Opinion
22-CV-6957 (VF)
09-27-2023
EDGEWOOD PARTNERS INSURANCE CENTER DIC. d/b/a EDGEWOOD PARTNERS INSURANCE AGENCY, as successor in interest to INTEGRO USA, INC., Plaintiff, v. PPD DEVELOPMENT, L.P., Defendant.
OPINION & ORDER
VALERIE FIGUEREDO, UNITED STATES MAGISTRATE JUDGE
Plaintiff Edgewood Partners Insurance Center Inc., as successor in interest to Integra USA, Inc., commenced this action against Defendant PPD Development, L.P. for breach of contract. Defendant has moved for summary judgment on Plaintiff s two breach-of-contract claims pursuant to Federal Rule of Civil Procedure 56. For the reasons that follow. Defendant's motion is DENIED, as it pertains to Plaintiffs second cause of action in the amended complaint. With regards to Defendant's motion concerning Plaintiffs first cause of action-a breach-of-contract claim based on a failure to pay-oral argument is scheduled for October 16, 2023, at 10:30 a.m. in Courtroom 17-A, United States Courthouse, 500 Pearl Street, New York, New York.
Page citations herein to documents filed on ECF are to the original pagination in the document.
Unless otherwise noted, the facts recounted herein reflect the undisputed, material facts contained in PPD's Local Civil Rule 56.1 Statement of Facts (“R. 56.1 Statement”). See ECF No. 28. At times, EPIC contends that a statement in PPD's Rule 56.1 Statement is disputed because it inaccurately or misleadingly quotes from the parties' Agreement, arguing that the Agreement “speaks for itself.” See ECF No. 39 (Pl.'s Response to R. 56.1 Statement) ¶¶ 5, 7, 1011, 13-14, 26-27. EPIC, however, does not dispute the authenticity of the Agreement (see Id. ¶ 4), which has been submitted to the Court as an exhibit to a declaration from PPD's counsel in support of its Motion for Summary Judgment. See ECF No. 29-1. When discussing provisions of the Agreement, the Court has relied on the Agreement itself and quoted directly from it, rather than from PPD's Rule 56.1 Statement.
In June of 2019, Defendant PPD Development, L.P. (“PPD”) entered into a Consulting Agreement (the “Agreement”) with Integro USA Inc., to which Plaintiff Edgewood Partners Insurance Center Inc. (“EPIC”) is the successor in interest. R. 56.1 Statement ¶ 4; see also ECF No. 29-1 (the “Agreement”). Pursuant to the Agreement, EPIC agreed to assist PPD with strategic benefits planning, design, funding, administration, and communication concerning PPD's employee benefits program. R. 56.1 Statement ¶ 5. In exchange, PPD agreed to pay consulting fees to EPIC. Id. ¶ 6.
EPIC provides consulting services for employee medical benefits plans. R. 56.1 Statement ¶ 3.
Exhibit 1 to the Agreement sets out the calculation for determining those consulting fees.
See Agreement at 10 (Exhibit 1). The amount of consulting fees is calculated by adding two numbers: a “base fee” determined by the number of employees participating in PPD's benefits program, and a “success fee” based on the amount of medical-cost savings EPIC achieved for PPD. See R. 56.1 Statement ¶ 7; see also Agreement at Exhibit 1 ¶¶ 1-3. The base fee is calculated as prescribed in Paragraph 1 of Exhibit 1 to the Agreement, which states:
[Redacted]
Agreement at Exhibit 1 ¶ 1. Accordingly, the base fee, which is paid quarterly, is calculated by [Redacted] multiplying for each month each PPD employee participates in the benefit program. R. 56.1 Statement ¶ 9.
At the heart of the parties' dispute is the calculation of the success fee, if any, owed by PPD under the Agreement. EPIC claims that PPD has breached the Agreement by failing to pay EPIC (a) the 2020 success fee, (b) the 2021 fourth-quarter base fee, and (c) the 2021 success fee. R. 56.1 Statement ¶ 21. PPD does not dispute that it owed EPIC a 2020 success fee of $429,491 and a 2021 fourth-quarter base fee of $177,770. See ECF No. 27 (“Def's Br.”) at 6. The parties' dispute concerns the amount of the 2021 success fee, if any, owed to EPIC.
The calculation of the success fee is outlined in Paragr aphs 2 and 3 of Exhibit 1 to the Agreement. Paragraph 2. which defines [Redacted] states:
[Redacted]
Agreement at Exhibit 1 ¶ 2. Paragraph 3. which defines [Redacted] states:
[Redacted]Agreement at Exhibit 1 ¶ 3.
The Agreement states that Annex 1 provides [Redacted] and Annex 2 contains [Redacted] id. at 12-13 (Annexes 1-2). There is no dispute that if the is greater than the then the success fee is positive and PPD would owe EPIC a success fee in addition to the “base fee.” R. 56.1 Statement ¶ 12.
EPIC's second breach-of-contract claim asserts that PPD violated a confidentiality provision in the Agreement when it disclosed the Agreement and the confidential information contained therein to one of EPIC's competitors. See ECF No. 8 (“Am. Compl.”) ¶¶ 38, 46-57. The Agreement contains a Confidentiality clause which states, in relevant part:
It is understood and agreed that any and all information which may be made available to or learned by Consultant from the Client or any of its subsidiaries and affiliates during the Term of this Agreement (“Confidential Information”), is to be treated by the Consultant as strictly confidential. Confidential information shall be used solely in connection with this Agreement and shall not be published or disclosed to any third parties except to provide the Services other than to Consultant's officers, directors, affiliates, advisors (including attorneys), agents, employes or subcontractor's (collectively, “Representatives”) . . . and provided that such Representative is under a similar obligations [sic] to keep such information strictly confidential. Neither Consultant nor Client shall disclose copies of this Agreement to any party for any purpose without the prior written consent of the other party, unless the disclosure is made by either party to its own accountants, attorneys or agents, or the disclosure is determined by a court of competent jurisdiction to be required by law.Agreement ¶ 13.
B. Procedural History
EPIC initiated this action on August 16, 2022. See ECF No. 1. On August 22, 2022, EPIC filed an amended complaint, asserting claims against PPD for breach of contract based on a (1) failure to pay the success fee contemplated in the Agreement, and (2) disclosure of confidential information in violation of the Agreement's confidentiality provision. See Am. Compl. ¶¶ 40-57. PPD filed an answer to Plaintiff's amended complaint on September 14, 2022. See ECF No. 16. The parties consented to the undersigned's jurisdiction on October 26, 2022 (see ECF No. 20), and on November 15, 2022, PPD moved for summary judgment on all of EPIC's claims (see ECF No. 24). On November 22, 2022, the parties appeared before the undersigned for an initial case management conference. See Minute Entry, Nov. 22, 2022. On that same day, the Court entered an order staying all discovery deadlines pending the outcome of PPD's motion for summary judgment. See ECF No. 31. EPIC submitted its response in opposition to PPD's motion for summary judgment on December 9, 2022 (see ECF No. 38), and PPD submitted its reply brief on December 23, 2022 (see ECF No. 45).
LEGAL STANDARD
Summary judgment is warranted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir. 1994). “[T]he trial court's task at the summary judgment motion . . . is carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them.” Gallo, 22 F.3d at 1224. The moving party bears the initial burden of demonstrating an entitlement to judgment as a matter of law and identifying the matter or matters that “it believes demonstrate the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 323; Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008). “When no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight, there is no genuine issue of material fact and a grant of summary judgment is proper.” Gallo, 22 F.3d at 1224.
Under New York law, the threshold question in a contract dispute is whether the contractual terms at issue are ambiguous. Law Debenture Tr. Co. v. Maverick Tube Corp., 595 F.3d 458, 465 (2d Cir. 2010). “It is well settled that [a court's] role in interpreting a contract is to ascertain the intention of the parties at the time they entered into the contract. If that intent is discernible from the plain meaning of the language of the contract, there is no need to look further.” Evans v. Famous Music Corp., 1 N.Y.3d 452, 458 (2004). “A court tasked with interpreting a contract should seek ‘to give effect to the intent of the parties as revealed by the language of their agreement.'” Ferguson v. Lion Holding, Inc., 478 F.Supp.2d 455, 467 (S.D.N.Y. 2007) (quoting Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153, 157 (2d Cir. 2000)). “Whether a contract is ambiguous is a question of law for a court to determine as a threshold matter.” World Trade Ctr. Props., L.L.C. v. Hartford Fire Ins. Co., 345 F.3d 154, 184 (2d Cir. 2003); see also Quintel Comms., Inc. v. Fed. Transtel, Inc., 142 F.Supp.2d 476, 481 (S.D.N.Y. 2001) (explaining that “[t]he construction and interpretation of a contract, being a matter of law for the court, may properly be disposed of by summary judgment”) (alteration in original, citation omitted).
The choice-of-law provision in the Agreement requires application of New York law. See Agreement ¶ 12(D); see also Terwilliger v. Terwilliger, 206 F.3d 240, 245 (2d Cir. 2000) (applying New York law in diversity action where agreement contained a choice of law provision requiring application of New York law). Under New York law, a plaintiff asserting a breach-of-contract claim must show “(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages.” Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004); see also 34-06 73, LLC v. Seneca Ins. Co., 39 N.Y.3d 44, 52 (2022). Only the third prong is in dispute between the parties here-namely, whether PPD breached the agreement.
“Contract language is ambiguous if it is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.” Am. Home Assur. Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 316 (2d Cir. 2006) (internal quotation marks and citation omitted). In deciding whether contract language is ambiguous, “the court should not find the language ambiguous on the basis of the interpretation urged by one party, where that interpretation would strain the contract language beyond its reasonable and ordinary meaning.” Fed. Ins. Co. v. Am. Home Assur. Co., 639 F.3d 557, 568 (2d Cir. 2011) (internal quotation marks and citations omitted). In a breach-of-contract action, summary judgment is generally appropriate where contractual terms are unambiguous. Fischer & Mandell, LLP v. Citibank, N.A., 632 F.3d 793, 799 (2d Cir. 2011) (citation omitted). Conversely, “contract claims are generally not subject to summary judgment if the resolution of a dispute turns on the meaning of an ambiguous term or phrase.” Fed. Ins. Co., 639 F.3d at 567 (citations omitted).
DISCUSSION
A. Admissibility of Attorney Affidavit
As an initial matter, EPIC contests the admissibility of the attorney affidavit put forth by Avi Israeli, counsel for PPD, in support of its motion for summary judgment. See ECF No. 38 (“Pl.'s Br.”) at 8-11. The Israeli Affidavit introduces seven documents and asserts that they are all “true and correct” copies of: (1) the Consulting Agreement between PPD and Integro USA, Inc. executed June 19, 2019; (2) an Excel spreadsheet titled “PPD Shared Savings Calculation” provided to PPD by EPIC on March 31, 2022; (3) an invoice dated March 8, 2022, from EPIC to PPD for $177,770; (4) an Oracle Payment File Register of September 12, 2022, from PPD to EPIC for $105,287; (5) an email exchange between individuals at PPD and individuals representing EPIC between February 8, 2022, and July 5, 2022, titled “FW: EPIC/PPD -Consulting Agreement;” (6) the Consulting Services Agreement between PPD and Brown & Brown executed on September 27, 2021; and (7) an email from an individual at PPD to various individuals at Brown & Brown from October 27, 2021, with the subject line “Financial Performance.” See ECF No. 29 (“Israeli Aff.”).
EPIC argues that the Israeli Affidavit is not based on Israeli's personal knowledge and EPIC also attacks the authenticity of “[a]t least two [appended] exhibits.” Pl.'s Br. at 8-11. Specifically, EPIC attacks the authenticity of the Consulting Agreement between PPD and Brown & Brown (ECF No. 29-6) and the email from Hollis at PPD to Brown & Brown (ECF No. 29-7), contending that these exhibits “do not appear to be ‘true and correct' copies.” Pl.'s Br. at 8-9. EPIC also contests the date the affidavit indicates the Excel spreadsheet (see ECF No. 29-2) was provided by EPIC to PPD. Pl.'s Br. at 9. EPIC, however, does not contest the authenticity of the copy of the Consulting Agreement annexed to the Affidavit (see ECF No. 29-1)-the Agreement at the center of the parties' dispute.
“Despite the requirement that a declaration be made upon personal knowledge, attorneys often submit declarations in support of or in opposition to a motion for summary judgment for the purpose of introducing documents into the record.” Osuna v. Gov't Emps. Ins. Co., No. 11-CV-3631 (JFB) (AKT), 2014 WL 1515563, at *5 (E.D.N.Y. Apr. 17, 2014), aff'd, 623 Fed.Appx. 3 (2d Cir. 2015) (citations and internal quotation marks omitted); see also SEC v. Competitive Techs., Inc, No. 04-CV-1331 (JCH), 2006 WL 3346210, *1 (D. Conn. Nov. 6, 2006) (“Attorney affidavits are acceptable when . . . a party uses them only as a vehicle through which to present admissible evidence relevant to the matter at hand.”).
Here, the Court has relied on the Israeli Affidavit only to the extent it was used to introduce the Agreement at issue in the parties' dispute. See ECF No. 29-1. As it concerns that Agreement, EPIC does not dispute that the copy annexed to the Israeli Affidavit is a true and correct copy. See Pl.'s Response to R. 56.1 Statement ¶ 4; see Pl.'s Br. at 8-11.
B. Plaintiff's Claim for Breach of Contract (Confidentiality)
The Agreement contains a confidentiality provision, forbidding disclosure of “confidential information,” including the Agreement itself, to third parties. Agreement ¶ 13. The Agreement provides an exception to that bar, permitting disclosure of “confidential information” to the parties' “officers, directors, affiliates, advisors (including attorneys), agents, employees or subcontractors,” provided that such individuals are “under a similar obligations [sic] to keep such information strictly confidential.” Id.
EPIC alleges that PPD improperly disclosed “confidential information” to a third party in violation of the Agreement. Am. Compl. ¶¶ 38, 46-57. Specifically, the Amended Complaint avers that PPD “provided copies of [the Agreement], claims analysis, and other associated confidential and proprietary information to at least one competitor” of EPIC. Id. at ¶¶ 38, 51. The Amended Complaint does not identify the competitor to whom PPD allegedly disclosed the confidential information. Id. PPD does not contest the disclosure, stating that the disclosure was to Brown & Brown, “the employee benefit firm that succeeded EPIC as PPD's consultant.” Def.'s Br. at 11. Instead, PPD argues that Brown & Brown is its agent and therefore the disclosure was expressly permitted under the Agreement. Id. There is, however, a question of fact as to whether Brown & Brown is PPD's agent.
“New York common law provides that an agency relationship results from a manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and the consent by the other to act.” Bigio v. Coca-Cola Co., 675 F.3d 163, 175 (2d Cir. 2012) (quoting N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 122 (2d Cir. 2001)); see also Restatement (Third) of Agency § 1.01 (2006). Agency can result from “actual” or “true” authority, which can be either express or implied, Restatement (Third) of Agency § 2.01 (2006), or “apparent” authority, which results “when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal's manifestations,” id. § 2.03. “Although there is no set rule for determining whether an entity is an agent of a principal or merely an independent contractor, an essential characteristic of an agency relationship is that the agent acts subject to the principal's direction and control.” Sty-Lite Co. v. Eminent Sportswear Inc., No. 01-CV-3320, 2002 WL 15650, at *3 (S.D.N.Y. Jan.7, 2002) (citation and internal quotation marks omitted); see also Mersen USA EP Corp. v. TDK Elecs. Inc., 594 F.Supp.3d 570, 583 (S.D.N.Y. 2022) (“Agency involves a relationship where ‘the agent acts subject to the principal's direction and control.'”) (quoting Shulman Transp. Enters., Inc. v. Pan Am. World Airways, Inc., 744 F.2d 293, 295 (2d Cir. 1984)). Thus, to establish the existence of an agency relationship, a party must show “(1) the manifestation of the principal that the agent shall act for him, (2) the agent's acceptance of the undertaking, and (3) the parties' understanding that the principal is to be in control of the undertaking.” Manley v. AmBase Corp., 337 F.3d 237, 246 (2d Cir 2003) (citation and internal quotation marks omitted). The burden of proving an agency relationship is on the party who asserts the existence of such a relationship. See Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading Inc., 697 F.3d 59, 72 (2d Cir. 2012).
PPD states that Brown & Brown is its agent, but PPD's use of the term “agent” in its briefs is not conclusive as to whether an agency relationship exists between it and Brown & Brown. “It is well-recognized that the descriptive term agent is not necessarily determinative”; instead, “[t]he acts of a person and not the label attached may well determine in a practical sense and as a factual matter, the category into which the person falls.” Lumbermens Mut. Cas. Co. v. Franey Muha Alliant Ins. Servs., 388 F.Supp.2d 292, 302 (S.D.N.Y. 2005) (citations, alterations, and internal quotation marks omitted).
Further, PPD does not point to any undisputed evidence establishing the existence of an agency relationship with Brown & Brown. PPD relies on the Consulting Services Agreement it has with Brown & Brown, but EPIC contests that the exhibit provided to the Court is an accurate copy of the agreement, noting that it appears to be missing a number of pages. See ECF No. 296; Pl.'s Br. at 8. It thus cannot be relied on to support a motion for summary judgment. See Kramsky v. Chetrit Grp., LLC, No. 10-CV-2638 (HB), 2011 WL 2326920, at *2 (S.D.N.Y. June 13, 2011) (declining to rely on exhibits at the summary judgment stage where their authenticity was disputed by plaintiffs). In any case, even if the agreement were considered, it does not establish, as a matter of law, that Brown & Brown was PPD's agent.
First, the agreement is silent on the existence of an agency relationship between Brown & Brown and PPD. It does not state that Brown & Brown is an agent of PPD, and nor does it say that an agency relationship has been created. See ECF No. 29-6. And although the “label” attributed to a party in a contract is not itself dispositive of the existence of an agency relationship, here, the agreement with Brown & Brown does not even use the term agency. N. Shipping Funds I, LLC v. Icon Cap. Corp., 921 F.Supp.2d 94, 103 (S.D.N.Y. 2013). Instead, Section 2 of the agreement states that Brown & Brown is an “independent contractor and [that] nothing in [the] Agreement is intended nor shall be construed to create an employer/employee relationship, a joint venture relationship or a partnership relationship.” ECF No. 29-6 § 2. In other words, the Agreement expressly disclaims the existence of the kinds of relationships that are traditionally viewed as agency relationships. See Race v. Goldstar Jewellery, LLC, 84 A.D.3d 1342, 1343 (2d Dep't 2011) (describing the employer as the principal and the employee as the agent in the context of the employment relationship) (citation omitted); CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 366 (2d Cir. 1986) (where arrangements among business entities are “similar to” or “sufficiently analogous to joint venture or partnership,” sufficient control exists to satisfy that element of agency); see also In re Rivera, 217 B.R. 379, 387 (Bankr. D. Conn. 1998) (“agency principals” are “inherent in a partnership relationship”).
To be sure, the Agreement describes Brown & Brown as an independent contractor, and an independent contractor may also be an agent. U.S. v. Thomas, 377 F.3d 232, 238 (2d Cir. 2004). But nothing in the agreement indisputably establishes that Brown & Brown acts subject to PPD's direction and control, and “[w]ithout control, there is no agency relationship.” In re Rezulin Prods. Liability Litig., 390 F.Supp.2d 319, 330 (S.D.N.Y. 2005); see also N. Shipping Funds I, 921 F.Supp.2d at 103 (“An essential element of agency is a principal's ability to exercise control over its agent.”).
PPD, pointing to Section 2 of the agreement, argues that Brown & Brown could “bind PPD by, among other things, managing vendors, terminating contracts and changing PPD's management and communications strategy.” Def.'s Reply at 9 (citation omitted). PPD also relies on Schedule A of its agreement with Brown & Brown, which outlines the services Brown & Brown would perform for PPD. See Def's Reply at 9. But determining whether an agency relationship exists is a “highly fact specific” inquiry, Khodeir v. Sayyed, No. 15 Civ. 8763 (DAB), 2016 WL 5817003, at 9 (S.D.N.Y. Sept. 28, 2016), that looks at the actual “facts and circumstances of the parties' relationship.” N. Shipping Funds I, 921 F.Supp.2d at 103; see also Lumbermens, 388 F.Supp.2d at 302 (“[W]hether an agency exists hinges predominately on the facts and circumstances of a particular case.”). Pointing to the parties' agreement alone, without examining the nature of their actual relationship, is insufficient. See Onebeacon Ins. Co. v. Forman Int'l, Ltd., No. 04-CV-2271 (RWS), 2005 WL 100849, at *4 (S.D.N.Y. Jan. 19, 2005) (“Ultimately, the alleged acts of the defendant and not the label are determinative....”). In any case, the list of services in Schedule A do not on their face conclusively establish that PPD exercised control over Brown and Brown or that Brown & Brown had the ability to alter the legal relationships between PPD and third parties. See Mouawad Nat. Co. v. Lazare Kaplan Int'l Inc., 476 F.Supp.2d 414, 422-23 (S.D.N.Y. 2007) (explaining that an agency relationship “empower[s] the agent to take actions ‘on behalf of and for the benefit of the principal-not the agent'”) (citation omitted, emphasis in original).
PPD also relies on an October 27, 2021 email, written by Aimee Hollis of PPD to three individuals at Brown & Brown, to support its argument that an agency relationship existed. See ECF No. 29-7. Here, too, the authenticity of the email is contested by EPIC. See Pl.'s Br. at 8-9. Regardless, the email also does not conclusively establish the existence of an agency relationship. The email describes the services Brown & Brown provided to PPD-namely, reviewing portions of the Agreement with EPIC and providing financial calculations and models to PPD in order to assist PPD in calculating the amount of consulting fees owed to EPIC. Id. However, nothing in the email conclusively establishes that PPD has a right of control over Brown & Brown.
In short, the record is simply not sufficiently developed to establish, as a matter of law, that an agency relationship between PPD and Brown & Brown exists, without any evidence about the parties relationship in practice. Summary judgment is therefore inappropriate.
CONCLUSION
For the foregoing reasons, Defendant's motion for summary judgment is DENIED as to Count II of the Amended Complaint. The Clerk of Court is also respectfully directed to file this Opinion under seal and viewing levels are temporarily restricted to Plaintiff, Defendant, and the Court. The parties shall submit proposed redactions to this Opinion by October 9, 2023. The Court will review those redactions and subsequently file a redacted copy of the Opinion on the public docket. The Clerk of Court is respectfully directed to terminate the motion at ECF No. 74. The parties are reminded that oral argument to address Defendant's motion as it relates to the claim in Count I is scheduled for October 16, 2023.
SO ORDERED.