Court Opinion

ID: 6050385
Source: CourtListenerOpinion
Date Created: 2022-01-13 14:48:12.06439+00
Date Added: 2024-06-11T08:51:39.989999
License: Public Domain

Ellerin, J.,
dissents in part in a memorandum as follows:
While I find that the motion court properly dismissed plaintiffs causes of action for promissory estoppel and fraud, I would find that plaintiff has set forth a prima facie case for breach of contract and would reverse the court’s dismissal of that cause of action.
Plaintiff is a former vice-president of defendant investment bank, D.H. Blair & Co., Inc. (DHB). In February 1991, plaintiff and DHB entered into an employment agreement which provided, in pertinent part, that, in addition to plaintiffs annual salary, he would receive the following compensation:
“b) For any financing services provided to Clients (private placements of debt or equity, arranging bank or finance company financing, but excluding public offerings of securities for which compensation may be outlined in d) below), whether or not in conjunction with a transaction included in a), [plaintiff] shall receive 50% of the commission or financing fees of DHB. Similarly, [plaintiff] shall receive 50% of any brokerage fees generated by [plaintiff] * * *
“d) If an introduction by [plaintiff] results in the establishment of a new entity, or in the funding of an entity by DHB in a venture capital situation, then [plaintiff] shall receive five percent (5%) of the total investment interest (i.e., securities, equities and other investment positions) of DHB in each such entity.” (Emphasis added.)
Pursuant to the agreement, plaintiff began performing finance services for a DHB client, which ultimately culminated in an agreement that DHB would underwrite an initial public offering of the client’s stock. DHB received commissions and fees of approximately $598,000 in cash as well as warrants which allegedly reached a value of approximately $3,400,000. At issue on this appeal is whether plaintiff is entitled, under the above agreement, to 50% of the commissions and fees received by DHB. The motion court held that the agreement unambiguously excluded all public offerings from the type of transactions for which plaintiff would be paid 50% of commissions and fees and therefore dismissed plaintiffs complaint for failure to state a cause of action.
I would find that the agreement is ambiguous. The agreement clearly excludes from the type of transactions for which plaintiff would be paid 50% of commissions and fees any public *173offering for which plaintiff had provided the introduction. For such public offerings, plaintiff’s compensation would instead be governed by paragraph 1 (d), by which he would receive 5% of the total investment interest. The majority overlooks the significant difference between a total investment interest, of even 5%, in distinction to 50% of commissions or fees. The economic potential of such investment interest could far exceed the amount of fees or commissions.
As to public offerings for which plaintiff did not provide the introduction, as was the case here, the agreement is simply unclear. Paragraph 1 (b) initially refers to any financing services provided to clients, but then, parenthetically, lists only “private placements of debt or equity [and] arranging bank or finance company financing.” It is unclear whether these are illustrative examples, or limitations.
Moreover, as to the exclusion, contrary to the majority, I do not find that the use of the term “may be” rather than “is” in the phrase “excluding public offerings of securities for which compensation may be outlined in (d) below” clearly and unambiguously means that the exclusion applies to all public offerings while merely noting that for some public offerings, subparagraph (d) will come into play. Instead, it is entirely possible to read the sentence as excluding only those public offerings to which subparagraph (d) applies.
Indeed, an intent to exclude all public offerings would have been clearly evinced had the clause simply excluded public offerings from subparagraph b). As written, taken as a whole, the clause is ambiguous.
In light of this ambiguity, I would find that it was error to grant defendants’ motion to dismiss the cause of action for breach of contract and would, instead, grant the parties the opportunity to discover and present extrinsic evidence relevant to intent (see, Rivera v St. Regis Hotel Joint Venture, 240 AD2d 332, 334).