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Almut Von Biedermann v. Echo Metrix

August 6, 2012

ALMUT VON BIEDERMANN, PLAINTIFF,
v.
ECHO METRIX, INC. AS SUCCESSOR IN INTEREST TO SEARCHHELP, INC. AND SEARCHHELP, INC., DEFENDANTS.



The opinion of the court was delivered by: Spatt, District Judge.

MEMORANDUM OF DECISION AND ORDER

On April 22, 2010, Almut Von Biedermann ("Von Biedermann" or "the Plaintiff") commenced this action against Echo Metrix, Inc. ("Echo"), as successor in interest to SearchHelp, Inc., and SearchHelp, Inc. ("SearchHelp" and together with Echo, "the Defendants") seeking damages for alleged breaches of contract under New York law. Presently before the Court is the Plaintiff's motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth below, the motion is granted in part and denied in part.

I. BACKGROUND

Unless otherwise indicated, the following constitutes the undisputed facts of the case derived from the parties' submissions, accompanying affidavits, and Local Rule 56.1 Statements.

A. Factual Background

In April of 2007, plaintiff Almut Von Biedermann was introduced to William Bozsnyak, the founder, CEO, and Chairman of SearchHelp, Inc., a public company that was initially created to protect children online. At that time, Von Biedermann was a German citizen with German residency and could only travel to the United States on a business visa or for other limited purposes. Over the course of the next two years, while Von Biedermann attempted to obtain a green card, she continued to correspond with Bozsnyak about potential employment at SearchHelp.

The facts regarding Von Biedermann's attempt to obtain a visa and representations made by the parties to each other regarding Von Biedermann's immigration status are heavily disputed. However, it is undisputed that, between April of 2007 and March of 2009, the parties engaged in negotiations, resulting in a contingent agreement whereby SearchHelp would hire Von Biedermann as their new Chief Operating Officer ("COO") and President. Because any potential employment agreement would be contingent on the company obtaining funding, the parties entered into the following two agreements that are at issue in this litigation.

First, on March 20, 2009, the parties entered into a one page consulting agreement (the "Consulting Agreement"), pursuant to which the Plaintiff would provide SearchHelp with interim services over a two month period, which was subject to an extension. (See Murphy Aff., Ex. 5.) The Consulting Agreement was signed by Von Biedermann, and Jeffrey Greene, the CEO of SearchHelp. In addition to listing her interim responsibilities, the Consulting Agreement also included: (1) a schedule outlining the amount of time Von Biedermann would spend in New York, and the amount of time she would spend working from Germany and (2) a compensation provision whereby SearchHelp would pay Von Biedermann $10,000 per month, $5,000 of which would be paid at the time she invoiced for the work and $5,000 "to be accrued paid upon employment contract implementation". The Consulting Agreement was extended for an additional two months, and the Plaintiff submitted to the Defendant invoices for: March 16, 2009--April 16, 2009; April 16--May 16, 2009; May 18--June 18, 2009; and June 18--July 18, 2009.

Second, on March 23, 2009, the parties entered into a contingent employment agreement whereby Von Biedermann would become the COO and President of SearchHelp, from the date the agreement became effective, until March 16, 2012 ("the Employment Agreement"). (See Murphy Aff., Ex. 8.) The Employment Agreement was a "contingent" agreement because, pursuant to Section 2.1.4, it became effective if, and when, the Board of Directors "approved" the terms and conditions of funding. Once the employment agreement became effective, the parties do not dispute that the Plaintiff would become the COO and President of SearchHelp, receive an annual salary-the amount of which is in dispute-and receive 1.5 million immediately vesting warrants to purchase SearchHelp's common stock at $.10 per share.

On May 26, 2009, SearchHelp changed its name to Echo Metrix, Inc. On July 29, 2009, Echo's board approved the terms and conditions of funding by entering into a Series B Convertible Term Stock Purchase Agreement with Rock Island Capital, LLC, which provided Rock Island with 59.3% of the total shares of the company ("the Purchase Agreement"). (See Murphy Aff., Ex. 10.) On August 13, 2009 and August 26, 2009, Echo and Rock Island entered into an addenda to the Purchase Agreement, involving changes to the timing of payment by Rock Island to Echo. In addition, Echo and Rock Island entered into subsequent amendments to the Purchase Agreement, including one on September 4, 2009, that provided a change in the payment schedule. Following these agreements, a number of Rock Island employees were appointed to leadership positions at Echo and to the Echo Board of Directors. Von Biedermann contends that the Employment Agreement became effective on July 29, 2009, when Echo and Rock Island entered into the Purchase Agreement. However, the Defendants contend that the Employment Agreement never became effective.

Despite the fact that the Defendants take the position that the Employment Agreement had not become effective, on October 15, 2009, Greene sent an email to Von Biedermann advising her that:

The Board of Directors have concern over your ability to work permanently in New York. They have directed me to initiate the termination for good cause unless you can cure your visa/green card situation within 30 days as stipulated in your contract in section 4.1.1 (c). (Murphy Aff., Ex. 12.) Section 4.1.1(c) of the Employment Agreement states that the Defendants can terminate Von Biedermann for "good cause" is she is unable "to perform the Services" or is "incompeten[t] in adequately performing the Duties and Services, within reason, unless such failure to perform is not fully cured by the Executive within thirty (3) days of written notice therefore . . .". (Employment Agmt., § 4.1.1(c), pg. 11.)

The purported basis for terminating Von Biedermann's employment was that she had failed to secure a visa, and therefore could not fulfill the requirement in Section 2.1.5 of the Employment Agreement. Section 2 of the Employment Agreement related to Von Biedermann's duties and services as the COO and President of SearchHelp, and provided in section 2.1.5 that "Executive shall perform such services and duties at the Company's headquarters in Syosset, New York except when required to travel in the normal course of performing her duties". (Employment Agmt., §2.1.5, pg. 2.)

Subsequent to receiving the October 15, 2009 email from Greene, Von Biedermann, on her own and then through counsel, attempted to get the Defendants to cooperate in sponsoring or otherwise assisting her visa application. The Defendants refused and terminated Von Biedermann's employment pursuant to the Employment Agreement on November 15, 2009.

B. Procedural History

On April 22, 2010, the Plaintiff commenced this action against the Defendants asserting three causes of action for breaches of the Employment Agreement and the Consulting Agreement. The first and third causes of action allege that the Defendants breached the Employment Agreement. First, the Plaintiff alleges that the Defendants terminated her without "good cause" and in bad faith, and therefore, pursuant to section 4.1.3 of the Employment Agreement, she is entitled to monetary damages from the effective date of the Employment Agreement, July 29, 2009, through her termination on November 15, 2009, and one month's severance pay. The Plaintiff also asserts that the Defendants terminated her employment without good cause and as a result of a change in control of the company. Therefore, pursuant to section 4.3.2 of the Employment Agreement, she is entitled to twelve months salary, with all benefits, beyond the date of ...


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