Opinion
01 Civ. 0303 (RLC)
October 16, 2002
SPECTOR FELDMAN, L.L.P., New York, New York, JOEL J. SPECTOR, Of Counsel, Attorneys for Plaintiffs.
HARTER, SECREST EMERY, L.L.P., Rochester, New York, PETER H. ABDELLA, STEPHANIE L. ADLER, Of Counsel, Attorneys for Defendant.
OPINION
Plaintiffs Richard Kramer and Mentmore Holdings Corporation commenced this action for damages and an accounting against William Remley, asserting breach of contract, conversion, and breach of fiduciary duty. Defendant now moves for summary judgment with respect to the plaintiffs' breach of contract claims, pursuant to Rule 56, F.R.Civ.P. For the reasons discussed below, defendant's motion is denied as to plaintiffs' first breach of contract claim and is granted as to plaintiffs' second breach of contract claim.
BACKGROUND
Richard Kramer ("Kramer") and William Remley ("Remley") formed Mentmore Holdings Corporation ("Mentmore") in the early 1990's to serve as a vehicle for pursuing various business and investment opportunities. (Kramer Aff. ¶¶ 5-6; Stmt. Mat. Facts in Supp. of Summ. J. ¶ 8.) Kramer was a ninety percent owner of Mentmore and Remley owned a ten percent interest. (Stmt. Mat. Facts in Supp. of Summ. J. ¶ 9.) In addition, Kramer was Chairman of the Board of Mentmore, and Reinley was President of the corporation and sat on its Board of Directors. (Id. at ¶¶ 13-14.)
In the mid 1990's, Kramer and Remley invested in a company known as Texfi Industries ("Texfi"). (Id. at ¶ 28.) Reinley became President of Texfi and held this office for several years. (Id. at ¶ 29.) Pursuant to a written employment agreement, Remley received a salary from Texfi in the amount of $150,000 per year. (Kramer Aff. ¶ 16.)
It appears from the record that in mid-1999 the relationship between Kramer and Remley began to deteriorate. (Remley Aff. Exh. E.) Several disagreements arose between the parties, leading to the filing of this lawsuit in December of 2000.
There are two contracts at issue in the instant motion. The first is an alleged oral contract between Kramer and Remley pursuant to which all ventures jointly entered into would be split 90/10; i.e., Kramer would have a ninety percent interest in all joint ventures, provide ninety percent of the funding and pay ninety percent of the expenses, and Remley would have a ten percent interest, provide ten percent of funding and pay ten percent of expenses.
Kramer claims that this agreement was breached in that Remley did not provide his ten percent share of funding for various ventures (which Kramer then advanced on his behalf) and that Remley did not always pay his ten percent share of expenses (which Kramer also covered). (Compl. ¶ 13; Kramer Aff. ¶¶ 14, 20.) Many of these investments sustained losses. (Compl. ¶ 14.)
Remley does not dispute that there was a 90/10 arrangement, but contends that it was limited to his receiving ten percent of the gains from the investments. (Def.'s Mem. Supp. Summ. J. at 16-17.) In other words, Remley claims that he never agreed, orally or otherwise, to pay ten percent of expenses or to provide ten percent of the funding for Kramer and Remley's investments.
The second contract at issue is a written contract entitled "Assignment and Nominee Agreement" (the "Agreement"), which was entered into by the parties in April 1995. Pursuant to the Agreement, Remley assigned all "Compensatory Proceeds" to Mentmore, and the instant dispute hinges on the precise meaning of that term. In the Agreement, "Compensatory Proceeds" is defined as
any and all compensation, bonuses, incentives, benefits, allowances, entitlements, severance, deferred payments, termination payments, receipts, proceed [sic] or other payments (in cash or in kind) arising from participation in Texfi's Incentive Plan (as described in the Employment Agreement), Management Incentive Plan, Performance Incentive Plan, Executive Stock Purchase Plan and/or Deferred Compensation Plan, payments in kind, notes and/or other proceeds to which [Remley] may be entitled pursuant to the Texfi Employment Agreement or otherwise from Texfi, other than (i) an amount of "Base Salary" (as defined in the Employment Agreement) equal to One Hundred Fifty Thousand Dollars ($150,000), (ii) payment of any reimbursable out-of-pocket expenses which have not been reimbursed to [Remley] by [Mentmore], (iii) health, disability and/or life insurance, (iv) stock options, warrants, common, preferred or other class of stock or proceeds from phantom stock arrangements (including bonuses paid in such equity interests), and (v) any other non-compensatory fringe benefit or other non-taxable compensation having an annual value of less than Five Thousand Dollars ($5,000) [collectively, the `Proceeds']
Plaintiffs claim that, by signing the agreement, Remley assigned to Mentmore all "beneficial right, title and interest to any and all amounts received by defendant annually from any entity controlled by Kramer, defendant or their affiliates" above $150,000. (Compl. ¶ 11.) (emphasis added). Remley, on the other hand, contends that "Compensatory Proceeds" solely refers to any and all amounts of compensation received from Texfi in excess of $150,000. (Def.'s Mem. Supp. Summ. J. at 26.)
This difference in interpretation is significant because plaintiffs contend that certain salary that Remley received from Mentmore in 1997, 1998, and 1999 (which put Remley's total annual salary well above $150,000 for each of those years) was in violation of the Agreement.
It is undisputed that Remley received salary from Mentmore of $676,630 in 1997, $296,986.88 in 1998, and $800,299.02 in 1999.
DISCUSSION
I. Summary Judgment StandardSummary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56, F.R.Civ.P. In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citingUnited States v. Diebold, Inc., 369 U.S. 654, 655 (1962)). "In considering the motion, the court's responsibility is not to resolve disputed issues of fact but to assess whether there are factual issues to be tried." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986).
II. The 90/10 Arrangement
Remley argues that summary judgment must be granted as to the plaintiffs' first breach of contract claim because there is no evidence "other than Kramer's say-so" that Remley orally agreed to provide ten percent of the funding and/or pay ten percent of expenses for their joint investments. (Def.'s Rep. Mem. Supp. Summ. J. at 2.) Yet even if the defendant is correct in stating that Kramer's affidavit is the only evidence of an oral agreement, summary judgment must nevertheless be denied because this testimony alone is sufficient to create a genuine issue of material fact. See R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 58 (2d Cir. 1997) (holding that the plaintiff's affidavit alone, which the district court found `decidedly vague,' created a genuine issue of fact as to the existence of an oral contract); Rule v. Brine, 85 F.3d 1002 (2d Cir. 1996) (holding that plaintiff's sworn testimony was alone sufficient to defeat summary judgment on an oral contract claim); Oscar Productions, Inc. v. Zacharius, 893 F. Supp. 250 (S.D.N.Y. 1995) (Leisure, J.) (holding that conflicting testimony concerning alleged oral agreement required credibility determination).
Credibility assessments and choices between conflicting versions of events are matters for a jury, not for the court on summary judgment.Brine, 85 F.3d at 1011 (citations omitted). Summary judgment with respect to this claim is therefore denied.
III. The Assignment and Nominee Agreement
It is well-settled that a court may not admit extrinsic evidence in order to interpret an unambiguous contract. Omni Quartz, Ltd. v. CVS Corp., 287 F.3d 61, 64 (2d Cir. 2002) (citations omitted). Hence, a party may not introduce extrinsic evidence of a contract's purpose in order to vary the plain meaning of the writing or to increase a party's obligations where those obligations were explicitly delineated in the contract itself. Id. (internal citations omitted). Where a contract is unambiguous, its proper interpretation is a question of law, and a dispute on such an issue may properly be resolved by summary judgment.Id. (citing Seiden Assocs., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992)).
The court sees no ambiguity in the Agreement's definition of "Compensatory Proceeds," quoted above. The definition plainly covers only compensation and other proceeds Remley was to receive from Texfi. Any extrinsic evidence that plaintiffs offer to suggest a contrary interpretation may not be considered in a case such as this one, where the meaning of the term is clearly discernable from the language of the contract.
In sum, a plain reading of the Assignment and Nominee Agreement entitles the defendant to judgment as a matter of law. Accordingly, summary judgment is granted with respect to this breach of contract claim.
CONCLUSION
For the reasons stated above, defendant's motion for summary judgment on the plaintiffs' first breach of contract claim is denied and the parties are ordered to complete pretrial preparation to ready that issue for trial. Defendant's motion for summary judgment on the second breach of contract claim is granted, as the Assignment and Nominee Agreement covers only proceeds from Texfi, and this claim of plaintiffs is dismissed.