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MARTIN PINCUS MKTG. v. SAWYER OF NAPA

September 12, 1991

MARTIN PINCUS MARKETING, PLAINTIFF,
v.
SAWYER OF NAPA, INC., DEFENDANT. SAWYER OF NAPA, INC., THIRD-PARTY PLAINTIFF, V. VINCENT MONE, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Kevin Thomas Duffy, District Judge.

OPINION

Plaintiff Martin Pincus Marketing ("MPM") commenced this diversity breach of contract action against defendant/third party plaintiff Sawyer of Napa, Inc. ("Sawyer"), seeking certain commission payments allegedly due and owing from 1988 and 1989 contracts. Sawyer commenced the third-party action against one of its former employees, Vincent Mone, as the person ultimately responsible for whatever amount of commissions might be due Pincus. A trial in this matter was conducted on June 11-13, 1991. The following constitutes my findings of fact and conclusions of law.

STATEMENT OF FACTS

At all times relevant to this action Sawyer, a California-based company, sold shearling and leather coats and jackets. Sales to retail outlets were conducted through sales representatives. Although acting on Sawyer's behalf to sell its products to the retail market, sales representatives were hired as independent contractors. Mone, Sawyer's national sales manager in 1987 and part of 1988, was responsible for hiring and supervising sales representatives for the company. Transcript ("Tr.") 8-9.

As the sole proprietor of MPM, Pincus was primarily in the business of selling women's apparel at the time and maintained his own showroom in New York City. Tr. 3. He contracted with Sawyer in March and then again in November of 1987 to be the exclusive sales representative for ladies outerwear, with MPM having the "exclusive sales agency rights to the Sawyer line of ladies' coats, jackets and skirts." Tr. 6, 67, and Stipulated Exh. 1. By the March and November contracts, the duration of Pincus' exclusive agency was established through 1988.

In addition to acting as Sawyer's sales manager, Mone conceived of and designed a leather jacket and coat line for men. Tr. 11. He developed this line for Sawyer in late 1987, although the company was primarily in the shearling business prior to that time. Contemporaneously, Sawyer was selling the men's leather jacket line, recut to fit women, its first efforts to develop a women's leather jacket line. Tr. 12. Although the line was limited, Pincus was expected to sell the women's line of leather coats as per explicit terms of contract.

On or about June 6, 1988, Mone had a conversation with Pincus, in which Mone represented his intent to leave Sawyer in order set up his own company. Mone's desire was to sell his own designs of ladies' leatherware. Tr. 51-52. At that time, Pincus expressed some interest in working for Mone. Tr. 52, 53. During July through August, Pincus and Mone continued to have further discussions about the possibility of Pincus' representing Mone's company, selling a ladies' leather line. Tr. 53-54. By August 1988, the two had determined certain basic terms upon which Pincus could represent Mone's new company — "Silverado Leather Co., Inc. ("Silverado")." Tr. 54. After Mone's departure from Sawyer, Paul Deutschman took over Mone's managerial position. Tr. 18.

On August 15, 1988, Pincus entered into a contract with Sawyer to last through 1989. That contract, in pertinent part, states that Pincus was to "act as [its] exclusive selling representative in the continental United States including Alaska for the Sawyer coat Division line of Ladies Coats." Stipulated Exh. 3; Tr. 88. The coat division included leathers as well as shearling products. That contract further provided that commissions were to be paid "in the amount of 10% on net dollar value of all merchandise shipped (less returns in any one month)." Stipulated Exh. 3. Also, "[o]rders accepted by Sawyer for this line shall be credited to the MPM account regardless of where the order is written or with whom it is placed, [and that] [n]o commission [was to be paid] on off price or close out sales unless negotiated in advance for each transaction," was provided for within that contract. Stipulated Exh. 3.

On August 18, 1988, Pincus was invited by Mone to meet, have drinks, and view some of the leather jackets that he had produced. After seeing the models, Pincus decided to represent Silverado, signing contract to represent it on September 1, 1988. Tr. 18, 55-56. Upon learning that Pincus was to represent Silverado in leathers, Sawyer's President and Chief Executive Officer Milton Dranow called Pincus to say that because Pincus undertook to sell a competitive line, "he was in a conflict of interest" and that "[Dranow] wanted the samples out of his [Pincus'] place [showroom] and [ ] didn't want him in any way to be representative of Sawyer merchandise." Tr. 163.

Dranow committed Sawyer to honoring the 1988 contract through to December 31, 1988, however, the Sawyer samples were removed from Pincus' showroom and Pincus was left to sell shearlings through Sawyer's printed literature alone. Tr. 26-29, 165-167. In addition, Sawyer contracted with Ressler Enterprises ("Ressler"), whereby Ressler was to act as Sawyer's exclusive ladies shearling coat representative during 1989. Both MPM and Sawyer claim breaches of the 1988 and 1989 contracts. At the point of trial, Pincus was represented by Mone's counsel and Mone was paying the attorneys' fees for the action commenced by Pincus for commissions.

DISCUSSION

Pincus now seeks certain commission payments or remuneration for sales that he procured after the Sawyer merchandise was removed from MPM's showroom, and for sales promoted by him during the 1988 contract. In addition, Pincus alleges that the 1989 contract was breached by Sawyer and that he is due all commissions that he could have made for that year. Sawyer counters by claiming that Pincus was paid all that was due him on the 1988 contract; that Sawyer respected the integrity of that contract up until December 31, 1988, that the 1989 contract was mutually rescinded, that purported damages on the 1989 contract are too speculative to merit; and, that, in any event, Pincus induced by fraud the signing of the 1989 contract and thus is not due any remuneration.

I.  1988 Contract

It is axiomatic that in New York, an exclusive agency creates an implied promise of the agent to use his good faith, best efforts to bring about the result sought by the agency. Wood v. Duff-Gordon, 222 N.Y. 88, 118 N.E. 214 (1917), reh. denied, 222 N.Y. 643, 118 N.E. 1082 (1918); Stendig, Inc. v. Thom Rock Realty Co., 163 A.D.2d 46, 558 N.Y.S.2d 917 (1st Dep't 1990). Similarly, implicit in all contracts entered between Sawyer and Pincus was that Pincus would employ his best efforts to sell Sawyer products. This precludes any possibility for the sale of goods competing with the Sawyer line. Thus Pincus ...


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