Wilson-Rich v. Don Aux Associates, Inc.

• Decision Date: 29 October 1981
• Docket Number: No. 80 Civ. 0741 (GLG).,80 Civ. 0741 (GLG).
• Citation: 524 F. Supp. 1226
• Parties: Bryan C. WILSON-RICH, Plaintiff, v. DON AUX ASSOCIATES, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

524 F. Supp. 1226

Bryan C. WILSON-RICH, Plaintiff, v. DON AUX ASSOCIATES, INC., Defendant.

No. 80 Civ. 0741 (GLG).

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

October 29, 1981.

Lieberman, Rudolph & Nowak, New York City, for plaintiff; Arthur M. Lieberman, New York City, of counsel.

Skadden, Arps, Slate, Meagher & Flom, New York City, for defendant; Kenneth A. Plevan, Joyce L. Kramer, New York City, of counsel.

OPINION

GOETTEL, District Judge:

Rocket of London, Inc. (Rocket) is a closely held corporation located in Branford, Connecticut. The company distributes medical products, which it imports from Rocket of London Ltd. (Rocket-London), a manufacturer of medical products in England. The plaintiff, Bryan C. Wilson-Rich, is the president of Rocket and owns fifty percent of the company. The other fifty percent is owned or controlled by Ernest Bernberg, who is the chairman of the board and managing director of Rocket-London. Of that fifty percent, ten percent is owned by Cedric Bernberg, Ernest's nephew, who is vice president of Rocket.

The defendant, Don Aux Associates, Inc. (Don Aux), is a small management consulting firm that specializes in small closely held corporations.¹ On August 5, 1979, Charles Auerbach, a salesman for Don Aux, visited the Branford offices of Rocket. Having asked to see the president of the company, Auerbach was directed to Wilson-Rich. During their conversation, Auerbach explained the services that Don Aux offered, and the plaintiff identified personnel motivation and morale as an area of concern in the company. At the conclusion of the meeting, Auerbach and Wilson-Rich signed a contract for an initial diagnostic survey² to be performed by Don Aux for Rocket. The contract was a one page form contract that lists the companies as the contracting parties, with the individuals signing on behalf of the companies. The contract had one handwritten note on the face of it, stating that payment of the fee was subject to the client's belief that the study was of significant value.

Between September 10 and September 19, 1979, two employees of Don Aux, Thomas O'Connor and Eileen Cummings,³ conducted the survey at Rocket's offices in Connecticut. They distributed questionnaires to all employees and on the basis of the questionnaires, selected several people for personal interviews. The fruits of this effort were compiled in a written report.

The report was very critical of the plaintiff's management of the company and included summaries of what the employees had said about his deficiencies. In at least a couple of cases, the employees who said certain things were identified, and in other cases, Wilson-Rich could probably figure out the source of the statement. (On the questionnaire given to the employees, Don Aux stated that those who responded to the survey would remain anonymous. Apparently, the individuals who were identified in the report had indicated that they did not care if their names were revealed.)⁴

On September 19, a copy of this report was mailed to Wilson-Rich, Ernest Bernberg, and Cedric Bernberg. (Apparently, it was Don Aux's policy to send reports to all stockholders who were active in the company.) Wilson-Rich, however, was incensed when he learned that the report had been sent to the Bernbergs. He called Don Aux and said that their contract had been breached and that the report was supposed to be confidential and sent only to him. Subsequently, he commenced this diversity action.

In Count One of his complaint, the plaintiff alleges that by sending the report to the Bernbergs without his permission, Don Aux breached an agreement to provide the results of the survey only to him. Count Two, entitled "Intentional Interference with Employee Relations," alleges that because the report referred to individuals and job titles, the "plaintiff's ability to ... manage and communicate effectively was damaged to an irreparable extent due ... to the hard feelings generated within plaintiff himself toward those employees." Complaint ¶ 23. Count Three, entitled "Breach of Assumed Fiduciary Relationships," contains an allegation that the survey was to be confidential "both in the respect that the report was to be rendered to plaintiff, and plaintiff alone, and that the sources of information were to remain masked," Complaint ¶ 26, and that the defendant "breached these confidential relationships." Complaint ¶ 27. The defendant has moved for summary judgment pursuant to Fed.R.Civ.P. 56 on Count One. As to Counts Two and Three, it has moved to dismiss on the grounds that they fail to state claims upon which relief can be granted, Fed.R.Civ.P. 12(b)(6), or alternatively, for summary judgment. For the reasons stated in the subsequent paragraphs, these motions are granted.

I. Breach of Contract

Before turning to the merits of defendant's motion for summary judgment, it is appropriate to delineate briefly the standards for granting summary judgment. Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment is appropriate when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The purpose of the procedure is to go beyond the pleadings to determine if a genuine need for a trial exists. Advisory Committee Note to Proposed Amendments to Rule 56(e), 31 F.R.D. 648 (1962).

The Second Circuit has taken a restrictive attitude concerning the propriety of granting summary judgment.⁵ See Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438 (2d Cir. 1980); Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317 (2d Cir. 1975). It has repeatedly admonished trial courts to determine only whether there are issues of fact to be tried and to avoid the temptation of making a subconscious judgment on the quality of proof by trying the issues. Heyman v. Commerce and Industry Insurance Co., supra, 524 F.2d at 1319-20; accord, Flli Moretti Cereali v. Continental Grain Co., 563 F.2d 563, 566 (2d Cir. 1977); United States v. Matheson, 532 F.2d 809, 813 (2d Cir.), cert. denied, 429 U.S. 823, 97 S.Ct. 75, 50 L.Ed.2d 185 (1976). Moreover, the party moving for summary judgment has the burden of showing the absence of a genuine issue as to a material fact, Quinn v. Syracuse Model Neighborhood Corp., supra, 613 F.2d at 444; George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 555 (2d Cir. 1977); Heyman v. Commerce and Industry Insurance Co., supra, 524 F.2d at 1320, and all reasonable inferences must be drawn in favor of the party opposing the summary judgment motion. Quinn v. Syracuse Model Neighborhood Corp., supra, 613 F.2d at 445; SEC v. Research Automation Corp., 585 F.2d 31, 33 (2d Cir. 1978); United States v. Matheson, supra, 532 F.2d at 813; Heyman v. Commerce and Industry Insurance Co., supra, 524 F.2d at 1320.

"Rule 56, however, is not a dead letter" in the Second Circuit. Steinberg v. Carey, 439 F.Supp. 1233, 1241 (S.D.N.Y.1977) (Weinfeld, J.); see SEC v. Research Automation Corp., supra; Mutual Marine Office Inc. v. Atwell, Vogel & Sterling, Inc., 485 F.Supp. 351 (S.D.N.Y.1980); Laurie Visual Etudes, Inc. v. Chesebrough-Pond's, Inc., 473 F.Supp. 951 (S.D.N.Y.1979); Miller v. Schweickart, 413 F.Supp. 1062 (S.D.N.Y. 1976). That the standards for granting summary judgment are stringent should not lead a court to such a cautious position that it will never utilize this procedural device. In many instances, summary judgment is a means to "unmask frivolous claims and put a swift end to meritless litigation." Quinn v. Syracuse Model Neighborhood Corp., supra, 613 F.2d at 445; accord, SEC v. Research Automation Corp., supra, 585 F.2d at 33 ("Indeed, the policy favoring efficient resolution of disputes, which is the cornerstone of the summary judgment procedure, would be completely undermined if unsubstantiated assertions were sufficient to compel a trial."); United States v. Matheson, supra, 532 F.2d at 813 (Summary judgment should be granted when "the only issues raised are frivolous or immaterial ones which would simply serve to provide an exercise in futility or a purposeless trial.").

At the commencement of this action, Wilson-Rich alleged that Don Aux breached an express agreement that it would divulge the results of the survey only to the plaintiff. Abandoning that claim, he now argues that, by distributing the report to Cedric and Ernest Bernberg, Don Aux breached an implied agreement—that is, an agreement not expressed orally or in writing, but one that can be reasonably implied from the conduct of the parties and the circumstances. See Restatement of Contracts § 3, Comment b (1932); id. § 21; 1 Williston on Contracts §§ 3, 22A (3d ed. 1957). On this motion for summary judgment, the evidentiary facts underlying the alleged implied agreement are not disputed; only the inferences to be drawn from them are in dispute.⁶ Stated otherwise, the plaintiff argues that the facts raise an inference of an implied agreement; the defendant contends that no such inference can be drawn. To warrant denial of the motion, this Court would have to find that it is reasonable to draw such conflicting inferences. If, on the other hand, "only one inference could reasonably be drawn from the undisputed evidentiary facts, then summary judgment would be proper, for, in the language of Rule 56(c), `the moving party is entitled to a judgment as a matter of law.'" Empire Electronics Co. v. United States, 311 F.2d 175, 180 (2d Cir. 1962) (Kaufman, J.).

Although mindful that it must draw all reasonable inferences in favor of the plaintiff, this Court must conclude that, on the evidence before it, no reasonable person could infer that there had been a meeting of the minds resulting in an implied promise to distribute the report only to Wilson-Rich.⁷...