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Silverberg v. SML Acquisition LLC

United States District Court, S.D. New York

February 27, 2017


          Jason Wolf Rutkin & Wolf PLLC White Plains, New York Counsel for Plaintiff.

          Katherine Zalantis Silverberg Zalantis LLP Tarrytown, New York Timothy P. Polishan Kelley, Polishan & Solfanelli LLC Old Forge, Pennsylvania Counsel for Defendants.


          CATHY SEIBEL, U.S.D.J.

         Before the Court is Defendants' Motion for Summary Judgment. (Doc. 21.) For the following reasons, Defendants' Motion is GRANTED.


         The following facts, which are based on Defendants' Rule 56.1 Statement of Material Facts (“Ds' 56.1”), (Doc. 25), supporting materials and the record in this case, are undisputed except where noted.[1]

         A. The 2011 Agreement

         Plaintiff Irwin Silverberg is the founder of San-Mar Laboratories (“San-Mar”), an FDA-licensed pharmaceutical company that manufactures over-the-counter products. (Silverberg Aff. ¶ 2.) In 2011, Plaintiff sold San-Mar to an individual who continued the business under the name SML Acquisition LLC (“SML”). (Id. ¶ 3.) As part of the sale, (id.), Plaintiff entered into a written consulting agreement with SML on December 2, 2011, (Zalantis Decl. Ex. 4 (“2011 Agreement”)).[2] The 2011 Agreement dictates that Plaintiff would be “retain[ed] for . . . [Plaintiff's] know-how, experience and services, ” and would “perform such duties as may be determined and imposed from time to time by [SML]'s President or such other person directed by [SML]'s President” for no more than ten hours per month. (Id. at 1-2.) In exchange for his services, Plaintiff would receive “annual consulting fees” of $150, 000 for four years, payable each month, and an additional $1, 041.67 per month for “accrued expenses [Plaintiff] has incurred on the Company's behalf prior to the date hereof.” (Id. at 2.) The 2011 Agreement included a clause providing that “[a]ny written modifications of this Agreement shall not be binding until and unless such written modification shall have been approved in writing by [Plaintiff] and by an authorized officer of [SML].” (Id. at 9.) The contract is governed by New York law. (Id. at 8.)

         SML made monthly payments totaling $176, 041.04 to Plaintiff's consulting company, Silver RPH Services, LLC (“Silver RPH”), [3] through December 2012. (Ds' 56.1 ¶¶ 21, 25; Zalantis Decl. Ex. 3, at 42:3-10; id. Exs. 9, 11.) In May 2012, Defendant Process Technologies and Packaging LLC (“PTP”) and SML entered into an Operating Agreement, pursuant to which PTP became SML's managing member with a 100% interest in SML. (Zalantis Decl. Ex. 8.) From January 2013 through February 2014, PTP paid at least $176, 041.71 to Silver RPH pursuant to the 2011 Agreement. (See Ds' 56.1 ¶¶ 21, 26.) Defendants contend that the total paid by PTP in that period is $189, 583.38 (Ds' 56.1 ¶¶ 21, 26), but Plaintiff states that he never received a payment for March 2013, (Silverberg Aff. ¶ 6). Defendants assert that PTP issued a wire transfer for $13, 541.67 to Silver RPH's checking account in March 2013, (Ds' 56.1 ¶ 21), and a transaction history for Silver RPH's account produced by Plaintiff, (id.), shows a corresponding March 2013 deposit, (Zalantis Decl. Ex. 11). In total, Plaintiff received $365, 624.42 (including the disputed March 2013 payment), or $352, 082.75 (excluding the disputed payment) under the 2011 Agreement. (Id. Ex. 9.) Plaintiff provided no consulting services to either SML or PTP under the 2011 Agreement. (Ds' 56.1 ¶ 24.) Neither side provided evidence as to whether Plaintiff was asked to do so.

         B. The 2014 Agreement

         On February 25, 2014, Defendants sent a letter to Plaintiff's counsel stating that PTP would cease making payments under the 2011 Agreement because Plaintiff had failed to provide any consulting services and because Defendants were being sued by a New York State agency. (Ds' 56.1 ¶ 42; Zalantis Decl. Ex. 14, at 5.)[4] PTP did not issue payments to Plaintiff for the months of March, April and May 2014. (Silverberg Aff. ¶ 7.) At some point during those months, Plaintiff contacted Jay Benson, PTP's Chief of Staff, to discuss why the payments under the 2011 Agreement had ceased.[5] PTP sent Plaintiff a letter on June 10, 2014, enclosing a consulting agreement “discussed on Monday 6/9/14, ” asking him to “make sure [he] ha[d] a full understanding of all enclosed in the agreement, ” and confirming that he would be coming to PTP's facility on June 16, 2014 to sign it. (Ds' 56.1 ¶ 40; Zalantis Decl. Ex. 13; id. Ex. 3, at 42:15-43:20.) Plaintiff does not contest that he received this letter, but testified that it was an example of the coercion he felt to enter into a new contract. (Ds' 56.1 ¶ 41; Zalantis Decl. Ex. 3, at 43:17-20.)

         On June 16, 2014, Plaintiff signed the new consulting agreement with PTP, dated June 10, 2014, (Zalantis Decl. Ex. 6 (“2014 Agreement”)), and below the words “[i]n response to the above offer of employment, ” made a check mark next to the words “I accept, ” (Ds' 56.1 ¶ 10; Zalantis Decl. Ex 7, ¶¶ 5-7; id. Ex. 3, at 20:17-22:20). Benson, PTP's CEO W. M. Godfrey and PTP Human Resources Manager Mason Byers signed the 2014 Agreement on PTP's behalf. (Ds' 56.1 ¶ 11; 2014 Agreement 2.) The 2014 Agreement provided that in exchange for his consulting services, Plaintiff would receive an annual salary of $175, 000 paid on a monthly basis, as well as a reimbursement of all “reasonable, necessary, and pre-approved travel, entertainment and other ancillary business expenses.” (2014 Agreement 1.) Plaintiff also had the opportunity to earn a “pre-negotiated commission on sales.” (Id.) The contract stipulated that it would commence June 1, 2014 and would end on June 1, 2015, (id.); if either party elected not to extend the agreement past June 1, 2015, it had to provide written notice to the other party by April 1, 2015, and if either party elected to cancel at any time thereafter, sixty days' written notice was required, (id. at 1-2). The contract provides that “[t]his agreement supersedes all prior and/or other agreements, contracts or other communication written or verbal. This specifically pertains to the prior document entitled ‘Consulting Agreement' dated 02 November 2011 with SML Acquisitions, LLC.”[6] (Id. at 2.)

         Plaintiff testified that after he stopped receiving payments under the 2011 Agreement, he and his wife experienced severe stress and anxiety, (see Silverberg Aff. ¶¶ 9-12; Zalantis Decl. Ex. 3, at 27:7-16), which were harmful to their preexisting cardiac problems, (Silverberg Aff. ¶ 12). He further testified that he had to drain much of his savings and sell some stock to account for the lack of income during March through May 2014. (Silverberg Aff. ¶ 12; Zalantis Decl. Ex. 3, at 27:22-28:2.) Benson had informed Plaintiff that he was considering suing Plaintiff for breach of contract, (Zalantis Decl. Ex. 10, at 51:17-18), thus presenting Plaintiff with the choice of signing a new consulting agreement or facing litigation, (id.; Silverberg Aff. ¶ 12). Defendants claim that Benson and Plaintiff exchanged drafts of the agreement, (Ds' 56.1 ¶¶ 45-48), and have provided drafts in which certain provisions regarding monthly payments and Plaintiff's travel needs were altered in Plaintiff's favor, (see id.; Zalantis Decl. Exs. 6, 15).[7]

         Under the 2014 Agreement, Plaintiff “engage[ed] in sales related activity [and] contact[ed] various individuals with whom he had not previously been in contact for a number of years in an effort to solicit sales for PTP.” (Ds' 56.1 ¶ 27; Zalantis Decl. Ex. 3, at 38:1-8, 40:21-41:6.) Defendants also fully performed under the second contract, making monthly payments in the amount of $14, 583.33 to Silver RPH, (Silverberg Aff. ¶ 14), plus an additional expense reimbursement of $1, 161.46, (Ds' 56.1 ¶ 30). Between the two agreements, Defendants paid a total of $556, 369.17 to Plaintiff, or $542, 827.50 excluding the contested March 2013 payment. (See Ds' 56.1 ¶ 22; Zalantis Decl. Ex. 9.)

         On March 24, 2015, according to Defendants, PTP sent Plaintiff a letter stating that “this letter will serve to terminate the consulting agreement between PTP and Silver RPH Services LLC effective 6/1/15.” (Benson Aff. ¶ 10; id. Ex. 16.)[8] The letter was sent via certified mail to the address Plaintiff provided PTP, but was returned to sender. (Id. ¶ 10; id. Ex. 17.) PTP then emailed the letter to Plaintiff on April 1, 2015, using the email address Plaintiff consistently used to communicate with PTP. (Id. ¶ 12; id. Exs. 18-20.) Plaintiff denies receiving any written notification that PTP intended to terminate or not extend the 2014 Agreement. (Silverberg Aff. ¶ 15.) According to Defendants, Plaintiff called Benson later that month, indicating that he was interested in renewing the agreement, (Benson Aff. ¶ 13), and followed up with an email, (id. Ex. 21), but Defendants were not interested, (id. ¶ 14; Silverberg Aff. ¶ 15). Defendants' counsel sent Plaintiff a letter on June 5, 2015 stating that “no contract exists between [Plaintiff] and PTP, ” and requesting that Plaintiff “no longer call or write PTP or its officers, directors or other employees with repetitive assertions to the contrary.” (Silverberg Aff. ¶ 16; Wolf Decl. Ex. A.)[9]

         C. Procedural History

         Plaintiff filed this lawsuit on September 10, 2015, seeking damages for breach of the 2011 Agreement. (Doc. 1.) The Complaint did not refer to or seek recovery under the 2014 Agreement. Defendants filed an answer on November 19, 2015. (Doc. 16.) Discovery was conducted, and this motion followed.


         Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[T]he dispute about a material fact is ‘genuine' . . . if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if it “might affect the outcome of the suit under the governing law . . . . Factual disputes that are irrelevant or unnecessary will not be counted.” Id. On ...

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