Opinion
4567/05.
Decided June 13, 2006.
Steven M. Weinstein, Esq., Westbury, New York, Counsel for plaintiff.
Duncan, Fish Vogel, LLP, Smithtown, New York, Counsel for defendant.
Defendant Fastrack Healthcare Systems, Inc. ("Fastrack") moves for summary judgment dismissing the complaint and for summary judgment on its sixth counterclaim.
BACKGROUND
Fastrack is involved in providing information technology, software and consulting services to the health care industry. Stuart Sipos ("Sipos") was employed by Fastrack as its National Sales Manager.
Sipos was employed pursuant to a written employment agreement ("Agreement") dated May 4, 2004. Although the Agreement was dated May 4, 2004, the Agreement covered the period of January 1, 2004 through December 31, 2006. The Agreement was prepared by Sipos.
Under the terms of the Agreement, Sipos was to be paid commissions which were a percentage of the annual gross sales of the sales department. The percentage Sipos was to receive was dependent upon the amount of sales. The higher the amount of sales, the larger the percentage. In addition to his salary, Sipos was to receive a bonus if Fastrack's sales exceed certain fixed targeted amounts. The Agreement also provided for payment of an additional bonus if sales increased by specific percentages over base amounts established by the Agreement.
The Agreement defined sales in two places. Paragraph 1(A) provides, "A Sale is defined as a signed contract and a Deposit or Purchase order Number. The Sale is dated when Fastrack receives the signed contract and deposit or Purchase Order Number."
The third subsection of Paragraph 1 provides, "A Sale includes New Customers and Upgrades from existing Customers (Does not include training, software support and CWA's)."
Sipos' last day of employment with Fastrack was March 18, 2005. Sipos asserts that he "resigned" because he was owed the bonus due for the year 2004 as well as other sums. Fastrack asserts that Sipos was paid all that he was entitled to receive under the terms of the Agreement and that it actually paid Sipos amounts in excess of the amounts due under the terms of the Agreement because it misinterpreted the Agreement. Fastrack has counterclaimed to recover these alleged overpayments.
In addition to commencing this action, Sipos filed a claim for unemployment benefits. The New York State Department of Labor initially denied Sipos claim for unemployment benefits effective March 19, 2005 on the grounds that Sipos voluntarily separated from his employment without good cause. Upon receipt of this determination, Sipos requested a hearing.
A hearing was held before an Administrative Law Judge ("ALJ") on September 12, 2005.
The ALJ rendered a written decision dated November 18, 2005 which denied Sipos' claim of entitlement to unemployment benefits. The ALJ found that, under the terms of the Agreement, Sipos was not entitled to receive commissions for training and other services. Sipos was paid money in this regard without the knowledge of Fastrack's president . Upon learning of these payments to Sipos, Fastrack requested a refund of these moneys. Sipos did not return these funds.
The ALJ made three specific findings that impact this action. They are: (1) Sipos was not owed any money when he terminated his employment with Fastrack; (2) Sipos did not have good cause in leaving his employment; and (3) Sipos voluntarily terminated his employment without good cause.
Fastrack asserts the decision of the ALJ is either res judicata or collateral estoppel regarding the claims brought by Sipos in this action. As a result, the action must be dismissed.
DISCUSSION
A. Res Judicata or Collateral Estoppel Effect of the Administrative Determination — First and Second Causes of Action
1. Legal Standard
"[I]t should be made clear that the doctrines of res judicata and collateral estoppel are applicable to give conclusive effect to the quasi-judicial determinations of administrative agencies (citations omitted) when rendered pursuant to the adjudicatory authority of an agency to decide cases brought before its tribunals employing procedures substantially similar to those used in a court of law (citation omitted)." Ryan v. New York Telephone Co., 62 NY2d 494, 499 (1984).
"[S]uch determinations, when final, become conclusive and binding on the courts." Bernstein v. Birch Wathen School, 71 AD2d 129, 132 (1st Dept. 1979), aff'd., 51 NY2d 932 (1980). See also, O'Gorman v. Journal News Westchester, 2 AD3d 815 (2nd Dept. 2003).
The decisions of an administrative agency will be given res judicata or collateral estoppel effect only where the parties were given a full and fair opportunity to contest the matter. Hughes v. Gibson Courier Services Corp., 218 AD2d 684 (2nd Dept. 1995); and Frybergh v. Kouffman, 145 AD2d 529 (2nd Dept. 1988).
In order to avoid res judicata or collateral estoppel effect of a decision of an administrative agency, the plaintiff must establish that he did not have a full and fair opportunity to litigate the issue before the administrative law judge. Alvarez v. Brown, 256 AD2d 530 (2nd Dept. 1998).
Collateral estoppel prevents a party from re-litigating in a subsequent action issues which have been decided against that party in a prior action in which the party had a full and fair opportunity to litigate the issue. Kaufman v. Eli Lilly and Co., 65 NY2d 449 (1985); Gilberg v. Barbieri, 53 NY2d 285 (1981); and Schwartz v. Public Administrator of County of Bronx, 24 NY2d 65 (1969). The party seeking the benefit of collateral estoppel must establish that the issue was decided in the prior action or proceeding while the party opposing the application of collateral estoppel must establish that it did not have the opportunity to fully and fairly litigate the issue in the prior action or proceeding while the party opposing the application of collateral estoppel must establish that it did not have the opportunity to fully and fairly litigate the issue in the prior action. Kaufman v. Eli Lilly and Co., supra.
In determining whether one should be collaterally estopped from litigating an issue decided in an administrative proceeding is a subsequent action, the court should consider the nature of forum, the importance of the claim in the prior litigation, the incentive and initiative to litigate, the extent of the litigation, the ability of counsel, the availability of new or different evidence, differences in the applicable law and the forseeablility of further litigation. Ryan v. New York Telephone Co., supra; Gilberg v. Barbieri, supra; and Schwartz v. Public Administrator, supra.
Weighing and balancing these factors, it is clear that Sipos should be collaterally estopped from re-litigating the issue of his entitlement to a bonus for 2004, reinstatement and claims for future consideration.
The New York State Department of Labor's Unemployment Insurance Appeal Board was unquestionably the proper agency to hear and decide Sipos' claim for unemployment benefits. See, Labor Law Article 18; and 12 NYCRR 460, et. seq. Furthermore, Sipos selected this forum by filing a claim for unemployment benefits.
Sipos was represented at the hearing held before the ALJ by the same attorney who represents him in his action. Sipos testified and was permitted to introduce evidence. Sipos' attorney was permitted to cross-examine the witnesses produced by Fastrack.
Sipos' primary complaint is that he was "sandbagged" at the unemployment hearing. However, Sipos has not established what actions were taken by the ALJ which deprived him of an opportunity to fully and fairly present his claim.
Spenser Kay, Fastrack's president, testified before the ALJ that training was not included in the calculations of sales for the purposes of determining Sipos entitlement to commissions is claimed to be false. The ALJ found this testimony credible and relied upon it in reaching his determination.
The ALJ was required to hear and determine issues relating to conflicting testimony. As the trier of fact, the ALJ is required to make determinations on issues of credibility. Sipos does not claim he was prevented from introducing evidence to establish the contrary.
If Sipos was aggrieved by the decision of the ALJ, his remedy was appeal to the Department of Labor Appeals Board. See, 12 NYCRR 463. The Appeals Board has the discretion to conduct an additional hearing and to receive further evidence. Labor Law § 621; and 12 NYCRR 463.1(f), 463.2(b) and 463.3(b). See, Matter of Miller, 9 AD3d 569 (3rd Dept. 2004).
If Sipos was than dissatisfied with the determination made by the Appeals Board, then his remedy was to challenge that determination through a proceeding brought pursuant to CPLR Article 78. Sipos did neither.
Since Sipos has not demonstrated that he was not given a full and fair opportunity to litigate this matter before the Department of Labor, the findings of the ALJ are final and binding and must be adopted by this Court in deciding these motions. Ryan v. New York Telephone Co., supra.
2. First Cause of Action
The ALJ's decision found that Fastrack's sales did not reach the amount required for Sipos to earn a bonus for 2004. The ALJ also found that Sipos was not owed any money by Fastrack.
Sipos seeks to avoid the collateral estoppel effect of the ALJ's decision by asserting that his employment contract was ambiguous and the ALJ did not rule on the issue of alleged contractual ambiguity.
Sipos' first cause of action seeks to recover the bonus due him for the year 2004 should Fastrack sales exceed $3,200,000.
Even if Sipos was not collaterally estopped, Sipos' first cause of action would have to be dismissed. The allegedly ambiguous provision of the contract provides that sales for the purposes of calculating Sipos entitlement to a bonus, "Does not include training, software support and CWA's." Sipos asserts that the provisions should be read or interpreted, "Does not include additional training, software support and CWA's."
This distinction is extremely important. If training, software support and CWA's were included in sales for 2004, then Sipos would have been entitled to the bonus. If they are not included, Sipos does not receive the bonus.
A contract will be interpreted in accordance with the intent of the parties as expressed in the language of the agreement. Greenfield v. Philles Records, Inc., 98 NY2d 562 (2002); and Katina, Inc. v. Famiglietti, 306 AD2d 440 (2nd Dept. 2003). The terms of an agreement are to be interpreted in accordance with their plain meaning. Greenfield v. Philles Records, Inc., supra; and Tikotzky v. New York City Transit Auth., 286 AD2d 493 (2nd Dept. 2001). The court is to give ". . . practical interpretation to the language employed and the parties' reasonable expectations." Slamow v. Del Col, 174 AD2d 725, 726 (2nd Dept. 1991), aff'd., 79 NY2d 1016 (1992).
A clear and complete written agreement should be enforced in accordance with its terms. South Road Assocs., LLC v. International Business Machines Corp., 4 NY3d 272 (2005); and Greenfield v. Philles Records, Inc., supra; and W.W.W. Assocs. v. Giancontieri, 77 NY2d 157 (1990).
The question of whether an agreement is ambiguous is a question of law to be determined by the Court. W.W.W. Assocs. v. Giancontieri, supra; and JJFN Holdings, Inc. v. Monarch Investment Properties, Inc., 289 AD2d 528 (2nd Dept. 2001). Ambiguity exists where the terms of the agreement are susceptible to two reasonable interpretations. See, Uribe v. Merchants Bank of New York, 92 NY2d 336 (1998); and Around the Clock Delicatessen, Inc. v. Larkin, 232 AD2d 514 (2nd Dept. 1996). Ambiguity does not exist simply because the parties urge different interpretations of its terms. Bethlehem Steel Co. v. Turner Construction Co., 2 NY2d 456 (1957); and Elletson v. Bonded Insulation Co., Inc., 272 AD2d 825 (3rd Dept., 2000).
Parol evidence will not be considered in interpreting a contract unless the contract is ambiguous. South Road Assocs., LLC. v. IBM Corp., 4 NY2d 272 (2005); and 767 Third Avenue, LLC v. Orix Capital Markets, LLC, 26 AD3d 216 (1st Dept. 2006).
The Agreement in this case is clear and unambiguous. The term "sales" does not include training, software support or CWA's. Sipos is attempting to create an ambiguity where none exists by adding an "additional" term to the Agreement.
Alternatively, Sipos is attempting to modify the agreement by making reference to prior agreements or a prior course of conduct. Neither approach can be permitted.
The court may not add or delete provisions of an agreement under the guise of interpretation nor may the court interpret the language of an agreement in such a way as would be contrary to the intent of the parties. Petracca v. Petracca, 302 AD2d 576 (2nd Dept. 2003); and Tikotzky v. New York City Transit Auth., supra. The court should not interpret an agreement to impliedly contain provisions that are not specifically stated. Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 NY3d 470 (2004).
Sipos asserts that the failure to include the word "additional" in the provision in question was a typographical error. However, Sipos prepared the Agreement. He has not sued for reformation. He has sued for breach of contract. Therefore, he is bound by the unambiguous provisions of the Agreement he drafted. See, Uribe v. Merchants Bank of New York, supra.
Therefore, even if Sipos was not collaterally estopped, the first cause of action would be dismissed.
3. Second Cause of Action
The second cause of action seeks reinstatement and damages in the amount that Sipos would have received as salary and bonuses from his date of termination through the end of the contract.
Sipos' second cause of action is dependent upon his establishing that he was wrongly discharged. If an employer breaches an employment contract, the employee may recover the amount that would have been paid to the employee over the remainder of the term of the contract. See, Cornell v. T.V. Development Corp., 17 NY2d 69 (1966). Where an employee voluntarily terminates employment, the employee may not recover on the contract. See, White v. Ammann, 22 AD2d 674 (1st Dept. 1964); and 52 NY Jur2d Employment Relations § 245.
In this case, the ALJ specifically found that Sipos voluntarily terminated his employment. This factual finding collaterally estops Sipos from re-litigating that issue in this action and precludes recovery on the second cause of action.
Therefore, Defendant's motion for summary judgment dismissing the first and second causes of action must be granted.
B. Third, Fourth, Fifth and Sixth Causes of Action
1. Third, Fourth and Fifth Causes of Action
The third, fourth and fifth causes of action seek to recover commissions alleged to be due to Sipos for the months of January, February and March 2005. Sipos alleges that he was paid commissions at the rate of 15% on "Hostings" and 5% on upgrades as opposed to the 18% required by the Agreement.
This Court cannot determine whether the calculation of Sipos' commissions for January, February and March 2005 was in issue in connection with the claim made for unemployment benefits. Certainly, these items are not mentioned in the ALJ's decision. Nor did Fastrack establish that the ALJ's decision that Sipos was "not owed money" included Sipos' claim for commissions for January, February and March 2005. The ALJ's decision focused on Sipos' claim of entitlement to a bonus based upon Fastrack's 2004 sales.
Thus, since Fastrack has not established that these claims were conclusively resolved the by the prior administrative proceeding, these action cannot be dismissed.
2. Sixth Cause of Action
The sixth cause of action seeks to recover money due Sipos as reimbursement on health insurance claims. This issue was most certainly not dealt with by the ALJ in connection with Sipos claim for unemployment benefits. Therefore, this cause of action should not be dismissed.
C. Defendant's Sixth Counterclaim
Defendant's sixth counterclaim seeks to recover overpayments of commissions. Fastrack asserts that Sipos' commissions were improperly calculated by including in sales training services and incomplete contracts. Fastrack asserts that the ALJ's decision mandates summary judgment on this counterclaim.
In order to obtain summary judgment, the party seeking the relief must establish a prima facie entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York, 49 NY2d 557 (1980). If the party seeking summary judgment fails to make a prima facie showing of entitlement to judgment as a matter of law, the motion must be denied. Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851 (1985); Widmaier v. Master Products Mfg., 9 AD3d 362 (2nd Dept. 2004); and Ron v. New York City Housing Auth., 262 AD2d 76 (1st Dept. 1999).
While the ALJ's decision collaterally estops Sipos from claiming he was entitled to commissions on training, the ALJ did not address the issue of whether Sipos was entitled to commissions on incomplete contracts. In fact, there is no discussion in either the ALJ's decision or the motion papers indicating what constitutes an incomplete contract or to what extent Sipos was paid commissions on incomplete contracts.
The motion papers do not provide this Court with any evidence in admissible form establishing the commissions paid to Sipos for training, software support or CWA's.
Since Fastrack has failed to make a prima facie showing of entitlement to judgment as a matter of law on its sixth counterclaim, its motion for such relief must be denied.
Accordingly, it is,
ORDERED, that Defendant's motion for summary judgment dismissing the complaint and for judgment on its sixth counterclaim is granted to the extent of dismissing Plaintiff's first and second causes of action and, in all other respects, is denied; and it is further,
ORDERED, that counsel for the parties shall appear for a status conference on July 11, 2006 at 9:30 a.m.
This constitutes the decision and Order of the Court.