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WILSON-RICH v. DON AUX ASSOCS.

October 29, 1981

BRYAN C. WILSON-RICH, Plaintiff, against DON AUX ASSOCIATES, INC., Defendant.


The opinion of the court was delivered by: GOETTEL

GOETTEL, D.J.:

Rocket of London, Inc. (Rocket) is a closely held corporation located in Branford, Connecticut. The company distributes medical products, which it imports from Rocket of London Ltd. (Rocket-London), a manufacturer of medical products in England. The plaintiff, Bryan C. Wilson-Rich, is the president of Rocket and owns fifty percent of the company. The other fifty percent is owned or controlled by Ernest Bernberg, who is the chairman of the board and managing director of Rocket-London. Of that fifty percent, ten percent is owned by Cedric Bernberg, Ernest's nephew, who is vice president of Rocket.

 The defendant, Don Aux Associates, Inc. (Don Aux), is a small management consulting firm that specializes in small closely held corporations. *fn1" On August 5, 1979, Charles Auerbach, a salesman for Don Aux, visited the Branford offices of Rocket. Having asked to see the president of the company, Auerbach was directed to Wilson-Rich. During their conversation, Auerbach explained the services that Don Aux offered, and the plaintiff identified personnel motivation and morale as an area of concern in the company. At the conclusion of the meeting, Auerbach and Wilson-Rich signed a contract for an initial diagnostic survey *fn2" to be performed by Don Aux for Rocket. The contract was a one page form contract that lists the companies as the contracting parties, with the individuals signing on behalf of the companies. The contract had one handwritten note on the face of it, stating that payment of the fee was subject to the client's belief that the study was of significant value.

 Between September 10 and September 19, 1979, two employees of Don Aux, Thomas O'Connor and Eileen Cummings, *fn3" conducted the survey at Rocket's offices in Connecticut. They distributed questionnaires to all employees and on the basis of the questionnaires, selected several people for personal interviews. The fruits of this effort were compiled in a written report.

 The report was very critical of the plaintiff's management of the company and included summaries of what the employees had said about his deficiencies. In at least a couple of cases, the employees who said certain things were identified, and in other cases, Wilson-Rich could probably figure out the source of the statement. (On the questionnaire given to the employees, Don Aux stated that those who responded to the survey would remain anonymous. Apparently, the individuals who were identified in the report had indicated that they did not care if their names were revealed. *fn4"

 On September 19, a copy of this report was mailed to Wilson-Rich, Ernest Bernberg, and Cedric Bernberg. (Apparently, it was Don Aux's policy to send reports to all stockholders who were active in the company.) Wilson-Rich, however, was incensed when he learned that the report had been sent to the Bernbergs. He called Don Aux and said that their contract had been breached and that the report was supposed to be confidential and sent only to him. Subsequently, he commenced this diversity action.

 In Count One of his complaint, the plaintiff alleges that by sending the report to the Bernbergs without his permission, Don Aux breached an agreement to provide the results of the survey only to him. Count Two, entitled "Intentional Interference with Employee Relations," alleges that because the report referred to individuals and job titles, the "plaintiff's ability to... manage and communicate [effectively] was damaged to an irreparable extent due... to the hard feelings generated within plaintiff himself toward those employees." Complaint P23. Count Three, entitled "Breach of Assumed Fiduciary Relationships," contains an allegation that the survey was to be confidential "both in the respect that the report was to be rendered to plaintiff, and plaintiff alone, and that the sources of information were to remain masked," Complaint P26, and that the defendant "breached these confidential relationships." Complaint P27. The defendant has moved for summary judgment pursuant to Fed. R. Civ. P. 56 on Count One. As to Counts Two and Three, it has moved to dismiss on the grounds that they fail to state claims upon which relief can be granted, Fed. R. Civ. P. 12(b)(6), or alternatively, for summary judgment. For the reasons stated in the subsequent paragraphs, these motions are granted.

 I. Breach of Contract

 Before turning to the merits of defendant's motion for summary judgment, it is appropriate to delineate briefly the standards for granting summary judgment. Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment is appropriate when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The purpose of the procedure is to go beyond the pleadings to determine if a genuine need for a trial exists. Advisory Committee Note to Proposed Amendments to Rule 56(e), 31 F.R.D. 648 (1962).

 The Second Circuit has taken a restrictive attitude concerning the propriety of granting summary judgment. *fn5" See Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438 (2d Cir. 1980); Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317 (2d Cir. 1975). It has repeatedly admonished trial courts to determine only whether there are issues of fact to be tried and to avoid the temptation of making a subconscious judgment on the quality of proof by trying the issues. Heyman v. Commerce and Industry Insurance Co., supra, 524 F.2d at 1319-20; accord, Fili Moretti Cereali v. Continental Grain Co., 563 F.2d 563, 566 (2d Cir. 1977); United States v. Matheson, 532 F.2d 809, 813 (2d Cir.), cert. denied, 429 U.S. 823 (1976). Moreover, the party moving for summary judgment has the burden of showing the absence of a genuine issue as to a material fact, Quinn v. Syracuse Model Neighborhood Corp., supra, 613 F.2d at 444; George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 555 (2d Cir. 1977); Heyman v. Commerce and Industry Insurance Co., supra, 524 F.2d at 1320, and all reasonable inferences must be drawn in favor of the party opposing the summary judgment motion. Quinn v. Syracuse Model Neighborhood Corp., supra, 613 F.2d at 445; SEC v. Research Automation Corp., 585 F.2d 31, 33 (2d Cir. 1978); United States v. Matheson, supra, 532 F.2d at 813; Heyman v. Commerce and Industry Insurance Co., supra, 524 F.2d at 1320.

 "Rule 56, however, is not a dead letter" in the Second Circuit. Steinberg v. Carey, 439 F. Supp. 1233, 1241 (S.D.N.Y. 1977) (Weinfeld, J.); see SEC v. Research Automation Corp., supra; Mutual Marine Office Inc. v. Atwell, Vogel & Sterling, Inc., 485 F. Supp. 351 (S.D.N.Y. 1980); Laurie Visual Etudes, Inc. v. Chesebrough-Pond's, Inc., 473 F. Supp. 951 (S.D.N.Y. 1979); Miller v. Schweickart, 413 F. Supp. 1062 (S.D.N.Y. 1976). That the standards for granting summary judgment are stringent should not lead a court to such a cautious position that it will never utilize this procedural device. In many instances, summary judgment is a means to "[unmask] frivolous claims and [put] a swift end to meritless litigation." Quinn v. Syracuse Model Neighborhood Corp., supra, 613 F.2d at 445; accord, SEC v. Research Automation Corp., supra, 585 F.2d at 33 ("Indeed, the policy favoring efficient resolution of disputes, which is the cornerstone of the summary judgment procedure, would be completely undermined if unsubstantiated assertions were sufficient to compel a trial."); United States v. Matheson, supra, 532 F.2d at 813 (Summary judgment should be granted when "the only issues raised are frivolous or immaterial ones which would simply serve to provide an exercise in futility or a purposeless trial.").

 At the commencement of this action, Wilson-Rich alleged that Don Aux breached an express agreement that it would divulge the results of the survey only to the plaintiff. Abandoning that claim, he now argues that, by distributing the report to Cedric and Ernest Bernberg, Don Aux breached an implied agreement -- that is, an agreement not expressed orally or in writing, but one that can be reasonably implied from the conduct of the parties and the circumstances. See Restatement of Contracts § 3, Comment b (1932); id. § 21; 1 Williston on Contracts §§ 3, 22A (3d ed. 1957). On this motion for summary judgment, the evidentiary facts underlying the alleged implied agreement are not disputed; only the inferences to be drawn from them are in dispute. *fn6" Stated otherwise, the plaintiff argues that the facts raise an inference of an implied agreement; the defendant contends that no such inference can be drawn. To warrant denial of the motion, this Court would have to find that it is reasonable to draw such conflicting inferences. If, on the other hand, "only one inference could reasonably be drawn from the undisputed evidentiary facts, then summary judgment would be proper, for, in the language of Rule 56(c), 'the moving party is entitled to a judgment as a matter of law.'" Empire Electronics Co. v. United States, 311 F.2d 175, 180 (2d Cir. 1962) (Kaufman, J.).

 Although mindful that it must draw all reasonable inferences in favor of the plaintiff, this Court must conclude that, on the evidence before it, no reasonable person could infer that there had been a meeting of the minds resulting in an implied promise to distribute the report only to Wilson-Rich. *fn7" The written contract does not indicate that only Wilson-Rich would receive a copy of the report. Moreover, there were no conversations on the subject. In their affadavits, the employees of Don Aux who dealt with Wilson-Rich -- O'Connor, Cummings, and Auerbach -- claim that the plaintiff was never told that only he would receive the results of the survey, that the plaintiff never instructed them to give the results only to him, and that there was no discussion concerning limitations on the distribution of the report. Indeed, Wilson-Rich does not dispute these assertions. He admits that there was no discussion concerning distribution, and that neither O'Connor, Cummings, nor Auerbach represented that the report would be sent only to him. But the plaintiff argues that "there was no need for a discussion with or requests of or instructions to Don Aux [because] plaintiff already had such an understanding." Plaintiff's Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment at 5. To support this assertion and to avoid summary judgment, he points to three things: a letter addressed to Wilson-Rich as president of Rocket that was marked "Personal and Confidential"; "[d]efendant's own data sheet on the 'client' [that] clearly refers to only... the plaintiff"; and the fact that Wilson-Rich was identified as the client in the handwritten addendum to the written contract. Id. at 9-10.

 These facts, however, are insufficient to defeat the motion for summary judgment. See Beidler & Bookmyer, Inc. v. Universal Ins. Co., 134 F.2d 828, 831 (2d Cir. 1943) (evidence that the "appellee's vice-president and the president of the insured were 'regular luncheon companions' and 'warm personal friends'" was insufficient to raise an inference that the appellee induced the insured to cancel an insurance policy). The addendum to the contract makes no reference to the plaintiff and merely states that payment of the fee was subject to the "client's" approval. The document that plaintiff refers to as the "client sheet" is actually entitled "Sales Survey Report." Rocket is listed as the "company" and the plaintiff as the "survey authorizer." The second page has a number of form questions concerning "the client," some of which call for responses about an individual -- presumably the survey authorizer. In the "Comments" segment, the need for Rocket-London's approval before the defendant's consulting services could be employed is stressed; consequently, it is stated that the results of the survey should be in writing to the extent ...


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