Whelan v. Toughman, Inc.
| Decision Date | 12 July 2010 |
| Docket Number | No. SC09–392.,SC09–392. |
| Citation | 957 N.Y.S.2d 639,28 Misc.3d 1207,2010 N.Y. Slip Op. 51203 |
| Parties | Charles WHELAN, Plaintiff, v. TOUGHMAN, INC., Defendant. |
| Court | New York City Court |
OPINION TEXT STARTS HERE
Donald Sandford, Esq., for Plaintiff.
Scott Forcino, Esq., for Defendant.
1 A triathlon is a multi-sport endurance event consisting of swimming, cycling, and running in immediate succession over various distances. Neither regular business relations nor litigation is customarily a component of a triathlon. Thus, this case. This is a small claims action brought against a triathlon organizer for services rendered by the plaintiff to the defendant. The defendant counterclaims claiming plaintiff misappropriated advertising space and apparel, a failure to perform and unfair competition. The parties once shared a love of triathlon and worked together to promote the local event. Now they get their rush, not from adrenaline or endorphins 2, but from casting charges and aspersions against each other.
The arrangement between the parties is notable by the absence of any written agreement or any writing at all specifying what plaintiff was to do or how much he would be paid. The plaintiff and the principal officer of the defendant had known each other for about ten years through participation in triathlons and running. The defendant operated the Westchester triathlon in 2008 and 2009. At some point, plaintiff began providing design services and web site programming services for defendant. Defendant paid plaintiff on a series of invoices for the 2008 and 2009 events, but stopped payment on the last issued check in the amount of $2,000.00. The plaintiff claimed he had an agreement with the defendant to perform the work but never testified that there was any agreement as to the amount he would be paid. Instead, plaintiff said he set his price based upon a standard set by an industry association.
Recovery under the theory of quantum meruit is not appropriate where an express contract governed the subject matter involved. Parker Realty Group, Inc. v. Petigny, 14 NY3d 864, 2010 WL 1790975 [2010]. Plaintiff has failed to prove an express agreement here.
To state a cause of action to recover in quantum meruit, a plaintiff must allege: (1) the performance of services in good faith; (2) the acceptance of the services by the person to whom they are rendered; (3) an expectation of compensation therefor; and (4) the reasonable value of the services allegedly rendered. Miranco Contracting, Inc. v. Perel, 57 AD3d 956, 871 N.Y.S.2d 310 [2nd Dept, 2008]. Here, plaintiff performed services although the defendant claims the services were not performed properly and were not performed in good faith. While plaintiff claims an expectation of payment, the defendant claims the services were part of a continuing pattern of volunteered services. The reasonable value is disputed. There is no doubt that defendant accepted plaintiff's services and that the plaintiff expected to be paid therefor.
Performance and acceptance of services are held to give rise to a legal inference of a promise to pay the reasonable value of such services. This inference, however, does not arise where, because of the relationship of the parties it is natural that such service should be rendered without expectation of pay. Moors v. Hall, 143 A.D.2d 336, 338, 532 N.Y.S.2d 412, 414 [2nd Dept, 1988]. The question of whether a party had a reasonable expectation of compensation for services rendered is a matter for the trier of fact to determine based on the evidence before it. In re Alu, 302 A.D.2d 520, 755 N.Y.S.2d 289 [2nd Dept, 2003].
The defendant claims that the services were not performed in good faith since (1) plaintiff was virtually the only person to be paid for working on the events as most of the workers at the triathlon were volunteers working for the not for profit event that raised funds for charities; (2) the plaintiff used his relationship to misappropriate goods and intellectual property from the defendant for his own use or the benefit of his brother's cycle shop; and (3) plaintiff's work was shoddy and involved use of publicly available materials.
Allegations are insufficient “to state a cause of action in quantum meruit where none of the services allegedly performed are so distinct from the duties of employment and of such nature that it would be unreasonable for the employer to assume that they were rendered without expectation of further pay” (Freedman v. Pearlman, 271 A.D.2d 301, 304 [1st Dept 2000]; LaJaunie v. DaGrossa, 159 A.D.2d 349, 349 [1st Dept 1990] [] ). Root v. Swig Equities, LLC, 27 Misc.3d 1222(A), 2010 WL 1945730 (Table) [Sup Ct New York County, 2010]. Here, there was a mixture of admittedly volunteer services performed by plaintiff and services for which plaintiff seeks payment. Defendant relies on the assumption that the plaintiff's services were rendered without the expectation of further pay. This assumption is further bolstered by the not-for-profit nature of the defendant's events and the mixture of services offered by plaintiff. However, the defendant's issuance of the final $2,000.00 check to pay plaintiff the amount he billed strongly suggests that there was not only an expectation of payment on the plaintiff's part, but acquiescence on the defendant's part. The parties could have easily protected themselves by reducing their understanding to writing, thus leaving no doubt as to what was to be done and how much was to be paid for the work, if anything.
The plaintiff rests his value of his services on a published industry-suggested standard. Defendant claims that the industry standard rate is excessive and violates the Sherman Act, 15 USC § 1, and the Donnelly Act, General Business Law § 340. Sherman Act and Donnelly Act prohibitions extend to instances of price fixing that occur in connection with a trade association published rate schedule, even when association members are not compelled to set prices accordingly. United States v. Nationwide Trailer Rental Sys., Inc., 156 F Supp 800, 805 [D. Kans.], aff'd per curiam,355 U.S. 10 [1957]. Publication alone is a per se violation of the antitrust laws, when the intent is to confer a particular benefit to members and thereby “have a definite effect on prices.” Plymouth Dealers' Association v. United States, 279 F.2d 128, 133–134 [9th Cir.1960].
In interpreting the Donnelly Act, New York courts generally follow federal case law analyzing the Sherman Act. People v. Rattenni, 81 N.Y.2d 166, 171, 597 N.Y.S.2d 280 [1993];X.L.O. Concrete Corp. v. Rivergate Corp., 83 N.Y.2d 513, 611 N.Y.S.2d 786 [1994](there is no difference in the language of the Sherman and Donnelly Acts, or the public policies sought to be protected therein, which suggest that Federal precedents should not govern); & Anheuser–Busch, Inc. v. Abrams, 71 N.Y.2d 327, 335, 525 N.Y.S.2d 816 [1988] (). Indeed, the Donnelly Act has been called the “little Sherman Act”. 3Id. at 333, 525 N.Y.S.2d at 818.See also State of New York v. Mobil Oil Corp., 38 N.Y.2d 460, 463, 381 N.Y.S.2d 426 [1976].
Authority is not conclusive on whether setting a price according to a suggested range of fees subverts competition and thus, falls within the ambit of the Sherman and Donnelly Acts. See U.S. v. Socony–Vacuum Oil Co., 310 U.S. 150, 60 S Ct 811 (1940) (); But see U.S. v. Trenton Potteries, Co., 273 U.S. 392, 47 S Ct 377 (1927) () and Nationwide Trailer Rental Sys., Inc., 156 F Supp 800 at 805 (). See also, Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975).
Defendant faces other hurdles in advancing federal and state antitrust violations as a defense in the present action. As a defense to an action based on contract, the plea of illegality based on violation of the Sherman Act has not met with much favor in the Supreme Court. This has been the case notably where the plea has been made by a purchaser in an action to recover from him the agreed price of goods sold. Kelly v. Kosuga, 358 U.S. 516, 79 S Ct 429 [1959].See also, Viacom International Inc. v. Tandem Productions, Inc., 526 F.2d 593 [2d Cir.1975]. Federal courts permit antitrust defenses to contract actions only when the enforcement of the contract itself would violate the antitrust laws. The defense has been narrowly construed and confined to circumstances where there is a violation of the antitrust laws inhering in the sale. See e.g., Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 81 S Ct 623 [1961].
New York courts that have considered interposition of antitrust defenses in contract actions have followed the rule and rationale of Kelly. Winters Bros. Recycling Corp. v. H.B. Millwork, Inc., 72 AD3d 942, 900 N.Y.S.2d 99 [2nd Dept, 2010]. See also, Dachowitz v. Bergman, 113 Misc.2d 236, 239, 448 N.Y.S.2d 381 [Sup Ct, New York County 1982]; Fleet–Wing Corp. v. Pease Oil Co., 29 Misc.2d 437, 441, 212 N.Y.S.2d 871 [Sup Ct, Erie County], mod. on other grounds14 A.D.2d 728, 218 N.Y.S.2d 533[ 4th Dept 1961]; Mobil Oil Corp. v. Rubenfeld, 48 A.D.2d 428, 370 N.Y.S.2d 943 [2nd Dept 1975]; New York Stock Exch. v. Goodbody & Co., 42 A.D.2d 556, 345 N.Y.S.2d 58 [1st Dept 1973] (...
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