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United States District Court, N.D. New York

July 6, 2004.

JOSEPH F. CREAN, Plaintiff,
CP KELCO, Defendant.

The opinion of the court was delivered by: FREDERICK SCULLIN, Chief Judge, District



  On December 12, 2002, Plaintiff filed a complaint alleging that Defendant breached an employment contract it had with him. On February 27, 2003, Defendant filed two counterclaims seeking monetary damages for unjust enrichment and for breach of the same contract. Presently before the Court is Defendant's motion for summary judgment.


  Plaintiff, a resident of Edinburg, New York, founded a business consulting firm in 1994. In late 2000 and early 2001, he commenced negotiations to begin working as a full-time employee for Defendant, a relatively new company formed as the result of a merger between Hercules Inc. and Monsanto Co. According to Plaintiff, he did not approach Defendant. Rather, Harry Tucci, who was then Defendant's President and CEO, solicited him as a potential employee.

  On May 21, 2001, Mr. Tucci sent Plaintiff a letter agreement which outlined the terms of an offer for a senior vice president position.*fn1 The letter agreement, which had a signature line that Plaintiff signed, also referred to a contract, which Mr. Tucci stated that he would send at a later date.

  Plaintiff, who was living in Upstate New York during the negotiation period, accepted Defendant's offer and began planning to relocate permanently to Defendant's offices in Wilmington, Delaware. He began work on June 25, 2001, and Mr. Tucci left Defendant's employ very shortly thereafter. Plaintiff contends that, within a few days of his arrival, several executives, including John Falcetta, Senior Vice President of Human Resources, and Robert Toth, the new President, implied or directly stated that they no longer needed Plaintiff's services but believed that his employment contract was binding. According to Plaintiff, the executives then began an organized campaign to discredit his work, demote him, and eventually force him out of the company. Plaintiff resigned on August 22, 2001.

  After Plaintiff filed suit, Defendant asserted two counterclaims. Defendant counterclaimed on a theory of unjust enrichment for the return of $10,000.00, which it had paid to Plaintiff to cover his expenses in moving from New York to the Philadelphia area. Defendant also counterclaimed in the amount of $49,601.97 for breach of contract, contending that Plaintiff "forfeited his salary and other compensation received during the period of his employment." See Defendant's Answer and Counterclaims at ¶¶ 65-71.


  A. Summary Judgment Standard

  A court should grant a motion for summary judgment only if "there is no genuine issue as to any material fact and when, based upon facts not in dispute, the moving party is entitled to judgment as a matter of law." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir. 1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). In making this determination, the court must resolve all ambiguities and draw all reasonable inferences in a light most favorable to the non — moving party. See id. (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam)).

  With these standards in mind, the Court will address each of Plaintiff's claims.

  B. Existence of a Contract Between the Parties*fn2

  New York courts consider several factors in deciding whether a preliminary agreement binds the parties to the agreement, including whether one party has expressly reserved the right not to be bound in the absence of a writing, whether the parties have partially performed a contract, whether the parties have agreed to all the terms of a potential contract, and whether contracting parties would customarily commit that particular type of contract to writing. See Adjustrite Sys., Inc. v. GAB Bus. Servs., Inc., 145 F.3d 543, 549 (2d Cir. 1998) (quotation and other citation omitted). These factors help courts to determine whether the parties to the preliminary agreement intended that the agreement would bind them, which is necessary for the formation of a contract. See id. With regard to employment contracts, the parties can create a contract with relatively little formality; the contract need only contain "all of the essential terms of the contract — the parties to it, the position that plaintiff was to assume, [and] the salary that he was to receive. . . ." Crabtree v. Elizabeth Arden Sales Corp., 305 N.Y. 48, 54 (1953) (citations omitted).

  With regard to the specific terms of an employment contract, although New York law presumes at-will employment, a party can overcome this presumption with facts that show that the parties to the contract intended to create a term employment contract. See TSR Consulting Servs., Inc. v. Steinhouse, 267 A.D.2d 25, 26-27 (1st Dep't 1999) (citations omitted).

  Defendant contends that the parties never actually executed any contract. As support for its assertion, Defendant offers the text of the letter agreement, which states "You will also receive an employment contract for three years that will protect you from termination without cause at your annual salary and set forth the specific terms of your employment." See Defendant's Memorandum of Law at 9; see also Exhibit "B" to Plaintiff's Memorandum of Law. Defendant contends that Plaintiff has not provided any evidence that a contract existed and that the letter in question was prefatory to negotiations and to a fully-executed document memorializing all of the terms of an agreement.

  However, as Plaintiff points out, the letter agreement had each of the material elements that New York law requires — it contained a salary amount, the title of a position, and a definite duration of three years. In addition, since the letter agreement left space for Plaintiff to sign, the parties intended that the agreement be binding. Plaintiff also correctly notes that, unlike a prefatory agreement, the letter agreement between Plaintiff and Defendant had no contingency, did not require approval from any other individual, and omitted no material term. Defendant's argument that Plaintiff has failed to raise an issue of fact with respect to the existence of a contract is also problematic. Defendant acknowledged that it began performance by paying Plaintiff his annualized salary of $150,000.00 when he showed up to start the job. Defendant has also acknowledged that it originally intended to pay Plaintiff's relocation expenses in the amount of $10,000.00, a term to which Mr. Tucci had agreed during his negotiations with Plaintiff.*fn3 Since Defendant began to perform some of the material terms of the letter agreement, such as paying Plaintiff's salary and directing him to begin relocating, it cannot now reject other terms of the letter agreement, such as its promise of for-cause protection. While the letter agreement states that a contract would be forthcoming, as described above, New York law permits a party to assemble a contract through multiple written materials that, taken together, evidence a contract. Even if the letter agreement's reference to a forthcoming, fully integrated document weakens Plaintiff's case, Plaintiff has provided evidence that tends to show that he and Defendant had agreed upon the major terms of employment. Accordingly, the Court concludes that Plaintiff has raised a material issue of fact as to whether the parties intended to create an employment contract for a specified term.

  For the purposes of addressing whether Plaintiff's claims can withstand Defendant's motion for summary judgment, the Court will assume that a contract existed. C. Plaintiff's Constructive Discharge Claim

  As stated above, Plaintiff resigned two months after he commenced work. He advances several theories of recovery, including constructive discharge. The Second Circuit has held that a prima facie claim of constructive discharge requires a plaintiff to "show that the employer `"deliberately ma[de his] working conditions so intolerable that [he was] forced into an involuntary resignation."'" Stetson v. NYNEX Serv. Co., 995 F.2d 355, 360 (2d Cir. 1993) (quotation omitted). In Stetson, the Second Circuit emphasized that a plaintiff cannot meet this standard by merely showing that he was dissatisfied with the nature of his assignments, that his employer unfairly criticized him, or that his working conditions were difficult or unpleasant. See id. (citation omitted). In order to avoid summary judgment, an employee claiming constructive discharge must show that his working conditions were so difficult or unpleasant that they would have caused a reasonable person to resign. See id. at 361 (citation omitted).

  Plaintiff premises his constructive-discharge claim on Defendant's alleged efforts to "make [Plaintiff's] `life miserable' . . ." while he worked at the company. See Plaintiff's Memorandum of Law at 15. According to Plaintiff, Defendant's executives threatened to send him to notoriously unattractive locations like Cebu, Philippines, in the summer and Denmark in the winter. Defendant's executives also let Plaintiff know that he was not welcome at the company and that at least some of his work fell short of expectations. Several executives also discussed whether they would direct Plaintiff to report to other vice presidents, even though Plaintiff held the title of vice president. Finally, Defendant's executives threatened to set unrealistic goals for Plaintiff that he would be unable to meet.

  In turn, Defendant argues that Plaintiff's dissatisfaction with the nature of his assignments does not constitute a constructive discharge. Although Defendant acknowledges that some of its executives did not wish for Plaintiff to remain an employee, it offers testimony and documentary evidence showing that none of the executives ever took any action to force Plaintiff to quit. None of the executives threatened to fire Plaintiff, relocated him to any undesirable locations, or requested that he perform any demeaning work. Defendant points out that, although Mr. Toth and Mr. Falcetta occasionally criticized Plaintiff's work and questioned his role within the company, disagreements over management style cannot form the basis for a constructive-discharge claim.

  Plaintiff's complaints — that he had to answer to a lower-level executive than he expected and that Mr. Toth and Mr. Falcetta expressed a desire to see him leave — do not meet the very high threshold that New York courts and the Second Circuit have created for a constructive-discharge claim. Defendant has offered abundant and unrefuted evidence to show that most, if not all, of Plaintiff's work conditions, including title, salary, most duties, and benefits remained unchanged from any negotiated terms. A reasonable person might have resigned if faced with an unexpected forced relocation out of the country; however, Defendant made no specific plans to force Plaintiff to accept a position in Denmark or the Philippines. Accordingly, the Court concludes that Plaintiff's allegations are insufficient to maintain a constructive-discharge claim and grants summary judgment to Defendant with respect to this issue.

  D. Plaintiff's Anticipatory-Repudiation Claim

  Plaintiff advances anticipatory repudiation as another theory of recovery. A plaintiff can sue under a theory of anticipatory repudiation only where the allegedly breaching party, prior to the time performance is due, has declared its "intention not to fulfill a contractual duty." Lucente v. I.B.M., 310 F.3d 243, 258 (2d Cir. 2002) (citations omitted). This theory of recovery requires a plaintiff to choose between one of two options when faced with the impending breach: the plaintiff may either "elect to treat the repudiation as an anticipatory breach and seek damages for breach of contract, thereby terminating the contractual relation between the parties, or [] he may continue to treat the contract as valid and await the designated time for performance before bringing suit." Id. (citations omitted).

  As support for his anticipatory-repudiation claim, Plaintiff contends that Mr. Toth and Mr. Falcetta told him that he would be demoted. Plaintiff contends that the threat to demote him constituted an unequivocal, announced breach of a material term entitling Plaintiff to rescind the contract and sue for a total breach.

  With respect to the anticipatory-repudiation claim, Defendant contends that Plaintiff never raised this theory of recovery in his complaint. Moreover, Defendant contends that, even if the Court treats all of Plaintiff's assertions as true, it has provided overwhelming evidence that it never unequivocally stated its intention not to fulfill Plaintiff's contract. Finally, since Plaintiff continued to work for the same salary and benefits, this theory of recovery is no longer available to him.

  As Defendant correctly asserts, Plaintiff first references an anticipatory-repudiation theory when he asserts it in his answer to Defendant's counterclaim. Plaintiff did not raise anticipatory repudiation as a theory of recovery in his complaint, and he cited no authority for an anticipatory-repudiation theory in his memorandum of law. Even though Plaintiff provided some evidence that Defendant's executives discussed changing his responsibilities, Plaintiff did not provide any evidence that Defendant unequivocally stated its intention not to fulfill the contract. Moreover, since Plaintiff continued to work for Defendant, this theory of recovery is unavailable to him. Accordingly, the Court concludes that Plaintiff cannot maintain a claim for anticipatory repudiation and grants summary judgment to Defendant with respect to this issue.

  E. The Parties' Breach-of-Contract Claims

  When a party breaches a material provision of an employment contract, the breaching party will be liable to the non-breaching party for damages. See, e.g., BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 395 (1999). Although one party's failure to fulfill a contractual obligation may excuse the other party from performing its obligations under the contract, the determination of which party breached first is usually a question of fact. See Mega Group Inc. v. Halton, 290 A.D.2d 673, 674-75 (3d Dep't 2002) (citations omitted). However, a party may defeat a breach-of-contract claim on summary judgment by showing that its breach was in response to the opposing party's "`failure of performance that [was] substantial, material and [struck] at the very essence of the contract.'" Id. at 675 (quotation and other citations omitted). A substantial change or reduction in a party's responsibilities can constitute a material breach. See Romano v. Basicnet, Inc., 238 A.D.2d 910, 910-11 (4th Dep't 1997) (citing Zeumer v. Fire Burglary Instruments, 210 A.D.2d 318, 319) (other citation omitted).

  Plaintiff claims that Defendant materially breached the employment contract by, among other things, directing Plaintiff not to relocate to the greater Philadelphia area and lowering Plaintiff's status vis-a-vis other executives. Plaintiff contends that he negotiated both of these terms with Mr. Tucci. Although the letter agreement contained neither of these terms, Plaintiff provided copies of e-mails and internal company documents to support his contention that these terms were part of the quid pro quo for his agreement to work for Defendant. Plaintiff argues further that Defendant's breach relieved him from the duty to continue working for the company.

  Defendant first responds to Plaintiff's breach-of-contract claim by contending that, if a contract existed, the only material terms of the contract are those that the letter details. Defendant contends that "[i]f that letter [agreement] is an enforceable contract, as [Plaintiff] so vehemently insists, [Plaintiff] therefore concedes that. . . . all points on which the [letter agreement] is silent were not material terms of his employment." See Defendant's Reply Memorandum of Law at 4. To illustrate, since the letter did not describe Plaintiff's specific duties, Defendant contends that the duties are not material. However, as described above, New York law permits a party to use writings and documents to prove the existence of a long-term, for-cause employment contract. The terms of the letter agreement assist Plaintiff in proving the existence of a contract and some of its terms, but Plaintiff could still prove the existence of any additional terms by offering evidence of them. See Nausch v. AON Corp., 2 A.D.3d 101, 102 (1st Dep't 2003). Accordingly, Defendant's first argument is unavailing.

  Defendant asserts, alternatively, that Plaintiff acknowledged that his salary, benefits, title, and most of his duties, such as implementing a cost-savings plan, never changed. In addition, Mr. Toth and Mr. Falcetta had begun a dialogue with Plaintiff about his potential future contributions to the company, indicating that Defendant never intended to force Plaintiff to leave. Defendant has provided substantial evidence of these assertions, while Plaintiff has not rebutted them. Plaintiff resigned after working for Defendant for only two months, and it appears that the parties were attempting to negotiate Plaintiff's role within the company during that period. It seems normal that a period of adjustment would occur as Plaintiff began working for the company and establishing his exact responsibilities. Thus, Defendant claims that Plaintiff breached first when he resigned.

  However, although Plaintiff has offered very little evidence that Defendant breached by reducing his responsibilities or demoting him, Plaintiff has offered some evidence that Defendant may have breached first by directing Plaintiff not to move to Philadelphia. Defendant acknowledged that it directed Plaintiff not to move to Philadelphia before he resigned. Moreover, the presence of the Philadelphia relocation term in the letter agreement lends credence to Plaintiff's argument that the Philadelphia relocation was a material term. If a contract existed and the Philadelphia relocation was a material term, then Defendant may have breached first, if the evidence supports a finding that Defendant directed Plaintiff not to move and to refund the $10,000.00 in moving expenses. Accordingly, Plaintiff has raised an issue of fact with respect to whether, if the parties had a contract, he breached the contract first.


  After carefully considering the file in this matter, the parties' submissions, and the applicable law, and for the reasons stated herein, the Court hereby

  ORDERS that Defendant's motion for summary judgment is GRANTED as to Plaintiff's constructive-discharge claim; and the Court further

  ORDERS that Defendant's motion for summary judgment is GRANTED as to Plaintiff's anticipatory-repudiation claim; and the Court further

  ORDERS that Defendant's motion for summary judgment is DENIED as to Plaintiff's breach-of-contract claim; and the Court further ORDERS that Plaintiff's counsel is to initiate a telephone conference through a professional conference operator with the Court and opposing counsel at 11:00 AM on August 23, 2004 to set a trial date for this action.*fn4


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