NGL Group, LLC. v Guinsburg
Annotate this CaseDecided on August 8, 2006
Supreme Court, Nassau County
NGL Group, LLC, Plaintiff,
against
James S. Guinsburg, Defendant.
11173-05
COUNSEL FOR PLAINTIFF
Hopkins & Kopilow, Esqs.
Garden City Center
100 Quentin Roosevelt Blvd., Suite 506
Garden City, New York 11530-4843
COUNSEL FOR DEFENDANT
Victor Mevorah,P.C.
100 Garden City Plaza - Suite 400
Garden City, New York 11530
Leonard B. Austin, J.
Defendant James S. Guinsberg ("Guinsburg") moves for summary judgment dismissing the complaint.
BACKGROUND
Plaintiff NGL Group, LLC ("NGL") operates an independent insurance agency in Lynbrook. NGL is principally engaged in the business of obtaining property and casualty liability insurance for businesses and homeowners.
Prior to March 1994, Guinsberg operated a independent insurance agency known as Nathan M. Guinsburg & Son, Co ("NMG"). In March 1994, NGL purchased the business of NMG pursuant to the terms of a written agreement ("1994 Agreement"). NMG was engaged in a business similar to that of NGL. NMG maintained its offices in Rockville Centre.
As part of this transaction, Guinsberg became an independent contractor/consultant with NGL. Paragraph 4(b) of the 1994 Agreement provided for Guinsberg to receive a fixed salary and commissions based upon the commissions earned on policies renewed or placed by Guinsberg.
The compensation provisions of the 1994 Agreement were modified from time to time. The last modification ran from April 1, 2004 through March 31, 2005. Paragraph 8 of the 1994 Agreement contains a restrictive covenant prohibiting Guinsberg from engaging in the general insurance business within one hundred miles of NGL's Lynbrook office "... for a period of five (5) years, commencing at the end of the seventh year of this Agreement."
Guinsberg and NGL entered into a Restrictive Covenant Agreement in 2000 ("2000 Agreement").
Article 2 of the 2000 Agreement contains anti-solicitation provisions. This provision recognized that Guinsberg had a "book of business" when he joined NGL.
This provision provides that for a period of two (2) years after his separation from NGL Guinsberg will not solicit business from any customers of NGL with whom Guinsberg had not done business prior to his association with NGL. Article 2 further provides that for the two year period Guinsberg will not induce or attempt to influence any employees of NGL to terminate their employment or working relationship with NGL.
Guinsberg worked for NGL until March 17, 2005 when he was terminated. Guinsberg asserts he was terminated without cause and in violation of his employment agreement. Guinsberg is not presently involved in the insurance business.
After Guinsberg's affiliation with NGL was terminated, several of the customers who had been Guinsberg's customers when he joined NGL transferred their business to other insurance brokers or agents.
NGL's complaint alleges three causes of action. The first cause of action seeks money damages for prima facie tort. The second cause of action seeks money damages for breach of contract. The third cause of action seeks a permanent injunction enjoining Guinsberg from violating the restrictive covenant contained in the 1994 Agreement and the 2000 Agreement and from harassing NGL employees.
DISCUSSION
A. Summary Judgment - Standard
Summary judgment is a drastic remedy which will be granted only when the movant establishes that there are no triable issues of fact. Andre v. Pomeroy, 35 NY2d 361 (1974), See also, Mosheyev v. Pilevsky, 283 AD2d 469 (2nd Dept. 2001); and Akseizer v. Kramer, 265 AD2d 365 (2nd Dept. 1999).
The party seeking summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York, 49 NY2d 557 (1980).
Once the party seeking summary judgment has made a prima facie showing of entitlement to judgment as a matter of law, the party opposing the motion must come forward with proof in evidentiary form establishing the existence of triable issues of fact or must demonstrate an acceptable excuse for its failure to do so. Zuckerman v. City of New York, supra ; and Davenport v. County of Nassau, 279 AD2d 497 (2nd Dept. 2001); and Bras v. Atlas Construction Corp., 166 AD2d 401 (2nd Dept. 1991).
When deciding a motion for summary judgment, the court must determine if triable issues of fact exist. Matter of Suffolk County Dept. of Social Services v. James M., 83 NY2d 178 (1994); and Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957). The motion must be denied if the Court has any doubt as to the existence of a triable issue of fact. Freese v. Schwartz, 203 AD2d 513 (2nd Dept. 1994); Rudinsky v. Robbins, 191 AD2d 488 (2nd Dept. 1993); and Miceli v. Purex Corp., 84 AD2d 562 (2nd Dept. 1984). See, Peerless Ins. Co. v. Allied Bldg. Products Corps., 15 AD3d 393 (2nd Dept. 2005); and Matter of Cuttetto Family Trust, 10 AD3d 656 (2nd Dept. 2004).
When deciding a motion for summary judgment, the court must view the evidence in a light most favorable to the non-moving party and must give the non-moving party all of the reasonable inferences which can be drawn from the evidence. Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgt., L.P., 7 NY3d 96 (2006); Negri v. Stip & Shop, Inc., 65 NY2d 625 (1985); Erikson v. J.I.B. Realty Corp., 12 AD3d 344 (2nd Dept. 2004); and Louniakov v. M.R.O.D. Realty Corp., 282 AD2d 657 (2nd Dept. 2001).
B. Prima Facie Tort
Prima facie tort is the label given to an action arising out of the intentional infliction of economic harm without justification. Board of Education of Farmingdale Union Free School Distrixt v. Farmingdale Classroom Teachers Assoc., Inc., 38 NY2d 397 (1975).
The elements of a cause of action for prima facie tort are "...(1) the intentional infliction of harm, (2) which results in special damages, (3) without any excuse or justification, (4) by an act or series of acts which would otherwise be lawful (citations omitted)." Freihofer v. Hearst Corp., 65 NY2d 135, 142-143 (1985). See also, Cardo v. Board of Managers, Jefferson Village Condo 3, 29 AD3d 930 (2nd Dept. 2006); and Del Vecchio v. Nelson, 300 AD2d 277 (2nd Dept. 2002).
Recovery cannot be had in an action for prima facie tort "...unless malevolence is the sole motive for the Defendant's otherwise lawful act." Burns Jackson Miller Summit & Spitzer v. Lindner, 59 NY2d 314, 333 (1983). See also, Beardsley v. Kilmer, 236 NY 80 (1923); and Lynch v. McQueen, 309 AD2d 790 (2nd Dept. 2003). Plaintiff must plead and prove the existence of malice and ill will. Id.; and Smith v. County of Livingston, 69 NY2d 993 (4th Dept. [*2]1979).
Since Guinsberg terminated his association with NGL, NGL has lost at least 14 customers who were in Guinsberg's book of business. These customers have transferred their business to other insurance brokers. As a result, NGL has lost the commissions that would have been earned on the renewal of their policies.
Guinsberg was discharged by NGL after he had a significant disagreement and altercation with Jeffrey Greenfield, NGL's managing partner. Guinsberg admitted at his deposition that he spoke with some of his customers who switched agents or brokers
after he left NGL. With the exception of a few customers who were personal friends or relatives, he denies having initiated the contact. He asserts that a few of his long time customers contacted him after they were advised by NGL that Guinsberg was no longer associated with the firm. He denies advising any of his former clients to switch brokers. Guinsberg avers that since he is no longer in the insurance business, he has no motive or reason to have his former customers change insurance brokers.
Guinsberg attributes the loss of these customers to normal attrition or to his customer's choosing to take their business elsewhere once his relationship with NGL was terminated.
NGL asserts that circumstantial evidence exists to the contrary. Several of Guinsberg's former customers transferred their accounts to other brokers within days of Guinsberg's departure from NGL or within days of speaking with Guinsberg.
There is hearsay evidence to substantiate this claim. Jeffrey Greenfield testified at his deposition that customers who were in Guinsberg's book of business called to advise NGL that they were changing insurance brokers. When asked why they were changing brokers, these customers advised the NGL employee with whom they were speaking that Guinsberg had asked them to switch brokers.
Hearsay evidence is sufficient to defeat a motion for summary judgment provided it is not the only evidence establishing the existence of triable issues of fact. LaRusso v. Katz, 30 AD3d 240 (1st Dept. 2006); and Navedo v. 250 Willis Avenue Supermarket, 290 AD2d 246 (1st Dept. 2002). In this case, the Court has the hearsay evidence coupled with the undeniable fact that several of Guinsberg's customers switched their broker within days of Guinsberg's leaving NGL or speaking with the customers.
Guinsberg's eleven year relationship with NGL did not terminate amicably. Guinsberg claims he was improperly and unlawfully terminated after having a shouting and shoving incident with Jeffrey Greenfield, the managing partner of NGL regarding the handling of a claim. Guinsberg asserts that he spoke with Greenfield on the telephone the day after his discharge in an effort to smooth over the situation. Greenfield is alleged to have curtly and rudely advised Guinsberg that he was finished at NGL and slammed down the phone. Given this situation, the Court must, for the purposes of this motion, infer that Guinsberg has ill will towards NGL.
Under these circumstances, and provided competent evidence is introduced at trial regarding the circumstances relating to Guinsberg's clients changing brokers, the trier of fact could reasonably find that Guinsberg advised some of his customers to switch brokers solely for the purposes of depriving NGL of the commissions they would have earned on the renewal of the policies. [*3]
Where different inferences may be drawn from the facts, summary judgment cannot be granted. Sodexho Management, Inc. v. Nassau Health Care Corp., 23 AD3d 370 (2005). Therefore, Defendant's motion to dismiss the first cause of action must be denied.
C. Second Cause of Action - Breach of Contract
The elements of a cause of action for breach of contract are the existence of a contract between the plaintiff and defendant, consideration, performance by the plaintiff, breach by the defendant and damages resulting from the breach. Furia v. Furia, 116 AD2d 694 (2nd Dept. 1986). See also, 2 NY PJI 4:1, at 586 (2005). Plaintiff must establish the provisions of the contract the defendant is alleged to have breached. Peters v. Accurate Building Inspectors Division of Ubell Ent. Inc., 29 AD3d 972 (2nd Dept. 2006); Sud v. Sud, 211 AD2d 423 (2nd Dept. 1995); and Atkinson v. Mobil Oil Corp., 205 AD2d 719 (2nd Dept. 1994).
The claim for breach of contract is premised upon Guinsberg's violation of the restrictive covenant contained in the 1994 Agreement and his violation of the "Anti-Solicitation Covenant" of the 2000 Agreement.
Guinsberg is not in violation of the restrictive covenant contained in the 1994 Agreement. The restrictive covenant contained in the 1994 Agreement prohibits Guinsberg from engaging in the general insurance business within 100 miles of NGL's Lynbrook office except on behalf of or with the consent of NGL "...for a period of five years, commencing at the end of the seventh year of this Agreement." By its terms, this restrictive covenant expired at midnight on March 3, 2006.
The only evidence in this case establishes that from March 1994 through March 17, 2005, Guinsberg engaged in the general insurance business as and independent contractor/consultant for NGL. Since Guinsberg left NGL, he has not engaged in the general insurance business. Therefore, Guinsberg did not violate the restrictive covenant of the 1994 Agreement.
The anti-solicitation provisions of the 2000 Agreement prohibits Guinsberg for a period of two (2) years from the date of his separation from NGL from (1) soliciting insurance business from any customer of NGL who was not in Guinsberg's book of business prior to his affiliation with NGL; (2) advising any insurance carriers, manufacturers, distributors, customers and/or suppliers of NGL with whom Guinsberg did not do business prior to his affiliation with NGL to curtail or cancel their business relationship with NGL; and (3) inducing any employee, agent, independent contractor or sales representative of NGL to terminate employment with NGL.
Guinsberg avers that he has not engaged in any conduct that would be in violation of the anti-solicitation provisions of the 2000 Agreement.
NGL has not placed before the Court any evidence establishing directly or inferentially that Guinsberg has violated the anti-solicitation provision of the 2000 Agreement. Guinsberg's customers who have switched brokers since Guinsberg's termination were all from Guinsberg's book of business when he joined NGL. Under the terms of the 2000 Agreement, Guinsberg is permitted to contact these individuals and/or businesses. NGL has not placed before the Court the name of a single customer who became Guinsberg's customer while he was affiliated with NGL and who changed brokers after Guinsberg was terminated. Certainly, by carving out Ginsberg's book of business from the 2004 Agreement, demonstrates that, upon his termination, NGL had no reasonable expectation of keeping those customers.
NGL has also failed to place before this Court any evidence that Guinsberg violated the other provisions of the anti-solicitation provisions of the 2000 Agreement.
Since Guinsberg has established a prima facie entitlement to judgment as a matter of law [*4]on the breach of contract cause of action and NGL has failed to raise any triable issues of fact, summary judgment dismissing the second cause of action must be granted.
D. Third Cause of Action - Injunctive Relief
NGL seeks to enjoin Guinsberg from interfering with its clients. NGL further seeks an injunction directing Guinsberg to stay away from its place of business and employees, communicating with persons employed by or associated with NGL and from
harassing, intimidating or menacing NGL's employees.
A permanent injunction is a drastic remedy that will be issued only where plaintiff demonstrates it will suffer irreparable harm in the absence of injunctive relief. Icy Splash Food & Beverage v. Henckel, 14 AD3d 595 (2nd Dept. 2005). Irreparable harm means injury for which money damages would be insufficient. See, Klein, Wagner & Morris, v. Lawrence A. Klein, P.C., 186 AD2d 631 (1992).
Guinsberg denies having engaged in any of the conduct which NGL seeks to enjoin.
NGL has failed to place before the Court any evidence that Guinsberg has communicated with or solicited business from any customers of NGL the 2000 Agreement or that he engaged in the general insurance business in violation of the 1994 Agreement.
Guinsberg avers he has not been to NGL's place of business since March 17, 2005. NGL does not contradict this averment. Guinsberg's passing by NGL's office while traveling on Merrick Road, a major thoroughfare in Lynbrook, does not constitute a violation of the restrictive covenant.
The record indicates that Guinsberg last communicated with an employee or anyone affiliated with NGL since March 18, 2005 when he spoke with Jeffrey Greenfield on the telephone.
NGL does not submit an affidavit or any other proof in evidentiary form which raises questions of fact regarding this cause of action.
Since Guinsberg has made a prima facie showing of entitlement to judgment as a matter of law and NGL has failed to establish the existence of any factual issues necessitating a trial on this cause of action (Davenport v. County of Nassau, supra ), summary judgment dismissing the third cause of action must be granted.
E. Additional Discovery
NGL asserts summary judgment should be denied pending the completion of non-party discovery. This assertion must be rejected.
CPLR 3212(f) provides that summary judgment may be denied where "...facts essential to justify opposition may exist but cannot then be stated." In such a case, the court may either deny the motion or direct further discover so that the evidence needed to oppose the summary judgment can be obtained.
Mere speculation that discovery will reveal material or information necessary to defeat summary judgment is insufficient. The party asserting that evidence could be obtained through discovery which would defeat the summary judgment motion must demonstrate to the court a factual basis for that belief. Connecticut Indemnity Co. v. Travelers Ins. Co., 300 AD2d 530 (2nd Dept. 2002); and Cooper v. 6 West 20th Street
Tenants Corp., 258 AD2d 362 (1st Dept. 1999); and Cooper v. Milton Paper Co., Inc., 258 AD2d 614 (2nd Dept. 1999). Defendant has failed to indicated how further discovery might uncover material facts which would result in Plaintiff's motion being denied. Casey v. Clemente, [*5]-A.D.3d-, 817 NYS2d 644 (2nd Dept. 2006).
To the extent the second cause of action is based upon Guinsberg's violation of the anti-solicitation provisions of the 2000 Agreement. NGL knows who its customers were when Guinsberg was terminated. NGL also knows which customers were part of Guinsberg's book of business. NGL should be able to advise the Court which of its customers who were not in Guinsberg's book of business no longer use NGL as their broker. NGL has not placed before this Court the name of a single former customer who was not in Guinsberg's book of business. Additional discovery is not necessary to determine this information.
NGL also fails to place before the Court any reason why additional discovery is needed to oppose the motion for summary judgment seeking to dismiss the third cause of action.
If Guinsberg has harassed, annoyed or intimidated any NGL employees since his termination, NGL most certainly should have provided the Court with the name of the employee who has been subject to such harassment, the nature of the activity that constituted the harassment and when and where the offending conduct took place. NGL has failed to establish that Guinsberg has been back to NGL's place of business since March 17, 2005 or that he has communicated in any way with any of its employees since his telephone conversation with Jeffrey Greenfield on March 18, 2005.
NGL has also failed to establish that Guinsberg has communicated with any of its customers since March 17, 2005 except those who were in Ginsberg's book of business. The agreements between Guinsberg and NGL permit him to communicate with those persons or businesses.
NGL has failed to establish that the information needed to oppose the summary judgment motion is exclusively within Guinsberg's knowledge or possession or that additional discovery would lead to information that would permit NGL to defeat Guinsberg's motion for summary judgment dismissing the second and third causes of action.
Accordingly, it is,
ORDERED, that Defendant's motion for summary judgment is granted to the extent of dismissing the second and third cause of action and is denied as to the first cause of action; and it is further,
ORDERED, that counsel for the parties are directed to appear for a certification conference on August 30, 2006 at 9:30 a.m.
This constitutes the decision and Order of the Court.
Dated: August 8, 2006
_____________________________
Hon. LEONARD B. AUSTIN, J.S.C.
Mineola, NY
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