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Perella Weinberg Partners LLC v. Kramer

Supreme Court of New York, First Department

August 29, 2017

Perella Weinberg Partners LLC, et al., Plaintiffs-Respondents,
v.
Michael A. Kramer, et al., Defendants-Appellants, Ducera Partners LLC, Defendant. Michael A. Kramer, et al., Counterclaim Plaintiffs-Appellants,
v.
Perella Weinberg Partners LLC, et al., Counterclaim Defendants-Respondents. Michael A. Kramer, et al., Cross Claim Plaintiffs-Appellants,
v.
Joseph R. Perella, et al., Third-Party Cross Claim Defendants-Respondents. Perella Weinberg Partners LLC, et al., Plaintiffs, Perella Weinberg Group LP, Plaintiff-Respondent,
v.
Michael A. Kramer, et al., Defendants-Appellants, Joshua S. Scherer, et al., Defendants. Michael A. Kramer, et al., Counterclaim Plaintiffs-Appellants, Joshua S. Scherer, et al., Counterclaim Plaintiffs,
v.
Perella Weinberg Partners LLC, et al., Counterclaim Defendants, Perella Weinberg Partners Group, Counterclaim Defendant-Respondent. Michael A. Kramer, et al., Cross Claim Plaintiffs-Appellants, Joshua S. Scherer, et al., Cross Claim Plaintiffs,
v.
Joseph R. Perella, et al., Third-Party Cross Claim Defendants-Respondents.

          Arkin Solbakken LLP, New York (Lisa C. Solbakken of counsel), for appellants.

          Boies Schiller Flexner LLP, NY (Jonathan D. Schiller of counsel), and Weil, Gotshal & Manges LLP, New York (Jeffrey S. Klein of counsel), for respondents.

          Acosta, P.J., Sweeny, Renwick, Moskowitz, Kahn, JJ.

         Order, Supreme Court, New York County (Shirley W. Kornreich, J.), entered July 19, 2016, which, insofar as appealed from as limited by the briefs, denied defendants Michael A. Kramer and Derron S. Slonecker's motion for summary judgment on the issue of plaintiff Perella Weinberg Partners Group LP's liability for unpaid deferred compensation, and granted plaintiffs' and third-party cross claim defendants' motion to dismiss defendants Kramer, Slonecker, Joshua S. Scherer and Adam W. Verost's counterclaims and cross claims for fraudulent inducement, Labor Law, and breach of fiduciary duty, unanimously modified, on the law, to deny plaintiffs' and third-party cross claim defendants' motions as to the claim for breach of fiduciary duty asserted by Kramer against Joseph R. Perella, Peter A. Weinberg, and Perella Weinberg Partners LLC, and otherwise affirmed, without costs.

         We find that, for the reasons that follow, defendants Kramer and Slonecker have failed to establish that the Deferred Compensation Amount Election Forms dated May 31, 2011 (Election Forms) unambiguously modified the terms of the Deferred Compensation Agreements dated May 30, 2007 (DCAs) to require payment of the deferred compensation accounts upon any separation from service, thereby entitling them to immediate payment of their deferred compensation accounts.

         The separate DCAs executed by Kramer and Slonecker were virtually identical, detailed, four-page documents, except with respect to the amount of their respective compensation allocations. Each DCA entitled defendants to annual interest payments, and in paragraph 4 defined the "payment date" for the deferred compensation as follows:

         "4. Payment Date.

         The Compensation, plus any accrued but unpaid interest thereon... shall be payable by the Company to the Partner in lump sum on the earlier to occur of (a) the fifth anniversary of the Effective Date [June 1, 2007], or (b) the date 15 business days following the Partner's separation from service with the Company without Cause or by reason of death or Disability.... The Compensation shall be forfeited in full upon a termination by the Company for Cause."

         Each DCA further defined termination for "cause" to include "violation... of any non-solicitation, non-competition or similar restrictive covenant." Additionally, in paragraph 5(b), each DCA included a merger clause that contained the following language:

" Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the Compensation.... This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto...."

         Each subsequently executed Election Form was a single page document, printed with the employee's name, a space for signature and date, and a direction to "Please fill-in, " and providing the employee with a choice to continue the Payment Date as set forth in the DCA, or alternatively, to defer receipt of payment, and the taxable consequences of it, until a later date, by checking the appropriate box. The substantive provisions of the Election Forms read, in their entirety, as follows:

"I elect to defer payment of
% of my Deferred Compensation Amount of $
currently payable on June 1, 2012 (the "Payment Date"), in accordance with the terms of the Deferred Compensation Agreement, as amended, dated May 30, 2007, until the earlier to occur of my ...

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