Frank v. Metalico Rochester, Inc.

• Decision Date: 31 July 2019
• Docket Number: 348,CA 18–01400
• Citation: Frank v. Metalico Rochester, Inc., 174 A.D.3d 1407, 106 N.Y.S.3d 467 (N.Y. App. Div. 2019)
• Parties: Robert FRANK, Plaintiff–Respondent, v. METALICO ROCHESTER, INC., Formerly Known as Metallico Lyell Acquisitions, Inc., Defendant–Appellant.
• Court: New York Supreme Court — Appellate Division

174 A.D.3d 1407

106 N.Y.S.3d 467

Robert FRANK, Plaintiff–Respondent,

v.METALICO ROCHESTER, INC., Formerly Known as Metallico Lyell Acquisitions, Inc., Defendant–Appellant.

348

CA 18–01400

Supreme Court, Appellate Division, Fourth Department, New York.

Entered: July 31, 2019

BOND, SCHOENECK & KING, PLLC, ROCHESTER (KATHERINE S. MCCLUNG OF COUNSEL), FOR DEFENDANT–APPELLANT.

WOODS OVIATT GILMAN LLP, ROCHESTER (WARREN B. ROSENBAUM OF COUNSEL), FOR PLAINTIFF–RESPONDENT.

PRESENT: WHALEN, P.J., SMITH, DEJOSEPH, NEMOYER, AND CURRAN, JJ.

MEMORANDUM AND ORDER

It is hereby ORDERED that the order and judgment so appealed from is unanimously modified on the law by denying plaintiff's motion, vacating the third ordering paragraph and the decretal paragraph, striking the words "is denied" from the second ordering paragraph and substituting therefor the words "is granted," granting that part of defendant's motion with respect to the third cause of action, and granting judgment in favor of defendant as follows:

It is ADJUDGED and DECLARED that the restrictive covenant in the 2004 Non–Competition Agreement as amended in 2005 and 2009 was not superseded by the 2009 Employment Agreement, neither agreement has lapsed, and neither agreement would be rendered unenforceable solely because plaintiff was terminated without cause,

and as modified the order and judgment is affirmed without costs.

Memorandum: Plaintiff commenced this declaratory judgment action, which arises from his sale of a metal recycling business to defendant and plaintiff's ensuing employment by defendant, seeking a judgment declaring that he is not bound by certain restrictive covenants in the agreements that the parties entered into concerning the sale and employment. Defendant answered, and contemporaneously moved to dismiss the first and third causes of action pursuant to CPLR 3211(a)(1) and (7). Plaintiff moved for, among other relief, partial summary judgment on the second cause of action. Supreme Court issued an order and judgment in which it, inter alia, converted that part of defendant's motion seeking to dismiss the first cause of action into a motion pursuant to CPLR 3212 for summary judgment on that cause of action, denied the converted motion, searched the record, and granted summary judgment in favor of plaintiff on that cause of action, albeit with a typographical error regarding the cause of action at issue. The court also granted that part of plaintiff's motion seeking partial summary judgment on the second cause of action, and declared the rights of the parties in favor of plaintiff. Defendant appeals from the order and judgment.

Contrary to defendant's initial contention, the court did not err in converting that part of defendant's motion seeking to dismiss the first cause of action pursuant to CPLR 3211 into a motion for summary judgment on that cause of action. The statute provides that, "[w]hether or not issue has been joined, the court, after adequate notice to the parties, may treat the motion as a motion for summary judgment" ( CPLR 3211[c] ). Additionally, although the court is normally required to give notice to the parties before converting a motion to dismiss to one for summary judgment (see Carcone v. D'Angelo Ins. Agency, 302 A.D.2d 963, 963, 755 N.Y.S.2d 173 [4th Dept. 2003] ), the court properly dispensed with the statutory notice here inasmuch as the issue presented "rested entirely upon the construction and interpretation of an unambiguous contractual provision ... [that] ‘exclusively involve[d] issues of law which were fully appreciated and argued by the parties’ " ( F & T Mgt. & Parking Corp. v. Flushing Plumbing Supply Co., Inc., 68 A.D.3d 920, 923, 893 N.Y.S.2d 66 [2d Dept. 2009], lv denied 15 N.Y.3d 702, 2010 WL 2572397 [2010] ; see Hendrickson v. Philbor Motors, Inc., 102 A.D.3d 251, 258, 955 N.Y.S.2d 384 [2d Dept. 2012] ; see generally Mihlovan v. Grozavu, 72 N.Y.2d 506, 508, 534 N.Y.S.2d 656, 531 N.E.2d 288 [1988] ).

Here, the first cause of action sought a declaration of the rights of the parties with respect to the interplay among a series of written agreements, specifically whether certain restrictive covenants in the parties' 2004 Employment Agreement and 2004 Non–Competition Agreement were superseded by their 2009 Employment Agreement. The arguments of the parties were devoted solely to the legal impact of those contractual provisions, therefore, the court was not required to give notice before converting that part of the motion (see F & T Mgt. & Parking Corp., 68 A.D.3d at 923, 893 N.Y.S.2d 66 ).

We agree with defendant, however, that the court, after converting that part of the motion seeking to dismiss the first cause of action pursuant to CPLR 3211 into a motion for summary judgment, erred in denying that part of the motion and in searching the record and granting summary judgment in favor of plaintiff on the first cause of action. This litigation arises from several written agreements that the parties executed in 2004, 2005 and 2009. The initial set of documents, all of which were executed on the same day in 2004, include the 2004 Stock Purchase Agreement, by which plaintiff transferred ownership of his business to defendant, the 2004 Employment Agreement, which set the terms, conditions, and compensation for plaintiff's employment by defendant during the ensuing five-year period, and the 2004 Non–Competition Agreement, which provided that plaintiff would not compete against defendant during that term of employment and during the "Post–Employment Period," which extends for five years after the "Termination Date," which "means the last day of [plaintiff's] employment by" defendant or any of its affiliates. The 2004 Employment Agreement also contained restrictive covenants concerning plaintiff's activities during, inter alia, his term of employment. Each of those three documents references the other two, and they were all signed on the same date. Furthermore, each of the documents reflects that plaintiff was provided separate consideration in return for it, to wit, salary plus bonuses and other consideration in return for the 2004 Employment Agreement, cash plus stock and other consideration for the 2004 Stock Purchase Agreement, and additional monetary consideration for the 2004 Non–Competition Agreement.

In 2005, the parties executed an amendment to the 2004 Non–Competition Agreement, which provided that plaintiff's compensation under that agreement would be paid to a trust, rather than to his estate, if he died during the five-year term of those payments. The parties further modified the 2004 Non–Competition Agreement in 2009 and, on the same day that such modification was executed, they also executed another employment agreement, the 2009 Employment Agreement. In deciding the motions of the parties, the court concluded that "the 2009 [E]mployment [A]greement constituted the entire agreement between the parties and the stand-alone restrictive covenants necessarily merged with the 2009 [E]mployment [A]greement," based on, inter alia, an integration clause inserted in that document. The court further concluded that the restrictive covenants in the 2009 Employment Agreement expired in 2012 at the conclusion of the three-year duration of that agreement, regardless of the fact that plaintiff continued to be employed by defendant for an additional five years. We agree with defendant that the court erred in reaching those conclusions.

First, the integration clause in the 2009 Employment Agreement expressly states that it supersedes the 2004 Employment Agreement, but it does not include any language purporting to supersede the 2004 Non–Competition Agreement. Thus, employing the maxim of contract interpretation stating that "inclusio unius est exclusio alterius (the inclusion of one is the exclusion of another)" ( Uribe v. Merchants Bank of N.Y., 91 N.Y.2d 336, 340, 670 N.Y.S.2d 393, 693 N.E.2d 740 [1998] ; see Matter of Avella v. City of New York, 29 N.Y.3d 425, 436 n. 5, 58 N.Y.S.3d 236, 80 N.E.3d 982 [2017] ; Niagara Frontier Transp. Auth. v. Euro–United Corp., 303 A.D.2d 920, 921, 757 N.Y.S.2d 174 [4th Dept. 2003] ), we conclude that the integration clause does not require a determination that the 2009 Employment Agreement supersedes the 2004 Non–Competition Agreement.

Moreover, the parties included a term in the 2009 Employment Agreement that was not included in the 2004 version, to wit, the 2009 version also defines the post-employment period as "the period of three (3) years from the last day of the [plaintiff's] employment by [defendant] or any affiliate of" defendant. The restrictive covenant in the 2009 Employment Agreement states that plaintiff will abide by the specified restrictions "during the Employment Period and the Post–Employment Period."

In addition, on the same day in 2009 the parties also amended the 2004 Non–Competition Agreement by changing the post-employment period during which plaintiff would still be bound by the Restrictive Covenants in the 2004 Non–Competition Agreement, so that the restrictions were operative for a period of three years commencing on the "Termination Date." That date, as defined in the 2004 Non–Competition Agreement and explicitly incorporated into the 2009 amendment, was defined as "that last day of [plaintiff's] employment by [defendant] or any affiliate of" defendant.

"It is well settled that a contract must be read as a whole to give effect and meaning to every term ... Indeed, [a] contract should be interpreted in a way [that] reconciles all [of] its provisions, if possible" ( O'Brien & Gere, Inc. of N. Am. v. G.M. McCrossin, Inc., 148 A.D.3d 1804, 1805, 52 N.Y.S.3d 593 [4th Dept. 2017] [internal quotation marks omitted]; see Spellane v. Natarajan, 169 A.D.3d 1406, 1407, 93 N.Y.S.3d 489 [4th Dept. 2019] ; Maven Tech., LLC v. Vasile, 147 A.D.3d 1377, 1378, 46 N.Y.S.3d 720 [4th Dept. 2017] ). Thus, "[a]ll parts of the contract must be read in harmony to determine its meaning...