Case ID: ad3d_1/html/0225-02.html
Source: Caselaw Access Project
Author: {"author": "Sullivan, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(November 20, 2003)
    John J. Sheehy, Appellant, v Clifford Chance Rogers & Wells, LLP, Respondent.
    [769 NYS2d 1]
   Order, Supreme Court, New York County (Karla Moskowitz, J.), entered May 16, 2002, granting defendant’s cross motion for summary judgment dismissing the complaint and denying plaintiffs motion for partial summary judgment or to dismiss defendant’s affirmative defenses, modified, on the law, to deny defendant’s cross motion as to plaintiffs first cause of action, for breach of contract, except insofar as that cause seeks damages for the present value of future installment payments not yet due, and to reinstate that cause to that extent, and to grant plaintiffs motion insofar as to dismiss the second, third, fourth and fifth affirmative defenses, and otherwise affirmed, without costs.

Plaintiff is a former partner of defendant’s predecessor, Rogers & Wells'. At the time plaintiff left the firm, the Rogers & Wells Retirement Plan for Partners stated that partners aged 60-64 would be eligible for early retirement. The Rogers & Wells Partnership Agreement, which incorporated the Retirement Plan by reference, provided that the partnership’s executive committee could “enter into a written agreement” to pay not in excess of “Normal” or “Mandatory” retirement benefits to a partner who, “at the specific written request of the Executive Committee,” withdraws or retires other than in accordance with “Normal Retirement” (ages 65-69) or “Mandatory Retirement” (age 70). The retirement benefits available to a partner who takes normal or mandatory retirement included: four years of payments equal to 37.5% of the distribution of partnership profits the partner would have received had he not retired; participation in the firm’s medical and life insurance plans; use of office space and secretarial assistance; and supplemental retirement payments (SRPs), which are paid for life, beginning in the fifth year after the partner’s retirement. The Retirement Plan stated that SRPs “shall not be paid to a Partner who takes Early Retirement, except at the specific written request of the Executive Committee.”

Plaintiff contends that in January 1995, when he was 57 years old, he and the firm entered into the following oral agreement: in exchange for plaintiffs departure by the end of the year, he would be deemed to have taken early retirement at the executive committee’s specific written request, pursuant to the Retirement Plan and the Partnership Agreement, and he would be entitled to, inter alia, SRPs. Plaintiff duly departed the firm at the end of 1995, received the four years of 37.5% distribution payments, participated in the firm’s health and life insurance plans, and utilized firm office space and secretarial assets. In addition, Edward O’Sullivan, the firm’s Director of Finance/ CFO, testified at his deposition that James Asher, the managing partner, told him that the executive committee had approved SRPs for plaintiff, and it is undisputed that, in conjunction with outside actuaries, the firm’s controller, Vidya Rajpal, prepared and sent to plaintiff a memorandum calculating the SRPs he would receive. Nevertheless, defendant refused to pay plaintiff SRPs when they became due on January 1, 2000.

Contrary to the assertions of defendant and the dissent, article X (b) of the Partnership Agreement, which states that if a partner takes early retirement the executive committee “may . . . enter into a written agreement with the . . . Partner authorizing payment” of benefits in addition to those set forth in article X (a), such as SRPs, does not bar plaintiffs claim as a matter of law. Article X (b) does not declare that the only way in which a partner may receive SRPs and other amounts beyond those provided in article X (a) is by written agreement; in fact, it is undisputed that plaintiff received certain profit distributions, which are also not mentioned in article X (a), without a written agreement. In addition, plaintiff submitted evidence that at least two partners who took early retirement receive SRPs, even though they do not have written agreements with defendant, a fact overlooked by the dissent.

Similarly, and contrary to the dissent’s interpretation, section 5.4 of the Retirement Plan does not prohibit the payment of SRPs in the absence of a written agreement. Section 5.4 states: “[SRPs] shall not be paid to a Partner who takes Early Retirement, except at the specific written request of the Executive Committee.” The phrase “specific written request” refers to “Early Retirement,” not the payment of SRPs, and thus the provision should be read as conveying the sentiment that SRPs shall not be paid to a partner who takes early retirement unless the early retirement was at the specific written request of the executive committee; the provision is silent as to whether a written agreement to pay SRPs is required. That conclusion is compelled by logic (the executive committee would not “request” a retiring partner to permit the firm to pay him SRPs) and by the use of the identical phrase in article X (b) of the Partnership Agreement with respect to early retirement but not the payment of SRPs. Section 2.5 (b) of the Retirement Plan, cited by the dissent, merely references section 5, and thus adds nothing. Section 6.1 of the Retirement Plan does state that Senior Counsel “shall enter into a written agreement with the Firm containing provisions approved by the Executive Committee, including [a noncompete clause]” in “exchange for receiving [SRPs] and all other benefits under this Plan.” However, the Retirement Plan does not mandate any particular time requirement and, as already noted, Rogers & Wells paid “all other benefits” to plaintiff without a written noncompete agreement.

To the extent the Partnership Agreement and Retirement Plan appear to prohibit the payment of SRPs to a partner taking early retirement unless that early retirement was at the specific written request of the executive committee, neither the Partnership Agreement nor the Retirement Plan prohibits oral modifications, and article XXII of the Partnership Agreement specifically permits oral modifications. For that same reason, General Obligations Law § 15-301 does not bar plaintiffs claim.

Insofar as the dissent argues that plaintiff was not even a “Senior Counsel,” because he was not yet 60 years old (the commencement age of “Early Retirement” as set forth in the Retirement Plan) at the time he withdrew from the firm, it is undisputed that Rogers & Wells executed a “Change of Status Form” listing plaintiff as “Senior Counsel,” a term the dissent acknowledges is defined as a partner who “has retired in accordance with the provisions of [the Plan].” That plaintiff was designated a Senior Counsel, even though he had not yet attained the age of 60, also refutes the dissent’s proposition that the Retirement Plan and Partnership Agreement could not be orally modified.

We also disagree with defendant’s argument that the agreement alleged by plaintiff was an unenforceable agreement to agree. To be sufficiently definite, an agreement need not contain a dollar amount; if it contains a method for calculating the amount, that suffices (see e.g. Cobble Hill Nursing Home v Henry & Warren Corp., 74 NY2d 475, 483 [1989], cert denied 498 US 816 [1990]; Joseph Martin, Jr., Delicatessen v Schumacher, 52 NY2d 105, 110 [1981]). The Retirement Plan specifies in detail how to calculate SRPs.

Defendant argues, and the dissent agrees, that the statute of frauds bars the alleged oral agreement, since SRPs are paid for life, beginning in the fifth year of retirement, and thus are not capable of complete performance within one year. However, the statute of frauds is not a bar if “the acts to be performed beyond a year [in the instant case, payment of SRPs] concern only enforcement of . . . existing . . . rights under . . . written agreements [in the instant case, the Rogers & Wells Retirement Plan for Partners]” (Kane v Rodgers, 21 AD2d 773 [1964], affd 15 NY2d 544 [1964]). Here, the alleged oral agreement was to change plaintiff’s status from partner to early retirement (at the specific written request of the executive committee) with entitlement to SRPs. That agreement was fully performable within one year. The payment of SRPs was governed by the written Retirement Plan, which contains detailed instructions on how to calculate SRPs. Because plaintiff’s rights to SRPs under the Retirement Plan became fixed once he was deemed to have taken early retirement at the specific written request of the executive committee (if this was, indeed, the parties’ oral agreement), and because computation of the actual amount of plaintiffs SRPs would be “a mere ministerial act,” the fact that the payments wpuld extend into the future does not cause the statute of frauds to bar plaintiffs claim (see Pando v Fernandez, 127 Misc 2d 224, 227 [1984], revd on other grounds 118 AD2d 474 [1986]; see also Cron v Hargro Fabrics, 91 NY2d 362, 369-370 [1998]).

As the Court of Appeals has acknowledged, there may be certain circumstances which “represent a slight modification of language in previous case law concerning the necessity of full performance by all parties within a year to satisfy the Statute of Frauds” but nevertheless “warrant a slightly different analysis that remains consistent with . . . the overriding purpose of the Statute of Frauds,” namely “the prevention of fraud in the proving of certain legal transactions particularly susceptible to deception, mistake and perjury but not to afford persons a means of evading just obligations” (Cron, 91 NY2d at 370 [citations and internal quotation marks omitted]). Where, as here, “the measure of defendant’s obligation to compensate its employee is fixed within a year, the dangers envisioned by the Statute of Frauds do not come into play” (id.). Indeed, the absence of fraud on the part of plaintiff is indicated by the fact that the firm’s CFO confirmed the existence of the promise to pay plaintiff SRPs, the firm’s controller calculated the SRPs due to plaintiff, and the partnership had a history of paying SRPs to partners who took early retirement without a written agreement.

While the dissent is correct in noting that not all Senior Counsel are entitled to SRPs, the alleged oral agreement, as noted supra, was for plaintiff to become Senior Counsel (having been deemed to retire at the specific written request of the executive committee) with a right to SRPs.

Although the 1995 letter signed by Rajpal, the firm’s controller, which calculated the SRPs plaintiff was expected to receive, is some evidence of the existence of the oral agreement alleged by plaintiff, it does not constitute a memorandum signed by defendant’s agent such as to satisfy the writing requirement of the statute of frauds, since Rajpal did not have the authority to offer plaintiff SRPs. The other writings cited by plaintiff are also deficient; the Rogers & Wells “Change of Status Form” listing plaintiff as a “Senior Counsel” is not dispositive, since, under the Retirement Plan, not all Senior Counsel are entitled to SRPs, and the Benefit Plans Guide for Partners, which was sent to plaintiff after he withdrew from the firm, states that it “is not complete,” it “does not constitute an official summary of any . . . plans,” and in the event of a conflict between the benefit guide and “the provisions of the legal plan documents,” the latter would prevail.

We emphasize that our rejection of defendant’s “agreement to agree” argument and statute of frauds defense is not conclusive of the ultimate merits; issues of fact exist as to the terms of the parties’ agreement and the amount, if any, of the SRPs to which plaintiff is entitled. However, plaintiff can only recover the SRPs that have already fallen due; he is not entitled to the present value of future installments of SRPs (see e.g. Acacia Natl. Life Ins. Co. v Kay Jewelers, 203 AD2d 40, 43-44 [1994]; Romar v Alli, 120 AD2d 420, 421 [1986]).

Plaintiff’s unjust enrichment claim was properly dismissed because no benefit “was unjustly conferred upon defendant! ] at plaintiff’s expense” (J.E. Capital v Karp Family Assoc., 285 AD2d 361, 362 [2001]). There is no common-law right to a pension (see Schlansky v United Merchants & Mfrs., Inc., 443 F Supp 1054, 1059 [1977]). Plaintiff was compensated for his work for the firm by receiving profit distributions while he was a partner. In addition, for the first four years after he left the firm, he received 37.5% of the distributions he would have received if he had remained a partner. Defendant’s refusal to pay SRPs is not so shocking that equity and good conscience require defendant to pay them, especially in light of evidence that plaintiff was asked to leave the firm because of a serious billing problem.

Plaintiff’s claim for breach of fiduciary duty was properly dismissed because he failed to allege an independent tort (see William Kaufman Org. v Graham & James, 269 AD2d 171, 173 [2000]; cf. Mandelblatt v Devon Stores, 132 AD2d 162, 167-168 [1987]). Although plaintiff argues that defendant acted in bad faith, a failure to pay money in accordance with an alleged promise is a breach of contract, not a tort. Concur—Buckley, PJ., Mazzarelli and Andrias, JJ.

Sullivan, J.,

dissents in a memorandum as follows: In late 1993, after a major billing problem involving overcharges at the law firm of Rogers & Wells came to light and while an internal investigation was still underway, plaintiff, a 55-year-old partner for over 20 years and responsible for one of the firm’s largest clients, accepted, in writing, “full responsibility” for the “serious and systemic” billing problem and resigned from the firm’s executive committee and as head of the litigation department. In December 1994, the firm’s executive committee met and agreed to ask plaintiff to withdraw from the firm.

Shortly after the December 1994 meeting, the managing-partner, a member of the committee, and another partner met briefly with plaintiff to tell him that because of the billing problem the executive committee had lost confidence in him and wanted him to withdraw from the firm by the end of 1995. The managing partner told plaintiff that if he resigned he would receive a four-year payout of 37.5% of the actual distributions that he would have received had he remained with the firm. The payout was one of the benefits that the firm’s Partnership Agreement permitted the executive committee to award to a partner who withdrew or retired before the age of 65. Plaintiff readily agreed to the proposal. Although it constitutes a bone of contention in this case, plaintiff claims that, in addition, he was orally promised that at the end of the four-year payout, he would receive supplemental retirement payments (SRPs), monthly payments for life referred to in the Partnership Agreement for which partners retiring after reaching age 65 (Normal Retirement) might qualify under the Partnership Agreement. There is no written agreement memorializing the terms of plaintiffs alleged agreement with the firm.

In January 2000, four years after he withdrew from the firm after receiving the annual payout of 37.5% of distributions, plaintiff contacted the firm and inquired about the payment of SRPs. The matter was referred to the former executive committee of the firm, which, effective January 1, 2000, had combined with Clifford Chance to form Clifford Chance Rogers & Wells, LLP The executive committee confirmed that plaintiff was not entitled to SRPs. When the firm denied ever making such an agreement and refused to make any SRP payments, this lawsuit followed. On cross motions for summary judgment, Supreme Court found plaintiffs contract claim void under the statute of frauds because the alleged oral agreement could not be performed within one year and that the documents upon which plaintiff relied failed to satisfy the statute. The majority agrees with the latter finding but not the former. I would affirm.

In his complaint, plaintiff alleges that at an early January 1995 meeting, James Asher, the firm’s managing partner, asked him to withdraw from the firm and stated that, if he did, he “would be treated under the Partnership Agreement as taking early retirement at the [fjirm’s request” and receive the 37.5% payments for four years, and following that he would receive SRPs for life. In a last-ditch effort to avoid the bar of the statute of frauds, plaintiff now claims that the alleged oral agreement was one merely to allow him to take Early Retirement Status if he withdrew from the firm, claiming that such a change in status was fully performable within a year. Having changed his status, he asserts, he became entitled to SRPs under the written terms of the Partnership Agreement.

As a withdrawing partner, plaintiffs rights were governed by the Partnership Agreement, which, expressly incorporating into it the firm’s Retirement Plan for Partners (RPP), provided for three categories of retirement: “Early Retirement” (ages GO-64), “Normal Retirement” (beginning at age 65) and “Mandatory Retirement” (beginning at age 70). A partner who “has retired in accordance with the provisions of th[e] plan” is defined as “Senior Counsel.” When plaintiff withdrew from the firm on December 31, 1995, he was 57 years of age and did not fall within any of the three categories.

As provided in articles VIII and X of the Partnership Agreement and section 5.4 of the RPR only partners who elect Normal Retirement or are subject to Mandatory Retirement were entitled to SRPs. Under article VIII, partners who take Normal or Mandatory Retirement “receive the following payments in full satisfaction and in full accounting” of their partnership interest and income units in the partnerships: (a) a four-year payout of 37.5% of the cash distributions the partner would have received had he not retired, (b) the amount of the retiring partner’s net capital account, (c) the actual cash distributions made to the partner through the end of the month in which the partner retires and (d) the amounts payable under the provisions of the RPR which include SRPs.

Plaintiffs rights, as a withdrawing partner who had not yet reached age 65, were governed by article X (a), which provided that such partners

“shall receive the following payments in full satisfaction and in full accounting of the Partner’s Partnership interest and Income Units in the Partnership:

“(i) The amount in the Partner’s net capital account computed as provided in Article VII, shall be paid, without interest not later than one year after the date of withdrawal or retirement;
“(ii) The Partner may retain actual cash distributions made to the Partner on or before the date of his or her withdrawal or retirement; and
“(iii) The Partner’s share of Partnership profits for such year shall equal the actual cash distributions made to the Partner on or before the date of his or her withdrawal or retirement.” Unlike article VIII (d), article X (a) does not incorporate the benefits provided in the RPP; nor does it give a partner, such as plaintiff, who withdrew before the age of 65 any right to SRPs.

Furthermore, as to partners like plaintiff, who withdraw or retire other than in accordance with the Normal or Mandatory Retirement, article X (b) provides: “[T]he Executive Committee may, in its sole discretion and notwithstanding any other provision of this Agreement, enter into a written agreement with the withdrawing or retiring Partner authorizing payment to the withdrawing or retiring Partner [sic] additional amounts not in excess of the sums which would be paid under Article VIII to a Partner withdrawing in accordance with Normal Retirement or Mandatory Retirement as defined in the Rogers & Wells Retirement Plan for Partners. Nothing in this Agreement, however, shall be construed to require the Executive Committee to enter into such an agreement or to otherwise authorize any payments to a withdrawing or retiring Partner pursuant to this subparagraph.”

This provision cannot be read, as the majority holds, as permitting an oral authorization of SRP payment. The discretionary may is limited to authorization by writing only.

The RPP provides, in section 5.4, that “[t]he Supplemental Retirement Payment shall not be paid to a Partner who takes Early Retirement, except at the specific written request of the Executive Committee.” Thus, in order to obtain SRPs, a partner taking Early Retirement must have a writing from the Executive Committee authorizing the payment thereof. There is no such writing in the record.

Plaintiff, an experienced and sophisticated commercial litigator and partner in the firm for 25 years, familiar with the provisions of the Partnership Agreement relating to SRPs, must have known that the statute of frauds would require a writing to make enforceable a purported oral agreement for the payment of SRPs that would not even begin until four years after he withdrew from the firm and, in any event, could not be completed before the end of his lifetime.

On or about February 6, 1996, the firm’s Director of Finance, its controller and a firm administrator signed a Change of Status Form listing plaintiff as Senior Counsel; the form said nothing about any alleged agreement between the firm and plaintiff for the payment of SRPs. On March 12, 1996, a benefits consultant at the firm sent a form letter to plaintiff enclosing the Firm Benefits Guide, which, with respect to SRPs, states that “Supplemental Retirement Payments are payable monthly following your retirement for your life.” On page 1, it also states that “this Guide ... is intended as a general summary for your convenience and does not constitute an official summary of any such plans. Any conflicts between these descriptions and the provisions of the legal plan documents will be governed by the provisions of the plan documents.”

To be effective, the purported oral promise that plaintiff receive SRPs, whether or not based on a change of status to that of Early Retirement, must be in writing because the first payment was not to be made for four years and, thus, was “not to be performed within one year” (Freedman v Chemical Constr. Corp., 43 NY2d 260, 265 [1977]; Lowinger v Lowinger, 287 AD2d 39 [2001], lv denied 98 NY2d 605 [2002]). Plaintiffs change of status argument and the majority’s conclusion that the oral agreement is not within the statute of frauds is fatally flawed because it proceeds on the false premise that partners taking Early Retirement at the request of the executive committee automatically qualify for SRPs. In clear and unambiguous terms, section 5.4 of the RPI] as previously noted, provides that SRPs “shall not be paid to a Partner who takes Early Retirement, except at the specific written request of the Executive Committee.”

At the heart of plaintiffs argument and the majority’s determination is a construction of section 5.4 which automatically entitles a partner who takes early retirement at the request of the executive committee to the payment of SRPs. The majority reasons that section 5.4 “should be read as conveying the sentiment that SRPs shall not be paid to a partner who takes early retirement unless the early retirement was at the specific written request of the executive committee.” If the majority’s construction were the intended one, the agreement would provide, “The Supplemental Retirement Payment shall not be paid to a Partner who takes Early Retirement, except if the partner takes Early Retirement at the specific request of the Executive Committee.”

In any event, even if the majority’s interpretation of section 5.4 is correct and does permit, without the written request of the executive committee, the payment of SRPs to a partner who takes Early Retirement at the committee’s request, there is nothing in section 5.4 which leaves room for a construction requiring the payment of SRPs to such a partner. Without belaboring the point, it makes no sense to construe the agreement so as to reward a partner who takes Early Retirement at the request of the committee, i.e., who, at least in some circumstances, is being asked to leave the firm, in effect, being “shown the door.”

In addition, although article X (b) of the Partnership Agreement provides that if a partner takes other than Normal or Mandatory Retirement “at the specific written request of the Executive Committee, the Executive Committee may, in its sole discretion and notwithstanding any other provision of this Agreement, enter into a written agreement with the . . . Partner authorizing payment to the . . . Partner [szc] additional amounts not in excess of the sums which would be paid [to a Partner taking Normal or Mandatory Retirement],” the same subparagraph also provided that “[n]othing in this Agreement . . . shall be construed to require the Executive Committee to enter into such an agreement or to otherwise authorize any payments to a withdrawing or retiring Partner pursuant to this subparagraph.”

Thus, even if the firm agreed to treat plaintiff as if he had taken Early Retirement under the RPR rather than early retirement as a face-saving device to disguise his expulsion, as testified to by the partner who led the firm’s internal investigation into the billing problem, that agreement does not automatically entitle plaintiff to SRPs. Since any agreement to pay SRPs at the end of four years would have been a separate agreement, collateral to the agreement to accord plaintiff Early Retirement status, the agreement as to SRPs would not be capable of being performed within one year and is thus unenforceable.

Plaintiff argues that he was entitled to SRPs because of his listing as Senior Counsel on the Change of Status Form and in the Benefits Guide and letter of transmittal. Not only did plaintiff fail to meet the definition of Senior Counsel, but even the designation as Senior Counsel does not entitle a partner who retires before age 65 to receive SRPs. Senior Counsel is defined in the Partnership Agreement as “a Partner who has retired in accordance with the provisions of this plan.” Since he retired at age 57, plaintiff did not retire in accordance with the provisions of the RPP because he did not fall within any of the defined categories of Early (60-64), Normal (65-69) or Mandatory (age 70) Retirement. But, even if plaintiff were to be deemed a Senior Counsel taking Early Retirement, he is not entitled to the payment of SRPs since he did not receive the written agreement for the payment of SRPs that article X (b) makes mandatory.

Moreover, section 6.1 of the RPP requires that each Senior Counsel enter into a written agreement with the firm in exchange for receiving SRPs and all other benefits. Similarly, it should be noted, section 2.5 (b) of the RPP provides that “Senior Counsel shall receive the Supplemental Retirement Payments, if any, to which he is entitled in accordance with section 5 of this plan,” a clear acknowledgment that not all Senior Counsel are entitled to SRPs.

Since plaintiffs first cause of action alleging breach of an oral agreement (the only cause of action sustained by the majority, which concedes that plaintiffs attempts to cobble together writings sufficient to satisfy the statute of frauds fail) is barred by the statute, the complaint should be dismissed and the order appealed from affirmed. 
      
       Plaintiff has not raised the doctrine of part performance, an exception to the statute of frauds, which in any event would be inapplicable, since the acts of part performance must have been those of the party insisting on the contract and unequivocally referable to the agreement, but plaintiffs early retirement and acceptance of certain retirement payments and benefits did not automatically entitle him to SRPs (see Messner Vetere Berger McNamee Schmetterer Euro RSCG v Aegis Group, 93 NY2d 229 [1999]).