Shapiro v. Dictaphone Corp.

66 A.D.2d 882, 411 N.Y.S.2d 669, 1978 N.Y. App. Div. LEXIS 14224
CourtAppellate Division of the Supreme Court of the State of New York
DecidedDecember 29, 1978
StatusPublished
Cited by29 cases

This text of 66 A.D.2d 882 (Shapiro v. Dictaphone Corp.) 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
Shapiro v. Dictaphone Corp., 66 A.D.2d 882, 411 N.Y.S.2d 669, 1978 N.Y. App. Div. LEXIS 14224 (N.Y. Ct. App. 1978).

Opinion

In an action by a business broker for a finder's fee, inter alia, based upon an alleged contract relating to the acquisition by defendant of another company, defendant appeals from an order of the Supreme Court, Westchester County, dated January 31, 1978, which denied its motion for summary judgment. Order affirmed, with $50 costs and disbursements. In this suit by plaintiff for a finder’s fee, the questions raised on appeal are (1) whether there are triable issues of fact with respect to whether plaintiff produced sufficient writing to satisfy the Statute of Frauds as to his contract and quantum meruit causes of action, and (2) whether defendant, Dictaphone Corporation, because of the actions of some of its officers, is estopped from asserting the Statute of Frauds defense. The following facts and contentions are gleaned from the supporting and opposing affidavits submitted on the motion and from the pretrial discovery proceedings. In 1972, approximately four years before the parties to this action had any contact with each other relating to the matter in dispute, Dictaphone made a corporate decision to acquire the stock or assets of a major company. Immediately thereafter it formed an ad hoc acquisition committee composed of its top officers and directors (including its then president, E. Lawrence Tabat), and its in-house counsel, Robert A. Falise. In the spring of 1972 the acquisition committee held a meeting to discuss its search which, up to that time, was unsuccessful. At that meeting it was agreed that the search would be widened and, inter alia, "broker-finders” would be used by Dictaphone to find a company for acquisition. As Falise pointedly stated in a memorandum shortly after the meeting: "In the meantime, we agreed to take certain steps to facilitate the search for target companies, as follows: * * * 3. Discussions with investment bankers, broker-finders and industry contacts should be commenced immediately to uncover acquisition targets Siting our overall objectives” (emphasis supplied). Falise also admitted that in line with its decision to expand its search, Dictaphone sent copies of an outline entitled acquisition program to substantial numbers of investment and commercial bankers, brokers and finders. Notwithstanding its increased efforts to find a company for acquisition, Dictaphone, from 1972 to April, 1976, was unable to consummate a merger with any firm brought to its attention. However, on April 23, 1976, plaintiff, a self-employed business broker, wrote Tabat a letter in which he asked whether Dictaphone would be interested in acquiring a company which produced a line of business forms, tabulating cards and labels. Plaintiff concluded the missive with the following sentence: "If and when a deal is consummated we would look to Dictaphone Corporation for our compensation.” On April 26 Tabat called plaintiff and requested the [883]*883identity of the corporation alluded to by plaintiff. The latter revealed the name of the corporation to be Data Documents, Inc. (Data Documents). In a letter dated the same day, plaintiff at Tabat’s request, sent Tabat information about Data Documents. That letter also contained a statement that plaintiff expected to be compensated by Dictaphone. The information contained in the April 26 letter about Data Documents was then passed along by Tabat to Dictaphone’s vice-president and controller, John T. Gaffney. After making an analysis of Data Documents, Gaffney, on April 28, transmitted a memorandum to Tabat in which he stated, inter alia: "This company [Data Documents] which per Mr. Shapiro’s recent correspondence to us is available for sale has had an outstanding record of growth over the past few years”. (Emphasis supplied.) Tabat testifed at his examination before trial that he requested information about Data Documents which plaintiff subsequently sent him and that plaintiff, at his request called Mr. Cleary, Data Document’s president, and a meeting was then set up between Tabat and Cleary. The meeting, which took place on July 15, 1976, led to the subsequent acquisition of Data Documents by Dictaphone. Plaintiff maintains that beginning in May, 1976, he made numerous efforts to have the amount of his fee resolved. Each time he made such attempt, Tabat, in effect, stated that it was too early to discuss compensation. On the eve of the acquisition of Data Documents, plaintiff and Tabat met to discuss the former’s fee. Plaintiff indicated he wanted to be compensated according to the "Lehman formula”, which purportedly was the method used to determine the fee of a business broker. Under such formula, plaintiff would be entitled to about $300,000. Tabat offered $50,000 on a "take it or leave it” basis. On October 4, 1976 Tabat sent a letter to plaintiff with respect to a meeting they had had the previous week. The following excerpts are pertinent: "As I told you last Monday, in view of the fact that you were involved in this transaction only to a minimal extent, and no written or oral agreement with regard to the amount of any fee was ever discussed by you with either of the principals or anybody else involved in the transaction, I came to the conclusion that Dictaphone Corporation is not legally obligated to pay you anything but that a moral obligation may exist for some compensation in this connection. Based upon the actual services performed and other circumstances that we deem relevant, I have offered you a ñnder’s fee in the amount of $50,000, which I think is adequate in this case. Any greater amount would involve a gratuitous corporate payment of such size as to open me and our Board of Directors to serious criticism. In future transactions between us, we both now know that the proper way to proceed is to have a written agreement signed by both parties in advance specifying what the fee is to be in the event of a completed transaction. I have not called the references that you sent to me in your letter of September 30th, because I have no reason to doubt your standing and reputation in the community, and I am confident that your references will support the statement in your letter that your usual fee is in accordance with the old 'Lehman formula’. I am, however, equally aware that such 'Lehman formula’ is observed more often in the exception than in the adherence and notice that even the agreements that you showed me, to which you are a party, do not uniformly adhere to that formula.” (Emphasis supplied.) In his amended complaint seeking actual and punitive damages, plaintiff asserted three causes of action, the first alleging fraud, and the second and third based on breach of contract, and quantum meruit, respectively. The answer of Dictaphone asserts that since there is no writing to satisfy the Statute of Frauds (General Obligations Law, § 5-701), it has no obligation to pay [884]*884plaintiff for any services he rendered, In its motion for summary judgment, Dictaphone asserts that the three letters from Tabat to Shapiro, dated October 4, 15 and 26, 1976, respectively, are insufficient to meet the requirements of the Statute of Frauds in that they do not memorialize all the essential terms of the alleged agreement, they affirmatively deny the existence of any agreement, and they refer only to a discussion of a possible moral obligation. Furthermore, there are no specific details with respect to the first cause of action alleging fraud, but merely conclusory boiler-plate phrases. We disagree with such arguments. In our opinion, the thrust of plaintiff’s first cause of action is that Dictaphone entered into the agreement with the undisclosed intention to induce the other party to perform in reliance upon the agreement (see Channel Master Corp. v Aluminium Ltd. Sales, 4 NY2d 403).

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Bluebook (online)
66 A.D.2d 882, 411 N.Y.S.2d 669, 1978 N.Y. App. Div. LEXIS 14224, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shapiro-v-dictaphone-corp-nyappdiv-1978.