Following an in-person trial that was held in Supreme Court, Suffolk County back in May, 2021 (yes, that was the first in-person trial I had taken part in since the beginning of the pandemic), the Court, as many do, took post-trial submissions from the parties, and "reserved decision," meaning that it would render its judgment at a later date in time, after considering the papers submitted by the respective parties.
In this particular case, I was defending an insurance broker who had purportedly diverted a potential client from his then-employer (the plaintiff) to a competing insurance agency, thereby depriving this insurance agency of the commissions it would, or could, have earned had they successfully brokered that policy.
As a result, the plaintiff claimed it was entitled to an array of damages flowing from the breach of my client's employment agreement with them, and for breach of his fiduciary duties to them, including the following:
- The wages plaintiff had paid him during his purported period of disloyalty;
- $100,000 in liquidated damages, as called for by the terms of his employment agreement;
- $20,000 for the purportedly diverted commissions; and,
- Nearly $80,000 in legal fees incurred by plaintiff in prosecuting the action.
In all, the plaintiff sought over $200,000 in damages.
But that's not what the Court awarded them.
Instead, this is what happened:
The Trial Court Dismissed the Former Employer's Liquidated Damages Claim
Earlier in the case, we moved - and the Court granted - our motion to dismiss the plaintiff's claims seeking the liquidated damages set forth in the employment agreement, agreeing with our assertion that "the liquidated [damage] amount is disproportionate to the presumable or probably damage or to a readily ascertainable loss," and "was in the nature of a security for performance," and therefore, was unenforceable as a matter of law.
What Happened With Regard to the Plaintiff's Remaining Claims At, and After, Trial
At trial, the plaintiff submitted into evidence proof of its alleged damages sustained as a result of our client's breach of his employment agreement and fiduciary duties, including a claim for legal fees totaling $77,908.89. We objected, arguing that this evidence was directly contrary to the positions that the plaintiff had taken throughout the litigation until that point, and should be disregarded.
While their submissions were accepted into evidence, at the end, this is what the trial court held:
"The Court is confronted with Plaintiff s claims for damages and counsel fees. Counsel fees are recoverable pursuant to the Employment Agreement duly acknowledged by the parties. The Plaintiff was successful to the extent it proved the Defendant in breach of the Employment Agreement' Plaintiffis seeking to recover $77,908.89 in legal fees ... At the risk of stating the obvious, no reasonable client would urge their attomey to run up legal bills more than 4 times the maximum value of their initial claim. ...
"The Court finds that the Plaintiff failed to prove other actual damages and DENIES any such relief."
In the end, the Court acknowledged that my client did, in fact, breach his agreement and violated his fiduciary duties, but awarded plaintiff $20,000 in damages.
Under the circumstances, our client was (understandably) thrilled.
