Opinion
00 Civ. 0512 (LAK).
March 29, 2001.
ORDER
WWF Paper Corporation ("WWF") here sues its former officer, John Quinlan, for the unpaid balance of $86,900 on two demand promissory notes plus interest and for a determination that it is entitled to ownership and use of certain Internet domain names registered by Quinlan in the name of an entity under his personal control. Quinlan counterclaims in principal part to recover certain allegedly unpaid sales commissions. WWF moves for summary judgment on its affirmative claim and dismissing the counterclaim.
The Notes
In 1995, Quinlan approached his boss about the possibility of WWF paying his tuition for obtaining an M.B.A. degree. Quinlan applied to Columbia Business School. The application contained a paragraph encaptioned "Sponsoring Organization's Agreement" that provided:
"If this applicant is accepted in the Columbia Executive MBA Program, our organization will keep the participant's travel time to a minimum, will release him/her completely from all job responsibilities on all class days, and will pay the cost of the Program. Our organization agrees that the applicant will be paid full salary while engaged in this program." (Quinlan Aff. Ex. A)
The document was signed on behalf of WWF by its president and chief executive officer and dated October 5, 1996.
In due course, Quinlan was accepted into the Columbia program. On November 22, 1996, however, he executed a demand note to the order of WWF in the amount of $51,000 for the initial tuition payment. (Quinlan Aff. ¶¶ 9, 11; Klein Aff. Ex. 8) He executed a second demand note in its favor in the amount of $41,000 approximately one year later. (Klein Aff. Ex. 8)
Quinlan claims that he had an oral understanding with WWF that the loan would be worked out by Quinlan's remaining in the employ of WWF for an additional period of years. (Quinlan Aff. ¶¶ 10-11) Indeed, it is undisputed that the parties contemplated that they would negotiate an employment agreement and that it would provide for satisfaction of the notes, but the plain fact is that no agreement ever was reached. Quinlan nevertheless contends that he has no obligation to pay the notes because he remained with WWF for the three year period that, he contends, WWF orally agreed would be the quid pro quo for discharge of the notes.
An unambiguous writing intended by the parties as a complete integration of their bargain precludes the consideration of extrinsic evidence to vary, contradict, add to or explain its terms. "But if the writing `was not intended to embody the entire agreement between the parties,' parol evidence would be admissible to prove the terms of the agreement."
E.g., E.G.L. Gem Lab Ltd. v. Gem Quality Institute, Inc., 90 F. Supp.2d 277, 303 (S.D.N Y 2000), aff'd, ___ F.3d ___, No. 00-7833, 2001 WL 170455 (2d Cir. Feb. 20, 2001).
Id. (quoting Fogelson v. Rackfay Const. Co., 300 N.Y. 334, 337 (1950)).
The notes at issue here are complete written instruments. "In the absence of a merger clause, as here, the court must determine whether or not there is an integration `by reading the writing in light of the surrounding circumstances, and by determining whether or not the agreement was one which the parties would ordinarily be expected to embody in the writing.'" Braten v. Bankers Trust Co., 60 N.Y.2d 155, 162, 468 N.Y.S.2d 861, 864 (1983) (quoting Ball v. Grady, 267 N.Y. 470, 472 (1935)). There is little doubt that the alleged agreement that Quinlan would not have to repay the money as long as he remained at WWF for three years is one that the parties would have been expected to embody in the promissory notes. Moreover, New York cases determining the integration issue in the bills and notes context where a merger clause is lacking consistently hold that the instrument in question is a complete integration when the obligor seeks to avoid liability imposed by the clear terms of the instrument by proof of a collateral understanding at variance with those terms. E.g., Braten, 60 N.Y.2d at 162-63, 468 N.Y.S.2d at 864 (guaranty); Bankers Trust Co. v. Stahl, 145 A.D.2d 311, 313, 534 N.Y.S.2d 979, 981-82 (1st Dept. 1988) (reversing denial of summary judgment and holding that promissory note complete on its face is an integrated contract); Manufacturers Hanover Trust Co. v. Margolis, 115 A.D.2d 406, 407-08, 496 N.Y.S.2d 36, 37 (1st Dept. 1985) (reversing denial of summary judgment and holding that promissory note complete on its face is an integrated contract in the absence of any reference therein to another document or transaction); see also Bank of Suffolk County v. Kite, 49 N.Y.2d 827, 828, 427 N.Y.S.2d 782, 783 (1980).
In view of the foregoing, the Court holds that the promissory notes are fully integrated agreements and that the parol evidence rule bars proof of the alleged contemporaneous agreement asserted by Quinlan. Nor does the fact that the parties expected to work out a different arrangement, which they never in fact reached, alter the analysis.
Although the point is utterly immaterial to the result, Quinlan's contention that repayment would be excused if he remained with the company for three years is inconsistent with his own memo to the company's general counsel, written on the day he signed the first promissory note. The memo said, "The note will be addressed in a contract that will be prepared and signed by WWF and me. The contract will contain provisions for the repayment and/or forgiveness of the note." (Quinlan Aff. ¶ 13 Ex. D)
The Rule 56(f) Affidavit
In resisting WWF's motion for summary judgment with respect to the notes, Quinlan's counsel has submitted a purported Rule 56(f) affidavit, complaining that he has not yet taken the deposition of WWF's president, Furlong.
A party resisting summary judgment on the ground that it needs discovery in order to defeat the motion must submit an affidavit showing "`(1) what facts are sought [to resist the motion] and how they are to be obtained, (2) how those facts are reasonably expected to create a genuine issue of material fact, (3) what effort affiant has made to obtain them, and (4) why the affiant was unsuccessful in those efforts.'" Meloff v. New York Life Ins. Co., 51 F.3d 372, 375 (2d Cir. 1995) (quoting Hudson River Sloop Clearwater, Inc. v. Department of Navy, 891 F.2d 414, 422 (2d Cir. 1989)). Accord, Gurary v. Winehouse, 190 F.3d 37, 43 (2d Cir. 1999). Quinlan has not satisfied this standard here. While he has told us he wishes to depose Furlong, he fails to explain how a deposition of Furlong reasonably might be expected to create a genuine issue of material fact with respect to Quinlan's obligation to repay the notes. Nor has he explained adequately why he failed to conduct the deposition between January 25, 2000, when the action was filed, and late November 2000, when he apparently first made on effort to arrange the deposition, after earlier having received three prior extensions of the discovery period. The fact is that plaintiff's counsel, as far as this record discloses, made no effort whatsoever to depose Mr. Furlong until after the motion for summary judgment was made.
Plaintiff is entitled to recover the unpaid balance on the notes plus interest.
The Domain Names
According to Quinlan, he began building an Internet web site, www.papersales.com, in April 1996 to provide a means by which potential buyers and sellers of surplus paper could make contact and negotiate transactions. (Quinlan Aff. ¶ 14) To that end, he registered three domain names — wwfpaper.com, papersales.com, and papermerchant.com — with Network Solutions. In so doing, he claims to have checked the "individual" box on the registration form, although he entered "WWF Paper Corp." in the company data field. (Id. ¶ 16) He claims that he sold the wwfpaper.com name to WWF in 1997 but that he has continued to pay the annual hosting fees for the other two domain names himself. (Id. ¶¶ 18-19) He later registered additional domain names with Network Solutions, ostensibly in his own name and as an individual, paying for them with his personal funds. (Id. ¶¶ 28-32)
The affidavit says "1999," but the context demonstrates that this is a typographical error and was intended to read "1996."
WWF contends that all of these domain names belong to it, asserting inter alia that Quinlan in fact charged the expenses of registering and maintaining the domain names to the company and listed WWF on the registration applications as the organization using them. Although WWF has come forward with substantial documentary evidence supporting its position, there plainly are genuine issues of fact material to disposition of this claim.
The Counterclaim
The principal aspect of Quinlan's counterclaim is his contention that he was entitled to receive sales commissions at so-called "super commission rates" effective July 1, 1999. Discovery, however, has narrowed the dispute to whether Quinlan is entitled to the super rates for all sales booked prior to December 6, 1999, when the WWF discontinued the super rates, or only as to sales booked and shipped prior to that date, which WWF contends would have been its standard practice.
Quinlan asserts that the super rates were paid pursuant to an oral agreement to induce him not to defect to a competitor and that there was no understanding between him and WWF that the rates would be paid only if in effect at the date of shipment. (Quinlan Aff. ¶¶ 24-26) WWF on the other hand contends that it agreed to pay the super rates only in consideration of Quinlan's remaining with the company and signing an employment agreement, which never occurred. Thus, there is a genuine issue of material fact as to the terms of the parties' agreement.
The other aspects of Quinlan's counterclaim, however, are entirely without merit. He is not entitled to a declaratory judgment with respect to his obligations, or lack thereof, on the promissory notes because that issue has been decided on WWF's claim for coercive relief. Nor is there any basis for his promissory estoppel claim with respect to the notes, which is merely a vehicle for attempting to circumvent the parol evidence rule by asserting a promise at variance with the terms of the notes that Quinlan signed.
Conclusion
Plaintiff's motion for summary judgment is granted to the extent that (1) plaintiff shall recover of defendant the sum of $86,900 together with interest thereon at the rate of 9 percent from January 25, 2000 to the date of the judgment, (2) defendant's counterclaims, save for that seeking payment of commissions at super rates, are dismissed, and denied in all other respects.
SO ORDERED.