NorthWinds Renewables LLC v Rheuben

[*1] NorthWinds Renewables LLC v Rheuben 2014 NY Slip Op 50076(U) Decided on January 28, 2014 Appellate Term, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 28, 2014
SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT
PRESENT: Torres, J.P., Schoenfeld, Shulman, JJ
570798/12.

NorthWinds Renewables LLC and and NorthWinds Advisors LLC, Plaintiffs-Respondents,

against

Sean P. Rheuben, Defendant-Appellant.

Defendant appeals from an order of the Civil Court of the City of New York, New York County (Arlene P. Bluth, J.), dated May 8, 2012, which granted plaintiffs' motion for summary judgment in the principal sum of $22,274.12, and dismissed the counterclaim.

Per Curiam.

Appeal from order (Arlene P. Bluth, J.), dated May 8, 2012, deemed an appeal from the ensuing judgment (same Court and Judge), entered June 13, 2012, and so considered (see CPLR 5520[c]), judgment reversed, with $30 costs, motion denied and counterclaim reinstated.

Plaintiffs' motion for summary judgment on their claim to recover a $25,000 "advance against future bonus payments" extended to defendant should have been denied. Plaintiff failed to demonstrate as a matter of law that the monies advanced to defendant, a managing director at plaintiffs' investment firm, constituted a loan or that there was an express or implied agreement by defendant to repay the funds. Indeed, the email confirming the advance indicated that the advance was treated as compensation to defendant for tax purposes, rather than a loan. Moreover, in the absence of an express or implied agreement to repay, an advance is generally not recoverable by an employer (Pease Piano Co. v Taylor, 197 App Div 468 [1921], affd 232 NY 504 [1921]; Posner v Precision Shapes, Inc. 271 App Div 435 [1946]), even where, as here, the employee resigned before the time the total bonus was to be determined and paid (Gray v Lurie, 3 AD2d 956 [1957]). The parties' written memorandum of understanding ("MOU"), while setting forth a method to determine the amount of bonus payments due defendant upon his voluntary resignation, contained no express agreement to repay the advance. At most, a triable issue is raised as to whether the MOU can be read to include an implied obligation by defendant to repay the unearned portion of the advance (see Fernandez v Hencke, 93 AD3d 440 [2012]; People v Grasso, 13 Misc 3d 1227[A], 2006 NY Slip Op 52019[U] [2006], mod on other grounds 54 AD3d 180 [2009]).

Summary judgment dismissing defendant's counterclaim for unpaid bonus payments is [*2]also unwarranted. Plaintiffs failed to eliminate all triable issues as to whether bonus payments under the MOU were discretionary and forfeitable, rather than earned income not subject to forfeiture (see Mirchel v RMJ Securities Corp., 205 AD2d 388, 389 [1994]; see also Ryan v Kellogg Partners Institutional Services, 79 AD3d 447, 448 [2010]; Weiner v Diebold Group, 173 AD2d 166, 167 [1991]), especially given the MOU's mandatory language that plaintiffs "shall" allocate a specific portion of revenues to the bonus pool, which "shall" be allocated to participants, who "shall" allocate the appropriate split (see Caruso v Allnet Communications Servs., 242 AD2d 484, 484-485 [1997]; cf. Hunter v Deutsche Bank AG, New York Branch, 56 AD3d 274 [2008]). Defendant also raised a factual issue as to his contribution to the investment transactions for which he claims entitlement to a bonus.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: January 28, 2014