[*1]
| Barber v ActKnowledge, Inc. |
| 2009 NY Slip Op 51419(U) [24 Misc 3d 1211(A)] |
| Decided on June 30, 2009 |
| Supreme Court, Kings County |
| Demarest, J. |
| Published by New York State Law Reporting Bureau
pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be
published in the printed Official Reports. |
Supreme Court, Kings County
Christopher Barber
a/k/a CHRISTOPHER BARBER ASSOCIATES, Plaintiff,
against
ActKnowledge, Inc., Defendant.
|
33224/08
Christopher P. Barber Plaintiff Pro Se
138 Hoyt Street, Suite 3
Brooklyn, NY 11217
Attorney for Defendant
Joseph M. Heppt, Esq.
260 Madison Avenue
New York, NY 10016
Carolyn E. Demarest, J.
Defendant ActKnowledge, Inc., moves pursuant to CPLR 3211(b) for
dismissal of plaintiff Christopher Barber's first affirmative defense to defendant's counterclaims
that plaintiff had breached his fiduciary duty and duty of loyalty as an independent contractor in
defendant's employ, had tortiously interfered with both existing and prospective business
relationships with third parties, had converted defendant's database and breached his contract
with defendant, misappropriated confidential information and unfairly competed, all of which
claims are amply supported in defendant's pleading. In response, as a "first defense," plaintiff
asserts: "Plaintiff's status as an independent contractor did not constitute the kind of agent
relationship in which a fiduciary duty or duty of loyalty is owed, expected, or agreed." Although,
as a legal premise, defendant is correct that the rule is not as stated,' defendant's motion must be
denied.
BACKGROUND
[*2]
Defendant is a consulting firm that provides
computer software solutions for nonprofit organizations and government agencies. Defendant
retained plaintiff as an independent contractor to create software for defendant and defendant's
clients. In July 2008, business relations between defendant and plaintiff became strained and
plaintiff terminated his relationship with defendant. Plaintiff alleges that defendant refused to
pay him for work performed on various projects, thus leading him to commence this action on
May 6, 2009, claiming defendant owes him approximately $210,000.00 in unpaid fees.
Defendant's answer includes several counterclaims. Defendant alleges in his first
counterclaim that plaintiff, while working on various projects for defendant, breached his
fiduciary duty and duty of loyalty to defendant by using defendant's confidential and proprietary
information and diverting defendant's clients for his own benefit. Defendant moves to dismiss
plaintiff's defense that his "status as an independent contractor did not constitute the kind of
agent relationship" in which a principal is owed a duty of loyalty, pursuant to CPLR 3211(b),
arguing that such defense "is legally insufficient" because, as a matter of law, an independent
contractor owes a fiduciary duty and duty of loyalty to the entity that retained him or her.
DISCUSSION
On a motion
brought pursuant to CPLR 3211(b), "[o]rdinarily the only issue presented . . . is whether there is
any legal or factual basis for the assertion of the defense." (Winter v. Leigh-Mannell, 51
AD2d 1012, 1012 [2d Dept 1976].) The movant bears the initial burden of showing that the
defense is legally insufficient or factually insufficient (see Town of Hempstead v. Lizza
Industries, Inc., 293 AD2d 739, 740 [2d Dept 2002]). Once the movant meets its burden, the
burden then shifts to the non-movant to show the existence of a triable factual issue respecting
the defense's merit (see Faulkner v. City
of New York, 47 AD3d 879, 879 [2d Dept 2008]). "When material issues of fact are not
resolved, a court should not strike a defense." (Id.)
Generally, an agent is obligated "to be loyal to his employer and is prohibited from
acting in any manner inconsistent with his agency or trust and is at all times bound to exercise
the utmost good faith and loyalty in the performance of his duties.'" (Western Elec. Co. v.
Brenner, 41 NY2d 291, 295 [1977], quoting Lamdin v. Broadway Surface Adver.
Corp., 272 NY 133, 138 [1936].) The duty of an agent or employee "not to use confidential
information acquired in his employment in competition with his principal is implicit in the
relation . . . It is an absolute and not a relative duty." (Byrne v Barrett, 268 NY 199, 206
[1935], citing Kaumagraph Co. v Stampagraph Co., 235 NY 1, 6 [1923].) The Second
Department has noted that the faithless agent rule is founded upon this duty: " An agent is held
to uberrima fides in his dealings with his principal, and if he acts adversely to his
employer in any part of the transaction, or omits to disclose any interest which would naturally
influence his conduct in dealing with the subject of his employment, it amounts to such a fraud
on the principal as to forfeit any right to compensation for services.'" (G.K. Alan Assoc., Inc. v. Lazzari, 44
AD3d 95, 100-101 [2d Dept 2007], quoting Murray v Beard, 102 NY 505 [1886].)
Courts have extended these principles to independent contractors in cases where the agreement
between the principal and the independent contractor established an agent-principal relationship
(see, e.g., Feiger v. Iral Jewelry, Ltd., 85 Misc 2d 994 [Sup Ct, [*3]New York County 1975], aff'd 41 NY2d 928 [1977];
G.K. Alan; Compsolve, Inc. v. Neighbor, 18 Misc 3d 1104(A) [Sup Ct, Erie
County 2007]). However, in each case, the applicability of agency principles in a given dispute
depends on the terms on the agreement, as "[a]gency is a personal relationship, in the sense that
an agent is an agent only by virtue of the agent's consent to act on behalf of a particular party, the
principal, who has also consented that the agent shall act on his or her behalf." (G.K.
Alan, 44 AD3dat 101, citing Restatement 2d of Agency, § 1.)
Defendant correctly relies on Feiger, G.K. Alan, and Compsolve
for the proposition that an independent contractor is an agent that owes fiduciary and loyalty
duties to his or her principal. However, the question presented in the motion at bar is a factual
one as to the nature and limits of the agency relationship between the parties. In G.K.
Alan, the Court stated that the duties of an agent are defined by the specific terms of the
agreement that gave rise to the agency (G.K. Alan, 44 AD3d at 101, citing Restatement
2d of Agency, § 376). Here, this Court cannot determine the precise terms of the
relationship between plaintiff and defendant based on the pleadings and the documents
submitted, particularly since the alleged breaches of duty occurred subsequent to the expiration
of the written contracts. It is noted, however, that the confidentiality provisions of the written
contracts survived the expiration of the contracts. An inquiry into the exact nature of plaintiff
and defendant's relationship is necessary to determine whether plaintiff breached a fiduciary duty
and duty of loyalty to defendant. Giving plaintiff's reply the broad interpretation which must be
accorded pleadings, the presence of factual issues preclude the granting of defendant's motion
notwithstanding plaintiff's misstatement of the law in general.
Defendant's motion is denied.
This constitutes the order and decision of the Court.
E N T E R
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J.S.C.