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PURDY v. CONSUMERS DISTRIB. CO.

December 4, 1986

EVERETT PURDY, Plaintiff,
v.
CONSUMERS DISTRIBUTING COMPANY, LTD., Defendant



The opinion of the court was delivered by: CEDARBAUM

CEDARBAUM, J.

This is a suit for breach of an employment contract for which plaintiff seeks both compensatory and punitive damages. Defendant has moved to dismiss that portion of the complaint which asserts a claim for punitive damages. Because plaintiff has failed to allege the type of conduct by defendant that would warrant the imposition of punitive damages under New York law, defendant's motion is granted.

 Background

 In December 1984, Everett Purdy ("Purdy") was hired by Consumers Distributing Co. ("Consumers") as president of its U.S. Division. Purdy and Consumers entered into a five-year employment agreement ("Agreement") that provided for an automatic extension of two years, and for one-year extensions thereafter "unless terminated by either party on at least one (1) year's notice given prior to the end of the Initial [5 year] Term...." The Agreement expressly granted Consumers the right to terminate Purdy for "cause," during the first five-year term. The Agreement provided, in pertinent part, that "cause" shall mean:

 the wilful engaging of the Employee in a course of misconduct which, in the good faith opinion of the Board of Directors of the Employer, is materially harmful to the Employer and which continues for a period of more than ten (10) days after detailed written notice by the employer to the Employee of the acts constituting such misconduct....

 Para. 2.02(b)(ii).

 The Agreement also provided that:

 In the event that it is subsequently determined by a court of proper jurisdiction that Cause did not exist:

 (i) the Employer shall pay the Employee an agreed severance in lieu of any and all other monies or damages payable as a consequence of such termination, of an amount equal to two (2) years Base Salary; and

 (ii) the prohibition regarding competition set forth in subparagraph 2.06 hereof shall be null and void and shall be of no further force and effect.

 Para. 2.04(b).

 On March 5, 1986, defendant sent notice to Purdy, pursuant to subparagraph 2.02(b)(ii) of the Agreement, alleging that he had engaged in numerous acts of "misconduct materially harmful to Consumers" and requiring that "such acts of misconduct cease on or before March 17, 1986." Purdy responded by letter dated March 11, 1986, disagreeing with the allegations in Consumers' March 5th letter. Purdy also indicated his willingness "to attempt to resolve any differences between us." Plaintiff alleges that he received no response to his letter and that, instead, he received a copy of a Resolution of the Board of Directors of Consumers, dated March 17, 1986, terminating his employment with Consumers.

 On April 30, 1986, Purdy instituted the present action, claiming that defendant terminated him in bad faith without cause and in violation of the terms of the Agreement. Plaintiff seeks to recover ...


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