Gootee v. Global Credit Services, LLC

139 A.D.3d 551, 32 N.Y.S.3d 105
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMay 19, 2016
Docket651553/10 -4395
StatusPublished
Cited by4 cases

This text of 139 A.D.3d 551 (Gootee v. Global Credit Services, LLC) 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
Gootee v. Global Credit Services, LLC, 139 A.D.3d 551, 32 N.Y.S.3d 105 (N.Y. Ct. App. 2016).

Opinions

Order, Supreme Court, New York County (Jeffrey K. Oing, J.), entered June 25, 2014, which granted plaintiffs motion for summary judgment with respect to liability for breach of contract and dismissing defendant’s counterclaim, referred the issue of damages to a special referee or judicial hearing officer to hear and report, and denied defendant’s motion for summary judgment on its counterclaim, modified, on the law, to deny plaintiff’s motion for summary judgment, and otherwise affirmed, without costs.

By letter agreement dated September 26, 2008, defendant hired plaintiff to be its president (the employment agreement). The terms of employment provided, inter alia, that plaintiff was to receive: an annual salary “[p]ayable at the gross rate of $275,000 per year”; a bonus of 3% on new “ARMZ” contracts paid monthly; medical and other insurance benefits; a housing allowance of $25,000 “to be paid in 24 equal payments per year”; 375,000 shares of class B stock, to vest 125,000 units per year; a $50,000 loan, forgivable on specified terms (the forgivable loan); a $250,000 separation payment, subject to reduction on specified terms; and 25 vacation days per year. The employment agreement also provided that plaintiff would be subject to the confidentiality and nonsolicitation provisions set forth in an agreement annexed thereto.

The employment agreement did not state a fixed duration for [552]*552plaintiff’s employment or that he could only be terminated for cause. Nor did it expressly state that plaintiff was an “at-will employee.” However, it contained a provision that prohibited modification of “any provision” thereof without “a writing signed by the party against whom enforcement is sought” (the no oral modification clause).

In conformity with the no oral modification clause, on September 16, 2009, the parties executed a “First Amendment” to the employment agreement, which reduced plaintiff’s salary to $150,000 and increased his ARMZ bonus from 3% to 7.5%. The housing allowance was changed to $4,000 per month, payable on the first day of each month. A “Retention Loan” of $90,000 was added, which, along with the forgivable loan, would be forgiven over a three-year period in three equal installments beginning on January 1, 2011, provided that plaintiff was employed by defendant on the anniversary dates. The separation payment was deleted.

Plaintiff was removed as president in February 2010. For the next six months, he continued to attend conferences and trade shows on defendant’s behalf and was paid a reduced salary and benefits. After efforts to negotiate a written consulting agreement to supersede the employment agreement failed, in July 2010, plaintiff wrote defendant a letter that included a notice to cure alleging that defendant had breached the employment agreement. In August 2010, defendant drafted a revised consulting agreement, which plaintiff rejected. After defendant stopped paying him, plaintiff commenced this action asserting claims for breach of contract based on the failure to pay the salary, bonus, housing allowance, insurance premiums, and stock allegedly due under the employment agreement.

While the employment agreement does not state a fixed duration, plaintiff alleges in his complaint that “ [i] t was agreed by the parties that the contract was to run no less than five (5) years.” Defendant denies liability on the ground that it had the right to alter the terms of plaintiff’s employment because it was “at will,” and asserts counterclaims for the repayment of the forgivable and retention loans.

Supreme Court granted plaintiff summary judgment on liability and referred the issue of damages to a special referee or JHO to hear and report. It denied defendant summary judgment on its counterclaim. While finding that the employment agreement was unambiguous and created an “at-will employment . . . terminable at any time by either the Plaintiff or the Defendant,” the court held that “it[ ] still is governed by [its] terms,” which “provide [ ] [for] no modification, amendment, [553]*553extension, discharge, termination or waiver of any provision . . . unless the same shall be in writing, signed by the party against enforcement is sought.” Thus, although it rejected plaintiff’s argument that the no oral modification clause provided “a duration of time,” the court held that when defendant removed plaintiff as president in February 2010 and altered his salary and benefits without a signed writing, it violated the no oral modification clause and breached the employment agreement. The court stated further: “With respect to damages, I had asked Plaintiff’s Counsel how far out we are going because if it’s infinite, he has a problem. He says there is age 67 is where he goes or where the damages go to, so that’s where we are at and I believe he represents the Plaintiff is 67 so that’s where we are at in terms of figuring out the damages.”

“[A]bsent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will, terminable at any time by either party” (Sabetay v Sterling Drug, 69 NY2d 329, 333 [1987]; Rooney v Tyson, 91 NY2d 685, 689 [1998]). The presumption can be rebutted by evidence of a limitation on the employer’s right to discharge the employee at will (Weiner v McGraw-Hill, Inc., 57 NY2d 458 [1982]; Talansky v American Jewish Historical Socy., 8 AD3d 150 [2004]).

The inclusion of the no oral modification clause in the employment agreement does not, in and of itself, suffice to rebut the at-will presumption. While the clause precluded the modification of “any provision” of the agreement without a writing signed by the party against whom enforcement was sought, there is no express provision in the agreement that precluded defendant from terminating plaintiff without cause. However, as Supreme Court found, the no oral modification clause is an enforceable contract term even if the employment was at will (see JCS Controls, Inc. v Stacey, 57 AD3d 1372, 1373 [4th Dept 2008] [“terms set forth in the . . . employment agreement, which was signed by plaintiff’s president, are binding on plaintiff despite defendant’s status as an at-will employee”]; see also Israel v Chabra, 12 NY3d 158, 163 [2009] [General Obligations Law § 15-301 (1) “indicates that where a contract contains a ‘no oral modification’ clause, that clause will be enforceable”]).

General Obligations Law § 15-301 (1) provides that “[a] written agreement . . . which contains a provision to the effect that it cannot be changed orally, cannot be changed by an executory agreement unless such executory agreement is in writing and signed by the party against whom enforcement of [554]*554the change is sought or by his agent.” Although a no oral modification clause does not take precedence over other contract terms, “Section 15-301 (1) places this type of clause on the same footing as any other term in a contract” (Israel v Chabra, 12 NY3d at 167). “[W]hen a ‘no oral modification’ clause purportedly conflicts with another clause in a contract, every attempt should be made to harmonize the two provisions using common-law tools of contract interpretation” (id.). Here, consistent with the no oral modification clause, the parties, through their course of conduct, confirmed the need for “a writing signed by the party against whom enforcement is sought” in order to effect any change or modification to the express provisions of the agreement, such as those relating to plaintiff’s duties and compensation (see Firtell v Update, Inc., 17 Misc 3d 1101[A], 2007 NY Slip Op 51786[U] [Sup Ct, NY County 2007]).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
139 A.D.3d 551, 32 N.Y.S.3d 105, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gootee-v-global-credit-services-llc-nyappdiv-2016.