Richied v. D.H. Blair & Co.

272 A.D.2d 170, 710 N.Y.S.2d 25, 2000 N.Y. App. Div. LEXIS 5638

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: May 16, 2000
• Status: Published

Opinions

—Judgment, Supreme Court, New York County (Charles Ramos, J.), entered June 30, 1998, dismissing the complaint and bringing up for review a prior order, same court and Justice, entered June 1, 1998, which granted defendants’ motion to dismiss the complaint for failure to state a cause of action, affirmed, without costs. Appeal from the order dismissed, without costs, as subsumed in the appeal from the judgment.

This action is based on an employment agreement in which, under paragraph 1 (b), defendant investment bank agreed to compensate plaintiff, in addition to his annual salary, in the amount of 50% of its fees “[f]or any financing services provided to Clients (private placements of debt or equity, arranging bank or finance company financing, but excluding public offerings of securities for which compensation may be outlined in (d) below)” (emphasis added). In paragraph 1 (d), defendant agreed to compensate plaintiff, in addition to his annual salary, 5% of its investment position in entities established or funded by defendant in venture capital situations created “as a result of an introduction [made] by [plaintiff].”

Plaintiff now claims that he is entitled to 50% of the fees, which includes an investment position, earned by defendant in connection with a public offering for a client he did not introduce. His argument is that the absence of a comma between the words “securities” and “for” in the phrase “public offerings of securities for which compensation may be outlined in (d) below” evinces an intent to limit the exclusion of public offerings from the 50% compensation rate provided for in paragraph 1 (b) only to those public offerings for which an alternative compensation scheme is provided for in paragraph 1 (d). In other words, plaintiff argues that he is entitled to 50% of the fees earned in connection with this public offering even though the work was done on behalf of a client he did not introduce.

The motion court aptly characterized plaintiff’s reading as “strained,” noting that the word “may,” completely ignored by plaintiff, evinces an intent not to condition the exclusion of compensation in paragraph 1 (b) upon the availability of compensation in paragraph 1 (d), and also noting that punctuation is an unreliable interpretive tool to which resort should be had only when other means of interpretation fail (see, Reliance Grant El. Equip. Corp. v Reliance Ball-Bearing Door Hanger Co., 205 App Div 320, 323). We agree.

As to public offerings for which plaintiff did not provide the introduction, as is the case here, the dissent finds paragraph 1 (b) to be simply unclear in that although it initially refers to any financing, it thereafter parenthetically lists only “placements of debt or equity [and] arranging bank or finance company financing.” The dissent finds it unclear whether these latter terms are intended to be illustrative examples or limitations and that it is entirely possible to read the phrase “excluding public offerings of securities for which compensation may be outlined in (d) below” as excluding only those public offerings to which subparagraph (d) applies.

Such a strained interpretation, however, ignores the plain meaning of paragraph 1 (b) when it is read, as it must be, in conjunction with paragraph 1 (d). The parenthetical language of paragraph 1 (b) specifically excludes “public offerings.” Paragraph 1 (d) includes public offerings only where plaintiff made the introduction resulting in the creation of a new company capitalized by a public offering, in which case he would get 5% of the total investment interest. On the other hand, pursuant to paragraph 1 (b), plaintiff would get 50% of commissions, financing fees or brokerage fees for any financing services offered to clients, other than public offerings, whether or not he made the introduction. Given the clear distinction in the agreed upon compensation, there is simply no basis for a finding of ambiguity in the parties’ agreement. Under plaintiff’s reading, he would receive 50% compensation on public offerings for defendant’s existing clients and only 5% compensation on public offerings for clients he introduced — clearly an unexpected and unreasonable result.

The breach of contract and promissory estoppel claims were therefore properly dismissed as inconsistent with the agreement (see, Prestige Foods v Whale Sec. Co., 243 AD2d 281). The fraud claim against the individual defendant was properly dismissed for failure to adequately allege justifiable reliance and damages (see, King v Schonberg & Co., 233 AD2d 242). Since no compensation was owed plaintiff under the agreement, he cannot claim any damages as a result of the individual defendant’s alleged unkept promise to make a part payment of the compensation he claims is due thereunder. Concur — Rosenberger, J. P., Tom, Andrias and Buckley, JJ.