Novick v. AXA Network LLC, AXA Advisors, LLC
714 F. App'x 22
| 2d Cir. | 2017Background
- Steven Novick, an independent broker, contracted with AXA Advisors and AXA Network in 2002 and received $1.5 million in loans evidenced by two promissory notes (Jan. 2003 $500,000; Aug. 2003 $1,000,000). A clarifying document reserved certain pre-existing customer lists to Novick.
- AXA terminated Novick’s affiliation in October 2006; Novick sued asserting contract and tort claims (including whistleblower/retaliation theories); AXA counterclaimed to collect on the notes.
- The district court (Hellerstein, J.) dismissed Novick’s tort claims in 2011 as duplicative of contract claims, tried the remaining issues in 2016, excluded certain expert and parol evidence, declined to give a previously proposed adverse-inference instruction, and awarded AXA attorney fees on the notes.
- Novick appealed the dismissal of tort claims, evidentiary rulings (expert, parol evidence, adverse inference), and the amount/recoverability of AXA’s attorney-fee award.
- The Second Circuit affirmed the district court’s merits rulings (dismissal of tort claims; evidentiary exclusions; refusal to reinstate adverse inference) but remanded the attorney-fee award for recalculation and to determine whether any “fees on fees” were improperly awarded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Dismissal of tort claims as duplicative of contract | Novick argued torts implicate duties apart from the contract and should survive | AXA argued the dispute is governed by written agreements, so tort claims duplicate contract remedies | Affirmed: tort claims dismissed—no independent duty alleged beyond contracts (contract governs) |
| Law-of-the-case/adverse inference | Novick argued district court violated its earlier order granting an adverse inference by later declining to give it | AXA moved to preclude the adverse inference and argued reconsideration was appropriate | Affirmed: district court did not abuse discretion—Novick had sufficient notice of reconsideration and opportunity to respond |
| Exclusion of expert testimony | Novick contended expert needed to explain technical compensation terms to jury | AXA argued compensation terms were understandable to jurors and Novick failed to show Rule 702 reliability/relevance | Affirmed: no abuse of discretion in excluding expert—Novick didn’t identify technical issues beyond jurors’ understanding |
| Exclusion of parol evidence | Novick sought to admit negotiation statements to interpret contract references to commission schedules | AXA argued the agreements unambiguously incorporated published schedules; parol evidence is inadmissible to vary unambiguous written contracts | Affirmed: parol evidence properly excluded—contracts unambiguous and incorporated schedules by reference |
| Attorney-fee award (amount and “fees on fees”) | Novick argued the $263,206.40 award was excessive and included unrecoverable “fees on fees” | AXA sought full contractual fees under the notes | Vacated in part/remanded: fee entitlement under notes affirmed but district court abused discretion in awarding full requested amount without allocating hours to note-related work and may have awarded impermissible "fees on fees"; remand for allocation and reduction as necessary |
Key Cases Cited
- Chambers v. Time Warner, Inc., 282 F.3d 147 (2d Cir. 2002) (standard for reviewing motion to dismiss)
- Diesel Props S.r.l. v. Greystone Bus. Credit II LLC, 631 F.3d 42 (2d Cir. 2011) (contract claims preclude duplicative tort claims absent independent duty)
- Mid-Hudson Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp., 418 F.3d 168 (2d Cir. 2005) (contractual governance and fee-award review principles)
- United States v. Uccio, 940 F.2d 753 (2d Cir. 1991) (law-of-the-case doctrine and prejudice inquiry)
- Birney v. United States, 686 F.2d 102 (2d Cir. 1982) (law-of-the-case is discretionary and not inviolate)
- Fed. R. Evid. Rule 702 authority: Nimely v. City of New York, 414 F.3d 381 (2d Cir. 2005) (expert admissibility standards)
- Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186 (2d Cir. 2003) (deferential review of district court’s fee-amount determinations)