Perella Weinberg Partners LLC v. Kramer
153 A.D.3d 443
| N.Y. App. Div. | 2017Background
- Plaintiffs Perella Weinberg Partners LLC and related entities entered Deferred Compensation Agreements (DCAs) with defendants Kramer and Slonecker in 2007 providing lump-sum payment on earlier of the fifth anniversary (June 1, 2012) or 15 business days after separation if without "Cause"; DCAs forfeited compensation if terminated for "Cause" and contained an amendment clause requiring a written signed instrument.
- In 2011 employees were given single-page Election Forms to elect deferral of some percentage of their Deferred Compensation Amount from 2012 to a later date; forms stated deferral was "in accordance with the terms of the Deferred Compensation Agreement, as amended, dated May 30, 2007."
- Election Forms were unsigned by plaintiffs (no PWP signature), were administratively routed to HR, and did not mention forfeiture-on-termination or alter other DCA provisions.
- Kramer and Slonecker were later accused of breaching non-solicit/noncompete obligations and duty of loyalty, conduct that if proven would constitute termination for "Cause" under the DCAs.
- Defendants moved for summary judgment seeking immediate payment of deferred compensation, arguing the Election Forms removed the "forfeiture for Cause" condition; plaintiffs moved to dismiss several counterclaims including fraudulent inducement, Labor Law claims, and breach of fiduciary duty.
- Supreme Court denied defendants' summary judgment on the payment issue and granted dismissal of several counterclaims; on appeal the Appellate Division modified to allow Kramer's breach of fiduciary duty claim to proceed against PWP LLC and controlling persons, and otherwise affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2011 Election Forms unambiguously modified DCAs to eliminate forfeiture-on-termination for Cause and require immediate payment upon separation | Election Forms merely implement DCA deferral option and do not alter forfeiture clause; amendment clause of DCA requires a signed written instrument | Election Forms effectively amended DCAs by giving PWP more time to pay and, in consideration, eliminated the forfeiture restriction | Denied SJ to defendants — Election Forms do not unambiguously amend DCA; extrinsic evidence needed, issue for jury |
| Whether Election Forms complied with DCA amendment clause (written instrument signed by parties) | Plaintiffs: amendment clause not satisfied; forms lacked plaintiff signature and were administrative HR documents | Defendants: forms constitute an agreement to extend payment and modify terms implicitly | Held for plaintiffs as a reasonable interpretation; absence of plaintiffs' signature supports that forms did not amend DCA; factual dispute remains precluding SJ |
| Whether defendants stated a valid fraudulent inducement claim to rescind Election Forms | Plaintiffs: allegations fail to show misrepresentation of present fact or present intent to deceive in 2011; conduct occurred later; reliance is a fact question | Defendants: contend they were induced by misrepresentations that compensation would not be forfeited | Dismissal of fraudulent inducement as pleaded at this stage for lack of facts showing present intent to deceive; reliance is disputed fact not resolved on prediscovery motion |
| Whether Labor Law §193 claims are viable for withholding of deferred compensation | Plaintiffs: withholding was not a "deduction" under §193 | Defendants: withholding of deferred compensation qualifies as unlawful deduction | Labor Law claims dismissed — wholesale withholding is not a "deduction" under §193 |
| Whether breach of fiduciary duty claim may proceed and to whom it applies | Plaintiffs: breach of contract covers compensation dispute; fiduciary claim duplicative or barred | Defendants: fiduciary claim alleges pre-termination misconduct distinct from contract breach | Breach of fiduciary duty claim allowed only as asserted by Kramer against Perella Weinberg Partners LLC and Perella and Weinberg (control persons) under Delaware law; not duplicative because alleges distinct pre-termination misconduct |
Key Cases Cited
- Hartford Acc. & Indem. Co. v. Wesolowski, 33 N.Y.2d 169 (court outlines when contractual interpretation is for court vs jury)
- Ellington v. EMI Music Inc., 24 N.Y.3d 239 (contract ambiguity requires more than one commercially reasonable interpretation)
- Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 60 A.D.3d 61 (entire contract and circumstances inform ambiguity analysis)
- Braddock v. Braddock, 60 A.D.3d 84 (elements of fraudulent inducement)
- Deerfield Communications Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954 (misrepresentation must be of present fact, not future intent)
- Ryan v. Kellogg Partners Institutional Servs., 19 N.Y.3d 1 (discussed in context of wage withholding and related precedents)
- Cuervo v. Opera Solutions LLC, 87 A.D.3d 426 (discussion of Labor Law §193 and related employment deductions)