Opinion
No. 30324–2003.
2012-08-1
Michael C. TRIMARCO, Plaintiff/counterclaim-defendant, v. DATA TREASURY CORPORATION, Defendant/counterclaim-plaintiff.
Robert J. Del Col, Esq., Smithtown, for Plaintiff/Counterclaim–Defendant. Scott E. Mollen, Esq., Raimondo J. Guerra, Esq., Herrick, Feinstein LLP, New York City, for Defendant/Counterclaim–Plaintiff.
Robert J. Del Col, Esq., Smithtown, for Plaintiff/Counterclaim–Defendant. Scott E. Mollen, Esq., Raimondo J. Guerra, Esq., Herrick, Feinstein LLP, New York City, for Defendant/Counterclaim–Plaintiff.
EMILY PINES, J.
DECISION
In this commercial dispute, Defendant's counsel moves, in limine, to preclude evidence at the trial of this matter concerning any change in the value of the stock of DataTreasury Corporation (“DTC”) after the date of what Plaintiff, Michael Trimarco (“Trimarco”) claims to be a breach of his agreement by DTC's failure to comply with his partial exercise of stock options on September 9, 2003. Trimarco opposes the motion, setting forth that he is entitled to prove the value of the benefit of his bargain once breach is determined and that includes any increase in the value of what he terms to be his shares. DTC has taken the position in the underlying action that Trimarco lost the right to exercise any stock options as a result of his breach of his fiduciary duties to DTC and has counterclaimed for certain specific lost business opportunities.
The Defendant's counsel has cited and this Court agrees, that the controlling New York precedent on this issue is set forth by the Second Circuit in the case of Lucente v. International Business Machines Corp, 310 F.3d 243 (2d Cir2002). That court reiterated the general principle of New York law that damages for breach of contract must be measured from the date of the breach. See, e.g., Simon v. Electrospace Corp, 28 N.Y.2d 136 (1971). Lucente, like Trimarco, was allegedly denied the benefit of stock options. The Second Circuit stated that it supported the proposition that it was error to consider, in this vein, post breach actual economic conditions and post breach performance since such use of hindsight could not be utilized when the analysis required a date of the breach calculation. Id. at 262.The Court acknowledges the citation by Trimarco's counsel of Boyce v. Soundview Technology, 464 F.3d 376 (2d Cir2006), which permitted evidence of post breach stock valuation where a privately held stock was about to go public. This is not the case here. Rather, where an alleged breach involves the value of stock in a closely held corporation such as in the case at bar, the measure of damages is the difference between the contract price and the fair market value of the stock at the time of the breach. Aroneck v. Atkin, 90 A.D.2d 866 (4th Dep't 1982). Further, with regard to the possible applicability of Delaware law on this issue, the Court has found no cases dealing again with valuation of stock in a closely held corporation which is not about to be publicly traded.
The Court notes that although actual events subsequent to the breach are not to be taken into account in calculation of damages arising from breach of a contract involving failure to deliver stock, the Court is not precluding an expert from setting forth the value of the bargain based upon what knowledgeable persons anticipated regarding future conditions and future performance at the time of breach. See Aroneck, supra.
The Court notes that in his papers in opposition to the application in limine, Trimarco's counsel sets forth that his client is also seeking equitable remedies in the form of specific performance. This ruling does not in any way prevent the Plaintiff from setting forth whatever proof he believes is necessary to prove entitlement to such remedy. In addition, the Court has neither been provided with the Complaint in this action, nor with the years of discovery involved and is not in a position to state whether the kind of documentation the Defendant wishes to preclude may be relevant to another issue in this case. The Court's ruling, accordingly, applies only to the issue of the measure of damages for breach of a contract which denied a claimant the benefit of his exercise of a stock option in a privately held corporation.
This constitutes the ORDER of the Court.