For Plaintiff:
McCarter & English, LLP
Patrick M. Collins, Esq.
Christina M. Schmid, Esq.
New York, New York
516-741-6565

The following papers and the attachments and exhibits thereto have been read on this motion:

The Defendants, National Grid USA, KeySpan Corp., KeySpan Services Inc., Keyspan Energy Corp., and National Grid Corporate Services LLC,^[FN1] move for summary judgment on all causes of action asserted in the Second Amended Complaint and dismissal of the Second Amended Complaint with prejudice, pursuant to CPLR 3212. The Plaintiffs, Jason Cohen, Richard Choinski, John Adams, Patrick Benson, Eileen Bonasia, Patrick Boyle, Gerald Chiarella, James Commisso, Christian Cruz, Jennifer Forst, Makr Goercke, Gerard Mangelli, Peter Petronzi, Elena Thompson, and Kristin Zaky cross-move for an order pursuant to CPLR 3212 granting summary judgment on all causes of action asserted in the Second Amended Complaint.

KeySpan Corporation was a utility holding company doing business primarily in the Northeastern United States (Plaintiffs' Statement of Undisputed Facts at ¶ 3). In 1999 and 2000, Plaintiffs Cohen, Mangelli, Adams, Boyle, Commisso, Choinski, and Goercke executed letter agreements wherein they became employees of KeySpan Communications Corporation ("KCC") (Ex. "42" to Plaintiffs' Motion). KCC, an indirect subsidiary of KeySpan, provided telecommunications services primarily in New York and New Jersey.

In 2007, KeySpan issued the 2007 KeySpan Management Change of Control Severance Plan (the "2007 Severance Plan") which provided that :

In the event of Change of Control as defined in the senior executive Change of Control Plan, severance pay will be provided to all management employees if terminated without cause (as defined in [the] Senior Executive Change of Control Plan) within 18 months after the date of change of control.^[FN2]

In August 2007, National Grid acquired KeySpan. The KeySpan Severance Plan was in effect prior to the merger.

In February 2008, KeySpan entered into a Purchase Agreement with Light Tower Fiber LLC ("Light Tower") to sell KCC to Light Tower. The Plaintiffs were all employees of KCC at the time Light Tower purchased KCC, which was on July 25, 2008 (Defendants' Statement of Undisputed Facts ¶¶ 7-9). Light Tower is not owned by, or in any way affiliated with, any of the KeySpan Defendants (Answer at ¶ 70).

Section 7.12 of the Purchase Agreement, dated February 26, 2008, provided that:

(a) Effective as of the closing, Buyer [Light Tower] shall cause the Company [KCC] to continue the employment of each Company Employee employed by the Company immediately prior to the Closing other than those Company Employees set forth on Schedule 7.12(a) on terms and conditions with respect to base salary or wages that are not less favorable in the aggregate than that in effect as of immediately prior to the Closing and with respect to incentive opportunities and employee benefits that are substantially similar in the aggregate to those terms and conditions in effect as of immediately prior to the Closing . . . .

(b) For at least one year immediately following the Closing, Buyer and its Affiliates shall provide to the Continuing Employees (i) a rate of base salary or wages that is no less than that in effect as of immediately prior to the Closing Date; (ii) a position at the same location at which such Continuing Employee is employed immediately prior to the Closing Date, except for business travel requirements as were applicable to such Continuing Employee as of immediately prior to the Closing Date; (iii) employee benefits (other than benefits under a defined benefit pension plan) that are in the aggregate substantially similar to those provided to the Continuing Employees as of immediately prior to the Closing Date; and (iv) notwithstanding the generality of clause (iii) above, severance benefits that are no less favorable to such Continuing Employee as in effect immediately prior to the Closing Date under the 2007 Management Change of Control Severance Plan, a copy of which has been provided to Buyer.

Also pursuant to the Purchase Agreement, Defendants agreed not to employ, hire or solicit the Plaintiffs for a one-year period (Ex. "4" to Affirmation in Support of Motion at p 39 Section 7:12[a]).

Prior to the sale, and by letter dated May 19, 2008, each Plaintiff had requested the payment of severance benefits upon the closing as per the 2007 Severance Plan (Ex. "32" to Plaintiffs' Cross Motion). KeySpan denied Plaintiffs' requests on the ground that the 2007 Severance Plan was not triggered as Plaintiffs were not jobless but, rather, hired by Light Tower after the sale. Specifically, according to the Defendants:

The Severance Plan is intended to protect employees by providing a benefit to those who face joblessness in the wake of a Change of Control of KeySpan Corporation, the parent of [KCC]. Thus, an employee becomes eligible for severance pay and benefits under the [2007] Severance Plan if and only if his or her employment is "terminated without cause" [*2]within 18 months after the date of a Change of Control. The sale of [KCC] to Light Tower will not entitle your clients to severance benefits under the Severance Plan because the sale does not constitute a Change of Control, and your clients' employment is not being terminated (Ex. "33" to Plaintiffs' Cross Motion).

Having been denied severance pay, the Plaintiffs commenced the instant action asserting causes of action for breach of contract (the 2007 Severance Plan); declaratory judgment declaring that the sale of KCC to Light Tower terminated the Plaintiffs' employment without cause, thus entitling Plaintiffs to receive severance pay provided for by the 2007 Severance Plan; and breach of the letter agreements.^[FN3]

Discovery ensued after which the Plaintiffs moved for partial summary judgment. By order entered June 8, 2010 (Warshawsky, J.), the court granted the branches of the Plaintiffs' motion which were for summary judgment on the first and second causes of action (breach of the 2007 Severance Plan and declaratory judgment). The Defendants appealed Justice Warshawsky's order and the Appellate Division reversed, finding that:

The plaintiffs failed to establish their entitlement to judgment as a matter of law on the first and second causes of action, inter alia, to recover damages for breach of contract based on the defendants' failure to provide them with severance pay under a certain severance plan. The plaintiffs did not tender sufficient evidence demonstrating that the defendants had a regular practice of providing severance payments under the subject severance plan and that the plaintiffs had knowledge of such practice and relied on it in accepting or continuing their employment (Cohen v National Grid USA, et al, 89 AD3d 1051 [2d Dept 2011] [annexed as exhibit "41" to Plaintiffs' Cross Motion).

Following the decision on appeal, the action was remanded after which further discovery ensued followed by the instant motion and cross motion for summary judgment.

The Defendants move for summary judgment dismissing the second amended complaint in its entirety. Initially, in support of dismissal of the first cause of action, which asserts a claim for breach of an employment policy, the Defendants argue that: 1) the Plaintiffs "do not dispute that defendants have no history or practice of providing severance benefits to persons who continue their employment or continue without interruption to be employed by a subsidiary company following a change in control" and, further, 2) that there is no proof that any Plaintiff "knew or relied to their detriment upon any regular practice by defendants to pay severance benefits" (Defendants' Memorandum of Law in Support of Motion at pp 6, 8).

In support of their cross motion seeking judgment on all nine causes of action asserted in the second amended complaint, the Plaintiffs argue that: 1) Defendants had a regular practice of paying severance under the 2007 Severance Plan; 2) Plaintiffs had knowledge of the Defendants' practice of paying severance under the 2007 Severance Plan; and 3) Plaintiffs relied on the practice of paying severance in accepting and continuing their employment. Based upon each of [*3]these factors, the Plaintiffs argue that they have proven their entitlement to severance benefits under the 2007 Severance Plan.

For the reasons that follow, the Defendants' motion is granted in part and denied in part and the Plaintiffs' cross motion is granted in part and denied in part.

In the first cause of action, the Plaintiffs allege that following the sale of KCC to Light Tower, they ceased being "employees" of any KeySpan entity and, thus, there was a " termination without cause' within 18 months of a "Change of Control", thus entitling them to severance under the 2007 Severance Plan but that the Defendants refused to pay the Plaintiffs severance, contending that the Plaintiffs were not terminated but, rather, transferred (Second Amended Complaint at ¶¶ 77-99).

In view of the well settled case law that routinely issued employee policy statements should not lightly be converted into binding employment agreements (see Lobosco v New York Telephone Company/NYNEX, 96 NY2d 312, 317 [2001]), the Appellate Division concluded that, for Plaintiffs to succeed on their breach of contract claim, insofar as they assert that the Defendants breached the 2007 Severance Plan, the Plaintiffs must "tender sufficient evidence demonstrating that the defendants had a regular practice of providing severance payments under the subject severance plan and that the plaintiffs had knowledge of such practice and relied on it in accepting or continuing their employment" (Cohen v National Grid USA, et al, 89 AD3d 1051 [2d Dept 2011] [annexed as exhibit "41" to Plaintiffs' Motion).

In support of their showing that Defendants had a regular practice of providing severance under the 2007 Severance Plan, the court notes that the Defendants admitted in their supplemental responses to Plaintiffs' requests for documents and interrogatories that "Jed Sabio,^[FN4] Dorothy Snyder,^[FN5] and Carol Ranno Beers received severance benefits pursuant to the [2007 Severance Plan] during the period from August 2007 through February 2009" (Ex. "63" to [*4]Plaintiffs' Cross Motion).^[FN6] Moreover, the letter agreements under which the Seven Plaintiffs were employed made reference to the availability of severance and health coverage benefits.

The Defendants also stated, during a December 2007 question and answer meeting concerning the contemplated sale of the company, that certain employees would be "eligible for an involuntary severance benefit, consistent with the severance benefits afforded to former KeySpan employees today" (Ex. "P" to Defendants' Motion).

Here, the Plaintiffs' submission of the 2007 Severance Plan, which is the Severance Plan adopted by KeySpan in 2007 for certain KeySpan employees, including the Plaintiffs, coupled with evidence that several KeySpan employees (not the Plaintiffs at bar) received severance pay under the 2007 KeySpan Severance Plan, is sufficient to establish that Defendants provided severance pay as a regular practice.

With respect to whether the Plaintiffs had knowledge of the 2007 Severance Plan, Risley stated in her affidavit that the "employees were concerned about severance and the loss of their employment [following the sale of KCC], which would end their active participation in the KeySpan/NG benefit plans, including the defined pension benefit pension plan" and, further, that it was "generally known throughout the company that if an employee was terminated without cause, he would receive some kind of severance" (Risley Affidavit at ¶¶ 4, 12).^[FN7]

Morever, each of the Plaintiffs submitted affidavits and testified at their depositions that they were aware of Defendants' regular practice of paying severance, including severance under the 2007 Severance Plan and, moreover, Plaintiffs, Cohen, Choinski, Adams, Boyle, Goercke, Benson, Mangelli, Commisso, Zaky, Bonasia, Thompson and Forst stated they had received a copy of the 2007 Severance Plan before the closing of the sale of KCC to Light Tower.^[FN8] In this regard, the Plaintiffs also stated in their affidavits that they were aware of another employee [*5]named Jed Sabio who was terminated in 2008 and received severance pay under the 2007 Severance Plan.^[FN9] Risley confirmed this in her affidavit wherein she stated that "Jed Sabio received severance under the 2007 Plan" (Risley Affidavit at ¶ 10).

There is, in addition, ample testimony that the Plaintiffs relied upon the 2007 Severance Plan in either accepting or continuing their employment with KCC. Each of the Plaintiffs stated, in effect, in their affidavits and depositions, that they relied upon the severance plan when deciding whether to leave KeySpan and go to KCC or, at a minimum, to continue their employment with KCC.^[FN10]

Accordingly, the Plaintiffs have established that Defendants had a regular practice of providing severance under the 2007 Severance Plan and that Plaintiffs had knowledge of, and relied upon, the 2007 Severance Plan.

Having established that the 2007 Severance Plan was a contract, the next question is whether there was a breach insofar as the Plaintiffs were not paid severance.^[FN11] Again, the 2007 Severance Plan provided that "[i]n the event of Change of Control . . . severance pay will be provided to all management employees if terminated without cause . . . within 18 months after the date of change of control".

In their second amended complaint, the Plaintiffs allege that they "lost their employment with National Grid within the 18 month-period after the change of control of KeySpan i.e., the acquisition of KeySpan by National Grid" (Second Amended Complaint at ¶ 75). According to the Plaintiffs, they are each entitled to receive severance benefits promised by the 2007 Severance Plan "because it was triggered as each had his employment by Defendants involuntarily terminated without cause when KCC was sold within 18 months of the change of control" (Plaintiffs' Memorandum of Law in Opposition at p 6).

The Defendants, however, maintain that the Plaintiffs were not terminated and, thus, not entitled to severance. Specifically, the Defendants claim that the sale of KCC was a "change of control" and those employees who continued to be employed by Light Tower (formerly KCC) were called "Continuing Employees" (Defendants' Statement of Undisputed Facts ¶ 15). In this regard, the Defendants assert that the "plaintiffs were not eligible for severance pay because their employment continued without break or interruption following the sale of KCC, and defendants have no history or practice of making severance payments under such circumstances" (Defendants' Reply Memorandum of Law in Further Support at p 14).

Initially, the court notes the following admissions in Defendants' answer: "admit that plaintiffs ceased being employees of KCC within eighteen months of the acquisition of KeySpan Corporation by National Grid"; admit that after the closing the Plaintiffs became employed by Light Tower and "ceased being employed by KCC"; and admit that Light Tower is not affiliated with or owned by the Defendants (Answer at ¶¶ 39, 67, 46-47, 67, 75, 77, 82).

Contrary to the Plaintiffs' arguments, numerous oral and written communications from KeySpan establish that the Plaintiffs were terminated and thus entitled to severance under the 2007 Severance Plan. For example, various interoffice emails, letters and verbal messages referred to the sale of KCC to Light Tower as a "divestiture" and the employees as being "terminated" (Plaintiffs' Statement of Undisputed Facts ¶¶ 49 - 70; Exs. "15", "26","27" & "59" to Cross Motion). Employees also received notices indicating that, although they were vested in benefit plans, such as the KeySpan Retirement Plan and the Group Life Plan, they could no longer participate in these plans due to their "termination" (Plaintiffs' Statement of Undisputed Facts at ¶¶ 75-93 & 99).^[FN12] This fact was confirmed by the deposition testimony of Lori Santoro, the Director of Retirement Strategy, wherein she stated that the KCC employees could not participate in the Defined-Benefit Plan because they were no longer employees of National Grid. Santoro testified that KCC employees were considered terminated with respect to all the benefits and benefit plan, - "all of them other than for severance" (Ex. "8" to Plaintiffs' Cross Motion at p 94). Maureen Heaphy, Vice President of Compensation and Benefits, similarly testified that for benefits purposes, the KCC employees had been terminated because the company they worked for was no longer part of National Grid (Ex. "7" to Plaintiffs' Cross Motion at pp 128-132).

In sum, the motion papers are replete with evidence indicating that the Plaintiffs were terminated upon the sale of KCC to Light Tower in August 2008 (Exs. "15", "26", "27" & "59", to Plaintiffs' Cross Motion). As such, the Plaintiffs have established their prima facie entitlement to summary judgment on the first cause of action.

With respect to the third through ninth causes of action which assert breach of the letter agreements entered into between KeySpan and Plaintiffs Cohen, Mangelli, Adams, Boyle, Commisso, Choinski, and Goercke, the Seven Plaintiffs maintain that they are also entitled to severance pursuant to the letter agreements, "which contain a further promise of severance relied upon in their acceptance of employment" (Plaintiffs' Memorandum of Law in Support of Cross Motion at p 35).

Beginning in June 1999 and continuing throughout 2000, the Seven Plaintiffs each signed letter agreements which included severance and other benefits provisions. The Seven Plaintiffs contend that due to the risk and uncertainty of making the move to KCC, which "had no proven track record", KeySpan made a "promise to provide them with certain employment benefits including a severance benefit in the event the employee was discharged other than for cause."^[FN13] Although each letter agreement differed in some ways, they all included the following statement:

If your employment is terminated by the company for any reason other than cause, you will receive severance and health coverage benefits equal to that of a comparable KeySpan Energy Utility Services employee.

The Seven Plaintiffs also allege that they relied upon the terms of the letter agreements and its written promise of severance in deciding to accept and continue their employment with KCC and that they were aware that KeySpan had provided severance benefits to other employees upon being discharged without cause (Second Amended Complaint at ¶¶ 107-113).

Defendants concede that the Seven Plaintiffs relied upon promise of severance in accepting employment at KCC. In this regard, the court noted that affidavits of each of the Plaintiffs wherein they indicated that they insisted upon a written promise of severance due to the inherent risk of accepting employment at KCC, an unregulated utility.

The Defendants' contend, however, that while the Seven Plaintiffs may have accepted offers of employment with KCC in reliance on the Defendants' promise, the Defendants' promise "was not a promise to pay severance under any circumstances" but, rather, it was a "commitment that those plaintiffs would continue to be eligible for the same severance benefits as would be available to comparable management employees' of other subsidiaries" and, thus, "[b]ecause there is no evidence that any comparable management employee was ever eligible to or did in fact receive the severance pay sought herein under similar circumstances or where their [*6]employment continued, defendants are entitled to summary judgment on the Third through Ninth causes of action" (Defendants' Reply Memorandum of Law in Further Support at p 22).^[FN14]

Here, the Seven Plaintiffs have established that the Defendants breached the individual letter agreements insofar as the Seven Plaintiffs tendered sufficient evidence demonstrating that the Defendants had a regular practice of providing severance and that the Seven Plaintiffs had knowledge of the practice and relied on it in accepting or continuing their employment ^[FN15] (see discussion supra at pp 6-8).

In the second cause of action, the Plaintiffs state that "there is a justiciable controversy as to whether Plaintiffs' employment with [KCC] was terminated by the Transaction with [LightTower], within the meaning of the Contracts, including the [2007] Severance Plan, so as to trigger Plaintiffs' entitlement to benefits under the [2007] Severance Plan and under the individual employment agreements" with the seven Plaintiffs. Plaintiffs also assert that the court should declare "that the sale of [KCC to LightTower] terminated the employment of Plaintiffs by KeySpan Defendants without cause, and, therefore, Plaintiffs became eligible to receive the Severance Pay provided by the Contracts" and that "Defendants are obligated to pay each Plaintiff his or her Severance Pay in accordance with the Contracts" (Second Amended Complaint ¶¶ 101-104).

The Defendants, on the other hand, argue that the second cause of action should be dismissed as the Plaintiffs do "not seek a declaration as to their rights; rather, plaintiffs simply re-plead their breach of contract claims under the guise of seeking declaratory relief" (Defendants Memorandum of Law in Support of Motion at p 10).

The branch of Plaintiffs' cross motion for an order declaring that the Plaintiffs were terminated and, thus, entitled to severance benefits, in effect seeks summary judgment on their declaratory judgment claim. Inasmuch as the Plaintiffs have an adequate alternative remedy in an action for breach of contract, the branch of the cross motion is denied and the branch of the motion seeking dismissal of the second cause of action is granted (Morgenthau v Erlbaum, 59 NY2d 143, 148 [1983] [court may exercise its discretion in not affording declaratory relief when other remedies are available and adequate]; Alizio v Feldman, 82 AD3d 804 [2d Dept 2011]; BGW Development Corp. v Mount Kisco Lodge No. 1552 of the Benevolent and Protective Order of Elks of the United States of America, 247 AD2d 565 [2d Dept 1998] [" cause of action for a declaratory judgment is unnecessary and inappropriate when the plaintiff has an adequate, [*7]alternative remedy in another form of action such as breach of contract'", quoting Apple Records v Capital Records, 137 AD2d 50, 54 [1st Dept 1988]; Wells Fargo Bank v GSRE II, Ltd., 92 AD3d 535 [1st Dept 2012] [plaintiff may not seek declaratory relief when other remedies are available, such as a breach of contract action]; Niagara Falls Water Board v City of Niagara Falls, 64 AD3d 1142 [4th Dept 2009]; Main Evaluations, Inc. v State, 296 AD2d 852 [4th Dept 2002] [cause of action seeking a declaration that defendant breached the contract was dismissed as unnecessary and inappropriate where the plaintiff had an adequate alternative remedy in an action for breach of contract]).

Based on the foregoing, it is hereby

Ordered that the Defendants' motion seeking summary judgment dismissing the second amended complaint is denied, except with respect to the second cause of action, which is hereby dismissed; and it is further

Ordered that the Plaintiffs' cross motion for an order granting them summary judgment on the causes of action asserted in the second amended complaint, is granted, except with respect to the second cause of action, which is denied.

This constitutes the decision and order of the court.