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`EXHIBIT A
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`EXHIBIT A
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`
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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF NEW YORK
`
`APPLE MORTGAGE CORP.,
`
`Plaintiff,
`
`- against -
`
`RICHARD BARENBLATT ET AL.,
`
`Defendants.
`
`13-CV-9233
`
`OPINION AND ORDER
`
`JOHN G. KOELTL, District Judge:
`
`Apple Mortgage ("Apple"), a mortgage broker in New York,
`
`brought this action against four former employees of Apple,
`
`namely Richard Barenblatt, David Breitstein, Keith Furer, and
`
`Kevin Ungar (collectively the "defendants"), after those
`
`employees resigned from Apple and joined GuardHill Financial
`
`Corporation ("GuardHill"), another mortgage broker. The gist of
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`Apple's suit is that the defendants copied documents pertaining
`
`to Apple's customers and used the information at GuardHill to
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`close deals with purported Apple customers.
`
`Apple asserted various state law claims against the
`
`defendants, including breach of contract, unfair competition.
`
`and tortious interference with prospective and existing
`
`contractual relations. Apple also brought claims against the
`
`defendants for violation of the Computer Fraud and Abuse Act, 18
`
`U.S.C. § 1030 et seq. ("CFAA"), alleging that the defendants
`
`accessed Apple's computer network without authorization. Compl.
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`1
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`SII 126-27, 131-34. Apple sought injunctive relief and at least
`
`$5 million in compensatory damages and $10 million in punitive
`
`damages. The defendants brought several counterclaims against
`
`Apple, arguing that Apple had failed to pay them commissions for
`
`loans including loans that closed after they left Apple and
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`quarterly bonuses to which they were allegedly entitled. The
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`defendants also claimed that Apple improperly deducted $276 from
`
`each of their paychecks and other amounts for various expenses
`
`such as advertising, although these deductions were not part of
`
`the compensation formula in the defendants' employment
`
`contracts. Defs.' Answer M 3, 104-07, 130, 134, 139, 144, 155-
`
`56, 159.
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`This Court has jurisdiction under 28 U.S.C. § 1331 over
`
`Apple's claims under the CFAA. The Court has supplemental
`
`jurisdiction under 28 U.S.C. § 1367(a) over Apple's state law
`
`claims under New York law and the defendants' state law
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`counterclaims.
`
`Apple now moves for summary judgment dismissing the
`
`defendants' counterclaims. The defendants move for summary
`
`judgment dismissing Apple's claims and cross move for summary
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`judgment on Apple's liability on their counterclaims. The
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`defendants' motion for summary judgment dismissing Apple's
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`claims is granted, and the defendants' cross-motion for summary
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`judgment as to Apple's liability on the counterclaims is denied.
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`2
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`Apple's motion for summary judgment dismissing the defendants'
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`counterclaims is granted in part and denied in part.
`
`I.
`
`The standard for granting summary judgment is well
`
`established. \\The court shall grant summary judgment if the
`
`movant shows that there is no genuine dispute as to any material
`
`fact and the movant is entitled to judgment as a matter of law. //
`
`Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477
`
`U.S. 317, 322 (1986).
`
`\\
`
`[T]he trial court's task at the summary
`
`judgment motion stage of the litigation is carefully limited to
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`discerning whether there are any genuine issues of material fact
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`to be tried, not to deciding them. Its duty, in short, is
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`confined at this point to issue-finding; it does not extend to
`
`issue-resolution.
`
`rr
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`Gallo V. Prudential Residential Servs. Ltd.
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`P'ship, 22 F.3d 1219, 1224 (2d Cir. 1994). The moving party
`
`bears the initial burden of \\informing the district court of the
`
`basis for its motion
`
`//
`
`and identifying the matter that it
`
`\\
`
`believes demonstrate[s] the absence of a genuine issue of
`
`material fact. //
`
`Celotex, 477 U.S. at 323. The substantive law
`
`governing the case will identify the material facts and
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`[o]nly
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`disputes over facts that might affect the outcome of the suit
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`under the governing law will properly preclude the entry of
`
`3
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`summary judgment. ft Anderson v. Liberty Lobby, Inc., 477 U.S.
`
`242, 248 (1986).
`
`In determining whether summary judgment is appropriate, the
`
`Court must resolve all ambiguities and draw all reasonable
`
`inferences against the moving party. See Matsushita Elec. Indus.
`
`Co. V. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing
`
`United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see
`
`also Gallo, 22 F.3d at 1223. Summary judgment is improper if
`
`there is any evidence in the record from any source from which a
`
`reasonable inference could be drawn in favor of the non-moving
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`party. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d
`
`Cir. 1994).
`
`II.
`
`The parties do not dispute the following facts unless
`
`otherwise noted.
`
`Defendants David Breitstein, Keith Furer, Richard Barenblatt,
`
`and Kevin Ungar began working as mortgage loan originators at
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`Apple between November 1998 and November 2002. Pi.'s 56.1 Stmt.
`
`II 1-4; Defs.' 56.1 Resp. II 1-4. The defendants were at will
`
`employees. Defs.'
`
`56.1 Stmt. I 5; PI.'s 56.1 Resp. I 5. Eric
`
`Appelbaum is the sole owner of Apple and was the President of
`
`Apple while the defendants were employed by Apple. Defs.' 56.1
`
`Stmt. I 3; Pl.'s 56.1 Resp. I 3.
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`4
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`During their employment, the defendants received an Employee
`
`Handbook. PI.'s 56.1 Stmt.
`
`5-8; Defs.' 56.1 Resp. If 5-8. The
`
`Handbook stated that it was \\
`
`not a contract of employment or a
`
`legal document// and that it was the employee's w responsibility
`
`to read and follow the policies. // Rogin Decl., Ex. I, at 7. Each
`
`defendant signed an employee acknowledgment form. Rogin Decl.,
`
`Exs. J-M. There is no dispute that the Handbook included a w Non-
`
`Disclosure // provision that explained that if employees had
`
`access to confidential information such as financial information
`
`and marketing strategies, Apple \\may ask that [the employee]
`
`sign a non-disclosure agreement as a condition of [the
`
`employee's] employment. // Rogin Decl., Ex. I, at 14 (§ 112). None
`
`of the defendants were ever required to sign a confidentiality
`
`or non-disclosure agreement. Defs.' 56.1 Stmt. I 5; PI.'s 56.1
`
`Stmt. SI 5. The Handbook also stated that Apple prohibited
`
`\\[s]ending or posting confidential material, trade secrets, or
`
`proprietary information outside of the organization. // Rogin
`
`Decl., Ex. I, at 34 {§ 517) .
`
`1
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`Each defendant also signed a Compensation Agreement that set
`
`forth a compensation formula based on the loans originated by
`
`the defendants. PI. ' s 56.1 Stmt. SISI 13-16; Defs. ' 56.1 Resp. ISI
`
`13-16. The Compensation Agreements are almost identical—the only
`
`1 The parties dispute the effect of the Handbook but the content of the
`Handbook is undisputed. PI. ' s 56.1 Stmt. SI 9; Defs.' 56.1 Resp. SI 9.
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`5
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`variation among the agreements is the percentage of the
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`commission. For example, Breitstein's compensation was based on
`
`50% of the loan amount after $400 was reduced from 1% of the
`
`loan amount. Rogin Decl., Ex. N. Furer's compensation by
`
`contrast,
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`was based on 56% of the loan amount after $250 was
`
`reduced from 1% of the loan amount. Rogin Decl., Ex. 0.
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`Barenblatt's compensation was based on 55% of the loan amount
`
`after $400 was reduced from 1% of the loan amount. Rogin Decl.,
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`Ex. P. Ungar's compensation was based on 50% of the loan amount
`
`after $400 was reduced from 1% of the loan amount. Rogin Decl.,
`
`Ex. Q. The Compensation Agreements also provided that the
`
`defendants w
`
`must comply with all Federal and State laws.
`
`n and
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`that the defendants \\shall not engage in any activities which
`
`are deemed to be deceitful or misleading.
`
`//
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`Rogin Decl., Exs. N-
`
`Q, §§ 1.3, 1.4.
`
`Several deductions were taken from the defendants' paychecks.
`
`including a 10% deduction for commissions for deals where Apple
`
`provided the lead and advertising charges were assessed against
`
`Furer, Breitstein, and Ungar. Defs.' 56.1 Stmt.
`
`17-19. Apple
`
`does not deny deducting these charges, but disputes the
`
`frequency of some of those charges and contends that the
`
`defendants agreed to those deductions. PI. ' s 56.1 Resp.
`
`17-
`
`19. The defendants dispute this characterization. Defs. ' 56.1
`
`Stmt. 5 29. A deduction of $276 was reflected in the defendants'
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`6
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`compensation for various pay periods and the adjustments were
`
`labeled as a \N FICA" charge. Defs.' 56.1 Stmt, f 20; PI.'s 56.1
`
`Resp. I 20. This deduction had nothing to do with withholdings
`
`under Federal Insurance Contributions Act ("FICA") . Defs.' 56.1
`
`Stmt, f 21; PI.'s 56.1 Resp. I 21. The deductions were set forth
`
`on commission worksheets that the defendants submitted before
`
`Apple paid the commissions. Defs.' 56.1 Stmt. SI 31; Pi. ' s 56.1
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`Resp. SI 31.
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`There is no dispute that on August 19, 2013, the defendants
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`met with Alan Rosenbaum, the president of GuardHill, to discuss
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`the possibility of becoming mortgage loan originators at
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`GuardHill. PI. ' s 56.1 Stmt. SI 18; Defs.' 56.1 Resp. SI 18. The
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`defendants signed employment agreements with GuardHill between
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`August 30, 2013 and September 3, 2013. PI. ' s 56.1 Stmt. SISI 19-
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`22; Defs.' 56.1 Resp. SISI 18-22. The defendants resigned from
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`Apple and began working at GuardHill on September 3, 2013. PI. 's
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`56.1 Stmt. SI 23; Defs.' 56.1 Resp. SI 23.
`
`According to Apple, the defendants electronically copied
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`information and documents during their final days at Apple.
`
`PI. ' s 56.1 Stmt. SI 26. The four defendants concede that they
`
`forwarded, emailed, or copied the contents of their Outlook
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`contact lists. PI. ' s 56.1 Stmt. SISI 30, 40, 50, 58; Defs.' 56.1
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`Resp. SISI 30, 40, 50, 58. The defendants provided their Outlook
`
`contacts to GuardHill after joining GuardHill. Pl.'s 56.1 Stmt.
`
`7
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`SIl 36, 49, 56, 63; Defs.' 56.1 Resp.
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`36, 49, 56, 63.2
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`Breitstein, Purer, and Unger also downloaded, emailed, or
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`printed documents from Apple's Encompass Database which
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`contained loan documents and customer information. They printed
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`out borrower summaries consisting of the first page of loan
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`applications. The loan documents, known as Forms 1003 and 1008,
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`contained customers' social security numbers and dates of birth.
`
`Pl.'s 56.1 Stmt. 11 34, 43, 59; Defs.' 56.1 Resp. 11 34, 43, 59.3
`
`Breitstein and Barenblatt also uploaded documents from their
`
`Apple computers to external memory devices. Pl.'s 56.1 Stmt. 11
`
`28, 51; Defs.' 56.1 Resp. 11 28, 51. It is undisputed that
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`Breitstein and Barenblatt connected the memory devices to
`
`computers at GuardHill. Pl.'s 56.1 Stmt. 11 38, 54; Defs.' 56.1
`
`Resp. 11 38, 54. The defendants deny however that Breitstein and
`
`Barenblatt used the information on those external memory
`
`devices. Pl.'s 56.1 Stmt. 11 38, 54; Defs.' 56.1 Resp. 11 38,
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`54 .
`
`It is undisputed that Breitstein, Purer, and Barenblatt
`
`deleted information and folders that were contained on their
`
`computers at Apple and on their phones. Breitstein deleted all
`
`the documents he copied onto his memory device from his computer
`
`2 The defendants contend that Apple did not have any role in creating their
`Outlook databases. Defs.' 56.1 Resp.
`36, 49, 50, 63.
`3 The defendants contend they did not use the information contained in these
`documents at Guardhill. Defs.' 56.1 Resp. 5S1 43, 59.
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`at Apple. Pl.'s 56.1 Stmt. SI 29; Defs.' 56.1 Resp. SI 29. ^ On
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`September 2, 2013, Furer remotely deleted folders on his phone
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`which may have included client contact information. Pl.'s 56.1
`
`Stmt. I 47; Defs.' 56.1 Resp. SI 47. From August 27, 2013 to
`
`September 3, 2013, Barenblatt deleted files and folders from his
`
`computer at Apple. Pl.'s 56.1 Stmt. SI 57; Defs.' 56.1 Resp. SI
`
`57 .
`
`It is undisputed that the defendants input their contact
`
`lists into their computers at GuardHill, and that an email was
`
`sent to their contacts announcing the defendants' new
`
`affiliation with GuardHill. Defs.' 56.1 Stmt. SI 81; Pl.'s 56.1
`
`Resp. SI 81. The parties do not dispute that the defendants did
`
`not use the information they downloaded or printed from Apple's
`
`computers and databases. Specifically the defendants did not use
`
`any personal customer information such as social security
`
`numbers, salary information, or credit ratings. Defs. ' 56.1
`
`Stmt. SI 82; Pl.'s 56.1 Resp. SI 82. However, the defendants
`
`concede that Furer input some email addresses and birth dates
`
`from the loan documents into his computer at GuardHill. Pl.'s
`
`56.1 Stmt. SI 46; Defs.' 56.1 Resp. 1 43.
`
`^ Breitstein contends that he thought the deletions were consistent with Apple
`policy and that Apple did not require electronic copies of client data to be
`retained. Defs.' 56.1 Resp. SI 29.
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`9
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`The parties dispute the extent of Apple's alleged losses and
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`damages arising from the defendants' actions. See Defs. ' 56.1
`
`Stmt. I 97; PI.'s 56.1 Resp. 1 97. Apple initially sought
`
`damages for lost profits based on loans the defendants
`
`originated at GuardHill, the sign-on bonuses the defendants
`
`received from GuardHill, attorney's fees, and fees charged by
`
`Emanuel Mamakas for examining the server. Defs.' 56.1 Stmt, f
`
`105; PI. ' s 56.1 Resp. 5 105. Apple presently estimates its total
`
`damages at $139,733.92. PI. ' s 56.1 Resp. f 106. Apple has also
`
`identified the cost of a technology consultant that it employed
`
`to recover files and determine what files were taken or deleted
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`by the defendants. PI.'s 56.1 Resp. 5 97.
`
`The defendants' motion for summary judgment argues, in part.
`
`that Apple's claims should be dismissed because Apple ceased to
`
`exist as a corporate entity and sold its assets to Sterling
`
`National Bank ("Sterling"). In September 2013, after the
`
`defendants' resignation, Appelbaum initiated discussions with
`
`Sterling Bank regarding the possibility of selling Apple to
`
`Sterling. Defs.' 56.1 Stmt, i 83; PI. ' s 56.1 Resp. SI 83. After
`
`this lawsuit commenced, Apple and Sterling signed a purchase
`
`agreement on February 4, 2014, pursuant to which Appelbaum had
`
`the right to receive Sterling stock valued at $250,000 and Apple
`
`would receive $50,000 in cash. Defs.' 56.1 Stmt. SI 86; Pl.'s
`
`56.1 Resp. SI 86. The parties dispute whether Sterling acquired
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`10
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`all of Apple's assets, particularly whether Sterling purchased
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`Apple's right to pursue this lawsuit. Defs.' 56.1 Stmt. 'I 89;
`
`PI.'s 56.1 Resp. 5 89. It is undisputed that Sterling was aware
`
`of the ongoing litigation between the defendants and Apple at
`
`the time that Apple and Sterling signed the purchase agreement.
`
`Defs.' 56.1 Stmt. SI 93; PI. ' s 56.1 Resp. SI 93. As of February 4,
`
`2014, Apple ceased originating new loans and no longer has any
`
`active business or licenses necessary to conduct business as a
`
`mortgage broker. Defs.' 56.1 Stmt. SII 95-96; Pl.'s 56.1 Resp. SISI
`
`95-96.
`
`The defendants brought several counterclaims. They seek
`
`commissions on loans that had already closed before they left
`
`Apple and loans that closed after they left Apple, in the
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`amounts of (1) $9, 463.12 (Breitstein) ; (2) $36, 862.60 (Furer);
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`(3) $64,366.42 (Barenblatt); and (4) $16,621 (Unger) . Pl.'s 56.1
`
`Stmt. 1 66; Defs.' 56.1 Resp. SI 66. The defendants also seek
`
`unpaid prior commissions. //
`
`arguing that they are owed bonuses:
`
`(1) $ 6,364.59(Breistein); (2) $26, 963.90, including additional
`
`payment for mentoring another employee (Furer); (3) $12,000
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`(Barenblatt); (4) $10, 000 (Ungar). Pl.'s 56.1 Stmt. SI 70; Defs.'
`
`56.1 Resp. SISI 66, 68, 70. The defendants also claim damages from
`
`improper deductions, but the amounts are disputed. Pl.'s 56.1
`
`Stmt. 1 72; Defs.' 56.1 Resp. SI 72.
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`11
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`III.
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`A.
`
`The defendants move for summary judgment dismissing all of
`
`Apple's claims. The gist of Apple's complaint is that the
`
`defendants misappropriated Apple's property by emailing Outlook
`
`contact lists, deleting certain files containing client contact
`
`information, and making copies of mortgage loan documents.
`
`Compl. 1 2. Apple alleges that after the defendants left their
`
`employment at Apple, they continued to access and delete
`
`information on Apple's computer network. Id.
`
`Apple alleged eleven claims: (1) a cause of action for
`
`breach of the duty of loyalty against all the defendants for
`
`violating the terms of the Employee Manual by allegedly
`
`accessing and copying confidential client files, id. M 82-86
`
`("Count 1"); (2) a cause of action for theft of business
`
`property against all the defendants for allegedly accessing and
`
`copying Apple's confidential files and deleting the information
`
`from Apple's network, id. SISI 87-90 ("Count 2"); (3) a cause of
`
`action for unfair competition against all the defendants for
`
`allegedly copying Apple's files with the intent to use the
`
`information for the benefit of their new employer, id.
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`91-95
`
`("Count 3"); (4) a cause of action for breach of contract
`
`against all the defendants because the defendants allegedly had
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`12
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`an obligation not to misappropriate or disclose Apple's
`
`confidential information to third parties, id. M 96-100 ("Count
`
`4") ; (5) a cause of action for conspiracy against all the
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`defendants for allegedly conspiring amongst themselves and
`
`entering into a scheme to destroy Apple's business and goodwill,
`
`id. M 101-06 ("Count 5"); (6) a cause of action for tortious
`
`interference with existing and prospective contractual relations
`
`against all the defendants for allegedly using data and
`
`documents from Apple's computer network and inducing Apple's
`
`clients to discontinue their business with Apple, id.
`
`107-11
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`("Count 6"); (7) a cause of action under the faithless servant
`
`doctrine against all the defendants for violating the fiduciary
`
`duty of loyalty the defendants owed to Apple by accessing and
`
`disclosing confidential client files and unfairly competing with
`
`Apple,
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`M 112-17 ("Count 7"); (8) three causes of action
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`against all the defendants for violations of the CFAA, 18 U.S.C.
`
`§§ 1030(a) (2) , (4), and (5), for allegedly accessing Apple's
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`computer network without authorization and downloading
`
`confidential client information with intent to defraud, id. SIH
`
`118-23 ("Count 8"), furthering the intended fraud and obtaining
`
`value of more than $5,000.00 from Apple's confidential and
`
`proprietary information, id. M 124-29 ("Count 9") , and
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`disclosing the information from Apple's files to GuardHill, id.
`
`Si'll 130-34 ("Count 10"); and (9) a cause of action seeking a
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`13
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`constructive trust over any and all funds, commissions, and
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`revenue obtained as a result of the information the defendants
`
`acquired from Apple's computer network, id. M 135-37 ("Count
`
`11") .
`
`The defendants now move for summary judgment dismissing all
`
`of Apple's claims.
`
`1.
`
`The defendants move for summary judgment dismissing all of
`
`Apple's claims on the ground that Apple does not have standing
`
`to assert these claims because Apple is defunct and sold all of
`
`its assets to Sterling. The defendants' argument that Apple is
`
`defunct is without merit because Apple still exists as
`
`corporation. Appelbaum Aff. in 0pp. to Defs.' Mot. 1 3. Summary
`
`judgment against Apple cannot be granted on that basis.
`
`Apple responds to the defendants' argument that Apple sold
`
`its assets to Sterling, by arguing that Sterling and Apple did
`
`not intend to convey Apple's legal claims against the Defendants
`
`as part of the asset sale. Id. 1 4. This argument fails in view
`
`of the plain words of the contract.
`
`\\
`
`Under New York law, the initial interpretation of a
`
`contract
`
`'is a matter of law for the court to decide. f n
`
`K. Bell
`
`& Assocs., Inc. V. Lloyd's Underwriters, 97 F.3d 632, 637 (2d
`
`Cir. 1996)
`
`(quoting Readco, Inc, v. Marine Midland Bank,
`
`81 F.3d
`
`295, 299 (2d Cir. 1996) ) . w
`
`Included in this initial
`
`14
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`interpretation is the threshold question of whether the terms of
`
`the contract are ambiguous. n Alexander & Alexander Servs. v.
`
`These Certain Underwriters at Lloyd's, London, 136 F.3d 82, 86
`
`(2d Cir. 1998); see also Curry Road Ltd, v. K Mart Corp., 893
`
`F.2d 509, 511 (2d Cir. 1990). A court should construe a contract
`
`as a matter of law only if the contract is unambiguous on its
`
`face. See Metro. Life Ins. Co. v. RJR Nabisco Inc. , 906 F.2d
`
`884, 889 (2d Cir. 1990). A contract is unambiguous if it has 'a
`
`definite and precise meaning, unattended by danger of
`
`misconception in the purport of the [contract] itself, and
`
`concerning which there is no reasonable basis for a difference
`
`of opinion.! II Sayers v. Rochester Tel. Corp. Supplemental Mgmt.
`
`Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (quoting Breed v.
`
`Insurance Co. of N. Am., 385 N.E.2d 1280 (1978)); see also
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`Alexander & Alexander, 136 F.3d at 86; United Nat' 1 Ins. Co. v.
`
`Waterfront N.Y. Realty Corp., 994 F.2d 105, 109 (2d Cir. 1993);
`
`Metro. Life Ins. Co., 906 F.2d at 889.
`
`If a contract is unambiguous, a court is
`
`\\
`
`required to give
`
`effect to the contract as written and may not consider extrinsic
`
`evidence to alter or interpret its meaning. // Consarc Corp. v.
`
`Marine Midland Bank, N.A., 996 F.2d 568, 573 (2d Cir. 1993); see
`
`also Alexander & Alexander, 136 F.3d at 86; K. Bell & Assocs.,
`
`97 F.3d at 637. Contractual language
`
`w
`
`whose meaning is otherwise
`
`plain is not ambiguous merely because the parties urge different
`
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`interpretations in the litigation. tr Metro. Life Ins. Co., 906
`
`F.2d at 889; see also United States Tr. Co. of N.Y. v. Jenner,
`
`168 F.3d 630, 632 (2d Cir. 1999); Wards Co. v. Stamford Ridgeway
`
`Assocs. , 761 F.2d 117, 120 (2d Cir. 1985). Where the contractual
`
`language is subject to more than one reasonable meaning and
`
`where extrinsic evidence of the parties intent exists, the
`
`question of the proper interpretation should be submitted to the
`
`trier of fact. See Alexander & Alexander, 136 F.3d at 86;
`
`Consarc Corp., 996 F.2d at 573; Compania Financiera de
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`Desarollo, S.A. v. Chase Manhattan Bank, No. 97-cv-5724 (JGK),
`
`1998 WL 74299,*3 (S.D.N.Y. Feb. 19, 1998), aff'd, 165 F.3d 13
`
`(2d Cir. 1998); see also Simpson v. Mut. of Omaha Ins. Co., No.
`
`97-CV-1339 (JGK), 2000 WL 322780, at *3-4 (S.D.N.Y. Mar. 28,
`
`2000) .
`
`Apple brought this lawsuit on December 31, 2013. On
`
`February 4, 2014, Apple and Sterling signed a purchase
`
`agreement. Defs.' 56.1 Stmt. SI 86; PI. ' s 56.1 Resp. SI 86. The
`
`purchase agreement between Sterling and Apple is clear:
`
`\\[Sterling] will acquire all of the business, assets, and
`
`rights
`
`f/
`
`of Apple. Schoenstein Decl., Ex. 12, at 2. Sterling thus
`
`acquired Apple's right to pursue the claims against the
`
`defendants and thus, Apple lost its standing to bring its
`
`claims. See Altman v. Bedford Cent. Sch. Dist., 245 F.3d 49, 69
`
`(2d Cir. 2001) ("[I]f the plaintiff loses standing at any time
`
`16
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`during the pendency of the proceedings in the district court or
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`in the appellate courts, the matter becomes moot, and the court
`
`loses jurisdiction.")
`
`Apple does not argue that the contract is ambiguous. Apple
`
`instead argues that Sterling and Apple did not intend for
`
`Apple's claims to be included in the asset sale. See Appelbaum
`
`Aff. in 0pp. to Defs.' Mot., Ex. A (letter from Sterling
`
`confirming that the present lawsuit was not included in the
`
`assets purchased by Sterling). To the extent that the purchase
`
`agreement appears to sell Apple's rights to Sterling, Apple
`
`argues that there was a mutual mistake by the parties. Under New
`
`York law, however.
`
`a mutual mistake must be as to a fact, and
`
`not as to the legal consequences of the contract into which the
`
`parties are entering.
`
`//
`
`Cobalt Multifamily Inv'rs I, LLC v.
`
`Bridge Capital (USVI), LLC, No. 06-cv-5738 (KMW)(MHD) , 2007 WL
`
`2584926, at *9 (S.D.N.Y. Sept. 7, 2007).
`
`To the extent the agreement conveyed Apple's rights in this
`
`lawsuit to Sterling, Apple requests that this Court reform the
`
`contract to give effect to the parties' intent. But the Court
`
`cannot reform a contract between Apple and Sterling because
`
`Sterling is not a party to this action and the reformation would
`
`affect Sterling's rights under the purchase agreement. See
`
`Galbraith v. Guida, 554 N.Y.S.2d 592, 593 (App. Div. 1990) (a
`
`court cannot reform a contract when a necessary party has not
`
`17
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`been joined in the action). In all the years this case has been
`
`pending, Apple has not sought to join Sterling in this action
`
`and has not submitted any evidence that Sterling conveyed its
`
`right back to Apple.
`
`The plain language of the contract is clear. Apple does not
`
`have the right to pursue this action against the defendants
`
`because it sold that right to Sterling. There is no triable
`
`issue of material fact as to Apple's lack of standing. Thus,
`
`Apple's claims should be dismissed without prejudice for lack of
`
`j urisdiction.
`
`2.
`
`For purposes of completeness, the Court will also consider
`
`the other bases the defendants urge as arguments for summary
`
`judgment dismissing Apple's claims. The defendants argue that
`
`Apple's claims should be dismissed for lack of damages. Apple
`
`sought damages for the amount of commissions Apple would have
`
`received on loans that were originated by the defendants at
`
`GuardHill. Apple reasoned that since the defendants took
`
`customer lists, including the names and information of past
`
`Apple clients, Apple would have received a commission from those
`
`revenue streams if the defendants had not taken the clients'
`
`information. In its complaint Apple sought compensatory damages
`
`of $5 million and punitive damages of $10 million.
`
`Apple most
`
`18
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`recently drastically revised its damages statement downward to
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`seek damages in the amount of $139,733.92,^ the amount of
`
`commissions it would have received on 13 loans, plus the
`
`commissions the defendants received on another 6 loans which
`
`were originated after Apple ceased operations. PI.'s 56.1 Resp.
`
`1 106.
`
`Summary judgment dismissing Apple's claims for lack of
`
`damages is not appropriate. There are genuine issues of material
`
`fact as to whether Apple would have originated various loans had
`
`it not been for the defendants' allegedly wrongful conduct.
`
`Therefore, the lack of damages is not an appropriate grounds on
`
`which to grant the defendants' motion for summary judgment.
`
`3.
`
`The defendants also move for summary judgment dismissing
`
`Apple's claims on the grounds that the claims fail as a matter
`
`of law. The defendants did not initially move to dismiss Apple's
`
`constructive trust claim and only mentioned the constructive
`
`trust claim in their reply brief. However, at the oral argument
`
`of the current motions, Apple agreed to the dismissal of the
`
`constructive trust claim. Therefore, Count 11 must be dismissed
`
`5 Apple originally alleged damages with respect to the defendants' signing
`bonuses, attorney and consultant fees, and other forms of economic loss. But
`Apple's papers in opposition only address damages from loans Apple could have
`allegedly originated, and the revised damages estimate does not include other
`types of damages. PI.'s 56.1 Resp. 1 106.
`
`19
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`on this additional ground. Apple also concedes that there is
`
`insufficient evidence to support its claim for tortious
`
`interference with existing and prospective contractual
`
`relations, Count 6, and does not oppose granting the defendants'
`
`motion for summary judgment dismissing Count 6. Thus, Count 6
`
`must be dismissed on this additional ground.
`
`With respect to the remaining claims on which the
`
`defendants argue that they are entitled to summary judgment
`
`based on the undisputed evidence, there are genuine issues of
`
`material fact that would preclude summary judgment on almost all
`
`of the claims on the grounds urged by the defendants.
`
`a.
`
`The defendants seek to dismiss Apple's causes of action
`
`alleging breach of the duty of loyalty and faithless servant
`
`claims. Counts 1 and 7, arguing that there is no evidence that
`
`the defendants were competing with Apple while still employed by
`
`Apple. However, there are genuine issues of material fact that
`
`preclude dismissal of these claims on that basis.
`
`Under New York law, an employee owes the employer a duty of
`
`good faith and loyalty. While an employee may create a competing
`
`business before leaving the employer, an employee may breach the
`
`fiduciary duty to the employer if the employee makes improper
`
`use of the employer's time, facilities, or proprietary secrets. n
`
`20
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`Island Sports Physical Therapy v. Burns, 923 N.Y.S.2d 156, 157-
`
`58 (App. Div. 2011) (internal citations omitted). Solicitation
`
`of customers is
`
`not actionable unless the customer list could
`
`be considered a trade secret, or there was wrongful conduct by
`
`the employee . . . such as physically taking or copying files or
`
`using confidential information. n Id.; see also Fada Int'l. Corp.
`
`V. Cheung, 870 N.Y.S.2d 23, 24 (App. Div. 2008).
`
`Although the defendants argue that there is no evidence
`
`t