10-518-cv; 10-527-cv
Argilus, LLC v. The PNC Financial Services Group, Inc., et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
New York, on the 18th day of April, two thousand eleven.
PRESENT: CHESTER J. STRAUB,
ROBERT D. SACK,
GERARD E. LYNCH,
Circuit Judges.
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ARGILUS, LLC,
Plaintiff-Appellant,
v. No. 10-518-cv
THE PNC FINANCIAL SERVICES GROUP, INC.,
PNC EQUITY CAPITAL, PNC EQUITY
MANAGEMENT CORP., PNC EQUITY PARTNERS, L.P.,
Defendants-Appellees.
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WILLIAMSON ACQUISITION, INC.,
DAVID L. WILLIAMSON,
Plaintiffs-Appellants,
v. No. 10-527-cv
PNC EQUITY MANAGEMENT CORP.,
Defendant-Appellee.
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FOR APPELLANTS: GLENN E. PEZZULO, Culley, Marks, Tanenbaum &
Pezzulo, LLP, Rochester, New York.
FOR APPELLEES: DAVID ROTHENBERG, Elizabeth Reitkopp Young, Geiger
& Rothenberg, LLP, Rochester, New York.
Appeal from the United States District Court for the Western District of New York
(Michael A. Telesca, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court is AFFIRMED.
These actions arise from a common set of facts. In late 2002, David L. Williamson
and Williamson Acquisition, Inc. (collectively “Williamson”) joined with Argilus, LLC
and the PNC defendants (collectively “PNC”) in an ultimately unsuccessful effort to
acquire Griffith Oil Company (“Griffith”). Several months after the Williamson
acquisition effort failed, PNC succeeded in purchasing Griffith with the help of Philip
Saunders, a former owner of Griffith. Williamson and Argilus sued, alleging that, by
acquiring Griffith without their involvement, PNC had breached its contractual
obligations to both companies and committed several common law business torts. After
extensive discovery, the district court granted summary judgment for defendants.
Plaintiffs appealed.
We assume the parties’ familiarity with the factual details, the procedural history
of the case, and the issues on appeal.
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DISCUSSION
We review an award of summary judgment de novo, affirming “only if there is no
genuine issue as to any material fact, and if the moving party is entitled to a judgment as a
matter of law.” Allianz Ins. Co. v. Lerner, 416 F.3d 109, 113 (2d Cir. 2005).
I. Breach of Contract Claims
Williamson and Argilus identify two sources of contractual obligation that they
claim PNC breached by joining with Saunders to purchase Griffith. The first of these is a
written agreement signed by PNC and Argilus, acting on behalf of Williamson (“the
Confidentiality Agreement”). Under the Confidentiality Agreement, PNC committed to
keep confidential certain proprietary information that it received in connection with the
Williamson proposal. Appellants argue that PNC breached the agreement “by using this
information” in connection with its ultimate acquisition of Griffith. But, as the district
court correctly observed, despite extensive discovery, appellants have been unable to
identify any evidence to support this assertion. Appellants argue that a fact finder could
conclude that PNC breached its confidentiality obligation, because some documents
included in the Saunders proposal were similar to documents developed by Williamson
and PNC. But the mere submission of similar proposals is not evidence that PNC shared
Williamson’s confidential information with Saunders. The content of both proposals was
largely derived from Morgan Stanley’s offering memorandum, and linguistic similarities
between the proposals are unsurprising given that PNC drafted both proposal letters from
a template. Moreover, even if the Saunders proposal did rely on original information
contained in Williamson’s earlier offer, appellants have offered no evidence that PNC,
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rather than Griffith, was the source of that information. Absent any evidence to support
appellants’ claim that PNC breached its obligations under the Confidentiality Agreement,
the district court did not err in awarding PNC summary judgment on that claim.
Appellants’ second claimed source of contract liability is a “Confidential
Information Memorandum” that accompanied documents transmitted by Argilus to PNC.
Although the Memorandum largely repeated the terms of the Confidentiality Agreement,
it also provided: “By accepting this Memorandum, you acknowledge and agree that . . .
[t]here will be no direct or indirect contact . . . with Griffith . . . unless specifically
approved beforehand by Argilus . . . .” Appellants contend that PNC violated this
provision by asking members of Griffith management about their reservations regarding
the Williamson proposal. PNC does not dispute that such a conversation took place,
though it contends that the communication was authorized.
Standing on its own, the Memorandum cannot constitute an enforceable contract.
Appellants ask us to construe PNC’s failure to reject the memorandum as an agreement to
be bound by its terms in exchange for the deal information that accompanied it. Under
New York law, however, absent a signed writing, a party cannot enforce a contract for
which it gave no consideration other than a promise to carry out a preexisting duty.
Beitner v. Becker, 824 N.Y.S.2d 155 (App. Div. 2006). In this case, Williamson, and
Argilus as its agent, were already obligated under the Confidentiality Agreement to
provide PNC with the documents it would need to participate in the bid to acquire
Griffith. Indeed, the Memorandum acknowledged as much, noting that the documents
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that accompanied it were “provided pursuant to a Confidentiality Agreement (“CA”)
between the recipient [PNC], Griffith and WAI.” The Memorandum can thus create legal
obligations only if it is understood as a modification of the parties’ pre-existing
agreement. That possibility is clearly foreclosed, however, by the terms of the
Confidentiality Agreement, which provides that the agreements contained therein “may
be modified or waived only by a separate writing signed by the Company and [PNC]
expressly so modifying or waiving such agreements.” Since the unsigned Confidential
Information Memorandum can neither modify the Confidentiality Agreement nor
constitute a stand-alone contract, appellants’ claim that PNC was contractually prohibited
from communicating directly with Griffith is untenable.
Finally, appellants may not claim that PNC violated its contractual duty of good
faith and fair dealing. As noted above, the only contract – express or implied – by which
PNC was bound was the Confidentiality Agreement between it and Williamson. We see
no indication that PNC violated “an implied promise so interwoven” with that agreement
“as to be necessary for the effectuation of [its] purposes.” Thyroff v. Nationwide Mut.
Ins. Co., 460 F.3d 400, 407 (2d Cir. 2006) (internal quotation marks omitted).
II. Joint Venture Claims
Appellants also seek to establish PNC’s liability on the theory that, in working
together to acquire Griffith, Williamson, Argilus, and PNC entered into a joint venture,
giving rise to mutual fiduciary duties and an obligation on PNC’s part to pay Argilus’s
success fee. Even assuming that the parties agreed to form a joint venture, a claim that
PNC contests, appellants’ arguments are unsupported by the evidence.
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Under New York law, participants in a joint venture owe one another the same
fiduciary duties that inhere between members of a partnership. Stem v. Warren, 174 N.Y.S.
30 (App. Div. 1919). Thus, a joint venturer must generally obtain permission from his
associates before taking personal advantage of a business opportunity that he learns of
through his participation in the venture. Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928).
Appellants argue that PNC violated this rule by purchasing Griffith without their
involvement. It is clear, however, that any fiduciary duties that PNC owed to the
appellants were extinguished long before PNC and Saunders made their offer to purchase
Griffith in July 2003. By appellants’ own account, their relationship with PNC came to
an end in January 2003 when it became clear that the Williamson proposal would not be
accepted. Appellants contend that PNC turned Griffith’s owners against the deal in some
unspecified way, but they do not seriously dispute that the main sticking point was
discomfort on the part of Griffith’s management with David Williamson’s planned role in
the merged company, and they point to no evidence that PNC created or encouraged that
discomfort. Accordingly, no reasonable fact-finder could conclude that PNC breached its
fiduciary obligations to appellants.
Nor would the existence of a joint venture obligate PNC to pay Argilus’s $1.2
million success fee. Williamson and Argilus negotiated the success fee well before they
approached PNC with the opportunity to purchase Griffith. Their agreement obligated
Williamson, not any prospective joint venture, to pay Argilus if Williamson succeeded in
acquiring Griffith. There is no evidence that PNC expressly or impliedly assumed joint
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liability with Williamson on that agreement.
III. Other Claims
Appellants allege a host of other common law contract and tort violations, none of
which has any merit.
Argilus and Williamson argue that they may recover from PNC on a theory of
unjust enrichment, because the information that PNC received from them facilitated its
negotiation of the Saunders purchase of Griffith. As the district court recognized,
however, appellants have not shown that they are entitled “in equity and good
conscience” to receive some portion of the benefit that accrued to PNC as a result of
PNC’s ultimate participation in the purchase of Griffith. See Kaye v. Grossman, 202 F.3d
611, 616 (2d Cir. 2000).
Argilus alone also argues that it is entitled to recover from PNC on a theory of
quantum meruit because it “provided information and services to PNC” in the expectation
that, when the purchase of Griffith closed, it would receive compensation for its work in
the form of the $1.2 million success fee. As the district court correctly noted, however, a
party cannot recover in quantum meruit if there is “a valid, enforceable contract that
governs the same subject matter as the quantum meruit claim.” Mid-Hudson Catskill
Rural Migrant Ministry v. Fine Host Corp., 418 F.3d 168, 175 (2d Cir. 2005). Here, the
work for which Argilus seeks compensation was governed by its agreement with
Williamson, which entitled Argilus to various benefits if Williamson succeeded in
acquiring Griffith. Argilus’s quantum meruit claim against PNC is therefore foreclosed
as a matter of law.
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Nor has Argilus raised a factual issue on its claims of tortious interference with
contract and tortious interference with a prospective business advantage. Both claims
require a showing of malicious intent on the part of the defendant. See Lama Holding Co.
v. Smith Barney, Inc., 88 N.Y.2d 413, 424 (1996) (discussing the elements of a tortious
interference with contract claim); John R. Loftus, Inc. v. White, 540 N.Y.S.2d 610, 612
(App. Div. 1989) (“[T]he motive [for interference with a prospective business advantage
to be tortious] must be solely malicious, and the plaintiff has the burden of proving this
fact.” (internal quotation marks omitted)). Argilus has produced no evidence that PNC
intended either to frustrate the relationship between Argilus and Williamson or to deprive
Argilus of its success fee.
Finally, because we have already concluded that the record is devoid of evidence
that PNC used any confidential information in its eventually successful bid for Griffith,
we reject Argilus’s contention that the district court inappropriately awarded summary
judgment for PNC on its misappropriation of trade secrets claim. Cf. Integrated Cash
Mgmt. Servs., Inc. v. Digital Transactions, Inc., 920 F.2d 171, 173 (2d Cir. 1990)
(requiring that a plaintiff claiming misappropriation of trade secrets prove that “defendant
is using that trade secret in breach of an agreement” (emphasis added, internal quotation
marks omitted)).
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CONCLUSION
We have considered the appellants’ remaining arguments and find them to be
without merit. For the reasons stated above, we AFFIRM the judgment of the District
Court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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