SKYLINE RISK MANAGEMENT, INC., Plaintiff, -against- YANNIS LEGAKIS et al., Defendants.
20-cv-8395 (AS)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
May 9, 2024
ARUN SUBRAMANIAN, United States District Judge
ARUN SUBRAMANIAN, United States District Judge:
Almost four years ago, Plaintiff Skyline Risk Management, Inc. (Skyline), brought this case against Yannis Legakis and his company, Laconic Risk Solutions (collectively, Legakis). Among other things, Skyline alleged that Legakis, who used to work with Skyline, stole its clients and property when he left. Now, Legakis moves for summary judgment. For the reasons that follow, that motion is granted.
BACKGROUND
I. Factual Background
For this motion, the Court takes the facts as Legakis gives them. Under Local Civil
Now on to those facts: This case stems from a death and the subsequent dissolution of a business relationship. Skyline is an insurance brokerage that serves the construction industry. Back in 2014, Skyline’s then president, Anthony Kammas, brought on his friend, Yannis Legakis, to develop the company’s bonding business. Dkt. 224 ¶¶ 2, 4. There was no written employment agreement between Legakis and Skyline. ¶ 7. Instead, Legakis was to act as an independent contractor, and Skyline and Legakis would split Legakis’s commissions. ¶ 6. Legakis and Kammas agreed that Legakis could take his clients with him if he left Skyline. ¶ 8. In addition to developing Skyline’s bonding business, Legakis also wrote some insurance policies for Skyline clients during his time with the company. ¶ 10.
When Kammas passed away in 2020, Legakis decided to leave Skyline. ¶ 11. On July 14, 2020, Legakis and Menexas met to discuss Legakis’s departure. Id. The same day, Legakis sent a follow-up email. ¶ 12. He explained that, as it related to the bonding business, he would finish out the rest of the week and then start to move accounts over. Id. As it related to the insurance business, Legakis wrote that he would keep [his] book with Skyline, to be paid at the same payout as before, contingent on a specific Skyline employee or a suitable replacement handling his accounts. ¶ 12. Legakis also told Menexas that hе had a laptop that Skyline had given him years ago, which he would like to keep. Id. Legakis offered to pay for the laptop. Id. Finally, Legakis said that because he and Skyline were still working together, he’d like to have access to his insurance files and email. Id. Legakis asked Menexas to let [him] know if Skyline was going to shut [him] off. Id. If that was the case, Legakis proposed setting up his account files in a separate Dropbox account. Id.
Menexas did not respond to that email or to several follow-up emails that Legakis sent over the next two months. ¶¶ 13–16. When Menexas finally responded, he said nothing about Legakis’s decision to take his bonding clients with him, thе laptop, or access to Skyline’s system. ¶ 20. Instead, Menexas wrote only that it was Legakis’s choice to quit and that he w[ould] be paid in the same manner [he was] paid in the past. Id. As of August 30, 2020, just about a month before this lawsuit was brought, Skyline had not disabled Legakis’s access to Skyline’s computer system. ¶ 21. Nor did Menexas ever tell Legakis that he could not access the Skyline system. Id.
II. Procedural Background
Skyline brought this lawsuit against Legakis and his company, Laconic Risk Solutions, on October 7, 2020, alleging that Legakis stole Skyline’s clients and property and defamed it. Dkt. 1. On December 28, Legakis filed an answer as well as counterclaims for unpaid
This litigation proceeded at a snail’s pace. Between 2021 and 2023, Skyline requested six discovery extensions, which were granted in full or in part. Dkts. 59, 119, 145, 157, 160, 165. Apparently, more than 500 days into litigation, Skyline still had not served Legakis with any discovery requests. Dkt. 172-1 at 6.
In January 2023, Menexas failed to appear for his deposition. Dkt. 165. So the magistrate judge overseeing discovery granted Legakis’s motion to compel Menexas’s deposition. Id. Menexas again failed to appear, so the magistrate judge granted Legаkis’s motion for sanctions. Dkt. 195. In addition, on the date Skyline had scheduled to take Legakis’s deposition, Skyline didn’t show up. Dkt. 172-1 at 7. Legakis waited for forty-five minutes without any word from Skyline. Id. As a result, it appears (from the summary-judgment submissions) that Skyline never took Legakis’s deposition.
But the sanctions did not scare Skyline straight. Instead, Skyline continued to disregard this Court’s orders. Without explanation, Skyline blew past the deadline for paying the sanctions. Dkt. 226. This Court set another deadline and then extended that deadline at Skyline’s request. Id.; Dkt. 230. Skyline blew past the new deadline. Dkt. 233. After Skyline represented that it did not have the funds to pay the sanctions, this Court ordеred Skyline to submit documentation of that fact. Dkt. 236. Again, Skyline missed the deadline, although the sanctions were eventually paid. Dkts. 237, 238.
The second amended complaint lists twelve causes of action. Dkt. 132 at 19–30. But on October 26, 2023, Skyline withdrew its trade-secrets claims. See Dkt. 234 at 5. And on November 17, 2023, Skyline advised Legakis that it was also withdrawing its unjust-enrichment claim. Dkt. 222-4; Dkt. 234 at 5.
Although there is nothing abnormal about issues crystallizing as litigation progresses, the Court notes that the contours of Skyline’s alleged injuries have remained elusive throughout this case and remain so even now, almost four years in. In its opposition brief, for example, Skyline says its right to relief arises from the fact that Legakis took steps to leave Skyline while still working with Skyline, such as copying and/or ret[aining] Skyline computer files to which he was not entitled and [preparing] Broker of Record letters, so that by the [time he left,] he had all the information necessary to steal the bonding business clients of Skyline. Dkt. 234 at 5. But in his deposition, Menexas admitted that he had no issue with clients moving over to Legakis after Legakis gave [Skyline] his notice on [July] 15th. Dkt. 222-5 at 286:2–11. Menexas instead describes Legakis’s misconduct as purposely delaying bonds to manipulate [them] so they came to fruition after [he left Skyline]. Id. Yet there’s nо reference to bonds being purposely delayed in Skyline’s brief.
LEGAL STANDARDS
Summary judgment is only appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Davis v. Blige, 505 F.3d 90, 97 (2d Cir. 2007). The movant bears the burden of establishing that no genuine issue of material fact exists. Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995). But [i]n moving for summary judgment against a party who will bear the ultimate burden of proof at trial, the movant’s burden will be satisfied if he can point to an absence of evidence to supрort an essential element of the nonmoving party’s claim. Id. Once the moving party has made a properly supported showing sufficient to suggest the absence of any genuine issue as to a material fact, the nonmoving party, in order to defeat summary judgment, must come forward with evidence that would be sufficient to support a jury verdict in his favor. Id.
Because the failure to respond to a statement of material facts means that the court accepts the moving party’s statement as uncontested, [i]n the typical case, failure to respond results in a grant of summary judgment once the сourt assures itself that
DISCUSSION
Below, the Court details why summary judgment is warranted on each of Skyline’s remaining claims. At bottom, however, there are four main reasons for Skyline’s failure to successfully oppose summary judgment. The first three are issues with Skyline’s factual presentation—or lack thereof. First, Skyline did not file a counterstatement of material facts, as required by Local Rule 56.1(c). Second, in asserting that there are disputed facts, Skyline failed to support the assertion by ... citing to particular parts of materials in the record, as required by
But Skyline wasn’t sunk just by its procedural missteps. Skyline’s failure to successfully oppose summary judgment appears to stem from something deeper than just a disregard for rules (though to be sure, Skyline has, throughout this litigation, repeatedly shown such a disregard). Rather, it seems that despite years of litigation, Skyline simply failed to do much discovery at all. As already discussed, Skyline didn’t bother to show up to depose Legakis. Now, all that Skyline can scrape together to opрose summary judgment is an affidavit from its principal (filled with
Finally, Skyline’s fourth failure is that it fails to respond to many of the arguments that Legakis raises in his summary-judgment brief. A plaintiff effectively concedes a defendant’s arguments by [its] failure to rеspond to them. Felske v. Hirschmann, 2012 WL 716632, at *3 (S.D.N.Y. Mar. 1, 2012); see, e.g., Fuentes v. Schemmer, 2023 WL 188739, at *14 (S.D.N.Y. Jan. 13, 2023); Rosenberg v. LoanDepot, Inc., 2023 WL 1866871, at *4 (S.D.N.Y. Feb. 9, 2023); Canas v. Whitaker, 2019 WL 2287789, at *6 (W.D.N.Y. May 29, 2019). So by not responding to many of Legakis’s arguments, Skyline has conceded them. All four of these reasons contribute to the disposition of this motion.
I. The Computer Fraud and Abuse Act
To show a violation of the Computer Fraud and Abuse Act (CFAA), Skyline must show that Legakis accesse[d] a protected computer without authorization, or exceed[ed] authorized access, causing Skyline damages.
Still, in its brief, Skyline repeatedly asserts that Legakis was no longer authorized to access its computers after leaving Skyline. Dkt. 234 at 6. But Skyline cites nothing to back that up (in fact, this section of Skyline’s brief has no record citations whatsoever), and [t]he party opposing summary judgment may not rely simply on conclusory statements. Goenaga, 51 F.3d at 18; see
II. Conversion
Conversion occurs when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone еlse, interfering with that
III. Unfair Competition
To sustain an unfair competition claim involving misappropriation, a plaintiff must establish that the defendant: (1) misappropriated the plaintiff’s labors, skills, expenditures, or good will; and (2) displayed some element of bad faith in doing so. Barbagallo v. Marcum LLP, 820 F. Supp. 2d 429, 446 (E.D.N.Y. 2011) (cleaned up). [U]nder New York law, an unfair cоmpetition claim may be based on the misappropriation of a client list where wrongful or fraudulent tactics are employed[.] Apple Mortg. Corp. v. Barenblatt, 162 F. Supp. 3d 270, 284 (S.D.N.Y. 2016).
Legakis says Skyline’s unfair competition claim fails because (among other things) there was no bad faith. Dkt. 222 at 12. By pointing out that there is an absence of evidence to support the nonmoving party’s case, Legakis has shift[ed] the burden to [Skyline] to come forward with specific facts showing that there is a genuine issue for trial. PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 105 (2d Cir. 2002) (internal quotation marks omitted). Skyline blatantly fails to do so; it once again does not cite a single piece of evidence in this sectiоn of its brief. Dkt. 234 at 10–11.
IV. Breach of Fiduciary Duty and Faithless Servant
Although New York courts are far from clear regarding the contours of—and interplay between—a claim for breach of fiduciary duty and the faithless servant doctrine, there is a close relationship between the two. Yukos Cap. S.A.R.L. v. Feldman, 977 F.3d 216, 242 (2d Cir. 2020). The elements of a breach-of-fiduciary-duty claim are (i) the existence of a fiduciary duty; (ii) a knowing breach of that duty; and (iii) damages resulting therefrom. Williams Trading LLC v. Wells Fargo Sec., LLC, 553 F. App’x 33, 35 (2d Cir. 2014) (citation omitted). Meanwhile, the faithless-servant doctrine entitles a principal to recover from his unfaithful agent any commission paid by the principal. Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184, 200 (2d Cir. 2003) (citation omitted).
Legakis says that summary judgment is warranted on these claims because he wasn’t Skyline’s fiduciary or agent. Dkt. 222 at 12–16. [A] fiduciary relationship exists under New York law when one person is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation. Williams Trading, 553 F. App’x at 35 (cleaned up). Similarly, [a]n essential characteristic of an agency relationship is that the agent acts subject to the principal’s direction and control. Pan Am. World Airways, Inc. v. Shulman Transp. Enters., Inc., 744 F.2d 293, 295 (2d Cir. 1984); see also Quik Park W. 57, LLC v. Bridgewater Operating Corp., 49 N.Y.S.3d 112, 114 (1st Dep’t 2017).
It is deemed admitted that Legakis was an independent contractor, not a Skyline employee. Dkt. 224 ¶ 6. Indeed, even Menexas’s affidavit (to which Skyline’s brief never even cites) does not dispute this. Dkt. 235 ¶ 4. And Legakis says that there’s no evidence that despite being an independent contractor, he was nevertheless Skyline’s agent or fiduciary. Dkt. 222 at 13–16. In fact, Menexas said in his deposition that it was our company that was being controlled by Legakis ... guiding [the company’s departments as] to what to do. Id. at 14 (quoting Dkt. 222-5 at 176:9–14). Menexas further testified that Legakis didn’t let anybody talk to clients and he would basically control the flow of information and communication. Dkt. 222-5 at 182:17–24; see also 187:2–4, 194:24–195:2. Menexas’s own testimony thus supports Legakis’s argument that he was not Skyline’s agent.
In response, Skyline repeatedly asserts thаt Legakis was an agent and fiduciary of Skyline but cites nothing. Dkt. 234 at 11–14. Skyline says that Legakis produced business for Skyline
True, in Menexas’s affidavit, he repeatedly asserts that Legakis was Skyline’s agent. But for one thing, [t]he court need consider only the cited materials, and Menexas’s affidavit is not cited in Skyline’s brief.
Skyline’s citation to Alevy v. Uminer, 2007 WL 2175601 (N.Y. Sup. Ct. Mar. 23, 2007), doesn’t save it either. In that case, the court allowed a breach-of-fiduciary-duty claim to survive a motion to dismiss, writing that there was some evidence of a fiduciary relationship even though the defendant was an independent contractor. Id. at *4. Although the court did not identify what that evidence was, the defendant had signed a contract stating that he would not compete with the company either while he worked there or for two years after leaving. Id. at *1–2. Here, there is no evidence of any non-compete agreement between Skyline and Legakis. And Alevy confirmed that [f]or an independent contractor to have a fiduciary relationship to an employer, it must be shown that the relationship was akin to an employer-employee relationship. Id. at *4. Skyline cites no evidence of an employer-employee relationship. Id.
Plus, even if Skyline had sufficient evidence to support the conclusion that Legakis was Skyline’s agent or fiduciary, these claims would still fail. Skyline asserts in its brief that Legakis began to divert customers of Skyline while still acting as an agent for Skyline. Dkt. 234 at 12. Skyline says that [t]his is clear from the Broker of Record letters ... that were prepared almost simultaneously with the notice from Legakis that he would be terminating his relationship with Skyline and from the emails he sent to the bonding companies advising them of his imminent departure. Id. First off, the brief does not actually cite to these letters and emails, so it’s not entirely clear what Skyline is referencing. Second, the letters that Skyline seems to be referencing are all dated after Legakis left Skyline, as Skyline concedes. Dkt. 222-2. Skyline says that this shows that the letters were prepared before Legakis officially left. But even if that were a reasonable inference to draw, agents are allowed to take acts in preparation to compete.
As to the email that Skyline appears to be referencing (although again, the Court is left to guess), it seems to show that as of July 8th, Legakis had told someone that he was going to venture off on his own soon. Dkt. 235-12 at 2. But this email does not give rise to a genuine issue of material fact for numerous reasons. First, it doesn’t appear that this person was a client; instead, it seems that this person was someone at a bonding company. Id. Second, even if the person was a client, mere advisement to one’s clients of a future planned departure from one’s employment would not constitute a breach of loyalty or fiduciary duties. Poller v. BioScrip, Inc., 974 F. Supp. 2d 204, 227 (S.D.N.Y. 2013); see also Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, 813 F. Supp. 2d 489, 521 (S.D.N.Y. 2011). Despite almost four years of litigation, Skyline has no evidence that Legakis solicited clients while he was still working with Skyline, and a party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment. FTC v. Moses, 913 F.3d 297, 305 (2d Cir. 2019) (citation omitted). Plus, Legakis has produced declarations from his clients that he did not solicit them until July 20, 2020, or later, when he no longer worked with Skyline. Dkt. 222-3 at 4, 6, 8, 10, 12, 14, 16.
Even if a reasonable inference is that Legakis, prior to leaving Skyline, was asking clients to go with him, it is undisputed that these were Legakis’s clients, and he could take them. Dkt. 224 ¶ 8. So there can be nothing faithless about Legakis’s actions, nor did he breach any fiduciary duty. Legakis was not solicit[ing] customers away from the principal because it was agreed thаt these were his customers. Restatement (Third) of Agency § 8.04 cmt. c.
Finally, Skyline’s contention that Legakis breached his duties or acted faithlessly by taking client information also fails. First, it is undisputed that Legakis’s clients were his, and he was allowed to take them with him when he left. This suggests that Legakis was allowed to take any information necessary to serving his clients, like their contact information, with him. See Grossman v. Schenker, 100 N.E. 39, 40 (N.Y. 1912) (A contract includes, not only what the parties said, but also what is necessarily to be implied from what they said.); see also Cordero v. Transamerica Annuity Serv. Corp., 211 N.E.3d 663, 670 (N.Y. 2023) ([T]he Court will infer that contracts include any promises which a reasonable person in the positiоn of the promisee would be justified in understanding were included at the time the contract was made. (citation omitted)). In fact, Skyline itself describes the information that Legakis took as that which is necessary for the determination of the bonding costs. Dkt. 234 at 9 (emphasis added); see id. at 5. This understanding is confirmed by the fact that Menexas never responded to object to Legakis’s email, which indicated Legakis’s intent to keep his client’s files. Dkt. 224 ¶¶ 12–20. Second, it’s not even clear what client information Skyline thinks that Legakis wrongfully took. Skyline’s brief refers to the compilation of client’s [sic] financial data, contact infоrmation and bonding history and the way in which it is compiled but does not cite anything or specify which clients’ data Legakis allegedly took or how the data was compiled. Dkt. 234 at 10–11. In addition, Legakis explains in his brief that the client data belonged to the clients, not Skyline,
In sum, there are numerous reasons that summary judgment must be granted for Legakis on the breach-of-fiduciary-duty and faithless-servant claims.
V. Fraud and Fraudulent Misrepresentation
Under New York law, the elements of a fraud claim are: (1) a material misrepresentation or omission of fact (2) made by defendant with knowledge of its falsity (3) intent to defraud; (4) reasonable reliance on the part of the plaintiff; and (5) resulting damage to the plaintiff. Structured Cap. Sols., LLC v. Commerzbank AG, 177 F. Supp. 3d 816, 836 (S.D.N.Y. 2016) (internal quotation marks omitted). Similarly, [t]o state a claim for fraudulent misrepresentation under New York law, a plaintiff must show: (1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiffs thereby, (3) the plaintiffs reasonably relied upon the representation, and (4) the plaintiffs suffered damage as a result of their reliance. Quintana v. B. Braun Medical Inc., 2018 WL 3559091 (S.D.N.Y. July 24, 2018) (internal quotation marks omitted). The complaint alleges that Legakis committed fraud and made a fraudulent misrepresentation by inflating the amounts he charged clients for bonding services. Legakis says that even if that’s true, Skyline can’t sue because it wasn’t damaged. Rather, Skyline benefited because it received a share of Legakis’s commissions. Skyline fails to respond to that argument. So to the extent that Skyline’s fraud and fraudulent-misrepresentation claims are premised on inflated invoices, summary judgment is granted to Legakis. See Canas, 2019 WL 2287789, at *6.
Instead of responding to Legakis’s argument that Skyline was not damaged by the alleged fraud, Skyline pivots, claiming that Legakis committed fraud by taking Skyline’s clients, which resulted in lost commissions. The complaint doesn’t allege that as a fraud or fraudulent misrepresentation. Dkt. 132 ¶¶ 118–122, 140–145 (alleging instead that Legakis committed fraud by inflating premiums charged to clients and misrepresented the premiums). But in any event, Skyline’s argument fails for the reasons discussed above: for purposes of this motion, it is uncontested that Legakis and Skyline agreed that he could take his clients with him when he left. Dkt. 224 ¶ 8. So there was no false misrepresentation or intent to defraud, and summary judgment in Legakis’s favor is warranted on the fraud and fraudulеnt-misrepresentation claims too.
VI. Tortious Interference
To establish a claim for tortious interference with business relations, a plaintiff must plead: (1) the plaintiff had business relations with a third party; (2) the defendant interfered with those business relations; (3) the defendant acted for a wrongful purpose or used dishonest, unfair, or improper means; and (4) the defendant’s acts injured the relationship. Garvey v. Face of Beauty LLC, 634 F. Supp. 3d 84, 94 (S.D.N.Y. 2022). Legakis says that summary judgment is warranted because, among other things, he did not act with a wrongful purpose or use[]
Summary judgment is also warranted on Skyline’s claim for tortious interference with contract. Under New York law, a tortious interference claim requires a showing that a valid contract еxists and that a third party with knowledge of the contract intentionally and improperly procured its breach. JBCHoldings NY, LLC v. Pakter, 931 F. Supp. 2d 514, 534 (S.D.N.Y. 2013). Legakis says that Skyline has not identified any contract with which Legakis interfered. Dkt. 222 at 22–23. Skyline fails to respond to this argument (indeed, Skyline’s brief does not even mention its claim for tortious interference with contract), so summary judgment is warranted. See, e.g., Tarrant v. City of Mount Vernon, 2021 WL 5647820, at *5 (S.D.N.Y. Dec. 1, 2021); Johnston v. Town of Orangetown, 2013 WL 1189483, at *7 n.3 (S.D.N.Y. Mar. 22, 2013); Felske, 2012 WL 716632, at *3.
VII. Injurious Falsehood
Finally, Legakis says that there is no injurious falsehood because there was no false statement. In response, Skyline asserts that Legakis falsely advised the clients of Skyline that he was leaving Skyline and taking the bonding brokerage business with him. Dkt. 234 at 16. Once again, Skyline fails to сite any evidence to support this assertion.
But even if it had, summary judgment would still be warranted because this statement was true. See Grayson v. Ressler & Ressler, 271 F. Supp. 3d 501, 518 (S.D.N.Y. 2017) (listing elements of injurious falsehood). Legakis did leave Skyline, and he did take the bonding business with him. That’s why this lawsuit exists. Although Skyline may think that doing so was unlawful, that does not make the statement untrue, which is, of course, required for a claim of injurious falsehood. Id. In addition, an injurious falsehood is confined to denigrating the quality of the plaintiff’s business’s goods or services. Id. (cleaned up). The statement that Legakis was leaving Skyline does not denigrat[e] the quality of [Skyline’s] goods or services. So summary judgment is warranted on this basis as well.
CONCLUSION
Skyline may be upset that Legakis left Skyline and took his clients with him. But after almost four years of litigation, Skyline has failed to produce any evidence indicating that Legakis’s actions were unlawful—indeed, it fails to produce almost any evidence at all. So summary judgment is warranted in Legakis’s favor.
The Clerk of Court is directed to terminate Dkt. 221. Counsel for Skyline is directed to provide this Opinion & Order to Mr. Menexas by email on or before May 10, 2024.
SO ORDERED.
Dated: May 9, 2024
New York, New York
ARUN SUBRAMANIAN
United States District Judge