Nigam v Linium LLC

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Nigam v Linium LLC 2018 NY Slip Op 30728(U) April 25, 2018 Supreme Court, New York County Docket Number: 654809/2017 Judge: Barry Ostrager Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 04/25/2018 02:28 PM 1] NYSCEF DOC. NO. 43 INDEX NO. 654809/2017 RECEIVED NYSCEF: 04/25/2018 SUPREME COURT OF THE ST ATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 61 ----------------------------------------------------------------------------------X RAKESH NIGAM, IMAGINEERS GROUP, INC., INDEX NO. 654809/2017 Plaintiff, MOTION DATE MOTION SEQ. NO. -vLINIUM LLC, TARGETST8, INC., LINIUM CONSULTING LLC, STEPHEN SHYN 001 DECISION AND ORDER Defendant. --------------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number 26, 27, 28, 29, 30, 31, 32, 33, 36, 37, 38, 39,40 were read on this application to/for Dismiss HON. BARRY R. OSTRAGER: Plaintiff and Counterclaim-Defendant Rakesh Nigam ("Nigam") is a former employee of Defendants and Counterclaim-Plaintiffs Crossbridgc Consulting, Inc. ("Crossbridge") (f/k/a Crossbridge Consulting LLC, and n/k/a TargetSt8 Consulting, Inc.) and Stephen Shyn ("Shyn"), the principal of the Defendant entities. Plaintiffs allege causes of action sounding in defamation, tortious interference, and breaches of various agreements. Defendants filed the Second Amended Answer and Counterclaims alleging breach of fiduciary duty and tortious interference with contract. Plaintiff and Counterclaim-Defendant Nigam moves to dismiss the counterclaims asserted against him pursuant to CPLR § 321 l(a)(l) and (a)(7). 654809/2017 NIGAM, RAKESH vs. LINIUM LLC Motion No. 001 Page 1of7 1 of 7 [*FILED: NEW YORK COUNTY CLERK 04/25/2018 02:28 PM 2] NYSCEF DOC. NO. 43 INDEX NO. 654809/2017 RECEIVED NYSCEF: 04/25/2018 Factual Allegations In .January 2014, Nigam became an employee, officer; and shareholder of Crossbridge. During the time that N igam worked for Crossbridge, the business was restructured such that TargetSt8, Inc. ("Target") became the indirect parent of Crossbridge, and Nigam became an employee, officer, and shareholder of Target. 1 Crossbridge/Target is in the business of providing various consulting services to banks and other financial services companies_. In December 2014, Nigam and the other shareholders executed a Shareholders Agreement which provides that a departing shareholder can form or join a business to compete with Crossbridge/Target, without restriction, immediately upon the shareholder's resignation, if the shareholder opts to receive less money for the repurchase of the shareholder's stock. Since at least 2012, Crossbridge/Target had been providing consulting services to Barclays pursuant to a Master Services Agreement (the "MSA") between Barclays and Sente Partners LLC, a company wholly owned by Crossbridge/Target. The MSA contains a nonrecruitment provision that restricts both parties from soliciting the employees of the other for one year following a project's conclusion. On January 12, 2016, Nigam sent an email to the other shareholders of Crossbridge/Target, stating that he was terminating his employment and resigning as an officer and shareholder. On February 1, 2016, the parties executed a Stock Redemption Agreement in which Nigam opted for the ability to compete with Cross.bridge/Target in exchange for a lower redemption price for the shares he sold back to Crossbridge/Target. The parties also executed a Separation Agreement which provided, inter alia, that Nigam's employment with Crossbridge/T arget was terminated effective January 22, 2016, ten days after he sent his 1 For the purpose of simplicity, this Decision and Order will refer to these entities collectively as "Crossbridge/Target'" 654809/2017 NIGAM, RAKESH vs. LINIUM LLC Motion No. 001 Page 2 of 7 2 of 7 [*FILED: NEW YORK COUNTY CLERK 04/25/2018 02:28 PM 3] NYSCEF DOC. NO. 43 INDEX NO. 654809/2017 RECEIVED NYSCEF: 04/25/2018 resignation letter. Shortly after his resignation, Nigam started a competing venture, Imagineers Group, Inc. Defendants' counterclaims do not allege, nor could they, that Nigam's competing venture was facially improper. It is undisputed that Nigam had opted to compete against Crossbridge/Target after his resignation in exchange for a lower redemption price for his Crossbridge/Target stock. Instead, the counterclaims allege.that Nigam, during the ten-day period between his sending a resignation Jetter and .his official termination on January 22, 2016, ' secretly communicated with Barclays, a Crossbridge/Target client, in order to solicit business for his future competing venture. This allegation forms the basis of the breach of fiduciary duty counterclaim. The second counterclaim is for tortious interference with the Master Services Agreement .. ("MSA") between Barclays and Sente Partners LLC, a company wholly owned by Crossbridge/Target. Section 2.3 of the MSA contains a non-recruitment provision providing that Barclays may not solicit an employee of Crossbridge/Target who worked on a project for Barclays within one year following that person's last day of work on the project. (See Master Services Agreement [NYSCEF Doc. 30]). Counterclaimants allege that, prior to the expiration of the one-year non-recruitment period, Nigam started working for Barclays in direct competition to Crossbridge/Target, and therefore, that Nigam induced Barclays to breach the MSA by soliciting him for hire. Legal Analysis "On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction." Leon v. Martinez, 84 N.Y.2d 83, 87 (1994). The Court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable 654809/2017 NIGAM, RAKESH vs. LINIUM LLC Motion No. 001 Page 3 of 7 3 of 7 [*FILED: NEW YORK COUNTY CLERK 04/25/2018 02:28 PM 4] NYSCEF DOC. NO. 43 INDEX NO. 654809/2017 RECEIVED NYSCEF: 04/25/2018 inference, and determine only whether the facts as alleged fit within any cognizable legal theory." Id. at 87-88. To state a claim for breach of fiduciary duty, the complaint must "allege the misconduct complained of in Sl{ffi.cient detail to inform the defendants of the substance of the claims.'' Bernstein v. Kelso & Co., 231A.D.2d314, 320 (1st Dep't 1997). The pleading requirements of CPLR 30 l 6(b) do not strictly require specificity "in situations where it may be impossible to state in detail the circumstances constituting a fraud." Id. (internal quotations ' omitted). This rule is particularly applicable in cases where the facts constituting fraud or breach of fiduciary duty are necessarily "peculiarly within the knowledge of the [defrauding] party." Kal{fman v. Cohen, 307 A.D.2d 113, 121 (1st Dep't 2003) (internal quotations omitted). Breach of Fiduciary Duty Counterclaimants allege that Nigam breached his fiduciary duty by soliciting work from Barclays for his future competing venture while still employed by Crossbridge/Target. Counterclaimants point to a January 12, 2016 email exchange between Nigam, Ralph Orciuoli (a Barclays employee), and Orciuoli's assistant, in which Orciuoli directs his assistant to use two of Nigam's email accounts when contacting him. Nigam's email responds by indicating that both his Crossbridge email and Barclays email should be used "[f]or now at least." (January 12, 2016 Email [NYSCEF Doc. 39]). Counterclaimants argue that it is reasonable to infer from this exchange that Nigam had indicated to Orciuoli, prior to sending his resignation letter to Crossbridge/Target shareholders, that he was leaving the firm. Counterclaimants further argue that it is reasonable to infer that Nigam not only informed Orciuoli that he was resigning, but that he was starting a competing venture, and thus, tried to solicit future work from Orciuoli and Barclays. It is also alleged that shortly after Nigam's departure from Crossbridge/Target, 654809/2017 NIGAM, RAKESH vs. LINIUM LLC Motion No. 001 Page 4 of 7 4 of 7 [*FILED: NEW YORK COUNTY CLERK 04/25/2018 02:28 PM 5] NYSCEF DOC. NO. 43 INDEX NO. 654809/2017 RECEIVED NYSCEF: 04/25/2018 Barclays stopped communicating substantively with the firm and stopped responding to Shyn's emails. Finally, Barclays did, allegedly, retain Nigam after he started his competing venture. While the Court agrees that several inferential leaps are necessary for counterclaimants to prove their claim for breach of fiduciary duty on the evidence thus far submitted, it is equally true that the Court must accord the claimants every possible favorable inference on a CPLR 3211 (a)(7) motion, and that claimants must merely allege facts which, {(proven, state a cognizable legal claim. The inferences that counterclaimants ask this Court to make are not entirely unreasonable on their face, and, in any event, the facts constituting the breach of fiduciary duty are "peculiarly within the knowledge of the [defrauding] party." Kaufman, 307 A.D.2d at 121. Thus, discovery is necessary to determine the degree to which counterclaimants' allegations are supported by the actual facts. Therefore, Counterclaim-Defendant's motion to dismiss the breach of fiduciary duty counterclaim is denied without prejudice to renew following discovery. Tortious Interference Counterclaimants allege that Nigam tortuously interfered with the MSA between Barclays and Sente Partners LLC, a company wholly owned by Crossbridge/Target. Section 2.6 of the MSA provides: Unless otherwise agreed by the parties in writing, neither party shall Solicit any of the other party's Restricted Employees during the service period of the relevant work order and twelve (12) months after the date the relevant Work Order is completed. The parties hereby acknowledge and agree that this clause 2.6 does not apply to any Restricted Employee that the Recruiting Party reasonably believes to be responding to its general recruitment campaigns (including without limitation, any advertisement published in any form by the recruiting party or its agents). Solicit means that a party (the Recruiting Party) has targeted a specific employee or group of employees from the other party and taken positive steps to solicit such employee or employees to become and employee or contractor of the 654809/2017 NIGAM, RAKESH vs. LINIUM LLC Motion No. 001 Page 5 of 7 5 of 7 [*FILED: NEW YORK COUNTY CLERK 04/25/2018 02:28 PM 6] NYSCEF DOC. NO. 43 INDEX NO. 654809/2017 RECEIVED NYSCEF: 04/25/2018 Recruiting Party .... (Master Services Agreement [NYSCEF Doc. 30]) (emphasis added). Counterclaimants argue that Nigam induced Barclays to breach Section 2.6 of the MSA by inducing Barclays to hire him within twelve months of working on a Barclays project. The Court accepts the allegation that Nigam took steps to induce Barclays to hire him as a consultant, however, such would not amount to a breach of the MSA and is not what counterclaimants contend. Counterclaimants ask the Court to accept that Nigam contacted Barclays in order to induce Barclays to take "positive steps" to target and "solicit" him to become a contractor of Barclays. The allegation that Nigam contacted Barclays to induce Barclays to take positive steps to solicit him as a contractor, instead of merely contacting Barclays to induce Barclays to hire him directly, defies logic. Therefore, Counterclaim-Defendant's motion to dismiss the tortious interference counterclaim is granted. Accordingly, it is hereby ORDERED that Counterclaim-Defendant's motion to dismiss the counterclaims is granted as to the counterclaim for tortious interference with contract, and denied as to the counterclaim for breach of fiduciary duty without prejudice to renew following discovery; it is further ORDERED that Counterclaim-Defendant reply to the remaining counterclaim within twenty days of this decision and order; it is further ORDERED that the parties. appear for a compliance conference on July 17, 2018 at 10:30 a.m. 4/25/2018 DATE 1 '8ARRY R. OSTRAGER JSC -..;;:_ 654809/2017 NIGAM, RAKESH vs. LINIUM LLC Motion No. 001 Page 6 of 7 6 of 7 .. [*FILED: NEW YORK COUNTY CLERK 04/25/2018 02:28 PM 7] NYSCEF DOC. NO. 43 CHECK ONE: RECEIVED NYSCEF: 04/25/2018 CASE DISPOSED GRANTED APPLICATION: CHECK IF APPROPRIATE: INDEX NO. 654809/2017 D D NON-FINAL DISPOSITION DENIED SETTLE ORDER DO NOT POST 654809/2017 NIGAM, RAKESH vs. LINIUM LLC Motion No. 001 Fl GRANTED IN PART SUBMIT ORDER FIDUCIARY APPOINTMENT D D OTHER REFERENCE Page 7 of 7 7 of 7

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