Defendant, Allion Healthcare, Inc ("Allion") moves, by Notice of Motion (motion sequence number 003) for an Order granting such Defendant Summary Judgment, dismissing Plaintiff's Complaint pursuant to CPLR § 3212 (b). In the alternative, Defendant moves to dismiss Plaintiff's Complaint pursuant to CPLR § 3216 as a result of Defendant's failure to file and serve a Note of Issue within the ninety days as set forth in this Court's Order dated March 1, 2007. Plaintiff, Broughan Gorey ("Gorey") cross-moves, by Notice of Motion, (motion sequence number 004) for an Order granting the Plaintiff, as Counterclaim Defendant, Summary Judgment, dismissing Defendant's Counterclaims pursuant to CPLR § 3212(d).

The Complaint and Counterclaims, and thus, the ensuing motions, all arise out of an employment relationship between the Defendant, which provides pharmacy and disease management services to HIV/AIDS patients, and Plaintiff, its former Chief Financial Officer. Essentially, Plaintiff asserts, in his Verified Complaint and in his deposition testimony, that the Defendant breached its Employment Agreement ("Agreement") with him in several ways: 1) failing to provide Plaintiff with the option to purchase 90,000 shares of Common Stock of Allion in accordance with a 1998 stock option plan; 2) failing to permit Plaintiff to participate in an executive bonus plan as well as refusing to develop such plan at all; 3) failing to award Plaintiff a bonus based on his performance during his employment; and 4) failing to award Plaintiff a severance package in accordance with the terms of his Employment Agreement, following his resignation for "good reason". Plaintiff also asserts that Defendant, through its President and its Director, influenced him to accept employment with Defendant based on false promises, in that it lead him to believe that an executive bonus plan was in the [*2]process of being developed; that it would be forthcoming; and that such bonus would significantly increase his income; thus, giving rise to Plaintiff's claim for fraud in the inducement.

In its Counterclaims, Defendant asserts that Gorey likewise breached the Agreement and violated the Agreement's post termination restraints by 1) utilizing confidential corporate documents to invite twenty three (23) of Allion's employees, post resignation, to party at his home with representatives of a competitor pharmacy's employees; 2) providing a forum for the competitor to recruit such employees, several of whom shortly thereafter, accepted employment positions with Allion's competitor; and 3) stating to the employees at the party that Allion was in serious financial peril, all of which both solicited Allion's employees to leave such employment and interfered with such employment. The same essential allegations give rise to Defendant Counter-claimant's cause of action for tortious interference with business relations.

In support of its Summary Judgment motion, Allion argues that documentary evidence establishes that Allion complied with all of its obligations under the Agreement. The Employment Agreement requires, in pertinent part, that the employee is entitled to options to purchase 90,000 shares of Common Stock in accordance with Allion's stock option plan; that the options shall have an exercise price to be determined by the Board of Directors and that the options shall vest ratably over three years. Attached to its motion papers, and not countered by Plaintiff, is a June 24, 2002 Board resolution granting Plaintiff, Gorey, the option to purchase 90,000 shares of Allion's common stock (Moran Aff Exh B). The stock option plans attached to Defendant's moving papers all state that exercise of these options must be made within 30 days from termination of employment (Exh I to Moran Affidavit).As CFO, Gorey signed an SEC Form 4 on May 28, 2003, reporting to the Securities and Exchange Commission that he had been granted stock options to purchase 90,000 shares of Allion common stock at $3.50 per share vesting monthly over a period of three years. Allion's 2003 Definitive Proxy Statement, filed June 4, 2003, which plaintiff, as CFO, certified, also states that Allion granted Gorey options to purchase 90,000 shares of its common stock at $3.50 per share during the year ending December 31, 2002 (Moran Aff, Exh D). Plaintiffs response to the same is that he was never provided with an agreement setting forth is option rights; however, this is further belied by a post resignation letter from Allion's President and CEO, Michael Moran, setting forth his continued eligibility to purchase 46,533 shares at $3.50 share until April 19, 2004 (Exh H to Moran Aff).

With regard to his claim for severance, which is permitted under the Agreement, [*3]upon an Employee's resignation for "good reason", Allion states that Gorey is ineligible since he had no good cause or reason to terminate the employment relationship as there existed no breach and that he failed to comply with the express provisions of the Agreement. Such states at para 4 (f) (iii) that:

"Good Reason shall mean the occurrence of any of the events described below that continues for, and for which the Company has not cured within thirty (30) days after written notice to the Company thereof from the Employee . . . ."

Included within the definition is "(a)ny material breach of the Company's obligation under this Agreement".Paragraph 14 of the Agreement further provides that any notice required to be given the Company was to be provided to Moran at Allion's offices with a copy to Allion's corporate counsel, Harvey Z. Werblowsky, Esq. As set forth in the record, the letter from Gorey is, according to Allion, merely a resignation; not "notice" with an opportunity to cure and not ever sent to counsel. Thus, Allion asserts that Gorey never complied with the clear, contractual condition precedent to his alleged claim of entitlement to severance pay. In response, Gorey argues that the January 2004 letter not only gives Moran notice by setting forth Gorey's claims; but also states that it does not take effect until 30 days thereafter, to allow the Allion to do exactly what the Employment Agreement contemplated. However, rather than taking any action to cure, Gorey asserts that the Board met and terminated his employment immediately thereafter, thereby, terminating his employment without cause, and giving him the ability to seek severance under the terms of the Agreement. However, Allion states that the Agreement, para, 4 (a) specifically allows that "[a]ny termination of this Agreement shall be effective upon receipt of notice of termination by the non-terminating party".

With regard to the issue of the bonus plan, Allion states that the Agreement makes all bonuses precatory, setting forth that:

" In addition to the Base Compensation payable to Employee, Employee may be awarded performance bonuses from time to time, in the sole discretion of the Company's Board of Directors (the Board); provided, however, that Employee will receive a bonus of not less than the amount of $25,000 for his services in the Initial Term, which bonus shall be paid no later than March 15, 2003. The employee will participate in an executive bonus plan, which the Company is currently developing and will be subject to Board of Director approval." [*4]

Allion asserts that, as a matter of law, where a benefit provided in an employment agreement is discretionary, as it is in this case, or subject to the approval of management, no cause of action for breach of contract accrues, where the employer, in its discretion, elects not to issue such benefit. There is no question that in this case, according to Allion, Gorey received his guaranteed bonus and that all other bonuses, whether performance based or as part of a plan, were discretionary and subject to Board approval. In this regard, Allion also argues, that Plaintiff does not state a cause of action for fraud based on his allegation that he was induced via misrepresentations into entering employment with Allion based on his understanding that executive bonus packages would be forthcoming. Such allegation, Allion argues, is an attempt to displace the law of contract with that of tort based on the same factual allegations. Allion asserts that even false statements of intent to perform a contract merely give rise to a future claim under contract law and not for fraud, citing, Saleemi v Pencon Sys, Inc., 2000 U.S. Dist. Lexis 664 5 (SDNY 2000). Finally, Allion opines that Plaintiff has not set forth the elements of a fraud cause of action, which includes reasonable reliance on a false representation, because Gorey testified during his deposition that he understood when he took the position he had no expectation of any guaranteed bonus due to the risks associated with a start up company which has not yet achieved an IPO (Gorey EBT, pp 77-78).

In support of the cross-motion for Summary Judgment, dismissing Defendant's Counterclaims, Plaintiff asserts the only misconduct alleged is that Gorey is claimed to have taken a list of names and addresses of Allion's employees and used that list to invite people to a party for the purpose of recruiting them to work for a competitor. However, the list was provided by Allion's former controller, as set forth by that person, Dan Horan, at his deposition and Horan also testified that he observed no conduct at the party where Gorey was suggesting that anyone at Allion should leave their employment (Horan EBT at 18). Gorey states his only purpose in holding the party was to say good bye to those employees with whom he had worked over a 19 month period when he had been caused to leave in such an abrupt fashion. The only evidence produced by Defendant in support of its Counterclaim, according to Gorey, is the Affidavit of Allion's General Manager, Glenn Schnabel. According to his affidavit, Gorey participated in conversations at the party to the effect that Allion might not have sufficient funds to continue operations any longer. Without any more specific assertions, Gorey asserts the counterclaim must fail.

Allion counters that serious questions of fact remain concerning whether Gorey [*5]breached the "confidentiality" as well as the "Non-competition and Non-solicitation" provisions contained in para 5 of the parties' Agreement.

In pertinent part, those paragraphs provided that:

"(a) . . .As used in this Agreement, Confidential information means information belonging to the Company . . . that is of value to such company in the course of conducting their business and the disclosure of which could result in a competitive or other disadvantage to such company. . . Confidential information also includes the confidential information of others with which the Company or any Related Company has a business relationship."

"(b) . . .Employee . . .will not use or disclose any such information . . . except as may be necessary in the ordinary course of performing Employee's duties to the Company or as required by law."

"(c) . . .All documents, records, data. . . .whether or not pertaining to Confidential information which are furnished to Employee by the Company . . .will be and remain the sole property of the Company . . . Employee will return all such materials and property immediately upon termination of Employee's employment for any reason. Employee will not retain any such material or property or any copies thereof after the termination of Employee's Employment with the Company."

"(d) . . .During the Term and until one (1) year after the termination of Employee's employment with the company, Employee . . .will refrain from . . . soliciting, inducing, or influencing any person to leave employment with the Company . . .or otherwise interfere with any such employee's employment with the Company . . .and . . . will refrain from soliciting, encouraging, or inducing , directly or indirectly, any person, customer or supplier to terminate or otherwise modify adversely its business relationship with the Company . . ."

Allion states that after resigning from his position as CFO, Gorey removed and/or improperly obtained confidential information from the company. These including the names and addresses of all the company's employees. According to Allion, Gorey then planned and invited to a party at his home these employees as well as two other employees, who had recently resigned from Defendant's employment to go to work for one of Defendant's competitors. According to the Schnabel Affidavit, Plaintiff made [*6]statements at such party concerning the financial viability of Defendant. Shortly thereafter, at least three experienced Allion employees resigned their positions with Allion, and two went to work for the competitor. According to Defendant, two other corporate employees also resigned from Allion within months of the party hosted by plaintiff. These allegations are sufficient according to Allion, to avoid Summary Judgment on either of its claims.

SUMMARY JUDGMENT

Both parties in this mater have moved for Summary Judgment, seeking to dismiss the other party's claims, on the grounds that no issues of fact remain to be tried. A party moving for Summary Judgment must initially make a showing of entitlement to Judgment as a matter of law, offering sufficient evidence to demonstrate the absence of any material issues of fact. Winegrad v New York University Medical Center, 64 NY2d 85, 476 NE 642, 487 NYS2d 316 (1985); Zuckerman v City y of New York, 49 NY2d 557, 404 NE2d 718, 427 NYS2d 595 (1980). Because Summary judgment denies the opposing party the right to go to trial, it is considered a drastic remedy, not to be granted where there exists any doubt as to the existence of a triable issue; however, once a prima facie showing has been made, the burden shifts to the party opposing the motion to produce evidentiary proof in admissible form sufficient to establish material issues of fact which require a trial. State Bank of Albany v McAullife, 97 AD2d 607, 467 NYS2d 944 (3d Dep't 1983). The role of the court in deciding the Summary Judgment motion is "(n)ot to resolve issues of fact or to determine matters of credibility, but merely to determine whether such issues exist". Dyckman v Barrett, 187 AD2d 553, 590 NYS2d 224 (2d Dep't 1992).

In its motion for Summary Judgment, Allion argues that no issues of fact remain to be tried on Plaintiff's case because the claims raised by Plaintiff are all governed by clear terms of the parties' Agreement as well as documentary evidence demonstrating Allion has complied with the same.

A contract which is clear and explicit in its terms is left for the Court to construe as a matter of law. Huntington Coach Corp v Board of Education, 49 AD2d 761, 372 NYS2d 171 (2d Dep't 1975), affd, 40 NY2d 892, 389 NYS2d 362, 357 NE2d 1017 (1976). On the other hand, where the meaning of contractual terms is ambiguous, the construction is left to the trier of fact and Summary Judgment is considered inappropriate . Leon v Lukash, 121 AD2d 693, 504 NYS2d 455 (2d [*7]Dep't 1986). Whether a contract is ambiguous or clear is generally considered to be a question of law to be determined by the court by viewing within the four corners of the document. Geothermal Energy Corp v Caithness, 34 AD3d 420, 825 NYS2d 485 (2d Dep't 2006). Under New York law, a contract is generally considered unambiguous where "(o)n its face (it) is susceptible of only one meaning". Greenfield v Philles Records, 98 NY2d 562, 750 NYS2d 565, 780 NE2d 166 (2002). On the other hand, where the language, in light of the obligation as a whole, is susceptible to more than one interpretation, the contract is considered ambiguous and its meaning can be divined by the trier of fact. See, Feldman v National Westminster Bank, 303 AD2d 271, 760 NYS2d 3 (1ST Dep't 2003).

Plaintiff claims he was not provided with his stock options as promised. The contract on this point is clear. As set forth above, it entitled Gorey the right to purchase 90,000 shares of Allion's common stock, vesting ratably over three years, in accordance with the Defendant's stock option plan. The documentary evidence demonstrates that Defendant's Board of Directors adopted a resolution, signed June 24, 2002, granting plaintiff precisely what it had agreed. Plaintiff, as CFO of Defendant, acknowledged such grant in three forms which he signed and/or certified and filed with the Securities and Exchange Commission in 2003. All forms state that he had been granted the option to purchase 90,000 shares of the Defendant's common stock.( Moran Aff, Exhs. C, D, E). Plaintiff's plaint that he was unaware of the terms of the option is unavailing when he certified documents to the federal government setting forth such terms as well as the grant. The filings belie his latter day assertions of ambiguity with regard to Plaintiff's claim for the option he was granted and waived by failing and/or refusing to exercise the grant within 90 days of his separation from employment as required by the terms of the Plan.

Plaintiff asserts, further that he was not provided with appropriate bonuses for the years 2002, 2003 and 2004 (the year of his departure from employment as Defendant's CFO). As set forth in detail above, Paragraph 3(b) of the Agreement provided that the "Employee may be awarded performance bonuses from time to time, in the sole discretion of the Company's Board of Directors . . ." The Agreement goes on to award Plaintiff a specific bonus of $25,000 for his initial term of employment, payable by March 2003. Where an employer agrees, without condition, to award as bonus to an employee, such employee has a right to the bonus. see, Michael v RMJ Securities Corp, 205 AD2d 388 613 NYS2d 876 (1st Dep't 1994). However, an employee has no enforceable right to such bonus as part of compensation where the employment agreement vests the employer with absolute discretion to [*8]determine whether or not a bonus will be awarded. Namad v Salomon, 74 NY2d 751, 543 NE2d 722, 545 NYS2d 79 (1989); Brennan v J P Morgan Securities, 7 Misc 3d 1013 (A), 801 NYS2d 230 (Sup. Ct. NY Co 2004).

With regard to the actual provision of a particular bonus, the Agreement is again clear on its face. The $25,000, which was paid, was mandatory. Any future performance bonus was at the total discretion of the Board, via the clear language of the Agreement, and therefore does not give rise to a claim for breach when such bonus did not meet Plaintiff's expectations, or, indeed, come to fruition at all.

Based on the foregoing, the Court grants summary judgment dismissing plaintiff's claims with regard to a failure to provide the stock options and a performance bonus.

On the other hand, the oft cited paragraph 3(b) contains another term. It states, as set forth above, that Plaintiff will participate in an executive bonus plan, which the Company is currently developing and will be subject to Board of Director approval. While the Court agrees with Allion that such plan, which never came to fruition was, like the performance bonus described in earlier sentences, subject to Board approval and, therefore, precatory, the same cannot be said for the actual development of plan as well as the statement that the Board was already in the process of such development as well as the statement that Plaintiff would be entitled to participate in the same. While Moran and Director Pappajohn state repeatedly in their papers that it was understood such plan was dependent on an Initial Public Offering and Gorey was aware of the same, Gorey disputes the allegation and no such condition is set forth in the Agreement itself. Moreover, the parties dispute whether such Plan was, in fact being developed when this Agreement was signed by the parties or at any time prior to Plaintiff's letter of resignation. The Court finds that the last sentence of paragraph 3(b) , in light of the circumstances during which the Agreement was entered into, is, in fact, ambiguous; and , in addition, finds that Gorey has raised issues of fact concerning whether Plaintiff failed to comply with the same, giving rise to a resignation for "good reason" under paragraph 4 (f) (iii) of the Agreement. This issue is, therefore, one for the trier of fact, if Plaintiff is otherwise permitted to assert this claim.

Defendant asserts that Gorey cannot bring a breach of contract claim for severance pay in accordance with paragraph 4 (f) (iii), in any case, because he failed to give notice with an opportunity to cure in accordance with the Agreement terms. A resignation by the Employee for "good reason" requires that the employee give written [*9]notice of certain defined occurrences, such as a material breach by employer, and that such breach continue for thirty days accompanied by a continuing failure to cure the occurrence. Paragraph 14 of the Agreement requires all written notices to be sent to Michael Moran at Allion's headquarters, with a copy to the corporation's counsel. While Gorey does not call his letter of January 16, 2004 a notice to cure, he states that he is giving the Defendant notice of his resignation for "Good Reason" as "(p)er (his) Employment Agreement, dated June 17, 2001". Plaintiff then goes on to list specifically how he believes the Defendant has failed to comply with the terms of the Agreement. He ends the letter by giving the Defendant 30 days, "if you wish" to transition his responsibilities. Such letter was delivered personally to Michael Moran's desk and e-mailed to him, both of which are contemplated in paragraph 14 of the Agreement. Moran admits he received the letter on the date delivered and sets forth no reason why he was prejudiced by the manner in which the letter was written or delivered.

Strict compliance with contract notice provisions will not be enforced where the party against whom the claim is made both admits receipt of the notice and does not claim any prejudice as a result of the deviation. Suarez v Ingallis, 282 AD2d 599, 723 NYS2d 380 ( 2d Dep't 2001). A review of the January 14, 2004 letter from Plaintiff demonstrates that he did comply with the substantive requirements of paragraph 4, since the letter specifically referred to the words of the paragraph and the employment Agreement. In addition, although Plaintiff called it a resignation, he did both give the Defendant his grounds, including his belief that Defendant had not complied with the terms of his compensation, and gave the Defendant 30 days before transferring his responsibilities. The fact that Defendant treated the letter as a resignation and accepted it, notifying Plaintiff within 3 days that he was to leave the premises, does not mean the letter does not comply with the basic intent of paragraph 4 (f) (iii).

The issue of notice is a more important and somewhat complex one. The Defendant has cited several cases for the proposition that contractual notice provisions are strictly enforced. In general the Court agrees. However, in each of the cases cited, the moving party was not given the notice to which they were entitled in order receive the protection afforded by the notice provision. Thus, in Kalus v Prime Care Physicians, 20 AD3d 452, 799 NYS2d 115 (2005), an employee, who was entitled to 30 days notice to cure prior to his termination, was terminated effective immediately. Id at 453. In our case, Defendant was given 30 days prior to the effective date of resignation, along with a list demonstrating what the Defendant had failed to do, [*10]thereby granting Defendant an opportunity, if it so desired, to cure. In Kingsley Arms v Sano Rubin Constr Co, 16 AD3d 813, 791 NYS2d 196 ( 3d Dep't 2005), cited by Defendant, a subcontractor filed a construction delay Notice of Claim against a general contractor and owner 11 months after substantial completion, when the contract required such notices to be filed within 21 days of the occurrence giving rise to the claim. Again, the case is completely inapposite. Such notice was almost one year late and clearly the delay was prejudicial to the defendants' rights under the circumstances. Interestingly, even in that case, the Appellate Division, Third Department recognized that Plaintiff should be granted leniency in the attempt to raise an issue of fact. The court went on to set forth, that the two page affidavit of plaintiff without any other proof was insufficient. Id at 815. Again, this case provides no guidance to the situation at hand. Defendant's President received a hand and e-mail delivered written notice from its employee, setting forth the reasons he believed the Defendant had failed to comply with the terms of his Employment Agreement and a 30 day window prior to his resignation. Under the circumstances, plaintiff substantially complied with the terms of paragraphs 4 and 14 and the failure to send a copy of the letter to a counsel, when Moran testified that he was already in touch with counsel during the 3 day period between the letter and the Board's acceptance of the letter as a resignation, demonstrates Defendant was in no way prejudiced by this extremely minor deviation. Therefore, the motion for Summary Judgment regarding the alleged failure to create an Executive Bonus Plan is denied.

Plaintiff's motion for Summary Judgment, seeking to dismiss Defendant's Counterclaims, in the Court's view, raises more questions than it answers. While Plaintiff asserts he was given the list of employees' names and addressees by a person with authority to do so, Defendant denies this assertion and still claims Plaintiff may have improperly taken his own list. While Plaintiff asserts that the purpose of the party at his home was social, Defendant, with the Affidavit of one of its current employees, states otherwise. Whether Plaintiff made disparaging remarks concerning the financial health of Defendant at this gathering in an attempt to lure them from Defendant to employment with Defendant's competitor or otherwise is also a question of fact, in view of the subsequent departure of several of Defendant's employees who attended such gathering. If the allegations set forth in Defendant's Counterclaim did in fact occur, they certainly give rise to a breach of the provisions contained in paragraph 5 of the parties' Agreement. These must be presented, along with any claims of damages resulting therefrom, to the trier of fact, and therefore Summary Judgment is denied.

[*11]FRAUD-CONTRACT DICHOTOMY

A cause of action to recover damages for fraud, which arises out of a contractual term, under which the claimant is suing for under a contract theory, cannot stand. Crowley Marine Associates v Nycomm Associates, 292 AD2d 334, 738 NYS2d 681 ( 2d Dep't 2002). As set forth by the Appellate Division, Second Department, the claimant is not aided by asserting that the party being sued engaged in knowing behavior, if the alleged false representation is actually contained within the agreement that gives rise to the contract action. Id. As set forth, "(m)erely alleging scienter in a cause of action to recover damages for breach of contract, unless the representations alleged to be false are collateral or extraneous to the terms of the agreement, does not convert a breach of contract cause of action into one sounding in fraud (citations omitted). Id. At 334. In this case, there is no question that Gorey's fraud claim is based on the language in the contract giving him certain compensation rights. The Court has granted Summary Judgment dismissing those regarding the stock options and the performance bonus. However, the Court has allowed to remain the breach of contract action based on the last line of paragraph 3(b) dealing with the development and creation of an executive bonus plan. Plaintiff's claim for fraud in all instances is based on the Agreement itself, which gave rise to his breach of contract claims.

Defendant also moves to dismiss Plaintiff's claim for punitive damages. Although punitive damages do not constitute a separate cause of action and are, as they state, merely a damage claim, Defendant is correct that they may not lie in a breach of contract action such as that which survives this motion. See, New York University v Continental Ins Co, 87 NY2d 308, 639 NYS2d 233 662 NE2d 763 (1995).

With regard to Allion's application that the Court dismiss the remainder of Plaintiff's claim, if any should survive its motion, due to its failure to file a Note of Issue until two months after the Court's ordered date, such was filed and returned due to a clerical problem by the Supreme Court Clerk's office. In light of the above, any such application is denied.

Accordingly, as set forth in this Decision, the various motions are decided as follows:

1. Allion's motion for Summary Judgment dismissing Plaintiff's Complaint is granted [*12]in part, to the extent that all claims concerning the failure to provide a required stock option and to provide a performance bonus are dismissed.

2. Allion's motion for Summary Judgment dismissing Plaintiff's Complaint is denied in part, allowing Plaintiff to pursue the claimed failure to develop and to allow Plaintiff to participate in development of an executive bonus plan which may have constituted "good reason" within the contract terms for Plaintiff to resign, entitling him to claim severance as set forth in the Agreement.

3. Allion's motion for Summary Judgment dismissing Plaintiff's cause of action for fraud is granted, thereby barring his claims for punitive damages.

4. Gorey's motion to dismiss Plaintiff's counterclaims for breach of contract and tortious interference with business relations is denied.

Counsel for both parties are directed to appear in this Part for a conference on January 9, 2008 at 9:30 a.m.

This constitutes the DECISION and ORDER of the Court.

Dated: 01-07-2008 Riverhead, New York

EMILY PINES J. S. C.