the transaction in writing on November 8, 1993. In a related state court action, FCAM sued the three defendants for breach of contract. See FCAM v. NACI, Index No. 133996/94 (N.Y. Sup. Ct.) (the "State Court Action"). In a recent ruling on cross-motions for summary judgment, New York State Supreme Court Justice Shainswit granted FCAM's summary judgment motion as against NACI and NAP, but denied summary judgment as to Vahabzadeh, and granted his cross-motion dismissing the complaint against him. See Opinion Dated Feb. 27, 1997.
Plaintiff's connection to the above events is as follows. He was employed as chairperson and CEO of ABN AMRO Securities (USA) ("ABN") when he learned of the impending deal. Subsequently, he was offered employment as president and CEO of FCAM-DE in a letter dated September 15, 1993 (the "September Offer"). The September Offer laid out basic terms of employment, including an annual base salary of $ 235,000, a guaranteed bonus payable at the end of the FCAM's first fiscal year, participation in a profit sharing plan, options to buy company stock and health insurance. The September Offer was on FCAM letterhead and was signed by defendant Vahabzadeh and by Hassan Nemazee, as "Directors" of FCAM-DE. The offer was specifically conditioned on "consummation of the [SPA] and . . . execution of a definitive employment agreement." No such "definitive" agreement was ever reached. There is no dispute, however, that plaintiff resigned from his position at ABN in order to accept employment at FCAM-DE.
Plaintiff's claim of an employment agreement rests not only on the September Offer, but also on the SPA itself. The SPA specifically mentions plaintiff on four occasions and provides that: (1) at Closing, FCAM will deliver to NACI and NAP an executed employment agreement with plaintiff, but the absence of such an agreement will not postpone the Closing, SPA P 1.4(a)(ii); (2) FCAM will negotiate an employment agreement with plaintiff in good faith, such agreement to include the terms set forth in the September Offer, SPA P 4.1(e); (3) plaintiff, or a representative chosen by defendant Vahabzadeh, will serve as one of FCAM-DE's Directors, SPA P 5.1(d); and (4) certain stock will be set aside to meet FCAM-DE's obligations under the employment agreement with plaintiff. Finally, plaintiff also relies on a July 20, 1993 letter from NACI to FCAM (the "July letter"), describing the outline of the SPA and referring to the fact that "NACI will encourage [plaintiff] to accept the position of CEO of FCAM-DE."
From the above documents, plaintiff has asserted three causes of action: (1) breach of an employment agreement comprised of the July letter, the September Offer and the SPA, (2) enforcement of his rights as a third-party beneficiary of the SPA and (3) breach of an employment agreement reflected in the September Offer. Plaintiff has moved for summary judgment on his second and third claims and to dismiss certain of defendants' affirmative defenses. Plaintiff also moves for leave to file his amended complaint, which differs from the original complaint in that it alleges that defendant Vahabzadeh is vicariously liable for the liabilities of NAP and NACI under various theories. Defendants have cross-moved for summary judgment on all of plaintiff's claims.
I. Motion to Amend
Fed. R. Civ. P. 15(a) provides that "leave [to amend a complaint] shall be freely given when justice so requires." Though defendants make a general assertion of prejudice in light of the lateness of plaintiff's proposed amendment, they do not identify any particular manner in which they will be prejudiced. Moreover, the vicarious liability theories were pled in the State Court Action and the parties have stipulated that discovery from that action shall be available in this case as well. Defendants therefore cannot claim surprise or prejudice in light of the new theories of liability. Accordingly, plaintiff's motion for leave to amend his complaint is GRANTED.
II. Collateral Estoppel--Defendants' Affirmative Defenses
Plaintiff argues that defendants are collaterally estopped from asserting their first two affirmative defenses because the same defenses were asserted--and rejected by the court--in the State Court Action. Defendants fail to address the collateral estoppel argument, stating only that they disagree with the State Court ruling and that they intend to appeal.
Under New York law, the doctrine of issue preclusion only applies if (1) the issue in question was actually and necessarily decided in the prior proceeding, and (2) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the first proceeding.
Colon v. Coughlin, 58 F.3d 865, 869 (2d Cir. 1995). Both of these requirements are present here. The very same affirmative defenses of fraud and breach of warranties were argued to Justice Shainswit and rejected, and there is no assertion that defendants were deprived of a fair opportunity to litigate the issue in the State Court Action. Accordingly, defendants are estopped from asserting their first and second affirmative defenses of from arguing that they did not breach the SPA.
III. Enforceable Employment Agreement
Defendants argue that the claims for breach of contract should be dismissed because there was no enforceable employment agreement between defendants and plaintiff. "Under New York law, a contract is unenforceable if the parties did not intend to be bound except by a formal written agreement. This rule holds true even if the parties have orally agreed upon all terms of the proposed contract." Kaplan v. Vincent, 937 F. Supp. 307, 312 (S.D.N.Y. 1996); see also Scheck v. Francis, 26 N.Y.2d 466, 469-70, 311 N.Y.S.2d 841, 260 N.E.2d 493 (1970). In assessing whether the parties intend a formal written agreement to bind them, courts look to the following factors: (1) any expressions of such intent; (2) whether there has been partial performance; (3) whether all terms have been agreed upon leaving nothing else to negotiate; and (4) whether the agreement is of the sort that is usually written. R.G. Group, Inc v. Horn & Hardart Co., 751 F.2d 69, 75-76 (2d Cir. 1984); Kaplan, 937 F. Supp. at 312. "These factors may be shown by oral testimony or by correspondence or other preliminary or partially complete writings." Id. at 313.
Here, each of these factors supports the conclusion that the parties did not intend to be bound until a more definitive employment agreement was negotiated and signed. Of particular significance is the fact that the documents on which plaintiff relies specifically contemplate a written agreement. Thus, the SPA speaks of "an executed employment agreement", SPA P 1.4(a)(ii), and requires FCM-DE to "negotiate in good faith a form of employment agreement" with plaintiff, SPA P 4.1(e). Likewise, the September Offer conditions the offer of employment on "executing a more definitive employment agreement." Under these circumstances, no binding agreement can be found, and defendants are entitled to summary judgment dismissing plaintiff's breach of contract claims. See, e.g., Reprosystem, B.V. v. SCM Corp., 727 F.2d 257, 262 (2d Cir. 1984) (reference to future "definitive agreement" shows intent not to be bound).
IV. Third-Party Beneficiary
The parties cross-move for summary judgment on plaintiff's claim for enforcement of his rights as a third-party beneficiary of the SPA. New York has adopted the Restatement (Second) of Contracts ("Restatement") approach in assessing third-party beneficiary claims. Septembertide Publishing, B.V. v. Stein & Day, Inc., 884 F.2d 675, 679 (2d Cir. 1989). Restatement § 302 provides that only "intended" beneficiaries have enforceable rights under a contract to which they are not a party. Intended and "incidental" beneficiaries are defined as follows:
(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and . . .