Conant

Conant v Alto 53, LLC 2008 NY Slip Op 33347(U) December 10, 2008 Supreme Court, New York County Docket Number: 602408/2008 Judge: O. Peter Sherwood Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

[* 1 ]

SUPREME COURT OF THE STATE OF NEW YOR

kl-

PRESENT:

NEW YORK COUNTY

MOTION DATE

-

MOTION SEQ. NO.

A

MOTION CAL. NO.

39

I

0. PETER SHERWOOP

PART 61

Justice

S C O l l CONANT, INDEX NO.

Plaintiff,

Oct. 7, 2008

-against-

ALTO 53, LLC, Defendant. The foilowlng papers, numbered 1 to

10

were read on this motion tp dismiss pursuant to CPLR 3211

v Notice of Motlonl Order to Show Cause - Affldavlts

- Exhibits ...

1-3

Answering Affidavits - Exhiblts

5-7

Replylng Affldavits

8-10

Cross-Motion:

0 Yes

n No

Upon the foregoing papers, counterclaim plaintiffs’ motion to dismiss the complaint pursuant to CPLR 3211 (a) (7) and plaintiffs cross motion for summary judgment pursuant to CPLR 3212 are resolved in accordance with the accomp this same date.

This constitutes the decision and order of the Court.

0.PETER SHERWOOD,

Check one:

FINAL DISPOSITION

Check if appropriate:

J.S.C.

6 N - F I N A L DISPOSITION

fl DO NOT POST

[* 2 ]

DECISION AND ORDER Plaintiff, Index No. 6Q24Q8I2OQ8 -against-

ALTO 53,LLC,

Counterclaim Plaintiffs, -against-

In this action to recover money damages and attorney’s fees for breach and anticipatory breach of an employment “separation agreement”, defendant and counterclaim plaintiff Alto 53, LLC (“Alto 53”) and counterclaim plaintiff Christopher Cannon (“Cannon”) (hereinafter referred to collectively as “movants” or “counterclaim plaintiffs”) move for an order pursuant to CPLR § 321 1 (a) (7) dismissing the complaint for failure to state a cause of action. Plaintiff and counterclaim defendant Scott Conant (“Conant”, “plaintiff” or cLcross movant”)) cross moves for an order pursuant

to CPLR

5 3212 granting summary judgment

in his favor on the complaint and dismissing the

counterclaims, awarding him attorney’s fees and imposing sanctions against Alto, Cannon and their attorney for frivolous litigation practices.

Bnckgro un d Conant is a chef and restauranteur who was formerly the executive chef at two Manhattan restaurants, L’Impero and Alto, both of which are owned, operated and managed by Alto 53 and Cannon, among others. Conant also had a financial interest in these two restaurants. In March 2007, Conant parted ways with Cannon and Alto 53. In the course of terminating their ties, the parties

[* 3 ]

entered into a Separation Agreement, dated March 6, 2007 (“the Separation Agreement”).’ The Separation Agreement contained in paragraph three thereof a broad non-disparagement clause pursuant to which the parties agreed that they would not “denigrate, disparage, criticize, defame or make any false or derogatory statements, or induce or attempt to influence any other person to make any such false, defamatory or derogatory statements concerning any other Party or any Party’s current or former employees, officers, directors, board members, managers, including without limitation any statement, oral or written, which portrays the other in an unfavorable light or subjects it to scorn, obloquy or ridicule or which would in any way adversely reflect upon or affect the Party’s goodwill or business reputation, or reflect upon the legal liability or responsibility with respect to the Separation.” The Separation Agreement further provided for various payments from Alto 53 to Conant, including deferred compensation in the sum of $104,440.67, which was to be paid out in twenty-four (24) monthly installments (approximately $4,35 1.70 each), commencing on April 15, 2008, and repayment of a loan in the sum of $1 8,496.26 made by Conant to Alto 53 with proceeds Conant received from North Fork Bank. Although the first payment of deferred compensation was due on April 15, 2008, Conant received no payments from Alto 53 until April 25,2008. On that date, Conant received a check in the sum of $961.54, rather than $4,351.70. Twelve additional payments in the same amount were made approximately weekly to July 18, 2008, for total payments through that date of $1 1,538.48, rather than the amount of $17,406.80 required by the terms of the Separation Agreement. In 2008,Conant opened anew restaurant, Scarpetta, in the meatpacking district of Manhattan. In connection with the opening of Scarpetta, Conant was interviewed by a trade publication, New

YorkRestaurunt Insider, for an article which appeared in the June/July 2008 issue. Certain remarks Conant is alleged to have made to the interviewer are the basis for Alto 53’s claims that Conant violated the terms of the non-disparagement provision of the Separation Agreement. In a letter to Conant dated July 2, 2008, Alto 53’s and Cannon’s attorney, Joseph A. Fisch (“Fisch”), stated, without identifying the content or source of the remarks, that “it has come to the ‘Although the Separation Agreement contained in the record does not bear Conant’s signature, there is no dispute that the Agreement was fully executed. 2

[* 4 ]

attention of Christopher Cannon from multiple sources that you have been making disparaging and defamatory remarks and statements about Mr. Cannon and his restaurants.” Mr. Fisch further stated that such remarks violated the non-disparagement provision of the Separation Agreement, demanded that Conant “immediately cease and desist” from making further remarks that violated such provision, and warned that failure to comply with such demand would compel Cannon to pursue legal remedies. Conant’s attorney, Philip R. Hoffman (“Hoffman”), responded by letter dated July 15,2008, denying that Conant had violated the non-disparagement clause and advising that it was Cannon who had been making disparaging remarks about Conant. Mr. Hoffman also warned that Cannon should refrain from further remarks in violation of the subject provision and indicated that nothing contained in the letter should be deemed a waiver of any rights.

In a letter dated July 29,2008, Fisch essentially terminated the Separation Agreement (“the Termination Letter”). He stated that “[dlespite my client’s demand, Mr. Conant continues to criticize and make false, inaccurate, derogatory and defamatory remarks against Mr. Cannon and his companies.” While claiming that it was not the only instance in which Conant had violated the nondisparagement clause, Fisch noted as one such example the following statement attributed to Conant in the afore-mentioned article in the New York Restaurant Insider concerning the end of his relationship with the owners of Alto: It just became clear to me at a certain point that whether it was going to be with my former partners or not, there was real growth potential. But I think it has all worked out for the best, because it became clear to me that I couldn’t work with that group anymore. There is such a thing called the Peter Principle, where people rise to their level of incompetence. And it just became clear to me that maybe I was associated with a group that was in that category. So this project was about surrounding myself with people who really see the big picture of what was right and wrong and pursuing something from a very grounded place, as opposed to something that was highly frenetic and almost spastic. I don’t think that anybody can live in an environment like that for an extended period of time. Fisch went on to say that because of Conant’s breach of the Separation Agreement’s nondisparagement provision Alto 53 had ceased making payments to Conant and was exploring possible legal recourse against Conant. 3

[* 5 ]

Thereafter, in an article in the July 30, 2008 edition of the New York Post following the opening of Scarpetta, reference was made to plaintiffs split with Cannonand Alto 53, characterizing the relationship between Conant and Cannon as a “feud” and an “emotion-laden rivalry”, and taking out of context and not in their entirety some of the above-quoted remarks from the New York Restuurant Insider article. However, when asked by the interviewer to amplify those remarks,

Conant responded “I’m going to do the right thing and keep my mouth shut. It was a conversation I didn’t realize they were going to take verbatim.” Conant went on to say “they’re [Alto and replacement chef Michael White] doing a fine job.” Two weeks later in an August 12,2008 article in the New York Observer, the split between Conant and his former partners was described as “nasty”. It also mentioned the portion of Conant’s remarks -from the same New Fork Restaurant Insider article regarding the Peter Principle and indicated that such remarks referred to Conant’s split with Cannon. Following Fisch’s Termination Letter, Fisch and Hoffman engaged in a series of e-mail exchanges in which the New York Post article and also a review of Scarpetta by Frank Bruni of the New York Times are mentioned. Fisch stated on several occasions that Alto 53 was no longer going

to make the deferred compensation payments to Conant. However, Fisch indicated that Alto 53 would continue to pay down the North Fork Bank loan provided that Conant made no further disparaging or defamatory remarks about his clients. Hoffman responded formally to the Termination Letter by letter dated August 1 1, 2008, in which he advised Fisch that Alto 53 had breached the Separation Agreement by failing to make the requisite payments of deferred compensation and by Cannon’s violation of the non-disparagement clause in an article appearing in the June 2008 issue of Alto Cucina Inc. in which Cannon is quoted

as saying that: “The most important thing for me is to take a snapshot of the food we love. The flavor has got to be right: explosive without being overwrought; it’s important to have soulfulness in the food.” The article stated that Cannon and Conant had “parted company, partly on this issue” and quoted Cannon further as saying: “Scott sometimes was too refined. With dishes like his harnachi with ginger oil he strayed too far.” Mr. Hoffman warned that if Conant did not receive the amount ofthen outstanding deferred compensation in the amount of $1 0,220.02 by August 15,2008, legal action would be commenced to collect the entire sum of $92,902.19 remaining in deferred 4

[* 6 ]

compensation plus attorney’s fees to which Conant would be entitled under the terms of the Separation Agreement. Fisch responded by letter dated August 17, 2008, in which he adhered to his position that Conant had breached the non-disparagement provision of the Separation Agreement thereby relieving Alto 53 of any further obligation under such agreement. Fisch also engaged in a point-bypoint refutation of any alleged breaches by his client noting that Conant never objected to the payments which were admittedly not in the amounts or made in the time frame provided by the Separation Agreement and that payments made after publication of the New York Restaurant Insider article were done so without knowledge of the disparaging remarks made by Conant in that article. Fisch made a “good faith gesture” offering to pay Conant the difference between the payments actually made and the amount due under the Separation Agreement up to the date it was terminated by Alto 53. Hoffman accepted the proffered payments in the total sum of $5,868.32 with the proviso that Conant was accepting the checks without prejudice to any of his rights. This action was commenced by filing the summons and complaint on August 18, 2008 seeking recovery of compensatory damages in the amount of $92,402.32 and alleging causes of action for breach and anticipatory breach of contract. The first cause of action for breach of contract is predicated upon Alto 53’s failure to hlfill its obligation under the Separation Agreement to make full and timely payment of deferred compensation during the period April 15,2008 to August 15, 2008. The second cause of action is for the remaining 19 payments of deferred compensation which

would become due pursuant to the terms of the Separation Agreement. On or about September 8,2008, Alto 53 served an answer asserting numerous affirmative defenses, including that plaintiff waived any breach of the Separation Agreement by failing to object thereto, and, together with Cannon, countersued plaintiff seeking a declaratory judgment that Alto

53 was relieved of its obligations under the Separation Agreement due to Conant’s breach thereof (first counterclaim); that Conant’s remarks “to members of the New York Restaurant community” and to the publication New York Resiaurant Insider violated the Separation Agreement’s nondisparagement provision (second Counterclaim); and that Conant’s remarks to the New York

Restaurant Insider were false, defamatory and libelous (third counterclaim). No specific claim was made for the amount of compensatory damages sought on the counterclaims, but a claim for punitive

5

[* 7 ]

damages in the sum of $1,000,000 was stated. Motion Papers Counterclaim plaintiffs immediately thereafter moved pursuant to CPLR 5 32 1 1 (a) (7) to dismiss the complaint. The movants’ motion papers consist of an affirmation of their counsel with two annexed exhibits consisting of the summons and complaint and their answer with counterclaims to which is annexed the Separation Agreement, a copy of the JuneNuly 2008 New York Restaurant

Insider article, and the New York Posl und New York Observer articles containing excerpts of the New York Restaurant h i d e r article and a memorandum of law, but does not include an affidavit of a person with personal knowledge of the facts. The motion was premised on the ground that the complaint failed to state a cause of action for breach of contract because up to July 2008 Alto 53 had met its payment obligation to Conant under the terms of the Separation Agreement and the Separation Agreement was rendered null and void by Conant’s violation of the non-disparagement clause thereby relieving Alto 53 of any further obligations. Because of Conant’s own breach of the contract, the claim for anticipatory breach was rendered a nullity. Counterclaim plaintiffs further contend that Conant by accepting the non-conforming weekly payments from Alto 53 without objecting waived his right to terminate the Separation Agreement or complain of Alto 53’s breach.

In any event, they claim that Alto 53’s departure from the payment provisions of the Separation Agreement did not constitute a material breach, Alto 53 promptly corrected its error and Conant was not damaged as a result. Conant opposes the motion and cross moves for summary judgment in his favor on the claims contained in the complaint, dismissing the counterclaims and awarding him attorney’s fees and costs pursuant to a provision of the Separation Agreement and as sanctions against counterclaim plaintiffs and their attorney for frivolous litigation. The cross motion is supported by a memorandum of law the plaintiffs affidavit, the affirmation of his counsel and sixteen annexed exhibits. Exhibit A is plaintiff’s reply to the counterclaims. Exhibit B consists of a copy of the A h Cucina Inc. article referring to the split between Cannon and Conant. Exhibit C and D are the letters of the parties’ respective counsel, dated July 2 and July 15, 2008 concerning alleged breaches of the nondisparagement clause. Exhibit E is the Termination Letter of inovants’ attorney dated July 29,2008. Exhibits F through K are copies of the e-mail exchanges between the parties’ attorneys beginning

6

[* 8 ]

July 29, 2008 and continuing through August 6, 2008, concerning the alleged breaches of the Separation Agreement and the payments due thereunder. Exhibit L is the response of plaintiffs counsel, dated August 11,2008, to the counterclaim plaintiffs’ Termination Letter. Exhibit M is the response of movants’ attorneys to plaintiffs attorney’s August 1 1, 2008 letter. Exhibits N and 0 consist of letters dated August 19,2008 and August 20,2008, respectively, from plaintiffs attorney accepting the proffered overdue payments under the Separation Agreement and denying that plaintiff had made any disparaging remarks in violation of the non-disparagernent provision. Exhibit P is a computer printout from the American Herilage dictionary defining the “Peter Principle.” In reply, counterclaim plaintiffs submitted an affirmation oftheir attorney limited to the issue

of when the article in the New York Restaurant Insider was actually available for public review and

Cannon’s personal affidavit in which he recounts an incident in which Conant allegedly directed his manager to throw Cannon out of Scarpetta and details other allegedly disparaging remarks Conant made to other members of the New York restaurant community about Cannon.

A reply

memorandum of law was also submitted. On October 7, 2008, the date the motion and cross motion were marked fully submitted, Conant sought, by letter of counsel, permission to submit sur-reply papers on the ground that had he moved for summaryjudgment in the normal course rather than cross moving for that relief he would have had the opportunity to submit a reply to counterclaim plaintiffs motion. Conant’s attorney repeated the request in a follow-up letter, dated October 14, 2008, which set forth in greater detail the reason for plaintiffs application and provided the proposed reply papers consisting of an affidavit of Diana Delucia, the owner and operator of New York Restuurunt Insider magazine, and a reply memorandum of law. When he did not receive a response from the Court, plaintiff‘s counsel in a letter dated November 17,2008 repeated his request. Counterclaim plaintiffs oppose plaintiffs request contending that by filing a cross motion for summary judgment before any discovery had been conducted, plaintiff voluntarily gave up his right to submit a reply. The Court will not consider the sur-reply papers filed by plaintiff, Sur-reply submissions are not permitted by CPLR

5

2214, and plaintiffs counsel has failed to demonstrate “good cause”

suficient to warrant the Court’s consideration of these additional papers.

7

[* 9 ]

Discussion

Under well-established principles, counterclaim plaintiffs’ motion to dismiss under CPLR

6 321 1 (a) (7) for failure to state a cause of action requires the court to “afford the pleadings a liberal construction, take the allegations of the complaint as true and provide plaintifqs] the benefit of every possible inference [citation omitted], Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss” (EBC I v Coldman, Suchs & Co., 5

NY3d 1 1, 19 [2005]). In this regard, the court generally should not sua sponte search the record on a CPLR

5 321 1 motion to dismiss as this motion simply addresses the sufficiency of a pleading

whereas the standard ofreview upon a motion for summary judgment involves searching the record and examining the evidence underlying the pleadings (see, Friedman v Conneclicut Gmeral Life Ins.

Co., 30 AD3d 349,349-350 [ist Dept. 2006, u f d us mod. 9 NY3d 105 [2007]; Tenzer, Greenblatt, Fullon d Kuplan v Cupri Jewelry, 128 AD2d 467,469 [ 1’‘ Dept. 19871). However, the Court may give counterclaim plaintiffs’ motion to dismiss summary judgment treatment pursuant to CPLR 5 321 1 (c). Generally, the Court is required to give notice to the parties

of its intention to convert a 321 1 motion to a summary judgment motion (CPLR 5 321 1 [c]). Three exceptions to the notice requirement exist, namely: “( 1) where the action in question involves no issues of fact but only issues of law which are fully appreciated and argued by both sides; (2) where a request for summary judgment pursuant to CPLR 321 1 (c) is specifically made by both sides; and (3) where both sides deliberately lay bare their proof and make it clear that they are charting a

summary judgment course” (Shah v Shah, 21 5 AD2d 287 [ 1” Dept. 19951). Here, counterclaim plaintiffs, while denominating their motion as a pre-answer motion to dismiss, filed their motion within days of having served and filed the answer with counterclaims. Thus, even though issue had not been joined as to the counterclaims and no discovery has yet been conducted, Cannon and Alto 53 charted a summary judgment course by essentially arguing only questions of law as to breach of the Separation Agreement. Similarly, by cross moving for summary judgment and simultaneously opposing the motion to dismiss, Conant also unequivocally charted a summary judgment course thereby eliminating the notice requirement. Under these circumstances, the movants and the cross movant manifested an intention to lay bare their proofs. The counterclaim plaintiffs’ contention that

8

[* 10 ]

Conant’s motion for summary judgment is premature as there has been no discovery is rejected as lacking merit. Summaryjudgment is the procedural equivalent of a trial (see, Capelin Assocs. v Globe Mfg.

Corp., 34 NY2d 338, 341 [1973]). As such, the proponent of a summaryjudgment motion must make a prima facie demonstration of entitlement to judgment as a matter of law by tendering sufficient proof to demonstrate the absence of any material factual issues (see, Alvarez v Prospect

Hospital, 68 NY2d 320, 324 [1986]; Winegrad v New York Univ.Med. Ctr., 64 NY2d 851, 853 [1985]). In considering a motion for summary judgment, evidence is reviewed in a light most favorable to the party opposing the motion (see, Marlin v Briggs, 235 AD2d 192, 196 [l” Dept. 19971). An attorney’s affirmation, by itself, is of no probative value, but may serve as a vehicle for the submission of documentary evidence in admissible form (see, Zuckerman v City ofNew York, 49 NY2d 557, 563 [1980]). Moreover, credibility of parties or witnesses is not a proper issue for determination on a summary judgment motion (see, Capelin Assocs. v Globe Mfg.C o y . , supra). Reviewed in light of these principles, the Court concludes that neither the counterclaim plaintiffs nor Conant met their respective burdens. The elements of a cause of action for breach of contract are (1) the existence of a contract between plaintiff and defendant; (2) performance by the plaintiff; (3) defendant’s failure to perform; and (4) damages resulting from such failure to perform (see,

Noise in the Attic Productions v London Records, 10 AD3d 303, 307 [lStDept. 20041; Furia

v Furia, 116 AD2d 694 [2d Dept. 19863). Plaintiff properly pleaded breach of the Separation Agreement by setting forth the existence of a valid contract between the parties, his performance of his obligations thereunder, defendant Alto 53’s breach by its refusal to make the payments due for

deferred compensation, and resulting damages for such payments and attorney’s fees and costs incurred in seeking recovery through litigation.

As to the second cause of action, “[tlhe doctrine of anticipatory breach is applicable to bilateral contracts which contemplate some future performance by the non-breaching party 2Conant in his opposition acknowledges that Alto 53 has made payments of deferred compensation due under the Separation Agreement through July 15, 2008. However, the first cause of action in the complaint seeks payments through August 15, 2008, plus costs and attorney’s fees. Accordingly, the damage element of the first cause of action is supported by the record. 9

[* 11 ]

(American List Corp. v U S News & World Report, Inc. 75 NY2d 38, 44 [ 1989]). Pursuant to this doctrine, a non-breaching party is entitled to treat the conduct of another as a complete anticipatory breach of the contract where prior to the time of performance the other party has unequivocally repudiated or renounced the contract (id,). The non-breaching party need not tender performance or demonstrate its ability to perform, but rather the doctrine relieves the non-breaching party of the obligation to perform and entitles that party to recover the value of the entire contract (id).In the instant case, it is clear that counterclaim plaintiffs attorney Fisch in his Termination Letter and in his e-mail communications with plaintiffs attorney stated unequivocally that Alto 53 would be making no hrther payments of deferred compensation to Conant as required by the Separation Agreement. Therefore, the complaint properly states a claim for anticipatory breach. The remaining questions for this Court’s determination as to counterclaim plaintiffs’ motion are whether or not: (1) Alto 53’s failure to comply with the payment terms of the Separation Agreement constituted a material breach thereof; (2) plaintiff waived his right to sue for breach of contract by failing to object to Alto’s non-conforming payments; (2) Alto 53 was relieved of its obligations under the Separation Agreement by plaintiffs breach of a material term. It is well settled that “[wlhen a party materially breaches a contract, the non-breaching party must choose between two remedies: it can elect to terminate the contract or continue it. If it chooses the latter course it loses its right to terminate the contract because of the default” (Awards.corn, Inc. v Kinka’s, Inc., 42 AD3d 178, 188 [lstDept. 20071). Contrary to the counterclaim plaintiffs’

contention, the deferred cornpensation payments, while not the only monetary consideration under the Separation Agreement, constituted the primary consideration. The failure to make payments in a specific amount and at a specified time is generally considered to be a material breach of a contract which justifies termination of the contract (id).It is not disputed that the Separation Agreement unambiguously required that certain payments be made by certain dates and that Alto 53 failed to comply with those terms. It is also undisputed that Conant accepted the nonconforming payments for approximately three months before alerting Alto 53 of the discrepancy and that such notice did

not occur until August 4,2008, after Alto 53’sattorney had already sent the Termination Letter, when Conant’s attorney e-mailed Fisch with a schedule of payments made to date and noted that they did not conform to the terms of the Separation Agreement. Thus, while Alto 53 clearly breached the 10

[* 12 ]

Separation Agreement, it is also clear that Conant waived the right to terminate such Agreement on the basis of such breach (see,Albany Medical College v Lobel, 296 AD2d 70 1,703 [3d Dept. 20021). Moreover, once Conant’s attorney alerted Alto 53‘s attorney of the nonconforming payments, the outstanding payments through the due date of July 15, 2008. were forwarded to Conant. Accordingly, Conant sustained no damages as a result of this breach, at least through the payments due to July 15,2008. Nevertheless, where a contract contains a no-waiver provision, a non-breaching party may retain the option to terminate the contract for future breaches even where it waived the payment provisions as to past breaches (id. at 188-189). Paragraph 7 of the Separation Agreement is particularly relevant here. It provides as follows: “This Agreement and Exhibit A hereto constitutes the complete and exclusive agreement among the Parties with respect to the subject matter hereof and may not be amended except by writing signed by the Parties”. No argument has been made that

the Parties executed a written amendment to the payment provisions of the Separation Agreement. Although this provision does not specifically refer to non-waiver of the terms of the Separation Agreement, paragraph seven suggests that any modification, including a waiver of the provisions thereof, would have to be in writing. Accordingly, there is some question as to whether Conant by not objecting to past breaches, waived the Separation Agreement’s payment provisions as to future payments. “A waiver is the voluntary abandonment or relinquishment of a known right. It is essentially a matter of intent which must be proved” (Jefpaul Garage Corp. v Presbyterian Hosp., 61 NY2d 442,446 [1984]). It may be inferred by words, a course of conduct or a failure to act that “evinces an intent not to claim the purported advantage” (Hadden v Consolidated Edison Co. o f N Y , 45 NY2d 442,446 [ 19781; see, Fundamental Porvolio Advisors v Tocqueville Asset Management, 22 AD3d 204,209 [lstDept. 20051). A waiver must be “clear, unequivocal and deliberate” (Silverman v Silverman, 304 AD2d 41, 46 [lst Dept. 20031) “unmistakably manifested” and “not lightly

presumed” (Navillus Tile v Turner Constr. Co., 2 AD3d 209,210 [l” Dept. 20031). The burden of proving a waiver is upon the party asserting such defense (see, City ofNew York v State ofNew York, 40 NY2d 659,669 [ 19761). Review of the course of conduct between the parties does not indicate that Conant in any way evidenced an intent to waive his right to the remaining 19 payments under

11

[* 13 ]

the Separation Agreement. On this motion, counterclaim plaintiffs have failed to meet the substantial burden of establishing a waiver as to hture payments. Any claimed waiver as to future payments is belied by correspondence between plaintiff's counsel and Alto 53's attorney. Hoffman repeatedly stated that nothing contained in his correspondence should be deemed a waiver of any of his client's rights.

The question remains whether Conant violated the non-disparagement provision of the Separation Agreement and, if so, whether the counterclaim plaintiffs' performance under such Agreement was thereby excused. While counterclaim plaintiffs, by way of their attorney's affirmation, have made many serious allegations concerning plaintiffs alleged violation of the Separation Agreement and have furnished as attachments documents purporting to demonstrate plaintiff's violation thereof, the only specific conduct on plaintiffs part which they contend in their initial moving papers violated the non-disparagement provision of the Separation Agreement is Conant's published interview with the New York Restaurant Insider, excerpts of which were republished in the New York Post and the New York Observer. The question of whether the language attributed to Conant reported therein can reasonably be understood to be disparaging and, if so, whether violation of the non-disparagement provision constituted a material breach of the Separation Agreement, i. e, whether Conant's conduct substantially defeated the parties' contractual objective, are questions of fact, rather than of law. Moreover, in order to properly state a claim for breach of a non-disparagement clause, the employer must sufficiently allege damages resulting from the statements by the former employee (see, Arts4al1, Ltd. v Huncack, 5 AD3d 106, 1 10 [l" Dept.

2004; Matter ofAmerican Media,Inc. v Green, 8. Misc3d 1002 [A] ** 3 [Sup. Ct. N.Y. Co. 20051) and proffer evidence that Conant in some way solicited the various interviews or suggested the language in the articles which allegedly violated the subject provision (see, Sage Realty Corp. v

Kerin, 281 AD2d 334 [ 1 5 t Dept. 20011). In this case, rnovants have submitted no proof that they sustained economic damage as a result of the published comments by Conant or that Conant was in any way responsible for the articles in which the alleged disparaging comments were printed. In his reply affidavit, Cannon asserts other instances of disparaging comments alleged to have been made by Conant to members of the New York restaurant community, but such allegations are based upon hearsay and lack probative value sufficient to warrant the granting of summary judgment. 12

[* 14 ]

Turning then to those branches of Conant’s cross motion as seek to dismiss the counterclaims, the first and second counterclaims seek relief based upon Conant’s alleged violation of the non-disparagement provision of the Separation Agreement and are predicated upon the contention that such violation constituted a material breach of such Agreement. As discussed previously, the question of whether the non-disparagement provision was a material term of the Agreement, whether Conant violated such provision and, if so, whether such violation constituted a material breach present factual issues precluding the grant of summaryjudgment. In addition, there are questions as to whether Alto 53’s payments to Conant after it learned of Conant’s alleged breach of the non-disparagement provision and after the action was commenced constitute a waiver of its right to terminate the Separation Agreement and obligate it to make the remaining payments to Conant. Accordingly, Conant’s motion insofar as it seeks dismissal of the first and second counterclaim is denied. The third counterclaim asserts a cause of action for defamation. The elements of a defamation cause of action are a “false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard and it must either cause special harm or constitute defamation per se” (Salvatore v Kumar, 45 AD3d 560,563, quoting

Dillon v City ojNew Ynrk, 260 AD2d 34, 38 [lstDept. 19991). Special harm or special damage means the loss of something having economic or pecuniary value (see, Liberman v Gelstein, 80 NY2d 429 [ 19921). Although special damages need not be pled or proven when the cause of action is for defamation per se, defamation per se requires that the plaintiff prove that the defendant’s statements have hurt his trade, business or profession and further prove that the defamation is of a kind incompatible with his business, trade or profession (id.)The words alleged to constitute the defamation must be construed in the context of the entire statement “and if not reasonably susceptible of a defamatory meaning, they are not actionable” (Dillon v City of New York, supra at 38). The words alleged to constitute the defamation are Conant’s statements in the interview

published in the New York Restaurant Insider. The Court finds that Conant’s comments constitute

an expression of opinion that do not rise to the level of actionable conduct so as to support a claim for defamation. As has often been stated by the courts in ruling on defamation claims, “Courts will

13

[* 15 ]

not strain to find a defamatory interpretation where none exists” (Cohn v National Broudcasting Co., 50 NY2d 885, 887 [ 19801). Accordingly, the third counterclaim must be dismissed.

Conclusion Based upon the foregoing discussion, it is hereby

ORDERED, that the motion of the counterclaim plaintiffs to dismiss the complaint pursuant to CPLR

5 321 1 (a) (7) which has been converted pursuant to CPLR tj 321 1 (c) to a motion for

summary judgment is denied in its entirety; and it is further

ORDERED, that plaintiffs cross motion for summary judgment pursuant to CPLR tj 3212 is granted only to the extent that the third Counterclaim for defamation is dismissed and in all other respects the motion is denied; and it is further

ORDERED, that counsel shall appear in Part 61 on January 21, 2009, at 9:30 a.m., for a preliminary conference This constitutes the decision and order of the court.

ENTER,

flz-qzu 0.PETER SHERWOOD J.S.C.

J.S.C.

- 9