Novick v. Axa Network Llc

• Decision Date: 13 June 2011
• Docket Number: Docket No. 09–5277–cv.
• Citation: 642 F.3d 304,79 Fed.R.Serv.3d 1369
• Parties: Steven S. NOVICK, Plaintiff–Counterclaim–Defendant–Appellant,v.AXA NETWORK, LLC, AXA Advisors, LLC, Defendants–Counterclaimants–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

642 F.3d 304

79 Fed.R.Serv.3d 1369

Steven S. NOVICK, Plaintiff–Counterclaim–Defendant–Appellant,

v.AXA NETWORK, LLC, AXA Advisors, LLC, Defendants–Counterclaimants–Appellees.

Docket No. 09–5277–cv.

United States Court of Appeals, Second Circuit.

Argued: Jan. 5, 2011.Decided: June 13, 2011.

Michael S. Finkelstein, Garden City, NY (Finkelstein & Feil, Garden City, NY, on the brief), for Plaintiff–Counterclaim–Defendant–Appellant.

Michael A. Kalish, New York, NY, (Howard Schragin, Epstein, Becker & Green, New York, NY, on the brief), for Defendants–Counterclaimants–Appellees.Before: KEARSE, WINTER, and HALL, Circuit Judges.KEARSE, Circuit Judge:

Plaintiff Steven S. Novick, who commenced the present action against defendants AXA Network, LLC (“AXA Network”), and its sister company AXA Advisors, LLC (“AXA Advisors”) (collectively “AXA”), asserting claims of breach of contract and various business torts in connection with AXA's alleged wrongful termination of Novick's employment affiliation with AXA, has appealed from a partial final judgment of the United States District Court for the Southern District of New York, Alvin K. Hellerstein, Judge, granting summary judgment in favor of AXA on one of its counterclaims against Novick for nonrepayment of the outstanding balance of a loan for which he had given a promissory note. The district court ruled that there were no genuine issues of fact to be tried as to that counterclaim and, citing Fed.R.Civ.P. 54(b), ordered that a partial final judgment be entered immediately on that counterclaim, requiring Novick to pay AXA $539,038.77 plus interest, costs, and expenses including attorneys' fees. On appeal, Novick contends that (1) summary judgment was inappropriate, arguing that the promissory note and his affiliation agreements with AXA involved contractually interdependent promises and that AXA failed to fulfill its own obligations, and (2) the court abused its discretion in denying his request, pursuant to Fed.R.Civ.P. 62(h), that execution on the partial final judgment be stayed pending resolution of his claims against AXA. For the reasons discussed below, we conclude that the district court's Rule 54(b) certification was inappropriate, and we thus dismiss the appeal for lack of appellate jurisdiction.

I. BACKGROUND

The parties' pleadings reveal the following agreements. In November 2002, Novick, a stockbroker and insurance salesman with a sizeable book of clients, entered into agreements with AXA Advisors, a broker/dealer, and AXA Network, an insurance company, pursuant to which Novick became affiliated with those companies as an independent contractor (the “Affiliation Agreements” or “Agreements”). The parties agreed, inter alia, that Novick, upon terminating his affiliation with another company, would serve his clients through AXA, and that AXA would compensate Novick principally by paying him commissions based on the total AXA revenues he generated. The parties also agreed that AXA would give Novick, as a “Proven Producer,” two early loans, one for $500,000 and one for $1 million, to assist him with the expense of ending his prior business affiliation. In connection with these loans, Novick executed promissory notes in favor of AXA Network, one in January 2003 for $500,000 (the “January Loan Note”) and the other in August 2003 for $1 million (the “August Loan Note” or “Loan Note”). The latter is the promissory note that is the subject of this appeal.

“The [August] Loan Note was secured by interests in Novick's commissions, compensation and other amounts payable to him by AXA.” (AXA Counterclaims ¶ 22). The Loan Note provided that, if Novick defaulted on his loan payment obligations, AXA could “apply (directly or by the way of set-off) to the payment of any amounts owing by [Novick] ... all commissions, compensation of any kind and other amounts in any form payable to [Novick] under any of [Novick's] agreements with AXA.” (August Loan Note at 2.) Although October 1, 2008 was the date by which the loan was scheduled to be repaid in full ( see id. at 1), the Loan Note also provided that “[i]f any of [Novick's] AXA Agreements or [Novick's] affiliation with AXA is terminated for any reason, the entire amount owed under this Note shall automatically become immediately due and payable” ( id. at 2 (the “acceleration clause”)).

In October 2006, AXA terminated the Affiliation Agreements with Novick, stating that its action was based on Novick's failure to comply with all the provisions or conditions of the Agreements. In November 2006 and again in June 2007, AXA demanded payment of the unpaid principal amount of the August Loan Note, which was $450,000, plus all accrued interest. Novick made no further payments.

Novick commenced the present action against AXA Network in August 2007, adding AXA Advisors as a defendant in an amended complaint, asserting claims for breach of contract and various business torts, alleging that AXA had failed to pay him commissions to which he was entitled and had terminated its affiliation with him in retaliation for his “whistle blowing” to AXA management about sales-practice violations allegedly committed by another AXA broker. ( See Amended Complaint ¶¶ 9–10, 14–15.) Alleging that “AXA's conduct has damaged Mr. Novick in an amount in excess of $460,491.78”—the amount demanded by AXA in November 2006 (Amended Complaint ¶ 35)—the first cause of action in Novick's amended complaint requested a declaratory judgment “adjudicat[ing] the rights and other legal relationships of the parties” ( id. ¶¶ 33, 36) with regard to the Affiliation Agreements ( see id. ¶¶ 23–26), the January Loan Note ( see id. ¶¶ 27–33), and the August Loan Note ( see id. ¶¶ 34–36). The amended complaint also asserted causes of action for, inter alia, unfair business practice and interference with Novick's prospective business relationships, alleging that AXA, after terminating the Affiliation Agreements, made false statements about Novick in a regulatory filing and in communications with Novick's clients, whom AXA solicited to sever their ties with Novick and become clients of other AXA agents. ( See id. ¶¶ 53–70.) The amended complaint's prayer for relief included requests for “at least $10,000,000” in compensatory damages ( id. WHEREFORE ¶ (a)), and a “declar[ation] that Plaintiff is relieved of any financial obligation created pursuant to either the [January Loan Note] or the $1 million [August] Loan Note” ( id. WHEREFORE ¶ (b)).

AXA filed an answer and asserted counterclaims with respect to Novick's failures to pay the amounts due on the January Loan Note and the August Loan Note, along with a third counterclaim alleging unjust enrichment. Following a period of discovery, AXA moved for partial summary judgment on its counterclaim with respect to the August Loan Note. It argued that there were no genuine issues of fact to be tried as to, inter alia, (a) AXA's making the $1 million loan, (b) Novick's giving AXA the promissory note in that amount, (c) Novick's repayment of only $550,000 of that amount, leaving an outstanding principal balance of $450,000, and (d) the terms of the promissory note making Novick's outstanding debt on that loan due immediately upon termination of the Affiliation Agreements “for any reason” and making Novick liable for the expenses of collection. AXA stated that as of the date of the motion, accrued interest amounted to $89,038.77, making the total due $539,038.77.

Novick, without disputing his execution of the August Loan Note, opposed the motion on the grounds, inter alia, (1) that one of his claims is for breach of contract based on AXA's alleged failure to compensate him fully for his work under the Affiliation Agreements, that that failure by AXA unfairly prevented him from making additional payments on the August Loan Note, and that the amounts due him on that claim should constitute a setoff of the amount he owed under the August Loan Note; and (2) that given his claim that AXA wrongfully terminated the Affiliation Agreements in retaliation for Novick's having blown the whistle on wrongdoing by another AXA employee, AXA should not be allowed to invoke the August Loan Note's acceleration clause.

Novick argued that setoff should be allowed because his promissory note and the promises in the Affiliation Agreements were interdependent. In support of that argument, he submitted a copy of an AXA interoffice email dated October 16, 2001 (“AXA Internal Email” or “AXA Email”), describing the then-ongoing negotiations for the Affiliation Agreements and the up-front loans that Novick needed to cover the cost of bringing his clients' business to AXA. As to what AXA was offering in order “to bring him on board,” the AXA Email listed, inter alia, the proposed $1 million loan to Novick—along with a $500,000 forgivable loan that would be “paid up front and earned out based on his production, like the normal proven producer bonus”—stating that “[t]his would give him $1.5 million at signing.”

Novick requested, if the court were to grant AXA's motion and enter a partial final judgment on the August Loan Note counterclaim, that the court stay enforcement of such a judgment pursuant to Fed.R.Civ.P. 62(h) pending resolution of Novick's claims, contending that his recovery on those claims would offset part or all of any amounts due on AXA's August Loan Note counterclaim. Novick stated that if execution were allowed immediately, it would cause him undue hardship, prejudice his attempt to pursue his claims, and cripple him financially.

The district court, in an order dated August 27, 2009 (“August 2009 Order”), granted AXA's motion for partial summary judgment on the August Loan Note counterclaim. Applying New York law, the court ruled, inter alia, that the counterclaim was separable from other claims because the agreements in question did not involve interdependent promises. The court reasoned that the Affiliation Agreements and the August...