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FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016
NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 08/15/2018
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
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X
: Index No. 609073/2016
SCOTTISH AMERICAN CAPITAL, LLC and (Hon. Stephen A. Bucaria)
SCOTTISH AMERICAN INSURANCE GENERAL :
AGENCY, INC., AFFIRMATION IN
: SUPPORT OF MOTION
Plaintiffs, FOR PARTIAL SUMMARY
: JUDGMENT
-against-
:
ARTHUR GOLANN, NORTHEAST COVERAGES,
INC.,
Defendants.
..... - - -..............................
x
Keith J. Singer, being an attorney duly admitted to practice in the Courts of
the State of New affirms the under the penalties of perjury:
York, hereby following
1. I am a member of the law firm of Abrams, Fensterman, Fensterman,
Eisman, Formato, Ferrara & Wolf, LLP, attorneys for the defendants, Arthur
Golann ("Golann") and Northeast Coverages, Inc. ("Northeast Coverages"), and as
such, am familiar with the facts and circumstances herein.
defendants'
2. I submit this Affirmation in support of motion for partial
summary judgment to dismiss the first, second and third causes of action of the
Complaint.
3. For the reasons set forth herein, in the Affidavit in Support of Arthur
Golann, and in accordance with the authorities more fully discussed in the
defendants'
accompanying Memorandum of Law, it is respectfully submitted that
motion should be granted in its entirety.
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PROCEDURAL HISTORY
4. This action was commenced via filing of a Summons and Complaint on
November 22, 2016 (Exhibit "E"). Notably, the date of filing of the Complaint was
fourteen (14) months after Golann had been forced to resign from defendant
Scottish American Capital, LLC ("SAC"), and the purported restrictive covenant
had supposedly taken effect.
5. Defendants filed their Answer with Counterclaims on January 9, 2017
(Exhibit "F").
defendants'
6. Only after Answer with Counterclaims was filed did
plaintiffs then file an Order to Show Cause on January 17, 2017, seeking to,inter
alia, prohibit Golann from contacting any insurance client of SAC (Exhibit "G").
Exhibiting what can only be described as gross laches, SAC's Order to Show Cause
was not filed until sixteen (16) months after Golann had begun working with
Northeast Coverages, which was two (2) months short of the expiration of the
restrictive covenant.
7. Defendants filed an Amended Answer with Counterclaims, as of right,
on February 6, 2017 (Exhibit "H").
8. The Court subsequently denied the Order to Show Cause, by Order
dated March 8, 2017 (Exhibit "I"), citing the fact that the motion was effectively
moot because plaintiffs had filed their motion at such a late point in time that the
restrictive covenant had already lapsed.
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9. Thereafter, on September 19, 2017, plaintiffs amended the Complaint
(Exhibit "J"), which amendment was permitted via consent of defendants.
10. On October 11, 2017, defendants filed their Answer to the Amended
Complaint with Counterclaims (Exhibit "K"). The Answer to the Amended
Complaint raises numerous Affirmative Defenses regarding the validity and
enforceability of the restrictive covenant.
11. Discovery was completed, and thereafter the case was certified for trial
on April 26, 2018 (Exhibit "L"). The Note of Issue was subsequently filed on July 23,
2018. Defendants now move for partial summary judgment.
THE COMPLAINT
Defendants'
12. The Complaint alleges five (5) separate causes of action.
motion for summary judgment seeks to dismiss only the first three (3) causes of
action, all of which deal with the enforceability of the restrictive covenant.
13. The first cause of action seeks damages as against Golann for his
alleged breach of the restrictive covenant in Employment Agreement #2. The
restrictive covenant is unenforceable however, and therefore this cause of action
should be dismissed.
14. The second cause of action seeks damages as against both Golann and
Northeast Coverages for the alleged misappropriation of trade secrets, which SAC
describes as its client list and knowledge of the client's business. SAC does not
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possess any trade secrets, and therefore, it is legally impossible for the defendants
to have misappropriated same.
15. The third cause of action seeks damages as against Northeast
Coverages for tortious interference with the restrictive covenant. Necessarily, if the
restrictive covenant is deemed unenforceable, then this claim is rendered moot.
THE RESTRICTIVE COVENANT IS NOT ENFORCEABLE
16. As more fully discussed in the accompanying Memorandum of Law, the
restrictive covenant contained in Employment Agreement #2 is improper, insofar as
it is overbroad in duration, geographic area and in the actions it seeks to prohibit.
17. In particular, the restrictive covenant seeks to prohibit Golann from,
nteralia, both directly and indirectly contacting, dealing or transacting business
with any brokers with whom Golann communicated with while working for SAC,
even if that broker contacts Golann without solicitation 1 That restricts
effectively
Golann from doing business with the entire insurance brokerage pool.
18. Furthermore, the restrictive covenant has no restriction whatsoever as
to geographic area, so even if Golann had wished to move to Florida, for instance, to
make a living in the only business he has known for three decades, he could not do
so pursuant to the overly broad and unduly restrictive terms of the restrictive
covenant at issue.
The prohibition likewise would preclude Golann from having any contact whatsoever with any brokers who were
already doing business with Neitheâ:á Coverages prior to Golann's cmployment with the company.
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19. Finally, the restrictive covenant is unenforceable pursuant to its own
terms, as it relates to Golann. In that regard, the restrictive covenant states that it
is triggered "for a period of eighteen (18) months after termination of there [sic]
agreement"
(Exhibit "B").
"termination"
20. The Employment Agreement explicitly defines the term
as it is used in the Agreement at page 7, 16. It provides six (6) different events
wherein a termination of the Agreement is deemed to have occurred. None of these
enumerated events is the resignation (voluntary or involuntary) of the employee.
21. Accordingly, it is respectfully submitted that Golann's resignation from
SAC did not trigger the restrictive covenant.
22. Under these circumstances, the Court should declare the restrictive
covenant in Employment Agreement #2 to be void and unenforceable -
thereby
precluding SAC from recovering any damages whatsoever for the purported
violations of same.
SAC IS GUILTY OF GROSS LACHES
23. SAC waited to commence this action for fourteen (14) months after
Golann had resigned. In fact, SAC waited so long to commence this action, that by
the time it submitted its Order to Show Cause to enforce the restrictive covenant,
the eighteen (18) month term of the restrictive covenant had virtually lapsed.
24. SAC never notified Golann that it intended to enforce its improper
restrictive covenant after his resignation until this action was commenced.
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Likewise, SAC has never indicated why it waited fourteen (14) months to attempt to
enforce the restrictive covenant that it could have sought to enforce immediately
after Golann's resignation.
25. In its Order to Show Cause filed sixteen (16) months after Golann's
resignation, SAC indicated that it immediately assumed that Golann had stolen his
physical and electronic files from his office based on the fact that the physical files
were purportedly removed from his office and electronic files were purportedly
deleted. Bee Exhibit "G", at Thomson Aff. sworn to January 13, 2017, ¶ 63-71.
26. This fact, coupled with the import placed on the restrictive covenant
itself (see Thomson deposition transcript, Exhibit "M", at pp. 56, 103, 104 and 120);
the ability for SAC to track company financial information and accounts
instantaneously through the Bind HQ system, and the allegation that Golann was
so valuable as to cause a decrease of as much as 90% revenue on certain
relationships (See Exhibit "G", at Thomson Aff., ¶ 12), along with the fact that
Northeast Coverages hired several SAC employees during the time period in
question, deems it unreasonable and inexcusable for SAC to wait not less than
fourteen (14) months to act upon the restrictive covenant.
27. It is not only unreasonable and inexcusable for SAC to fail to mitigate
its damages for a period of at least fourteen (14) months, but it is significantly
prejudicial to Golann. Golann was hired by Northeast Coverages and worked there
for fourteen (14) months while SAC sat on its rights. Such an appalling lack of
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diligence further serves to vitiate SAC's claims regarding the damages it has
allegedly suffered herein.
28. Based on the foregoing, and for all of the reasons more fully discussed
in the accompanying Affidavit in Support of Arthur Golann, and the accompanying
defendants'
Memorandum of Law, it is respectfully submitted that motion should be
granted in its entirety, and that defendants should be awarded such other and
further relief as the Court may deem just, proper and equitable.
Dated: August 2018
13,
Keith J. Singer
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Preview
FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 08/15/2018 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU .............-........................ X : Index No. 609073/2016 SCOTTISH AMERICAN CAPITAL, LLC and (Hon. Stephen A. Bucaria) SCOTTISH AMERICAN INSURANCE GENERAL : AGENCY, INC., AFFIRMATION IN : SUPPORT OF MOTION Plaintiffs, FOR PARTIAL SUMMARY : JUDGMENT -against- : ARTHUR GOLANN, NORTHEAST COVERAGES, INC., Defendants. ..... - - -.............................. x Keith J. Singer, being an attorney duly admitted to practice in the Courts of the State of New affirms the under the penalties of perjury: York, hereby following 1. I am a member of the law firm of Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Wolf, LLP, attorneys for the defendants, Arthur Golann ("Golann") and Northeast Coverages, Inc. ("Northeast Coverages"), and as such, am familiar with the facts and circumstances herein. defendants' 2. I submit this Affirmation in support of motion for partial summary judgment to dismiss the first, second and third causes of action of the Complaint. 3. For the reasons set forth herein, in the Affidavit in Support of Arthur Golann, and in accordance with the authorities more fully discussed in the defendants' accompanying Memorandum of Law, it is respectfully submitted that motion should be granted in its entirety. 1 of 7 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 08/15/2018 PROCEDURAL HISTORY 4. This action was commenced via filing of a Summons and Complaint on November 22, 2016 (Exhibit "E"). Notably, the date of filing of the Complaint was fourteen (14) months after Golann had been forced to resign from defendant Scottish American Capital, LLC ("SAC"), and the purported restrictive covenant had supposedly taken effect. 5. Defendants filed their Answer with Counterclaims on January 9, 2017 (Exhibit "F"). defendants' 6. Only after Answer with Counterclaims was filed did plaintiffs then file an Order to Show Cause on January 17, 2017, seeking to,inter alia, prohibit Golann from contacting any insurance client of SAC (Exhibit "G"). Exhibiting what can only be described as gross laches, SAC's Order to Show Cause was not filed until sixteen (16) months after Golann had begun working with Northeast Coverages, which was two (2) months short of the expiration of the restrictive covenant. 7. Defendants filed an Amended Answer with Counterclaims, as of right, on February 6, 2017 (Exhibit "H"). 8. The Court subsequently denied the Order to Show Cause, by Order dated March 8, 2017 (Exhibit "I"), citing the fact that the motion was effectively moot because plaintiffs had filed their motion at such a late point in time that the restrictive covenant had already lapsed. 2 2 of 7 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 08/15/2018 9. Thereafter, on September 19, 2017, plaintiffs amended the Complaint (Exhibit "J"), which amendment was permitted via consent of defendants. 10. On October 11, 2017, defendants filed their Answer to the Amended Complaint with Counterclaims (Exhibit "K"). The Answer to the Amended Complaint raises numerous Affirmative Defenses regarding the validity and enforceability of the restrictive covenant. 11. Discovery was completed, and thereafter the case was certified for trial on April 26, 2018 (Exhibit "L"). The Note of Issue was subsequently filed on July 23, 2018. Defendants now move for partial summary judgment. THE COMPLAINT Defendants' 12. The Complaint alleges five (5) separate causes of action. motion for summary judgment seeks to dismiss only the first three (3) causes of action, all of which deal with the enforceability of the restrictive covenant. 13. The first cause of action seeks damages as against Golann for his alleged breach of the restrictive covenant in Employment Agreement #2. The restrictive covenant is unenforceable however, and therefore this cause of action should be dismissed. 14. The second cause of action seeks damages as against both Golann and Northeast Coverages for the alleged misappropriation of trade secrets, which SAC describes as its client list and knowledge of the client's business. SAC does not 3 3 of 7 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 08/15/2018 possess any trade secrets, and therefore, it is legally impossible for the defendants to have misappropriated same. 15. The third cause of action seeks damages as against Northeast Coverages for tortious interference with the restrictive covenant. Necessarily, if the restrictive covenant is deemed unenforceable, then this claim is rendered moot. THE RESTRICTIVE COVENANT IS NOT ENFORCEABLE 16. As more fully discussed in the accompanying Memorandum of Law, the restrictive covenant contained in Employment Agreement #2 is improper, insofar as it is overbroad in duration, geographic area and in the actions it seeks to prohibit. 17. In particular, the restrictive covenant seeks to prohibit Golann from, nteralia, both directly and indirectly contacting, dealing or transacting business with any brokers with whom Golann communicated with while working for SAC, even if that broker contacts Golann without solicitation 1 That restricts effectively Golann from doing business with the entire insurance brokerage pool. 18. Furthermore, the restrictive covenant has no restriction whatsoever as to geographic area, so even if Golann had wished to move to Florida, for instance, to make a living in the only business he has known for three decades, he could not do so pursuant to the overly broad and unduly restrictive terms of the restrictive covenant at issue. The prohibition likewise would preclude Golann from having any contact whatsoever with any brokers who were already doing business with Neitheâ:á Coverages prior to Golann's cmployment with the company. 4 4 of 7 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 08/15/2018 19. Finally, the restrictive covenant is unenforceable pursuant to its own terms, as it relates to Golann. In that regard, the restrictive covenant states that it is triggered "for a period of eighteen (18) months after termination of there [sic] agreement" (Exhibit "B"). "termination" 20. The Employment Agreement explicitly defines the term as it is used in the Agreement at page 7, 16. It provides six (6) different events wherein a termination of the Agreement is deemed to have occurred. None of these enumerated events is the resignation (voluntary or involuntary) of the employee. 21. Accordingly, it is respectfully submitted that Golann's resignation from SAC did not trigger the restrictive covenant. 22. Under these circumstances, the Court should declare the restrictive covenant in Employment Agreement #2 to be void and unenforceable - thereby precluding SAC from recovering any damages whatsoever for the purported violations of same. SAC IS GUILTY OF GROSS LACHES 23. SAC waited to commence this action for fourteen (14) months after Golann had resigned. In fact, SAC waited so long to commence this action, that by the time it submitted its Order to Show Cause to enforce the restrictive covenant, the eighteen (18) month term of the restrictive covenant had virtually lapsed. 24. SAC never notified Golann that it intended to enforce its improper restrictive covenant after his resignation until this action was commenced. 5 5 of 7 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 08/15/2018 Likewise, SAC has never indicated why it waited fourteen (14) months to attempt to enforce the restrictive covenant that it could have sought to enforce immediately after Golann's resignation. 25. In its Order to Show Cause filed sixteen (16) months after Golann's resignation, SAC indicated that it immediately assumed that Golann had stolen his physical and electronic files from his office based on the fact that the physical files were purportedly removed from his office and electronic files were purportedly deleted. Bee Exhibit "G", at Thomson Aff. sworn to January 13, 2017, ¶ 63-71. 26. This fact, coupled with the import placed on the restrictive covenant itself (see Thomson deposition transcript, Exhibit "M", at pp. 56, 103, 104 and 120); the ability for SAC to track company financial information and accounts instantaneously through the Bind HQ system, and the allegation that Golann was so valuable as to cause a decrease of as much as 90% revenue on certain relationships (See Exhibit "G", at Thomson Aff., ¶ 12), along with the fact that Northeast Coverages hired several SAC employees during the time period in question, deems it unreasonable and inexcusable for SAC to wait not less than fourteen (14) months to act upon the restrictive covenant. 27. It is not only unreasonable and inexcusable for SAC to fail to mitigate its damages for a period of at least fourteen (14) months, but it is significantly prejudicial to Golann. Golann was hired by Northeast Coverages and worked there for fourteen (14) months while SAC sat on its rights. Such an appalling lack of 6 6 of 7 FILED: NASSAU COUNTY CLERK 08/15/2018 02:50 PM INDEX NO. 609073/2016 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 08/15/2018 diligence further serves to vitiate SAC's claims regarding the damages it has allegedly suffered herein. 28. Based on the foregoing, and for all of the reasons more fully discussed in the accompanying Affidavit in Support of Arthur Golann, and the accompanying defendants' Memorandum of Law, it is respectfully submitted that motion should be granted in its entirety, and that defendants should be awarded such other and further relief as the Court may deem just, proper and equitable. Dated: August 2018 13, Keith J. Singer 7 7 of 7