of Dial's Board of Directors. (Id. at ¶ 32.) The Second Count
alleges that defendants' failure to pay plaintiff's salary,
bonus, and severance payments was a breach of the oral and
written agreements between plaintiff and Dial. (Id. at ¶ 35.)
The Third Count alleges a breach of the implied covenant of good
faith and fair dealing in the Employment Agreement. (Id. at ¶
38.) The Fourth Count of the Complaint alleges detrimental
reliance. (Id. at ¶¶ 41-45.) The Fifth Count alleges fraud.
(Id. at ¶¶ 45-50.) The Sixth Count of the Complaint seeks
recovery under the principle of quantum meruit. (Id. at ¶¶
52-54.) The Seventh Count alleges that defendant Dial was
unjustly enriched. (Id. at ¶¶ 56-59.)
I. Standard of Review
On a motion to dismiss under Rule 12(b)(6), the issue is
"whether claimant is entitled to offer evidence to support
claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683,
40 L.Ed.2d 90 (1974), overruled on other grounds, Davis v.
Scherer, 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984).
The Court must accept all of the well-pleaded facts as true and
consider those facts in the light most favorable to the
plaintiff. See id; Hertz Corp. v. City of New York, 1 F.3d 121,
125 (2d Cir. 1993); In re the AES Corp. Sec. Litig.,
825 F. Supp. 578, 583 (S.D.N.Y. 1993). A complaint should not be
dismissed for failure to state a claim "unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief." Padavan v. United
States, 82 F.3d 23, 26 (2d Cir. 1996) (quoting Hughes v. Rowe,
449 U.S. 5, 10, 101 S.Ct. 173, 66 L.Ed.2d 163 (1980)). Generally,
"[c]onclusory allegations or legal conclusions masquerading as
factual conclusions will not suffice to prevent a motion to
dismiss." 2 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE §
12.34[b] (3d ed. 1997); see also Hirsch v. Arthur Andersen &
Co., 72 F.3d 1085, 1088 (2d Cir. 1995).
In assessing the legal sufficiency of a claim, the Court may
consider not only the facts alleged in the complaint, but also
any document attached as an exhibit to the Complaint or
incorporated by reference. See Fed.R.Civ.P. 10(c); Allen v.
WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991). The
Complaint incorporates by reference the March 1, 1993 Employment
Agreement between plaintiff and Dial; therefore this Court will
consider the agreement in its determination of the motion to
dismiss. This Court will not consider plaintiff's affidavit,
which was submitted with plaintiff's opposition to the motion to
dismiss and was not incorporated by reference in the Complaint.
II. The Oral Agreement
Plaintiff alleges that defendants' "continuous failure to pay
Leroy Thayer's salary and bonus" as required by oral agreements
between plaintiff and Dial constitutes a breach thereof.
(Complt. ¶ 35.) Plaintiff asserts that, by devoting his full time
and effort to Dial, he accepted McDonnell's offer in June 1992 of
a fifty percent (50%) ownership interest in the venture together
with a monthly salary of $10,000 and a bonus of sixty to hundred
percent of plaintiff's annual salary. The terms of this oral
agreement were later modified in conversations between McDonnell,
Thayer and Fitzgerald.
However, the written Employment Agreement concerns the same
subject matter as the alleged oral agreements. A subsequent
contract concerning the same subject matter supersedes the prior
contract. See Independent Energy Corp. v. Trigen Energy Corp.,
944 F. Supp. 1184, 1195 (S.D.N.Y. 1996) (Conner, Senior J.). Even
if the agreements are inconsistent or concern different subject
matter, "a contract that appears complete on its face is an
integrated agreement as a matter of law." Id. at 1196.
The Employment Agreement includes a merger clause:
This Agreement represents the entire agreement
between the parties with respect to Employee's
employment with the Corporation. This Agreement may
not be modified or terminated unless in writing
signed by both parties hereto.
(Employment Agreement ¶ 9(b).)
Where the contract clearly states that it contains the entire
agreement between the parties, claims based on prior
understandings that contradict the plain terms of the written
contract are barred. See Village on Canon v. Bankers Trust Co.,
920 F. Supp. 520, 528 (S.D.N.Y. 1996). In Village on Canon, the
written agreements specified that they contained the entire
agreement between the parties, superseding all prior agreements,
and the court refused to enforce the prior oral agreement. Id.;
see also In re Cromer, 153 B.R. 391, 395 (Bkrtcy.E.D.N.Y. 1993)
("[T]he law is well-settled that a written contract merges all
prior and contemporaneous negotiations on the same subject,
especially where, as here, the contract plainly states that all
agreements are merged and incorporated."). Like the merger clause
in Village on Canon, the merger clause here states that the
Employment Agreement is the entire agreement between the parties
regarding plaintiff's employment. Therefore, plaintiff cannot
state a claim for breach of an oral agreement regarding the terms
of plaintiff's employment.
III. Breach of the Employment Agreement
In Counts One and Two of the Complaint, plaintiff alleges that
defendants breached the written Employment Agreement by: (A)
using improper procedures in the termination of plaintiff's
employment; and (B) failing to pay plaintiff salary, bonus, and
severance as required by the Employment Agreement.
A. Termination Procedures
Plaintiff alleges that the Employment Agreement is ambiguous as
to who may terminate plaintiff's employment with Dial.
Specifically, plaintiff notes that the Employment Agreement
states that the "employee shall report to and be under the
direction of the Corporation's Chief Executive Officer and Board
of Directors," but later states that "the Corporation may at any
time dismiss Employee on written notice. . . ." (Employment
Agreement ¶¶ 1(a), 6.) Plaintiff interprets these provisions of
the Employment Agreement to mean that he could only be removed by
the actions of Dial's Chief Executive Officer and Board of
Directors. Plaintiff argues that because plaintiff was terminated
by written notice from McDonnell, Dial's President, the
Employment Agreement was breached.
Under New York law, the determination of whether a contract
term is ambiguous is a question of law to be determined by the
court. See Independent Energy Corp., 944 F. Supp. at 1191.
"Issues of contract interpretation are generally matters of law
and therefore suitable for disposition on a motion to dismiss."
Marketing/Trademark Consultants, Inc. v. Caterpillar, Inc., No.
98 Civ. 2570, 1999 WL 721954, at *2 (S.D.N.Y. Sept. 16, 1999).
A contractual provision is ambiguous as a matter of law if it
is capable of "more than one meaning when viewed objectively by a
reasonably intelligent person who has examined the context of the
entire integrated agreement and who is cognizant of the customs,
practices, usages and terminology as generally understood in the
particular trade or business." Walk-In Med. Centers, Inc. v.
Breuer Capital Corp., 818 F.2d 260, 263 (2d Cir. 1987)
(citations omitted). In contrast, language that has "a definite
and precise meaning, unattended by danger of misconception in the
purport of the [contract] itself, and concerning which there is
no reasonable basis for a difference in opinion," is unambiguous.
Hunt Ltd. v. Lifschultz Fast Freight,
Inc., 889 F.2d 1274, 1277 (2d Cir. 1989) (citations omitted).
The provision of the Employment Agreement that states that
"Employee shall report to and be under the direction of the
Corporation's Chief Executive Officer and Board of Directors," is
under the subtitle "Employment." Further, it is preceded by the
statement "The Corporation hereby employs Employee . . . and
Employee accepts such employment." (Employment Agreement ¶ 1.) In
the agreement, the "Corporation" is defined as Dial Industrial
Sales, Inc. It is clear that plaintiff was under the direction of
the Board of Directors regarding his employment.
However, the Employment Agreement distinguishes plaintiff's
employment from his termination. In a separate paragraph of the
agreement, subtitled "Termination Without Cause," the agreement
articulates the procedures governing plaintiff's termination.
(Id. at ¶ 6.) This paragraph states that "the Corporation may
at any time dismiss Employee on written notice. . . ." (Id.)
(emphasis added). A reasonably intelligent person, viewing the
Employment Agreement as a whole, would attribute only one meaning
to the agreement. By separating the terms of the agreement
regarding plaintiff's employment from those of his termination,
the parties must have intended to apply different procedures to
each. To interpret the agreement as applying the provisions of
paragraph 1, governing plaintiff's employment, to paragraph 6,
governing termination, would be to add meaning that appears
inconsistent with the intent of the agreement.
Further, the Employment Agreement's statement that "the
Corporation" may dismiss plaintiff is unambiguous as a matter of
law. "It is black-letter law that a corporation can only act
through its officers, directors and employees." Maltz v. Union
Carbide Chemicals & Plastics Co., 992 F. Supp. 286, 305 (S.D.N Y
1998). Therefore, the agreement appears clearly to empower the
Corporation's officers to dismiss plaintiff by written notice.
That is exactly what occurred here: Dial's President, McDonnell,
dismissed plaintiff through written notice. Because the
Employment Agreement is unambiguous as a matter of law and
defendants followed the agreement's procedures for termination,
plaintiff fails to state a claim on the basis that his
termination was a breach of the Employment Agreement.
B. Failure to Pay
Plaintiff also alleges that defendants breach the Employment
Agreement by their "continuous failure to pay Leroy Thayer's
salary and bonus . . . and to pay severance required under the
Employment Agreement." (Complt. ¶ 35.) Here again, the terms of
the Employment Agreement are unambiguous. Under the subtitle
"Compensation," the agreement states:
(a) Salary. . . . Notwithstanding any other
provision of this Agreement, (i) Employee
acknowledges and agrees that Employee's salary shall
accrue, but not be payable, until the Corporation's
Board of Directors determines that the Corporation
has adequate cash flow to pay salaries to its
executive officers and (ii) thereafter accrued salary
shall be payable [sic] to Employee without interest
on a pro-rata basis together with accrued salary
payable to all other executive officers of the
(Employment Agreement ¶ 3(a).)