Directors in good faith)." The Agreement does not define "just cause."
17. Under New York law, an employer can fire an at-will employee for any reason or no reason at all, as long as the termination is not for a constitutionally impermissible purpose. Jones v. Dunkirk Radiator Corp., 21 F.3d 18, 21-22 (2d Cir. 1994) (citing Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 333, 514 N.Y.S.2d 209, 506 N.E.2d 919 (1987)); Murphy v. American Home Products Corp., 58 N.Y.2d 293, 305, 461 N.Y.S.2d 232, 448 N.E.2d 86 (1983)). In this case, the plaintiff was not an at-will employee but rather an employee under a contract that contained a provision limiting the grounds for his discharge. See Kemelhor v. Penthouse Int'l, Ltd., 689 F. Supp. 205, 213-14 (S.D.N.Y. 1988), aff'd without op., 873 F.2d 1435 (2d Cir. 1989) (under New York law, employer has the right to discharge employees pursuant to the terms of the employment contract). Under the express terms of the contract, as well as under New York law, the board must determine "just cause" in good faith. See Kemelhor, 689 F. Supp. at 213 (under New York law, "an employer seeking to discharge an employee by using a clause in the contract vesting the employer with discretion must act in good faith").
18. Under New York law it is clear that an employee can be dismissed for "just cause" if he breaches his employment contract. See Ohanian v. Avis Rent A Car System, Inc., 779 F.2d 101, 107-08 (2d Cir. 1985) (discussing New York law). The Court of Appeals for the Second Circuit has held that pursuant to New York law "reasons other than an employee's breach" may also constitute "just cause." Ohanian, 779 F.2d at 107; Volmar Distributors, Inc. v. New York Post Co., Inc., 825 F. Supp. 1153, 1168 (S.D.N.Y. 1993) (Conner, J.).
19. In this case, it is not necessary to explore the outer reaches of the meaning of "just cause" in the Agreement because the defendant did not make a good-faith determination that "just cause" existed to discharge the plaintiff. The defendant claims that Sudul was terminated because of his "unsatisfactory performance of his duties as Vice President and Operations Manager of the Division." (Joint Exh. D.) Although unsatisfactory work performance may have been "just cause" to discharge Sudul, this reason was clearly a pretext for the real reason Sudul was fired, which was simply so that COSI could save money by running the DFI Division without Sudul. Sudul had accomplished the task of integrating DFI's operation into COSI's operation, and he was no longer needed.
20. Based on my evaluation of all the evidence including the credibility of the witnesses, I find that COSI did not did not have just cause as the express terms of the contract required when it discharged Sudul.
21. As a matter of contract interpretation in this Agreement, it is apparent that "just cause" must mean something more than simply a determination that Sudul was no longer needed to run the DFI Division and COSI could save a considerable amount of money by firing him. Otherwise, the term would have no meaning and Sudul would simply be another at-will employee. Sudul was the only former DFI employee hired by COSI who was given the security of an employment agreement. All of the other employees were at-will employees subject to discharge for no reason at all. If "just cause" is to have meaning in Sudul's contract, it must have provided him with more security that simply the determination by COSI that it could save money by having other employees perform Sudul's functions more cheaply. Moreover, under the express terms of the contract and under New York law, the Board of Directors had to determine just cause "in good faith." Based upon all of the evidence and my evaluation of the credibility of the witnesses, I find that the COSI Board of Directors did not make the determination in good faith. It is significant that COSI did not present the testimony of any of its directors except Mr. Lonstein who presented his views to the Board. In any event, as explained above, the memorandum that allegedly contained the reasons presented to the Board for Sudul's discharge contained pretextual rather than the real reasons for Sudul's termination, and the testimony concerning the reasons for the termination was not credible.
22. The plaintiff's measure of damages for the breach of an employment contract is the
wage that would be payable during the remainder of the term reduced by the income which the discharged employee has earned, will earn, or could with reasonable diligence earn during the unexpired term.
Donald Rubin, Inc. v. Schwartz, 191 A.D.2d 171, 171, 594 N.Y.S.2d 193, 194 (1st Dep't 1993) (quoting Cornell v. T.V. Development Corp., 17 N.Y.2d 69, 74, 268 N.Y.S.2d 29, 215 N.E.2d 349 (1966) (internal quotations omitted)); Jones v. Dunkirk Radiator Corp., 21 F.3d 18, 22 (2d Cir. 1994) (applying New York law).
23. The parties do not agree which wage should be used to calculate the plaintiff's lost income. The plaintiff argues that because the June 24, 1993 Amendment ("Amendment") to the written Employment Agreement was an accord, he has the right to sue under either the terms of the original agreement or the Amendment. The defendant argues that the plaintiff is entitled only to damages based on the salary contained in the Amendment.
24. Generally, a party signing an agreement is bound by the provisions of such writing. See Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 11, 537 N.Y.S.2d 787, 792, 534 N.E.2d 824, 829 (1988); Pimpinello v. Swift & Co., Inc., 253 N.Y. 159, 162-163, 170 N.E. 530, 531 (1930); World Yacht v. Italian Welfare League, Inc., 200 A.D.2d 518, 518, 606 N.Y.S.2d 689, 689 (1st Dep't 1994) (citing Gillman); see also Sotheby's, Inc. v. Dumba, No. 90-6458, 1992 WL 27043, at *2-3 (S.D.N.Y. Jan. 31, 1992) (New York law). The plaintiff appears to argue that the Amendment is not enforceable for two independent reasons: (1) it was coerced by economic duress or business compulsion, and (2) it is an "accord" without "satisfaction." Both of these arguments are contrary to the evidence at trial and the law in New York and must be rejected.
25. A contract may be voided on the grounds of economic duress only where the complaining party was compelled to agree to the terms by a "wrongful threat by the other party which precluded the exercise of [his] free will," including threats by the other party to breach the contract by withholding performance unless the complaining party agreed to a further demand. 805 Third Ave. Co. v. M.W. Realty Assocs., 58 N.Y.2d 447, 451, 461 N.Y.S.2d 778, 780, 448 N.E.2d 445, 451 (1983); see Graubard Mollen Dannet & Horowitz v. Edelstein, 173 A.D.2d 230, 230-31, 569 N.Y.S.2d 639, 640 (1st Dep't 1991); see also Kamerman v. Steinberg, 891 F.2d 424, 431 (2d Cir. 1989) (New York law).
26. Here, the evidence establishes that COSI did not threaten to discharge plaintiff, wrongfully or otherwise, or threaten to cease paying the plaintiff under the original Agreement. The plaintiff testified that he felt threatened because Dellarmi of DFI, a customer of COSI, had warned plaintiff that he might be fired for poor performance. This warning is more fairly characterized as an expression of concern rather than a threat; in any event, there is no basis to impute Mr. Dellarmi's statement to COSI. The plaintiff admitted that he did not know if Lonstein even knew about Dellarmi's statements and admitted that no officer of COSI threatened to fire him in connection with negotiating the reduction of his salary. Instead, the plaintiff testified that he requested several days to think over the proposed salary cut and discuss it with his wife, which he did, whereupon he agreed to the salary cut. He also testified that he voluntarily signed the Amendment only after he read it over and understood its simple and clear terms. Because the plaintiff has not established that the defendant's threats compelled him to execute the Amendment, the plaintiff's claim of duress must fail. See Graubard, 173 A.D.2d at 230-31, 569 N.Y.S.2d at 640 (rejecting affirmative defense of duress because party arguing duress failed to present any admissible evidence of a wrongful threat).
27. An additional reason to reject the plaintiff's duress claim is that it was asserted too late. "A party 'who would repudiate a contract procured by duress, must act promptly, or he will be deemed to have elected to affirm it.'" Bank Leumi Trust Co. of New York v. D'Evori Int'l, Inc., 163 A.D.2d 26, 30, 558 N.Y.S.2d 909, 914 (1st Dep't 1990) (quoting Bethlehem Steel Corp. v. Solow, 63 A.D.2d 611, 612, 405 N.Y.S.2d 80, 82 (1st Dep't 1978)); see also Durante Bros. and Sons, Inc. v. Flushing Nat'l Bank, 755 F.2d 239, 251 (2d Cir. 1984) (applying New York law), cert. denied, 473 U.S. 906, 87 L. Ed. 2d 654, 105 S. Ct. 3530 (1985). In Bank Leumi, for example, the complaining party was deemed to have ratified the allegedly coerced contract where it waited six months to raise the claim of duress. Bank Leumi, 163 A.D.2d at 30, 558 N.Y.S.2d at 914; see also Industrial Recycling Sys., Inc. v. Ahneman Assocs., P.C., 892 F. Supp. 547, 551 (S.D.N.Y. 1995) (Parker, J.) (contract not voidable on grounds of duress because complaining party ratified contract through its acquiescence); Manufacturers Hanover Trust, Co. v. Jayhawk Assocs., 766 F. Supp. 124, 128 n.6 (S.D.N.Y. 1991) (Patterson, J.) (noting that under New York law, party who waited a substantial time after entering into a contract to assert claim would be deemed to have affirmed contract even if economic duress were present).
28. Here, the plaintiff did not raise his duress claim promptly. The plaintiff executed the Amendment on June 24, 1993 and worked under it for approximately two months. Although he was discharged in late August 1993, he did not commence this action until March 7, 1994, eight and a half months after the Amendment was executed. Even then, he did not claim duress in his complaint but waited to do so until the trial of this action in August 1995, more than two years after execution of the Amendment. Because the plaintiff waited an inordinate amount of time to challenge the Amendment on the basis of duress, he is deemed to have waived this claim by his acquiescence.
29. The plaintiff also argues that he is entitled to sue on the unamended Employment Agreement because the Amendment was an "accord" without concomitant "satisfaction." This argument is contrary to the evidence and the law.
30. Under New York law, an accord is an agreement by one party to offer and the other to agree to accept in settlement of an existing or matured unpaid claim an amount of money or some performance other than that to which the second party believes it is entitled. May Dep't Stores Co. v. International Leasing Corp., Inc., 1 F.3d 138, 140 (2d Cir. 1993); see Denburg v. Parker Chapin Flattau & Klimpl, 82 N.Y.2d 375, 383, 604 N.Y.S.2d 900, 905, 624 N.E.2d 995, 1000 (1993) ("An accord is an agreement that a stipulated performance will be accepted, in the future, in lieu of an existing claim."). The execution of the agreement is called satisfaction. "If the satisfaction is not tendered, the obligee may sue under the original claim or for breach of the accord." Denburg, 82 N.Y.2d at 383, 604 N.Y.S.2d at 905, 624 N.E.2d at 1000. Here, the plaintiff seeks to sue the defendant for breach of the original Employment Agreement, without any reduction in salary effected by the Amendment.
31. In this case, the Amendment is not an accord but a novation. Because the Amendment is a novation, the plaintiff may not claim damages under the original Employment Agreement. See Nat'l Am. Corp. v. Federal Republic of Nigeria, 448 F. Supp. 622, 643 (S.D.N.Y. 1978), aff'd, 597 F.2d 314 (2d Cir. 1979) (stating that if there is a novation, parties may seek relief only under the substitute agreement). The elements of novation are as follows: (1) a previously valid obligation; (2) an agreement of all parties to the extinguishment of the old contract; (3) an agreement of the parties to a new contract; (4) and a valid new contract. LCA Lease Corp. v. Borvig Corp., 826 F. Supp. 776, 779 (S.D.N.Y. 1993) (Sprizzo, J.) (citing Callanan Indus., Inc. v. Micheli Contracting Corp., 124 A.D.2d 960, 961, 508 N.Y.S.2d 711, 712 (3d Dep't 1986)).
32. As some courts have noted, "it is often difficult to distinguish between an executory accord and a substitute agreement," or novation. Nat'l Am. Corp., 448 F. Supp. at 643. The difference rests on a determination of when the parties intended the new agreement to discharge previously existing obligations. May Dep't Stores Co., 1 F.3d at 140; Denburg, 82 N.Y.2d at 383-84, 624 N.E.2d at 1000-01, 604 N.Y.S.2d at 904-05. A novation is "an agreement for an existing obligation to be extinguished immediately by the acceptance of a new promise." May Dep't Stores Co., 1 F.3d at 140 (quoting National Am. Corp., 448 F. Supp. at 643) (internal quotations omitted)). In contrast, if the parties intended that under the new agreement "'an existing claim [would] be discharged in the future by the rendition of a substituted performance,'" the new agreement constitutes an accord. Id. ( National Am. Corp., 448 F. Supp. at 643) (internal quotations omitted)).
33. In this case, it is clear from the language of the Amendment that the parties intended the Amendment to discharge the existing obligations of the Employment Agreement and that the Amendment would be substituted as the new agreement for the future. The Amendment states that it is an "amendment to the Employment Agreement" that would be "effective Monday, June 28, 1993," and that on that date Sudul's "annual base salary as stated in Section 3 of the original Employment Agreement shall be changed to $ 45,000 per year." (Joint Exh. C.) See, e.g., Nat'l Am. Corp., 448 F. Supp. at 643 (finding that agreement was novation because its language indicated a present discharge of prior obligations). Moreover, based on my evaluation of the witnesses it is also clear that they intended the Amendment to be the new agreement under which they would operate on a going, forward basis. Because the Amendment is therefore a novation, the plaintiff may not sue to enforce Section 3 of the original Employment contract. Accordingly, the plaintiff's damages must be based on the salary term contained in the Amendment.
34. As explained above, the general measure of damages for wrongful discharge is "'the wage that would be payable during the remainder of the term reduced by the income which the discharged employee has earned, will earn, or could with reasonable diligence earn during the unexpired term.'" Cornell v. T.V. Development Corp., 17 N.Y.2d 69, 74, 268 N.Y.S.2d 29, 33, 215 N.E.2d 349, 351 (1966) (quoting McClelland v. Climax Hosiery Mills, 252 N.Y. 347, 358, 169 N.E. 605, 609 (1930) (Cardozo, J., concurring), modified, 253 N.Y. 533, 171 N.E. 770 (1930)). Here, from August 20, 1993, the effective date of his discharge, until March 7, 1997 (four years after the commencement date of the Agreement), Sudul would have earned $ 45,000 a year in salary had the defendant not discharged him prematurely.
35. The plaintiff's total wages must be reduced by the amount, if any, that the plaintiff earned or with reasonable diligence could have earned from the date of his discharge to the date the contract terminated. Cornell, 17 N.Y.2d at 74, 268 N.Y.S.2d at 33, 215 N.E.2d at 351; Woodford v. Benedict Community Health Center, 188 A.D.2d 863, 864, 591 N.Y.S.2d 582, 583 (3d Dep't 1992); Ronder v. John Waters Assocs., Inc., 184 A.D.2d 240, 240, 586 N.Y.S.2d 749, 749 (1st Dep't 1992); see also Jones v. Dunkirk Radiator Corp., 21 F.3d 18, 22 (2d Cir. 1994) (applying New York law in wrongful discharge action); Air Et Chaleur, S.A. v. Janeway, 757 F.2d 489, 494 (2d Cir. 1985) (stating that under New York law plaintiffs have a duty to mitigate their damages). Even though the plaintiff was wrongfully discharged, he was obligated to use reasonable diligence to obtain similar employment elsewhere in the same locality when and if available. Fuchs v. Koerner, 107 N.Y. 529, 14 N.E. 445 (1887); Tynan Incinerator Co. v. International Fidelity Ins. Co., 117 A.D.2d 796, 797, 499 N.Y.S.2d 118, 120 (2d Dep't 1986); AMF, Inc. v. Cattalani, 77 A.D.2d 779, 780, 430 N.Y.S.2d 731, 733 (4th Dep't 1980) ("no recovery may be had for losses which the person injured might have prevented by reasonable efforts and expenditures"); see Ingrassia v. Shell Oil Co., 394 F. Supp. 875, 885-87 (S.D.N.Y. 1975) (explanation of what constitutes substantially similar employment under New York law); see also 2 N.Y. PJI 4:21 (1968 & 1996 Supp.). The defendant bears the burden of introducing evidence that the plaintiff could have reduced his damages. Air Et Chaleur, 757 F.2d at 494; Jenkins v. Etlinger, 55 N.Y.2d 35, 39, 447 N.Y.S.2d 696, 698, 432 N.E.2d 589, 591 (1982); Cornell v. T.V. Development Corp., 17 N.Y.2d at 74, 268 N.Y.S.2d at 33, 215 N.E.2d at 352.
36. Here, the defendant has proved that the plaintiff was not as diligent as he could have been in mitigating his damages. The plaintiff did not seek any employment for the first six months after he was discharged. Thereafter, his efforts to find new employment were not extensive. He registered with only a single employment agency and did not make a concerted effort to contact former customers or other prospective employers. COSI presented evidence that there is a demand for a person with plaintiff's experience and knowledge of mainframe computers and that such jobs pay in the comparable range of the plaintiff's former salary. On the other hand, the plaintiff presented evidence concerning the difficulty of his job search. The very fact that the employment agency produced so few concrete job opportunities is itself proof that Sudul's job search was genuinely difficult. The plaintiff argues that he has experience only with obsolete equipment and is not qualified for other employment; however, the plaintiff has a duty to mitigate his damages by seeking and accepting other employment of the same or substantially similar character.
37. Given all the factors in this case, including the plaintiff's failure to seek employment diligently and the difficulty of someone in the plaintiff's position in finding a job similar to his former job at COSI, the Court finds that the plaintiff should have been able to find new employment within two years, and his failure to find new employment after that time is attributable to his lack of diligent effort. The six-month period during which the plaintiff did not seek any employment, and thus did not mitigate his damages, should be subtracted from the two-year period of his unemployment. See Ronder, 184 A.D.2d at 240, 586 N.Y.S.2d at 749 (affirming lower court's denial of damages based on plaintiff's failure to use reasonable diligence to mitigate his damages after his employment was terminated); see also Miller v. Swissre Holding, Inc., 771 F. Supp. 56, 62 (S.D.N.Y. 1991) (Conboy, J.) (excluding from back pay calculations in Title VII action period of time when plaintiff was not looking for work).
38. The plaintiff's damages should not include any amounts corresponding to the value of the health insurance benefits he would have been entitled to under his employment contract. The plaintiff's contract entitled him to a certain level of health insurance coverage. The contract did not, however, entitle him to any monetary compensation if he did not take advantage of this coverage. The plaintiff admitted that he never signed up for these benefits when he was employed because he relied on his wife's health insurance. He also testified that he is still covered by his wife's insurance and that this coverage is currently the same as it was while he was employed by the defendant. Therefore, the plaintiff today enjoys the same health insurance coverage as he did, by his own choice, while he was employed by COSI. Because he has suffered no change in his insurance coverage by reason of his discharge, he has suffered no injury for which he either needs to be or can be recompensed. See, e.g., Proulx v. Citibank, N.A., 681 F. Supp. 199, 205 (S.D.N.Y.), aff'd, 862 F.2d 304 (2d Cir. 1988) (cost to employer of fringe benefits plaintiff did not need would not be added to award).
39. The plaintiff is, however, entitled to recover a nonaccountable automobile expense allowance of $ 15,600 per year. This allowance was part of his compensation and did not depend on the actual use of his car on COSI business. The defendant did not present any evidence to rebut the plaintiff's claim that this allowance was part of his income. See Abady v. Interco Inc., 76 A.D.2d 466, 478, 430 N.Y.S.2d 799, 806-07 (1st Dep't 1980) (holding that $ 2,5000 drawing account used to cover unitemized expenses was part of plaintiff's income and therefore had to be included in the plaintiff's damage award).
40. The parties agree that the plaintiff's damages must be reduced by the $ 7,800 the plaintiff received from unemployment insurance. See New York State Human Rights of Complaint of Bice v. Parkview Auto Sales, Inc., 206 A.D.2d 888, 889, 616 N.Y.S.2d 113, 114 (4th Dep't 1994) (excluding amount of unemployment compensation from damages award); Grumman Aerospace Corp. v. New York State Div. of Human Rights, 151 A.D.2d 573, 573, 542 N.Y.S.2d 681, 682 (2d Dep't), appeal denied, 75 N.Y.2d 701, 551 N.E.2d 106, 551 N.Y.S.2d 905 (1989) (same); Proloux, 681 F. Supp. at 205.
41. Therefore, the plaintiff is entitled to an award of damages for one-and-a-half years of lost income at the rate of $ 45,000 a year, amounting to $ 67,500, plus a car allowance of $ 23,400, less the $ 7,800 the plaintiff received as unemployment compensation, for a total award of $ 83,100.
The parties are directed to submit a proposed judgment (including interest) by March 15, 1996. If the parties are unable to agree upon a proposed judgment, the parties are directed to submit counter proposals with an explanation of the differences. Any proposed judgment should include an explanation of the calculation of interest.
The foregoing constitutes the Court's Findings of Fact and Conclusions of Law pursuant to Fed. R. Civ. P. 52(a).
John G. Koeltl
United States District Judge
Dated: New York, New York
March 10, 1996