Opinion
Civ. No. 96-0742 (DRD).
November 9, 1999
Arthur J. Raimon, Esq., MORGAN, MELHUISH, MONAGHAN, ARVIDSON, ABRUTYN LISOWSKI, Livingston, New Jersey, Attorneys for Plaintiff.
Christopher J. Losquardo, Esq., Kevin P. Kelly, Esq., HERTEIN, BURSTEIN, SHERIDAN, CEVASCO, BOTTINELLI LITT, L.L.C, Hackensack, New Jersey, -and- Peter Hoenig, Esq. (Pro Hac Vice) Daniel F. Hayes, Esq. (Pro Hac Vice) BIEDERMANN, HOENIG, MASSAMILLO, RUFF, P.C., New York, New York, Attorneys for Defendants.
O P I N I O N
This diversity action arises from a business venture entered into by plaintiff Insurance World Inc. ("IWI") and defendant Fenchurch Insurance Brokers, Ltd. ("Fenchurch"), s/h/a/ Fenchurch Group and Fenchurch Life and Pensions Consultants, Inc. IWI seeks to recover one-half of attorneys' fees and costs incurred in pursuing the venture, which it alleges Fenchurch agreed to pay. Fenchurch has counterclaimed for unpaid insurance commissions. Fenchurch has moved for summary judgment, dismissing the complaint pursuant to Fed.R.Civ.P. 56. Fenchurch also moves for summary judgment on a portion of its counterclaim. For the reasons set forth below, Fenchurch's motion for summary judgment dismissing IWI's complaint will be denied. Fenchurch's motion for summary judgment on a portion of its counterclaim will be granted.
STATEMENT OF FACTS
This lawsuit traces its origins to the development of an insurance product known as the Fiduciary Audit Protection Program ("FAPP"), originally conceived by an attorney named Jeffrey Mamorsky ("Mamorsky") at the New York law firm of Curtis, Mallet- Prevost, Colt, Mosle ("CMP"). Mamorsky was a partner at CMP and was also the owner of a corporation which held the copyright to a component of the product. The FAPP was an insurance policy offering coverage for breaches of fiduciary duty by ERISA fiduciaries; potential insureds were required to undergo an audit by CMP.
During February 1989, Mamorsky and CMP began working with defendant Fenchurch, a British insurance corporation, in developing the product and arranging for its placement in the London market. Fenchurch was represented by the Joint Managing Director of its North American subsidiary, Simon Cassey ("Cassey").
Fenchurch also decided to market the FAPP in the United States, a decision which required the assistance of an American insurance broker. In July or August of 1989, Mamorsky approached IWI, a New Jersey insurance brokerage firm. Mamorsky met with one of IWI's senior officers, Mark Grossbard ("Grossbard"), and asked Grossbard if IWI would be interested in developing and marketing the FAPP in the United States with Fenchurch, with IWI and Fenchurch to split the costs of development. IWI agreed to this arrangement, and Grossbard and Cassey began working on the project in August of 1989.
It is unclear whether Mamorsky approached IWI on behalf of Fenchurch, as IWI apparently believed, or whether he was acting on behalf of himself or CMP.
The parties' dispute arises over a payment of legal fees to CMP, which rendered services in connection with the FAPP project. IWI alleges that the parties agreed to share all costs equally, including legal expenses, and sues for reimbursement of one-half of the fees paid by IWI to CMP in January of 1990. Fenchurch denies the existence of any such agreement, challenges the allegation of payment of the fees by IWI, and refuses to pay.
Following oral argument of this motion on October 12, 1999, I granted IWI additional time to submit proof of payment of the fees. IWI has produced a certification of Mark Grossbard which includes microfiche copies of two treasurer's checks paid to CMP in January of 1990, totaling $155,135.08.
As to Fenchurch's counterclaim, Fenchurch sues for the recovery of insurance premiums resulting from its placement of "Professional Indemnity Errors Omissions" insurance policies on behalf of IWI's client, CMP. See Answer and Counterclaim at ¶ 13. CMP paid these premiums to IWI; IWI was then supposed to remit payment to Fenchurch. Id. at ¶ 14. IWI does not deny its liability for these premiums, but objects only to the amount claimed by Fenchurch "because it is based upon the split of the commission that existed prior to the agreement . . . pursuant to which Insurance World's portion of the commission was increased." IWI's answers to interrogatories, at ¶ 14-32. IWI concedes that it owes Fenchurch commissions in the amount of $18,000.Id., see also deposition of Mark Grossbard at 17-18, annexed to the Affidavit of Daniel F. Hayes as Exhibit AF.
STANDARD OF REVIEW
Summary judgment will be granted if the record establishes that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).
Rule 56(c) imposes a burden on the moving party simply to point out to the district court that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party has met this burden, the burden then shifts to the opposition to "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The evidence need not be in a form that would be admissible at trial. Celotex, 477 U.S. at 324. However, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
At the summary judgment stage, the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id. at 247. In determining whether there exists a material issue of disputed fact, however, the facts and the inferences to be drawn from the facts are to be viewed in the light most favorable to the nonmoving party. Pollock v. American Tel. Tel. Long Lines, 794 F.2d 860, 864 (3d Cir. 1986).
In addition to being genuine, the disputed facts must be material, as determined by the substantive law. Anderson, 477 U.S. at 248. Debate over extraneous issues will not suffice; "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id.
ANALYSIS
The parties have agreed that New York law governs the disposition of this action. In moving for summary judgment, Fenchurch has advanced the following arguments:
1) IWI's claim falls outside the statute of limitations;
2) the evidence is insufficient to prove that a contract existed;
3) if a contract did exist, it would be unenforceable under New York law:
a) because IWI cannot recover for voluntary payment of another's debt;
b) as an oral executory accord;
c) for lack of consideration, or;
d) because the contract would violate the New York Statute of Frauds.
Each of these arguments will be addressed below.
A. Statute of Limitations
The parties agree that this is an action sounding in breach of contract, and that under New York Civil Practice Law and Rules § 213, the limitations period for bringing an action for breach of contract is six years from the date of breach. The only dispute concerns the correct date when the IWI's cause of action accrued.
Under New York law, a breach of contract cause of action accrues at the time of the breach, even though no damage may occur until later.Ely-Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399; 599 N.Y.S.2d 501, 502 (1993); N.Y.C.P.L.R. § 203 (McKinney 1990). Accrual of the action is not dependent on a plaintiff's discovery of the breach, as "the statutory period of limitation begins to run from the time when liability for wrong has arisen, even though the injured party may be ignorant of the existence of the wrong or injury." Ely-Cruikshank, 599 N.Y.S.2d at 503.
Fenchurch asserts that, assuming there was an agreement to share legal fees, IWI's cause of action accrued when payment to CMP was due, sometime in November of 1989. Fenchurch finds support for this theory in New York v. Fenton, 68 A.D.2d 951; 414 N.Y.S.2d 58 (3d Dep't 1979). In Fenton, the State of New York sued a former university student for non-payment of tuition. The court found that the State's cause of action had ripened on the date when defendant's tuition and fees became due and payable, in that case seven days after the postmark date of billing. Fenchurch reasons that if it agreed to pay half of the legal fees, payment by Fenchurch would have been due upon presentation of the bills from CMP. Since IWI "had received bills and was being pressed for payment . . . as early as November 2, 1989," IWI's cause of action accrued on that date.
Fenchurch's argument, however, is not supported by the factual record. While Fenchurch and IWI may have incurred a debt to CMP by November of 1989, the exhibits presented in support of this motion show that payment of that debt was not due until the end of 1989. In a letter to Grossbard dated November 2, 1989, Mamorsky wrote that "fees . . . on this matter amount to approx. $140,000 and must be paid by year-end or else we are all 'up the creek without a paddle.'" See Affidavit of Daniel F. Hayes ("Hayes Aff.") at Exhibit H (emphasis added).
This understanding of the letter is consistent with the testimony given by Grossbard at his deposition on April 23, 1997, where he was asked:
Q: What did you understand Mr. Mamorsky to be stating to you when he said that the $140,000 must be paid by you or else we are all, quote, up the creek without a paddle, close quote?
A: If the fees weren't paid by the end of the billing year, I believe that the — Curtis' provisions as a law firm is to stop work on any active matter.
Q: And do you recall that Mr. Mamorsky was asking his fees to be paid in or around November 2, 1989?
A: He was just reminding us to pay by the end of the year.
Hayes Aff. at Exhibit AF, at 94 (emphasis added). Thus it appears that payment of the legal fees was not due until at least December 31, 1989. As in the Fenton case, the date when a debtor receives notice of a debt is not necessarily the date when the debt becomes due and payable. Under Fenchurch's own theory, IWI's cause of action accrued on December 31, 1989, and the complaint was timely filed on December 27, 1995.
In fact, payment may not have been due until some time thereafter. In a letter dated November 28, 1989, Mamorsky advised Grossbard that "in accordance with your request, we are deferring our fees for October-December, 1989 to 1990." Hayes Aff. at Exhibit K.
This determination obviates the need to address IWI's view that the action should be viewed as one for contribution. IWI notes that under New York law, a cause of action for contribution does not accrue until a party has paid the underlying claim. See John Grace Co. v. Tunstead, Schechter Torre , 186 A.D.2d 15; 588 N.Y.S.2d 262, 266 (1st Dep't 1992). IWI did not pay CMP until January of 1990.
B. Sufficiency of Evidence of the Agreement
Summary judgment is appropriate where a plaintiff has produced insufficient evidence to support a necessary element of its claim. See Celotex, 477 U.S. at 322-23. Under New York law, the plaintiff in a contract action has the burden of proof to establish by a fair preponderance of the credible evidence the existence of a contract under which it claims to be entitled to relief. Sims v. Blanchris, Inc., 648 F. Supp. 480, 484 (S.D.N.Y. 1986). Fenchurch argues that IWI has failed to put forth sufficient evidence to show that an agreement to share legal fees existed.In New York, parties are free to enter into a binding oral contract without memorializing their agreement in a fully executed document.Winston v. Mediafare Entertainment Corp., 777 F.2d 78, 80 (2d Cir. 1985). This freedom to contract orally remains even if the parties contemplate a writing to evidence their agreement. Id. Mere intention to commit the agreement to writing will not prevent contract formation prior to execution. Id. On the other hand, "where parties unequivocally indicate a desire not to be bound by an agreement 'until it is reduced to writing and signed by both of them, they are not so bound . . . until it has been written out and signed.'" Michael Coppel Promotions Pty. Ltd. v. Bolton, 982 F. Supp. 950, 954 (S.D.N.Y. 1997), quoting Scheck v. Francis, 26 N.Y.2d 466; 311 N.Y.S.2d 841, 843 (1970).
1. The Available Evidence
The parties agree that IWI and Fenchurch agreed to work together on the FAPP project; they also agree that no written contract was ever drafted. As a result, the existence of the alleged contract, as well as its terms, must be derived from other evidence.
There is, of course, the testimony of witnesses. IWI presents the certifications of Mark Grossbard and Jeffrey Mamorsky, prepared in opposition to this motion. Grossbard asserts that:
It was the clear understanding of Mr. Cassey that the payment of fees would be split by the plaintiff and the defendants. In fact, after the plaintiff would receive bills from Mr. Mamorsky's law firm, the plaintiff sent copies of the same to defendants and there were occasions when Mr. Cassey informed me that his superiors were complaining about the amount of the bills.
Certification of Mark Grossbard at ¶ 4. Mamorsky states that when he met with Grossbard:
plaintiff agreed to act as the United States representative for the marketing of the FAPP with the understanding that the plaintiff would contribute equally with the defendants toward payment of costs involved in the project, said costs being the legal fees to be paid to my law firm.
Mr. Cassey was aware that such expenses would be split between the plaintiff and the defendants and agreed to do so on behalf of the defendants.
Certification of Jeffrey D. Mamorsky at ¶¶ 3-4. Thus, there is evidence to support an inference that both of the parties agreed to such an arrangement.
Mamorsky's authority to bind Fenchurch to this contract is an issue of fact which precludes summary judgment. Fenchurch contends that "Grossbard made his own arrangement with Mamorsky over fees and expenses . . . and then assumed, based on his conversations with Mamorsky (not Cassey), that Fenchurch would pay half the fee and costs." Fenchurch's brief at 9. Cassey's statement in a letter to Fenchurch's finance director suggests that Mamorsky had authority to act on Fenchurch's behalf, stating that "splitting fees with Fenchurch . . . would have been something discussed between Mr. Mamorsky and Mr. Grossbard . . . ." See Hayes Aff. at Exhibit W.
Fenchurch counters with the deposition testimony of Simon Cassey, which it characterizes as an outright denial of these claims. At best, the cited passages indicate that Cassey had no knowledge of the parties' fee arrangements because "it was not his position to discuss Mamorsky's fees." Hayes Aff. at Exhibit AC, at 24-26. This conflicting testimony creates a triable issue of fact as to Cassey's knowledge and the credibility of the various witnesses.
Fenchurch's brief clearly tries to suggest that IWI's testimonial evidence is insufficient because its credibility may be suspect, noting that Grossbard is an officer of IWI as well as the husband of its owner; that Mamorsky's firm continues to do business with IWI; and that Mamorsky owned a copyright for an important part of the FAPP. Fenchurch further attempts to bolster Cassey's testimony by noting that because Cassey left Fenchurch on bad terms and continues to have a working relationship with Mamorsky and Grossbard, he would have every reason to support IWI and Grossbard's version of the facts. Credibility issues such as these are properly addressed to the trier of fact and are inappropriate on a motion for summary judgment.
Fenchurch also cites to a letter from Cassey to Anthony N. Wheal, the former finance director at Fenchurch, dated December 1, 1995. See Hayes Aff. at Exhibit W. The letter was written in response to a letter from Wheal, dated November 29, 1995, inquiring about Cassey's knowledge regarding the fee arrangement. See Hayes Aff. at Exhibit U. Wheal's letter recites Grossbard's allegations about the fee arrangement and asks Cassey to confirm their accuracy. See id. In particular, Grossbard had stated that "I was told I would have to split the fees with Fenchurch. I agreed to do so going forward, i.e.: all of the fees prior to August 1989 were the responsibility of Fenchurch." See id.
In his response, Cassey states that he "was not involved in the discussions about splitting fees with Fenchurch since that would have been something discussed between Mr. Mamorsky and Mr. Grossbard, but it would make sense that any fees that were agreed prior to August 1989, would be solely the responsibility of Fenchurch." Hayes Aff. at Exhibit W. This letter shows only that Cassey had no knowledge as to the parties' fee arrangement; it is not the equivalent of a denial that such an arrangement had in fact been entered into. Moreover, Cassey's comment that "it would make sense" that Fenchurch would pay all fees incurred prior to August 1989 tends to suggest that the parties would split the fees for legal services incurred thereafter.
The existence of an agreement concerning fees can also be inferred through a letter from Grossbard to Cassey, dated September 5, 1989. See Hayes Aff. at Exhibit F. In the letter, Grossbard discusses CMP's fees, noting that "CMP . . . is being reimbursed only for legal services as rendered, if any. . . Furthering the discussion of the fees, if any, this was all agreed to in New York when we all met." Id. While the terms of the agreement cannot be determined from the face of the letter, it appears that some agreement concerning CMP's fees was reached by the parties.
The record also includes a billing statement issued by CMP in October 1989 for professional services rendered in connection with the FAPP project during the period of September 1-30, 1989. See Hayes Aff. at Exhibit K. Notably, the billing statement is addressed to Fenchurch North America, Ltd., in care of IWI. Similarly, a past due billing statement dated March 9, 1993 is addressed to Fenchurch Life Pensions, Ltd. See Hayes Aff. at Exhibit O. If Fenchurch had no responsibility for CMP's fees, there would seemingly be no reason for CMP to bill Fenchurch.
In sum, Fenchurch's assertion that "plaintiff has no documentary evidence or other corroboration tending to prove the promise to pay or even the fact of payment," see Fenchurch's brief at 1, is simply incorrect. Both of the parties to the alleged agreement have testified to its existence; no representative of Fenchurch has presented similar testimony to refute these certifications. Grossbard's certification raises the additional question of why Cassey's superiors would complain about the amount of bills Fenchurch had no responsibility to pay. There is also an issue of fact as to Mamorsky's authority to act on behalf of Fenchurch in making the alleged agreement, which can perhaps be inferred from the fact that Fenchurch and IWI began working together shortly after the meeting between Grossbard and Mamorsky. The credibility of these witness can only be judged at trial.
Taken together, the testimony and exhibits presented are sufficient to allow the inference of the alleged agreement. At the very least, they raise numerous issues of fact which can only be resolved at trial, precluding summary judgment.
2. The Winston Test
Fenchurch urges application of the test developed by the United States Court of Appeals for the Second Circuit in Winston v. Mediafare Entertainment Corp., 777 F.2d 78 (2d Cir. 1985). The Winston decision articulated four factors to be applied in determining whether the parties intended to be bound in the absence of a document executed by both sides. See id. at 80. A court should consider: 1) whether there has been an express reservation of the right not to be bound in the absence of a writing; 2) whether there has been partial performance of the contract; 3) whether all of the terms of the alleged contract have been agreed upon, and; 4) whether the agreement at issue is the type of contract that is usually committed to writing. Winston, 777 F.2d at 80. Application of these factors would also permit the inference that a binding oral agreement was entered into by IWI and Fenchurch.
a. Express Reservation of the Right Not to Be Bound
Fenchurch asserts that "there is an admission in the record that the parties expressly reserved their right to be bound only in writing," citing the letter from Grossbard to Cassey dated September 5, 1989. Fenchurch's brief at 25. To the contrary, the cited exhibit suggests that the parties had already reached a complete agreement, as follows:
CMP on the other hand, is only being reimbursed for legal services as rendered, if any. If . . . there are no claims in this area for CMP to handle, there will be no fees at all. Furthering the discussion of fees, if any, this was all agreed to in New York when we all met.
Hayes Aff. at Exhibit F (emphasis added). While Grossbard added that he agreed with Cassey's "opinion to put this proposal in writing," it appears that a complete agreement had already been reached. Simply because the parties contemplate memorializing their agreement in a formal document does not prevent an agreement from coming into effect before written documents are drawn up. Bolton, 982 F. Supp. at 954; see also Winston, 777 F.2d at 80.
b. Partial Performance
Partial performance is an unmistakable signal that one party believes there is a contract; and the party who accepts performance signals, by that act, that it also understands a contract to be in effect. Bolton at 954, quoting R.G. Group, Inc. v. Horn Hardat Co., 751 F.2d 69, 75 (2d Cir. 1984).
Fenchurch notes that there has been no performance on its part; indeed, Fenchurch's failure to perform lies at the heart of this lawsuit. IWI argues, notwithstanding, that there was partial performance insofar as Fenchurch accepted the benefits of performance by CMP. The flaw in IWI's position is that such performance would serve only to establish the existence of a contract between CMP and Fenchurch. It says nothing about the alleged fee-sharing arrangement between Fenchurch and IWI.
c. Agreement on All Terms
This third factor was described by the Winston court as a consideration of whether there was "literally nothing left to negotiate." Winston, 777 F.2d at 82. This analysis is often done with the benefit of a subsequent written contract, from which a court may determine whether the parties had reached a complete and binding agreement during oral negotiations which was later memorialized, or whether there were significant subsequent changes in the substance of the agreement. See id. at 82.
In this case, there is of course no written agreement. The September 5, 1989 letter from Grossbard to Cassey, however, offers some guidance as to the status of the parties negotiations. While the letter does not explain the details of the fee-sharing arrangement, if any, Grossbard's letter does indicate that the parties had reached a complete agreement during a meeting in New York. See Hayes Aff. at Exhibit F.
Fenchurch contends that the agreement cannot be proved as to the material terms of price and time. To the contrary, the material terms of the alleged agreement are fairly simple and can be inferred from Grossbard's letter of September 5, 1989. While the exact dollar amount of the alleged contract was not (and could not be) determined, the amount owed was easily determinable; CMP was to be "reimbursed for legal services as rendered, if any," (except for services rendered prior to August of 1989), and Fenchurch was to pay half. See Exhibit F. Similarly, the time for performance is not indefinite; Fenchurch was obligated to pay half of the legal expenses billed by CMP as they came due.
d. Is the Agreement of the Type Usually Put in Writing?
Finally, the Court must determine whether the agreement at issue here was of the type ordinarily placed in writing. Fenchurch argues simply that a contract of this magnitude would normally be in writing. While the Court agrees that legal fees of $140,000 are not an entirely insignificant amount, it does not appear that the parties contemplated a contract of such magnitude at the time of their agreement. See Hayes Aff. at Exhibit "F" (noting that CMP would be reimbursed only for legal services as rendered and contemplating that if there were no claims for CMP to handle, there would be no fees at all). Indeed, the FAPP was a speculative product which eventually proved to be unsuccessful. See Fenchurch's brief at 2.
It is also noted that, while the amounts owed to CMP under the contract could potentially have been of some magnitude, the terms of the alleged contract itself are simple enough that the details need not be spelled out in a formal document, although the parties apparently considered doing so.
In sum, a review of the four factors described by the Winston court suggests that there is sufficient evidence from which the trier of fact could decide that a valid oral agreement was reached under New York law.
C. Enforceability of the Agreement
Fenchurch contends that, if an agreement was in fact made, it was nevertheless unenforceable as a matter of New York law under any number of theories. These contentions require little discussion.
1. Voluntary Payment of Another's Debt
Fenchurch avers that under New York law, voluntary payment of the liabilities of another, without his request, will not give rise to an action for repayment. See First Nat'l Bank of Ballston Spa v. Board of Supervisors, 106 N.Y. 488, 494 (1887); Perlmutter v. Timely Toys, Inc., 8 A.D.2d 834; 190 N.Y.S.2d 107, 109 (2d Dep't 1959). While this appears to be correct as a matter of law, the payment made by IWI cannot be characterized as "a voluntary payment of the debt of another; that is, a payment made without his request and by one who is under no legal liability or compulsion to make it." Ballston Spa, 106 N.Y. at 494.
First, IWI's payment of Fenchurch's half of the legal fees was not voluntary. IWI asserts that payment of Fenchurch's half of the fees in January 1990 was inadvertent. See Certification of Mark Grossbard at ¶ 5; IWI's answers to interrogatories at ¶ 7-13. Second, because IWI alleges that the parties agreed to share all legal fees equally, any payment of the fees would have effectively been at the request of Fenchurch. Third, it seems likely that IWI would have had the legal obligation to pay CMP for services rendered regardless of whether Fenchurch paid their share of the debt.
2. Oral Executory Accords
Fenchurch next argues that the agreement is unenforceable as an oral executory accord within the meaning of New York General Obligations Law ("GOL") § 15-501. An executory accord is defined as:
an agreement embodying a promise express or implied to accept at some future date a stipulated performance in satisfaction or discharge in whole or in part of a present claim, cause of action, contract, obligation, or lease, or any mortgage or other security interest in personal or real property, and a promise express or implied to render such performance in satisfaction or in discharge of such claim, cause of action, contract, obligation, or lease, or any mortgage or other security interest.
N Y Gen. Oblig. Law § 15-501(1) (McKinney 1989). GOL section 15-501(2) requires such agreements to be in writing and signed by the party against whom it is to be enforced. Id. at subsection (2).
Fenchurch asserts that if it already had a legal obligation to pay CMP at the time the agreement was made and then subsequently agreed to pay IWI for sums IWI had paid on Fenchurch's behalf, such an agreement would constitute an oral executory accord. A simple reading of the definition provided by GOL § 15-501 proves that it would not.
First, GOL § 15-501 concerns promises to perform in satisfaction of a present claim. An agreement to pay IWI for legal expenses incurred in the future cannot be described as an executory accord. Second, the "pre-existing" claim described by Fenchurch would be a legal obligation owed to CMP, not IWI. Consequently, an executory accord would requireCMP to agree to accept performance as satisfaction of its claim against Fenchurch.
3. Lack of Consideration
Fenchurch also contends that the purported agreement is void for lack of consideration. Fenchurch reasons that, if it already had a pre-existing duty to pay CMP for legal services rendered, the agreement is unenforceable because a promise to comply with a pre- existing legal duty is not adequate consideration. See Fafoutis v. Lyons 149 A.D.2d 565; 540 N.Y.S.2d 20, 21 (2d Dep't 1989).
This argument lacks merit for at least two reasons. First, Fenchurch had no pre-existing duty to pay for legal services which had not yet been rendered. Second, the argument entirely ignores the exchange of consideration which formed the basis of the parties bargain. IWI did not, as Fenchurch suggests, agree to provide its services as an insurance broker in exchange for Fenchurch's promise to pay for legal fees which it already owed to CMP. IWI contracted to provide its services as an American insurance broker with access to the American market in exchange for the commissions it would earn through marketing the FAPP product which Fenchurch was developing. Clearly, there was adequate consideration for the alleged contract.
4. Statute of Frauds
Finally, Fenchurch argues that if it promised to pay IWI for fees which IWI had already agreed to pay CMP, then the agreement would be void under the Statute of Frauds. New York's Statute of frauds requires certain agreements to be in writing, including any agreement to answer for the debt of another. N.Y. Gen. Oblig. Law § 5-701 (McKinney 1989). The alleged agreement was not, however, one in which Fenchurch agreed to pay half of IWI's legal fees. Instead, Fenchurch simply agreed to pay for itsown legal fees, a debt incurred when CMP rendered services to both corporations.
D. Fenchurch's Counterclaim
Regarding Fenchurch's counterclaim, there are no disputed issues of fact which would preclude summary judgment. In its counterclaim, Fenchurch alleges that IWI has failed to remit certain premiums owed to Fenchurch in the amount of $40,757.
IWI does not deny its liability for these premiums, but objects only to the amount claimed by Fenchurch "because it is based upon the split of the commission that existed prior to the agreement . . . pursuant to which Insurance World's portion of the commission was increased." IWI's answers to interrogatories, at ¶ 14-32. IWI concedes that it owes Fenchurch commissions in the amount of $18,000. Id., see also Grossbard deposition at 17-18. Fenchurch is entitled to summary judgment on its counterclaim for this amount.
CONCLUSION
For the reasons set forth herein, Fenchurch's motion for summary judgment will be denied. Fenchurch's motion for summary judgment on its counterclaim will be granted in the amount of $18,000. An appropriate order and judgment will be entered.
Dated: November 9, 1999
__________________________________ Dickinson R. Debevoise, U.S.S.D.J.