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Provident Healthcare Partners, LLC v. American Veterinary Supply Corp.

January 17, 2007


The opinion of the court was delivered by: Gerard E. Lynch, District Judge


Plaintiff Provident Healthcare Partners, LLC ("Provident") was retained under a brokerage contract to assist defendant American Veterinary Supply Corp. ("American") in the sale of all or part of American's business. Some time after American terminated the relationship, as it was entitled to do, American sold one of its divisions to a company that Provident had earlier contacted on American's behalf. Provident brings this action, claiming entitlement to a commission. American moves to dismiss, and Provident cross-moves for summary judgment. American's motion will be granted in part and denied in part; Provident's motion will be denied.


The facts below are taken from Provident's complaint, the allegations of which are presumed to be true for purposes of American's motion, and from the text of documents incorporated in or relied on by the complaint, which the Court can consider for purposes of a motion to dismiss, see Hayden v. County of Nassau, 180 F.3d 42, 54 (2d Cir.1999), and which in any event are provided by Provident in connection with its summary judgment motion.

On or about February 28, 2005, Provident and American entered a Transaction Engagement Agreement (the "Agreement"), under which Provident agreed to act as a financial advisor to American in connection with the projected sale of some or all of American's divisions or affiliates, in return for a specified commission should a sale be consummated. (Compl. ¶¶ 5-8.) The Agreement contained express terms relating to its termination. Specifically, Section Six provides in relevant part:

Term and Termination. This Agreement is effective from the date [American] signs below and, subject to the terms of this Agreement, expires one (1) year after said date (the "Termination Date"). Both [American] and Provident Healthcare shall have the right to terminate their obligations under this Agreement upon a thirty (30) day written notice to the other party(ies) hereto. Upon either the expiration or termination of this Agreement, Provident Healthcare will furnish to [American] a list of Approved Prospective Partners that have been contacted with respect to a Transaction . . . . [American] will remain obligated to pay to Provident Healthcare the 6% Transaction Fee if [American] enters into a fully executed written agreement with respect to a transaction involving an Approved Prospective Partner . . . within six months (6 months) after the Termination Date. (Ciardi Decl. Exh. A at 2-3; see Compl. ¶¶ 10-23.)

Thus, the Agreement provided that it would "expire[]" after a year, and also that both parties had a right to "terminate" the Agreement on 30 days' written notice. The parties provided protection for Provident against the risk that American would utilize its services without paying for them, by providing that "[u]pon either the expiration or termination" of the Agreement, Provident would provide American with a list of potential buyers it had contacted, and that American would "remain obligated" to pay specified fees if American entered a transaction with any buyer thus listed within six months of the "Termination Date."

The parties differ on the meaning of "Termination Date" for purposes of this provision. Provident notes that the very first sentence of Section Six provides that the Agreement will "expire[] one (1) year after [it is signed] (the 'Termination Date')," thus appearing to specifically define "Termination Date" for purposes of the Agreement as the date of one year after signing. (See Compl. ¶¶ 10-13, 28; see also Pl. Mem. 5-6.) American maintains that the term "Termination Date" must refer as well to any date on which one party "terminates" the Agreement, noting that this makes better business sense, and also conforms to the usage within Section Six referring to the Agreement as "expiring" on the "Termination Date," but as being "terminated" when one party invokes its right to break off the relationship. (See D. Mem. in Supp. of Mot. to Dismiss 7-8.)

This difference in interpretation is significant, because as events transpired, American exercised its option to terminate the Agreement in early July 2005, received Provident's list of Approved Prospective Partners shortly thereafter, and concluded a purchase contract with a company on that list on or about April 26, 2006. (See Compl. ¶¶ 18-24; Pl. Mem.3.) Thus, under American's interpretation of the Agreement, no commission is due, because it concluded the purchase contract more than six months after the effective date of its termination of the Agreement. Under Provident's interpretation, however, the purchase contract was concluded within six months of the "Termination Date," as defined in the contract to mean the one-year anniversary of the date on which the Agreement was signed.

Provident asserts claims for breach of contract and unjust enrichment based on American's failure to pay a commission. American moves dismiss the complaint, and Provident moves for summary judgment.


I. American's Motion to Dismiss

A motion to dismiss may only be granted when it "is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations" of the complaint. Williams v. N.Y. City Hous. Auth.,458 F.3d 67, 71 (2d Cir. 2006), quoting Swierkiewicz v. Sorema, 534 U.S. 506, 514 (2002). American argues that the breach-of-contract claim fails under this standard because the Agreement can only be interpreted as providing for a commission on transactions completed within six months of a party's termination of the Agreement, and that the unjust enrichment claim fails because the subject matter of the claim is governed by a written contract.

With respect to the contract claim, American's motion is manifestly unsuccessful. American's interpretation of the contract is attractive as a matter of business reality. Under the terms of the Agreement, Provident is protected against losing its commission if American consummates a sale during a set amount of time after the Agreement comes to an end. (See Compl. Exh. 1.) It makes sense that the time period during which this protection exists should run from the end of Provident's efforts, whether by "expiration" or "termination." Section Six provides that the list of contacts is to be provided by Provident upon either method by which the relationship may end, and it would make little sense that American could "terminate" the Agreement before its expiration, thus ending Provident's obligation to perform its ...

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