Lawrence v. Kennedy

34 Misc. 3d 711
CourtNew York Supreme Court
DecidedSeptember 22, 2011
StatusPublished
Cited by1 cases

This text of 34 Misc. 3d 711 (Lawrence v. Kennedy) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lawrence v. Kennedy, 34 Misc. 3d 711 (N.Y. Super. Ct. 2011).

Opinion

OPINION OF THE COURT

Stephen A. Bucaria, J.

Motion pursuant to CPLR 3213 by plaintiff Lawrence S. Lawrence for summary judgment in lieu of complaint is denied.

Motion pursuant to CPLR 3211 (a) (1), (2), (3) and (7) by co-defendant Michael F. Kennedy for an order dismissing the complaint insofar as interposed against him is granted.

Motion pursuant to CPLR 3211 (a) (1), (2), (3) and (7) by co-defendant Lawrence and Walsh, EC. for an order dismissing the complaint insofar as interposed against it is granted in part and denied in part.

Commencing in 1972, the now 70-year-old plaintiff, Lawrence S. Lawrence, served as a founding partner and/or member of the defendant law firm, Lawrence and Walsh, EC. (the Firm). In 2008, however, the plaintiff and the Firm jointly agreed that the plaintiff would relinquish his status as a Firm member and/or principal. It was also agreed, however, that the plaintiff would retain his association therein by serving as an employee, in an “of counsel” capacity (complaint 1111 1-2, 4-5; S. Lawrence aff 1111 4-5; Kennedy aff 1Í 7).

In early January of 2008, and after extensive negotiations (Kennedy aff 1Í 7), the parties executed two, related agreements which memorialized the plaintiff’s transition from Firm [714]*714principal/stockholder to employee; namely, a “Stock and Related Asset Purchase Agreement,” and an employment contract (see Bierman aff, exhibits B, C). In general, and pursuant to the key terms of the agreements, the plaintiff conveyed to the Firm, his 50% capital stock membership interest therein and the Firm then offered him employment spanning a 4V2-year term, scheduled to terminate in June of 2012 (agreement § 1 [a], [b]-[c]; § 3; complaint HIT 1-3, 6-7). Among other things, the parties’ employment agreement provides that the plaintiff was to assume the “responsibilities, duties and authority” customarily associated with his “of counsel” position, and that he was to devote “substantially all of his business time, attention, expertise and efforts to the business and affairs of the Firm in the same manner as past practices” (agreement § 1 [c], [d]).

With respect to compensation, the Firm agreed to pay the plaintiff an aggregate sum of $418,300 in fixed salary over the entirety of the contract term, to be paid in biweekly installments of $4,058.04. The plaintiff was also entitled to additional, performance-based salary amounts calculated in accord with a prescribed formula set forth in the agreement (agreement § 2 HI [c]; complaint HH 8-9, 13-15). Significantly, the agreement further provides that “for purposes of enforcement this [employment] Agreement and specifically section 2[b], shall be deemed an instrument for the payment of money, provided, however, that this provision shall not constitute a waiver of any defenses or counterclaims the Firm may have to enforcement of this provision” (agreement § 2 H 1 [c] at 5).

The agreement authorizes the Firm to terminate the plaintiff “for cause” in the event of the plaintiffs “willful misconduct, breach of fiduciary duty or material negligence, or a material breach of the agreement and/or conviction of any crime resulting in disbarment or suspension from the practice of law” (agreement § 3 [a] [iii]). Additionally, the Firm could terminate the plaintiffs employment upon, inter alia, his death or disability for 90 days, in which case the Firm was to be responsible for accrued, performance-based salary earned up the date of termination, and fixed salary amounts “for the remainder of the Term.” (Agreement § 3 [a], [i]-[v]; § 4 [a] at 10-12; see also agreement § 8 at 16.) With respect to defaults, the agreement states that in the event of a Firm default in paying fixed salary which remains uncured for a period exceeding 30 days, then the entire unpaid, fixed salary amount would — at the plaintiffs option — become immediately due and owing (agreement § 2 [b] at 4).

[715]*715Notably, section 19 of the agreement states in part that the plaintiff “irrevocably waives” any right to enforce the agreement against any individual member of the Firm, and that he similarly agreed to “look solely to the Firm for the enforcement of the liability and obligations contained in this agreement” (agreement § 19 at 21-22; see also Stock and Related Asset Purchase Agreement § 11).

In September of 2010, plaintiff took a leave of absence to undergo heart surgery, but suffered a stroke shortly after the surgery was performed. The stroke left plaintiff neurologically unable to perform his employment duties (S. Lawrence aff 1i 2; complaint lili 2, 16). According to the Firm’s managing member — codefendant Michael F. Kennedy — plaintiff's daughter then came to the Firm’s offices and informed Kennedy that the plaintiff would not be “returning to the practice” (Kennedy aff 1IH 12-13).

After plaintiff’s daughter inquired of Kennedy about the Firm’s obligations under the employment agreement, Kennedy responded by telling her that the Firm had “some real concerns and issues with respect to . . . [the plaintiff’s] conduct,” which Kennedy claims he intended to discuss with the plaintiff upon his recovery. These concerns and issues were allegedly founded on “significant and serious claims” which the Firm had against the plaintiff — in sums purportedly exceeding any salary amounts the Firm might owe the plaintiff under the 2008 employment agreement (Kennedy aff 1Í1Í12-13).

With respect to those salary amounts, plaintiff claims that payments allegedly due from February of 2010 were already then outstanding and unpaid (complaint lili 8-10 n 1 at 5). According to the plaintiff, the Firm terminated him in early January of 2011, and then failed to pay any further salary — fixed or otherwise — under the agreement (complaint U 17).

Thereafter, the plaintiff served a notice of default (complaint IT 21), and when the payments allegedly due were still not forthcoming, he commenced the within action as against the Firm and Michael F. Kennedy, individually. The verified complaint, dated May 25, 2011, sets forth the facts as generally summarized above and interposes three, separately captioned causes of action. The first two causes of action allege in substance that the Firm and Kennedy willfully and with “gross negligence” disregarded and breached their contractual duties to pay both fixed and performance-based salary amounts (complaint 1Í1Í 20, 22-27, 28-33).

[716]*716The third cause of action alleges, inter alia, that a fiduciary and/or “special” relationship existed between the plaintiff and the defendants and that the plaintiff is entitled to an accounting since Kennedy and the Firm have diverted the Firm’s assets and receipts for their own personal use (complaint 1i1f 2-3, 6, 10). The complaint further avers that in order to avoid the waste of assets which would render a judgment ineffectual, the defendants should be restrained and enjoined from further dissipating the Firm’s assets. Moreover, based on the above, the plaintiff seeks an accounting relating to “all sums” received by the defendants and spent “by them for travel . . . entertainment, referral fees and other perks and benefits” (complaint 1i1i 3, 9-10, 23-24, 34-35).

Notably, the record contains a short form, durable power of attorney which plaintiff executed in November of 2010 and which, inter alia, designates Sherry Lawrence, the plaintiff’s wife, as his agent and attorney in fact (S. Lawrence aff, exhibit A; see also S. Lawrence reply aff 1Í1Í 3-4; see generally

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Related

Lawrence v. Kennedy
95 A.D.3d 955 (Appellate Division of the Supreme Court of New York, 2012)

Cite This Page — Counsel Stack

Bluebook (online)
34 Misc. 3d 711, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lawrence-v-kennedy-nysupct-2011.