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LEHMAN v. DOW JONES & CO.

April 4, 1985

NORTON J. LEHMAN, Plaintiff, against DOW JONES & COMPANY, INC., a Corporation, Defendant.


The opinion of the court was delivered by: CONNER

OPINION AND ORDER

WILLIAM C. CONNER, United States District Judge.

 Plaintiff Norton J. Lehman ("Lehman") brought this diversity action to recover a finder's fee from Dow Jones & Company, Inc. ("Dow Jones") for services he allegedly rendered in connection with Dow Jones's 1981 acquisition of Continental Cablevision, Inc., a cable television company. Lehman alleges six theories of liability, including breach of express contract, breach of implied contract, unjust enrichment, quantum meruit, fraud, and breach of confidence.

 Defendant now moves for summary judgment on each of these counts arguing that: the first four contract-like claims are barred by New York's Statute of Frauds; the fraud claim is simply a contract claim in disguise, and thus also barred by the Statute of Frauds; and finally, that the breach of confidence count is wholly without merit. For the reasons stated below, defendant's motion for summary judgment is granted.

 Background

 Plaintiff Norton Lehman is a California attorney who devotes most of his professional time to work as a "finder" of corporate acquisition deals, primarily among cable television companies. Lehman Aff. at PP1-4. His first contact with Dow Jones occurred in October 1979, when he called the company's New York offices and spoke to Warren F. Phillips, Dow Jone's chairman and and chief executive officer, about whether Dow Jones might be interested in acquiring a cable company he had found. Id. at P7. Phillips referred Lehman to George W. Flynn, Dow Jones's senior vice-president in charge of acquisitions, who worked in the company's New Jersey offices. Id. Lehman called and wrote to Flynn in New Jersey about his acquisition proposal. Id. at PP8-9. Lehman says that Flynn advised him that Dow Jones was not interested in the particular cable company Lehman had found, but that it was interested in acquiring other cable systems. Id. at PP11. Lehman also avers that Flynn authorized him to find other cable companies for Dow Jones to acquire; most importantly, Lehman says Flynn stated that Dow Jones would pay Lehman a finder's fee if he procured an acquisition for it. Id. Lehman claims that on the basis of these representations, he began to search for promising acquisition prospects. Id.

 Over the next two years, Lehman sent a series of letters to Dow Jones's offices in New York and New Jersey advising its officers of potential acquisition candidates. In each instance, he recited that he was "going forward" as a finder for Dow Jones on the basis of a percentage compensation formula. Id. at PP13, 16, 20, 26. Dow Jones apparently never advised Lehman to stop sending these letters -- in fact, in January 1981, senior officers of Dow Jones met with Lehman and representatives of an acquisition candidate to discuss a possible deal. Id. at P22. The transaction was aborted, id. at P24, but Lehman continued to contact Dow Jones periodically with other acquisition prospects.

 In early September 1981, Lehman telephoned Dow Jones's New York and New Jersey offices to advise its officers that Continental Cablevision, Inc. ("Continental") was available for acquisition. Id. at P33. On September 11, 1981, he spoke to Frederick Harris, Dow Jones's vice-president of finance. Id. Lehman says he convinced Harris that Continental was a good prospect for Dow Jones, and Harris asked him to forward whatever information he had about the company. Id. Lehman also avers that he and Harris agreed that he would go forward on a one percent compensation formula, and that Dow Jones would keep his information confidential. Id.

 On September 14, 1981, Lehman sent a detailed submission letter concerning Continental to Harris and other senior officials at Dow Jones. Id. at P35; Appendix to Defendant's Mem. in Support of Motion for Summary Judgment, Ex.1. In that letter, Lehman stated again that he was proceeding on a one percent compensation formula, and emphasized that Dow Jones should keep the information about Continental confidential. Lehman Aff. at P35; Appendix to Defendant's Memo. in Support of Motion for Summary Judgment, Ex.1. The next day, after receiving the letter, Harris telephoned Lehman and said that Dow Jones was not interested in the proposed acquisition. Lehman Aff. at P37.

 However, on September 24, 1981, George Wiegers, a partner at Lehman Brothers (no relation to plaintiff), approached Harris and suggested that Dow Jones acquire a part interest in Continental. Id. at P38. Dow Jones apparently was interested in the transaction as proposed by Wiegers, because on October 22, 1981 it announced that it would purchase a $78 million interest in Continental. The deal was consummated in November 1981; plaintiff received no fees from the transaction.

 It is defendant's position that Lehman did not, by his actions, procure the acquisition. Of course, plaintiff takes a different view. He believes that he may have inadvertently alerted Lehman Brothers to the availability of Continental as a possible acquisition candidate. Id. at P38. When Dow Jones advised him that it was not interested in Continental, Lehman suggested to Continental that it investigate LIN Broadcasting Corporation as a possible suitor. Id. In particular, he suggested that Continental consult with F. Warren Hellman, a partner at Lehman Brothers who was familiar with both Continental and LIN Broadcasting. See Ex.6 to Lehman Aff. George Wiegers, the Lehman Brothers partner who met with officers of Dow Jones on September 24, has stated that prior to this meeting he spoke with Hellman about Continental and the possibility of its acquisition by Dow Jones. See Appendix to Defendant's Mem. in Support of Motion for Summary Judgment, Ex.6 at 70-74. Plaintiff argues that a trier of fact would properly infer that it was his own suggestion to Continental that it contact Hellman that caused Hellman to alert Wiegers to the availability of Continental, which ultimately led to the acquisition itself. Thus, in plaintiff's view, he did procure the transaction for Dow Jones.

 In October 1982, Lehman commenced an action in the Central District of California against Dow Jones and three of its officers. Senior District Judge David W. Williams dismissed the claims against the individual defendants for lack of in personam jurisdiction, and transferred the remaining claims against Dow Jones to the Southern District of New York. Upon its arrival, the case was assigned to me. Dow Jones now moves for summary judgment.

 Discussion

 A. Lehman's Contract and Quasi-contract Claims

 Dow Jones contends that the first four claims in plaintiff's complaint -- those for breach of express contract, breach of implied-in-fact contract, unjust enrichment, and quantum meruit -- are barred by New York's Statute of Frauds ("Statute"). New York General Obligation Law § 5-701(a)(10) provides that an agreement for a finder's fee is void unless that agreement is evidenced by a writing signed by the party to be charged. Here, plaintiff concedes that no writing exists that ...


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