Court Opinion

ID: 5944575
Source: CourtListenerOpinion
Date Created: 2022-01-13 05:57:27.811179+00
Date Added: 2024-06-11T08:47:23.512019
License: Public Domain

OPINION OF THE COURT
Asch, J.
Plaintiff Daley was employed as vice-president of the defendant The Related Companies, Inc. and as president of defendant Related Equities Corporation. Pursuant to an employment agreement entered into by the parties, plaintiff was to receive compensation of commissions based on real estate syndications which took place during his employment. The agreement further provided that plaintiff "shall have a draw against [his] commission at the rate of $80,000 per year, paid bi-weekly at the same time and on the same basis as all other Related executive personnel.”
The parties had a dispute as to the commissions owed to plaintiff and this action was commenced. In the first order appealed from, the IAS court granted defendants’ motion to dismiss the second and fourth causes of action based on the New York Labor Law, finding that the plaintiff was a member of the "narrow class of commission salesmen excluded from the wage claim protections” of the Labor Law. In the second order appealed from, the IAS court, inter alia, granted plaintiff’s motion for an order pursuant to Debtor and Creditor Law § 279 restraining defendants Ross and Wine from disposing of any assets transferred to them by defendant The Related Companies, Inc., except in the ordinary course of business, and restraining the corporate defendant from disposing of any general partnership interests except in the ordinary course of business.
The IAS court erred in finding that the definition of "commission salesman” in Labor Law § 190 (6), which excludes employees "whose principal activity is of a supervisory, managerial, executive or administrative nature”, applies to exclude plaintiff from the ambit of section 198 (1-a), which was the basis of plaintiff’s claims for attorneys’ fees and an additional 25% of wages due as liquidated damages in his second and fourth causes of action. This is apparent when the statute is read as a whole. Thus "employee” is also defined in section 190 (2) as "any person employed for hire by an employer in any employment”. Wages is defined in section 190 (1) as "the earnings of an employee for labor or services rendered, regardless of whether the amount of earnings is determined on a *58time, piece, commission or other basis”. (Emphasis added.) In section 191, dealing with frequency of payments, different subsets of workers are treated in different manners and "commission salesman” is used as one of these categories. Obviously, if plaintiff raised an objection to the frequency of his commission payments, this section would be relevant as would the fact as to whether or not he acted primarily as a supervisor or manager. However, plaintiff makes his claim pursuant to section 198 (1-a) which reads in pertinent part: "In any action instituted upon a wage claim by an employee * * * in which the employee prevails, the court shall allow such employee reasonable attorney’s fees and, upon a finding that the employer’s failure to pay the wage * * * was willful, an additional amount as liquidated damages equal to twenty-five percent of the total amount of the wages found to be due.” (Emphasis added.) Thus, this applies equally to all employees as defined in section 190 (2), and whether or not plaintiff comes under the definition of "commission salesman” in section 190 (6) is simply irrelevant. This analysis of the statute is further buttressed by section 192 (3) which deals with the cash payment of wages and which specifically excludes "any person employed in a bona fide executive, administrative, or professional capacity whose earnings are in excess of three hundred dollars a week”. If the same type of exclusion was intended by the Legislature in section 198 (1-a), for commission salesmen/ executives or executives as a class, it would have simply used similar language.
Accordingly, executives are within the class of employees protected by section 198 (1-a), from a plain reading of the statute. Moreover, recent case law compels the same conclusion. Thus in Klepner v Codata Corp. (139 Misc 2d 382, affd 150 AD2d 994), where the defendant contended that the plaintiff was not an employee within the meaning of section 198 since he was an executive, the court disagreed, finding that an attorney employed as a " 'general counsel’ ” and " 'assistant to the president’ ” of a corporation met the terms of the definition set forth in section 190 and was, therefore, covered. It noted that the definition of employee in Labor Law § 2 (5) (i.e., " 'Employee’ means a mechanic, workingman or laborer working for another for hire”) was not applicable to article 6, where section 190 mandates that its definitions are to be used in that article. We affirmed the Supreme Court in Klepner without opinion. In Matter of Dean Witter Reynolds v Ross (75 AD2d 373), we also found there was a rational basis *59for an administrative determination that an account executive at a brokerage firm was an "employee” within the meaning of article 6. (See also Magness v Human Resource Servs., 161 AD2d 418; Gerlach v Horn & Hardart Co., 683 F Supp 342, 346; Maggione v Bero Constr. Corp., 106 Misc 2d 384.)
The defendants further urge that the plaintiff’s claim under the second and fourth causes of action is for incentive compensation which is not a claim for wages under the Labor Law. However, Magness v Human Resource Servs. (supra) and Matter of Dean Witter Reynolds v Ross (supra), cited by defendants in support of this proposition, are simply inapplicable to the facts before us. In Magness, the employment contract provided for a "salary” for plaintiff plus "supplemental income” on revenues received by defendant. While we found the plaintiff, as an executive, was within the ambit of section 198, we found the " 'supplemental income’ ” was clearly incentive compensation and not " 'wages’ ” pursuant to Labor Law § 190 (1). (Magness v Human Resource Servs., supra, at 419.) Likewise in Dean Witter Reynolds, the account executive was guaranteed a monthly salary and was entitled to receive additional " 'incentive compensation’ ”, and we found that the term " 'wages’ ” does not encompass an incentive compensation plan. (Matter of Dean Witter Reynolds v Ross, supra, at 381.) Here, however, plaintiff seeks to recover commissions which were not any form of incentive compensation. The agreement he entered did not guarantee him a base salary, with additional compensation due as incentive. His remuneration throughout the agreement is referred to as "commissions”. He received a "draw” against these commissions which was to be paid biweekly. The commissions were payable, however, "balancing against your draw”.
Finally, with respect to this order, defendants seek, as alternative relief, if we fail to uphold the dismissal of the second and fourth causes of action, a dismissal of plaintiff’s demand for punitive damages. However, since defendants did not cross-appeal from this order, we are without power to grant them affirmative relief (see, Hecht v City of New York, 60 NY2d 57).
After the IAS court dismissed the second and fourth causes of action, which we have discussed, the plaintiff amended the complaint to assert a fifth cause of action. In this, he alleged that subsequent to the commencement of his action, partnership assets valued in excess of $1 million were transferred from defendant The Related Companies, Inc. to *60defendants Ross and Wine without consideration and without notice to plaintiff. Thereafter, he moved, pursuant to Debtor and Creditor Law § 279 to: (1) restrain Ross and Wine from disposing of the assets conveyed to them by the corporate defendant; (2) set aside as fraudulent conveyances these transfers; (3) direct the three defendants to pay attorneys’ fees pursuant to Debtor and Creditor Law § 276-a; and (4) grant an order of attachment against the property of the corporate defendant. The IAS court granted injunctive relief restraining Ross and Wine from disposing of any assets transferred to them except in the ordinary course of business, and the corporate defendant from disposing of any general partnership interests except in the ordinary course of business. We find that this constituted an abuse of its discretion and therefore reverse this second order.
While the IAS court, in fashioning relief for a creditor under section 279 of the Debtor and Creditor Law, may restrain defendants from transferring property, the interim or temporary use of such restraint, before final adjudication, should follow the rules for the issuance of preliminary injunctions (CPLR 6301 et seq.). While the nisi prius court discussed and applied the requisite elements for a preliminary injunction, it erred in its analysis and the conclusion it reached.
Initially, plaintiff failed to establish the necessary element of irreparable harm absent the grant of such relief. Plaintiff seeks only money damages, pursuant to his breach of contract claims and has no specific claim to the general partnership assets of the corporate defendant. "An injunction may no longer be issued on the ground that the defendant merely threatens to dispose of his property not the subject matter of the action, to render himself judgment proof. (CPA § 878 (2)). Because an injunction should never issue where there are other adequate remedies and CPLR 6201 (3) authorizes an order of attachment in this situation, no hardship will be worked by its omission from the injunction statutes. A preliminary injunction is still unavailable in an action for a sum of money only.” (McLaughlin, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C6301:1, at 209; see also, Rosenthal v Rochester Button Co., 148 AD2d 375.) We note that the IAS court specifically held that plaintiff did not come forward with sufficient evidence of fraudulent intent on the part of defendants to warrant issuance of an attachment and denied plaintiff’s motion for such relief pursuant to CPLR 6201. Finally, plaintiff failed to demonstrate, in any event, on *61the record herein, that the corporate defendant was in financial distress so as to prevent any meaningful recovery. It appears that the net worth of the corporate defendant and its affiliates exceeds plaintiffs claims by multiples.
Accordingly, the order of the Supreme Court, New York County (Beatrice Shainswit, J.), entered January 24, 1991, granting defendants’ motion to dismiss the second and fourth causes of action of the complaint should be reversed, on the law, and the motion denied, with costs and disbursements payable to plaintiff.
Order of the Supreme Court, New York County (Beatrice Shainswit, J.), entered June 17, 1991, which, inter alia, granted plaintiff a preliminary injunction, pursuant to Debtor and Creditor Law § 279, restraining defendants from disposing of any partnership assets except in the ordinary course of business, should be reversed, to the extent appealed from, on the law and facts, and in the exercise of discretion, and the motion denied, with costs and disbursements payable to defendants-appellants.