Opinion
Civil Action No. 3:01-CV-1776-L
October 3, 2003
MEMORANDUM AND OPINION ORDER
Before the court are the Plaintiff s Motion for Partial Summary Judgment, filed on November 21, 2002, and the Defendants' Motion for Summary Judgment, filed on September 18, 2002. After careful consideration of the motions, responses, replies, pleadings, summary judgment evidence, and applicable law, the court denies Plaintiff's Motion for Partial Summary Judgment and grants in part and denies in part Defendants' Motion for Summary Judgment.
Singer contends that Defendants' Response to Plaintiff's Motion for Partial Summary Judgment is not properly before the court because it was two days late. The court, however, determined that it will consider all the parties' filings in the interest of judicial economy. To do otherwise exalts form over substance.
I. Factual and Procedural Background
The underlying facts of this case are undisputed. Arthur Singer ("Singer" or "Plaintiff) was employed by Carrington Laboratories, Inc. ("Carrington") from April 1990 to November 2000. Carrington is a wound care product company. For most of his career with Carrington, Singer was a successful sales representative in the New York area. Singer was often a top salesperson qualifying for the "President's Club" and was the recipient of the Salesman of the Year award in 1992 and 1995. For a brief period of time, Singer served as the Eastern Regional Manager and was awarded Regional Manager of the Year in 1993.
After almost a decade of organizational upheaval at Carrington, Singer sought a contract to secure stability in his continued employment with Carrington. Singer met with Dr. Carlton Turner ("Turner"), Chief Executive Officer ("CEO") and President of Carrington, to discuss his desire for a contract. Singer and Turner reached an oral agreement which was memorialized in a memorandum, dated April 30, 1999 ("April Agreement"). The pertinent part of the April Agreement states:
I therefore wish to assure you that, as long as I [Turner] am the CEO of this Company with ultimate responsibility for wound care sales, and as long as these territories continue to prosper under your responsible guidance and management, these territories, unless you agree otherwise, will not be geographically realigned and/or delegated to another company sales representative, manager, or other Carrington employee for sales and sales management responsibilities.
Plaintiff's Appendix of Evidence in Support of His Motion for Partial Summary Judgment ("Pl. App.")at 31.
Moreover, Singer was paid on a commission basis according to his compensation plan. In 2000, Singer's compensation plan was set out in a memorandum, dated February 2, 2000 ("Compensation Plan"). The Compensation Plan confirmed that Singer would earn monthly commissions at "the rate of 18% of net tracked sales" in his sales territories. Pl. App. at 32. The term "net tracked sales" was not defined in the Compensation Plan.
Also in early 2000, Turner announced, in writing, that the year's winners of the President's Club would receive a trip to Portugal ("Portugal Notice"). To qualify for the trip, the salespersons had to "complete the year 2000 sales in the top five and at or above 100% quota." Pl. App. at 10.
In December, 2000, Carrington entered into a business arrangement with Medline Industries, Inc. ("Medline") whereby it transferred wound care sales to Medline in exchange for the right to manufacture certain products for Medline. As a result, Carrington terminated, among others, Singer's employment. As part of the transfer, however, Medline hired much of Carrington's sales force, including Singer. Singer continues to be employed by Medline.
Singer filed a lawsuit against Carrington and Turner (collectively "Defendants") in the Eastern District of New York on April 3, 2001. The case was transferred to the Northern District of Texas, Dallas Division, on August 28, 2001. Defendants filed an answer on October 25, 2001. Singer filed a First Amended Complaint on February 14, 2002 and a Second Amended Complaint on August 14, 2002. Defendants did not file an answer to either of the amended complaints.
In his Second Amended Complaint, Singer claims breach of contract, unjust enrichment, a violation of New York State Labor Laws § 190, et seq., fraud, and breach of the duty of good faith and fair dealing. Defendants filed a Motion for Summary Judgment on September 18, 2002, and Singer filed a Motion for Partial Summary Judgment on November 21, 2002.
Singer voluntarily dismissed the fraud claim against Defendants. Plaintiff s Brief in Support of His Response to Defendants' Motion for Summary Judgment at 2.
II. Summary Judgment Standard
Summary judgment shall be rendered 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 judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Ragas, 136 F.3d at 458. Further, a court "may not make credibility determinations or weigh the evidence" in ruling on motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871 (1994). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id.; see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir.), cert. denied, 506 U.S. 832 (1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues which are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
III. Analysis
A. Choice of Law
As a preliminary matter, the court must determine what substantive law governs this case. The parties disagree as to which law should apply to Singer's claims. Singer urges the application of New York law; whereas, Defendants counter that the laws of Texas and New York are similar in most respects and that regardless of the laws applied, they are entitled to summary judgment on all of Singer's claims.
In a diversity case such as this, a federal court is required to follow the choice of law rules of the state in which it sits. Godwin Gruber, P.C. v. Deuschle, 261 F. Supp.2d 682, 688 (N.D. Tex. 2003) (citing Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496(1941); Alberto v. Diversified Group, Inc., 55 F.3d 201, 203 (5th Cir. 1995)). This court therefore applies Texas choice of law principles to determine whether Texas or New York law should apply to Singer's breach of contract claims. Texas has adopted the "most significant relationship" test of the Restatement (Second) of Conflict of Laws in contract cases. Id. at 688-89 (citing Access Telecom, Inc. v. MCI Telecommunications Corp., 197 F.3d 694, 705 (5th Cir. 1999), cert. denied, 531 U.S. 917 (2000)). Under the most significant relationship test, courts consider (1) the place of the contract; (2) the place where the contract was negotiated; (3) the location of the subject matter of the contract; and (4) the domicile, residence, nationality, place of incorporation, and place of business of the parties. Id. at 689.
Consideration of these factors in this case leads the court to conclude that New York is the state having the most significant relationship to the contracts at issue. Singer is a New York citizen, and Defendants are Texas citizens. This factor is therefore irrelevant. While the place of negotiation could be either New York or Texas, Defendants do not dispute Singer's contention that the place of contracting was New York. Further, it is undisputed that Singer worked almost exclusively in New York selling Carrington's wound care products, and thus the place of performance was New York. Finally, the subject matter of the contracts were Singer's sales of wound care products in New York. The court therefore concludes that New York has the most significant relationship to the contracts in question, and New York law applies to Plaintiff's claims.
B. Breach of Contract
Singer's breach of contract claims are based on the following incidents: (1) Defendant's alleged failure to pay him the commissions owed to him pursuant to the Compensation Plan; (2) Defendants alleged unlawful termination of him contrary to the representations in the April Agreement; and (3) Defendant's failure to send him to Portugal as allegedly promised by the Portugal Notice.
The elements of a breach of contract claim under New York law are: "(1) the existence of an enforceable contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages." Rexnord Holding, Inc. v. Bidermann, 21 F.3d 522, 525 (2nd Cir. 1994) (citing Bank Itec NV v. J. Henry Schroder Bank Trust Co., 612 F. Supp. 134, 137-38 (S.D.N.Y. 1985)).
1. Compensation Plan
Singer contends that the Compensation Plan is a valid enforceable contract; that the sales he made satisfied the contractual obligations; and that Defendants breached the contract when they downwardly adjusted "net tracked sales," which resulted in a reduction of his commissions. The Compensation Plain provided that Singer's commissions would equal 18 percent of "net tracked sales." In 2000, Defendants adjusted the formula calculating "net tracked sales" by reducing gross sales by 11 percent. Thus, Singer's commissions for 2000 were based on the adjusted formula for "net tracked sales." Singer contends that by changing the way in which "net tracked sales" were calculated, Defendants failed to pay the agreed upon commissions. Defendants counter that they satisfied their contractual obligations by paying Singer 18 percent of the "net tracked sales;" that "net tracked sales" was not defined in the Compensation Plan; and that the calculation of "net tracked sales" was flexible to allow for periodic adjustments that more closely matched "actual sales."
The parties do not dispute the existence of a contract or performance by Singer; therefore, the court concludes that the first two elements of a breach of contract claim have been satisfied. The court must next determine whether a breach occurred, which is predicated on the meaning of "net tracked sales" as used in the Compensation Plan.
In interpreting contractual language, the court's primary objective is to give effect to the intent of the parties as revealed by the language in the contract. Compagnie Financiere De Cic Et De L'UNION Europeenne, Mgmt. Invest. Funding Ltd., v. Merrill Lynch, Pierce, Fenner Smith Inc., 232 F.3d 153, 157 (2d Cir. 2000) (applying New York law) (citing Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 F.3d 1091, 1094 (2d Cir. 1993)). "Summary judgment is generally proper in a contract dispute only if the language of the contract is wholly unambiguous." Id. at 158. The determination of whether a contract is ambiguous is a question of law reserved for the court. Id. "Contract language is ambiguous if it is 'capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.'" Sayers, 1 F.3d at 1095 (quoting Walk-In Medical Ctrs., Inc. v. Breuer Capital Corp., 818 F.2d 260, 263 (2d Cir. 1987) (internal quotation marks and citation omitted)).
On the other hand, no ambiguity exists when the contract language has "a definite and precise meaning" for which there is no reasonable basis for a difference of opinion. Sayers, 1 F.3d at 1095. The parties, however, may not create an ambiguity merely by urging different interpretations of the contract language. See Seiden Assocs., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992). Extrinsic evidence of the parties' intent may only be considered if an ambiguity exists. See Sayers, 7 F.3d at 1095. "A court may also grant summary judgment regarding the interpretation of ambiguous language if the non-moving party fails to point to any relevant extrinsic evidence supporting the party's interpretation of the language." Compagnie Financiere De Cic Et De L'UNION Europeenne, Mgmt. Invest. Funding Ltd., 232 F.3d at 158.
The court must decide the intent of the parties with respect to the calculation of commissions as revealed by the term "net tracked sales" as used in the Compensation Plan. The Compensation Plan is incomplete in that the term "net tracked sales" is not defined. Singer contends that "net tracked sales" was generally understood to mean the amount of revenues remaining after rebates were deducted from the amount of gross "tracked" sales. Defendants counter that "net tracked sales" referred to an adjustment made to "tracked sales" in order to more accurately reflect actual sales. Stated another way, the formula was not fixed but rather had to be periodically adjusted to accurately reflect actual sales. The parties could have intended "net tracked sales" to either be a fixed formula or a flexible one. Therefore, the term "net tracked sales" is ambiguous because it is capable of more than one meaning when viewed objectively by a reasonably intelligent person. See Sayers, 7 F.3d at 1095.
Because Carrington generally sold its product to distributors, it depended on its customers to report final sales by zip code so that it could determine the quantities of product that were sold in the various sales territories. These "tracked sales" usually exceeded actual sales and thus had to be adjusted to "net tracked sales" before salespersons' commissions could be calculated.
The court then looks to extrinsic evidence to discern the parties' intent. It is undisputed that before 1999 "net tracked sales" were computed as alleged by Singer supporting his contention that the term had a definite meaning. Defendants provided evidence, however, that in 1999, "net tracked sales" were reduced by three percent to more accurately reflect the actual sales made in that year, thus evidencing the flexible nature of the term. Singer contends that he did not know, and was not informed, of the three percent adjustment in 1999 and thus could not have intended "net tracked sales" to include such adjustments. After considering the extrinsic evidence, a reasonable jury could agree with either party's definition of "net tracked sales," and whether a breach occurred necessarily depends on whom the jury believes. A genuine issue of material fact therefore exists with respect to the contractual language. Accordingly, a grant of summary judgment to either party on this claim is inappropriate.
2. April Agreement
Singer contends that the April Agreement is a valid enforceable contract; that he satisfied the contractual obligations in that his sales territory continued to prosper; and that Defendants breached the contract by terminating his employment. Defendants counter that they did not breach the April Agreement because (1) Singer did not fulfill his contractual obligations in that his sales territory did not continue to prosper; (2) the agreement only limited Carrington from geographically realigning or delegating Singer's sales territories to another Carrington employee, but did not limit its right to terminate Singer's employment; (3) even if termination is considered a delegation of Singer's sales duties, Medline is not a "company sales representative" and thus a delegation of his duties to Medline does not violate the terms of the agreement; and (4) the agreement did not cover or contemplate the transfer of its wound care sales to Medline. The Defendants also contend that Singer cannot make a claim for breach of contract with respect to the April Agreement because he fraudulently induced them by materially misrepresenting that he had several job offers from other companies and because he cannot establish damages. The parties do not dispute the existence of a contract; thus, the first element of a breach of contract is satisfied. The court must next determine whether the second element, performance by Singer, is satisfied.
Performance under the April Agreement is predicated on whether Singer's sales territories "prospered." This element is satisfied because Defendants admitted Singer's performance in their Original Answer. See Fed.R.Civ.P. 8(b), (d).
In his Original Complaint, Singer stated that he "continued in his employment with CARRINGTON during the year 2000 and his designated territories continued to prosper under his responsible guidance and management." Complaint at 7 ¶ 39. In their Answer, Defendants admitted the allegations contained in Paragraph 39 of the Complaint. Answer at 4 ¶ 39. Singer restated this claim in his Second Amended Complaint: "[t]hereafter, Singer continued to responsibly manage his territory, and that territory prospered." Second Amended Complaint at 5 ¶ 33. Defendants did not file an Amended Answer.
The focus now turns to the third element, whether a breach occurred. According to the contractual language, Defendants breach the contract if they geographically realigned or delegated Singer's territory to a company sales representative, a manager, or other Carrington employee.
It is undisputed that Singer's territory was not geographically realigned. Singer contends, however, that his sales territories were delegated to Medline when Carrington terminated his employment and Medline hired him. Defendants counter that the term "delegated" is not ambiguous. Defendants contend that the term does not encompass termination and that the April Agreement did not change Singer's employment status.
The court determines that the term "delegated" as used in the April Agreement is unambiguous. Singer's interpretation of the term is not reasonable given the employment at will doctrine in New York. See Sayers, 7 F.3d at 1095. "Under New York law, absent an agreement establishing a fixed duration, an employment relationship is presumed to be hiring at will, terminable at any time by either party." Cole v. Kobs Draft Advertising, Inc., 921 F. Supp. 220, 224 (S.D.N.Y. 1996) (internal quotations omitted) (citing Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 514 N.Y.S.2d 209, 211, 506 N.E.2d 919, 920 (1987)).
In 1995, Singer was given an employee manual, for which he signed a receipt acknowledging his employment status as employment at will:
I further understand that my employment is terminable at will, either by myself or Carrington. . . . I understand that . . . no circumstances arising out of my employment will alter my "at will" employment relationship unless expressed in writing, with the understanding specifically set forth and signed by myself and the President of Carrington.
Defendants' Appendix to Brief in Support of Motion for Summary Judgment at 11.
The April Agreement does not contain language establishing a fixed duration on Singer's employment:
I therefore wish to assure you that, as long as I [Turner] am the CEO of this Company with ultimate responsibility for wound care sales, and as long as these territories continue to prosper under your responsible guidance and management, these territories, unless you agree otherwise, will not be geographically realigned and/or delegated to another company sales representative, manager, or other Carrington employee for sales and sales management responsibilities. Pl. App. at 31 (emphasis added). Singer contends that the April Agreement and the verbal assurances made by Turner constitute a change in his employment status. Specifically, Turner told Singer that "as long as I'm CEO and as long as I'm responsible for the wound care area and you make your area prosper, you have my word that you will keep your job." Pl. App. at 44 (emphasis added).
Defendants object to Turner's statement pursuant to the parole evidence rule because the statement predated the written agreement. Their objection is overruled.
Singer cites to Rooney v. Tyson, 697 N.E.2d 571 (1998), for the proposition that Turner's assurances coupled with the April Agreement created an employment contract. In Rooney, the parties did not have a written contract, but they conceded that there was an oral contract wherein the employee could train the employer "for as long as the boxer fights professionally." Id. at 575 (emphasis added). The Rooney court held that the oral contract was for a specific duration, but also reaffirmed that "[w]e do not at all abandon the tradition that has wisely guided the careful progression of the at-will doctrine and its application in particular circumstances." Id. at 576.
Rooney is distinguishable from this case in that the parties do not concede the existence of an oral contract and Turner's assurances are not for a specific duration because Singer's continued employment depended on a certain level of performance. See Gambello v. Time Warner Communications, Inc., 186 F. Supp.2d 209, 225 (E.D. N.Y. 2002) ("[P]laintiff in this case claims that he agreed to work until retirement, provided performance warranted such a term. Unlike in Rooney, this durational term is not 'legally and experientially limited and ascertainable by objective benchmarks.'") (emphasis added).
The court determines that Singer's contention that the term "delegated" as used in the April Agreement includes the termination of Singer's employment is not a reasonable interpretation given New York law regarding altering the employment at will status. Thus, the term "delegated" is unambiguous and does not include Singer's termination. Consequently, Singer has failed to raise a genuine issue of material fact with respect to the existence of a breach, and the court need not address the issues of damages or fraudulent inducement. Accordingly, Defendants are entitled to summary judgment on this claim.
3. Portugal Notice
Singer contends that the Portugal Notice is a valid enforceable contract; that his sales performance satisfied the contractual obligations; that Defendants breached the contract by failing to send him to Portugal or reimburse him for the trip; and that he suffered damages. Defendants counter that the Portugal Notice is not a valid enforceable contract because it is vague and no consideration was given; that even if it is a contract, Singer did not perform as required under its terms; and that Singer did not suffer any damages. Defendants also objected to Singer's evidence of damages under the best evidence rule.
The court first determines the existence of a valid enforceable contract. As previously stated the Portugal Notice is a written announcement advising Carrington salespersons that the winners of the "President's Club" will be awarded a trip to Portugal; "[t]o qualify for the trip a salesperson must complete the year 2000 sales in the top five and at or above 100% quota." Pl. App. At 10.
Defendants contend that the Portugal Notice is not a contract because no consideration was given. Singer counters that the consideration does exist: his extra hard work to qualify for the trip. A bonus is unenforceable for lack of consideration when it does not obligate the employee to do something that he was not otherwise obligated to do or forego doing something that he had a legal right to do. De Vito v. Pokoik, 540 N.Y.S.2d 858, 859-860 (App.Div.2d Dept. 1989). "It is a basic principle that the promise to perform or actual performance of a pre-existing duty is not adequate consideration." Roth v. homed, Inc., 746 F. Supp. 316, 319 (S.D.N.Y. 1990) (citing James A. Haggerty Lumber Mill Work, Inc. v. Thompson Starrett Constr. Co., 256 N.Y.S.2d 1011, 1012 (App.Div. 1st Dep't 1965)).
The Portugal Notice required Carrington salespersons to do something they were already obligated to do, that is, make sales; it merely rewarded those that sold the most products. Singer's contention that he had to work "extra hard" to qualify for the trip does not mean he did not have a pre-existing duty to make sales. Indeed, his employment obligated him to make sales. Singer, therefore, offered no consideration for the Portugal trip. Without consideration, no enforceable contract exists, and Singer's breach of contract claim fails. Having found that no contract exists, the court need not address the remaining elements of this claim or Defendants' objections to Singer's evidence on damages. Accordingly, the court grants summary judgment in favor of Defendant's on this claim.
C. Unjust Enrichment
Singer's claim of unjust enrichment is based on Defendants alleged failure to pay him the commissions owed to him pursuant to his Compensation Plan; and their failure to send him to Portugal or reimburse him for the trip.
The elements for unjust enrichment are: (1) the defendant is enriched, (2) the enrichment was at the plaintiff's expense, and (3) circumstances were such that equity and good conscience require the defendant to make restitution. Thayer v. Dial Indus. Sales, Inc., 85 F. Supp.2d 263, 274 (S.D.N.Y. 2000); see also EUA Cogenex v. N. Rockland Cent. Sch. Dist., 124 F. Supp.2d 861, 873 (S.D.N.Y. 2000). "The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi-contract for events arising out of the same subject matter." Id. A claim for unjust enrichment is only appropriate where the alleged services fall outside of the terms of the contract or there is a dispute with respect to the existence of a contract. Id. at 874. Under a theory of unjust enrichment, a plaintiff must have "a reasonable expectancy of receiving compensation." International Paper Co. v. Suwyn, 978 F. Supp. 506, 513 (S.D.N.Y. 1997).
1. Compensation Plan
Singer contends that Defendants were unjustly enriched when Defendants failed to pay him the commissions he was owed under his Compensation Plan. This claim is based on the same facts as his breach of contract claim. Neither party disputes that the Compensation Plan is a valid contract or that Singer fully performed, even though they dispute whether a breach occurred. Singer is thus precluded from recovering under a claim for unjust enrichment for any alleged nonpayment of commissions owed because the Compensation Plan governs the subject matter. See id. at 873. Therefore, this claim of unjust enrichment fails as a matter of law. Accordingly, the court grants summary judgment in favor of Defendants on this claim.
2. Trip to Portugal
Having found that the Portugal Notice is not an enforceable contract, Singer's claim for unjust enrichment is not precluded. See EUA Cogenex, 124 F. Supp.2d at 873. Singer contends that Defendants were unjustly enriched when they failed to send him to Portugal or reimburse him for the trip after he met the qualifications set out in the Portugal Notice. Defendants counter that Singer cannot establish the necessary elements of unjust enrichment because the "benefit" that they allegedly received was the sales Singer made for which he had already been compensated.
The issues then are whether the "extra" sales made by Singer constitute a benefit to Defendants and if so, whether Singer reasonably expected to receive the Portugal trip. These issues have not been adequately briefed by the parties. Neither party has cited to any case law to support their contentions; instead they cite to cases that generally set forth the elements of unjust enrichment Accordingly, the court denies summary judgment to both parties on this claim.
C. Violation of N.Y. Labor Law § 190 , et seq.
Singer contends that Defendants violated New York Labor Law section 193(1) when they downwardly adjusted "net tracked sales" because the adjustment reduced his wages. Carrington counters that Singer's wages were not reduced because he received the agreed upon percentage of "net tracked sales." This claim involves the same issue as the breach of contract: whether the reduction in "net tracked sales" was a change to the Compensation Plan.
Section 193(1) governs when an employer can deduct from a wage:
No employer shall make any deduction from the wages of an employee, except deductions which:
a. are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency; or
b. are expressly authorized in writing by the employee and are for the benefit of the employee; provided that such authorization is kept on file on the employer's premises. Such authorized deductions shall be limited to payments for insurance premiums, pension or health and welfare benefits, contributions to charitable organizations, payments for United States bonds, payments for dues or assessments to a labor organization, and similar payments for the benefit of the employee.
N.Y. LAB. LAW § 193(1) (McKinney 2003). Commissions are subject to section 193(1) as wages. Gebhardt v. Time-Warner Ent., 726 N.Y.S.2d 534, 535 (App.Div. 4th Dep't 2001).
Whether Defendants deducted from Singer's commissions turns on the question of whether adjusting "net tracked sales" deducts from Singer's commissions. For the reasons previously set forth, the court determines that a genuine issue of material fact exists with respect to definition of the term "net tracked sales." Accordingly, the court denies both motions for summary judgment as to Plaintiff's section 193(1) claim.
Singer contends that Defendants did not properly move for summary judgment on their Labor Law claim because they briefed and moved for judgment on section 191 instead of 193(1). Singer nonetheless "responded" as if Defendants had moved on his section 193(1) claim. Defendants admit their mistake but claim that they did not know which section Singer was claiming they violated, and they assumed it was section 190. They briefed 193(1) in their reply. In the interest of judicial economy, the court considered Defendants' arguments, authorities and competent summary judgment evidence on Singer's 193(1).
D. Breach of Good Faith and Fair Dealing
Singer contends that Defendants breached the implied covenant of good faith and fair dealing when they terminated him, thus denying him the benefit of the April Agreement. Defendants counter that the breach of good faith and fair dealing is not an independent cause of action and is subsumed in Singer's breach of contract claim.
No separate cause of action for breach of the covenant of good faith and fair dealing is recognized under New York law. Wolff v. Rare Medium, Inc., 210 F. Supp.2d 490, 497 (S.D.N.Y. 2002). "A breach of the covenant of good faith and fair dealing is an implied term of every contract and is considered to be a breach of the underlying contract. Id. "[A] claim for breach of the implied covenant [of good faith] will be dismissed as redundant where the conduct allegedly violating the implied covenant is also the predicate for breach of covenant of an express provision of the underlying contract." EUA Cogenex, 124 F. Supp.2d at 873.
Singer's claim of a breach of the covenant of good faith and fair dealing is based on the April Agreement, which is an enforceable contract. Thus, his claim fails as a matter of law. Accordingly, the court grants summary judgment in favor of Defendants on this claim.
E. Defendant's Objections
Defendants objected to certain summary judgment evidence produced by Singer. The court did not consider any evidence that did not meet the summary judgment standard. The court therefore denies as moot Defendants' objections.
IV. Conclusion
For the above stated reasons, genuine issues of material fact exist with respect to the following claims made by Singer: (1) breach of contract based on the Compensation Plan; (2) violation of New York Labor Law section 193(1); and (3) unjust enrichment based on the Portugal trip. Summary judgment is denied with respect to these three claims. No genuine issues of fact exist with respect to Plaintiff's claims of breach of contract based on the April Agreement and the Portugal Notice, unjust enrichment based on the Compensation Plan, and breach of good faith and fair dealing; the court grants summary judgment on these claims. Accordingly, the court grants in part and denies in part Defendant's Motion for Summary Judgment, and denies Plaintiff's Motion for Partial Summary Judgment.