Opinion
No. 02 Civ. 7803 (SHS).
June 18, 2004
OPINION AND ORDER
John F. Dillon Co., LLC ("Dillon"), a maritime broker, seeks $160,913 in unpaid commissions allegedly due it pursuant to a charter party agreement plaintiff negotiated among defendants Tradigrain Shipping, S.A. ("Tradigrain"), Foremost Maritime Corporation ("Foremost"), and Ji May Navigation Corporation ("Ji May") in 2001. Plaintiff seeks to recover on three causes of action: 1) breach of contract by Foremost and Ji May, 2) quantum meruit, and 3) tortious interference by Tradigrain with contractual relations between Dillon and Foremost. Defendants now move for summary judgment pursuant to Fed.R.Civ.P. 56 dismissing all claims. Defendant Foremost's motion is granted because Foremost acted as an agent for a disclosed principal, Ji May. Ji May and Tradigrain's motions are granted because this action is governed by a contract and that contract confers no rights on plaintiff as to Ji May and Tradigrain.
I. Background
The facts underlying this motion for summary judgment are largely undisputed and are taken from the complaint, and the parties' affidavits and statements made in opposition to and in support of summary judgment pursuant to Fed.R.Civ.P. 56.1. Factual disparities are indicated where they appear.
A. The Parties
Plaintiff Dillon is a maritime brokerage company organized and operating in the state of Connecticut. Defendant Ji May, a Panamanian corporation, is the owner and operator of the M/V JI MAY. Defendant Foremost, organized under the laws of the state of New York, acted as an agent of Ji May by securing charterers for the M/V JI MAY. Defendant Tradigrain is a Swiss Societe Anonyme and operates in, and is organized under, the laws of Switzerland Tradigrain was the charterer of the M/V JI MAY prior to terminating its involvement in the grain shipping business and filing for the Swiss equivalent of bankruptcy.
B. The Underlying Charter Party Agreement
On April 12, 2001, plaintiff, acting as a broker, fixed a charter party agreement between Tradigrain and Foremost ("Tradigrain Charter Party"). (Compl. ¶ 7). That agreement provided that Tradigrain would charter the M/V JI MAY for a minimum of thirty-four months and a maximum of thirty-eight months. (Cardozo Aff., Exh. B, "Charter Party Agreement," Clause 91). The daily rate for hire ranged from $8,500 to $13,000 and fluctuated based on a calculation of the fifteen day average of hire rates on four charter routes, as published by the Baltic Exchange. (Cardozo Aff., Exh. B, "Tradigrain Charter Party," Clause 95; Compl. ¶ 8). Dillon was to be paid a 1.25 percent commission. (Tradigrain Charter Party, Clause 43; Compl. ¶ 9). The commission is set forth in clause forty-three of the Tradigrain Charter Party ("Clause 43"): "A commission of 1.25 percent is payable by the Vessel and the Owners to John F. Dillon Co., Stamford on hire earned and paid under this Charter, and also upon any continuation or extension of this Charter." (Id.) The parties operated in accordance with that agreement until January 29, 2002, during which time Dillon was paid a 1.25 percent commission on all hire paid. (Ji May Rule 56.1 State. ¶ 33).
C. The Charter Party Agreement Terminates
On March 5, 2002, Farmland Industries, Inc., the parent company of Tradigrain, publically announced that Tradigrain would be leaving the grain trading business. (Compl. ¶ 12; Cardozo Aff., Exh. C). After learning this fact, all the parties to this action took steps to ensure that the M/V JI MAY would remain in use after Tradigrain exited the business. Foremost employees made inquiries with charterers known to them, and contacted at least one broker. (Depo. James Chao, 35:19; 37: 17-23). Tradigrain continued to charter the vessel and participated in the search for a replacement charterer. (Aff. Ziccardi, Exh. 1, "Aff. Dillon" ¶ 10).
Dillon also attempted to locate a company willing to substitute for Tradigrain under the original charter party agreement. (Compl. ¶ 15). Dillon composed a list of shipping companies it planned to approach about assuming that contract. (Aff. Kenney, in Aff. Ziccardi, Exh. 2, ¶ 14). A company called Bunge, S.A. was on the list Dillon prepared and a Dillon employee, broker Chris Kenney, telephoned Bunge about the charter party on March 7, 2002. (Id. ¶ 14). The next day, before Kenney placed a follow-up call to Bunge on behalf of Dillon, he was informed by Piero Raveno, a Tradigrain employee, that he should "back off" of Bunge. (Compl. ¶ 17, Aff. Kenney, in Aff. Ziccardi, Exh. 2, ¶ 14). Plaintiff alleges that Ravano had certain familial connections to Bunge and the broker that Bunge worked with, Ifchor, and therefore hoped to secure commissions for them. (Compl. ¶ 18, Aff. Kenney in Aff. Ziccardi, Exh. 2, 14-16). Dillon also claims that in the March 8th conversation, when Raveno allegedly told Kenney to "back off" of Bunge, he also assured Dillon that its commission under the April 12, 2001 charter party agreement would be preserved. (Compl. ¶ 17). Plaintiff claims that this assurance dissuaded it from contacting Bunge directly, but that Dillon continued to search for a potential charterer.
From March 5th until Dillon learned on March 13th that a charterer had been found, it continued to work on finding a replacement. Christopher Kenney testified that Dillon contacted Armada Shipping and solicited a charter proposal. (Depo. Kenney 107-108; Aff. Ziccardi, Exh. 2 ¶ 19). Armada was prepared to agree to the terms of the original Tradigrain Charter Party provided it was extended for six months. (Id.) Plaintiff offers that proposal to support its position that it did procure a willing and able party to enter into the charter agreement with Foremost.
During this period, for reasons unrelated to the search for a replacement charterer, a Dillon employee met with the Senior Vice President of Foremost, Michael Lee, on March 11, 2002. (Lee Depo. 84: 15-25). At that meeting they discussed the Tradigrain situation. (Id., at 85:14-18). Dillon claims that Foremost, at the time of that meeting, "failed to disclose fully its dealings with Tradigrain and Bunge." (Plt's Rule 56.1 State., ¶ 14). Defendants confirm that on March 11, 2002, sometime after the meeting started, Foremost received an offer from Bunge to charter the M/V JI MAY. (Foremost Rule 56.1 State., ¶ 16). However, Dillon employee Christopher Kenney stated that Dillon knew at the time of that meeting that it did not have the exclusive right to find a replacement for the charter party agreement. (Depo. Kenney 19-25). Dillon has not alleged that it had presented any potential charterers to Foremost as of that date.
During the seven days following the March 11 offer, Foremost and Ifchor, on behalf of their principals, negotiated Bunge's offer to charter M/V JI MAY. (Foremost Rule 56.1 State., ¶ 18). On March 13, Tradigrain told Dillon that the M/V JI MAY would be redelivered to Bunge. (Compl. ¶ 19; Cardozo Decl. Supp. Tradigrain's Mot. Summ. J. ("Cardozo Decl.," Exh. E)). That same day, Tradigrain and Foremost also agreed to a termination of the Tradigrain Charter Party without penalty. (Cardozo Decl. Exh. E J, Chao Depo., 135:19-137:6). On March 15, 2002, Michel Roduit, a director of Tradigrain, signed a letter memorializing an agreement between Tradigrain and Ji May to "cancel the Charter Party dated 12th of April 2001 . . . simultaneously without any penalty for either side." (Cardozo Aff., Exh. E).
Three days later, a charter party was signed between Bunge and Ji May for the M/V JI MAY ("Bunge Charter Party"). That charter party resembles the Tradigrain Charter Party. However, it has one different party — Bunge — and at least one different term; the length of hire is twenty-eight to thirty-two months. (Cardozo Aff., Exh. F). The Bunge Charter Party also specifically provides in its Clause 43 that commissions shall be paid to Ifchor, not Dillon. (Id.). Notwithstanding this agreement, plaintiff contends that the redelivery of the vessel to a new charterer was governed by the Tradigrain Charter Party of April 12, 2001 that Dillon brokered and the new charter party was an assignment of the Tradigrain Charter Party. (Plt.'s Rule 56.1 State., ¶ 19). Plaintiff alleges that the charter party agreement between Foremost and Bunge is not a new agreement because its underlying substance is the same as the original April 12, 2001 charter party and therefore it is a "direct continuation" of the Tradigrain Charter Party for which it is due commissions. (Plt's Rule 56.1 State., ¶ 20).
II. Analysis
A. Jurisdiction
"A plaintiff who has a cause of action cognizable both under federal admiralty law and under state law . . . may bring (1) a federal admiralty action in federal court, (2) an action in state court, or (3) a diversity action in federal court, assuming the additional requirements for diversity jurisdiction are met."Dluhos v. Floating and Abandoned Vessel, Known as New York, 162 F.3d 63, 71, 73 (2d Cir. 1998); Fed.R.Civ.P. 9(h). There is an exception that requires a plaintiff bringing certain types of in rem actions to do so pursuant to admiralty law. Id. This is not such a case.
The plaintiff has brought this action before this Court on diversity jurisdiction, pursuant to 28 U.S.C. § 1332. The parties agree that New York substantive law should apply to the claims asserted and have therefore invoked the right to pursue a common law remedy, as set forth in 28 U.S.C. § 1333(1). See American Dredging Co. v. Miller, 510 U.S. 443, 446-47 (1994). Plaintiff has satisfied the statutory prerequisites to establishing diversity jurisdiction pursuant to 18 U.S.C. § 1332 because plaintiff and defendants do not reside in the same state, and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332. Therefore, subject matter jurisdiction over this action is established pursuant to diversity jurisdiction, and New York state substantive law shall provide the decisional law of the case.
B. Summary Judgment Standard
Summary judgment may be granted "only when the moving party demonstrates 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.'" Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995) (quoting Fed.R.Civ.P. 56(c)); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The Court must view "all facts in the light most favorable to plaintiff and resolve all factual disputes in plaintiff's favor." Mandell v. The County of Suffolk, 316 F.3d 368, 374 (2d Cir. 2003). "To overcome such a motion, the nonmoving party must offer sufficient proof to allow a reasonable factfinder to decide in its favor." Mandell, 316 F.3d at 377. Hence, the Court may grant summary judgment only when "`no reasonable trier of fact could find in favor of the non-moving party.'" Allen, 64 F.3d at 79 (quoting Lund's Inc. v. Chem. Bank, 870 F.2d 840, 844 (2d Cir. 1989)).
C. Foremost Is Entitled to Summary Judgment Because It Acted as Agent for the Ji May Corporation
Common law principles of agency govern this action. Getty Oil Co. v. Norse Mgmt. Co. (PTE) Ltd., 711 F. Supp. 175, 177 (S.D.N.Y. 1989) (citations omitted). Pursuant to New York law, a party who signs a contract in his capacity as agent for a disclosed principal, within the authority delegated to him by that principal, is not primarily liable for damages caused by a breach of the contract. O'Sullivan v. Hardy Machinery Corp., No. Civ. 7375, 1993 WL 190342, at *3 (S.D.N.Y. June 2, 1993) (citing Seguros Banvenez, S.A. v. S/S Oliver Drescher, 761 F.2d 855, 860 (2d Cir. 1985); Ariel Mar. Group., Inc. v. Zust Bachmeier of Switz., Inc., 762 F. Supp. 55, 59 (S.D.N.Y. 1991)).
Foremost signed the charter party agreement with Tradigrain on April 12, 2001 in its capacity as agent for the owners of the M/V JI MAY. On the first page of the charter party, where the parties are listed, Foremost appears as "Foremost Maritime Corporation as Managing Agents to Owners of the vessel described below." (emphasis in original) (Decl. Cardozo, Exh. B; Compl. ¶ 7). Formost signed the contract as an agent: the signature line reads "Foremost Maritime Corporation as agents" above the signature of Foremost's president. As in O'Sullivan, because Foremost signed as agent, this notifies all parties that Foremost is not acting for itself. 1993 WL 190342, at *3; Fireman's Fund McGee Marine v. M/V Caroline, No. 02 Civ. 6188, 2004 WL 287663, at *2-3 (S.D.N.Y. Feb. 11, 2004).
Moreover, Foremost signed as an agent for a disclosed principal. A principal is "disclosed" if "at the time of a transaction conducted by the agent, the other party thereto has notice that the agent is acting for a principal and of the principal's identity, the principal is disclosed." Hidden Brook Air, Inc. v. Thabet Aviation Int'l Inc., 241 F. Supp.2d 246, 265 (S.D.N.Y. 2002) (citing Restatement (Second) of Agency § 4(a) (1958)). In maritime contracts, "the identification of the principal as `the owner of the vessel' is sufficient indication to alert the opposing party to the principal's name; once the vessel is named, it is a simple matter to discover who owns the vessel by consulting industry publications. O'Sullivan, 1993 WL 190342, at *4; (citing Getty Oil Co., 711 F. Supp. at 177.
Dillon has claimed alternatively that both Ji May Corp. and Foremost are liable as the owners of the M/V JI MAY at the time the charter party was signed. (Compl. ¶ 4; Plt.'s Rule 56.1 State.). Plaintiff further suggests that the Ji May corporation was formed sometime after Foremost signed the charter party as agent for the ship's owner in 2001. (Plt's Mem. Opp. Foremost's Summ. J. Mot., p. 2; Aff. Ziccardi, Exh. 2, ¶ 5). If Foremost were in fact the owner of the ship, Foremost would be liable under the charter party agreement as the disclosed principal. However, plaintiff has offered nothing more than an unsupported allegation that Ji May did not exist at the time the charter party was formed and therefore Foremost was acting for itself, not as an agent. Foremost has offered proof of the 1999 date of incorporation of Ji May in response. (Reply Aff. Michael Lee, ¶ 4, Exh. 1 "Ji May's Certificate of Incorporation"). At the summary judgment phase, the non-moving party must offer sufficient evidence on a factual dispute to allow a reasonable finder of fact to find in its favor. Mandell, 316 F.3d at 377. Plaintiff has not provided sufficient proof — indeed, it has offered no proof — to allow a reasonable finder of fact to find that Ji May was not the disclosed principal and owner of the ship named in the charter party agreement.
Because Ji May was the principal and Foremost its agent in executing the Tradigrain Charter Party, Foremost is not liable for any damages resulting from a breach of that contract and Foremost's motion for summary judgment dismissing Dillon's first cause of action is granted. Additionally, Foremost's motion for summary judgment in its favor on plaintiff's second cause of action based on quantum meruit is granted. Any enrichment that resulted from the contract or the breach of the contract flowed to the principal, not the agent.See e.g. Kagan v. K-Tel Entm't, Inc., 172 A.D.2d 375, 376, 568 N.Y.S.2d 756 (1st Dep't 1991) ("It is not enough that the defendant received a benefit from the activities of the plaintiff . . . if services were performed at the behest of someone other than the defendant, the plaintiff must look to that person for recovery.")
D. Breach of Contract Claims
1. Clause 43 of the Tradigrain Charter Party Entitles Dillon to Hire "Earned and Paid" Pursuant to this Charter Only
Dillon's right to payment flows from Clause 43 of the Tradigrain Charter Party, which states that Dillon will receive 1.25 percent of "hire earned and paid, and also upon any continuation or extension of this Charter." Language identical to that of Clause 43 has been interpreted to mean that a broker is entitled only to a portion of hire actually earned, and not to any sums paid pursuant to the contract if they are not for hire earned. Global Mar. Leasing Panama, Inc. v. M/S North Breeze, 349 F. Supp. 779, 784 (D.R.I. 1972) (citing B.W. Lougheed Co. Ltd. v. Yone Suzuki, 216 A.D. 487, 215 N.Y.S. 505 (1st Dep't 1926)); see also Tankers Int'l Navigation Corp., v. Nat'l Shipping Trading Corp., 116 A.D.2d 40, 499 N.Y.S.2d 697 (1st Dep't 1986). When the contract payments are interrupted either by termination of the contract or by unilateral breach, the broker is not entitled to be paid a commission. B.W. Lougheed Co. 215 N.Y.S. 505, 509-10 (broker entitled to a commission on "monthly payment of hire" not entitled to a commission where hire was not paid because vessel was not timely delivered by owner). Moreover, the broker is not entitled to commission on sums paid in settlement of the contract. Takers Int'l Navigation Corp., 116 A.D.2d 40.
Arguably, Kane v. Neptune Shipping Ltd., 274 A.D. 28, 79 N.Y.S.2d 396 (1st Dep't 1948), established a doctrine of "equivalent performance." Following that case, some courts suggest that when a contract providing for a broker's commission is breached or a condition of the contract is not satisfied, but the party owing the compensation to the broker is put in the same or better position than if the contract had been performed, then the broker is owed compensation. See, e.g. E.B. Harper Co., Inc. v. Nortek, Inc. 104 F.3d 913 (7th Cir. 1997). InKane, a broker was entitled to commission where a charterer remained obliged on the original contract but sub-contracted performance to another party. However, that doctrine does not apply when the contract is terminated and a new contract is entered into for the mitigation of damages flowing from that termination. See Tankers Int'l Navigation Corp., 499 N.Y.S.2d at 698; H. Edwin Anderson, III, Shipbrokers' Commissions: Entitlement, Standing, and Jurisdiction, 24 Tul. Mar. L.J. 55, at 63 (1999). Although Ji May ultimately suffered no harm in lost charter fees, Foremost and Ji May did agree to terminate the Tradigrain Charter Party and find a replacement charterer. Where a charter party agreement is prematurely terminated and a new one established, the doctrine of equivalent performance does not apply. See eg. Parsons v. Wales Shipping Co., Ltd., No. 84 Civ. 8432, 1986 WL 10282 (S.D.N.Y. 1986). Thus, this case is distinguishable from Kane, where the original contract still governed both contracting parties, but one of those parties subcontracted its obligations and profited from that subcontract.
Under the explicit terms of the Tradigrain Charter Party, Dillon was only entitled to 1.25 percent of the hire earned and paid on the charter, or any extension of that charter. As hire was only earned and paid pursuant to the Tradigrain Charter Party through March 19, 2002, Dillon is not entitled to any further payment under the terms of that contract, unless it was extended and hire continued to be earned and paid.
2. The Charter Party Was Terminated, Not Breached
Dillon has not claimed that the Tradigrain Charter Party itself was breached and does not dispute defendants' contention that it was terminated for legitimate business purposes; namely, Tradigrain was "winding up its operations" and exiting the business. (Plt.'s Rule 56.1 State., ¶ 4; Tradigrain Rule 56.1 State., p. 3). Thus, the plain language of the Tradigrain Charter Party does not entitle Dillon to commissions as no further hire was paid after the termination of the contract. However, Dillon has said that Foremost breached the "implied covenant of good faith and fair dealing" inherent in every contract, Aventine Inv. Mgmt. v. Canadian Imperial Bank of Commerce, 265 A.D.2d 513, 513-514, 697 N.Y.S.2d 128 (2d Dep't 1999), and therefore should be liable for resulting damages to Dillon.
"The implied covenant of good faith encompasses any promises which a reasonable person in the position of the promisee would be justified in understanding were included in the agreement, and prohibits either party from doing anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract." 1-10 Indus. Assoc. LLC v. Trim Corp. of Am., 297 A.D.2d 630, 631, 747 N.Y.S.2d 29 (2d Dep't 2002) (citations and internal quotation marks omitted)). However, the implied covenant of good faith and fair dealing does not add any new obligations to the underlying contract. See Don King Prods. Inc. v. Douglas, 742 F. Supp. 741, 767 (S.D.N.Y. 1990) ("The implied covenant does not . . . operate to create new contractual rights."). Moreover, no party has an ongoing obligation to preserve the broker's commission. See Spero v. Kobler, 245 A.D. 643, 646, 283 N.Y.S. 791 (1st Dep't 1935) ("[W]hen the condition on which the plaintiff's right to compensation had failed, the defendant was at liberty to consult his own interest in determining what adjustment to make with the purchaser."). The implied covenant "does not extend so far as to undermine a party's general right to act on its own interests in a way that may incidentally lessen the other party's anticipated fruits from the contract." M/A-COM Sec. Corp. v. Galesi, 904 F.2d 134, 136 (2d Cir. 1990). Thus, Foremost had no contractual obligation to protect Dillon's commission after the termination of the contract and Foremost had only an implied contractual obligation not to act fraudulently or in bad faith to deprive Dillon of the benefits due it under the contract. 1-10 Indus. Assoc., 297 A.D.2d at 631.
Plaintiff alleges that Foremost engaged in several incidents of "bad faith" behavior. First, Dillon alleges that it was bad faith for Foremost to complete a charter agreement with Bunge without considering a similar proposal submitted by Armada Shipping, with Dillon as the broker. (Plt.'s Mem. in Opp. to Ji May Corp.'s Mot. Summ. J. p. 21; Plt. Rule 56.1 State. ¶ 13). Here, Dillon seeks to draw an inference of Foremost's bad faith from the fact that it accepted Bunge as a charterer when Dillon had presented Armada as a potential charterer. However, Dillon has indicated that Armada was not willing to accept Foremost's time restrictions. In addition, Dillon has not even alleged that it presented Armada to Foremost before Foremost accepted Bunge as a charterer. Thus, Dillon has not provided any evidence to show that Foremost rejected an acceptable charterer introduced by Dillon. Instead, the evidence indicates that Foremost accepted a charterer presented by Ifchor to serve its own interests, as it is permitted to do. See M/A-COM Security Corp. v. Galesi, 904 F.2d at 136.
Second, Dillon claims that Foremost acted in bad faith by allowing Tradigrain or Bunge to approach Foremost with Ifchor as their broker because "both Foremost and Tradigrain knew that Dillon had been blocked from contacting Bunge." (Plt.'s Rule 56.1 State., ¶ 12). Third, Dillon contends that Foremost acted in bad faith when Angela Chao, a Foremost employee, told Tradigrain that Foremost was not constrained to entering a charter party with Dillon as the broker. (Plt.'s Mem. in Opp. to Ji May Corp.'s Mot. Summ. J. p. 20). Plaintiff's second and third claims of bad faith behavior amount to an assertion that Ji May and Foremost violated an ongoing obligation to protect Dillon's commission after the Tradigrain Charter Party was terminated. There is no such obligation contained in the terms of the contract, and no such terms can be implied. Don King Prods., 742 F. Supp. at 767. Nothing cited by the parties indicates that Foremost was obliged to use Dillon as the agent for fixing a new charter. Plaintiff has not alleged that Foremost acted to prevent Dillon from securing a charterer. Instead, Foremost gave Dillon a non-exclusive opportunity to replace Tradigrain in the charter party, (Foremost and Ji May Rule 56.1 State., ¶¶ 11-14; Plt.'s Rule 56.1 State.), but ultimately accepted a charterer presented by a different broker. Therefore, Dillon has not adequately alleged that Foremost acted in bad faith by entertaining offers from other brokers, by accepting an offer from another broker, and by refusing to pay Dillon under the new Bunge Charter Party.
Fourth, Dillon asserts that Foremost acted in bad faith by leading Dillon to believe, on March 11, 2002, that Dillon would be the broker to find a replacement charterer when Foremost had already all but concluded negotiations with Bunge to replace Tradigrain. (Plt.'s Mem. in Opp. to Ji May's Mot. Summ. J. p. 20, Plt. Rule 56.1 State. ¶ 14). Dillon bases this allegation on a "recap" agreement faxed to Foremost by Bunge on the afternoon of March 11. Dillon also asserts that Foremost prevented Dillon from procuring a replacement charterer by concealing the fact that substantial progress had been made on that agreement between Bunge and Foremost at the time of the March 11 meeting. Dillon only makes conclusory allegations to support its inference that Foremost acted in bad faith in failing to keep Dillon abreast of its negotiations with other charterers through other brokers. Foremost was entitled to consult its own best interest in considering offers from different sources, even if that operated to the detriment of Foremost. M/A-COM Security Corp. v. Galesi, 904 F.2d at 136. There is no allegation that Foremost acted with the intention to deprive Dillon of a commission, rather than to serve its own interest by consulting multiple brokers.
Finally, Dillon alleges that Foremost knew it had some liability to pay Dillon's commission based on the conditional assignment of that duty to Tradigrain in the agreement terminating the Tradigrain Charter Party, which states "brokerage compensation, if any, to be for Tradigrain's account." (Lee Aff. Exh. 6). Plaintiff alleges bad faith by Foremost because the clause indicates that Foremost knew it might owe commission payments to Dillon and nonetheless was willing to terminate the contract in order to secure a replacement charterer. Again, even assuming that Foremost did prioritize the need to find a charterer over its legal concerns about any on-going obligations to pay commissions, that at most indicates that Foremost acted out of a desire to protect its own financial situation, and not out of bad faith to injure Dillon. Foremost was entitled to protect its own interests in pursuing the formation of a new charter party. M/A-COM Security Corp., 904 F.2d at 136. Therefore, neither Ji May Corp. nor Foremost is liable to Dillon for commissions based on the Tradigrain Charter Party or the termination of that contract because none of the allegations set forth by Dillon, if proven, would amount to a breach of the covenant of good faith and fair dealing.
3. The Tradigrain Charter Party Was Not Assigned to Bunge
Plaintiff contends that it is entitled to be paid commission pursuant to Clause 43 because the Bunge Charter Party is an assignment to Bunge of Tradigrain's responsibilities under the Tradigrain Charter Party, or that it is a fraudulently disguised assignment presented as a new contract.
The Bunge Charter Party is not an assignment of the Tradigrain Charter Party because there is no indication that Tradigrain assigned its rights and obligations to Bunge. "The requisite manifestation of a present intent to transfer the right may be accomplished in writing, orally or by conduct, but such manifestation must be sufficient to show a perfected transaction between the parties." In re Int'l Eng'rs, Inc., 812 F.2d 78, 80 (2d Cir. 1987) (citing Miller v. Wells Fargo Bank Int'l Corp., 540 F.2d 548, 557-58 (2d Cir. 1976).
Plaintiff offers no evidence to support the theory that the contract is an assignment, except for the allegation that Foremost wanted a "back-to-back" contract to cover their losses, and that Tradigrain sought to "wash out" all of its contractual obligations before it exited the business. (Plt.'s Rule 56.1 State.; Compl. ¶ 14)). Foremost and Tradigrain's statements about what type of replacement charterer they hoped to secure for the M/V JI MAY is not sufficient to allow a reasonable jury to find that the Bunge Charter Party was in fact an assignment. See Miller v. Wells Fargo, 540 F.2d at 557-58. There is no evidence to indicate that Bunge sought to replace Tradigrain in the charter party as an assignee, nor is there evidence of any contractual dealings between Bunge and Tradigrain. Moreover, defendants have shown that there was a formal termination of the Tradigrain Charter Party and then a second document creating a new contract between Bunge and Foremost. The Tradigrain Charter Party was not an assignment.
3. The Bunge Charter Party Does Not Entitle Dillon to Commissions Merely Because It Is Similar to the Tradigrain Charter Party
Dillon contends that the Bunge Charter Party was a continuation or extension of the Tradigrain Charter Party within the meaning of Clause 43 of that charter party because the second charter party was not the product of serious negotiations and contained many of the same terms as the previous charter party. (Plt.'s Rule 56.1 State.). As proof that the contract is an extension or continuation, plaintiff offers the fact that the Bunge Charter Party was negotiated in only a week, while the Tradigrain Charter Party negotiations continued over many months. Additionally, plaintiff points out that the Foremost/Bunge contract is identical to the Foremost/Tradigrain agreement in all significant terms, including the price and length of hire. (Aff. Kenney, in Aff. Ziccardi, Exh. 2, ¶ 20.). Based on these allegations, plaintiff seeks the commission that the Tradigrain Charter Party provides on any "continuation" or "extension" of the contract.
Defendants respond that the charter party was not the same, but that the arrangement was negotiated more quickly than the April 12, 2001 agreement for various reasons, including that the previous agreement was used as a model. (Reply Aff. Lee, ¶ 9). A series of emails discussing the terms of the charter constitute evidence of genuine negotiations between Bunge and Foremost. (Aff. Lee, Exh. 6).
In the case where a contract provides for commission to a broker upon extension or renewal, and a second contract is subsequently made between the parties to the previous contract, New York real estate law provides a context to analyze whether a broker is entitled to a commission. New York law provides that "before the lessor is obligated to pay commissions, the renewal must be for the same term and the same rent as the original lease, or the new lease must have been the result of services performed by the broker."Stern v. Satra Corp., 539 F.2d 1305, 1310 (2d Cir. 1976) (noting that when the contract is not for real estate services, "any renewal" is not limited to "carbon copies" and "absurdly harsh" results are rejected) (citing Eastern Assoc., Inc. v. Sarubin, 274 Md. 378, 336 A.2d 765, 770 (1975); Allwin Realty Co. v. Barth, 161 A.D. 568, 146 N.Y.S. 960 (1st Dep't 1914). Here, the new lease is for the same rent as the old lease, but not for the same term. Moreover, the new lease is not the result of services performed by Dillon because Tradigrain and Ifchor, not Dillon, introduced the parties. Therefore, the Bunge Charter Party is not a "renewal" of the original contract.
Dillon has not presented anything beyond conclusory allegations to show that the Bunge Charter Party is an extension of the previous charter party. The mere fact that the Bunge Charter Party uses a pricing scheme employed in the Tradigrain Charter Party is not sufficient to establish that this contract is an extension of the previous one. In Parsons, Inc. v. Wales Shipping Company, Ltd., 1986 WL 10282, the plaintiff broker with a commission clause very similar to Clause 43 in this case sued for commissions due on the theory that a charter party had been extended, not terminated. In that case, a charter party had been cancelled when the ship was sold to a new owner. The new owner then negotiated a charter contract with the party who had previously chartered the ship from the previous owner, but the parties were introduced by different brokers. The district court held that where the plaintiff broker had not participated in the second charter party, that broker was not entitled to a commission because the previous contract had not been "extended."Id. at *2. In making that finding, the court emphasized the fact that the parties and certain terms were different. The court noted that the "most significant term and the essence of a time charter party: the rate of hire" had been changed. Id.
While the rate of hire in the Bunge Charter Party is the same as the hire in the Tradigrain Charter Party, that alone is not enough to show that it is an extension. The emails discussing the formation of the charter party show that genuine negotiations occurred between Bunge and Foremost. Moreover, the terms differ in that the parties to the contracts are different than the parties to the first contract, and plaintiff was not involved in negotiating the contract between Bunge and Foremost, nor did Dillon introduce Bunge to Foremost. In fact, as the contract was being negotiated, Dillon was working to procure the charter party agreement for a competitor, Armada.
Dillon has no right to be compensated on a contract it did not negotiate when it did not introduce the parties, and where that contract is the product of negotiation and has different terms than the previous contract on which Dillon did have the right to receive commission.
D. Plaintiff Has Not Shown Tortious Interference with Contractual Relations
In Count Three of the complaint, plaintiff claims that Tradigrain is liable for harms suffered by Dillon in lost commissions due to tortious interference by Tradigrain with the contractual relations of Dillon and Foremost. In order to state a claim for tortious interference with contractual relations under New York law, a plaintiff must show "(1) the existence of a valid contract between the plaintiff and a third party, (2) the defendant's knowledge of that contract, (3) the defendant's intentional procurement of the third party's breach without justification, (4) breach, and (5) damages." America Online Latino v. Am. Online, Inc., 250 F. Supp.2d 351, 361 (S.D.N.Y. 2003); see also Murray v. SYSCO Corp., 273 A.D.2d 760, 710 N.Y.S.2d 179 (3 Dep't 2000).
(1) Existence of a Valid Contract Between Plaintiff and a Third Party
Dillon asserts that there was a separate contract for the commissions to be paid to Dillon by Ji May contained within Clause 43 of the charter party, and that the commissions would have continued over into the assignment and extension of the Tradigrain Charter Party absent Tradigrain's actions. (Compl. ¶ 40). Dillon alleges that Tradigrain "deliberately structured the Foremost-Bunge agreement as a new charterparty for Tradigrain's self-interest and for the specific purpose of diverting the commissions due . . ." (Compl. ¶ 41), even though it does not allege that Tradigrain had any role to play in forming the Foremost-Bunge agreement. Dillon provides no decisional law or contractual language to support its assertion that the clause providing for commissions was somehow severable from the Tradigrain Charter Party and there is no evidence of a separate agreement between Dillon and Foremost that would survive the termination of the charter party. Moreover, Dillon had no performance due under that contract and there is no independent consideration for the clause. See e.g. F K Supply Inc. v. Willowbrook Dev. Co., 288 A.D.2d 713, 732 N.Y.S.2d 734, 2001 N.Y. Slip Op. 09321 (3 Dep't 2001). Because there is no separate clause for commissions that establishes a separate ongoing contractual relationship between Dillon and Foremost, Dillon must assert this action as a third party beneficiary to the Tradigrain Charter Party. Thus, this cause of actions fails because Tradigrain was a party to the Tradigrain Charter Party, including the obligations set forth in Clause 43, and a party "cannot tortiously interfere with its own contract." Klein v. Jostens, Inc., No. 83 Civ. 5351, 1985 WL 1865, at *2 (S.D.N.Y. 1985).
(2) Breach of the Underlying Contract
A claim of tortious interference with contractual relations cannot be brought unless there is in fact a breach of the underlying contract between the plaintiff and a third party. Here, as discussed above, there was no breach of the Tradigrain Charter Party.
Even if plaintiff could claim that there was a separate contract for commissions between Dillon and Foremost, and that contract would have survived had it not been breached, plaintiff cannot show that Tradigrain "intentional[ly] procure[d] the third party's breach without justification." America Online Latino, 250 F. Supp.2d at 361.
However, "a tortious interference with contract claim must plead that a defendant used `wrongful means' to induce the third party to breach the contract." Brown v. AXA RE, No. 02 Civ. 10138, 2004 WL 941959, at *6 (S.D.N.Y. May 3, 2004) (quotingWolff v. Rare Medium Inc., No. 01 Civ. 4279, 2001 WL 1448476, at *3 (S.D.N.Y. Nov. 15, 2001)). This has been defined to include "physical violence, fraud, or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure; they do not, however, include persuasion alone although it is knowingly directed at interference with the contract." Id. (quoting Guard-Life Corp. v. S. Parker Mfg. Corp., 50 N.Y.2d 183, 191, 406 N.E.2d 445, 449, 428 N.Y.S.2d 628, 632 (1980)).See Ivy Mar Co., Inc. v. C.R. Seasons Ltd., No. 95 Civ. 0508, 1998 WL 704112, at * 16 (E.D.N.Y. Oct. 7, 1998) (citing Wedeen v. Cooper, No. 97 Civ. 8621, 1998 WL 391117, at *3 (S.D.N.Y. July 24, 1998)).
Dillon has not alleged that Tradigrain took any actions — wrongful or otherwise — to promote Ifchor as the broker on the Bunge Charter Party or to interfere with Dillon's right to earn commissions. (Tradigrain Rule 56.1 State., ¶ 17). The only action Dillon sets forth beyond the conclusory statement that Tradigrain "deliberately structured the charter party . . . for the purpose of diverting commissions" (Compl. ¶ 40), is that Tradigrain introduced Bunge and Foremost through Ifchor to "foster the personal economic interests of a family network . . .". (Plt. Mem. Opp. Tradigrain's Summ. J. Mot. p. 16). The most specific action alleged to support the allegation misconduct against Tradigrain is that Raveno warned Dillon to "back off" of Bunge, but Dillon has not alleged that Tradigrain acted fraudulently or illegally. Dillon has not provided sufficient proof to allow a reasonable finder of fact to find that Tradigrain's actions were not taken for economic reasons, nor has it provided sufficient proof to show that Tradigrain acted with malice or fraudulent intent, or by illegal means. Mandell, 316 F.3d at 377.
For the reasons set forth above, plaintiff's claim for tortious interference with contractual relations against Tradigrain is dismissed.
E. Unjust Enrichment and Quantum Meruit
Dillon cannot claim recovery in quantum meruit based on the Tradigrain Charter Party. This is because a valid contract "governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter." Integral Control Sys Corp. v. Consol. Edison Co. of New York, 990 F. Supp. 295, 303 (S.D.N.Y. 1998); see also Stissi v. Interstate Ocean Transp. Co. of Phila., 814 F.2d 848, 851 (2d Cir. 1987). Because Dillon was entitled to a commission on the hire paid under the Tradigrain Charter Party, it cannot now claim that it is entitled to some other compensation for the effort spent in arranging that contract.
As an initial matter, Dillon has no right to a commission earned and paid on the Bunge Charter Party because the Bunge Charter Party is not the result of its work. A broker is only to be compensated where he "bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made, and until that is done his right to commissions does not accrue." Sibbald v. Bethlehem Iron Co., 83 N.Y. 378, 384, 38 Am. Rep. 441 (1881). Moreover, a "broker is never entitled to commissions for unsuccessful efforts"; and "if he fails, if without effecting an agreement or accomplishing a bargain, he abandons the effort, or his authority is fairly and in good faith terminated, he gains no right to commissions." Id. Thus, brokers are not entitled to reimbursement for the value of their efforts to secure a contract unless the parties have specifically agreed otherwise. See e.g., Sibbald v. Bethlehem Iron Co., 83 N.Y. 378 (1881).
The deposition testimony is clear that Dillon was aware that it was not the exclusive broker working to replace Tradigrain in the Tradigrain Charter Party. Dillon understood that other parties were involved in the search for a new charterer. Because Dillon did not believe that it was the only broker, it cannot claim that an oral contract gave rise to some obligation on the part of Foremost to reimburse or compensate Dillon's efforts to find a suitable replacement charterer. (Depo. Kenney at 19-25). As long as the principal acts in good faith, and does not act solely to avoid the payment of commissions, a broker is not entitled to any payment when negotiations break down, or when the broker fails to secure a buyer. Sibbald v. Bethlehem Iron Co., 83 N.Y. 378 (1881).
Plaintiff's contention that it is entitled to payment on the Bunge Charter Party also rises from the fact that the paperwork used to fix Bunge to the Foremost vessel is substantially similar to the contract used in the Tradigrain Charter Party. Dillon, in essence, claims that if the contract is not an assignment, it is at least plagiarized and Dillon constructed the contract. No legal principle cited by plaintiff entitles the drafter of a contract to a percentage of every contract made subsequently using that contract as a form or model.
Because Dillon was not involved in negotiating the Bunge Charter Party, Dillon has no claim in quantum meruit to profit from the resulting contract.
III. Conclusion
For the reasons set forth above, the motions for summary judgment of defendants Foremost, Tradigrain, and Ji May are granted. The Clerk of Court is directed to enter judgment dismissing the complaint.
SO ORDERED.