Martin v Southern Container Corp.

[*1] Martin v Southern Container Corp. 2010 NY Slip Op 51862(U) [29 Misc 3d 1217(A)] Decided on October 19, 2010 Supreme Court, Suffolk County Pines, J. 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 19, 2010
Supreme Court, Suffolk County

Eric Martin, Plaintiff,

against

Southern Container Corp. and ROCK - TENN SERVICES, INC., a/k/a ROCK - TENN COMPANY, Defendants.



20192-2008



Attorney for Plaintiff

Michael B. Schulman, Esq.

Michael B. Schulman & Associates, PC

145 Pinelawn Road, Suite 310 N

Melville, New York 11747

Attorney for Defendant

Jaspan Schlesinger, LLP

Daniel Shapiro, Esq.

300 Garden City Plaza

Garden City, New York 11530-3324

Emily Pines, J.

ORDERED, that the motion (motion sequence number 001) by plaintiff pursuant to CPLR §3212 for summary judgment on liability on the first and second causes of action of the Complaint is denied; and it is further

ORDERED, that the cross-motion (motion sequence number 002) by defendants pursuant to CPLR §3212 for summary judgment dismissing the Complaint, is granted to the extent that the first and third cause of action are dismissed; and it is further [*2]

ORDERED, that the motion (motion sequence number 003) by plaintiff pursuant to CPLR §3025(b) seeking leave to amend the Complaint, is denied; and it is further

ORDERED, that a pretrial conference is scheduled for November 8, 2010 at 9:30 a.m. before the undersigned.

Background

Plaintiff commenced this action against defendants by the filing of a Summons with Notice on July 8, 2008 and subsequently a Verified Complaint on August 14, 2008. Issue was joined by defendants' service of a Verified Answer dated August 26, 2008. The action arises out of plaintiff's employment with defendant Southern Container Corp. ("Southern Container") and his claim that he was denied certain benefits he believed he was promised in conjunction with his employment.[FN1] The Complaint alleges causes of action for breach of contract (first and second causes of action) and unjust enrichment (third cause of action). Specifically, the record reflects that on May 31, 1988 plaintiff and Steven Hill (then Vice President of Finance for Southern Container), executed a document which, by its terms stated that it was "an outline" of their understanding concerning plaintiff's employment. This document shall be referred to as the "letter agreement". The letter agreement provided for salary terms and also stated that plaintiff would be "eligible for all company benefits, including profit sharing". Additionally, the letter agreement stated: 8. You will be required to sign a Southern Container Salesman's Contract which will provide that the accounts which you brought with you will remain your accounts but other accounts developed during your employ will be Southern Container's accounts. We also hereby agree that upon your father's retirement, you will be permitted to succeed to his accounts.The above is an outline and will be embodied into the above mentioned contract. We look forward to a long and mutually rewarding relationship with your employment at Southern Container.

Although defendants terminated plaintiff's employment in May of 2008, plaintiff is not challenging such termination in this action.

Plaintiff alleges in the first cause of action that Southern Container breached this agreement by failing to transfer his father's accounts to him upon his father's retirement. In the second cause of action, plaintiff asserts that he was entitled to be paid for unused vacation time upon the termination of his employment, and defendants failed to compensate him for same. Finally, in the third cause of action, plaintiff asserts a claim against defendants sounding in unjust enrichment.

Motions for Summary Judgment

Plaintiff now moves for partial summary judgment as to liability only on the first and second causes of action of the Complaint. In support of the motion, plaintiff annexes the letter agreement, the Complaint, plaintiff's deposition transcript, the transcripts of the depositions of defendants' employees, Steven Hill, Mike Petee and Ron Byers', Southern Container's Employee Handbook and Benefits Booklet, and Southern Container's Employee Benefits Summary for Office/Salaried Employees. Plaintiff argues that he entered into the letter agreement with the understanding that [*3]upon his father's retirement, his accounts would be transferred to plaintiff and that at least six such accounts were not transferred to him. Plaintiff acknowledges that these accounts were transferred prior to the retirement of his father, Murray Martin, however, he argues that pursuant to the letter agreement, they still should have been transferred to him. Plaintiff admits that three accounts were transferred to him upon his father's retirement. Thus, plaintiff argues that there is no question of fact that defendants breached the letter agreement with regard to the transfer of his father's accounts, and he is entitled to summary judgment on the first cause of action.

With regard to the second cause of action regarding payment for the unused vacation time, plaintiff asserts that the letter agreement entitled him to "all company benefits"; and one of such benefits, as contained in the Employee Handbook, entitles him to be paid for his unused vacation time. Plaintiff states in his affidavit that during the course of his employment, he was never compensated for his vacation or received any additional salary for unused vacation time. Thus, he claims that defendants violated the terms of his employment and he is entitled to summary judgment on the second cause of action.

Defendants oppose the motion and cross-move for summary judgment dismissing the Complaint in its entirety. Initially, defendants assert that the letter agreement was merely an "agreement to agree", and as such, unenforceable. Defendants note that the letter agreement specifically indicates that it is merely an "outline, that a contract would follow at a later time and as such, the parties were not agreeing to be bound until such contract was executed. Thus, the letter agreement was not an enforceable contract

However, if the Court finds the letter agreement an enforceable contract, defendants further argue that it no longer applied to plaintiff because his employment status changed from salaried salesman to commissioned salesman in 1998. The terms of the letter agreement pertained to salaried salesman and included provisions for the payment of expenses and a salary. Plaintiff admitted in his examination before trial that the terms of his employment changed in 1998 to eliminate the payment of a salary as well as the expenses and thus, the letter of agreement (were it deemed enforceable, which defendants do not concede), no longer governed the plaintiff's employment. Therefore, he cannot now seek to assert rights he claims were afforded by the letter agreement.

Additionally, with regard to the transfer of Murray Martin's accounts, defendants argue that the letter agreement clearly and unambiguously only required the transfer of such accounts he had upon his retirement. Plaintiff admits that three accounts were transferred to him when his father retired and the remaining six accounts were not his father's. Rather, these accounts not been his father's for several years prior to his retirement and plaintiff admitted in his deposition that he was aware of such transfers. Therefore, defendants had no obligation to transfer these accounts to plaintiff upon Murray Martin's retirement.

Turning to the issue of the paid vacation, defendants argue that as a commission only salesperson, plaintiff was not entitled to a paid vacation because he was not required to be in the office and set his own schedules, and defendants would not even necessarily know if plaintiff was [*4]not working. Thus, it was not the company policy to pay commissioned salespeople for vacation time. Additionally, defendants point to the Employee Handbook, which provides that individuals who are terminated were only entitled to accrued and unused vacation in the year in which the termination occurred. So, even if the Court were to determine that plaintiff was entitled to some payment, it would only be for the year he was terminated, to wit, 2008. Moreover, the Employee Handbook also provided that if an employee believed there was a discrepancy in the calculation of his vacation pay or eligibility, he/she could request in writing a review. According to defendants, plaintiff did not seek a review of his vacation pay or eligibility. Finally, after defendants terminated plaintiff's employment, plaintiff sought $1,000.00 he claimed was owed for commissions yet did not seek any vacation pay. In response, defendants actually paid plaintiff the sum of $4,600.00 for commissions he earned prior to his termination. Based on all of these facts, defendants claim they are entitled to summary judgment dismissing the second cause of action of the Complaint.

Lastly, defendants argue that plaintiff cannot succeed on an unjust enrichment cause of action because it is duplicative of the breach of contract claims. Since plaintiff cannot succeed on the breach of contract claims based upon his father's accounts and/or the vacation pay, defendants assert that he likewise cannot succeed on an unjust enrichment theory arising out of the same facts. Therefore, defendants urge the Court to dismiss the Complaint in its entirety.

Plaintiff submits an affirmation of counsel in opposition to the cross-motion for summary judgment and further support of his motion for summary judgment. Plaintiff reiterates that the Court should find that the letter agreement is an enforceable contract as it contained the essential terms of his employment and did not state that it was not effective until a formal agreement was executed. The parties operated under the terms of the letter agreement for many years and defendants have been unable to produce any additional agreements, despite deposition testimony by Steven Hill that a Salesmen's Contract should have been executed. Plaintiff further claims that the terms of his employment were only partially modified when he became a commission only salesperson and the remaining terms of the letter agreement remained valid and enforceable.

Plaintiff also challenges defendants' claim that it complied with the terms of the letter agreement regarding the transfer of Murray Martin's accounts. Here, plaintiff argues that defendants, when they transferred the accounts, knew that Murray Martin, who was in his 80's, would be retiring soon. Plaintiff claims that defendants raised questions of fact as to when they knew Murray Martin was going to retire and if they appropriately initiated a transition of his accounts to plaintiff.

Plaintiff claims that defendants' arguments regarding the vacation pay are likewise without merit and must be rejected by the Court. He states that he was never advised he was no longer entitled to vacation pay upon becoming a commission only salesman. Moreover, plaintiff asserts that he is not seeking pay for accrued but unused vacation time, but rather vacation pay that defendants never provided him with pursuant to the Employee Handbook.

Finally, plaintiff argues that he has validly pleaded a claim for unjust enrichment as an alternative to the breach of contract cause of action. In the event the Court finds that the letter agreement constitutes a valid contract, plaintiff consents to the withdrawal of the unjust enrichment [*5]claim.

Defendants submit a further reply in response to the opposition to the cross-motion and reiterate that the letter agreement was not a valid and enforceable contract since it only contemplated a future binding agreement and the parties did not intend to be bound. Moreover, even if the Court finds the letter agreement was enforceable as a contract when executed, it ceased to be bind the parties when plaintiff became a commissioned salesperson as it applied only to his employment as a "salaried salesman". Plaintiff admitted in his deposition that the terms of his employment changed and thus he had notice of the changes. Moreover, defendants urge the Court to recognize that they complied with the letter agreement (if same is found to have still been in effect) in that they transferred Murray Martin's existing accounts at the time of his retirement, to plaintiff. With regard to three of the disputed accounts, defendants state that Murray Martin was no longer servicing them because they had become defunct and ceased being customers of Southern Container prior to his retirement. The other three disputed accounts had become "house accounts" in 2004 and 2005, also prior to Murray Martin's retirement. Defendants argue that the letter agreement did not bar them transferring any of Murray Martin's accounts prior to his retirement and thus there is no question of fact precluding summary judgment dismissing this claim. Defendants also repeat the arguments they made in their moving papers with regard to the payment for vacation time and seek dismissal of the Complaint in its entirety.

It is well settled that to obtain summary judgment, the moving party must make a prima facie showing of entitlement to judgment as a matter of law, offering sufficient evidence to demonstrate the absence of any material issues of fact. Goldberger v. Brick & Ballerstein, Inc., 217 AD2d 682, 629 NYS2d 813 (2d Dept. 1995) (internal citations omitted). The burden then shifts to the party opposing the motion to come forward with proof in admissible form demonstrating there are genuine issues of material fact which preclude the granting of summary judgment. Zayas v. Half Hollow Hills Cent. School Dist., 226 AD2d 713, 641 NYS2d 701 (2d Dept. 1996). However, if the movant fails to meet its prima facie burden, the Court need not consider the sufficiency of the opposition papers. McMahan v. McMahan, 66 AD3d 970, 886 NYS2d 825 (2d Dept. 2009)."It is not up to the court to determine issues of credibility or the probability of success on the merits, but rather to determine whether there exists a genuine issue of fact." Triangle Fire Protection Corp. v. Manufacturer's Hanover Trust Co., 172 AD2d 658, 570 NYS2d 960 (2d Dept. 1991). A motion for summary judgment "should not be granted where the facts are in dispute, where conflicting inferences may be drawn from the evidence, or where there are issues of credibility." Scott v. Long Island Power Auth., 294 AD2d 348, 741 NYS2d 708 (2d Dept. 2002).

The Court of Appeals has recognized that: In cases of contract interpretation, it is well settled that when parties set down their agreement in a clear, complete document, their writing should be enforced according to its terms.

South Road Assoc., LLC., v. International Business Machines Corp., 4 NY3d 272, 793 NYS2d 835, 826 NE2d 806 (2005)(internal quotations omitted). These principles have been oft repeated by [*6]the Second Department where it has held that a written agreement that is "complete, clear, and unambiguous" on its face must be enforced according to the plain meaning of the terms contained therein. Johnston v. MGM Emerald Enterprises, Inc., 69 AD3d 674, 893 NYS2d 176 (2d Dept. 2010). See also, Lobacz v. Lobacz, 72 AD3d 653, 897 NYS2d 516 (2d Dept. 2010); M & R Rockaway, LLC v. SK Rockaway Real Estate Co., 74 AD3d 759, 902 NYS2d 621 (2d Dept. 2010). However, before "a plaintiff may secure redress for the breach of an agreement, the promise made by the defendant must be sufficiently certain and specific so that the parties' intentions are ascertainable. Thus, an agreement to agree, which leaves material terms of a proposed contract for future negotiations is unenforceable." Andor Group, Inc., v. Benninghoff, 219 AD2d 573, 631 NYS2d 79 (2d Dept. 1995). Finally, the elements of an employment contract are the identity of the parties, the terms of employment, the duration of the contract and the salary. Durso v. Baisch, 37 AD3d 646, 830 NYS2d 327 (2d Dept. 2007)(internal quotations omitted).

In the case at bar, the Court finds that the letter agreement was effective as an employment contract and was not merely an unenforceable "agreement to agree". The letter agreement set forth the essential terms of plaintiff's employment, including salary terms and benefits, notwithstanding the fact that it contemplated the execution of a further agreement.

On the merits, plaintiff has failed to demonstrate prima facie entitlement to summary judgment on the first and second cause of action and defendants have met their prima facie burden. The record reflects, as evidenced by the deposition testimony of defendants' employees, that defendants' transferred to plaintiff those accounts that belonged to Murray Martin at the time he retired. That is what the plain language of the parties' letter agreement required, and no more. The letter agreement did not preclude defendants from transferring accounts prior to Murray Martin's retirement and the Court notes that it does not appear they were transferred on the eve of the retirement, but rather, a substantial period prior to the retirement. Thus, the Court finds that defendants did not breach the letter agreement as to the transfer of Murray Martin's accounts, and the first cause of action is dismissed.

The second cause of action regarding the vacation time is more problematic. Although defendants claim that plaintiff was not entitled to paid vacation during his tenure as an employee because he was a commissioned salesman, the Employee Handbook does not make any distinctions. But, it is clear that the Employee Handbook provides that upon termination of an employee's employment, he would be entitled to be paid for vacation pay which had accrued during the year of the termination. Thus, the Court agrees with defendants that the maximum plaintiff would be entitled to would be equal to accrued and unused vacation pay for the 2008 calendar year as set by defendants. Since there are questions of fact as to whether plaintiff was entitled to any vacation pay as a commission only salesperson, the cross-motions for summary judgment on the second cause of action are denied.

The third cause of action sounding in unjust enrichment is dismissed based upon the Court's determination that there was a valid contract between the parties. See, e.g.,Whitman Realty Group, [*7]Inc. v. Galano, 41 AD3d 590, 838 NYS2d 585 (2d Dept. 2007); Doo v. Berger, 227 AD2d 435, 642 NYS2d 694 (2d Dept. 1996).

Motion to Amend Complaint

Plaintiff moves by separate Notice of Motion for leave to amend the Complaint to assert an additional cause of action for breach of the implied covenant of good faith and fair dealing. The allegations arise out of defendants' alleged improper transfer of accounts from Murray Martin prior to his retirement. This proposed cause of action for a breach of the implied duty of good faith and fair dealing would be duplicative of the failed breach of contract claim and therefore, the motion for leave to amend is denied. R.I. Island House, LLC v. North Town Phase II Houses, Inc.,

Based on the foregoing, plaintiff's motion for partial summary judgment is denied. Defendant's cross-motion for summary judgment is granted to the extent that the first and third causes of action are dismissed. The second cause of action is severed and continued. Counsel are reminded that a pretrial conference is scheduled for November 8, 2010 at 9:30 a.m. before the undersigned. The trial in this matter is scheduled for December 13, 2010.

This constitutes the DECISION and ORDER of the Court.

Dated: October 19, 2010

Riverhead, New York

EMILY PINES

J. S. C. Footnotes

Footnote 1:It appears that defendant Rock-Tenn Services, Inc. purchased Southern Container in or about 2008.