The opinion of the court was delivered by: David G. Larimer United States District Judge
Plaintiff, Thomas K. Barry ("Plaintiff" or "Barry") commenced this action against his former employer, Corning Natural Gas ("Defendant" or "CNG"), for breach of contract (First Cause of Action) and for specific performance (Second Cause of Action) as the result of CNG's breach of a Consulting, Confidentiality, and Non-Competition Agreement ("Consulting Agreement"), which provided for the assignment of a key-man life insurance policy that the company held on the Plaintiff's life ("the Barry Policy" "the insurance policy" or "the key-man policy").
The Complaint originally alleged five causes of action. See Compl. at Dkt. #1. The Third Cause of Action against CNG sought to recover post-retirement dental and medical benefits pursuant to the terms of a Term Sheet dated November 8, 2006. The Fourth and Fifth Causes of Action were pled against the Osborne Trust for tortious interference of a contract and prima facie tort. Compl., ¶¶ 20-36. By order entered July 8, 2008, this Court dismissed the Third, Fourth, and Fifth Causes of Action in the Complaint pursuant to Fed.R.Civ.P. 12(b)(6). See Dkt. #21. The Osborne Trust is no longer a party to this action.
Plaintiff now moves for summary judgment as to CNG's liability on the First and Second Causes of Action. See Dkt. #47.
CNG is a gas distribution company that provides metered gas, transportation, storage, and other unbundled energy services to the Finger Lakes and Southern Tier regions of New York State. Plaintiff was the President, Chief Executive Officer, and Chairman of the Board of Directors ("the Board") of CNG until his resignation on November 30, 2006. During Barry's tenure, the company ran into financial trouble, such that by November, 2006, CNG's natural gas supplier refused to provide it with gas for the upcoming winter season unless CNG obtained a $4 million letter of credit as security. In addition, the New York State Public Service Commission ("PSC") threatened to issue an order to show cause as to why a receiver should not be appointed for the company if CNG did not secure a gas supplier by November 30, 2006.*fn2
The Osborne Trust, a significant shareholder of CNG, offered to provide the necessary letter of credit to keep the company operational. In exchange, it was agreed that CNG would effectuate Plaintiff's resignation, a new Board would be appointed, and Richard M. Osborne would be installed as Chairman of the new Board.
On November 8, 2006, negotiations between the Osborne Trust and CNG culminated in the issuance of a Convertible Note and Letter of Credit Term Sheet ("the Term Sheet").*fn3 As part of the Term Sheet's Conditions to Closing, Barry was to resign as Chairman of the Board, Chief Executive Officer and President of CNG. The Term Sheet's Conditions to Closing also provided that Barry and CNG would enter into the a Consulting Agreement, pursuant to which Barry would be paid an annual sum of $150,000 for a period of four years as consideration for severance, agreement not to compete, and for providing consulting services. See Pl. Exhs. A & D at Dkt. #48-1 to 48-4. As further part of the Conditions to Closing, the Term Sheet stated that the Osborne Trust "acknowledges and approves that the Company intends to assign Mr. Barry the key-man life insurance it holds on the life of Mr. Barry." Pl. Exh. A at 7. It is this policy that is at the heart of the case.
During a Special Meeting on November 8, 2006, CNG's then-Board of Directors voted to approve the Term Sheet and move forward with the proposed transaction. Another Special Meeting of the Board of Directors was held on November 30, 2006, during which CNG approved the execution of the Consulting Agreement, including the transfer of the key-man insurance policy to Plaintiff. Barry abstained from the Board's vote to approve the Consulting Agreement. CNG attorneys Krathwohl and Kane were present at those Board meetings during which Barry's separation package was discussed and approved. Following Board approval, Barry executed the Consulting Agreement with CNG. Barry then resigned as Chairman, CEO, and President of CNG on November 30, 2006. Richard Osborne, Trustee of the Osborne Trust, became Chairman of the Board, and the remaining seats on the Board were filled with new members.
On or about January 2, 2007, without notice to Plaintiff, Defendant surrendered the Barry Policy to the insurance company and received $236, 730.36. Plaintiff subsequently commenced this lawsuit for breach of contract and specific performance on August 9, 2007.*fn4
I. Summary Judgment--General Principles
A court may grant summary judgment only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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." Fed.R.Civ.P. 56(c). The Court determines which facts are material by considering the substantive law of the action, for only those "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The initial burden rests with the moving party to demonstrate the absence of any genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party satisfies its burden, the non-moving party must provide "specific facts showing that there is a genuine issue for trial" in order to survive the motion for summary judgment. Fed.R.Civ.P. 56(e); see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574 (1986); Shannon v. New York City Transit Auth., 332 F.3d 95, 98-99 (2d Cir. 2003).
In considering a motion for summary judgment, the Court must view the evidence in the light most favorable to the non-moving party, and draw all reasonable inferences in that party's favor. See Williams v. R.H. Donnelley Corp., 368 F.3d 123, 126 (2d Cir. 2004). The Court must refrain from weighing the evidence, and restrict its ...