Lauter v. W & J SLOANE, INC.

• Decision Date: 30 June 1976
• Docket Number: No. 72 Civ. 3465.,72 Civ. 3465.
• Citation: 417 F. Supp. 252
• Parties: Robert I. LAUTER, Plaintiff, v. W & J SLOANE, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of New York

417 F. Supp. 252

Robert I. LAUTER, Plaintiff, v. W & J SLOANE, INC., et al., Defendants.

No. 72 Civ. 3465.

United States District Court, S. D. New York.

June 30, 1976.

COPYRIGHT MATERIAL OMITTED

Olwine, Connelly, Chase, O'Donnell & Weyher, New York City, for plaintiff.

Becker, Ross & Stone, New York City, for defendants.

MEMORANDUM

LASKER, District Judge.

This diversity action arises out of the discharge of the plaintiff, Robert I. Lauter, from his position as President of the New York Division of the defendant W & J Sloane, Inc. (Sloane). Lauter sues Sloane for breach of an alleged three year employment contract (Complaint, ¶¶ 13-21) and asserts a separate claim against Sloane's two parent corporations, City Stores, Inc. (City Stores) and Bankers Securities Corp. (Bankers Securities), for the tort of intentional interference with his contract with Sloane. (Complaint, ¶¶ 22-25) He also asserts claims for misrepresentation and fraudulent misrepresentation against four individuals who hold positions of importance in all three corporate defendants, Leonard J. Novogrod, Isidore Newman II, Louis Melchoir and Gustave G. Amsterdam. Lauter claims that these men, each of whom was involved in the decision to hire him, induced him to leave a good position with another firm by misleading him as to the nature of the terms of the proffered employment with Sloane. (Complaint, ¶¶ 26-35) Lauter seeks damages from the corporate defendants of $272,000., representing the unpaid balance of his salary, the value of a variety of employment benefits of which he claims to have been deprived and the expenses he incurred in finding new employment. From the individual defendants he seeks damages of $500,000., the derivation of which is unspecified.

By their amended answer, the defendants deny the material allegations of the complaint, admitting only that Lauter was employed as President of Sloane's New York Division and that he was discharged. (Amended Answer, ¶¶ 8 and 10) They also assert several affirmative defenses, including, inter alia, that Lauter's contract claim is barred by the statute of frauds and that his discharge was justified by incompetence and misfeasance. (Amended Answer, ¶¶ 19 and 20) In addition, Sloane asserts three counterclaims, in which it alleges that during the course of negotiations for his employment by Sloane, Lauter misrepresented the value of certain profit sharing benefits he would forfeit at his previous job and thereby obtained an agreement to compensate him by an equivalent amount. By reason of this alleged misrepresentation Sloane claims to be entitled to rescind any contract of employment that may have been entered and, in addition, to recover money which it continued to pay Lauter for a period of almost a year subsequent to his discharge. (Amended Answer, ¶¶ 24-39)

The defendants move for summary judgment, asserting that the statute of frauds bars both the contract action against Sloane and the claim for interference with a contract against City Stores and Bankers Securities, and, with regard to the latter claim, that the parent corporations' economic interest in Sloane's welfare provides an absolute defense. Summary judgment is also sought on the claims against the individual defendants on the ground that they are legally insufficient. Lauter cross-moves for the same relief both on his claim against Sloane for breach of contract and on Sloane's counterclaims.

For the reasons which follow, we agree with the defendants that they are entitled to judgment on all of the claims against them and that the existence of material issues of fact precludes summary relief to Lauter on Sloane's counterclaim.

I. Factual Background

The following facts are undisputed.

Prior to his employment with Sloane, Lauter was Senior Vice President in charge of merchandising for Macy's New York (Macy's), a division of R. H. Macy & Co., a company he had been employed by for a period of 24 years. In the Fall of 1969 he began negotiations with representatives of Sloane looking toward employment as President of Sloane's New York Division. Following several meetings with the individual defendants, the last of which took place on the morning of November 3, 1969, Novogrod, the President of Sloane, sent Lauter the following letter (the Novogrod letter):

"November 3, 1969 Mr. Robert Lauter 3 Chester Drive Rye, New York

Dear Bob:

This is to confirm our understanding arrived at this morning as to the terms of your employment with W & J Sloane. Your position will be President of the New York Division of W & J Sloane, which encompasses all the stores presently operated out of New York, plus the stores contemplated in Atlanta, Houston and Troy (Michigan).

The term shall be for three years with automatic renewal from year to year, unless either party gives ninety (90) days' prior notice.

The salary will be $105,000 per annum, plus a special payment of $25,000 for each of the first three years to compensate for the loss you are incurring from your present profit-sharing program.

A 5,000 share option will be recommended at the next meeting of the City Stores' Board of Directors. In addition, you will be given 3% of the increased profits before taxes over the 1969 profits of the New York Division of W & J Sloane.

If this meets with your approval, I would appreciate your signing one copy and returning same to me. If you should desire a more formal contract, I shall be happy to arrange it.

Sincerely /s/ Leonard J. Novogrod Leonard J. Novogrod" N:M

There is no evidence that Lauter ever signed and returned Novogrod's letter, and in this litigation he does not contend that he did so.¹ Rather, Lauter called Novogrod the day after he received the letter and indicated that he wished a formal contract to be drawn. (Ex. D, Stone Affidavit, November 14, 1975) Nevertheless, Lauter commenced work as President of Sloane's New York Division on December 8, 1969, without having executed a formal contract document,² and he held the position for approximately one year until he was discharged on November 2, 1970. Lauter asserts without contradiction that during the period of his employ, and for nearly a year thereafter, Sloane paid him in accordance with the terms of the Novogrod letter.³

In this suit Lauter relies on an alleged oral contract of employment made on November 3, 1969, evidenced by the Novogrod letter. Sloane's position is that the letter represents only an offer which Lauter rejected in favor of negotiating for additional, more advantageous terms, that a final contract was never agreed upon and that Lauter's employment in the meantime was therefore an employment terminable at will. It argues further that the letter is in any event insufficient to satisfy the requirements of the statute of frauds as it incompletely evidences the terms of the asserted agreement of November 3. This contention is the principle focus of its argument on this motion.

II. The Defendants' Summary Judgment Motion

A. The Claim Against Sloane for Breach of Contract

Sloane argues that under the law of New York, which is controlling, a memorandum is insufficient to evidence an oral contract unless it contains all the material terms of the oral agreement, and that according to Lauter's own deposition testimony throughout this litigation, at least four important terms of the understanding were omitted from the Novogrod letter. In particular, Sloane emphasizes that Lauter himself has flatly asserted that in addition to the terms set forth in the letter, it was agreed at the November 3 meeting that:

1. he would receive a full salary for the first six months of disability; (Exs. D, E and G, Stone Affidavit, November 14, 1975);

2. he would receive a death benefit of six months' salary; (Exs. D, G and H, Stone Affidavit, supra);

3. the New York Division (on whose sales he was to receive a commission or override) would include, in addition to those stores specified in the letter, all stores opened thereafter east of the Mississippi, excluding Washington, D.C.; (Exs. G and K; and see I and J, Stone Affidavit, supra) and

4. he could, at his option and for his tax advantage, receive part of his salary in deferred compensation. (Exs. G and M; see L, Stone Affidavit, supra)

Lauter counters that the law only requires a memorandum which reflects the agreement with reasonable certainty, but that the Novogrod letter meets even the stricter standard urged by Sloane, because it contains "all the material and essential terms of the oral agreement made earlier that day." (¶ 3, Lauter Affidavit, January 13, 1976) By this assertion Lauter does not deny his previous contentions, but asserts that neither party considered the missing items essential or material. Moreover, he attempts to raise a factual issue as to whether these items were agreed to by reference to Novogrod's deposition testimony in which Novogrod recounted the phone conversation he had with Lauter on November 4. Novogrod's report of their discussion indicates that Lauter complained of the absence of these four items from the letter and that Novogrod denied that at least two of them, the death benefits provision and the expanded definition of the New York Division, had been agreed to. (Exhibit I, Pindyck Affidavit, December 5, 1975)⁴ Finally, Lauter strenuously urges that to apply the statute of frauds in this situation would be a misinterpretation of the law and a distortion of its fundamental purpose.

It is apparent from the affidavits and exhibits on this aspect of the motion that material issues of fact exist as to whether, on the morning of November 3, the parties agreed that Lauter would receive a death benefit of six months' pay and whether the agreed definition of the New York Division was broader than that reflected in the Novogrod letter.⁵ It is equally apparent, however, although Lauter's attorneys have minimized its significance, that in addition to the terms specified in the letter it was also...