| Gizara v New York Times Co. |
| 2011 NY Slip Op 00308 [80 AD3d 1026] |
| January 20, 2011 |
| Appellate Division, Third Department |
| Paul H. Gizara et al., Respondents-Appellants, v The NewYork Times Company, Appellant-Respondent. |
—[*1] Kriss, Kriss & Brignola, L.L.P., Albany (Charles T. Kriss of counsel), forrespondents-appellants.
Mercure, J.P. Cross appeals from an order of the Supreme Court (Catena, J.), entered April 1,2010 in Montgomery County, which partially granted defendant's motion to dismiss thecomplaint.
Plaintiff Paul H. Gizara is a consultant who, during the relevant time periods, provided salestax recovery services in his role as president and sole shareholder of plaintiff Gizara Group, Inc.In 1997, Gizara Group entered into a written contract with defendant for the provision of taxrecovery services in connection with sales tax that defendant improperly paid on purchases ofexempt property. The term of the contract was two years, but it provided that it could beextended upon the agreement of both parties or terminated earlier in writing by either party.Defendant paid plaintiffs approximately $1 million for their services through 2003.
Plaintiffs assert that the parties reached an oral agreement in 2004 wherein plaintiffs agreedto sell their sales tax recovery methodology to defendant for $200,000, and to modify the writtencontract to provide for additional tax consulting work and compensation. Nevertheless, plaintiffsclaim, defendant refused to provide authorization for them to pursue refunds for the 2004 taxyear onward, and ultimately notified plaintiffs that their services were no longer needed. [*2]Thereafter, plaintiffs commenced this action, alleging causes ofaction for breach of contract, as well as equitable claims. Supreme Court partially granteddefendant's motion to dismiss the complaint, dismissing all claims except the first cause of actionfor breach of the 1997 written contract and the third cause of action to the extent that it allegedbreach of the written contract as modified in the 2004 oral agreement. Defendantappeals,[FN*]and we now affirm.
Initially, we reject defendant's argument that Supreme Court erred in concluding that thecomplaint states a cause of action for breach of the 1997 contract. On a CPLR 3211 motion todismiss, "we liberally construe the complaint, . . . accept as true the facts alleged inthe complaint and any submissions in opposition to the dismissal motion[,] . . .[and] accord plaintiffs the benefit of every possible favorable inference" (511 W. 232ndOwners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002] [citations omitted]; see Nonnon v City of New York, 9NY3d 825, 827 [2007]). When the motion is brought under CPLR 3211 (a) (7), "thecriterion is whether the proponent of the pleading has a cause of action, not whether he [or she]has stated one" (Leon v Martinez, 84 NY2d 83, 88 [1994] [internal quotation marks andcitations omitted]). Thus, "[t]he motion must be denied if from the pleadings' four corners factualallegations are discerned which taken together manifest any cause of action cognizable at law"(511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d at 152 [internal quotationmarks and citations omitted]).
Defendant is correct that courts are "duty-bound to adjudicate the parties' rights according tounambiguous provisions [of a contract] and [to] give words and phrases employed their plainmeaning" (Bauersfeld v Board of Educ.of Morrisville-Eaton Cent. School Dist., 46 AD3d 1003, 1005 [2007], lv denied10 NY3d 704 [2008] [internal quotation marks and citations omitted]). That duty does not,however, negate the rule that "[i]n New York, all contracts imply a covenant of good faith andfair dealing in the course of performance" (511 W. 232nd Owners Corp. v Jennifer RealtyCo., 98 NY2d at 153; see Dalton v Educational Testing Serv., 87 NY2d 384, 389[1995]). While the covenant does not nullify other terms of the contract (see Greene Tech. vAtoma Intl. of Am., 296 AD2d 695, 696 [2002]; Burdett Radiology Consultants vSamaritan Hosp., 158 AD2d 132, 136 [1990]), it "embraces a pledge that neither party shalldo anything which will have the effect of destroying or injuring the right of the other party toreceive the fruits of the contract" (Dalton v Educational Testing Serv., 87 NY2d at 389[internal quotation marks and citation omitted]; accord Moran v Erk, 11 NY3d 452, 456 [2008]). Here, while thecontract provided that refund claims could not be processed "without prior review and FULLauthorization, in writing by [defendant]," that provision did not give defendant the right to actarbitrarily or in bad faith when reviewing the refund claims prepared by plaintiffs. As SupremeCourt concluded, plaintiffs' complaint adequately stated a cause of action based upon breach ofthe implied covenant in alleging that defendant directed them to prepare a refund claim for 2005,but submitted its own claim and refused to review or submit the claim prepared by plaintiffs,thereby depriving plaintiffs of the benefits of the contract (see 511 W. 232nd Owners Corp. vJennifer Realty Co., 98 NY2d at 153-154; 1-10 Indus. Assoc. v Trim Corp. of Am.,297 [*3]AD2d 630, 631-632 [2002]; see also Just-Irv Sales vAir-Tite Bus. Ctr., 237 AD2d 793, 794-795 [1997]).
Turning to defendant's argument that the third cause of action for breach of the 2004 oralagreement should have been dismissed under CPLR 3211 (a) (5) as violative of the statute offrauds, General Obligations Law § 5-701 (a) (1) provides that an agreement that "[b]y itsterms is not to be performed within one year from the making thereof" must be memorialized in asigned writing. The statute of frauds is not implicated in the case of oral agreements that areterminable at will because such agreements are capable of completion within one year (see D& N Boening v Kirsch Beverages, 63 NY2d 449, 456 [1984]; Romaine v ColonialTanning Corp., 301 AD2d 732, 733 [2003]). Moreover, when a "contract has been materiallymodified, the modification establishes a new agreement between the parties which supplants theaffected provisions of the underlying agreement while leaving the balance of its provisionsunchanged" (Benipal v Herath, 251 AD2d 933, 934 [1998]). Liberally construing thecomplaint and according plaintiffs the benefit of every possible favorable inference, plaintiffsalleged that the 2004 agreement was an oral modification of the 1997 written agreement thatcarried forward the provision permitting the parties to terminate the contract at will—aprovision that defendant successfully invoked in 2007, as plaintiff concedes. Therefore, SupremeCourt properly concluded that the 2004 oral agreement does not violate General Obligations Law§ 5-701 (a) (1).
Finally, we agree with Supreme Court that the 2004 agreement is not barred by the statute offrauds as an unwritten agreement to negotiate a business opportunity. General Obligations Law§ 5-701 (a) (10) provides that an unsigned or unwritten agreement is void if it "[i]s acontract to pay compensation for services rendered in negotiating . . . a businessopportunity." The statute defines "negotiating" as including the procurement of "an introductionto a party to the transaction or assisting in the negotiation or consummation of the transaction"(General Obligations Law § 5-701 [a] [10]). The statute applies " 'where . . .the intermediary's activity is . . . that of providing "know-how" or "know-who"[ ] inbringing about between principals an enterprise of some complexity or an acquisition of asignificant interest in an enterprise' " (Snyder v Bronfman, 13 NY3d 504, 510 [2009], quotingFreedman v Chemical Constr. Corp., 43 NY2d 260, 267 [1977]). Plaintiffs were notnegotiating a business opportunity for defendant or providing know-how in bringing a businessenterprise to fruition; rather, they were providing tax-recovery services—auditingdefendant's accounts payable invoices to identify sales tax overpayments and preparing refundclaim forms for submission to the Department of Taxation and Finance (see Super vAbdelazim, 108 AD2d 1040, 1041-1042 [1985]; cf. Snyder v Bronfman, 13 NY3d at509-510).
The parties' remaining arguments are not properly before us.
Malone Jr., Stein, McCarthy and Egan Jr., JJ., concur. Ordered that the order is affirmed,with costs. Ordered that the cross appeal is dismissed as untimely.
Footnote *: Although plaintiffscross-appealed, their cross appeal—taken 86 days after defendant mailed notice of entry ofSupreme Court's order to plaintiffs, and 78 days after defendant filed and served its notice ofappeal—is untimely and must be dismissed (see CPLR 5513 [a], [c]; O'Connor v Sleasman, 14 AD3d986, 987 [2005]).