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Pashman v. Chemtex Inc.

decided as amended.: July 17, 1987.

HOWARD B. PASHMAN, PLAINTIFF-APPELLANT,
v.
CHEMTEX, INC., DEFENDANT-APPELLEE



Appeal from a judgment of the United States District Court for the Southern District of New York, John M. Walker, Judge, granting defendant's motion for summary judgment.

Oakes, Meskill, and Pratt, Circuit Judges. Oakes, Circuit Judge (dissenting).

Author: Pratt

PRATT, Circuit Judge:

This appeal from a grant of summary judgment against plaintiff Howard Pashman requires us to assess the meaning of "pretax profits", as used in Pashman's employment agreement with defendant Chemtex, Inc., 664 F. Supp. 701. This agreement called for Pashman to receive a "participation of ten [10] percent of the pretax profits on all sales made by" him. Because the meaning of this contract is clear, and as applied to the sale at issue entitled Pashman to no more, and perhaps less, than he has already received, we agree with the district court that Pashman raises no "genuine issue of material fact", Fed. R. Civ. P. 56, and therefore affirm.

BACKGROUND

Much of the factual background of this case is undisputed. In 1977 Pashman went to work for Chemtex as a salesman of paint plants. His compensation was established by a clause in his employment contract that provided:

Your compensation for these services will be a participation of ten [10] percent of the pretax profits on all sales made by you. A draw against this participation in the amount of $3,500 per month will be paid to you monthly. Participation will be paid, net of draw, on the basis of 50% payable on contract effectuation and 50% payable on the acceptance of the plant by the customer.

Under this agreement Pashman participated in the sale of only one plant, to Egyptian businessman Adel Khalil. The plant was to be constructed in Egypt.

By the terms of the sale, Chemtex agreed to sell its "equipment, formulae, and technical services" to Khalil for $7.6 million. Khalil, Chemtex, and another party (Issa Nakleh) formed an Egyptian corporation, the Egyptian-American Paint Company, to facilitate the transaction and eventually purchase the plant from Khalil. Chemtex holds 36.67% of the equity in the company, Khalil holds 60%, and Nakleh the remaining 3.33%.

In April 1981, three years after negotiating the Egyptian sale, Pashman quit his job at Chemtex. Based on his draw-against-commission, he had received a total of $162,752 from Chemtex.

Later in 1981 the terms of the sales agreement between Chemtex and Khalil were altered. The sales price increased from $7.6 million to $10.1 million, and Chemtex formed an Austrian subsidiary, as a condition of obtaining Austrian financing, to export many of the materials and equipment to be used in the project.

In 1985, Pashman filed suit against Chemtex alleging that he should receive 10% of the $10.1 million sale price received by Chemtex, less the $162,750 he had already drawn. While his prayer for relief asked for damages of $5 million, it appears that his actual claimed damages are $847,250.

Chemtex moved for summary judgment, submitting documents showing it had actually lost money on the transaction, approximately $722,000. Since the deal generated no profits for Chemtex, it argued that Pashman is entitled to no commission and thus that Pashman was in fact $162,750 ahead.

In response, Pashman argued that the term "profits" in his contract actually meant "gross revenues", and that Chemtex's accounting -- which deducted costs from total revenues -- was therefore ...


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