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