Opinion
No. 02 Civ. 4770 (SAS).
September 8, 2004
Emile B. Maalouf, New York, for Plaintiff (Pro Se).
Boaz Morag, Esq., Nicole Biguenet, Esq., Cleary, Gottlieb, Steen Hamilton, New York, for Defendant.
OPINION AND ORDER
I. INTRODUCTION
Emile Maalouf, doing business as Chicago International Network ("CIN") and appearing pro se, is suing Salomon Smith Barney, Inc., ("Smith Barney") for breach of contract, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, tortious interference with prospective business relations, tortious interference with contract, and unjust enrichment. Jurisdiction is based on diversity of citizenship, pursuant to 28 U.S.C. § 1332. Smith Barney is moving for summary judgment dismissing all of Maalouf's claims, or, in the alternative, limiting his recovery to nominal damages. For the following reasons, Smith Barney's motion for summary judgment is granted, dismissing all claims other than breach of contract, and limiting recovery for the contract claim to nominal damages.
II. BACKGROUND
The following facts are taken from the Fourth Amended Complaint, the parties' Rule 56.1 statements, and relevant affidavits and declarations. Unless otherwise indicated, the facts are undisputed.
A. Introduction
Maalouf, a Virginia resident, formed CIN, an Illinois partnership, in 1992. CIN was formed to develop business opportunities in the emerging markets of the former Soviet Union, "by assisting, advising and establishing alliances with major Russian business enterprises." Maalouf travelled to Russia for the first time in 1992. In the following years, CIN entered into agreements with at least two Russian enterprises to act as their "exclusive representative" for "financing and advisory services." Maalouf approached Smith Barney in 1995 for the "purpose of underwriting capital markets transactions by major Russian companies in the United States." CIN was to act as an intermediary between Smith Barney and the Russian companies with which Maalouf had developed contacts, introducing Smith Barney to these companies and receiving fees in return once a deal was consummated. Maalouf approached Smith Barney because Smith Barney had no presence in Russia at that time. The rights and obligations of the parties were memorialized in the following two agreements.
Plaintiff's Statement of Material Facts Pursuant to Local Rule 56.1 ("Pl. 56.1") ¶ 3.
See id. ¶ 5.
November 23, 1994 Agreement between Almazy Yakutii Co. and CIN ("Nov. 23 Agreement"), Ex. B to Fourth Amended Complaint ("Compl."). Almazy Yakutii is the financial arm of Alrosa. See also June 28, 1995 Agreement between Oil Corporation Rosneft ("Rosneft") and CIN, Ex. C to Compl.; Compl. ¶ 7.
Pl. 56.1 ¶ 6.
See id. ¶ 7.
B. The Agreements
On May 10, 1995, CIN and Smith Barney entered into a Non-Disclosure and Non-Circumvention Agreement (the "May 1995 Agreement") whereby CIN was to act as representative for three Russian companies, referred to as "Listed Parties" in the Addendum attached to the May 1995 Agreement. The three companies were Rosneft, Almazy Yakutii, and Almazy Rossii-Sakha Joint Stock Company ("Alrosa"). The May 1995 Agreement describes these Listed Parties as "seeking advice and assistance with regard to the potential sale of their securities in the United States and elsewhere."
See May 1995 Agreement, Compl. Ex. D.
See id., Addendum.
Id. at 1.
Pursuant to the May 1995 Agreement, CIN agreed to provide Smith Barney with certain "Confidential Information" relating to the Listed Parties. Smith Barney in turn agreed to maintain the confidentiality of that information. More importantly, Smith Barney agreed that "neither Smith Barney nor its Representatives will make any separate contact [sic] with, deal with, or enter into any transactions with the Listed Parties or their affiliates, without CIN's express written permission." It is this provision that Maalouf alleges Smith Barney breached. The May 1995 Agreement did not include any provisions relating to CIN's compensation.
See id.
Id. at 2.
The agreement further provided that it would "terminate three years from the date hereof, unless otherwise extended by mutual agreement of the parties." Because no such mutual agreement took place, the contract expired by its terms on May 10, 1998.
Id. at 3.
See Pl. 56.1 ¶ 10.
On June 24, 1996, the parties entered into a supplemental agreement (the "June 1996 Agreement"). Smith Barney characterizes this agreement as intended to "advance CIN costs for organizing a trip to Moscow and to set up a short window of three months to see whether any of Maalouf's contacts would bear fruit." Maalouf's view is that the agreement was "made to share in cost [sic] and to demonstrate to CIN that Smith Barney was serious and able to close business after failing CIN for over a year with its clients." Despite this dispute as to its purpose, the provisions of the June 1996 Agreement are clear.
See June 1996 Agreement, Ex. E. to Compl.
Defendant's Statement of Material Facts Pursuant to Local Rule 56.1 ("Def. 56.1") ¶ 11.
Pl. 56.1 ¶ 11.
The June 1996 Agreement sets forth specific terms and conditions governing CIN's arrangement with Smith Barney. The June 1996 Agreement describes the scope of services to be provided by CIN to Smith Barney as follows:
The Company [CIN] agrees to provide consulting services to Smith Barney on an exclusive basis with regard to business opportunities, including the potential offering of securities in the United States ("collectively, "Business Opportunities") for the Russian companies identified as "Listed Parties" in a letter agreement between the Company and Smith Barney, dated May 10, 1995.
June 1996 Agreement at 1.
The June 1996 Agreement was to expire "upon the earlier to occur of the date upon which Smith Barney reaches a definitive conclusion as to whether to pursue a Business Opportunity and communicates such conclusion to the Company or September 30, 1996, unless extended by mutual written consent." The parties agree that the agreement was never extended.
Id. at 2.
See Pl. 56.1 ¶ 12; Def. 56.1 ¶ 12.
With regard to compensation, the June 1996 Agreement provides for the payment of a $25,000 consulting fee, payable in two installments of $12,500. The first installment was payable upon execution of the June 1996 Agreement and the second upon its expiration. Maalouf received this payment. This was not intended to be Maalouf's only compensation:
See June 1996 Agreement at 1.
See Pl. 56.1 ¶ 13.
The parties acknowledge that the compensation described in the preceding paragraph shall not constitute compensation for closing any transaction with one or more Listed Parties, and the parties agree to negotiate a reasonable compensation to be paid by Smith Barney to [CIN] in the event such a transaction is completed on terms customary for Smith Barney for similar services (unless otherwise agreed to in writing by both parties).
June 1996 Agreement at 2.
The June 1996 Agreement provides that CIN is to function as an independent contractor with regard to the above services, not as an employee or agent of Smith Barney. The agreement "does not create a partnership or joint venture between [CIN] and Smith Barney." Nor does it constitute CIN's "`express written permission' . . . to make a separate contact [sic] with or enter into a transaction with any of the Listed Parties."
Id. at 2.
Id.
Both the May 1995 Agreement and the June 1996 Agreement contain provisions to the effect that they "may not be amended or modified other than by a written agreement executed by each of the parties." The June 1996 Agreement states that it "supersedes all prior agreements (except for the [May 1995 Agreement]) whether oral or written."
Id. at 3.
Id.
The two contracts contain different choice of law clauses. The May 1995 Agreement provides that "[t]he laws of the State of Illinois shall govern all aspects of this letter agreement." The June 1996 Agreement provides that "[t]his agreement shall be governed by and construed in accordance with the laws of the State of New York."
May 1995 Agreement at 3.
June 1996 Agreement at 3.
C. The August 1996 Meetings in Moscow
In August 1996, Kamal Tabet, a Managing Director at Smith Barney, accompanied Maalouf on a visit to Moscow. Maalouf and Tabet met with representatives of various Russian business and government entities, including, among others, the Listed Parties Alrosa and Rosneft, and the gas company Gazprom. Smith Barney claims that, "[f]ollowing these meetings, Smith Barney was disappointed because it did not think it had been exposed to decision-makers." Maalouf contends that "Smith Barney was very impressed with the level of contact." In any case, Smith Barney did not extend the June 1996 Agreement. Maalouf made no further trips to Russia, and has had no contact with the Listed Parties or Gazprom since "about the end of 1996 early 1997."
See Pl. 56.1 ¶ 14.
See id. ¶ 15.
Def. 56.1 ¶ 16.
Pl. 56.1 ¶ 17.
See id.
Id. ¶¶ 18, 19.
D. The Alleged Breaches
Maalouf alleges breaches of the May 1995 and June 1996 Agreements by Smith Barney with respect to three transactions.
1. The "Alrosa Busted Transaction"
In 1997, Alrosa retained Smith Barney to work on a planned Eurobond Offering. The offering was never consummated. Smith Barney invoiced Alrosa for a "busted deal fee" of $75,000 and for expenses of $197,880, but Alrosa paid neither. Maalouf alleges that Smith Barney's 1997 dealings with Alrosa breached the agreements between the parties.
See id. ¶ 27.
See id. ¶ 28.
Id. ¶ 29.
See Compl. ¶ 22.
2. The "Gazprom Transaction"
Maalouf arranged a meeting between Gazprom and Smith Barney on August 15, 1996. This was the only meeting Maalouf arranged between the two entities. Maalouf offers a draft term sheet of a transaction between Smith Barney and Gazprom from 1997 as evidence of direct dealings between Smith Barney and Gazprom. However, no deal between Gazprom and Smith Barney was consummated until April and October 2002, when Smith Barney served as one of the lead underwriters of $1.2 billion in Eurobond offerings for Gazprom. Smith Barney earned $5,386,087 from this offering. Based on this conduct, Maalouf alleges that Smith Barney "breached its contractual obligations to CIN by dealing directly with Gazprom without CIN's express permission both during the term of the Circumvention Agreement and continuing to the present." Maalouf seeks damages for this breach "based upon the understanding of a discounted fee at a minimum of 0.5% of total Capital raised = $6 million."
See Pl. 56.1 ¶ 23.
See id. ¶ 24.
See Declaration of Emile B. Maalouf in Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgment ("Maalouf Decl.") ¶ 11; RAO Gazprom Term Sheet, Ex. 1 to Maalouf Decl., SSB 00390.
See Pl. 56.1 ¶ 20.
See id. ¶ 21.
Compl. ¶ 23.
Maalouf Interrogatory Response No. 2, Ex. 9 to Declaration of Boaz S. Morag, defendant's counsel, in Support of Defendant's Motion for Summary Judgment ("Morag Decl.").
Gazprom was not one of the three parties explicitly listed in the May 1995 Agreement. However, Maalouf contends that Gazprom was an "affiliate" of the Listed Party Rosneft, and therefore covered by the May 1995 Agreement. Maalouf also claims that, on August 7, 1996, shortly before the meeting Maalouf arranged between Smith Barney and Gazprom, Tabet orally promised that Gazprom would be subject to the same non-circumvention constraints as the Listed Parties. Tabet has denied making any such statement.
Compl. ¶¶ 11-12.
See id. ¶ 19. See also Deposition of Emile B. Maalouf ("Maalouf Dep."), Ex. 2 to Morag Decl., at 109:7 — 110:20.
See Deposition of Kamal Tabet, Ex. 3 to Morag Decl., at 42:22-43:8. Tabet testified that he told Maalouf, "The list, is the list. We will not change the list. If you want to set up a meeting for me to go to meet them, I am happy to do it. And then, after the meeting, if things go well, we can talk about expanding it."
3. The "RAIB Transaction"
In 1996, the Russian-American Investment Bank ("RAIB") acted as an advisor to Alrosa in obtaining a $62 million loan guaranteed by the Ex-Im Bank. Smith Barney holds an interest in RAIB: Smith Barney describes its interest as an "indirect minority interest," while Maalouf contends that "it is not clear what the ownership percentage was." Maalouf alleges that Smith Barney "breached the agreements by secretly dealing directly with Listed Party [Alrosa] . . . through the [Smith Barney] affiliate [RAIB]."
See Pl. 56.1 ¶ 30.
Def. 56.1 ¶ 32; Pl. 56.1 ¶ 32.
Compl. ¶ 21.
III. LEGAL STANDARD
Summary judgment is appropriate if the evidence of record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "An issue of fact is genuine `if the evidence is such that a jury could return a verdict for the nonmoving party.'" "A fact is material for these purposes if it `might affect the outcome of the suit under the governing law.'"
Overton v. New York State Div. of Military and Naval Affairs, 373 F.3d 83, 89 (2d Cir. 2004) (quoting Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986)).
Id. (quoting Anderson, 477 U.S. at 248).
The movant has the burden of demonstrating that no genuine issue of material fact exists. In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact. To do so, it "must do more than simply show that there is some metaphysical doubt as to the material facts," and it must "come forward with `specific facts showing that there is a genuine issue for trial.'" In determining whether a genuine issue of material fact exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all inferences in that party's favor. However, "[w]hile all factual ambiguities must be resolved in favor of the nonmoving party, the nonmoving party may not rely on conclusory allegations or unsubstantiated speculation."
See Powell v. Nat'l Bd. of Medical Examiners, 364 F.3d 79, 84 (2d Cir. 2004).
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
Powell, 364 F.3d at 84 (quoting Aslanidis v. United States Lines, Inc., 7 F.3d 1067, 1072 (2d Cir. 1993)).
See Williams v. R.H. Donnelley, Corp., 368 F.3d 123, 126 (2d Cir. 2004).
Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 428 (2d Cir. 2001) (quotation omitted).
Pro se parties are entitled to "extra consideration" on summary judgment motions. However, "[p]roceeding pro se does not otherwise relieve a litigant from the usual requirements of summary judgment, and a pro se party's `bald assertion,' unsupported by evidence, is not sufficient to overcome a motion for summary judgment."
Salahuddin v. Coughlin, 999 F. Supp. 526, 535 (S.D.N.Y. 1998).
Cole v. Artuz, No. 93 Civ. 5981, 1999 WL 983876, at *3 (S.D.N.Y. Oct. 28, 1999).
IV. DISCUSSION
A. Breach of Contract and Breach of the Covenant of Good Faith
Maalouf asserts claims for breach of contract, "implied contract in fact," and breach of the covenant of good faith and fair dealing. Maalouf's claims for breach of the covenant of good faith and fair dealing, and "implied contract in fact," are entirely duplicative of his claim for breach of contract, and must be dismissed. The remainder of this section analyzes Maalouf's claims for breach of contract with regard to Smith Barney's three alleged breaches.
See Union Carbide Corp. v. Montell, N.V., 944 F. Supp. 1119, 1136 (S.D.N.Y. 1996).
1. The Alrosa Busted Transaction
Smith Barney does not dispute that Alrosa was a Listed Party, and that Smith Barney worked on a Eurobond transaction for Alrosa during the term of the May 1995 Agreement. There is certainly a genuine issue as to whether Smith Barney breached the May 1995 Agreement. However, the only damages that Maalouf could obtain for such a breach would be compensation Smith Barney received for the transaction but failed to share with Maalouf. In fact, it is undisputed that Smith Barney received no compensation from the Alrosa Busted Transaction.
Maalouf argues that he is entitled to damages based on the amount of the busted transaction and "the $3bln. of future business lost." But Smith Barney was under no obligation to complete any transaction with any Listed Party: Smith Barney's only obligations were to maintain the confidentiality of CIN's information, refrain from dealing with a Listed Party without CIN's permission, and to pay CIN reasonable compensation in the event that a transaction was completed. Maalouf's claims for consequential damages for, inter alia, "loss of credit and reputation . . . anxiety and anguish [and] loss of health and well-being," are entirely speculative and have not been shown to be within the contemplation of the parties. As a result, such damages are not recoverable as a matter of law.
Plaintiff's Memorandum of Law in Opposition to Motion for Summary Judgment ("Pl. Mem.") at 4.
Id. at 9.
Maalouf is therefore limited to nominal damages for Smith Barney's alleged breach. Where a defendant's liability is limited to a certain amount, courts may grant summary judgment limiting damages to that amount. Smith Barney's motion for summary judgment limiting Maalouf's potential recovery with regard to the Alrosa Transaction to nominal damages of one dollar is granted.
"[F]ailure of proof of damages does not justify the dismissal of a claim for breach of contract, as it does most tort claims. The victim of a breach of contract is always entitled to nominal damages if he proves a breach but no damages." Olympia Hotels Corp. v. Johnson Wax Dev. Corp., 908 F.2d 1363, 1373 (7th Cir. 1990). See also Chronister Oil Co. v. Unocal Ref. Mktg., 34 F.3d 462, 466 (7th Cir. 1994) (awarding nominal damages, "to which for reasons we do not understand every victim of a breach of contract, unlike a tort victim, is entitled.").
See, e.g., Clark v. Meyer, 188 F. Supp. 2d 416, 424 (S.D.N.Y. 2002) (granting summary judgment limiting plaintiff's recovery for breach of contract to $8,000, where plaintiff had failed to come forward with admissible evidence showing that loss could exceed that amount).
One dollar is the standard measure of nominal damages. "Even if the breach caused no loss . . . the injured party can recover as damages a nominal sum, commonly six cents or a dollar, fixed without regard to loss." Allen E. Farnsworth, Farnsworth on Contracts § 12.8 (2d ed. 1998).
2. The Gazprom Transaction
Maalouf's claim that the Gazprom Transaction breached the parties' agreements depends on his being able to show that Gazprom was covered by the May 1995 Agreement. Maalouf claims that, on August 7, 1996, Tabet orally promised that Gazprom:
would have the same protection under the May 10 as the listed party in the May 10, 1995 Agreement . . . Meaning my rights and interests would be protected, that I would not be circumvented, and that . . . Smith Barney's obligation to myself would be paid at the time of closing . . . any business with Gazprom . . . If there was any dealing during the terms of the May 10, 1995 Agreement.
Maalouf Dep. at 109:7 — 110:20.
Smith Barney contends that Maalouf's reliance on this alleged oral agreement is barred by the terms of the May 1995 and June 1996 Agreements, both of which preclude oral modifications. Smith Barney cites New York law to this effect. Smith Barney's reliance on New York law is misplaced: Illinois law governs this issue.
Smith Barney notes that, in its previous opinion, this Court determined that "New York substantive law governs the claims in issue here." Maalouf v. Salomon Smith Barney, Inc., No. 02 Civ. 4770, 2003 WL 1858153, at *3 n. 4 (S.D.N.Y. Apr. 10, 2003). Maalouf's contract claims, however, were not at issue in that opinion. That opinion determined that New York law was applicable to all other claims at issue here.
A federal court sitting in diversity must apply the choice of law rules of the forum state, in this case New York. New York gives effect to choice of law clauses, absent fraud or violation of public policy, so long as the state selected has sufficient contacts with the transaction. The May 1995 Agreement contains an Illinois choice of law clause, while the June 1996 Agreement contains a New York choice of law clause. Because CIN was an Illinois partnership and Smith Barney is a New York corporation, both states have sufficient connections to the transaction, and so both clauses are enforceable. The June 1996 Agreement specifically states that it does not supersede the May 1995 Agreement, so the later clause cannot supersede the earlier clause. Each clause must therefore be treated as effective with regard to the contract to which it pertains. Maalouf alleges that Tabet's promise modified the May 1995 Agreement, adding to that Agreement's Listed Parties. Whether the May 1995 Agreement can be modified by such a promise is determined by Illinois law.
See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 497 (1941).
See Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir. 2000).
It is unlikely that these two contracts could be seen as a single agreement, given the length of time between the two. See Williams v. Mobil Oil Corp., 83 A.D.2d 434, 439 (2d Dep't 1981) ("Generally, the rule is that separate contracts relating to the same subject matter and executed simultaneously by the same parties may be construed as one agreement."). But even if the two contracts are construed as a single agreement, the outcome is the same. According to general rules of contract interpretation, "an interpretation that gives a reasonable and effective meaning to all terms of a contract is preferable to one that leaves a portion of the writing useless or inexplicable." Hartford, 230 F.3d at 556 (construing conflicting choice of law clauses in single contract so that each clause applied to a different phase of the transaction). If the two contracts are read together, the natural interpretation of the two clauses is that the Illinois clause applies to disputes arising out of the subject matter of the May 1995 Agreement, Smith Barney's non-circumvention obligations with regard to the Listed Parties.
Under Illinois law, Tabet's alleged promise might have had the effect of modifying the May 1995 Agreement. "Oral modifications of contracts not involving the sale of goods . . . are enforceable under the common law of Illinois." Smith Barney's reliance on the clauses barring oral modification is unavailing. "It is settled law in Illinois that, except for agreements concerning the sale of goods, parties may modify contracts orally after including a contract provision that precludes oral modification." Because there is a genuine issue of material fact as to whether the May 1995 Agreement was orally modified to cover Gazprom, Maalouf's claim for breach of contract with regard to the Gazprom Transaction cannot be dismissed at this stage.
Monarch Coaches, Inc. v. ITT Industrial Credit, 818 F.2d 11, 12 (7th Cir. 1987).
Williams v. Jader Fuel Co., 944 F.2d 1388, 1395 (7th Cir. 1991).
However, even if Maalouf can show that the May 1995 Agreement was modified, and that Smith Barney's dealings with Gazprom in 1997 therefore breached the agreement, he cannot show that he is entitled to damages. The only transactions ever consummated between Smith Barney and Gazprom occured in 2002, four years after the expiration of the May 1995 Agreement and six years after the expiration of the June 1996 Agreement. Whether the issue is analyzed under Illinois law, applicable to the May 1995 Agreement (which fixed Smith Barney's non-circumvention obligations), or New York law, applicable to the June 1996 Agreement (which fixed Maalouf's compensation), Maalouf had no right to compensation for transactions occurring after the expiration of the agreements.
Under Illinois law, "a [broker] may be entitled to commissions made after the termination of employment if that [broker] procured the sales through its activities prior to termination." The broker must show that the sale was "all but consummated" prior to termination. Maalouf has failed to come forward with any facts that might suggest that the 2002 transactions were `all but consummated' prior to the expiration of his agreements with Smith Barney. The result is the same if the issue is analyzed under New York law, applicable to the June 1996 Agreement. The general rule in New York is that, absent an express contractual right to ongoing commissions, a "broker is not entitled to a commission on a sale negotiated after the term of his employment, even though the sale is negotiated with a buyer introduced to the seller by the broker." A broker may be entitled to commissions on such transactions only if he can show that his actions brought the parties together on the essential terms of the transaction during the period of his employment, and the termination of his employment was a bad faith effort to avoid payment of his commission.
Heuvelman v. Triplett Electrical Instrument Co., 23 Ill. App. 2d 231, 238 (Ct.App.Ill. 1959).
Air Support Int'l, Inc. v. Atlas Air, Inc., 54 F. Supp. 2d 158, 167 (E.D.N.Y. 1999).
See id.
Consequently, Maalouf can recover at most nominal damages for Smith Barney's alleged breach. Smith Barney's motion for summary judgment limiting Maalouf's potential recovery for any breach connected with the Gazprom Transaction to nominal damages is granted.
3. The RAIB Transaction
Maalouf alleges that Smith Barney breached the May 1995 Agreement by causing RAIB, as Smith Barney's representative, to deal with Alrosa during the period of the agreement. Maalouf has failed to come forward with any evidence to support this claim. Maalouf's only evidence is that Smith Barney owned an indirect minority interest in RAIB (as did Alrosa). Maalouf does not present any evidence that Smith Barney controlled RAIB, with respect to this transaction or any other. Maalouf does not allege that Smith Barney received any fee for RAIB's transaction with Alrosa. Because no reasonable jury could infer from the evidence presented that RAIB was acting as Smith Barney's representative, Maalouf's claims for breach of contract with regard to the RAIB Transaction are dismissed.
See Pl. 56.1 ¶¶ 32-33.
D. Unjust Enrichment
Maalouf also seeks to recover under a theory of unjust enrichment, alleging that Smith Barney has been
unjustly enriched to the detriment of CIN by [Smith Barney's] receipt and exploitation of the Confidential Information, of CIN's valuable services in introducing and vouching for [Smith Barney] to senior Russian executives and government officials, and of the proceeds of the [Alrosa Busted, Gazprom and RAIB Transactions].
Compl. ¶ 53.
The "essence" of an unjust enrichment claim "is that one party has received money or a benefit at the expense of another." Maalouf cannot show that Smith Barney was unjustly enriched at his expense by its receipt of CIN's services and information: CIN and Smith Barney explicitly contracted for CIN to provide its services and information, in return for compensation to be paid if Smith Barney closed a transaction with one of the listed parties within the period of the contract. Nor can Maalouf show that Smith Barney was unjustly enriched at his expense by the 2002 Gazprom Transaction. He fails to present evidence that he was responsible for the retention of Smith Barney for that transaction; indeed, he concedes that he had no contact with Gazprom after early 1997. Finally, Maalouf has failed to present evidence that Smith Barney was involved in any way with the RAIB Transaction. Smith Barney's motion for summary judgment dismissing Maalouf's unjust enrichment claim is therefore granted.
Kaye v. Grossman, 202 F.3d 611, 616 (2d Cir. 2000).
See Pl. 56.1 ¶ 19.
D. Tortious Interference Claims
As noted, Maalouf has presented evidence that CIN had contractual and business relationships with various Russian enterprises. Maalouf contends that Smith Barney's alleged breaches of the agreements between CIN and Smith Barney "eliminated CIN's participation in future business development activities in Russia and elsewhere, and severely limited its exposure to Rosneft, [Alrosa], and Gazprom." On the basis of this conduct, Maalouf asserts claims for tortious interference with prospective business relations and tortious interference with contract.
See supra n. 3.
Compl. ¶ 26.
Smith Barney asserts that New York law governs these claims. The applicable law is determined by New York's choice of law rules. In tort actions, "New York applies the law of the state with the most significant interest in the dispute." The two states with significant interests in the dispute are Illinois and New York. CIN is a defunct Illinois partnership. Smith Barney is a New York corporation. The dispute arises out of a business relationship governed by contracts that contain Illinois and New York choice of law clauses respectively. Because there is no material conflict between Illinois and New York law, on either claim, the Court will apply New York law.
See Klaxon, 313 U.S. at 497.
Lee v. Bankers Trust Company, 166 F.3d 540, 545 (2d Cir. 1999).
See IBM v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004) ("In the absence of substantive difference . . . a New York court will dispense with choice of law analysis; and if New York law is among the relevant choices, New York courts are free to apply it.").
The elements of a claim for tortious interference with prospective business relations are "(1) a business relationship between plaintiff and a third party; (2) defendant's knowledge of such relationship; (3) intent to interfere; (4) defendant acted with the sole purpose of harming plaintiff or used dishonest, unfair or improper means; and (5) the relationship is injured." To recover on a theory of tortious interference with prospective business relations, Maalouf must show the existence of a business relationship. Maalouf has adduced evidence of business relationships between CIN and Alrosa, and CIN and Rosneft. However, he has adduced no evidence of any pre-existing business relationship with Gazprom. With respect to Rosneft, Maalouf has offered no evidence that Smith Barney interfered, in any way, with that relationship. Thus, the only remaining basis for Maalouf's claim must be that Smith Barney tortiously interfered with his relationship with Alrosa, by breaching the May 1995 Agreement with CIN to enter into a transaction with Alrosa.
Nadel v. Play-by-Play Toys Novelties, Inc., 208 F.3d 368, 382 (2d Cir. 2000).
See Nov. 23 Agreement.
See Pl. 56.1 ¶ 22.
To recover, Maalouf must allege that he was "actually and wrongfully prevented from entering into or continuing in a specific business relationship." Maalouf cannot satisfy this requirement. The only specific business relationship that Smith Barney may have prevented him from entering into was the Alrosa Busted Transaction. Maalouf has presented no argument or evidence that Smith Barney's transaction with Alrosa affected CIN's representation of Alrosa with respect to any of Alrosa's other business. The Alrosa Busted Transaction between Smith Barney and Alrosa in fact failed, for reasons beyond Maalouf's control. Because Maalouf cannot show any injury, his claim for tortious interference with a prospective business relationship fails.
Solar Travel Corp. v. Nachtomi, No. 00 Civ. 3564, 2001 WL 641151, at *10 (S.D.N.Y. June 8, 2001) (quotation omitted, emphasis in original).
The foregoing analysis applies equally to his claim for tortious interference with contract. It is possible that Alrosa breached Almazy-Yakutii's exclusive representation contract with CIN by dealing with Smith Barney. However, "to maintain a claim for tortious interference with contractual relations, a plaintiff must establish damages." Maalouf cannot show damages from the loss of the Alrosa Busted Transaction, and his other claims for damages are entirely speculative. Smith Barney's motion for summary judgment dismissing Maalouf's tort claims is granted.
This would, of course, depend on the relationship between Almazy Yakutii and Alrosa, which is not altogether clear at this stage.
Net2globe Int'l v. Time Warner Telecom of N.Y., 273 F. Supp. 2d 436, 463 (S.D.N.Y. 2003). Accord Burrell v. City of Matoon, 378 F.3d 642 (7th Cir. 2004) (holding that damages are an element of a claim for tortious interference with contract or with prospective business advantage under Illinois law).
E. Breach of Fiduciary Duty
In order to pursue a breach of fiduciary duty claim, there must be a fiduciary relationship between the parties. Entering into a conventional business relationship ordinarily does not create a fiduciary relationship. "[A]n arm's-length business transaction, even those where one party has superior bargaining power[,] is not enough to give rise to a fiduciary relationship." Maalouf offers only conclusory allegations that Smith Barney and CIN had anything other than a conventional business relationship. Smith Barney's motion for summary judgment dismissing Maalouf's claim for breach of fiduciary duty is therefore granted.
See Whitney v. Citibank, N.A., 782 F.2d 1106, 1115 (2d Cir. 1986).
See Reuben H. Donnelly Corp. v. Mark I. Mktg. Corp., 893 F. Supp. 285, 289 (S.D.N.Y. 1995).
Sony Music Entm't Inc. v. Robison, No. 01 Civ. 6415, 2002 WL 272406, at *3 (S.D.N.Y. Feb. 25, 2002). Accord Pro Football Weekly, Inc. v. Gannett Co., 988 F.2d 723, 727 (7th Cir. 1992) (holding that arm's-length relationship between businesses does not give rise to fiduciary duty under Illinois law).
V. CONCLUSION
For the foregoing reasons, Smith Barney's motion for summary judgment dismissing Maalouf's claims is granted with respect to all claims other than breach of contract, and with respect to the claim for breach of contract arising out of the RAIB Transaction. Smith Barney's motion for summary judgment limiting Maalouf's recovery to nominal damages is granted with respect to the remaining claims for breach of contract. Maalouf is precluded from offering evidence of damages. The Clerk of the Court is directed to close this motion (docket # 48). A conference is scheduled for September 23, 2004 at 4:30.
Although the effect of this order is to reduce the amount Maalouf can recover to below the jurisdictional minimum, the court retains jurisdiction. While Maalouf has failed to come forward with evidence showing that he is entitled to recover more than nominal damages, it is not possible to say that the face of Maalouf's complaint was "so patently deficient as to reflect to a legal certainty that he could not recover the amount alleged, or that the damages alleged were feigned to satisfy jurisdictional minimums." Wolde-Meskel v. Vocational Instruction Project Community Servs., Inc., 166 F.3d 59, 63 (2d Cir. 1999). It is possible, for example, that Maalouf might have adduced evidence showing that RAIB was a representative of Smith Barney.
SO ORDERED.