A&S Reps, LLC v North Am. Enclosures, Inc.
Annotate this CaseDecided on May 16, 2005
Supreme Court, Suffolk County
A&S Reps, LLC, Plaintiff,
against
North American Enclosures, Inc., Defendant.
15496-03
BRIAN K. SALTZ, ESQ.
Attorney for Plaintiff
500 Bi-County Boulevard, Suite 112
Farmingdale, New York 11735
GRAFSTEIN - SUAREZ & ASSOCIATES, P.C.
Attorneys for Defendant
215 East Main Street, Suite 206
Huntington, New York 11743-7904
Elizabeth Hazlitt Emerson, J.
On June 21, 2000, the parties entered into a written contract in which the plaintiff was retained to act as the defendant's exclusive sales agent and representative for the solicitation of orders for picture frames and framed art. The agreement provided that the defendant would pay the plaintiff a commission of between 5% and 10% of net billings, depending on the discount structure utilized when selling the product to the customer. Net billings were defined as gross sales less freight and other delivery charges, discounts, advertising allowances, insurance costs, sales taxes, special handling charges, rebates, defective allowances, and warehouse allowances. The agreement also provided that it could not be amended "except in writing and signed by both parties."
In October 2000, the defendant added J.C. Penney to the list of companies for which the plaintiff would act as its sales agent and representative. While the defendant initially paid the
Index No.: 15496-03
Page 2
plaintiff a 5% commission for sales to J.C. Penney, in April 2002, it reduced the plaintiff's commission to 3% retroactive to February 2002. In an e-mail dated April 29, 2002, the defendant
advised the plaintiff of the change as follows:
This is to serve as confirmation of our discussion pertaining to your commission structure for J.C. Penney corporate stores. Due to the high costs incurred by providing fixtures and brackets to J.C. Penney corporate stores at no charge, it is necessary to reduce the commission rate from 5% to 3%. Please review the format below detailing the commission rates and net aggregate dollar volumes to be attained before returning back to the original commission rate.
The plaintiff's principal Wayne Schneider responded, "Thanks Nick, could we discuss whenever you are available? Wayne"
Subsequent discussions about the reduced commission did not result in a formal written agreement. On January 9, 2003, the defendant terminated the parties agreement, and this action ensued. The plaintiff seeks to recover the difference between the 5% commission provided for in the parties' written agreement and the 3% paid from February through December 2002 ($40,501). The defendant counterclaims for alleged overpayments to the plaintiff in the amounts of $4,543.03, $906.63, and $1,278.55, respectively. Both sides now move for summary judgment. [*2]
Preliminarily, the court notes that, although the plaintiff is domiciled in Texas and the contract was negotiated, signed, and performed in Texas, the plaintiff explicitly consented "to the jurisdiction of the State of New York, County of Suffolk for the purposes of any claim, dispute or litigation arising under or in connection with this agreement." Moreover, the agreement provides, "[I]f any paragraph, or part thereof, shall be considered void or invalid under the laws of the State of New York, the remaining portions of this Agreement which are severable shall remain in full force and effect." The court, therefore, finds that the agreement intended for New York law to apply to any disputes thereunder. The court also finds that this dispute is not governed by General Obligations Law § 5-701, as the defendant contends, but General Obligations Law § 15-301, which provides in pertinent part: A written agreement or other written instrument which contains a provision to the effect that it cannot be changed orally, cannot be changed by an executory agreement unless such executory agreement is in writing and signed by the party against whom enforcement of the change is sought or by his agent.
The e-mail dated April 29, 2002, is insufficient to satisfy the requirements of GOL § 15-301. The defendant's contentions to the contrary notwithstanding, it is not signed by either party, and it contains no clear indication that the plaintiff agreed to the defendant's proposed reduction of its commission from 5% to 3%. Rather, it indicates that the plaintiff merely agreed to discuss the defendant's proposal.
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Having determined that GOL § 15-301 applies and that there is no writing signed by the plaintiff, the court turns to the defendant's estoppel argument. Estoppel is an exception to GOL § 15-301 (see, Rose v Spa Realty Assoc., 42 NY2d 338, 343-344; Richardson & Lucas v New York Athletic Club, 304 AD2d 462). Under the doctrine of equitable estoppel, a party to a written agreement who has induced another's significant and substantial reliance upon an oral modification will be estopped from invoking GOL § 15-301 (see, Rose v Spa Realty Assoc., supra, at 344-345; Club Haven Investment Co. v Capital Co. Of America, 160 F Supp 2d 590, 592). Moreover, the conduct relied upon to establish estoppel must not otherwise be compatible with the agreement as written (see, Rose v Spa Realty Assoc., supra, at 344; Irving O. Farber, PLLC v Kamalian, 16 AD3d 506). Here, the defendant alleges that it would not have entered into a contract with J.C. Penney for net billings worth more than $2 million if the defendant did not agree to reduce his commission by a mere $40,000. Under these circumstances, the court finds that there was no reasonable reliance on the alleged oral promise, and the defendant suffered no unconscionable injury (see generally, Aris Indus. v 1411 Trizechahn-Swig, LLC, 294 AD2d 107). The court also finds that the conduct of the parties did not evidence an indisputable mutual departure from their written agreement (see, Rose v Spa Realty Assoc., supra, at 344; Irving O. Farber, PLLC v Kamalian, supra, at 610). [*3]
Finally, there is no merit to the defendant's accord-and-satisfaction argument. As a general rule, acceptance of a check in full settlement of a disputed unliquidated claim operates as an accord and satisfaction discharging the claim. Such agreements are enforceable, however, only when the person receiving the check has been clearly informed that acceptance of the amount offered will settle or discharge the claim (see, Merrill Lynch Realty/Carl Barr, Inc. v Skinner, 63 NY2d 590, 596). Here, there is simply no evidence that the plaintiff was advised that the reduced commission checks sent by the defendant were offered in settlement of the parties' dispute (id. at 596).
In view of the foregoing, the summary judgment is granted in favor of the plaintiff in the amount of $40,501 with interest from February 1, 2002, and the defendant's counterclaims are dismissed.
DATED: May 16, 2005
J. S.C.
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