The opinion of the court was delivered by: Lewis A. Kaplan, District Judge.
Plaintiff and defendant allegedly entered into an oral partnership agreement that contemplated the acquisition by the enterprise of cellular telephone assets and their operation as a business. They are said to have agreed that plaintiff would be owner of 20 percent and defendant of 80 percent of the equity. The assets subsequently were acquired by a limited liability company owned solely by defendant. The Federal Communications Commission ("FCC") approved the necessary license transfer, but the parties then were unable to reach agreement on the terms of legal instruments giving effect to their alleged relationship. Plaintiff then brought this action for damages for breach of fiduciary duty and of contract, unjust enrichment, and promissory estoppel. Defendant moves for summary judgment dismissing the complaint.
A. The Alleged Transaction
The crux of this case is whether plaintiff Stein and defendant Gelfand entered into an oral partnership agreement for the acquisition of the cellular telephone assets. There are sharp conflicts in the testimony on this and other issues. Gelfand, however, seeks summary judgment dismissing the complaint on the ground that he would be entitled to judgment as a matter of law even if Stein's version of events were credited. Accordingly, I assume the truth of Stein's version of the events for purposes of this motion.*fn1
The parties have known each other for over 30 years, during which Gelfand and the Stein family continuously have been friends.*fn2 In February 2003, Gelfand told Stein that he had received from Legg Mason, an investment banker, an offer to sell various clusters of cellular assets in the northeast and that he would like Stein to participate in the transaction with him.*fn3 There was no mention of the amount of the investment that was contemplated.*fn4 Following that conversation, Gelfand sent Stein the offering document.*fn5
The parties spoke again at the end of February. According to Stein, Gelfand again asked Stein to participate in the investment and asked him what amount he would like to invest. Stein replied "20 percent." He testified also that "[a]t that time we agreed that we would manage the business together and that we would share in losses and profits, hopefully profits and losses as opposed to losses and profits."*fn6 Nothing else was discussed with respect to the terms of the proposed transaction.*fn7
The parties next spoke about the deal at a meeting on June 12, 2003 attended also by Lawrence Movsin, Gelfand's attorney.*fn8
On that occasion, Gelfand "reiterated the arrangement that [they] had come to."*fn9 He informed Stein that he had formed a company called Buffalo Lake Erie Wireless Company, LLC ("BLEW") to acquire the assets. He suggested that Gelfand apply to the FCC for approval of the license needed to operate the business "because he [Gelfand] had a long history with them" and that Stein would be admitted to the LLC when FCC approval was obtained.*fn10
On August 6, 2003, BLEW executed an agreement to purchase the assets in question for $4 million.*fn11 The FCC approved the license transfer application on November 7, 2003.*fn12 The closing was scheduled for December 23, 2003.*fn13
On a number of occasions, Stein asked Gelfand "to get the terms of [Stein's] admittance into the LLC down on paper."*fn14 He reiterated this request in November 2003.*fn15 Gelfand then asked Stein "to prepare bullet point notes on [his] admittance into the LLC agreement," which resulted in Stein's preparation of a memorandum dated November 18, 2003.*fn16
The November 18 memorandum proposed the following key points:
* Stein and Gelfand both would be Managing Members of the LLC.
* Either Stein or Gelfand generally could act on behalf of the company, although certain material actions would require the agreement of both.
* Stein would participate in the management of the LLC, albeit not as an employee, and spend about one day a week at its offices.
* Both Stein and Gelfand would be obliged during the first three years after the purchase to lend money, in proportion to their respective investments, to the LLC up to a maximum amount of $10 million. Stein proposed that they discuss whether such loans should be secured or unsecured.
* The LLC would have the authority, if Stein and Gelfand did not satisfy the commitment to loan money to it, to borrow up to $10 million from a third-party lender on commercially available terms. In that event, Gelfand, but not Stein, would be obliged to provide a personal guarantee.
* The LLC and then the remaining member would have a first refusal on the interest of the other in the event of the other's ...