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Wengryn v. American Business Consultant Group Holding, LLC

United States District Court, S.D. New York

May 15, 2015

AMERICAN BUSINESS CONSULTANT GROUP HOLDING, LLC; J. MICHAEL KAFES, in his official and individual capacity; DENNIS LEE, in his official and individual capacity; PROVISION CONSULTANTS CORPORATION; DBA PROVISION CORPORATION, LLC; ABC CORPS. 1-10; and JOHN DOES 1-10, in their official and individual capacities, jointly and severally, Defendants.



This action concerns three employment relationships gone sour. Plaintiffs commenced the action on July 1, 2013 (ECF No. 1), and amended their complaint twice thereafter (ECF Nos. 21, 38 ("SAC")). The operative complaint is the Second Amended Complaint (the "SAC") filed on February 18, 2014. (SAC.)[1] While plaintiffs have asserted a myriad of claims, their core claim is that defendants breached each of their employment contracts. This claim is set forth in Count Six. Defendants asserted three counterclaims when they answered the initial complaint-cast as claims for breach of employment contracts, "implied indemnity" and "contribution." (ECF No. 10.)

Plaintiffs have now moved for summary judgment as to Count Six and both counterclaims. (ECF No. 75.) For the reasons set forth below, that motion is GRANTED.


Before addressing the motion that is the principle topic of this Opinion, the Court notes that it has concerns regarding the allegations in each of the complaints supporting this Court's subject matter jurisdiction. As the parties are aware, this matter was reassigned to the undersigned on February 24, 2015, as part of a routine, intra-district redistribution of business. The Court therefore cannot know whether the issues it perceives were addressed and resolved long ago (if so, such resolution is not reflected on the docket). Needless to say, it would be inefficient to explore these issues now. The face of the complaint alleges jurisdiction-and that is sufficient for current purposes.

The issue is this: The initial complaint as well as both amendments have asserted federal jurisdiction pursuant to the Fair Labor Standards Act (the "FLSA")-alleging claims for wage and hour violations as to one of the three plaintiffs, Peter Wengryn. (E.g., SAC ¶¶ 15, 120-26.) It does not appear that- based on his employment position and responsibilities-Wengryn can in fact pursue a wage and hour claim under the FLSA. He is the quintessentially exempt employee pursuant to FLSA's bona fide executive exception. See 29 U.S.C. § 213(a)(1); 29 C.F.R. §§ 541.100(a), 541.102, 541.700(a). In addition, there is no separate basis for federal jurisdiction alleged as to the other two plaintiffs (though under appropriate circumstances this Court might be able to assert pendent jurisdiction). Thus, even assuming that Wengryn does have a cognizable wage and hour claim, there is no necessary reason why the claims of the other two plaintiffs must be joined in the same action with his. This appears to be a case in which a slim reed supporting federal jurisdiction was found as to Wengryn and the claims of the other two plaintiffs were tacked on.


On September 19, 2012, each of the three plaintiffs agreed to accept employment with defendants and entered into written employment contracts effective as of October 1, 2012. (Certification of Valerie Fasolo, ECF No. 96 ("Fasolo") exs. A-8, A-14, A-15; see also DRSOF ¶ 1.) Wengryn was hired to be the Chief Executive Officer ("CEO") of American Business Consultant Group Holding LLC d/b/a ABC Group. (Fasolo ex. A-8.) Plaintiff Laila Sayad was hired to fill the position of Chief Financial Officer ("CFO") and Gerry Louw was hired to fill the position of Chief Technical Officer ("CTO"[3]). (Fasolo exs. A-14, A-15.)

Each of the employment agreements provides for a base salary, standard health benefits and eligibility for an incentive bonus. (Fasolo exs. A-8 ¶ 4, A-14 ¶ 4, A-15 ¶ 4.) Each agreement contains similar termination provisions providing for termination with or without cause. (Fasolo exs. A-8 ¶ 3, A-14 ¶ 3, A-15 ¶ 3.) In the event of termination without cause, each plaintiff is entitled to receive certain compensation including the "remaining amount of salary, benefits and bonuses due through the end of this six month agreement." (Fasolo exs. A-8 ¶ 6(c), A-14 ¶ 6(c), A-15 ¶ 6(c).) "Cause" is defined similarly in each agreement as any material breach of the employment agreement, any material failure to comply with written company policies or rules, continued failure to perform material duties after having received a written warning and 30-day period to cure, a criminal conviction, misappropriation of funds, or gross or willful misconduct resulting in a material loss to the company or material damage to the reputation of the company. (See Fasolo exs. A-8 ¶ 6(e), A-14 ¶ 6(e), A-15 ¶ 6(d).[4])

In addition, each employment agreement contains a standard integration clause providing that:

This Agreement embodies the complete agreement and understanding among the parties hereto and supercedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter of this Agreement in any way.

(Fasolo exs. A-8 ¶ 12, A-14 ¶ 12, A-15 ¶ 12.) The terms of Wengryn and Luow's agreements was six months (renewable), and Sayad's was for one year. (Fasolo exs. A-8 ¶ 2, A-14 ¶ 2, A-15 ¶ 2.)

Defendants separately requested that Wengryn pay for certain business expenses as to which he was promised reimbursement. (DRSOF ¶¶ 9, 11.) In connection with that arrangement, he paid certain health insurance premiums. (DRSOF ¶ 10.) Wengryn has set forth additional business expenses for which he seeks reimbursement-and as to which the President of the ABC Group Board of Directors, J. Michael Kafes, has conceded payment is owed. (DRSOF ¶¶ 12-13.) (Kafes was Wengryn's immediate supervisor. (DRSOF ¶ 67.))

Plaintiffs and defendants agree that funding for the company became an issue. Whether funding was always an issue or became an issue due to unilateral action by ...

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