Snyder v. JP Morgan Securities LLC
Posted on Categories Business & Employment, Court Decisions

By Noah D. Sorkin

Plaintiff’s various causes of action in Breach of Contract lawsuit are dismissed where facts allege do not support claims or plaintiff effectively waived his claims.

Snyder vs. JP Morgan Securities LLC, No. 651524/2018 (N.Y. Sup. Ct., NY Cty., 6/4/19).

Before the NY Court is Defendant JP Morgan’s motion to dismiss, pursuant to NY CPLR §3211(a)(1) and (7), claims brought by former registered representative Barry Snyder. Snyder first joined JP Morgan in 2013. In 2015 the FBI approached him and asked his cooperation with an ongoing investigation into JP Morgan and one of its large clients. Although he did initially work with the authorities, Snyder subsequently ceased cooperating. The FBI then revealed to JP Morgan that Snyder had previously provided them with information. When JP Morgan inquired of Snyder as to his earlier communications with the FBI, he refused to discuss the investigation. JP Morgan terminated Snyder in April 2015.

According to Snyder’s pending lawsuit against JP Morgan, he was then forced to sign a termination agreement releasing JP Morgan of its obligations to pay Snyder significant sums of money; he alleged that JP Morgan made clear its intention to file a negative Form U5 if he did not sign this Termination Agreement. Indeed, according to Snyder’s complaint, although he did execute the Agreement, JP Morgan nonetheless subsequently filed a false and defamatory Form U5; moreover, Snyder alleges that JP Morgan seized assets in his own securities account and withheld other bonuses due to him. He brought this suit alleging six causes of action.

The Court now rules on JP Morgan’s motions to dismiss each of these claims. First, the Court grants JP Morgan’s motion to dismiss Snyder’s clam for Declaratory Relief, seeking to have the Termination Agreement declared unenforceable as having been signed under economic duress. Finding that Snyder failed to allege that he was compelled to sign the Agreement by means of a wrongful threat precluding the exercise of his free will, the Court also notes that the mere threat not to correct an allegedly false FINRA filing, or even to continue to disparage Snyder to his clients, are insufficient to support a claim of economic duress. Moreover, the Court stresses that economic duress is not present where a plaintiff is offered a business arrangement, which he is free to accept or reject. Here, Snyder was represented by counsel during the negotiations leading to his signing of the Termination Agreement; he was free to reject the Agreement if he so wished.

The Court next dismisses plaintiff’s cause of action based upon supposed tortious interference with economic advantage: the claim that JP Morgan interfered with his relationships with his clients by leading them to believe, erroneously, that plaintiff was under investigation and by filing a false Form U5. As the Court rules, plaintiff’s complaint fails to allege that JP Morgan acted solely out of malice or used dishonest or improper means to interfere with Snyder’s clients. Because JP Morgan’s alleged conduct does not rise to the level of a crime or an independent tort, that conduct is insufficient to support a cause of action for tortious interference with economic advantage. The Court then goes on to dismiss plaintiff’s cause of action based upon unjust enrichment. Noting, first, that, as occurs here, such a cause of action is simply duplicative of plaintiff’s breach of contract or fraud claim, the Court also finds that this claim alleges conduct which occurred prior to the effective date of the Termination Agreement; therefore, plaintiff released this claim.

Nor does the Court allow plaintiff’s claim based upon fraudulent inducement to stand. The Court agrees with JP Morgan’s position that plaintiff waived any claim for fraudulent inducement since plaintiff’s pleadings confirm that he knew that JP Morgan had not fulfilled its alleged promise shortly after the Termination Agreement had been signed: despite this knowledge plaintiff waited over two years before asserting his fraudulent inducement claim, thereby effectively waiving this cause of action. Turning next to plaintiff’s breach of contract claim, the Court permits only one branch of this cause of action to proceed. To the extent that plaintiff’s breach of contract claim is based upon JP Morgan’s promise to refrain from future disparagement, plaintiff’s pleadings do not allege any facts supporting JP Morgan’s breach of this promise. However, the Court concludes that additional discovery is warranted before ruling on plaintiff’s allegation of breach of contract stemming from a supposed oral agreement that, if he were to remain “quiet and patient,” JP Morgan would correct the erroneous Form U5. Finally, insofar as plaintiff’s cause of action is based upon defamation, the Court grants the motion to dismiss this claim, confirming that statements made by an employer on a Form U5 are entitled to an absolute privilege.

(N. Sorkin)

(SOLA Ref. No. 2019-31-04)

NOTICE: The court decision synopsis published above represents an abbreviated description of the actual decision and is re-printed here for its educational value. The author's effort is to report concisely the substance of the decision or a selected portion of the decision; commentary or analysis is generally reserved for the italicized section at the bottom of the summary. Subscribers to SAC's Online Litigation Alert (SOLA), from which this synopsis is excerpted, have immediate access to the full decision, in addition to the synopsis. 

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