Thompson v. Gjivoje
| Decision Date | 12 July 1988 |
| Docket Number | No. 85 Civ. 8928 (RWS).,85 Civ. 8928 (RWS). |
| Citation | 687 F. Supp. 922 |
| Parties | David T. THOMPSON and Thompson Communications Companies, Inc., Plaintiffs, v. Davor G. GJIVOJE, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Cohn & Blau, New York City (Frederick H. Cohn, of counsel), for plaintiffs.
Anderson Russell Kill & Olick, P.C., New York City (R. Mark Keenan, Rosemary H. Yeoh, of counsel), for defendant.
Defendant Davor G. Gjivoje ("Gjivoje") has moved for summary judgment pursuant to Rule 56, to dismiss the three claims of plaintiffs David T. Thompson ("Thompson") and Thompson Communications Companies, Inc. ("TCC") For the reasons set forth below, the motion is granted.
Gjivoje was employed by TCC from late 1980 or early 1981 until April 1, 1983 as president of that concern. Among TCC's holdings, and of primary concern to Gjivoje, was a concern which ultimately became known as Networld. Networld was involved with the representation in the United States of foreign providers of land based travel services (such as hotel, ground transportation, etc.) primarily to United States group operators.
In 1983, due to TCC's financial problems, Gjivoje resigned from the firm. Shortly thereafter, however, Gjivoje contracted with Thompson to buy Networld — to be called New Networld. According to Gjivoje, the sale was suggested by Thompson in order to reduce TCC's financial difficulties.
The contract for sale was executed on April 27, 1983. The provisions in dispute in this action pertain to the purchase price, an agreement not to compete for six months, and an agreement on the part of Gjivoje to invest at least $100,000 in New Networld.1
In considering a motion for summary judgment a court is to determine whether there is a genuine issue of fact necessitating trial. Anderson v. Liberty Lobby, 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). The court "is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight v. United States Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, ___ U.S. ___, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987).
The first disputed provision, that relative to the purchase price, states as follows:
New Networld to pay to Thomspon 1/5 of New Networld's annual pre-tax profits (until $300,000 is paid) in exchange for Thompson's regular consulting services as will be agreed upon between Gjivoje, on behalf of the new Networld Company, and Thompson.
According to Gjivoje, this provision clearly conditions payment on New Networld's making a profit and on Thompson's continuing consulting services. Since, he claims, New Networld has not made such a profit and Thompson has not rendered his services, payment of the price is not owing.
Thompson, on the other hand, contends that Gjivoje has indeed made a profit, but that the profit has been concealed by the creation of a second entity. According to Thompson, after contracting for the sale of Networld, Thompson incorporated Networld into Networld Incorporated and then created a second entity called Networld Communications Incorporated. Thompson claims that assets were shifted between the companies thereby creating a paper loss. In his affidavit, he further asserts that this court should look to the aggregate profits of Gjivoje's companies. However, nothing in the contract forbids Gjivoje from starting another company, and Thompson's claim here is strictly for breach of contract. No fraud has been alleged.
Since Thompson has presented no contested facts with respect to the breach of contract — that is, he does not claim that Networld, Inc. per se made a profit — summary judgment will be granted. Thompson, however, will be granted leave to amend his complaint if he can substantiate a claim of fraud.
The second disputed provision states:
Gjivoje to continue consulting services for TCC in the Business Development area. Gjivoje and Networld will support all existing TCC business and will not for a period of 6 months from the termination of this contract pursuant to paragraph 8 solicit or accept business from existing TCC clients except on behalf of TCC, provided, however, that if TCC fails to make any payment to Gjivoje within 15 days of the due date hereunder then Gjivoje will be relieved of this noncompete agreement if he, for his part, agrees to pay commissions to TCC for any business obtained by Networld from companies who are clients of TCC on the date this agreement is signed in the same amounts and on the same schedule as TCC would have paid Gjivoje under this agreement, such commissions payable to TCC to be reduced by all commissions payable to Gjivoje from TCC. (emphasis in original).
Soon after this provision was adopted, Gjivoje began negotiations with Mastercard International Incorporated concerning a project encompassing a TCC feasibility study for a new electronic payment instrument known as the universal travel voucher. However, since TCC had competing accounts, it was agreed that Gjivoje and Networld take the account. Thus, the parties signed the following March 2, 1984 letter agreement modifying the contract:
This is to confirm that contrary to our agreement of April 1983, you have specifically asked in the presence of Marion Haller, that I (i.e. Networld) take on the Universal voucher project directly with MasterCard and sign with them an agreement to that effect.
The parties disagree as to the effect this agreement has on the original contract. Thompson, in his amended complaint, asserts that he is due commissions on the MasterCard deal under the original agreement. He opposes the motion on that ground.2
In addition, Thompson, in his papers responding to this motion, for the first time claims that he was fraudulently misled into signing away the MasterCard account in that Gjivoje did not reveal the true terms of the MasterCard agreement. This claim was not asserted in the amended complaint, and Thompson did not request leave to file a second amended complaint although Gjivoje's answer has been filed for two years. Fraud "must be asserted as an alternative to the breach of...
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