Unker v. Joseph Markovits, Inc.

• Decision Date: 17 September 1986
• Docket Number: No. 85 Civ. 2022 (PKL),85 Civ. 5361 (PKL).,85 Civ. 2022 (PKL)
• Citation: 643 F. Supp. 1043
• Parties: Howard UNKER, Plaintiff, v. JOSEPH MARKOVITS, INC. and Nicholas V. Marsh, Defendants. JOSEPH MARKOVITS, INC., Plaintiff, v. Howard UNKER, Defendant.
• Court: U.S. District Court — Southern District of New York

643 F. Supp. 1043

Howard UNKER, Plaintiff, v. JOSEPH MARKOVITS, INC. and Nicholas V. Marsh, Defendants.

JOSEPH MARKOVITS, INC., Plaintiff, v. Howard UNKER, Defendant.

Nos. 85 Civ. 2022 (PKL), 85 Civ. 5361 (PKL).

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

September 17, 1986.

Donner, Hariton & Berka, P.C., Bay Shore, N.Y. (Ira M. Hariton, of counsel), for plaintiff/defendant Howard Unker.

Golenbock and Barell, New York City (Arthur M. Handler, of counsel), for defendant/plaintiff Joseph Markovits, Inc. and defendant Nicholas V. Marsh.

LEISURE, District Judge.

The above-captioned actions are related, at least insofar as they involve common parties and both arise out of events that occurred during and shortly after the period in which Howard Unker ("Unker") was employed by Joseph Markovits, Inc. ("JMI"), a New York corporation in the business of importing and selling artificial flowers.

In the first action, Unker v. JMI, 85 Civ. 2022 ("85-2022"), Unker has brought suit against his former employer as well as Nicholas V. Marsh ("Marsh"), President and Chairman of the corporate defendant. Unker's amended complaint sets forth four causes of action: a claim for breach of a severance pay compensation agreement against JMI; a claim for breach of an employment contract against JMI; a claim against Marsh individually for defamation; and a claim against JMI for Marsh's defamatory remarks, which Unker alleges were made in the scope of Marsh's employment at JMI. Unker's defamation claim against Marsh includes a prayer for punitive damages.

Defendants in 85-2022 have moved, pursuant to Fed.R.Civ.P. 12(b)(6), to dismiss Unker's employment contract claim and defamation claim against JMI. Defendant Marsh has also moved to dismiss any claim against him for punitive damages.

In the second action, JMI v. Unker, 85 Civ. 5361 ("85-5361"), JMI is suing its former employee for Unker's alleged default or promissory note. In 85-5361, both plaintiff and defendant have moved for summary judgment.

Subject matter jurisdiction in both actions is based upon diversity of citizenship, 28 U.S.C. § 1332.¹

I. UNKER'S SUIT FOR BREACH OF CONTRACT AND DEFAMATION (85-2022)

It is axiomatic that for purposes of a motion under Rule 12(b)(6), the allegations of the complaint must be taken "at face value." California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 515, 92 S.Ct. 609, 614, 30 L.Ed.2d 642 (1972). A motion to dismiss for failure to state a claim tests only the sufficiency of a complaint. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). It should not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); accord Anderson v. Coughlin, 700 F.2d 37, 40 (2d Cir.1983).

A. Breach of Employment Contract

In 1977, having worked at JMI as the firm's Controller for over eight years, Unker was promoted to Vice President and given broad financial and administrative responsibilities. See Amended Complaint (85-2022) (hereinafter "Unker AC") ¶ 7. Unker alleges that one year earlier, in Spring 1976, JMI requested that he move from his home in South Jersey (English-town) to North Caldwell, New Jersey in order to be closer to the company plant in Totawa, New Jersey. See Unker AC ¶ 21.

Unker further alleges that, in reliance on what he terms JMI's "express promise" of long-term job security, he moved his family from their $30,000 home in Englishtown to a $90,000 home in North Caldwell. See Unker AC ¶ 24.² Although Unker admits that JMI consistently refused to accede to his request for a written, long-term employment, he nonetheless alleges that he was repeatedly told by the company's agents that JMI's "express policy was not to fire employees, particularly high level employees, without just cause." Unker AC ¶ 23. Thus, Unker alleges, JMI breached an express contract of employment with plaintiff by firing him without just cause on July 5, 1984. See Unker AC ¶¶ 37-38.

In moving to dismiss Unker's claim for breach of an employment contract, JMI relies upon the New York Court of Appeals' pronouncement that "absent ... an express limitation in the individual contract of employment, an employer's right at any time to terminate an employment at will remains unimpaired." Murphy v. American Home Products Corp., 58 N.Y.2d 293, 305, 448 N.E.2d 86, 91, 461 N.Y.S.2d 232, 237 (1983); see also Sabetay v. Sterling Drug, Inc., 114 A.D.2d 6, 7, 497 N.Y.S.2d 655, 656 (1st Dep't 1986) (under New York law, "hiring is presumed to be at will").³

Unker, in turn, relies on Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 443 N.E.2d 441, 457 N.Y.S.2d 193 (1982), in which the New York Court of Appeals found that an express statement in a company's policy statement did constitute a limitation on the employer's right to hire and fire at will. See id, 57 N.Y.2d at 465, 443 N.E.2d 441, 457 N.Y.S.2d 193. JMI points out, however, that Unker has failed to allege the existence of any written statement such as the one discussed in Weiner. Furthermore, JMI argues, Unker's allegations that he received constant assurances of long-term job security do not, standing alone, create a cause of action for breach of contract. See Gould v. Community Health Plan of Suffolk, Inc., 99 A.D.2d 479, 479-80, 470 N.Y.S.2d 415, 417 (2d Dept.1984); see also O'Connor v. Eastman Kodak, 65 N.Y.2d 724, 725, 481 N.E.2d 549, 550, 492 N.Y.S.2d 9, 10 (1985) (popular perception of defendant as "womb to tomb" employer did not limit employer's common law right to terminate employment at will).

Nonetheless, although the facts of Wiener are obviously distinguishable from those in the case at bar, it is difficult to ignore that Court's statement that "an agreement on the part of an employer not to dismiss an employee except for `good and sufficient cause only' ... does not create an ineluctable employment at will." Wiener, 57 N.Y.2d at 465, 443 N.E.2d 441, 457 N.Y.S.2d 193. Significantly, Unker has specifically alleged that JMI, through its agents and employees expressly "promised plaintiff that he would not be terminated unless for just cause." Unker AC ¶ 29.⁴

Moreover, Unker's admission that JMI's promise of long-term employment was never put in writing is not fatal to his claim. Such promises, even if only made orally, are clearly enforceable if found to be supported by sufficient consideration. See Ohanian v. Avis Rent A Car System, Inc., 779 F.2d 101, 109 (2d Cir.1985). In Ohanian, the Second Circuit, applying New York law, found that the plaintiff employee had presented sufficient evidence at trial for the jury to have found the existence of a contract of lifetime employment terminable by the employer only for just cause. See id. In addition, the Court indicated that plaintiff Ohanian's relocation from San Francisco to New York provided adequate consideration for his employer's oral promise of lifetime employment, see id., an observation with clear application to Unker's allegation that he relocated his family at considerable expense in reliance on JMI's express promise that he would not be fired without just cause. See Unker AC ¶ 24.

Even the dissent in Ohanian implied that a claim for breach of an oral contract for lifetime or long-term employment might well withstand an attack on the sufficiency of the complaint if, as here, the defendant raised no question as to the Statute of Frauds. See Ohanian, 779 F.2d at 119 (Wyatt, J., dissenting). Accordingly, it can hardly be said, with regard to Unker's claim that JMI breached its contract of employment, that "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. at 45-46, 78 S.Ct. at 102. Under such circumstances, dismissal for failure to state a claim is a drastic step which must not be taken. See Meyer v. Oppenheimer Management Corp., 764 F.2d 76, 80 (2d Cir.1985).

B. Defamation

Unker alleges that at various times from April 1984 to June 1985, both at JMI's New Jersey plant and at its New York offices, defendant Marsh published a series of defamatory remarks about Unker to third persons. See Unker AC ¶¶ 41-46. For example, Marsh allegedly told others that Unker's actions had financially harmed JMI, see id. ¶¶ 41, 44, and that Unker was a "kike" and a "blackmailer." Id. ¶ 43. Unker further alleges that he has been emotionally traumatized as a result of Marsh's defamatory remarks, and has suffered injury to his reputation that has left him unable to find employment, especially in the small, close-knit industry of imported flowers. See id. ¶¶ 48-51.

Based on these allegations, Unker seeks $2,016,000 in compensatory damages from both Marsh and JMI.⁵ In addition, Unker is suing Marsh for $2,500,000 in punitive damages.

1. Availability of Punitive Damages

Marsh argues that punitive damages are unavailable as a remedy in a wholly private dispute where no public rights are involved. In support of this proposition, Marsh cites Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 353 N.E.2d 793, 386 N.Y.S.2d 831 (1976), a case which involved "mere breach of contract," id., 40 N.Y.2d at 358, 353 N.E.2d 793, 386 N.Y.S.2d 831, and which was particularly concerned with "the issue of whether an arbitrator has the power to award punitive damages." Id. at 355, 353 N.E.2d 793, 386 N.Y.S.2d 831 (emphasis added). There is no reason to assume that the New York Court of Appeals, in deciding Garrity, intended to eliminate or even diminish the established right of a plaintiff to seek punitive damages for defamation upon a showing of actual malice. See 44 NY Jur2d, Defamation and Privacy § 137 at 132 (1985); see also Meehan v. Snow, 494 F.Supp. 690, 697 (S.D.N.Y.1980), rev'd on other grounds, 652 F.2d 274 (2d Cir.1981) (per curiam). Moreover, it cannot be argued that Garrit...