3]
Kaye previously swore that "Jennifer has not provided Winston, nor do I believe that she has utilized, any documents or information from Greystone in attempting to compete in the staffing market." He now attests " I stand by this statement . . . to the extent that if Vincenzi utilized any documents or information belonging to Greystone, I was unaware of it." He denies ever discussing Greystone or its records with Toomey.
DISCUSSION
"Stipulations of Settlement are favored by the courts and not lightly cast aside (citations omitted)." Hallock v. State, 64 NY2d 224, 230 (1984). "Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation." Hallock v. State, supra, citing Matter of Frutiger, 29 NY2d 143, 149-150 (1971). See also, Meaders v. Jones, 15 AD3d 490 (2nd Dept. 2005).
Vincenzi's representation in the Stipulation that her April 12, 2004 affidavit was true and correct has been proven false. That is, Vincenzi's representation in her April 12, 2004 Affidavit that she took nothing from Greystone and that she had none of their files was not truthful. There is no question that Greystone relied on that representation in entering into the Stipulation of Settlement and it is entitled to its vacatur as against Vincenzi. Ruby Development Corp. v. Charrim Development Corp., 160 AD2d 928 (2nd Dept. 1990). Vincenzi's attempt to avoid vacatur of the Stipulation of Settlement premised upon her alleged misunderstanding of it fails. "One who enters into a plain and unambiguous contract cannot avoid the obligation by merely stating that [s]he erred in understanding its terms." Aventine Investment Mgt., Inc. v. Canadian Imperial Bank of Commerce, 265 AD2d 513, 514 (2nd Dept. 1999); Touloumis v. Chalem, 156 AD2d 230, 232 (1st Dept. 1989). See also, Freda v McNamara, 254 AD2d 251, 252 (2nd Dept. 1998).
As to the Winston Defendants, whether Kaye himself was actually aware of Vincenzi's possession and/or use of Greystone's documents is not clear. Nevertheless, "[t]he general rule is that knowledge acquired by an agent acting within the scope of his agency is imputed to his principal and the latter is bound by such knowledge although the information is never actually communicated to it (citations omitted)." Center v. Hampton Affiliates, Inc., 66 NY2d 782, 784 (1985). See, Restatement [Second] of Agency § 272 at 591. "Underlying the rule is the presumption that an agent has discharged his duty to disclose to his principal 'all the material facts coming to his knowledge with reference to the subject of his agency.' " Center v. Hampton Affiliates, supra at 782, quoting Henry v Allen, 151 NY 1, 9 (1996). Therefore, Vincenzi's and Toomey's knowledge is to be imputed to the Winston Defendants.
In any event, assuming, arguendo, that Kaye and the Winston Defendants were unaware of Vincenzi's possession and/or use of Greystone's documents; that Vincenzi's knowledge cannot be imputed to them; and, that their intent to defraud is lacking, vacatur is still appropriate.
Scienter need not be proven to obtain rescission based upon fraud. Steen v. Bump, 233 AD2d 583, 584 (3rd Dept.1996), lv. app. den., 89 NY2d 808 (1997). See also, Albany Motor Inn and Restaurant, Inc. v. Watkins, 85 AD2d 797 (3rd Dept. 1981); and Lyndon v. Hasse, 265 AD2d 531 (2nd Dept. 1999). Greystone satisfied the scienter element of the fraudulent omission by the Winston Defendants by establishing a "reckless indifference to error" or "a pretense of exact knowledge". Reno v. Bull, 226 NY 546 (1919). See also, Allen v. Westpoint - Pepperill, Inc., 11 F.Supp 2d 277, 288-9 (S.D.NY 1997).
Winston's reliance on the Stipulation's provision that Greystone "may file a motion [*4]seeking the entry of a judgment for actual damages" in the event that any of the Defendants have made misrepresentations as providing the sole remedy available to Greystone fails. "Under New York law, a contract induced by misrepresentation or fraud is void. The contract itself . . . cannot bar an action based on misrepresentation or fraud (citations omitted)." Allen v. Westpoint-Pepperell, Inc., supra at 289. That is, "[a] contract procured by fraudulent inducement cannot be saved by its own terms." Golden v. Guaranty Acceptance Capital Corp., 807 F. Supp. 1161, 1164 (S.D.NY 1992).
Furthermore, "[i]t is incumbent on the court, when interpreting a contract, to give the words and phrases contained therein their ordinary plain meaning (citation omitted)." Wallace v. 600 Partners Co., 205 AD2d 202 (1st Dept. 1994). The provision which provides that Greystone "may file a motion seeking the entry of a judgment," is permissive; not mandatory or exclusive. See, Marro v. Bartlett, 61 AD2d 729, 731 (3rd Dept. 1978), affd., 46 NY2d 674 (1979). Contrary to Winston's contentions, the Stipulation itself precludes it from being construed against any party. It provides that "[t]his Stipulation . . . shall be deemed to have been drafted by all parties hereto, to remove any negative inference against the drafter hereof." Thus, the Stipulation of Settlement is vacated as against the Winston Defendants.
Plaintiff also seeks sanctions pursuant to 22 NYCRR § 130-1.1. Plaintiff asserts that Vincenzi knowingly and intentionally made false statement in her affidavit of April 12 2004 which was submitted and in the Stipulation of Settlement. In the Stipulation of Settlement, which is dated April 27, 2004, Vincenzi confirmed that the contents of her affidavit sworn to April 12, 2004 were true. In that affidavit, Vincenzi stated under oath that she was not and had never been in possession of any information belonging to Greystone and more specifically its customer lists and fee information. She further swore that she did not need any of the Greystone material to perform her job.
Vincenzi now admits in her affidavit submitted in response to this motion that she had and used material belonging to Greystone while in the employ of Winston. She claims that, when she signed the Stipulation of Settlement, she thought she was averring that she was no longer in possession of and using the Greystone material as of the date of the Stipulation . She claims that no one explained to her that she was confirming the statements made in her affidavit of April 12, 2004.
Sanctions may be imposed upon a party who "...asserts material factual statements that are false." 22 NYCRR 130-1.1(c)(3). Vincenzi has engaged in such conduct when she submitted her April 12, 2004 affidavit to the Court and re-affirmed the contents of that affidavit in the Stipulation of Settlement.
An affidavit is defined as "[a] voluntary declaration of facts written down and sworn to by the declarant before an office authorized to administer oaths." Black's Law Dictionary, 7th Ed. An oath is to be administered in such a way as to impress upon the person making the oath that the material to which the person is swearing is true. See, CPLR 2309(b); and Siegel, New York Practice 3d §388. Vincenzi now concedes that prior to the Stipulation of Settlement she was in possession of and used Greystone information and material.
Vincenzi has now admitted making material misstatements of fact when she swore to her April 12, 2004 affidavit and executed the Stipulation of Settlement. Her misstatements of fact were the basis of the settlement of this action. Accordingly, sanctions should be imposed.
Likewise, Winston made significant representations in response to the underlying preliminary injunction motion. Those representations also proved to be false and misleading [*5]based either on its knowledge of the falsity of those statements or its reckless disregard for the truth. Thus, awarding sanctions against Winston is also appropriate.
However, sanctions cannot be imposed with a hearing. 22 NYCRR 130-1.1(d); and Haddad v. Haddad, 272 AD2d 371 (2nd Dept. 2000).
Accordingly, it is,
ORDERED, that Plaintiff's motion to vacate the Stipulation of Settlement and reinstate this action is granted and, all other respects, is referred to the Preliminary Conference; and it is further,
ORDERED, that counsel for the parties are directed to appear for a Preliminary Conference and for a conference to schedule a hearing to determine the sanctions to be imposed upon the Defendants on June 17, 2005 at 9:30 a.m.
This constitutes the decision and Order of the Court.
Dated: Mineola, NY _____________________________
May 12, 2005 Hon. LEONARD B. AUSTIN, J.S.C.
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