| Snyder v Bronfman |
| 2008 NY Slip Op 10051 [57 AD3d 393] |
| December 23, 2008 |
| Appellate Division, First Department |
| Richard E. Snyder, Respondent, v Edgar M. Bronfman, Jr.,Appellant. |
—[*1] Wilson Sonsini Goodrich & Rosati, P.C., New York (Robert Gold of counsel), forrespondent.
Order, Supreme Court, New York County (Bernard J. Fried, J.), entered April 24, 2008,which, insofar as appealed from, denied defendant's motion to dismiss plaintiff's causes of actionfor unjust enrichment and quantum meruit, unanimously reversed, on the law, with costs, themotion granted and said causes of action dismissed.
The causes of action for unjust enrichment and quantum meruit are barred by the applicablestatute of frauds, General Obligations Law § 5-701 (a) (10). In relevant part, this enactmentrenders void any oral agreement "to pay compensation for services rendered in . . .negotiating the purchase . . . of any . . . business opportunity."(Id.) As is evident, the statute broadly applies to "any" business opportunity. Thestatute expressly defines the term "negotiating" and does so in the following broad terms: "'Negotiating' includes procuring an introduction to a party to the transaction or assisting in thenegotiation or consummation of the transaction." (Id.) Thus, the statute's sweep iscomprehensive as it covers conduct occurring at the outset, during the course of and at theconclusion of the purchase of a business opportunity. Finally, the statute applies not only to analleged oral agreement but also "to a contract implied in fact or in law to pay reasonablecompensation." (Id.)
The unjust enrichment and quantum meruit causes of action fall squarely within the statute'sbroad and unambiguous prohibition as they seek compensation for plaintiff's role in theacquisition of Warner Music Group. Contrary to plaintiff's contention, Freedman v ChemicalConstr. Corp. (43 NY2d 260 [1977]) does not limit the scope of the statute to situations inwhich the plaintiff merely provides limited and transitory services. Nor does the text of thestatute provide any basis for principled distinctions to be drawn distinguishing services that areand are not sufficiently limited and transitory to be barred.
Freedman, in which the plaintiff's role in the transaction is "limited and transitory"(id. at 267), is a paradigmatic case for application of General Obligation Law §5-701 (a) (10). But the paradigmatic case cannot logically be equated with the essential orexclusive case for the statute's application. Nothing in the broad language of the statute supportssuch a narrow reading of its scope. Rather, as Chief Judge Breitel stated, "where . . .the intermediary's activity is so evidently that of providing 'know-how' or 'know-who', in bringingabout between principals an enterprise of some complexity or an acquisition of a significantinterest in an [*2]enterprise, the statute is entitled to be read bothin accordance with its plain meaning, its evident purpose, and to accomplish the prevention ofthe mischief for which it was designed" (id.). The crux of plaintiff's claim is that heprovided "know-how" and "know-who" in connection with the acquisition of Warner MusicGroup. Accordingly, the quasi-contractual causes of action also are barred.
For the same reason, plaintiff cannot avoid the bar of the statute by alleging that he acted as aprincipal in the contemplated business opportunity. That is, nothing in the text of the statutesuggests that it applies to claims for compensation advanced by all persons other than those whoclaim to be or can be characterized as principals or partners in the prospective businessopportunity. Moreover, as defendant correctly observes, limiting the statute to the claims ofnonprincipals or nonpartners would permit its purpose to be frustrated if not circumvented by theassertion of a legal conclusion. Finally, the complaint seeks compensation solely for plaintiff'sefforts in connection with the acquisition of Warner Music Group. Accordingly, it is of nomoment that the complaint alleges that plaintiff performed services in connection with othertransactions that were not consummated or that plaintiff alleges he provided services fordefendant following the acquisition of Warner Music Group. Concur—Friedman, J.P.,Sweeny, McGuire, Renwick and Freedman, JJ. [See 19 Misc 3d 1126(A), 2008 NY SlipOp 50859(U).]