Summary
affirming dismissal of claim that employee was entitled to bonus where employee handbook stated that bonuses were paid at the "sole discretion" of employer
Summary of this case from Todd English Enters., LLC v. Hudson Home Grp., LLCOpinion
12-01-2016
NEWMARK & COMPANY REAL ESTATE, INC., Plaintiff–Respondent, v. Paul FRISCHER, Defendant–Appellant, Newmark Energy Solutions, LLC, Defendant. Paul Frischer, Counterclaim–Plaintiff–Appellant, v. Newmark & Company Real Estate, Inc., Counterclaim–Defendant–Respondent.
White and Williams LLP, New York (John McDonald of counsel) and White and Williams LLP, Philadelphia, PA (Thomas B. Fiddler of the bar of the State of New Jersey and Commonwealth of Pennsylvania, admitted pro hac vice, of counsel), for appellant. David A. Paul, New York, for respondent.
White and Williams LLP, New York (John McDonald of counsel) and White and Williams LLP, Philadelphia, PA (Thomas B. Fiddler of the bar of the State of New Jersey and Commonwealth of Pennsylvania, admitted pro hac vice, of counsel), for appellant.
David A. Paul, New York, for respondent.
Order, Supreme Court, New York County (Saliann Scarpulla, J.), entered March 25, 2014, which granted plaintiff's motion to dismiss defendant Frischer's counterclaims, affirmed, without costs.
The operative employee handbook stating, inter alia, that bonuses were paid at the sole discretion of plaintiff, and the acknowledgment of the handbook's terms signed by defendant, conclusively refute the counterclaims based on the alleged oral promise to pay an annual nondiscretionary bonus (see Kaplan v. Capital Co. of Am., 298 A.D.2d 110, 747 N.Y.S.2d 504 [1st Dept.2002], lv. denied 99 N.Y.2d 510, 760 N.Y.S.2d 101, 790 N.E.2d 275 [2003] ).
Nor was the discretionary bonus policy modified by the alleged oral agreement. As defendant's acknowledgment makes clear, “[N]o supervisor, manager or other representative of [plaintiff] has the authority to make any verbal promises, commitments, or statements of any kind regarding the Company's policies, procedures, or any other issues that are legally binding on the Company.”
The quasi-contractual counterclaims based on the alleged agreement are likewise precluded by the discretionary bonus policy (see Kaplan, 298 A.D.2d at 111, 747 N.Y.S.2d 504 ; De Madariaga v. Union Bancaire Prive, 103 A.D.3d 591, 961 N.Y.S.2d 50 [1st Dept.2013], lv. denied 21 N.Y.3d 854, 2013 WL 1831583 [2013] ).
The alleged oral promise to pay acquisition proceeds, however, was not established to be a “bonus” within the scope of the discretionary bonus policy. The complaint alleges that the promised payment was not performance-based, but was an inducement to keep defendant from quitting (see Gruber v. J.W.E. Silk, Inc., 52 A.D.3d 339, 859 N.Y.S.2d 650 [1st Dept.2008] ). The breach of contract counterclaim based on this alleged promise is nonetheless barred because the promise was not in writing, as required by the broad language of the acknowledgment (see Jordan Panel Sys. Corp. v. Turner Constr. Co., 45 A.D.3d 165, 179–180, 841 N.Y.S.2d 561 [1st Dept.2007] ).
The quasi-contractual counterclaims, to the extent predicated on an alleged agreement to pay acquisition proceeds, likewise fail. Such claims require an element of reasonable reliance on a promise, a reasonable expectation of compensation, or an inequity, all of which are negated where, as here, the plaintiff receives adequate compensation and signed a written acknowledgment confirming the fact that no representative of plaintiff had authority to make legally binding verbal promises (see Kaplan, 298 A.D.2d at 111, 747 N.Y.S.2d 504 ; De Madariaga, 103 A.D.3d 591, 961 N.Y.S.2d 50 ).
SWEENY, J.P., MANZANET–DANIELS, FEINMAN, WEBBER, JJ., concur.
All concur except Feinman, J. who dissents in part in a memorandum as follows: FEINMAN, J. (dissenting in part)
This appeal raises the familiar question of when an employee's bonus constitutes a discretionary bonus subject to forfeiture at the will of the employer or earned compensation not subject to forfeiture. The majority answers this question in favor of the plaintiff-employer, dismissing each of the defendant-employee's counterclaims, based upon plaintiff's documentary evidence. While I agree with the majority that plaintiff's documentary evidence is sufficient to conclusively refute defendant's counterclaims insofar as they relate to an alleged oral promise to pay an annual nondiscretionary bonus, I disagree that it conclusively refutes defendant's counterclaim for unjust enrichment as it relates to the alleged oral promise to pay acquisition proceeds. In my view, dismissal of this counterclaim at this early stage is premature.
On a motion to dismiss pursuant to CPLR 3211(a)(1), we must accept the “factual allegations [in defendant's counterclaim] as true, according [him] the benefit of every possible favorable inference, and determining only whether the facts as alleged fit within any cognizable legal theory” (Weil, Gotshal & Manges, LLP v. Fashion Boutique of Short Hills, Inc., 10 A.D.3d 267, 270, 780 N.Y.S.2d 593 [1st Dept.2004] [internal quotation marks omitted] ). Dismissal of a counterclaim is warranted only where plaintiff's documentary evidence “utterly refutes” defendant's factual allegations (see Mill Fin., LLC v. Gillett, 122 A.D.3d 98, 103, 992 N.Y.S.2d 20 [1st Dept.2014], citing Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 [2002] ). Therefore, documentary evidence that “fails to resolve all factual issues as a matter of law” is insufficient to support dismissal (Sirius XM Radio Inc. v. XL Speciality Ins. Co., 117 A.D.3d 652, 652, 987 N.Y.S.2d 324 [1st Dept.2014] ).
In general, “[a]n employee's entitlement to a bonus is governed by the terms of the employer's bonus plan” (see e.g. Hall v. United Parcel Serv. of Am., 76 N.Y.2d 27, 36, 556 N.Y.S.2d 21, 555 N.E.2d 273 [1990] ). It is well-settled under New York law that an employee has no enforceable right to payment of a bonus where a bonus plan clearly vests the employer with absolute discretion in making bonus decisions (Gruber v. J.W.E. Silk, Inc., 52 A.D.3d 339, 340, 859 N.Y.S.2d 650 [1st Dept.2008] ; Weiner v. Diebold Group, 173 A.D.2d 166, 167, 568 N.Y.S.2d 959 [1st Dept.1991] ). However, this rule is limited by the “long standing policy against the forfeiture of earned wages” (173 A.D.2d at 167, 568 N.Y.S.2d 959 ). Therefore, when an employer fails to clearly indicate that bonuses are discretionary, the question of whether unpaid incentive compensation constitutes a discretionary bonus or earned wages not subject to forfeiture becomes one of fact (Ryan v. Kellogg Partners Inst. Servs., 79 A.D.3d 447, 448, 914 N.Y.S.2d 81 [1st Dept.2010], affd. 19 N.Y.3d 1, 945 N.Y.S.2d 593, 968 N.E.2d 947 [2012] ; Mirchel v. RMJ Sec. Corp., 205 A.D.2d 388, 389, 613 N.Y.S.2d 876 [1st Dept.1994] ).
In this case, defendant's counterclaims arise from two alleged oral promises made by plaintiff to defendant: (1) a promise to pay an annual nondiscretionary bonus of $100,000 for the year of 2011; and (2) a promise to pay a portion of the proceeds derived from BGC Partners, Inc.'s acquisition of plaintiff. More specifically, in regard to the latter, defendant alleges that after communicating his desire to leave the company prior to the acquisition, plaintiff's CEO promised defendant he would receive acquisition proceeds in an amount no less than the amount received by the partner with the smallest partnership interest. Defendant further alleges that in reliance upon this promise, he did not seek alternative employment and took on additional acquisition-related responsibilities. Given the procedural posture, these allegations must be accepted as true.
In support of its motion to dismiss, plaintiff submitted as documentary evidence a copy of its employee handbook and a form signed by defendant, acknowledging his receipt and understanding of the terms of the handbook. The handbook provides that bonuses were left to the plaintiff's “sole discretion.” Additionally, the signed acknowledgment form requires that any modifications to the employee handbook be in writing.
In light of the discretionary bonus plan, I agree with the majority that defendant's counterclaims based on the alleged oral promise to pay an annual nondiscretionary bonus are conclusively refuted by plaintiff's documentary evidence (see De Madariaga v. Union Bancaire Privée, 103 A.D.3d 591, 961 N.Y.S.2d 50 [1st Dept.2013], lv. denied 21 N.Y.3d 854, 2013 WL 1831583 [2013] ; Kaplan v. Capital Co. of Am., 298 A.D.2d 110, 747 N.Y.S.2d 504 [1st Dept.2002], lv. denied 99 N.Y.2d 510, 760 N.Y.S.2d 101, 790 N.E.2d 275 [2003] ). I also agree with the majority that documentary evidence makes clear that the alleged oral promise to pay defendant acquisition proceeds cannot be a “bonus” within the scope of the discretionary bonus policy. The policy provides that bonuses are “generally paid at year end” and that plaintiff will consider “overall performance” and “[c]ompany profitability” in awarding them. Defendant alleges that the promised payment was not based on performance or profitability, but rather, was an inducement to keep defendant from leaving the company and was given in consideration for defendant taking on additional acquisition-related responsibilities.
However, because plaintiff's bonus plan does not contemplate the alleged oral promise to pay defendant acquisition proceeds, the question of whether such unpaid incentive compensation constitutes a discretionary bonus or earned wages not subject to forfeiture becomes one of fact (see Gruber, 52 A.D.3d at 340, 859 N.Y.S.2d 650 ). This conclusion is in accordance with New York law. In cases where employers induce employee reliance by promising bonuses, New York courts have permitted employee claims to go forward (see Gruber, 52 A.D.3d at 339, 859 N.Y.S.2d 650 [finding issues of fact precluded summary judgment where employee alleged she was promised an additional bonus to remain working for her employer]; see also Ryan, 19 N.Y.3d at 14, 945 N.Y.S.2d 593, 968 N.E.2d 947 [denying employer's motion for judgment notwithstanding the verdict where employee left previous job in reliance on promise to receive bonus]; Guggenheimer v. Bernstein Litowitz Berger & Grossmann LLP, 11 Misc.3d 926, 931, 810 N.Y.S.2d 880 [Sup.Ct., N.Y. County 2006] [denying employer's motion to dismiss where it induced its employee to bring in business by promising to pay her a bonus]; see also Restatement of Employment Law § 3.02, Comment d [“Bonuses ... to ensure that employees will continue working for the employer during some period of corporate change ... normally constitute earned compensation once the conditions of the bonus are satisfied.”] ).
Defendant's counterclaims for breach of contract, promissory estoppel, and quantum meruit are, as the majority holds, conclusively refuted by the signed acknowledgment form. The breach of contract counterclaim is barred by the statute of frauds, because the promise was not in writing, as required by the acknowledgment form (see General Obligations Law § 15–301[1] ). Likewise, the promissory estoppel and quantum meruit counterclaims must fail, because, as the majority concludes, such claims require either a reasonable reliance on a promise or an expectation of compensation. Neither can be established here, because as the signed acknowledgment form demonstrates, defendant should have known that the promise of acquisition proceeds had to be in writing (see Kaplan, 298 A.D.2d at 111, 747 N.Y.S.2d 504 ).
However, I part company with the majority to the extent it affirms the dismissal of defendant's counterclaim for unjust enrichment. The signed acknowledgment form is insufficient to conclusively refute defendant's counterclaim for unjust enrichment (see Mirchel, 205 A.D.2d at 390–391, 613 N.Y.S.2d 876 [“It is well established that a claim ... of unjust enrichment may be ... employed as an alternative basis for recovery should the contract sued upon be held void under the [s]tatute of [f]rauds.”] ). To prevail on a claim of unjust enrichment, defendant must show (1) plaintiff was enriched (2) at defendant's expense, and (3) that “it is against equity and good conscience to permit the [plaintiff] to retain what is sought to be recovered” (e.g. Paramount Film Distrib. Corp. v. State of New York, 30 N.Y.2d 415, 421, 334 N.Y.S.2d 388, 285 N.E.2d 695 [1972], cert. denied 414 U.S. 829, 94 S.Ct. 57, 38 L.Ed.2d 64 [1973] ). Defendant has alleged that plaintiff promised to pay him acquisition proceeds in consideration for his remaining in plaintiff's employ, as to not interrupt business activities throughout the acquisition. In acceptance and reliance upon this promise, defendant did not seek alternative employment and took on additional acquisition-related responsibilities beyond his job description. These factual allegations are sufficient to allege a cause of action for unjust enrichment (see Nakamura v. Fujii, 253 A.D.2d 387, 390, 677 N.Y.S.2d 113 [1st Dept.1998] ; see also Guggenheimer, 11 Misc.3d at 934, 810 N.Y.S.2d 880 [unjust enrichment claim sufficiently pleaded where plaintiff alleged she was induced to bring business into the firm and defendant refused to pay promised bonus] ). The majority necessarily views the signed acknowledgment form as conclusively refuting each of these allegations. However, the only way to reach this result is to conclude that defendant's allegations are incredible as a matter of law, a finding that is not appropriate at this juncture. Accepting defendant's allegations as true, he has satisfied the pleading requirements for unjust enrichment.
The majority concludes that defendant's promissory estoppel, quantum meruit, and unjust enrichment counterclaims must fail because plaintiff's acknowledgment form negates “reasonable reliance on a promise, an expectation of compensation, or an inequity.” Because reasonable reliance and an expectation of compensation are elements of promissory estoppel and quantum meruit respectively, the majority apparently takes the position that defendant's unjust enrichment counterclaim must fail because an inequity is refuted by the acknowledgment form.
Accordingly, the order appealed from should be modified to deny plaintiff's motion to dismiss defendant's counterclaim for unjust enrichment, and otherwise affirmed.