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LAUTER v. W & J SLOANE

June 30, 1976

Robert I. LAUTER, Plaintiff,
v.
W & J SLOANE, INC., et al., Defendants



The opinion of the court was delivered by: LASKER

MEMORANDUM

 LASKER, District Judge.

 This diversity action arises out of the discharge of the plaintiff, Robert I. Lauter, from his position as President of the New York Division of the defendant W & J Sloane, Inc. (Sloane). Lauter sues Sloane for breach of an alleged three year employment contract (Complaint, paras. 13-21) and asserts a separate claim against Sloane's two parent corporations, City Stores, Inc. (City Stores) and Bankers Securities Corp. (Bankers Securities), for the tort of intentional interference with his contract with Sloane. (Complaint, paras. 22-25) He also asserts claims for misrepresentation and fraudulent misrepresentation against four individuals who hold positions of importance in all three corporate defendants, Leonard J. Novogrod, Isidore Newman II, Louis Melchoir and Gustave G. Amsterdam. Lauter claims that these men, each of whom was involved in the decision to hire him, induced him to leave a good position with another firm by misleading him as to the nature of the terms of the proffered employment with Sloane. (Complaint, paras. 26-35) Lauter seeks damages from the corporate defendants of $272,000., representing the unpaid balance of his salary, the value of a variety of employment benefits of which he claims to have been deprived and the expenses he incurred in finding new employment. From the individual defendants he seeks damages of $500,000., the derivation of which is unspecified.

 By their amended answer, the defendants deny the material allegations of the complaint, admitting only that Lauter was employed as President of Sloane's New York Division and that he was discharged. (Amended Answer, paras. 8 and 10) They also assert several affirmative defenses, including, inter alia, that Lauter's contract claim is barred by the statute of frauds and that his discharge was justified by incompetence and misfeasance. (Amended Answer, paras. 19 and 20) In addition, Sloane asserts three counterclaims, in which it alleges that during the course of negotiations for his employment by Sloane, Lauter misrepresented the value of certain profit sharing benefits he would forfeit at his previous job and thereby obtained an agreement to compensate him by an equivalent amount. By reason of this alleged misrepresentation Sloane claims to be entitled to rescind any contract of employment that may have been entered and, in addition, to recover money which it continued to pay Lauter for a period of almost a year subsequent to his discharge. (Amended Answer, paras. 24-39)

 The defendants move for summary judgment, asserting that the statute of frauds bars both the contract action against Sloane and the claim for interference with a contract against City Stores and Bankers Securities, and, with regard to the latter claim, that the parent corporations' economic interest in Sloane's welfare provides an absolute defense. Summary judgment is also sought on the claims against the individual defendants on the ground that they are legally insufficient. Lauter cross-moves for the same relief both on his claim against Sloane for breach of contract and on Sloane's counterclaims.

 For the reasons which follow, we agree with the defendants that they are entitled to judgment on all of the claims against them and that the existence of material issues of fact precludes summary relief to Lauter on Sloane's counterclaim.

 I. Factual Background

 The following facts are undisputed.

 Prior to his employment with Sloane, Lauter was Senior Vice President in charge of merchandising for Macy's New York (Macy's), a division of R.H. Macy & Co., a company he had been employed by for a period of 24 years. In the Fall of 1969 he began negotiations with representatives of Sloane looking toward employment as President of Sloane's New York Division. Following several meetings with the individual defendants, the last of which took place on the morning of November 3, 1969, Novogrod, the President of Sloane, sent Lauter the following letter (the Novogrod letter):

 
"November 3, 1969
 
Mr. Robert Lauter
 
3 Chester Drive
 
Rye, New York
 
Dear Bob:
 
This is to confirm our understanding arrived at this morning as to the terms of your employment with W & J Sloane. Your position will be President of the New York Division of W & J Sloane, which encompasses all the stores presently operated out of New York, plus the stores contemplated in Atlanta, Houston and Troy (Michigan).
 
The term shall be for three years with automatic renewal from year to year, unless either party gives ninety (90) days' prior notice.
 
The salary will be $105,000 per annum, plus a special payment of $25,000 for each of the first three years to compensate for the loss you are incurring from your present profit-sharing program.
 
A 5,000 share option will be recommended at the next meeting of the City Stores' Board of Directors. In addition, you will be given 3% of the increased profits before taxes over the 1969 profits of the New York Division of W & J Sloane.
 
If this meets with your approval, I would appreciate your signing one copy and returning same to me. If you should desire a more formal ...

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