Seiden Associates, Inc. v. ANC Holdings, Inc.

• Decision Date: 08 July 1991
• Docket Number: No. 90 Civ. 5130 (MBM).,90 Civ. 5130 (MBM).
• Citation: Seiden Associates, Inc. v. ANC Holdings, Inc., 768 F.Supp. 89 (S.D. N.Y. 1991)
• Parties: SEIDEN ASSOCIATES, INC., Plaintiff, v. ANC HOLDINGS, INC. and American National Can Company, Defendants.
• Writing for the Court: Jeremy G. Epstein and Michael W. Jahnke, Shearman & Sterling, New York City, for defendants
• Court: U.S. District Court — Southern District of New York

768 F. Supp. 89

SEIDEN ASSOCIATES, INC., Plaintiff, v. ANC HOLDINGS, INC. and American National Can Company, Defendants.

No. 90 Civ. 5130 (MBM).

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

July 8, 1991.

COPYRIGHT MATERIAL OMITTED

Daniel A. Pollack, Pollack & Kaminsky, New York City, for plaintiff.

Jeremy G. Epstein and Michael W. Jahnke, Shearman & Sterling, New York City, for defendants.

OPINION AND ORDER

MUKASEY, District Judge.

Plaintiff Seiden Associates, a New York executive recruiting firm, sues for a portion of its fee allegedly earned by causing William N. Sick, Jr. to be hired as chief executive officer of American National Can Company ("Can"), a Delaware Corporation with its principal place of business in Chicago. In an earlier opinion published at 754 F.Supp. 37, I denied defendants' motion to dismiss plaintiff's quantum meruit and unjust enrichment claims because the existence of a written contract governing the same subject matter did not, as a matter of law, preclude quasi-contractual recovery from entities that were not parties to the contract. Both sides have now moved for summary judgment on plaintiff's contract claims. For the reasons set forth below, defendants' motion for summary judgment is granted. In addition, because it is now clear that defendant ANC Holdings Inc. (ANC) is a successor-in-interest to a party to the original contract, plaintiff's unjust enrichment and quantum meruit claims are also dismissed.

I.

On December 2, 1986, Seiden entered into a contract dated October 31, 1986 with Triangle Industries Inc. to recruit a Chief Executive Officer for Triangle's container business. Plaintiff's Rule 3(g) Statement ¶ 2. ANC is a successor-in-interest to Triangle. Id. ¶ 3; Stelzel Aff. ¶ 16. The contract, which plaintiff drafted, provided that it would be compensated as follows:

Our fee for this assignment, which shall be an exclusive one, will be equivalent to 30% (thirty percent) of the executive's first year's earned base and incentive compensation, reduced by the paid portion of our retainer but not lower than the total retainer, as set forth in the following paragraph. The final fee will be determined 12 months from the date of employ.

As such retainer, Triangle Industries Inc. agrees to pay Seiden Associates $300,000 (three hundred thousand) in five equal monthly payments of $60,000 (sixty thousand) beginning on the date this letter is signed by you. This retainer is based on 30% of the Chief Executive Officer's initially estimated first year's total cash compensation of $1 million.

When the Chief Executive Officer of your container business is hired, we shall be entitled to the unpaid balance of our $300,000 retainer, which shall be non-refundable.

Seiden Aff., Exh. A.

During 1987, Seiden contacted and evaluated over 100 candidates for the position and eventually recruited William N. Sick, Jr. to serve as Chief Executive Officer of Can, effective January 1, 1988. Plaintiff's Rule 3(g) Statement ¶ 6. Seiden assisted Sick in negotiating the terms of his employment. Defendants' 3(g) Statement ¶ 10. Sick and Can eventually agreed to a five-year employment agreement, dated January 1, 1988, which provided that Sick would receive an annual salary of $800,000 and would be "eligible to receive a cash bonus award up to an amount equal to 100% of the actual salary payable ... for such year." Stelzel Aff., Exh. F. § 2.1.2. The agreement further provided that the cash bonus "shall be based upon the achievement, as determined by ... Can's Board of Directors in the exercise of its reasonable judgment" of certain company and individual performance goals set by Can's Board at the beginning of the year and that it would "be payable in a lump sum on or before each April 1 for the immediately preceding calendar year." Id. Thus, Sick's right to receive the bonus was subject to the Board's reasonable discretion and was payable any time on or before April 1 of the following year. Defendants' Rule 3(g) Statement ¶ 12. In addition to this discretionary bonus, Sick was also eligible to receive compensation from a Deferred Performance Incentive Plan and two stock option plans. Stelzel Aff., Exh. F §§ 2.1.3, 2.1.4.

Sick started employment with Can on January 1, 1988. Stelzel Aff. ¶ 3. According to Sick's 1988 W-2 form, Sick was paid total cash compensation of $800,004 during calendar year 1988. In addition to cash compensation, Sick's W-2 also shows $4,700 for "tax preparation," $173,437.50 for "stock options," and $45,189.67 for "moving expense." Stelzel Aff., Exh. A. Thus, his total 1988 earnings, before 401-K contributions, was $1,023,331.17. Meanwhile, during 1988, both Triangle and its subsidiaries, including Can, were sold to the Pechiney Group. Stelzel Aff. ¶ 15. As mentioned, defendant ANC is a successor-in-interest to Triangle. Id. ¶ 16; Plaintiff's Rule 3(g) Statement ¶ 2. Pechiney Group apparently became the parent of both defendants as a result of the sale.

On March 1, 1989, the Chairman of Pechiney, Jean Gandois, determined that Sick should be granted a discretionary bonus of $1 million. Seiden Aff. ¶ 7, Exh. C; Stelzel Aff. ¶ 18. There is no dispute that this bonus was applicable to Sick's performance during 1988, and could therefore be considered "earned" during that year. However, it is also undisputed that neither defendant was obligated to pay that bonus, nor was Sick entitled to receive it, until March 1, 1989.

The Annual Report on Form 10-K filed by Trian Holdings, Inc., apparently another successor of Triangle (Seiden Aff. ¶ 5), shows that for the year ended December 31, 1988, Sick was paid "Cash Compensation" of $2,041,206. Seiden Aff., Exh. B. There is no dispute that this amount includes Sick's $1 million discretionary bonus, id. ¶ 7, as well as the other items on his W-2 form.¹

The dispute in this case is straightforward. Seiden contends that, under its contract, it is entitled to a total placement fee of $612,361.80, which it calculates by multiplying Sick's "cash compensation" set forth in the annual report by 30%. Because Seiden already has received a $300,000 advance retainer, it sues for the remainder of $312,361.60. In particular, Seiden contends that the $1 million discretionary bonus, determined by Gandois on March 1, 1989, should be used in calculating the total fee. On the other hand, defendants contend that the contract clearly and unambiguously provided that the final fee was to be determined 12 months from the date of employ and that, therefore, only amounts which Can had paid or was obligated to pay Sick as of December 31, 1988 (the "final fee date") were to be used in calculating Seiden's final fee. Defendants contend that Sick's 1988 cash compensation of $800,004, as set forth in his W-2 form, is the only item relevant to the fee calculation. Therefore, defendants assert that because 30% of that amount, $240,001.20, is less than the amount already paid, Seiden is not entitled to an additional fee. Moreover, defendants contend that the term "incentive cash compensation" —as used in the contract — referred to a specific type of long-term cash incentive available to Can management, namely the "Deferred Performance Incentive Plan," and did not include the $1 million discretionary bonus.

II.

Under Fed.R.Civ.P. 56(c), a trial judge must grant summary judgment if the evidence demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). In determining whether there is a genuine issue of material fact, a court must resolve all ambiguities, and draw all reasonable inferences, against the moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam), cited in Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir.1987).

The mere existence of disputed factual issues is insufficient to defeat a motion for summary judgment. Knight v. United States Fire Ins. Co., 804 F.2d 9, 11-12 (2d Cir.1986). The disputed issues of fact must be "material to the outcome of the litigation," Knight, 804 F.2d at 11, and must be backed by evidence that would allow "a rational trier of fact to find for the non-moving party." Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Id. With respect to materiality, "the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.

Summary judgment may be appropriate in contract actions where the language of the relevant agreement is unambiguous. Under New York law, which governs this dispute, if a contract is unambiguous on its face, its proper construction is a question of law. United States Naval Institute v. Charter Communications, Inc., 875 F.2d 1044, 1048 (2d Cir.1989). Furthermore, extrinsic evidence is inadmissable to contradict an unambiguous contract.

"Contract language is unambiguous if it has `a definite and precise meaning unattended by the danger of misconception in the purport of the contract itself, and concerning which there is no reasonable basis for a difference of opinion.' Language whose meaning is otherwise plain is not ambiguous merely because the parties urge different interpretation in the litigation. The court should not find the language ambiguous on the basis of the interpretation urged by one party, where that interpretation would `strain the contract language beyond its reasonable and ordinary meaning.'

"The parties' rights under

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