Faberge International, Inc. v. Di Pino

109 A.D.2d 235, 491 N.Y.S.2d 345, 1985 N.Y. App. Div. LEXIS 49743
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJuly 2, 1985
StatusPublished
Cited by50 cases

This text of 109 A.D.2d 235 (Faberge International, Inc. v. Di Pino) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Faberge International, Inc. v. Di Pino, 109 A.D.2d 235, 491 N.Y.S.2d 345, 1985 N.Y. App. Div. LEXIS 49743 (N.Y. Ct. App. 1985).

Opinion

OPINION OF THE COURT

Asch, J.

The defendant is an Italian-born American citizen who in 1971 returned to Italy to work for plaintiff Faberge International, Inc. as an international sales executive. The defendant held this position until 1973, when he was appointed by Faberge as the general manager of its newly formed Italian branch.

For the first time, in March 1979, Faberge and the defendant entered into a written employment agreement. The defendant’s salary was divided into two parts, the larger portion being payable in the United States, in dollars, for work done by the defendant as Faberge’s executive vice-president for international sales. A smaller portion of his salary was paid in Italy for his work as head of the Italian branch. The defendant lived on his Italian salary and arranged for an attorney on Faberge’s staff to deposit his American salary directly into his account with a bank in the United States.

The agreement provided that it was to be governed by New York law and for arbitration in New York City of all “[cjontroversies of any kind relating to [the] agreement”. The agreement [237]*237also contained a clause whereby the defendant, as “executive”, “expressly agrees that the company shall be entitled to injunctive and other equitable relief to prevent a breach of this agreement by the executive” (emphasis added).

The employment agreement was based upon the standard form employment agreement developed by plaintiff for executives like the defendant and allegedly was intended to set forth all of the defendant’s employment rights. Allegedly, the United Nations Convention governing arbitration awards was never discussed or considered before the employment agreement was executed and plaintiff also alleges that neither it nor the defendant intended to preclude Faberge from resorting to any remedies, including attachment.

In early 1984, McGregor Corporation acquired Faberge, and its Chairman, Daniel J. Manella, announcing a “management shake-up” of Faberge, went to Italy, investigated the defendant’s activities, and allegedly discovered “significant wrongdoing” on his part. On July 18, 1984, Faberge’s vice-president, Albert Jonus, sent the defendant a letter which terminated him “without notice * * * effective immediately.” The letter accused the defendant of sundry and assorted wrongdoings and improper and insubordinate conduct. It directed the defendant to leave the premises of the company and not return,, surrender all company cards and return forthwith all company property and documents in his possession, custody and control.

On July 20, 1984, the defendant sent Faberge a letter in response stating that he rejected “the termination for just cause because the events which you list are baseless and specious”, and “I reserve all rights which I may have against your Company under the laws of the State of New York and of the Republic of Italy”. The defendant’s Italian attorney promptly informed Faberge’s Italian attorney that he intended to institute a summary judgment proceeding in Italy to collect any amounts due for termination and action before the Italian Labor Court and/or arbitration tribunal to enforce his rights under the Italian labor laws and arbitration proceedings in New York to enforce his rights under the employment agreement.

Plaintiff commenced this action against defendant and moved for a preliminary injunction enjoining defendant from revealing trade secrets and confidential information, from commencing suit in any forum other than New York, and seeking attachment of the funds of defendant in the possession of banks and others in New York. Defendant cross-moved for an order staying this action pending arbitration. Special Term granted plaintiff’s [238]*238motion for a preliminary injunction enjoining defendant from revealing trade secrets and confidential information and from commencing any action or proceeding in the Italian forum. Defendant’s cross motion to compel arbitration pursuant to the agreement was also granted. Special Term, additionally, denied attachment of defendant’s assets.

Special Term was correct in denying the attachment both as a matter of law and fact. However, it erred in enjoining defendant from disclosing trade secrets by failing to apply the proper standards applicable to preliminary injunctions. Finally, although Special Term was correct in staying the action and directing arbitration in New York, it erred in restraining defendant from pursuing his Italian statutory rights in an Italian forum.

The employment agreement contains a broad arbitration clause stating in relevant part: “Controversies of any kind relating to this agreement shall be settled by arbitration in accordance with the rules then obtaining of the American Arbitration Association in the State of New York, which said arbitration shall be conducted in the City and State of New York.” Paragraph 9 (a) of the employment agreement describes fraud, embezzlement and misappropriation of company funds as grounds for termination which excuse plaintiff Faberge from claims of breach for wrongful termination, and from making otherwise contractually required severance payments. Thus, Faberge’s present claims are clearly issues which the parties intended to be arbitrated. In any event, the type of claims made by Faberge are arbitrable under the broad arbitration agreement herein (see, Menaker v Padover, 75 AD2d 807; Bayly, Martin & Fay v Glaser, 92 AD2d 850).

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (see, text of convention following 9 USC § 201) provides (art I, § 3) that an agreement arising out of a legal relationship, contractual or not, “considered as commercial”, falls within its purview. In addition, it provides that any agreement or award arising out of such a relationship, which is entirely between citizens of the United States, does not fall within the Convention unless it envisages performance or enforcement abroad or has some other reasonable relation with a foreign State. It is clear that the agreement herein contemplated performance abroad. Defendant was employed as plaintiff’s Italian branch manager. In addition, contrary to plaintiff’s assertion, the employment agreement is also one which must be “considered as commercial” within the meaning of the Convention. The fact that the employer-employee [239]*239relationship may include a degree of fiduciary obligation does not deprive it of its commercial character.

The Court of Appeals has concluded that the Convention “precludes the courts from acting in any capacity except to order arbitration, and therefore an order of attachment could not be issued. To hold otherwise would defeat the purpose of the UN Convention” (Cooper v Ateliers de la Motobecane, 57 NY2d 408, 414).

In any event, the arbitration statute does not now permit such a provisional remedy to be granted in a proceeding to compel arbitration (CPLR 7503 [a]) and as indicated by the court in Cooper, an order of attachment might remain valid if it were obtained with notice or confirmed in a contract action before the defendant obtained a stay of the proceedings on the grounds the underlying controversy was subject to arbitration (supra, at p 413). Thus, attachment prior to arbitration is unavailable in New York unless a defendant with notice fails to seek a stay of litigation, concededly not the case herein.

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Bluebook (online)
109 A.D.2d 235, 491 N.Y.S.2d 345, 1985 N.Y. App. Div. LEXIS 49743, Counsel Stack Legal Research, https://law.counselstack.com/opinion/faberge-international-inc-v-di-pino-nyappdiv-1985.