JAMES P. JONES, District Judge.
The plaintiff, Sylvain A. Maggard, has sued the defendants, an international conglomerate and its related entities (herein collectively called "Essar") for a finder's fee that he claims is owed him following the $600 million acquisition by Essar of a coal mining company, Trinity Coal Corporation ("Trinity Coal"). Essar agreed that it hired Maggard, but contends that it was only as a consultant. It paid him a monthly salary and expenses and concedes that he was a "valued and valuable member of Essar's deal team, [who] devoted considerable time and energy to a substantial due-diligence effort." (Defs.' Reply Supp. Mot. Summ. J. 19.) Nevertheless, Essar contends
Following discovery in the case, Essar has filed a Motion for Summary Judgment. It contends that judgment should be entered in its favor because (1) the uncontested facts show that Maggard was not the source of the Trinity Coal opportunity; (2) the oral contract for a finder's fee alleged by Maggard is barred under the New York statute of frauds; and (3) Maggard's alternative claim for quantum meruit recovery fails as a matter of law.
Essar's Motion for Summary Judgment has been briefed and orally argued and is ripe for decision. For the reasons that follow, I will deny the motion.
The following facts taken from the summary judgment record are either undisputed, or where disputed, are stated in the light most favorable to the plaintiff.
In 2008, Essar developed an interest in acquiring a source of metallurgical coal for use in its Essar Steel Algoma, Inc. ("Algoma") operations. UBS Investment Bank ("UBS"), "[a]s part of a decade-long relationship," began to advise Essar on potential acquisitions for Algoma's supply of metallurgical coal. (Mem. Supp. Defs.' Mot. Summ. J. 14.) UBS employee Dan Chu, who had recently assisted Denham Capital, the owner of Trinity Coal, in an unsuccessful initial public offering of Trinity Coal, listed the coal mining company as a "Strategic Coal Opportunit[y]" in a September 2008 presentation to Essar executives. (Id. Ex. E.) UBS again discussed Trinity Coal in presentations to Essar in January and June 2009, and "[a]round and among these three presentations, Mr. Chu met with Essar in London, New York, and Toronto; with Trinity Coal in Scott Depot, West Virginia; and with Denham Capital in Boston and Houston to further discuss the opportunity," all before Maggard was hired by Essar. (Mem. Supp. Defs.' Mot. Summ. J. 15.)
In an April 7, 2009, internal email, Essar executive Rajiv Saxena attached "the consolidated list of metallurgical coal opportunities received/being considered by Essar...." (Id. Ex. G.) Trinity Coal was listed among several other potential companies, and Essar intended to "get back to UBS if interested ...." (Id.) At that time, however, Essar was "seriously considering acquisition" of Grande Cache Coal Corporation, a Canadian coal mining company. (Id.) By June 2009, an Essar internal document reported three potential acquisitions — Grand Cache Coal Corporation, Imagin Natural Resources, and Alloy Mine — but noted that the company was "[i]dentifying other potential targets through local brokers in mining regions in [the] U.S." (Pl.'s Mem. Opp'n Defs.' Mot. Summ. J. Ex. 4.) To that end, Essar had published a classified advertisement seeking a "Senior Mining Consultant" in newspapers in Charleston, West Virginia, and Pittsburgh, Pennsylvania, and on coal-related websites. The advertisement specified, among other things, that qualified candidates "[m]ust be familiar with North American and in particular Central Appalachian coals," and that a "[r]esident in Central Appalachia is preferred." (Id. Ex. 5.) It indicated that "[t]he successful candidate will consult with senior members of the corporate team regarding formulating the right strategy for coal mining resource options in North America." (Id.) On June 12, 2009, Maggard emailed the following response to the advertisement:
(Id. Ex. 6.) On June 21, 2009, Madhu Vuppuluri, an Essar executive in New York, telephoned Maggard at his home in Pound, Virginia. According to Maggard, in this conversation, he proposed for his services $750 per day, an additional $500 for any overnight travel, reimbursement of expenses, and a three percent commission "for any opportunity that [he] presented that led to an investment." (Pl.'s Mem. Opp'n Defs.' Mot. Summ. J. 8.) Vuppuluri responded, "Fair enough, when can you come to New York to meet with [Essar founder] Ravi Ruia[?]" (Mem. Supp. Defs.' Mot. Summ. J. Ex. I at 497:3-4.) That same month, Maggard did travel to Essar's New York office to deliver an informational presentation on coal and a description of the properties in his portfolio.
After this initial meeting, Maggard began arranging mine visits and communicating with executives at coal mining companies in several different states. On July 23, 2009, Maggard emailed Karan Ahluwalia, an Essar Steel Minnesota associate, and stated, "I can talk to Ben Hatfield at ICG, Ken Woodring [President and Chief Executive Officer] at Trinity, Gary Cox at Premier Elkhorn and set up appointments at your request." (Mem. Opp'n Defs.' Mot. Summ. J. Ex. 20.) Maggard then arranged the first site visit to Trinity Coal's West Virginia metallurgical mines and the first meeting between Essar and Trinity Coal executives on July 29.
By early August 2009, Maggard had obtained the execution of a non-disclosure agreement between Trinity Coal and Essar, facilitating the exchange of information in the acquisition negotiations. In an August 6 email to Maggard, Woodring proposed an itinerary for additional site visits between August 15 and August 25, and indicated that Trinity Coal was "pleased to hear Essar is interested in looking further at [its] metallurgical properties." (Id. Ex. 25.)
On August 17, Maggard indicated that "[t]here are three people besides Essar at the table" with Trinity Coal; he expressed concern that Essar's failure to visit per the itinerary "would be considered [a] lack of interest," and he requested "an Essar representative to satisfy their agenda." (Id. Ex. 29.) On August 18, Ahluwalia, Vuppuluri, and Maggard traveled to Trinity Coal's office in Scott Depot, West Virginia and "[three] structures [were] broadly discussed [with Trinity Coal executives] for potential transaction with Essar." (Id. Ex. 30.) On August 19, Maggard emailed Essar executives after speaking with Woodring and notified them that the "[s]tructure between Essar and Trinity was discussed with Den ham [sic] today. Ken does not foresee a problem with structure details. But does think it may be Friday before
Although Maggard had been working for Essar for several months, a written employment agreement had not been executed, raising concerns among some Essar executives, including Narasimha Ramakrishnan, the Director of Finance at Essar Steel Minnesota, that he might be considered an employee rather than an independent contractor. In September 2009, because he was working more than originally anticipated, Maggard renegotiated his compensation to $4,000 per month, and on September 17, Ahluwalia requested from Ramakrishnan an emergency transfer of funds to Maggard, assuring Ramakrishnan that he would "ensure all the paper work is complete once [he is] back in NY." (Id. Ex. 48.) On October 2, Ramakrishnan forwarded a copy of Essar's form contract for independent contractors to Ahluwalia, and remarked, "Let the compensation be mentioned as $4,000 per month. Do not specify the hours." (Id. Ex 44.) Confirming the new arrangement, Vuppuluri wrote the following in a November 17, 2009 correspondence to Maggard:
(Id. Ex 47.) (emphasis in original). According to Maggard, Vuppuluri orally explained that the engagement letter served as a necessary legality to continue receiving "Part A of [his] compensation agreement," but Vuppuluri assured him that this did not affect his "Part B" commission arrangement. (Id. Ex. 1 at 344:5-17.)
On November 30, 2009, Ahluwalia emailed Maggard the independent contractor agreement, and wrote, "Give me a call later so that we can go through and amend as required per your job duties/compensation. Once we amend, we can execute after I show to Madhu [Vuppuluri]." (Id. Ex. 38.) Maggard replied on December 4, 2009, with a revised version of the agreement containing his proposed changes. He substituted the following language in place of the draft compensation section:
(Id. Ex. 39.) Maggard also amended a subsection entitled "Service to be Rendered by Contractor" to include "Helping the Company to find investment and/or cooperation opportunities; Assisting the Company in discussions and negotiations with the Clients and managing the process in respect of the same." (Id.) Maggard signed and backdated the agreement to June 22, 2009, but Essar never executed it. Maggard similarly signed and backdated the non-disclosure agreement, emailed to him on December 8, 2009, that Essar similarly did not execute. On January 15, 2010, Ramakrishnan emailed Ahluwalia expressing worry that Essar was "inviting avoidable [legal] trouble" in failing to define Maggard's employment relationship with Essar. (Id. Ex. 48.) He noted that Ahluwalia had not completed Maggard's "paper work" as promised and that the [November 17, 2009] engagement letter was "still pending." (Id.)
On March 20, 2010, Maggard emailed Vuppuluri to inquire about the status of his impending commission payment: "Now that our first project together is coming to close. How and when, will my finders/bonus fee for bringing Essar to the Trinity opportunity be paid?" (Id. Ex. 50.) There was no response by Essar.
Essar purchased Trinity Coal from Denham Capital on April 7, 2010. Essar subsequently offered Maggard employment at Trinity Coal, with an annual salary of $65,000 plus fringe benefits, and the defendants highlight that "[h]e accepted the job without protesting the ... breach he now alleges. He left Trinity Coal two years later, in June 2012, about four months before filing this suit." (Mem. Supp. Defs.' Mot. Summ. J. 8-9.) Maggard responds that he continually attempted to address his outstanding finder's fee and that he accepted the position so as not to "insult Ravi Ruia and sour relations with Essar before receiving his commission." (Pl.'s Mem. Opp'n Defs.' Mot. Summ. J. 15.) Indeed, on June 16, 2010, Maggard wrote to Ruia again seeking resolution of his alleged commission agreement, to which he never received a reply.
Summary judgment is appropriate when there is "no genuine dispute as to any material fact," given the parties' burdens of proof at trial. Fed.R.Civ.P. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining whether the moving party has shown that there is no genuine dispute of any material fact, a court must assess the factual evidence and all inferences to be drawn therefrom in the light most favorable to the non-moving party. See Ross v. Commc'ns Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985), overruled on other grounds, Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989). Applying these standards, the defendants' motion for summary judgment must be denied.
In a diversity case, I must apply the conflict of law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). "It is a longstanding rule in Virginia that `[t]he nature, validity, and interpretation
While it is true that when "a contract is made in one jurisdiction but performed in another, the law of the place of performance governs the contract," Hunter Innovations Co. v. Travelers Indem. Co. of Conn., 753 F.Supp.2d 597, 603 (E.D.Va. 2010) (citing Erie Ins. Exch. v. Shapiro, 248 Va. 638, 450 S.E.2d 144 (1994)), "an exception exists when the contract is to be performed more or less equally among two or more states, in which case the law of the state in which the contract was made should apply." Tharpe v. Lawidjaja, No. 6:12-cv-00039, 8 F.Supp.3d 743, 780, 2014 WL 1268820, at *32 (W.D.Va. Mar. 26, 2014); see also Restatement (Second) of Conflict of Laws § 188 cmt. e. (1971) ("The place of performance can bear little weight in the choice of the applicable law when (1) at the time of contracting it is either uncertain or unknown....") The present summary judgment record does not indicate in which state the parties intended the alleged contract to be performed, and in fact, according to the plaintiff, it was partly performed in New York, Minnesota, Virginia, West Virginia, and even in India. Because the alleged oral contract was to be performed in multiple jurisdictions, and no jurisdiction appears to have been the principal place of performance, it is governed by the law of the place where it was made — New York.
The defendants first argue that they are entitled to summary judgment because Maggard did not satisfy the terms of his alleged commission agreement, insofar as he did not "present" the Trinity Coal opportunity to Essar. However, given the parties' differing interpretations of presentment and the evidence both parties have offered in support of their respective interpretations, I find that there is a genuine factual dispute as to whether Maggard's actions on behalf of Essar satisfied the terms of the alleged oral agreement.
"When a contract, read as a whole to determine its purpose and intent, plainly manifests the intent of the parties, relief may be granted by way of summary judgment. Where, however, the contractual provision relied upon is ambiguous, the resolution of the ambiguity is for the trier of fact." Spano v. Kings Park Cent. Sch. Dist., 61 A.D.3d 666, 877 N.Y.S.2d 163, 166 (2009) (internal quotation marks and citations omitted).
Maggard made clear as early as his email responding to Essar's advertisement of the position that his value was his knowledge of potential opportunities. Furthermore, there is no indication that acquisition talks were underway before Maggard arranged formal introductions between Essar and Trinity executives. In fact, by June 2009, immediately before Maggard was hired, it appears as if Essar had eliminated Trinity from its previous list of potential acquisitions and narrowed the prospects to Grande Cache Coal Corporation, Imagin Natural Resources, and Alloy Mine.
It is certainly true that UBS was first in time to alert Essar to Trinity Coal as a potential acquisition, and the defendants make much of the fact that Maggard had no contact with Trinity Coal's owner Denham Capital. However, executives at Trinity Coal like Woodring appear to have been intimately involved in the acquisition and communicated regularly with Maggard in that regard. In addition, David Riggan, the former Senior Vice President and Chief Financial Officer at Trinity Coal, confirms in a declaration filed in opposition to summary judgment that
(Id. Ex 19.) While it is undisputed that the potential acquisition of Trinity Coal was first mentioned by UBS, the question of whether the actual opportunity was made available by UBS or by Maggard is more difficult to answer. The intention of the parties as to what constituted presentment under the alleged commission agreement and whether Maggard performed in satisfaction of that agreement simply cannot be determined based upon the conflicting evidence now before the court.
The defendants contend that the New York statute of frauds bars Maggard's action. That statute, in relevant part, provides as follows:
N.Y. Gen. Oblig. Law § 5-701(a)(10). Virginia has no similar provision in its statute of frauds. Maggard contends that the New York statute does not apply.
As previously discussed, New York law governs with respect to the nature, validity, and interpretation of the alleged finder's fee contract. Nevertheless, because choice-of-law doctrine directs only the application of the contracting state's substantive law, and not its procedural rules, Frye v. Commonwealth, 231 Va. 370, 345 S.E.2d 267, 272-73 (1986), the rule of lex loci contractus may not always result in the application of the foreign statute of frauds. The question becomes whether the particular statute of frauds causes the oral contract to be void (substantive) or merely unenforceable in the courts of that state (procedural). See Brown, 240 F.Supp. at 541 (finding that New Jersey statute of frauds was not applicable to bar oral contract made in New Jersey for sale of goods valued over $500, otherwise enforceable in the forum state, because the New Jersey statute made such oral contracts only unenforceable and not void and thus was merely procedural).
The Virginia Supreme Court has not expressly adopted a choice-of-law analysis for the statute of frauds and thus in order to apply Virginia law, I must predict how it would decide the issue. To do so, I may consider among other things, "recent pronouncements of general rules or policies by the state's highest court." Wells v. Liddy, 186 F.3d 505, 528 (4th Cir.1999). Because the Virginia Supreme Court has declined to adopt the Second Restatement's "most significant relationship" test when deciding similar choice-of-law issues in tort cases because it would "creat[e] uncertainty and confusion in application of [Virginia's choice-of-law] theory," McMillan v. McMillan, 219 Va. 1127, 253 S.E.2d 662, 664 (1979), and in view of its continued recognition of the general principle of lex loci contractus, I believe that it would adhere to the traditional substantive-procedural distinction in determining whether to apply the contracting state's statute of frauds.
The New York statute of frauds clearly implicates the oral contract here and the parties' dispute is over whether the New York law is substantive or procedural — that is, whether it voids an oral contract within its purview, or merely makes it unenforceable in the New York courts.
It is certainly correct, as pointed out by the defendants, that the New York statute itself provides that the various oral contracts described are "void" and not merely voidable, which may be an indication that the statute is substantive. Nevertheless, it appears clear that New York courts have routinely construed the statute, notwithstanding its use of the word "void," as procedural. See, e.g., Rubin v. Irving Trust Co., 305 N.Y. 288, 113 N.E.2d 424, 430 (1953) ("[T]his court has time and again spoken of Statutes of Frauds which declare contracts `void' as enunciating a rule of evidence or establishing a mode of proof."); Eurofactors Int'l, Inc. v. Jacobowitz, 21 A.D.3d 443, 800 N.Y.S.2d 569, 571 (2005) ("An oral agreement which falls within the statute of frauds is not absolutely invalid, but is only voidable."); Raoul v. Olde Village Hall, Inc., 76 A.D.2d 319, 430 N.Y.S.2d 214, 220 (1980) ("[D]espite the express wording ... that such oral contracts are `void', the courts of this State have construed the statute to be merely a rule of evidence which, like the construction of the English statute, bars only the remedy and does not make the contract absolutely void." (internal citation omitted)); Livoti v. Elston, 52 A.D.2d 444, 384 N.Y.S.2d 484, 485 (1976) ("The oral contract... was not void since it is the settled New York rule that our Statute of Frauds ... makes oral agreements not void but unenforcible [sic]." (alternation, internal quotation marks and citation omitted)).
In support of their position, the defendants cite cases by this circuit and others that have applied the New York statute of frauds in other forums under the lex loci contractus principle. But I do not find any of these cases binding or persuasive precedent. For example, in Hardy-Latham v. Wellons, 415 F.2d 674 (4th Cir. 1968), the only Fourth Circuit case relied upon, a brokerage contract made in New York had been sued upon in federal court in North Carolina. On appeal, the court noted sua sponte
In Arsham v. Banci, 511 F.2d 1108 (6th Cir.1975), the court applied the New York statute to a finder's fee oral contract made in New York but sued upon in Ohio solely on the basis that the New York statute of frauds declared the oral contract "void," with no discussion of the New York case authority discounting the meaning of that language. Id. at 1114 ("[I]f the statute of the state where a contract is made declares it to be "void" if not in writing, the courts of Ohio will not enforce the agreement.")
For these reasons, the New York statute of frauds is not applicable to bar the plaintiff's action.
Finally, the defendants contend that quantum meruit recovery is unavailable to the plaintiff because "the parties had an express, oral contract for the provision of coal consulting services." (Mem. Supp. Defs.' Mot. Summ. J. 29.) However, the plaintiff is properly seeking recovery, in the alternative, under the equitable theory of quantum meruit, in the event that a jury finds that there was no express agreement or that an express agreement did not address the subject matter of relevance here.
"Although little direct guidance exists as to which choice of law principles govern quasi-contractual claims in Virginia ... courts within the Fourth Circuit generally treat quasi-contractual claim as arising out of contract." Scott & Stringfellow, LLC v. AIG Commercial Equip. Fin., Inc., No. 3:10CV825-HEH, 2011 WL 1348324, at *4
It is true that "[t]he existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter." Clark-Fitzpatrick, Inc. v. Long Island. R.R., 70 N.Y.2d 382, 521 N.Y.S.2d 653, 516 N.E.2d 190, 193 (1987). However, "where there is a bona fide dispute as to the existence of a contract or where the contract does not cover the dispute in issue, plaintiff may proceed upon a theory of quantum meruit and will not be required to elect his or her remedies." Am. Tel. & Util. Consultants v. Beth Israel Med. Ctr., 307 A.D.2d 834, 763 N.Y.S.2d 466, 466 (App.Div.2003). Likewise, under Virginia law, "where there is an express contract, but the validity of the contract is challenged, a plaintiff may plead quantum meruit and unjust enrichment claims as alternative theories of liability." Weiler v. Arrowpoint Corp., No. 1:10cv157, 2010 WL 1946317, at *9 (E.D.Va. May 11, 2010) (citing Royer v. Bd. of Cnty. Supervisors of Albemarle Cnty., 176 Va. 268, 10 S.E.2d 876 (1940)). Moreover, "[i]f an express contract exists but does not cover the services rendered, a cause of action for unjust enrichment remains available." Lion Assocs., LLC v. Swiftships Shipbuilders, LLC, 475 Fed.Appx. 496, 503 (4th Cir. 2012) (unpublished). These same principles have been affirmed in West Virginia, as well. See, e.g., George Golf Design, Inc. v. Greenbrier Hotel Corp., No. 5:10-cv-01240, 2012 WL 4748802, at *6 (S.D.W.Va. Oct. 4, 2012) ("The general rule is that no quasi-contractual claim can arise when a contract exists between the parties concerning the same subject matter on which the quasi-contractual claim rests." (alteration, internal quotation marks, and citation omitted)).
In the present case, the parties contest the existence of a finder's fee agreement. Essar admits that it hired Maggard as a consultant, but denies any contractual promise for a finder's fee — a different subject matter. Essar contends that there was merely a contract with Maggard to assist it in conducting the necessary due diligence of any acquisition, based upon his knowledge of coal mining in the region; Maggard contends that there was a different contract, one in which he would receive a commission for presenting the successful acquisition to Essar. Maggard's reliance upon this alleged agreement is challenged by Essar, and thus he has permissibly pled an alternative quantum meruit claim. Accordingly, the defendants' request for summary judgment on the plaintiff's quantum meruit claim must also be denied.
For the foregoing reasons, it is
A court may also refuse to enforce a foreign rule of law that is against the forum's public policy, but there is no indication that New York's particular statute affronts Virginia public policy, since Virginia's own statute affects various types of oral contracts. See Va. Code Ann. §§ 11-1, 11-2, 11-2.01 (2011).
