This employment dispute regarding sales commissions comes before the Court on Defendants/Counterclaim-Plaintiffs Innovative Commercials Systems LLC's ("ICS") and Electronic Security and Communications Corp.'s ("ESCC," collectively "Defendants") motion for summary judgment dismissing the Complaint in its entirety. Plaintiff/Counterclaim-Defendant Gary Linder opposes and cross-moves for summary judgment on the Complaint as to liability, and for summary judgment dismissing Defendants' counterclaims. Defendants oppose the cross-motion.

Since 1985, Defendant ESCC has installed and serviced residential security systems. (Affidavit of Mark Harmon in Support of Defendants' Motion for Summary Judgment [*2]("Harmon. Aff.") ¶ 7). In 2000, the owner of ESCC, Robert Horowitz, began to discuss business opportunities with his longtime neighbor, Plaintiff Linder. (Harmon Aff. ¶ 8). Based on Linder's professed experience with both commercial real estate and security systems, Horowitz formed ICS and hired Linder to install and maintain security systems in commercial properties. (Harmon Aff. ¶ 10).

Linder's primary job responsibilities were to sell and to maintain relationships with customers. (Affidavit of Jonathan A. Ozarow ("Ozarow Aff.") Ex. 7 at 50:18-52:4 ("Linder Dep.")). For the first few years, ICS paid Linder a fixed salary instead of commissions. (Affidavit of Robert Horowitz ("Horowitz Aff.") ¶ 12). During this initial period, Horowitz gave Linder the opportunity to earn equity in ICS if Linder met certain sales goals. (Horowitz Aff. ¶ 12). Linder failed to meet any of the sales goals and failed to earn equity in ICS. (Horowitz Aff. ¶ 13). In 2002, ICS ceased paying Linder a salary and instead paid him solely sales commission. (Horowitz Aff. ¶ 13). At that time, ICS began to pay Linder commission on the contracts he had procured while salaried. (Horowitz Aff. ¶ 14).

Linder sold two types of contracts relating to security systems: installation contracts and maintenance contracts. (Ozarow Aff. ¶ 9). Linder received 15% commission based on monies that ICS received from customers relating to installation contracts, and 20% commission on monies received on maintenance contracts. (Ozarow Aff. ¶ 9). While there was no signed agreement, in practice ICS paid Linder commission on the contracts he procured as customers paid their balances over time. (Linder Dep. 74:25-77:2). When the original term of a customer contract expired and renewed automatically, Linder continued to receive commission as monies were paid. (Linder Dep. 120:5-121:23).

ICS only paid Linder commission when ICS received customer monies. (Linder Dep. 44:5-44:19). ICS provided monthly spreadsheets to Linder detailing the cash received, the date, and the percentage commission that Linder would receive. (Linder Dep. 77:17-78:11; Ozarow Aff. Ex. 8). ICS also gave Linder photocopies of customer checks showing the amounts that customers had paid, and Linder would compare the checks to his sales documents to track his commissions. (Linder Dep. 75:15-76:14).

Linder also helped to collect past-due balances from delinquent customers on a regular basis. (Linder Dep. 77:17-81:2). Because Linder did not receive any commissions unless a customer paid, ICS would provide an accounts-receivable report to Linder if a customer did not make a monthly payment. (Linder Dep. 44:5-44:19, 78:12-81:2). Linder would discuss the arrears with the billing clerk, and when the billing clerk's collection attempts "very often" failed, the matter was referred back to Linder. (Linder Dep. 79:16-80:7)

During 2009, Linder's sales totals diminished. (Horowitz Aff. ¶ 17). Shortly before ICS terminated Linder, Linder had stopped responding to customer inquiries. (Horowitz Aff. Ex. 7). On November 4, 2009, ICS fired Linder. (Ozarow Aff. ¶ 15).

On April 28, 2010, Linder filed the Complaint, which asserted causes of action for (i) breach of contract, (ii) breach of the implied covenant of good faith and fair dealing, (iii) [*3]unjust enrichment, and (iv) violation of New York Labor Law section 193. Defendants answered on June 8, 2010, asserting a counterclaim against Linder for breach of Linder's duties of loyalty and fidelity to ICS. At the pre-trial conference held on April 3, 2013, this Court granted leave for both parties to file the instant summary judgment motions.

Defendants filed their motion for summary judgment on May 6, 2013, seeking dismissal of the Complaint in its entirety. Plaintiff opposed and cross-moved for summary judgment as to liability on the causes of action asserted in the Complaint, as well as dismissal of Defendants' counterclaims and re-opening of discovery.

Analysis

I.Summary Judgment Standard

The standards for summary judgment are well-settled. The movant must tender evidence, by proof in admissible form, to establish the cause of action "sufficiently to warrant the court as a matter of law in directing judgment." CPLR 3212(b); Zuckerman v. City of New York, 49 NY2d 557, 562 (1980). "Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers." Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853 (1985). Once such proof has been offered, to defeat summary judgment "the opposing party must show facts sufficient to require a trial of any issue of fact." CPLR 3212(b); Zuckerman, 49 NY2d at 562.

II.Motion and Cross-Motion for Summary Judgment on Complaint

The pertinent issue on these motions is the time at which Linder "earned" his commission. If Linder "earned" his commission upon a customer's signing of a contract, then the commission cannot be forfeited and Linder is entitled to summary judgment. See Arbeeny v. Kennedy Exec. Search, Inc., 71 AD3d 177, 182 (1st Dep't 2010). If Linder "earned" his commission only as money was received from customers, then he is not entitled to post-termination commissions and Defendants are entitled to summary judgment. See Mackie v. La Salle Indus., 92 AD2d 821, 822 (1st Dep't 1983). If the record does not reveal an answer, summary judgment must be denied. See Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853 (1985).

Generally, "a sales representative, hired at will, is not entitled to commissions after the termination of employment," merely because the sales representative originated the customer relationship. See Mackie v. La Salle Indus., 92 AD2d 821, 822 (1st Dep't 1983); Yudell v. Ann Israel & Assocs., Inc., 248 AD3d 189, 190 (1st Dep't 1998). However, New York Courts have held that once a commission is earned, it becomes a wage that cannot be forfeited. See Arbeeny v. Kennedy Executive Search, Inc., 71 AD3d 177, 182 (1st Dep't 2010) ("Once the commission is earned, it cannot be forfeited"). If an employee can point to a specific sale and amount for which the employee has "earned" commission, then the termination does not affect the employee's right to receive that [*4]compensation. See Yudell, 248 AD3d at 190-91.Defendants argue that Linder only earned his commissions as payments were made by customers. Defendants contend that Linder's duties included continuing responsibilities towards clients, and Linder was required to perform those duties to receive his commissions. Defendants also point to a letter from ICS to Linder, dated December 29, 2004, in which ICS proposed a commission structure and stated that "a signed contract will NOT be considered as part of [Linder's] sales until the appropriate deposit check has been received by ICS." See Harmon Aff. Ex. K.

Linder argues that there is no agreement between the parties regarding commissions, and "in the absence of a written agreement, a commission is deemed to be earned upon the employee's production of a ready, willing, and able purchaser of the services.'" See Plaintiff's Memorandum of Law ("Pl.'s Br.") 6, 8 (quoting Pachter v. Bernard Hodes Grp., Inc., 10 NY3d 609 (2008)). Linder contends that the various spreadsheets showing his sales and commission payments reveal that he produced ready, willing and able buyers, and thus "earned" his commissions before being terminated.

The Court of Appeals recently provided guidance as to when and how a commission can be deemed "earned." In Pachter v. Bernard Hodes Group, Inc., 10 NY3d 609 (2008), the plaintiff placed advertisements on a commission basis without a written employment agreement. Pachter, 10 NY3d at 613. Over the course of nearly ten years, the parties developed a practice where the plaintiff's commission was calculated as a percent of the advertisement's cost, less plaintiff's business expenses. Pachter, 10 NY3d at 613, 618. Plaintiff was aware of the practice and never lodged a complaint, until the employer terminated her. Pachter, 10 NY3d at 613.

The plaintiff in Pachter sued to recover the business expense deductions, arguing that she had "earned" her commissions before the deductions were made, and so the deductions illegally reduced her "earned" wages. Pachter, 10 NY3d at 614. The Court of Appeals disagreed and found that "the lack of a specific written contract [was] not determinative." Pachter, 10 NY3d at 618. The Court held that the commissions were "earned" after the deductions because "in the absence of a governing written instrument, when a commission is earned' and becomes a wage' . . . is regulated by the parties' express or implied agreement . . . ." Pachter, 10 NY3d at 618. The Court concluded that "the evidence of the parties' extensive course of dealings for more than 11 years and the written monthly compensation statements issued . . . provide[d] ample support for the conclusion that there was an implied contract under which the final computation of the commissions earned by [plaintiff] depended on first making adjustments . . . ." Pachter, 10 NY3d at 618.

Here, as in Pachter, there was a decade-long course of dealing and regular statements showing how commissions were calculated. See Linder Dep. 77:17-78:11; Ozarow Aff. Ex. 8. There is no dispute that ICS paid commissions to Linder only when money was received from clients. See Linder Dep. 44:5-44:19. Further, Linder did not [*5]even expect to receive commission when clients were often delinquent. See Linder Dep. 44:5-44:19.

Linder received the benefit of this "cash-received" compensation structure when ICS began paying him commissions on contracts that he had procured while salaried. See Horowitz Aff. ¶ 14. Linder also benefitted from the compensation structure by receiving commission on customer payments received based on automatic renewals. See Linder Dep. 120:5-121:23.

Linder argues, unpersuasively, that there was no agreement regarding when he "earned" commission because there was no controlling written document. As the Court of Appeals held in Pachter, parties are free to expressly or impliedly agree as to when a commission is "earned." See Pacther, 10 NY3d at 618. Linder's interpretation of the parties' actions ignores Linder's acquiescence to the roughly seven-year practice where he would receive commission payments only if customers actually paid.

Based on their years-long course of dealing, ICS and Linder impliedly agreed that Linder would "earn" commissions when customers paid. See Pachter, 10 NY3d at 618; Harmon Aff. Ex. Q (Plaintiff's Pre-Trial Memorandum of Law) at 1-2 (stating that Plaintiff "would only be entitled to payments once ESCC and/or ICS received those monies from the customer."). Linder received monthly reports reflecting this commission structure and Defendants complied with the agreement in all respects by paying Linder his commission on each customer check received until he was terminated.

This Court finds that the affidavits and deposition testimony relating to Plaintiff's breach of contract claim establish Defendants' defense sufficiently to warrant directing judgment as a matter of law. See Zuckerman v. City of New York, 49 NY2d 557, 562 (1980). Linder's conclusory and contradictory assertions regarding when he "earned" commissions, as opposed to when he became "entitled to receive payment" of commissions, do not present a genuine issue of material fact requiring a trial. See Harmon Aff. Ex. Q at 1-2.

Further, Plaintiff's claims for breach of the covenant of good faith and fair dealing, unjust enrichment, and violation of New York Labor Law, are duplicative of the breach of contract claim and must be dismissed. See Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce, 70 AD3d 423, 426 (1st Dep't 2010) (dismissing claim for breach of implied covenant of good faith as duplicative of breach of contract claim); Hoeffner v. Orrick, Herrington & Sutcliffe LLP, 61 AD3d 614, 615 (1st Dep't 2009) (dismissing unjust enrichment claim as duplicative of breach of contract claim); Tierney v. Capricorn Investors, L.P., 189 AD2d 629, 632 (1st Dep't 1993) (dismissing Labor Law claim as dependent on dismissed breach of contract claim). All of Plaintiff's claims allege the same wrong and identical damages.

Therefore, Defendants' motion for summary judgment is granted, Plaintiff's cross-motion for summary judgment on causes of action in the Complaint and to re-open discovery is denied, and the Complaint is dismissed in its entirety. [*6]

III.Plaintiff's Cross-Motion for Summary Judgment on Counterclaims

In their Answer, Defendants assert a counterclaim against Linder alleging that he breached his duties of both good faith and loyalty to ICS. Defendants contend that under the "faithless servant" doctrine, Linder forfeited any claim to compensation upon his first act of faithlessness. Plaintiff now moves for summary judgment on the counterclaim, arguing that a commission salesperson does not breach a duty to an employer when he or she merely fails to sell.

The faithless servant doctrine states that an employee who is faithless in performance of their duties is not entitled to recover either salary or commission. See Feiger v. Iral Jewelry, 41 NY2d 928, 928 (1977). While the phrasing of the rule may imply a broad proposition, courts apply the rule relatively narrowly. See, e.g., W. Elec. Co. v. Brenner, 41 NY2d 291, 295 (1977) (employee theft); Maritime Fish Prods., Inc. v. World-Wide Fish Prods., Inc., 100 AD2d 81, 88 (1st Dep't 1984) (employee usurping corporate opportunity). Courts will usually only hold an employee liable under the faithless servant doctrine if the employee has usurped a corporate opportunity or actively stolen for the employer. See Visual Arts Found., Inc. v. Egnasko, 91 AD3d 578, 579 (1st Dep't 2012); Soam Corp. v. Trane Co., 202 AD2d 162, 162 (1st Dep't 1994) (employee promoted competitor's products over employer's); Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184, 203 (2d Cir. 2003) (employee usurped corporate opportunity).

Each case cited by Defendants involves the employee's theft or funneling of business away from the employer to a competitor. See Matter of Marceca, 40 AD3d 318, 318 (1st Dep't 2007) (employee theft); 212 Inv. Corp. v. Kaplan, 2007 WL 2363233, at *10 (Sup. Ct. NY Cnty. July 18, 2007) (partner stole partnership assets). A salesman compensated solely on commission does not breach either a duty of good faith or of loyalty by failing to zealously pursue sales. The evidence here shows there was neither theft of property nor active divergence of corporate opportunities. See Horowitz Aff. ¶¶ 17, 18. Nor was Linder's failure to make sales behavior of the same type or kind. Therefore, summary judgment must be granted as to Defendants' counterclaims.

The remaining arguments made by both parties have been considered and are unpersuasive.

(Order of the Court appears on the next page.)

CONCLUSION

[*7]Accordingly, it is hereby

ORDERED that Defendants' motion for summary judgment is GRANTED and the complaint is dismissed with costs and disbursements to the Defendants as taxed by the Clerk upon submission of an appropriate bill of costs; and it is further

ORDERED that Plaintiff's cross-motion for summary judgment is GRANTED solely to the extent that the Defendants' counterclaims are dismissed with costs and disbursements to the Plaintiff as taxed by the Clerk upon submission of an appropriate bill of costs, and Plaintiff's motion otherwise is DENIED; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.

This constitutes the decision and order of the court.

Dated: New York, New York

October 16, 2013

ENTER:

/s/

Hon. Eileen Bransten, J.S.C.