Summary Judgment Denied Where Termination “For Cause” Conflicted with Contract Text

By: Jeffrey M. Haber

In Kim v. XP Sec., LLC, 2026 N.Y. Slip Op. 01731 (1st Dept. Mar. 24, 2026), the Appellate Division, First Department affirmed the denial of summary judgment in a wrongful termination action, reiterating settled principles of contract interpretation: clear, unambiguous agreements between sophisticated, counseled parties are enforced according to their plain meaning, without recourse to extrinsic evidence. The plaintiff, a senior executive employed under a five‑year agreement permitting termination only for cause, challenged his discharge following an internal email exchange. The employer’s reliance on alleged misconduct and insubordination raised triable issues of fact, including whether workplace policies were uniformly enforced and whether the stated grounds for termination were pretextual. Because factual disputes remained as to whether the conduct satisfied the contractual definition of “cause,” summary judgment was properly denied.

Under well-settled New York law, the “best evidence of what parties to a written agreement intend is what they say in their writing.”[1] A “written agreement that is complete, clear, and unambiguous on its face must be enforced according to the plain meaning of its terms.”[2] Moreover, when “interpreting a commercial contract negotiated by and entered into at arms length between sophisticated business people, represented by an attorney, a court must enforce the agreement according to its terms, and extrinsic and parole evidence is not admissible to create an ambiguity in a written agreement that is complete, clear, and unambiguous on its face.”[3] 

With these principles in mind, we examine Kim v. XP Sec., LLC.

Defendant, a broker-dealer, hired plaintiff in 2017 to be the head of its Asia Desk. At the time he was hired, plaintiff was a professional with decades of experience in the emerging markets foreign exchange (Forex) community. He had conceived a technology-based solution, to be called HUBL, designed to radically improve Forex trading, and was looking for a firm to provide the support necessary to develop it. Defendant hired plaintiff specifically for the purpose of developing, at defendant’s expense, a computerized Forex technology “stack” to more efficiently manage bid price points in the industry. Defendant represented to plaintiff that it had the technology and infrastructure necessary to accomplish this objective. 

Plaintiff was hired pursuant to a five-year employment agreement (the “Agreement”), which provided that he could only be terminated for “cause.” The Agreement defined “cause” as, among other things, insubordination and “willful or gross serious misconduct” in the performance of an employee’s duties and responsibilities, including conduct in disregard of defendant’s written rules or policies. Defendant’s employee handbook, as well as its separate written ethics code, prohibited employees from engaging in offensive or disruptive behavior, including threatening employees; using abusive or vulgar language; interfering with others in the performance of their duties; engaging in acts of disloyalty to defendant, including but not limited to slandering or disparaging defendant, its officers and/or employees; and from displaying discourteous or inappropriate conduct with clients and customers. 

After plaintiff joined the firm, he learned that it did not have the promised resources necessary to develop HUBL. In late January 2020, defendant’s management notified the firm’s entire New York office via email that a senior employee would be leaving and that defendant would be closing down parts of its business, including plaintiff’s division. The email also directed the entire New York office that “nothing beyond the announcement” of the employee’s departure “[was] to be discussed/commented outside of [the firm].” Plaintiff sent an email to the employees in the New York office, pointing out that they had been instructed not to discuss this change, but that the employees in the London office had not been given the same instructions. He suggested that the two offices should be given the same instructions to avoid confusion. On January 27, 2020, defendant suspended plaintiff and barred him from its offices for his “inappropriate” and “insubordinate” email.

By letter dated February 27, 2020, defendant purported to terminate plaintiff “for cause,” specifically citing his “common law disloyalty” and “willful or gross serious misconduct” as referred to in certain provisions of the Agreement. The letter also made general allegations that plaintiff was “derisive” and “rude.” 

Plaintiff commenced the action, which, as amended, alleged (1) defendant’s breach of contract for not dedicating any funds to HUBL; (2) defendant’s breach of the covenant of good faith and fair dealing for not dedicating any funds to HUBL; (3) fraud in the inducement against all of the defendants, because of their false representations to plaintiff that defendant had the technological tools and skills that would enable it to support plaintiff’s development of HUBL; (4) declaratory judgment against defendant that the conduct plaintiff was accused of did not amount to “common law disloyalty” or “willful or gross misconduct”; and (5) breach of contract against defendant for its “wrongful termination of [him] for ‘cause.’ ”

Defendant moved for summary judgment dismissing plaintiff’s breach of contract cause of action for wrongful termination. The motion court denied the motion.

The First Department affirmed, holding that the motion court properly denied the motion.[4] The Court noted that since the Agreement was “[a]n arm’s length commercial contract executed by counselled, sophisticated parties,” it “should be enforced according to its terms.”[5] 

In considering the propriety of the motion court’s decision and order, the Court framed the dispute as whether the specific conduct identified as the basis for termination – an internal email response – satisfied the contractual definition of “cause,” rather than whether plaintiff had engaged in objectionable conduct more generally. In that regard, defendant contended that plaintiff’s termination complied with the Agreement based on a history of allegedly offensive language toward colleagues and a client, conduct for which plaintiff had previously been admonished and disciplined. However, noted the Court, plaintiff was not terminated for that conduct. Rather, defendant discharged plaintiff for alleged insubordination arising from an internal email responding to a directive that the departure of a senior manager not be discussed outside defendant’s New York office. In that response, plaintiff merely suggested that the same instruction be communicated to the London office to avoid confusion. Whether this conduct, said the Court, viewed in context, “constituted insubordination or otherwise satisfied the Agreement’s contractual standard for termination ‘for cause’ present[ed] a factual question, particularly where the employer relied on prior conduct not identified as the basis for termination.”[6] 

As a result, the Court held that “[o]n th[e] record [before it] there [were] triable issues of fact that preclude[d] summary judgment in [defendant]’s favor.”[7] First, said the Court, “there [were] questions of fact as to whether the rules or policies on which [defendant] relie[d] were followed and uniformly enforced - in particular, its rules prohibiting ‘offensive or disruptive behavior, including . . . using abusive or vulgar language’ and ‘discourteous or inappropriate conduct with clients/customers.’”[8] The Court noted that “[m]ultiple [firm] employees testified that emotional exchanges, yelling, cursing, and demeaning language, including some of the same slurs plaintiff was] alleged to have used, were common among employees at [the firm].”[9] “This testimony,” concluded the Court, “raise[d] questions as to whether [plaintiff]’s rude behavior was in line with the prevailing culture at [the firm] and whether [defendant]’s reference to it as a reason for his termination was pretextual.”[10]  

Second, held the Court, “there [were] questions of fact as to whether the financial burden associated with the promises [defendant] made to plaintiff at the time of his hiring was the reason [defendant] examined more closely plaintiff’s offensive work comments and chose termination as the discipline to impose.”[11] 

Finally, said the Court, “there [were] questions of fact as to whether plaintiff’s email sent solely to the members of the New York office concerning a management change constituted an ‘insubordinate’ or ‘inappropriate’ response to an email directing employees not to discuss the matter outside the New York office.”[12] 

Takeaway

In New York, plain meaning and ambiguity perform distinct but complementary roles, and understanding their limits is critical to explaining how courts approach disputes like the one in Kim.

As the Court noted, when a contract is complete, clear, and unambiguous on its face, courts enforce it as written, without resort to extrinsic evidence. Ambiguity is not created merely because the parties disagree about the contract’s effect or because one party wishes the language were different. Nor do courts consider outside evidence to manufacture ambiguity where the text reasonably bears only one meaning.

The limit of focusing solely on plain meaning, however, lies in its application. Even where contractual language is unambiguous, disputes often arise over whether the conduct at issue falls within the scope of that language. This is not textual ambiguity but a factual dispute – a question of whether undisputed terms have been satisfied by disputed conduct. New York courts recognize that enforcing a contract according to its terms does not require accepting a party’s characterization of events. Instead, courts examine whether the conduct relied upon reflects the parties' intent as set forth in the contract.

Accordingly, ambiguity is carefully confined. Courts do not relax plain‑meaning rules to accommodate after‑the‑fact explanations. But they also do not treat clear and unambiguous language as solely dispositive when the dispute between the parties concerns conduct or performance.

In Kim, the Court did not find the Agreement ambiguous. To the contrary, the Court held that the Agreement – negotiated by sophisticated, counseled parties – was clear in permitting termination only for “cause.” Under New York law, that clarity foreclosed any resort to extrinsic evidence to alter or modify the contractual standard. Therefore, defendant could not rely on generalized notions of business judgment, workplace norms, or equitable considerations to justify termination outside the language of the Agreement.

At the same time, the Court recognized the limit of plain meaning: while the meaning of the contract was fixed as a matter of law, whether plaintiff’s conduct satisfied that meaning was not. Defendant attempted to defend the termination by invoking a broader narrative of prior misconduct and disciplinary history. The Court rejected that framing, focusing instead on the conduct actually cited as the basis for discharge – an internal email suggesting that employees in another office receive the same instruction to avoid confusion. That focus reflects an important principle of contract interpretation: disagreement over whether conduct meets a contractual standard is not textual ambiguity, but a factual question concerning conduct and performance. Therefore, because reasonable people could differ on whether the email constituted “insubordination” or “willful or gross misconduct” within the meaning of the Agreement, the case could not be resolved on summary judgment.

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. 

This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice.

Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions and not on matters handled by the firm.

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[1] Slamow v. Del Col, 79 N.Y.2d 1016, 1018 (1992).

[2] Greenfield v. Philles Records, 98 N.Y.2d 562, 569 (2002).

[3] Pavarini McGovern, LLC v. Tag Court Sq., LLC, 62 A.D.3d 680, 680 (2d Dept. 2009) (citing Madison Ave. Leasehold, LLC v. Madison Bentley Assoc. LLC, 8 N.Y.3d 59, 66 (2006)).

[4] Slip Op. at *1.

[5] Id. (citing Madison Ave., 8 N.Y.3d at 66).

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.