Opinion
No. 99 Civ. 9407 (RCC).
August 21, 2001
OPINION AND ORDER
Plaintiff ZZYZX Studios ("ZZYZX") brings this action against defendants Volvo Cars of North America, Inc. ("Volvo") and Guy De Poortere ("De Poortere"), a former Volvo employee, alleging fraud, breach of contract and breach of the covenant of good faith and fair dealing. ZZYZX claims that Volvo, through representations made by De Poortere, agreed to sponsor a planned ZZYZX theatrical production but ultimately failed to provide the promised funding. ZZYZX seeks to recover for damages it incurred in reliance on the Volvo sponsorship.
Volvo now moves for summary judgment pursuant to Fed.R.Civ.P. 56 or, alternatively, for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c), on the grounds that Volvo neither made sponsorship representations to ZZYZX nor authorized De Poortere's statements, and thus cannot be held liable. For the reasons set forth below, Volvo's motion for summary judgment is granted.
I. BACKGROUND
For purposes of this motion, Volvo takes no position with respect to the following facts set forth by ZZYZX. ZZYZX is a not-for-profit theatrical production company based in New York City. DeLuca Decl. ¶ 3. ZZYZX's first production, "The Maids," premiered in early 1997. Id. De Poortere was one of four principal investors in the show. Id. ¶ 4. De Poortere attended numerous performances of "The Maids." Id. ¶ 6. According to De Poortere, members of Volvo's Marketing Department also attended "The Maids" on at least five occasions and were enthusiastic about the production. Id.
Shortly after "The Maids" closed, De Poortere approached Frank DeLuca ("DeLuca"), the ZZYZX Artistic Director, about a possible Volvo sponsorship for ZZYZX's next production, "Sweet Bird of Youth." Id. ¶ 8. De Poortere suggested that ZZYZX write a proposal in accordance with Volvo Marketing Department specifications, which were provided to ZZYZX by De Poortere. Id. ¶ 10.
In or about June 1997, ZZYZX presented the proposal to De Poortere, who promised to forward it to a Volvo Vice President of Marketing. Id., ¶ 11. Soon thereafter, De Poortere met with ZZYZX directors and informed them that Volvo had approved the project and had "green lighted" the production. Id. ¶ 12. After that meeting, De Poortere made several follow-up phone calls to ZZYZX confirming the sponsorship. 14. ¶ 13. He also stated that funds would be forthcoming. Id. During the following months, De Poortere attended ZZYZX meetings and continued to vouch for Volvo sponsorship. Id. ¶ 15. Based upon De Poortere's statements, ZZYZX proceeded with production for "Sweet Bird of Youth." Id. ¶ 14.
In early 1998, ZZYZX entered into a contract with the Classic Stage Company and faxed copies of that document both to De Poortere and to Volvo's Marketing Department. Def. Rule 56.1 Statement ¶ 5. Neither Volvo nor De Poortere responded to the fax or returned phone calls from ZZYZX. Id. ¶ 6. Finally, on February 13, 1998, De Poortere advised ZZYZX that Volvo had rejected the project. Id. ZZYZX commenced this action against both Volvo and De Poortere on September 2, 1999.
De Poortere has never been formally served in this action, and his current whereabouts are unknown. On October 27, 2000, this Court ordered Volvo to provide his last known address to plaintiff, but neither party has made any contact with De Poortere to date.
II. DISCUSSION
Volvo contends that summary judgment, or, in the alternative, judgment on the pleadings, is warranted here. Volvo argues that ZZYZX has failed to set forth any competent proof that Volvo either agreed to sponsor the production or authorized De Poortere to do so. Furthermore, Volvo asserts that any reliance placed upon De Poortere's representations was unreasonable as a matter of law. ZZYZX argues in opposition that there are genuine issues of fact as to whether De Poortere had authority to act on Volvo's behalf and as to whether ZZYZX's reliance on that authority was reasonable.
Because discovery is complete and ZZYZX has submitted an affidavit in support of its position, this Court will treat the instant motion as one for summary judgment. See Fed.R.Civ.P. 12(c) ("If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment. . . ."). The moving party bears the initial burden of proof on such a motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Facts, and all inferences therefrom, must be viewed in a light most favorable to the non-movant. Nationwide Life Ins. Co. v. Bankers Leasing Ass'n, 182 F.3d 157, 160 (2d Cir. 1999). If the moving party meets its burden, then the non-movant must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
Mere "metaphysical doubt" is inadequate; sufficient evidence must exist upon which a reasonable jury could return a verdict for the non-movant.Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). A grant of summary judgment is appropriate when no rational jury could find in favor of the non-movant because there is no genuine issue of material fact based on the evidence in the record or the substantive law. Gallo v. Prudential Residential Services, Ltd., 22 F.3d 1219, 1224 (2d Cir. 1994); see also, Fed.R.Civ.P. 56(c). Applying this standard, this Court concludes that there is no basis for a trial in this action as against defendant Volvo.
It is undisputed that Volvo did not sign any contracts or communicate in any way with ZZYZX with respect to the funding of "Sweet Bird of Youth." Instead, ZZYZX relies exclusively on representations made by De Poortere in order to support its claims against Volvo. ZZYZX argues that De Poortere's statements are attributable to Volvo under an agency theory of liability.
Under New York law, "an agent must have authority, whether apparent, actual or implied, to bind his principal." Merrill Lynch Interfunding, Inc. v. Argenti, 155 F.3d 113, 122 (2d Cir. 1998). If such authority exists, then the principal becomes responsible for the agent's acts within the scope of the bestowed authority. Old Republic Ins. Co. v. Hansa World Cargo Ser., Inc., 51 F. Supp.2d, 457, 471 (S.D.N.Y. 1999).
ZZYZX cannot support its claim that De Poortere had actual, implied or apparent authority to bind Volvo. Actual authority is created by "direct manifestations" from the principal to the agent. Peltz v. SHB Commodities, Inc., 115 F.3d 1082, 1088 (2d Cir. 1997); see also Minskoff v. American Express, 98 F.3d 703, 708 (2d Cir. 1996). Implied authority is simply "actual authority given implicitly by a principal to his agent." Old Republic Ins. Co., 51 F. Supp.2d at 474 (citing Marfia v. T.C. Ziraat Bankasi, 100 F.3d 243, 251 (2d Cir. 1996)). Finally, apparent authority is created when the words or conduct of the principal, as communicated to a third party, give rise to the appearance and belief that the agent possesses the authority to enter into a transaction. Id. at 475 (citing Hallock v. State, 64 N.Y.2d 224, 231, 485 N.Y.S.2d 510, 513 (1984)).
In its papers, ZZYZX mentions only the concepts of actual and implied agency by name. Pl. Mem. at 2. However, because ZZYZX also implicitly relies on the concept of apparent authority, and because Volvo briefed the theory in its papers, the Court will address that argument as well.
In other words, a finding of agency under each of these theories depends on some conduct by the principal that authorizes, or appears to authorize, the agent to do business on its behalf Here, however, there is simply no competent evidence that Volvo itself took any action that empowered De Poortere to sponsor "Sweet Bird of Youth."
The only "proof" of Volvo's involvement with the production derives from statements made by De Poortere. De Poortere claimed that he had presented the "Sweet Bird of Youth" proposal to an unnamed Volvo Vice President of Marketing and that Volvo had authorized the project. DeLuca Decl. ¶ 12. De Poortere then continued to attend production meetings and to assure ZZYZX that funds would be forthcoming. Id. ¶¶ 13, 15. De Poortere's self-serving assertion that he had received Volvo's approval, however, is insufficient as a matter of law to prove agency. See Reiss v. GAN S.A., 78 F. Supp.2d 147, 158 (S.D.N.Y. 1999) (holding that alleged agent's statements to third party, claiming that principal had authorized him to enter into an agreement, were inadequate as a matter of law), vacated on other grounds, 235 F.3d 738 (2d Cir. 2000); Tarstar Shipping Co. v. Century Shipline Ltd., 451 F. Supp. 317, 323 (S.D.N.Y. 1978) (stating that agency cannot be proven merely by offering "the self-serving statements of the purported agent"), aff'd, 597 F.2d 837 (2d Cir. 1979).
Moreover, ZZYZX has not submitted any affidavits, declarations or other testimony by De Poortere; instead, De Poortere's statements are merely repeated second-hand in the Declaration of Frank DeLuca. As such, they may also constitute hearsay. See Fed.R.Evid. 802.
The record contains no other evidence of conduct by Volvo that could support a finding of agency. ZZYZX claims that Volvo appeared to authorize De Poortere's actions because (1) members of Volvo's Marketing Department attended performances of "The Maids," an earlier ZZYZX production, and responded enthusiastically, and (2) Volvo sponsors various events as part of its public relations efforts. See Complaint ¶¶ 3, 11; DeLuca Decl. ¶ 6. Again, however, ZZYZX's sole proof that Volvo executives were present at those performances comes from representations made by De Poortere, see DeLuca Decl. ¶ 6, which are inadequate as a matter of law. Reiss, 78 F. Supp. 2d at 158. Moreover, the mere fact that Volvo on occasion funds artistic endeavors cannot support a conclusion that Volvo sponsored the production at issue here. See County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 1318 (2d Cir. 1990) (holding that the non-movant "is not entitled to the benefit of unreasonable inferences").
Counsel for ZZYZX apparently did not serve any interrogatories during the discovery period in order to attempt to substantiate this allegation. Consequently, the Court has no other proof that any Volvo employees actually attended the show.
Furthermore, to the extent that ZZYZX invokes a theory of apparent authority, it is well settled that the plaintiff's reliance on that authority must be reasonable. See FDIC v. Providence College, 115 F.3d 136, 140 (2d Cir. 1997). In the absence of further inquiry, ZZYZX's reliance was unjustified. Under New York law, a duty of inquiry into the scope of the authority arises when (1) the facts and circumstances are such as to put the third party on inquiry, (2) the transaction is extraordinary, or (3) the novelty of the transaction alerts the third party to a danger of fraud. Id. at 141.
Here, the record reflects that ZZYZX had no prior relationship with Volvo, never communicated with anyone at Volvo except De Poortere and never received any documents or return phone calls from Volvo. Moreover, although De Poortere made assurances that funds from Volvo would be forthcoming, no money was ever transferred to ZZYZX. Yet ZZYZX made no attempt to ascertain the scope of De Poortere's authority, or even to confirm what position he held at Volvo. Given the circumstances here, ZZYZX's failure to do so was unreasonable.
Indeed, neither the Complaint nor the papers submitted by ZZYZX make any mention of the title held by De Poortere at Volvo. It was not until oral argument, where Volvo acknowledged that De Poortere had been employed in the Marketing Department, that ZZYZX became aware of the exact nature of De Poortere's position.
III. CONCLUSION
There is simply no evidence here which would allow a reasonable juror to conclude that De Poortere had the authority to bind Volvo. Consequently, this is one of those cases where summary judgment properly should serve as "the ultimate screen to weed out truly insubstantial lawsuits prior to trial." Crawford-El v. Britton, 523 U.S. 574, 600 (1998). Volvo's motion for summary judgment is therefore GRANTED. Furthermore, because ZZYZX never effectuated service upon De Poortere, this action also must be dismissed as against him pursuant to Fed.R.Civ.P.4(m). The Clerk of the Court is therefore directed to close this case.