Danco Enters., LLC v Livexlive Media, Inc.
188 A.D.3d 453, 2020 N.Y. Slip Op. 06385
Appellate Division, First Department · November 10, 2020
What the court decided
A former owner who sold his company and stayed on as an employee alleged that the buyer dismantled the business to keep him from reaching the sales thresholds that would have triggered his performance bonus. The claim for breach of the implied covenant was dismissed: where the agreement provided for termination without cause, the covenant claim was duplicative of the contract.
Who won
The employer won. Dismissal of the covenant claim was unanimously affirmed.
Why it matters for salespeople
This is the employer’s best recent First Department authority on a claim that the employer made a bonus condition impossible. What it decides is narrow: a covenant claim pleaded as a separate cause of action, where the agreement expressly allowed termination without cause, was duplicative of the contract claim. The lesson is procedural — plead the frustration inside the contract claim, as the reason the condition is excused — and it has nothing to say about a commission already earned, which cannot be forfeited.
Key passage: 188 A.D.3d 453 at 454.
Read the decision (PDF) Marked with official reporter pages for citation.
Source of the text: New York State Law Reporting Bureau (official report) — https://www.nycourts.gov/reporter/3dseries/2020/2020_06385.htm. This page summarizes the decision in plain language; the court’s own words are in the opinion below.
Where this case comes up in the guide
The opinion
Red markers such as [188 AD3d 000] show where each page of the official reporter begins. Gray markers such as [*2] are the slip opinion's own page markers.
Danco Enters., LLC v Livexlive Media, Inc. 2020 NY Slip Op 06385 [188 AD3d 453] November 10, 2020 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, December 30, 2020
[*1] [188 AD3d 453] Danco Enterprises, LLC, et al., Plaintiffs, and Joseph Schnaier, Appellant, v Livexlive Media, Inc., Formerly Known as Loton Corp., et al., Respondents, et al., Defendants.
[188 AD3d 454] Schlam Stone & Dolan LLP, New York (Joshua Wurtzel of counsel), for appellant.
Law Offices of Steven D. Isser, New York (Steven D. Isser of counsel), for respondents.
Order, Supreme Court, New York County (Jennifer G. Schecter, J.), entered February 6, 2019, which, to the extent appealed from as limited by the briefs, granted defendants' motion to dismiss the cause of action for breach of the covenant of good faith and fair dealing, unanimously affirmed, without costs.
Plaintiff Schnaier argues that defendant LiveXLive Tickets, Inc. breached the covenant of good faith and fair dealing implied in the employment agreement between them by dismantling the ticketing company that he had sold to it at the time the agreement was entered into, thereby preventing him from earning a performance bonus to which the agreement entitled him if LiveXLive Tickets reached certain sales thresholds. He contends that LiveXLive Tickets acted in bad faith when it shut down the ticketing business, which frustrated the purpose of the employment agreement, and terminated his employment without cause.
There are no rights in the employment agreement that relate to the ticketing company, and, as plaintiff concedes the agreement provided for termination without cause, the claim of breach of the implied covenant of good faith and fair dealing was correctly dismissed as duplicative of the breach of contract claim (see Murphy v American Home Prods. Corp., 58 NY2d 293, 304 [1983]; Logan Advisors, LLC v Patriarch Partners, LLC, 63 AD3d 440, 443 [1st Dept 2009]). Concur—Friedman, J.P., Renwick, Oing, Mendez, JJ.