| NTL Capital, LLC v Right Track Rec., LLC |
| 2010 NY Slip Op 03770 [73 AD3d 410] |
| May 4, 2010 |
| Appellate Division, First Department |
| NTL Capital, LLC, Assignee of Wells Fargo Bank of MinnesotaNational Association, Respondent, v Right Track Recording, LLC, et al., Appellants, etal., Defendant. |
—[*1] Proskauer Rose LLP, New York (Steven E. Obus and Matthew J. Morris of counsel), forLegacy Recording Studios, appellant. Kazlow & Kazlow, New York (Stuart L. Sanders of counsel), for respondent.
Order, Supreme Court, New York County (Debra A. James, J.), entered February 9, 2009,which denied the motion of defendants Right Track Recording, LLC and Legacy RecordingStudio to dismiss the complaint as against them, unanimously modified, on the law, to dismissthe second, fourth, fifth, sixth and seventh causes of action against Legacy, and otherwiseaffirmed, without costs.
Contrary to Right Track's contention, plaintiff, as assignee of the equipment lease enteredinto between Wells Fargo Bank and Right Track, has standing to bring this action to enforce theterms of the lease. Pursuant to the settlement agreement between Wells Fargo and Right Track,the lease and its terms remain in full force and effect because Right Track failed to pay thesettlement amount. Accordingly, pursuant to the terms of the lease, Wells Fargo was entitled toassign the lease to plaintiff, and plaintiff was entitled to enforce its rights thereunder. AlthoughWells Fargo filed a proof of claim in Right Track's bankruptcy proceeding setting forth as itsunsecured, nonpriority claim the amount due under the settlement agreement, plaintiff is seekingto enforce its rights under the lease, not under the settlement agreement, and it may seek the fullamount due under the lease. Contrary to Right Track's assertion, plaintiff was not required tocomply with the notice provisions in the settlement agreement. Nor is there any indication that itwas required to provide notice of default under the terms of the lease.
The first cause of action, as amplified by plaintiff's opposition papers, sufficiently pleads abreach of the lease against Legacy, based on the doctrine of de facto merger (see Fitzgerald vFahnestock & Co., 286 AD2d 573, 574 [2001]). The motion court also correctly determinedthat [*2]Legacy may be a mere continuation of Right Track andthus may be held responsible for Right Track's preexisting liabilities. Contrary to Legacy'scontention, the documentary evidence does not conclusively establish that Right Track is still inexistence (compare Schumacher v Richards Shear Co., 59 NY2d 239, 244 [1983]). Inany event, plaintiff sufficiently pleaded the mere continuation exception to the rule againstsuccessor liability by showing that Legacy has acquired Right Track's business location,employees, management and goodwill (see Societe Anonyme Dauphitex v SchoenfelderCorp., 2007 WL 3253592, *5-6, 2007 US Dist LEXIS 81496, *14-16 [SD NY 2007]).
Plaintiff concedes that its second cause of action, alleging estoppel, should be dismissed asagainst Legacy. The third cause of action, for unjust enrichment, is supported by sufficientfactual allegations. There being no lease between plaintiff and Legacy, plaintiff is not precludedfrom alleging unjust enrichment as against Legacy (see Gateway I Group, Inc. v Park Ave. Physicians, P.C., 62 AD3d141, 149 [2009]).
The fourth cause of action, for conversion, is duplicative of the breach of contract cause ofaction (see Richbell Info. Servs. v Jupiter Partners, 309 AD2d 288, 306 [2003]; Wolfv National Council of Young Israel, 264 AD2d 416, 416-417 [1999]).
The sixth cause of action, alleging a violation of Debtor and Creditor Law § 276, isnot pleaded with sufficient particularity (see CPLR 3016 [b]; Wildman & BernhardtConstr. v BPM Assoc., 273 AD2d 38, 38-39 [2000]). The fifth and seventh causes of action,alleging violations of Debtor and Creditor Law §§ 273 and 274, respectively,contain only legal conclusions and no specific factual allegations (see Between The BreadRealty Corp. v Salans Hertzfeld Heilbronn Christy & Viener, 290 AD2d 380, 381 [2002],lv denied 98 NY2d 603 [2002]). In any event, the documentary evidence refutes theseclaims as a matter of law. It indicates that Legacy's first-priority, secured claim far exceeds thevalue of Right Track's foreclosed-upon assets and dwarfs plaintiff's unsecured claim. Thus, therewould have been no property available to satisfy plaintiff's claims even if there had been nofraudulent conveyance (see Marine Midland Bank v Murkoff, 120 AD2d 122, 133[1986], appeal dismissed 69 NY2d 875 [1987]; Miller v Forge Mench PartnershipLtd., 2005 WL 267551, *5, 2005 US Dist LEXIS 1524, *14-18 [SD NY 2005]).Concur—Gonzalez, P.J., Tom, Renwick, DeGrasse and Abdus-Salaam, JJ.