| Phoenix Capital Invs. LLC v Ellington Mgt. Group, L.L.C. |
| 2008 NY Slip Op 04617 [51 AD3d 549] |
| May 22, 2008 |
| Appellate Division, First Department |
| Phoenix Capital Investments LLC,Respondent-Appellant, v Ellington Management Group, L.L.C.,Appellant-Respondent. |
—[*1] Sullivan & Cromwell, LLP, New York (David B. Tulchin of counsel), forrespondent-appellant.
Order, Supreme Court, New York County (Karla Moskowitz, J.), entered November 13,2007, which granted defendant's dismissal motion only to the extent of dismissing part of the firstcause of action and the entire fourth and sixth causes of action, unanimously modified, on thelaw, the fifth and seventh causes of action dismissed as well, and otherwise affirmed, with costsin favor of defendant payable by plaintiff.
The 2000 agreement and its 2003 revisions, when read together, made clear that plaintiff wasentitled to a fee for bringing defendant and prospective investors together only if the actualinvestment was made within one year of either the last contact between plaintiff and a particularinvestor on defendant's behalf, or one of the parties providing the other with a written terminationof the agreement, whichever occurred earlier. Plaintiff claims it introduced defendant to aprospective investor, Norges Bank, and expended considerable time and expense encouragingNorges Bank to invest in the funds managed by defendant. Several weeks after an introductorymeeting, defendant terminated the agreement with plaintiff. Norges Bank did eventually investwith defendant, but two years later. Under the explicit terms of the contract, which plaintiffnegotiated and, in 2003, renegotiated, plaintiff was not entitled to an annual fee of 1% as aconsequence of the Norges Bank investment. Plaintiff's claim that the 2003 amendmentomitted—and thus eliminated—this one-year "tail" provision is belied by the termsof the 2003 amendment, which provided that the original fee schedule would continue, withexceptions not applicable herein, and even expanded the tail provision.
Plaintiff's claim that defendant caused Norges Bank to purposely delay its investment untilafter the lapse of the one-year tail period, so as to impede plaintiff's recovery of its fee, is aninvalid substitute for its nonviable breach of contract claim (Triton Partners v PrudentialSec., 301 AD2d 411 [2003]). The claim is defeated since defendant, in terminating itsagreement with plaintiff, acted entirely within the agreement termination provision (id.).Plaintiff actively negotiated the tail provision, with all its risks and benefits to both parties, andcannot nullify that provision on the basis of a bare allegation that defendant acted unfairly, bothin terminating the agreement and in exercising its rights pursuant to the tail provision(Gallagher v Lambert, 74 NY2d 562, 567 [1989]). [*2]We adhere to the well-established principle that the impliedcovenant of good faith and fair dealing will be enforced only to the extent it is consistent with theprovisions of the contract (Murphy v American Home Prods. Corp., 58 NY2d 293, 304[1983]; SNS Bank v Citibank, 7AD3d 352, 354-355 [2004]). To allow plaintiff to plead a conclusory claim that defendantcontrived with Norges Bank to delay its investment of hundreds of millions of dollars for twoyears so as to avoid paying plaintiff its fee, thereby breaching an implied covenant of good faithand fair dealing, would unjustifiably frustrate the expectations of the parties as made explicit inthe contract. The stark inconsistency between the claim and the negotiated terms of the contractrequires that the claim be dismissed.
For similar reasons, plaintiff's claim under the Connecticut Unfair Trade Practices Act (ConnGen Stat § 42-110b [a]) must be dismissed. The claim is defeated because defendant, byadhering to the precise terms of the negotiated contract, did not act wrongfully (Ramirez vHealth Net of Northeast, Inc., 285 Conn 1, 21, 938 A2d 576, 590 [2008]; Edmands vCUNO, Inc., 277 Conn 425, 451, 892 A2d 938, 955 [2006]).
Finally, plaintiff has failed to adequately plead a claim that defendant tortiously interferedwith its prospective business relations with Norges Bank involving other potential investmentopportunities from which plaintiff might have realized additional fees. Initially, the claim that insome unelaborated manner defendant directed Norges Bank, which had several hundred milliondollars to invest in defendant's funds and elsewhere, to cease all communications with plaintiff,thus freezing plaintiff out of unrelated business opportunities with Norges Bank, fails as entirelyconclusory (Jacobs v Continuum HealthPartners, 7 AD3d 312 [2004]; Herman v Greenberg, 221 AD2d 251 [1995]).Moreover, the complaint fails to allege the requisite malice—that defendant acted solely toharm plaintiff, or that the conduct constituted a crime or independent tort or was otherwiseegregious (Carvel Corp. v Noonan,3 NY3d 182, 189 [2004]). Concur—Lippman, P.J., Andrias, Nardelli, Acosta andDeGrasse, JJ.