United States District Court, S.D. New York
June 18, 2004.
JOHN F. DILLON & CO. LLC, Plaintiff
FOREMOST MARITIME CORPORATION, JI MAY NAVIGATION CORPORATION, and TRADIGRAIN SHIPPING, S.A., Defendants.
The opinion of the court was delivered by: SIDNEY STEIN, District Judge
OPINION AND ORDER
John F. Dillon & Co., LLC ("Dillon"), a maritime broker, seeks
$160,913 in unpaid commissions allegedly due it pursuant to a
charter party agreement plaintiff negotiated among defendants
Tradigrain Shipping, S.A. ("Tradigrain"), Foremost Maritime
Corporation ("Foremost"), and Ji May Navigation Corporation ("Ji
May") in 2001. Plaintiff seeks to recover on three causes of
action: 1) breach of contract by Foremost and Ji May, 2) quantum
meruit, and 3) tortious interference by Tradigrain with
contractual relations between Dillon and Foremost. Defendants now
move for summary judgment pursuant to Fed.R.Civ.P. 56 dismissing
all claims. Defendant Foremost's motion is granted because
Foremost acted as an agent for a disclosed principal, Ji May. Ji
May and Tradigrain's motions are granted because this action is
governed by a contract and that contract confers no rights on
plaintiff as to Ji May and Tradigrain.
The facts underlying this motion for summary judgment are
largely undisputed and are taken from the complaint, and the
parties' affidavits and statements made in opposition to and in
support of summary judgment pursuant to Fed.R.Civ.P. 56.1.
Factual disparities are indicated where they appear.
A. The Parties
Plaintiff Dillon is a maritime brokerage company organized and
operating in the state of Connecticut. Defendant Ji May, a
Panamanian corporation, is the owner and operator of the M/V JI
MAY. Defendant Foremost, organized under the laws of the state of
New York, acted as an agent of Ji May by securing charterers for
the M/V JI MAY. Defendant Tradigrain is a Swiss Societe Anonyme
and operates in, and is organized under, the laws of Switzerland
Tradigrain was the charterer of the M/V JI MAY prior to
terminating its involvement in the grain shipping business and
filing for the Swiss equivalent of bankruptcy.
B. The Underlying Charter Party Agreement
On April 12, 2001, plaintiff, acting as a broker, fixed a
charter party agreement between Tradigrain and Foremost
("Tradigrain Charter Party"). (Compl. ¶ 7). That agreement
provided that Tradigrain would charter the M/V JI MAY for a
minimum of thirty-four months and a maximum of thirty-eight
months. (Cardozo Aff., Exh. B, "Charter Party Agreement," Clause
91). The daily rate for hire ranged from $8,500 to $13,000 and
fluctuated based on a calculation of the fifteen day average of
hire rates on four charter routes, as published by the Baltic
Exchange. (Cardozo Aff., Exh. B, "Tradigrain Charter Party,"
Clause 95; Compl. ¶ 8). Dillon was to be paid a 1.25 percent
commission. (Tradigrain Charter Party, Clause 43; Compl. ¶ 9).
The commission is set forth in clause forty-three of the
Tradigrain Charter Party ("Clause 43"): "A commission of 1.25
percent is payable by the Vessel and the Owners to John F. Dillon
& Co., Stamford on hire earned and paid under this Charter, and
also upon any continuation or extension of this Charter." (Id.)
The parties operated in accordance with that agreement until
January 29, 2002, during which time Dillon was paid a 1.25
percent commission on all hire paid. (Ji May Rule 56.1 State. ¶ 33).
C. The Charter Party Agreement Terminates
On March 5, 2002, Farmland Industries, Inc., the parent company
of Tradigrain, publically announced that Tradigrain would be
leaving the grain trading business. (Compl. ¶ 12; Cardozo Aff.,
Exh. C). After learning this fact, all the parties to this action
took steps to ensure that the M/V JI MAY would remain in use
after Tradigrain exited the business. Foremost employees made
inquiries with charterers known to them, and contacted at least
one broker. (Depo. James Chao, 35:19; 37: 17-23). Tradigrain
continued to charter the vessel and participated in the search
for a replacement charterer. (Aff. Ziccardi, Exh. 1, "Aff.
Dillon" ¶ 10).
Dillon also attempted to locate a company willing to substitute
for Tradigrain under the original charter party agreement.
(Compl. ¶ 15). Dillon composed a list of shipping companies it
planned to approach about assuming that contract. (Aff. Kenney,
in Aff. Ziccardi, Exh. 2, ¶ 14). A company called Bunge, S.A. was
on the list Dillon prepared and a Dillon employee, broker Chris
Kenney, telephoned Bunge about the charter party on March 7,
2002. (Id. ¶ 14). The next day, before Kenney placed a follow-up
call to Bunge on behalf of Dillon, he was informed by Piero
Raveno, a Tradigrain employee, that he should "back off" of
Bunge. (Compl. ¶ 17, Aff. Kenney, in Aff. Ziccardi, Exh. 2, ¶
14). Plaintiff alleges that Ravano had certain familial
connections to Bunge and the broker that Bunge worked with,
Ifchor, and therefore hoped to secure commissions for them.
(Compl. ¶ 18, Aff. Kenney in Aff. Ziccardi, Exh. 2, 14-16).
Dillon also claims that in the March 8th conversation, when
Raveno allegedly told Kenney to "back off" of Bunge, he also
assured Dillon that its commission under the April 12, 2001
charter party agreement would be preserved. (Compl. ¶ 17).
Plaintiff claims that this assurance dissuaded it from contacting
Bunge directly, but that Dillon continued to search for a
potential charterer. From March 5th until Dillon learned on March 13th that
a charterer had been found, it continued to work on finding a
replacement. Christopher Kenney testified that Dillon contacted
Armada Shipping and solicited a charter proposal. (Depo. Kenney
107-108; Aff. Ziccardi, Exh. 2 ¶ 19). Armada was prepared to
agree to the terms of the original Tradigrain Charter Party
provided it was extended for six months. (Id.) Plaintiff offers
that proposal to support its position that it did procure a
willing and able party to enter into the charter agreement with
During this period, for reasons unrelated to the search for a
replacement charterer, a Dillon employee met with the Senior Vice
President of Foremost, Michael Lee, on March 11, 2002. (Lee Depo.
84: 15-25). At that meeting they discussed the Tradigrain
situation. (Id., at 85:14-18). Dillon claims that Foremost, at
the time of that meeting, "failed to disclose fully its dealings
with Tradigrain and Bunge." (Plt's Rule 56.1 State., ¶ 14).
Defendants confirm that on March 11, 2002, sometime after the
meeting started, Foremost received an offer from Bunge to charter
the M/V JI MAY. (Foremost Rule 56.1 State., ¶ 16). However,
Dillon employee Christopher Kenney stated that Dillon knew at the
time of that meeting that it did not have the exclusive right to
find a replacement for the charter party agreement. (Depo. Kenney
19-25). Dillon has not alleged that it had presented any
potential charterers to Foremost as of that date.
During the seven days following the March 11 offer, Foremost
and Ifchor, on behalf of their principals, negotiated Bunge's
offer to charter M/V JI MAY. (Foremost Rule 56.1 State., ¶ 18).
On March 13, Tradigrain told Dillon that the M/V JI MAY would be
redelivered to Bunge. (Compl. ¶ 19; Cardozo Decl. Supp.
Tradigrain's Mot. Summ. J. ("Cardozo Decl.," Exh. E)). That same
day, Tradigrain and Foremost also agreed to a termination of the
Tradigrain Charter Party without penalty. (Cardozo Decl. Exh. E &
J, Chao Depo., 135:19-137:6). On March 15, 2002, Michel Roduit, a director of Tradigrain, signed a letter
memorializing an agreement between Tradigrain and Ji May to
"cancel the Charter Party dated 12th of April 2001 . . .
simultaneously without any penalty for either side." (Cardozo
Aff., Exh. E).
Three days later, a charter party was signed between Bunge and
Ji May for the M/V JI MAY ("Bunge Charter Party"). That charter
party resembles the Tradigrain Charter Party. However, it has one
different party Bunge and at least one different term; the
length of hire is twenty-eight to thirty-two months. (Cardozo
Aff., Exh. F). The Bunge Charter Party also specifically provides
in its Clause 43 that commissions shall be paid to Ifchor, not
Dillon. (Id.). Notwithstanding this agreement, plaintiff
contends that the redelivery of the vessel to a new charterer was
governed by the Tradigrain Charter Party of April 12, 2001 that
Dillon brokered and the new charter party was an assignment of
the Tradigrain Charter Party. (Plt.'s Rule 56.1 State., ¶ 19).
Plaintiff alleges that the charter party agreement between
Foremost and Bunge is not a new agreement because its underlying
substance is the same as the original April 12, 2001 charter
party and therefore it is a "direct continuation" of the
Tradigrain Charter Party for which it is due commissions. (Plt's
Rule 56.1 State., ¶ 20).
"A plaintiff who has a cause of action cognizable both under
federal admiralty law and under state law . . . may bring (1) a
federal admiralty action in federal court, (2) an action in state
court, or (3) a diversity action in federal court, assuming the
additional requirements for diversity jurisdiction are met."
Dluhos v. Floating and Abandoned Vessel, Known as New York,
162 F.3d 63, 71, 73 (2d Cir. 1998); Fed.R.Civ.P. 9(h). There is an
exception that requires a plaintiff bringing certain types of in
rem actions to do so pursuant to admiralty law. Id. This is
not such a case.
The plaintiff has brought this action before this Court on
diversity jurisdiction, pursuant to 28 U.S.C. § 1332. The parties
agree that New York substantive law should apply to the claims
asserted and have therefore invoked the right to pursue a common
law remedy, as set forth in 28 U.S.C. § 1333(1). See American
Dredging Co. v. Miller, 510 U.S. 443, 446-47 (1994). Plaintiff
has satisfied the statutory prerequisites to establishing
diversity jurisdiction pursuant to 18 U.S.C. § 1332 because
plaintiff and defendants do not reside in the same state, and the
amount in controversy exceeds $75,000. See 28 U.S.C. § 1332.
Therefore, subject matter jurisdiction over this action is
established pursuant to diversity jurisdiction, and New York
state substantive law shall provide the decisional law of the
B. Summary Judgment Standard
Summary judgment may be granted "only when the moving party
demonstrates that `there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a
matter of law.'" Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir.
1995) (quoting Fed.R.Civ.P. 56(c)); accord Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). The Court must view "all
facts in the light most favorable to plaintiff and resolve all
factual disputes in plaintiff's favor." Mandell v. The County of
Suffolk, 316 F.3d 368, 374 (2d Cir. 2003). "To overcome such a
motion, the nonmoving party must offer sufficient proof to allow
a reasonable factfinder to decide in its favor." Mandell, 316
F.3d at 377. Hence, the Court may grant summary judgment only
when "`no reasonable trier of fact could find in favor of the
non-moving party.'" Allen, 64 F.3d at 79 (quoting Lund's
Inc. v. Chem. Bank, 870 F.2d 840, 844 (2d Cir. 1989)). C. Foremost Is Entitled to Summary Judgment Because It Acted
as Agent for the Ji May Corporation
Common law principles of agency govern this action. Getty Oil
Co. v. Norse Mgmt. Co. (PTE) Ltd., 711 F. Supp. 175, 177
(S.D.N.Y. 1989) (citations omitted). Pursuant to New York law, a
party who signs a contract in his capacity as agent for a
disclosed principal, within the authority delegated to him by
that principal, is not primarily liable for damages caused by a
breach of the contract. O'Sullivan v. Hardy Machinery Corp.,
No. Civ. 7375, 1993 WL 190342, at *3 (S.D.N.Y. June 2, 1993)
(citing Seguros Banvenez, S.A. v. S/S Oliver Drescher,
761 F.2d 855, 860 (2d Cir. 1985); Ariel Mar. Group., Inc. v. Zust
Bachmeier of Switz., Inc., 762 F. Supp. 55, 59 (S.D.N.Y. 1991)).
Foremost signed the charter party agreement with Tradigrain on
April 12, 2001 in its capacity as agent for the owners of the M/V
JI MAY. On the first page of the charter party, where the parties
are listed, Foremost appears as "Foremost Maritime Corporation as
Managing Agents to Owners of the vessel described below."
(emphasis in original) (Decl. Cardozo, Exh. B; Compl. ¶ 7).
Formost signed the contract as an agent: the signature line reads
"Foremost Maritime Corporation as agents" above the signature of
Foremost's president. As in O'Sullivan, because Foremost signed
as agent, this notifies all parties that Foremost is not acting
for itself. 1993 WL 190342, at *3; Fireman's Fund McGee Marine
v. M/V Caroline, No. 02 Civ. 6188, 2004 WL 287663, at *2-3
(S.D.N.Y. Feb. 11, 2004).
Moreover, Foremost signed as an agent for a disclosed
principal. A principal is "disclosed" if "at the time of a
transaction conducted by the agent, the other party thereto has
notice that the agent is acting for a principal and of the
principal's identity, the principal is disclosed." Hidden Brook
Air, Inc. v. Thabet Aviation Int'l Inc., 241 F. Supp.2d 246,
265 (S.D.N.Y. 2002) (citing Restatement (Second) of Agency § 4(a)
(1958)). In maritime contracts, "the identification of the
principal as `the owner of the vessel' is sufficient indication
to alert the opposing party to the principal's name; once the
vessel is named, it is a simple matter to discover who owns the
vessel by consulting industry publications. O'Sullivan, 1993 WL
190342, at *4; (citing Getty Oil Co., 711 F. Supp. at 177.
Dillon has claimed alternatively that both Ji May Corp. and
Foremost are liable as the owners of the M/V JI MAY at the time
the charter party was signed. (Compl. ¶ 4; Plt.'s
Rule 56.1 State.). Plaintiff further suggests that the Ji May corporation
was formed sometime after Foremost signed the charter party as
agent for the ship's owner in 2001. (Plt's Mem. Opp. Foremost's
Summ. J. Mot., p. 2; Aff. Ziccardi, Exh. 2, ¶ 5). If Foremost
were in fact the owner of the ship, Foremost would be liable
under the charter party agreement as the disclosed principal.
However, plaintiff has offered nothing more than an unsupported
allegation that Ji May did not exist at the time the charter
party was formed and therefore Foremost was acting for itself,
not as an agent. Foremost has offered proof of the 1999 date of
incorporation of Ji May in response. (Reply Aff. Michael Lee, ¶
4, Exh. 1 "Ji May's Certificate of Incorporation"). At the
summary judgment phase, the non-moving party must offer
sufficient evidence on a factual dispute to allow a reasonable
finder of fact to find in its favor. Mandell, 316 F.3d at 377.
Plaintiff has not provided sufficient proof indeed, it has
offered no proof to allow a reasonable finder of fact to find
that Ji May was not the disclosed principal and owner of the ship
named in the charter party agreement.
Because Ji May was the principal and Foremost its agent in
executing the Tradigrain Charter Party, Foremost is not liable
for any damages resulting from a breach of that contract and
Foremost's motion for summary judgment dismissing Dillon's first
cause of action is granted. Additionally, Foremost's motion for summary judgment in its favor
on plaintiff's second cause of action based on quantum meruit is
granted. Any enrichment that resulted from the contract or the
breach of the contract flowed to the principal, not the agent.
See e.g. Kagan v. K-Tel Entm't, Inc., 172 A.D.2d 375, 376,
568 N.Y.S.2d 756 (1st Dep't 1991) ("It is not enough that the
defendant received a benefit from the activities of the plaintiff
. . . if services were performed at the behest of someone other
than the defendant, the plaintiff must look to that person for
D. Breach of Contract Claims
1. Clause 43 of the Tradigrain Charter Party Entitles Dillon
to Hire "Earned and Paid" Pursuant to this Charter Only
Dillon's right to payment flows from Clause 43 of the
Tradigrain Charter Party, which states that Dillon will receive
1.25 percent of "hire earned and paid, and also upon any
continuation or extension of this Charter." Language identical to
that of Clause 43 has been interpreted to mean that a broker is
entitled only to a portion of hire actually earned, and not to
any sums paid pursuant to the contract if they are not for hire
earned. Global Mar. Leasing Panama, Inc. v. M/S North Breeze,
349 F. Supp. 779, 784 (D.R.I. 1972) (citing B.W. Lougheed & Co.
Ltd. v. Yone Suzuki, 216 A.D. 487, 215 N.Y.S. 505 (1st Dep't
1926)); see also Tankers Int'l Navigation Corp., v. Nat'l
Shipping & Trading Corp., 116 A.D.2d 40, 499 N.Y.S.2d 697 (1st
Dep't 1986). When the contract payments are interrupted either by
termination of the contract or by unilateral breach, the broker
is not entitled to be paid a commission. B.W. Lougheed & Co.
215 N.Y.S. 505, 509-10 (broker entitled to a commission on
"monthly payment of hire" not entitled to a commission where hire
was not paid because vessel was not timely delivered by owner). Moreover, the broker is not entitled to
commission on sums paid in settlement of the contract. Takers
Int'l Navigation Corp., 116 A.D.2d 40.
Arguably, Kane v. Neptune Shipping Ltd., 274 A.D. 28,
79 N.Y.S.2d 396 (1st Dep't 1948), established a doctrine of
"equivalent performance." Following that case, some courts
suggest that when a contract providing for a broker's commission
is breached or a condition of the contract is not satisfied, but
the party owing the compensation to the broker is put in the same
or better position than if the contract had been performed, then
the broker is owed compensation. See, e.g. E.B. Harper & Co.,
Inc. v. Nortek, Inc. 104 F.3d 913 (7th Cir. 1997). In
Kane, a broker was entitled to commission where a charterer
remained obliged on the original contract but sub-contracted
performance to another party. However, that doctrine does not
apply when the contract is terminated and a new contract is
entered into for the mitigation of damages flowing from that
termination. See Tankers Int'l Navigation Corp., 499 N.Y.S.2d
at 698; H. Edwin Anderson, III, Shipbrokers' Commissions:
Entitlement, Standing, and Jurisdiction, 24 Tul. Mar. L.J. 55,
at 63 (1999). Although Ji May ultimately suffered no harm in lost
charter fees, Foremost and Ji May did agree to terminate the
Tradigrain Charter Party and find a replacement charterer. Where
a charter party agreement is prematurely terminated and a new one
established, the doctrine of equivalent performance does not
apply. See eg. Parsons v. Wales Shipping Co., Ltd., No. 84
Civ. 8432, 1986 WL 10282 (S.D.N.Y. 1986). Thus, this case is
distinguishable from Kane, where the original contract still
governed both contracting parties, but one of those parties
subcontracted its obligations and profited from that subcontract.
Under the explicit terms of the Tradigrain Charter Party,
Dillon was only entitled to 1.25 percent of the hire earned and
paid on the charter, or any extension of that charter. As hire
was only earned and paid pursuant to the Tradigrain Charter Party
through March 19, 2002, Dillon is not entitled to any further
payment under the terms of that contract, unless it was extended
and hire continued to be earned and paid.
2. The Charter Party Was Terminated, Not Breached
Dillon has not claimed that the Tradigrain Charter Party itself
was breached and does not dispute defendants' contention that it
was terminated for legitimate business purposes; namely,
Tradigrain was "winding up its operations" and exiting the
business. (Plt.'s Rule 56.1 State., ¶ 4; Tradigrain
Rule 56.1 State., p. 3). Thus, the plain language of the Tradigrain Charter
Party does not entitle Dillon to commissions as no further hire
was paid after the termination of the contract. However, Dillon
has said that Foremost breached the "implied covenant of good
faith and fair dealing" inherent in every contract, Aventine
Inv. Mgmt. v. Canadian Imperial Bank of Commerce, 265 A.D.2d 513,
513-514, 697 N.Y.S.2d 128 (2d Dep't 1999), and therefore
should be liable for resulting damages to Dillon.
"The implied covenant of good faith encompasses any promises
which a reasonable person in the position of the promisee would
be justified in understanding were included in the agreement, and
prohibits either party from doing anything which will have the
effect of destroying or injuring the right of the other party to
receive the fruits of the contract." 1-10 Indus. Assoc. LLC v.
Trim Corp. of Am., 297 A.D.2d 630, 631, 747 N.Y.S.2d 29 (2d
Dep't 2002) (citations and internal quotation marks omitted)).
However, the implied covenant of good faith and fair dealing does
not add any new obligations to the underlying contract. See
Don King Prods. Inc. v. Douglas, 742 F. Supp. 741, 767
(S.D.N.Y. 1990) ("The implied covenant does not . . . operate to
create new contractual rights."). Moreover, no party has an
ongoing obligation to preserve the broker's commission. See Spero v. Kobler,
245 A.D. 643, 646, 283 N.Y.S. 791 (1st Dep't 1935) ("[W]hen the
condition on which the plaintiff's right to compensation had
failed, the defendant was at liberty to consult his own interest
in determining what adjustment to make with the purchaser."). The
implied covenant "does not extend so far as to undermine a
party's general right to act on its own interests in a way that
may incidentally lessen the other party's anticipated fruits from
the contract." M/A-COM Sec. Corp. v. Galesi, 904 F.2d 134, 136
(2d Cir. 1990). Thus, Foremost had no contractual obligation to
protect Dillon's commission after the termination of the contract
and Foremost had only an implied contractual obligation not to
act fraudulently or in bad faith to deprive Dillon of the
benefits due it under the contract. 1-10 Indus. Assoc., 297
A.D.2d at 631.
Plaintiff alleges that Foremost engaged in several incidents of
"bad faith" behavior. First, Dillon alleges that it was bad faith
for Foremost to complete a charter agreement with Bunge without
considering a similar proposal submitted by Armada Shipping, with
Dillon as the broker. (Plt.'s Mem. in Opp. to Ji May Corp.'s Mot.
Summ. J. p. 21; Plt. Rule 56.1 State. ¶ 13). Here, Dillon seeks
to draw an inference of Foremost's bad faith from the fact that
it accepted Bunge as a charterer when Dillon had presented Armada
as a potential charterer. However, Dillon has indicated that
Armada was not willing to accept Foremost's time restrictions. In
addition, Dillon has not even alleged that it presented Armada to
Foremost before Foremost accepted Bunge as a charterer. Thus,
Dillon has not provided any evidence to show that Foremost
rejected an acceptable charterer introduced by Dillon. Instead,
the evidence indicates that Foremost accepted a charterer
presented by Ifchor to serve its own interests, as it is
permitted to do. See M/A-COM Security Corp. v. Galesi, 904
F.2d at 136. Second, Dillon claims that Foremost acted in bad faith by
allowing Tradigrain or Bunge to approach Foremost with Ifchor as
their broker because "both Foremost and Tradigrain knew that
Dillon had been blocked from contacting Bunge." (Plt.'s
Rule 56.1 State., ¶ 12). Third, Dillon contends that Foremost acted in bad
faith when Angela Chao, a Foremost employee, told Tradigrain that
Foremost was not constrained to entering a charter party with
Dillon as the broker. (Plt.'s Mem. in Opp. to Ji May Corp.'s Mot.
Summ. J. p. 20). Plaintiff's second and third claims of bad faith
behavior amount to an assertion that Ji May and Foremost violated
an ongoing obligation to protect Dillon's commission after the
Tradigrain Charter Party was terminated. There is no such
obligation contained in the terms of the contract, and no such
terms can be implied. Don King Prods., 742 F. Supp. at 767.
Nothing cited by the parties indicates that Foremost was obliged
to use Dillon as the agent for fixing a new charter. Plaintiff
has not alleged that Foremost acted to prevent Dillon from
securing a charterer. Instead, Foremost gave Dillon a
non-exclusive opportunity to replace Tradigrain in the charter
party, (Foremost and Ji May Rule 56.1 State., ¶¶ 11-14; Plt.'s
Rule 56.1 State.), but ultimately accepted a charterer presented
by a different broker. Therefore, Dillon has not adequately
alleged that Foremost acted in bad faith by entertaining offers
from other brokers, by accepting an offer from another broker,
and by refusing to pay Dillon under the new Bunge Charter Party.
Fourth, Dillon asserts that Foremost acted in bad faith by
leading Dillon to believe, on March 11, 2002, that Dillon would
be the broker to find a replacement charterer when Foremost had
already all but concluded negotiations with Bunge to replace
Tradigrain. (Plt.'s Mem. in Opp. to Ji May's Mot. Summ. J. p. 20,
Plt. Rule 56.1 State. ¶ 14). Dillon bases this allegation on a
"recap" agreement faxed to Foremost by Bunge on the afternoon of
March 11. Dillon also asserts that Foremost prevented Dillon from procuring a
replacement charterer by concealing the fact that substantial
progress had been made on that agreement between Bunge and
Foremost at the time of the March 11 meeting. Dillon only makes
conclusory allegations to support its inference that Foremost
acted in bad faith in failing to keep Dillon abreast of its
negotiations with other charterers through other brokers.
Foremost was entitled to consult its own best interest in
considering offers from different sources, even if that operated
to the detriment of Foremost. M/A-COM Security Corp. v. Galesi,
904 F.2d at 136. There is no allegation that Foremost acted with
the intention to deprive Dillon of a commission, rather than to
serve its own interest by consulting multiple brokers.
Finally, Dillon alleges that Foremost knew it had some
liability to pay Dillon's commission based on the conditional
assignment of that duty to Tradigrain in the agreement
terminating the Tradigrain Charter Party, which states "brokerage
compensation, if any, to be for Tradigrain's account." (Lee Aff.
Exh. 6). Plaintiff alleges bad faith by Foremost because the
clause indicates that Foremost knew it might owe commission
payments to Dillon and nonetheless was willing to terminate the
contract in order to secure a replacement charterer. Again, even
assuming that Foremost did prioritize the need to find a
charterer over its legal concerns about any on-going obligations
to pay commissions, that at most indicates that Foremost acted
out of a desire to protect its own financial situation, and not
out of bad faith to injure Dillon. Foremost was entitled to
protect its own interests in pursuing the formation of a new
charter party. M/A-COM Security Corp., 904 F.2d at 136.
Therefore, neither Ji May Corp. nor Foremost is liable to Dillon
for commissions based on the Tradigrain Charter Party or the
termination of that contract because none of the allegations set
forth by Dillon, if proven, would amount to a breach of the covenant of good faith and fair
3. The Tradigrain Charter Party Was Not Assigned to Bunge
Plaintiff contends that it is entitled to be paid commission
pursuant to Clause 43 because the Bunge Charter Party is an
assignment to Bunge of Tradigrain's responsibilities under the
Tradigrain Charter Party, or that it is a fraudulently disguised
assignment presented as a new contract.
The Bunge Charter Party is not an assignment of the Tradigrain
Charter Party because there is no indication that Tradigrain
assigned its rights and obligations to Bunge. "The requisite
manifestation of a present intent to transfer the right may be
accomplished in writing, orally or by conduct, but such
manifestation must be sufficient to show a perfected transaction
between the parties." In re Int'l Eng'rs, Inc., 812 F.2d 78, 80
(2d Cir. 1987) (citing Miller v. Wells Fargo Bank Int'l Corp.,
540 F.2d 548, 557-58 (2d Cir. 1976).
Plaintiff offers no evidence to support the theory that the
contract is an assignment, except for the allegation that
Foremost wanted a "back-to-back" contract to cover their losses,
and that Tradigrain sought to "wash out" all of its contractual
obligations before it exited the business. (Plt.'s
Rule 56.1 State.; Compl. ¶ 14)). Foremost and Tradigrain's statements about
what type of replacement charterer they hoped to secure for the
M/V JI MAY is not sufficient to allow a reasonable jury to find
that the Bunge Charter Party was in fact an assignment. See
Miller v. Wells Fargo, 540 F.2d at 557-58. There is no evidence
to indicate that Bunge sought to replace Tradigrain in the
charter party as an assignee, nor is there evidence of any
contractual dealings between Bunge and Tradigrain. Moreover,
defendants have shown that there was a formal termination of the
Tradigrain Charter Party and then a second document creating a
new contract between Bunge and Foremost. The Tradigrain Charter Party
was not an assignment.
3. The Bunge Charter Party Does Not Entitle Dillon to
Commissions Merely Because It Is Similar to the Tradigrain
Dillon contends that the Bunge Charter Party was a continuation
or extension of the Tradigrain Charter Party within the meaning
of Clause 43 of that charter party because the second charter
party was not the product of serious negotiations and contained
many of the same terms as the previous charter party. (Plt.'s
Rule 56.1 State.). As proof that the contract is an extension or
continuation, plaintiff offers the fact that the Bunge Charter
Party was negotiated in only a week, while the Tradigrain Charter
Party negotiations continued over many months. Additionally,
plaintiff points out that the Foremost/Bunge contract is
identical to the Foremost/Tradigrain agreement in all significant
terms, including the price and length of hire. (Aff. Kenney, in
Aff. Ziccardi, Exh. 2, ¶ 20.). Based on these allegations,
plaintiff seeks the commission that the Tradigrain Charter Party
provides on any "continuation" or "extension" of the contract.
Defendants respond that the charter party was not the same, but
that the arrangement was negotiated more quickly than the April
12, 2001 agreement for various reasons, including that the
previous agreement was used as a model. (Reply Aff. Lee, ¶ 9). A
series of emails discussing the terms of the charter constitute
evidence of genuine negotiations between Bunge and Foremost.
(Aff. Lee, Exh. 6).
In the case where a contract provides for commission to a
broker upon extension or renewal, and a second contract is
subsequently made between the parties to the previous contract,
New York real estate law provides a context to analyze whether a
broker is entitled to a commission. New York law provides that "before the lessor is
obligated to pay  commissions, the renewal must be for the same
term and the same rent as the original lease, or the new lease
must have been the result of services performed by the broker."
Stern v. Satra Corp., 539 F.2d 1305, 1310 (2d Cir. 1976)
(noting that when the contract is not for real estate services,
"any renewal" is not limited to "carbon copies" and "absurdly
harsh" results are rejected) (citing Eastern Assoc., Inc. v.
Sarubin, 274 Md. 378, 336 A.2d 765, 770 (1975); Allwin Realty
Co. v. Barth, 161 A.D. 568, 146 N.Y.S. 960 (1st Dep't 1914).
Here, the new lease is for the same rent as the old lease, but
not for the same term. Moreover, the new lease is not the result
of services performed by Dillon because Tradigrain and Ifchor,
not Dillon, introduced the parties. Therefore, the Bunge Charter
Party is not a "renewal" of the original contract.
Dillon has not presented anything beyond conclusory allegations
to show that the Bunge Charter Party is an extension of the
previous charter party. The mere fact that the Bunge Charter
Party uses a pricing scheme employed in the Tradigrain Charter
Party is not sufficient to establish that this contract is an
extension of the previous one. In Parsons, Inc. v. Wales
Shipping Company, Ltd., 1986 WL 10282, the plaintiff broker with
a commission clause very similar to Clause 43 in this case sued
for commissions due on the theory that a charter party had been
extended, not terminated. In that case, a charter party had been
cancelled when the ship was sold to a new owner. The new owner
then negotiated a charter contract with the party who had
previously chartered the ship from the previous owner, but the
parties were introduced by different brokers. The district court
held that where the plaintiff broker had not participated in the
second charter party, that broker was not entitled to a
commission because the previous contract had not been "extended."
Id. at *2. In making that finding, the court emphasized the fact that the parties and certain terms were different. The court
noted that the "most significant term and the essence of a time
charter party: the rate of hire" had been changed. Id.
While the rate of hire in the Bunge Charter Party is the same
as the hire in the Tradigrain Charter Party, that alone is not
enough to show that it is an extension. The emails discussing the
formation of the charter party show that genuine negotiations
occurred between Bunge and Foremost. Moreover, the terms differ
in that the parties to the contracts are different than the
parties to the first contract, and plaintiff was not involved in
negotiating the contract between Bunge and Foremost, nor did
Dillon introduce Bunge to Foremost. In fact, as the contract was
being negotiated, Dillon was working to procure the charter party
agreement for a competitor, Armada.
Dillon has no right to be compensated on a contract it did not
negotiate when it did not introduce the parties, and where that
contract is the product of negotiation and has different terms
than the previous contract on which Dillon did have the right to
D. Plaintiff Has Not Shown Tortious Interference with
In Count Three of the complaint, plaintiff claims that
Tradigrain is liable for harms suffered by Dillon in lost
commissions due to tortious interference by Tradigrain with the
contractual relations of Dillon and Foremost. In order to state a
claim for tortious interference with contractual relations under
New York law, a plaintiff must show "(1) the existence of a valid
contract between the plaintiff and a third party, (2) the
defendant's knowledge of that contract, (3) the defendant's
intentional procurement of the third party's breach without
justification, (4) breach, and (5) damages." America Online
Latino v. Am. Online, Inc., 250 F. Supp.2d 351, 361 (S.D.N.Y.
2003); see also Murray v. SYSCO Corp., 273 A.D.2d 760, 710 N.Y.S.2d 179 (3 Dep't 2000).
(1) Existence of a Valid Contract Between Plaintiff and a Third
Dillon asserts that there was a separate contract for the
commissions to be paid to Dillon by Ji May contained within
Clause 43 of the charter party, and that the commissions would
have continued over into the assignment and extension of the
Tradigrain Charter Party absent Tradigrain's actions. (Compl. ¶
40). Dillon alleges that Tradigrain "deliberately structured the
Foremost-Bunge agreement as a new charterparty for Tradigrain's
self-interest and for the specific purpose of diverting the
commissions due . . ." (Compl. ¶ 41), even though it does not
allege that Tradigrain had any role to play in forming the
Foremost-Bunge agreement. Dillon provides no decisional law or
contractual language to support its assertion that the clause
providing for commissions was somehow severable from the
Tradigrain Charter Party and there is no evidence of a separate
agreement between Dillon and Foremost that would survive the
termination of the charter party. Moreover, Dillon had no
performance due under that contract and there is no independent
consideration for the clause. See e.g. F& K Supply Inc. v.
Willowbrook Dev. Co., 288 A.D.2d 713, 732 N.Y.S.2d 734, 2001
N.Y. Slip Op. 09321 (3 Dep't 2001). Because there is no separate
clause for commissions that establishes a separate ongoing
contractual relationship between Dillon and Foremost, Dillon must
assert this action as a third party beneficiary to the Tradigrain
Charter Party. Thus, this cause of actions fails because
Tradigrain was a party to the Tradigrain Charter Party, including
the obligations set forth in Clause 43, and a party "cannot
tortiously interfere with its own contract." Klein v. Jostens,
Inc., No. 83 Civ. 5351, 1985 WL 1865, at *2 (S.D.N.Y. 1985). (2) Breach of the Underlying Contract
A claim of tortious interference with contractual relations
cannot be brought unless there is in fact a breach of the
underlying contract between the plaintiff and a third party.
Here, as discussed above, there was no breach of the Tradigrain
Even if plaintiff could claim that there was a separate
contract for commissions between Dillon and Foremost, and that
contract would have survived had it not been breached, plaintiff
cannot show that Tradigrain "intentional[ly] procure[d] the third
party's breach without justification." America Online Latino,
250 F. Supp.2d at 361.
However, "a tortious interference with contract claim must
plead that a defendant used `wrongful means' to induce the third
party to breach the contract." Brown v. AXA RE, No. 02 Civ.
10138, 2004 WL 941959, at *6 (S.D.N.Y. May 3, 2004) (quoting
Wolff v. Rare Medium Inc., No. 01 Civ. 4279, 2001 WL 1448476,
at *3 (S.D.N.Y. Nov. 15, 2001)). This has been defined to include
"physical violence, fraud, or misrepresentation, civil suits and
criminal prosecutions, and some degrees of economic pressure;
they do not, however, include persuasion alone although it is
knowingly directed at interference with the contract." Id.
(quoting Guard-Life Corp. v. S. Parker Mfg. Corp., 50 N.Y.2d 183,
191, 406 N.E.2d 445, 449, 428 N.Y.S.2d 628, 632 (1980)).
See Ivy Mar Co., Inc. v. C.R. Seasons Ltd., No. 95 Civ. 0508,
1998 WL 704112, at * 16 (E.D.N.Y. Oct. 7, 1998) (citing Wedeen
v. Cooper, No. 97 Civ. 8621, 1998 WL 391117, at *3 (S.D.N.Y.
July 24, 1998)).
Dillon has not alleged that Tradigrain took any actions
wrongful or otherwise to promote Ifchor as the broker on the
Bunge Charter Party or to interfere with Dillon's right to earn
commissions. (Tradigrain Rule 56.1 State., ¶ 17). The only action
Dillon sets forth beyond the conclusory statement that Tradigrain "deliberately structured the
charter party . . . for the purpose of diverting commissions"
(Compl. ¶ 40), is that Tradigrain introduced Bunge and Foremost
through Ifchor to "foster the personal economic interests of a
family network . . .". (Plt. Mem. Opp. Tradigrain's Summ. J. Mot.
p. 16). The most specific action alleged to support the
allegation misconduct against Tradigrain is that Raveno warned
Dillon to "back off" of Bunge, but Dillon has not alleged that
Tradigrain acted fraudulently or illegally. Dillon has not
provided sufficient proof to allow a reasonable finder of fact to
find that Tradigrain's actions were not taken for economic
reasons, nor has it provided sufficient proof to show that
Tradigrain acted with malice or fraudulent intent, or by illegal
means. Mandell, 316 F.3d at 377.
For the reasons set forth above, plaintiff's claim for tortious
interference with contractual relations against Tradigrain is
E. Unjust Enrichment and Quantum Meruit
Dillon cannot claim recovery in quantum meruit based on the
Tradigrain Charter Party. This is because a valid contract
"governing a particular subject matter ordinarily precludes
recovery in quasi contract for events arising out of the same
subject matter." Integral Control Sys Corp. v. Consol. Edison
Co. of New York, 990 F. Supp. 295, 303 (S.D.N.Y. 1998); see
also Stissi v. Interstate & Ocean Transp. Co. of Phila.,
814 F.2d 848, 851 (2d Cir. 1987). Because Dillon was entitled to a
commission on the hire paid under the Tradigrain Charter Party,
it cannot now claim that it is entitled to some other
compensation for the effort spent in arranging that contract.
As an initial matter, Dillon has no right to a commission
earned and paid on the Bunge Charter Party because the Bunge
Charter Party is not the result of its work. A broker is only to
be compensated where he "bring the minds of the buyer and seller
to an agreement for a sale, and the price and terms on which it is to be made, and until that is
done his right to commissions does not accrue." Sibbald v.
Bethlehem Iron Co., 83 N.Y. 378, 384, 38 Am. Rep. 441 (1881).
Moreover, a "broker is never entitled to commissions for
unsuccessful efforts"; and "if he fails, if without effecting an
agreement or accomplishing a bargain, he abandons the effort, or
his authority is fairly and in good faith terminated, he gains no
right to commissions." Id. Thus, brokers are not entitled to
reimbursement for the value of their efforts to secure a contract
unless the parties have specifically agreed otherwise. See
e.g., Sibbald v. Bethlehem Iron Co., 83 N.Y. 378 (1881).
The deposition testimony is clear that Dillon was aware that it
was not the exclusive broker working to replace Tradigrain in the
Tradigrain Charter Party. Dillon understood that other parties
were involved in the search for a new charterer. Because Dillon
did not believe that it was the only broker, it cannot claim that
an oral contract gave rise to some obligation on the part of
Foremost to reimburse or compensate Dillon's efforts to find a
suitable replacement charterer. (Depo. Kenney at 19-25). As long
as the principal acts in good faith, and does not act solely to
avoid the payment of commissions, a broker is not entitled to any
payment when negotiations break down, or when the broker fails to
secure a buyer. Sibbald v. Bethlehem Iron Co., 83 N.Y. 378
Plaintiff's contention that it is entitled to payment on the
Bunge Charter Party also rises from the fact that the paperwork
used to fix Bunge to the Foremost vessel is substantially similar
to the contract used in the Tradigrain Charter Party. Dillon, in
essence, claims that if the contract is not an assignment, it is
at least plagiarized and Dillon constructed the contract. No
legal principle cited by plaintiff entitles the drafter of a
contract to a percentage of every contract made subsequently using that contract as a form or model.
Because Dillon was not involved in negotiating the Bunge
Charter Party, Dillon has no claim in quantum meruit to profit
from the resulting contract.
For the reasons set forth above, the motions for summary
judgment of defendants Foremost, Tradigrain, and Ji May are
granted. The Clerk of Court is directed to enter judgment
dismissing the complaint.
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