The opinion of the court was delivered by: CONNER
Plaintiff Kraft General Foods, Inc. ("Kraft") brings this action against defendants Claudia Cattell, Prographics One of Valhalla, Inc. ("Prographics I"), Prographics II, Joseph DeVito, and John Does 1, 2, 3, 4, and 5, alleging breach of contract, breach of fiduciary duty, unjust enrichment and various acts of common law fraud. The Court has jurisdiction over the action pursuant to 28 U.S.C. § 1332. Plaintiff now moves for partial summary judgment against defendants DeVito and Prographics II with respect to the claims for unjust enrichment, breach of fiduciary duty and common law fraud. For the reasons that follow, plaintiff's motion is denied.
In 1993, plaintiff commenced this action against defendants, alleging that DeVito, graphics designer and owner of design studios Prographics I and II, Cattell, former Senior Design Manager for Kraft, and others had stolen more than $ 6 million dollars from it between 1988 and 1993, through overcharges for graphics designs used in packaging its products, for example on boxes for children's cereals.
In 1995, after discovery in this action was nearly complete, Kraft reported DeVito and Cattell to the Westchester County District Attorney. DeVito was charged with commercial bribery and grand larceny in the first degree and tried in Westchester County Supreme Court. At his trial, DeVito's defense was that he had not bribed Cattell but that she had extorted money from him. Cattell, who had pled guilty to grand larceny in 1996, was the State's principal witness against him. On July 30, 1997, DeVito was acquitted on both counts.
In August 1995, pursuant to a settlement agreement with Cattell, Cattell and the "John Doe" defendants were dismissed from the action. In June 1998, Kraft moved for partial summary judgment against DeVito and Prographics II. The motion was stayed until July 1998, pending transcription of the criminal trial proceedings against DeVito.
Kraft, relying on Cattell's testimony from the criminal proceedings against DeVito, alleges the following. DeVito was the sole provider of graphic design services for its Honeycomb, Alpha-Bits and Pebbles cereals from 1988-1993. Pl.'s Rule 56.1 Stmt. at P 7 (citing Cattell Direct at 406). During this period, DeVito and Cattell engaged in a complex kickback scheme, by which Cattell would set a budget for DeVito's projects based upon her estimate of the amount of work required, and submit these budgets to Kraft product managers for approval. DeVito would then prepare invoices in the amount of the approved budgets. The amounts of the budgets allegedly included an amount that DeVito had agreed to pay Cattell through a shell company called "Creative Pencil" and an amount representing DeVito's overcharge. According to Kraft, DeVito would give Cattell money, through Creative Pencil, in order to secure additional projects from Kraft. See id. at P 12. Cattell did not inform Kraft that the budgets included payments to DeVito and herself. On every project awarded to DeVito, Cattell was paid monies, in most cases between 30-33% of the invoice, for a total of $ 3.2 million over a five-year period. This does not include $ 3 million in profit, id. at P 14, which DeVito made on his work for Kraft and which he used, inter alia, to refurbish his beach house, and to buy a Porsche.
DeVito paints a different version of events. According to DeVito, he paid Cattell money in response to her threats to put him out of business, in order to prevent his companies from going bankrupt, to make payments on his house and to support his wife and child. He claims that gradually, over time, Cattell forced him to become dependent on Kraft's business, and her relationship with Kraft. He offers the following facts in support of his account.
DeVito began providing designs to Kraft in November 1987, after one of its regular designers had broken his nose and could not complete a project for Kraft's "Birds-eye" product line. DeVito Direct at 1694. Cattell approached DeVito with a "rush job" for the Birds-eye product, to be completed over Thanksgiving weekend. Id. Kraft paid DeVito $ 3,000 for the job, and since DeVito had considered it a "nightmare," Cattell promised to "make it up" to him by getting him a project on "Country Time Lemonade." Id. at 1694, 1700. Thereafter, Cattell asked DeVito to meet her to discuss the Country Time job. DeVito met with Cattell, who told him that another company, Biondo Design, had been given Country Time's work, but that she was willing to give him the job. Id. at 1701. According to DeVito, just as soon as he had returned to his studio with the job in hand, Cattell called, directing him to bring the job back, which he did. Id.
Later that year, Cattell invited DeVito to lunch "to talk" and to give him some work. Id. at 1703. Over lunch, Cattell told DeVito that she had "a lot of work" that she could give him. Before agreeing to give him any work, however, Cattell asked him whether he had ever paid anyone money in order to get work. Id. After responding "no," to this question, Cattell said, "great, you're just the person I'm looking for." Id.
The next day, Cattell called DeVito with a "Kool-Aid job," that had become available because her associate, Harry Brooks, was on vacation. DeVito began the job. Two days later, Cattell called him to say that Brooks had returned from vacation and wanted the job back. DeVito returned the job to Kraft. Id.
Cattell then invited DeVito to shoot a job for "California Raisins," another Kraft product. That job had belonged to Joel Bronz Design, but Cattell had taken Bronz off the job, after having had "disagreements" with him. Id. at 1704. After DeVito completed the job, he sent Cattell a bill for his work. Cattell promised to pay DeVito within 30 days, and asked him to "borrow a limousine." Id. at 1705-06. Cattell borrowed the limousine for 4 days and then called DeVito with another job. After DeVito had begun working on this job, Cattell asked him again for the limousine. She also asked to borrow $ 200. Id. at 1706.
Thereafter, Cattell gave DeVito jobs on "Flintstones Fruity and Cocoa Pebbles," other Kraft products. Id. at 1707. Around this time, Cattell became the Senior Design Manager in charge of Kraft's children's cereal division. According to DeVito, whenever he sent Cattell a bill for his work on a cereal box, Cattell "wanted a percentage of . . . . [his] profit." Id. at 1718. In the beginning, she asked for 10% and suggested that he would be off the job and receive no further work, if he did not ...