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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: December 10, 2016

Claim Based on Oral Promise to Pay Employee Fails Where Employee Handbook Required Writing

On December 1, 2016, the First Department issued a decision in Newmark & Co. Real Estate, Inc. v. Frischer, 2016 NY Slip Op. 08100, affirming the dismissal of a claim based on an oral promise to pay an employee a share of the proceeds from an acquisition when the firm’s employee handbook required such promises to be in writing, explaining:

The operative employee handbook stating, inter alia, that bonuses were paid at the sole discretion of plaintiff, and the acknowledgment of the handbook’s terms signed by defendant, conclusively refute the counterclaims based on the alleged oral promise to pay an annual nondiscretionary bonus.

Nor was the discretionary bonus policy modified by the alleged oral agreement. As defendant’s acknowledgment makes clear, “[N]o supervisor, manager or other representative of [plaintiff] has the authority to make any verbal promises, commitments, or statements of any kind regarding the Company’s policies, procedures, or any other issues that are legally binding on the Company.”

The quasi-contractual counterclaims based on the alleged agreement are likewise precluded by the discretionary bonus policy.

The alleged oral promise to pay acquisition proceeds, however, was not established to be a “bonus” within the scope of the discretionary bonus policy. The complaint alleges that the promised payment was not performance-based, but was an inducement to keep defendant from quitting. The breach of contract counterclaim based on this alleged promise is nonetheless barred because the promise was not in writing, as required by the broad language of the acknowledgment.

The quasi-contractual counterclaims, to the extent predicated on an alleged agreement to pay acquisition proceeds, likewise fail. Such claims require an element of reasonable reliance on a promise, a reasonable expectation of compensation, or an inequity, all of which are negated where, as here, the plaintiff receives adequate compensation and signed a written acknowledgment confirming the fact that no representative of plaintiff had authority to make legally binding verbal promises.

(Internal quotations and citations omitted).

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