EMPLOYEE WHO VIOLATED EMPLOYMENT CONTRACT CAN'T SUE OLD EMPLOYER BECAUSE NEW EMPLOYER FIRED HIM, AFTER OLD EMPLOYER TATTLED ON EMPLOYEE TO NEW EMPLOYER

Court: Supreme Court, Appellate Division, Second Department, New York.

Case: Smith v. Meridian Technologies, Inc.

Date: July 12, 2011.

From: New York attorney Gary E. Rosenberg (personal injury and accident attorney and lawyer; serving Brooklyn Queens Bronx; Queens Brooklyn accident injury lawyer)

Comment: Very interesting non-accident case, but a commercial injury-type fight. In 2006 plaintiff quit his job with defendant to work elsewhere. Defendant wrote plaintiff's new employer to tell it that plaintiff was violating his agreement with defendant not to compete with it if he left his employment by defendant and, also, that he might be breaching his agreement to keep confidential the trade secrets (about video transmission by fiber optic cables) that he learned while working for defendant. Suitably warned, the new employer washed its hands of plaintiff, letting him go. This lawsuit followed.

In an action, inter alia, to recover damages for prima facie tort and intentional interference with prospective contractual relations, and for a judgment declaring that the restrictive covenants in the parties' employment agreement are unenforceable, the plaintiff appeals from an order of the Supreme Court, Nassau County (Brandveen, J.), dated June 25, 2010, which granted the defendants' motion, in effect, for summary judgment dismissing the first, second, third, and sixth causes of action, and for a declaration that the restrictive covenants in the parties' employment agreement are enforceable, and denied his cross motion for summary judgment on the complaint.

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment, inter alia, declaring that the restrictive covenants in the parties' employment agreement are enforceable.

The plaintiff commenced this action, inter alia, to recover damages for prima facie tort and intentional interference with prospective contractual relations. This action arises from events that occurred in 2006, when the plaintiff resigned from a position as a vice president for sales development at the defendant Meridian Technologies, Inc. (hereinafter Meridian). The plaintiff executed an employment agreement while he was employed at Meridian which provided, among other things, that during and after the period of the plaintiff's employment, he would not reveal any "Confidential Information or Trade Secrets" to any entity. The agreement also provided that, for a period of two years after the plaintiff "terminated ... th[e] agreement," the plaintiff would not be employed at "any business, which researches, designs, develops, manufactures, sells or deals in any way with the technology of video transmission systems via fiber optic cables."

In late June 2006, the plaintiff resigned from Meridian. Several days later, he began working for another company, Multidyne, Inc. (hereinafter Multidyne). In August 2006 the managing director of Meridian, the defendant Michael C. Barry, sent a letter to the plaintiff, and also sent a copy of that letter to the president of Multidyne. That letter alleged, among other things, that the plaintiff had "exploited confidential trade secrets" of Meridian during his employment at Multidyne. Approximately one week later, counsel for Meridian sent another letter to the plaintiff; a copy of that letter was also sent to the president of Multidyne. That letter stated, inter alia, that the plaintiff's employment at Multidyne was in violation of the noncompetition provision of his employment agreement with Meridian. Shortly after the second letter was received, the plaintiff's employment at Multidyne was terminated, and this action ensued.

The Supreme Court did not err in granting that branch of the defendants' motion which was for summary judgment dismissing the cause of action to recover damages for prima facie tort. The requisite elements of a cause of action sounding in prima facie tort are: "(1) the intentional infliction of harm, (2) which results in special damages, (3) without any excuse or justification, (4) by an act or series of acts which would otherwise be lawful" ( Freihofer v. Hearst Corp., 65 N.Y.2d 135, 142-143; see Curiano v. Suozzi, 63 N.Y.2d 113, 117-118; Del Vecchio v. Nelson, 300 A.D.2d 277, 278; Levy v. Coates, 286 A.D.2d 424). "[T]here is no recovery in prima facie tort unless malevolence is the sole motive for defendant's otherwise lawful act," that is, "unless defendant acts from 'disinterested malevolence' " ( Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 333, quoting American Bank & Trust Co. v. Federal Reserve Bank of Atlanta, 256 U.S. 350, 358). For purposes of a cause of action to recover damages for prima facie tort, " 'the genesis which will make a lawful act unlawful must be a malicious one unmixed with any other and exclusively directed to injury and damage of another' " ( Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d at 333, quoting Beardsley v.. Kilmer, 236 N.Y. 80, 90). Thus, " '[a] claim of prima facie tort does not lie where the defendant's action has any motive other than a desire to injure the plaintiff' " ( Weaver v. Putnam Hosp. Ctr., 142 A.D.2d 641, 641-642, quoting Global Casting Indus. v. Daley-Hodkin Corp., 105 Misc.2d 517, 522).

Here, the evidence showed that, in sending the subject letters, the defendants did not act solely based on disinterested malevolence, as, inter alia, the defendants alleged in those letters that the plaintiff's employment at Multidyne, a company engaged in the sale of fiberoptic video transmission equipment, violated the terms of the covenants not to compete set forth in the plaintiff's employment agreement with Meridian. In opposition to that showing, the plaintiff failed to raise a triable issue of fact as to whether the defendants' actions were solely motivated by disinterested malevolence. Accordingly, the Supreme Court properly granted that branch of the defendants' motion which was for summary judgment dismissing the cause of action to recover damages for prima facie tort (see Burns Jackson Miller Summit & Spitzer Lindner, 59 N.Y.2d at 333-334; Simaee v. Levi, 22 AD3d 559, 562-563; Lynch v. McQueen, 309 A.D.2d 790, 792; see also Bainton v. Baran, 287 A.D.2d 317, 318).

The Supreme Court also properly granted that branch of the defendants' motion which was for summary judgment dismissing the causes of action to recover damages for intentional interference with prospective contractual relations. To establish a defendant's liability for damages for tortious interference with prospective contractual relations, the plaintiff must show that the defendant engaged in wrongful conduct which interfered with a prospective contractual relationship between the plaintiff and a third party. As a general rule, such wrongful conduct must amount to a crime or an independent tort, and may consist of "physical violence, fraud or misrepresentation, civil suits and criminal prosecutions" ( Guard-Life Corp. v. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 191). Such wrongful conduct may include "some degrees of economic pressure;" however, "persuasion alone" is not sufficient (id. at 191; see Lyons v. Menoudakos & Menoudakos, P.C., 63 AD3d 801, 802). Here, in light of, inter alia, the covenants not to compete set forth in the employment agreement between Meridian and the plaintiff, and the evidence showing that Meridian and Multidyne were both engaged in the sale of fiberoptic video equipment, the defendants showed, prima facie, that they did not engage in wrongful conduct for purposes of this cause of action, and the plaintiff failed to raise a triable issue of fact (see Adler v. 20/20 Cos., 82 AD3d 915, 918; BGW Dev. Corp. v. Mount Kisco Lodge No. 1552 of Benevolent & Protective Order of Elks, of U.S. of Am., 247 A.D.2d 565, 567-568).

The Supreme Court properly granted that branch of the defendants' motion which was for summary judgment dismissing the cause of action to recover damages for breach of contract, as the defendants showed, prima facie, that they did not breach the parties' employment agreement, and the plaintiff failed to raise a triable issue of fact as to whether the defendants failed to comply with any specific obligations under that agreement (see Morales v. County of Suffolk, 82 AD3d 1184, 1185-1186).

The Supreme Court did not err in granting that branch of the defendants' motion which was, in effect, for summary judgment declaring that the restrictive covenants in the parties' employment agreement are enforceable. The defendants showed, prima facie, that those clauses were enforceable under the circumstances presented herein, and the plaintiff failed to raise a triable issue of fact in opposition to that showing (see Michael G. Kessler & Assoc. v. White, 28 AD3d 724, 725; see also Stiepleman Coverage Corp. v. Raifman, 258 A.D.2d 515, 516).

Since this is, in part, a declaratory judgment action, the matter must be remitted to the Supreme Court, Nassau County, for the entry of a judgment, inter alia, declarating that the restrictive covenants in the parties' employment agreement are enforceable (see Lanza v. Wagner, 11 N.Y.2d 317, 334, appeal dismissed, 371 U.S. 74, cert denied 371 U.S. 901).

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