| Kopelowitz & Co., Inc. v Mann |
| 2011 NY Slip Op 03037 [83 AD3d 793] |
| April 12, 2011 |
| Appellate Division, Second Department |
| Kopelowitz & Co., Inc., Appellant, v Maurice Mann et al.,Defendants, and Northbrook Partners, LLC, et al., Respondents. |
—[*1] Wrobel & Schatz, LLP, New York, N.Y. (Philip R. Schatz of counsel), forrespondents.
In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals, aslimited by its brief, from so much of an order of the Supreme Court, Kings County (Schack, J.),dated April 17, 2009, as granted those branches of the motion of the defendants NorthbrookPartners, LLC, and Northbrook Management, LLC, pursuant to CPLR 3211 (a) (1) and (7) whichwere to dismiss the first, second, fifth, sixth, seventh, eighth, and tenth causes of action insofar asasserted against those defendants.
Ordered that the order is modified, on the law, by deleting the provisions thereof grantingthose branches of the motion of the defendants Northbrook Partners, LLC, and NorthbrookManagement, LLC, which were pursuant to CPLR 3211 (a) (7) to dismiss the fifth and sixthcauses of action insofar as asserted against them, and substituting therefor a provision denyingthose branches of the motion; as so modified, the order is affirmed insofar as appealed from,without costs or disbursements.
The plaintiff, a real estate sales, investment, and financing company, alleged that around"mid 2007," the Racolin/Martinson family (hereinafter the Racolins) decided to sell AVJ RealtyCorp. (hereinafter AVJ), a real estate holding company that, along with its subsidiaries, held titleto certain residential properties in New York. The Racolins sought to accomplish this by an"off-market offering." In or around May 2007, the plaintiff was approached by an intermediaryon behalf of the Racolins regarding the possibility of the plaintiff purchasing AVJ. Shortlythereafter, the plaintiff approached Maurice Mann, the owner of Mann Realty Associates(hereinafter Mann Realty), about potentially becoming a partner to acquire AVJ or, alternatively,to earn a finder's fee for introducing a potential purchaser to the Racolins. Prior to disclosing theAVJ offering to Mann, the plaintiff entered into a nondisclosure letter agreement with Mann andMann Realty (hereinafter together the Mann defendants). The letter agreement provided, interalia, that the Mann defendants would maintain strict confidentiality with the plaintiff, that nocommunications would take place with any other parties regarding properties held by AVJ orsales of such properties, and that in the event of any transaction involving the Mann defendants,the plaintiff would be entitled to "appropriate [*2]compensation."
Upon receipt of and in reliance on the letter agreement, the plaintiff disclosed to Mann theAVJ offering and conveyed to him a package of documents pertaining to the offering. Theplaintiff asserted that, as a result of the letter agreement, it refrained from pursuing theacquisition with other willing partners. Shortly thereafter, Mann informed the plaintiff that hehad placed an offer with AVJ in excess of $300 million and assured the plaintiff that he wouldprotect its interests and that the plaintiff would "profit handsomely" from an acquisition of AVJ.Subsequently, Mann informed the plaintiff that he was contracting to purchase AVJ. In January2008 AVJ allegedly was acquired by a group of entities including the Mann defendants, for afinal purchase price in excess of $349 million.
The plaintiff alleged that it repeatedly demanded a meeting with Mann to discusscompensation, but Mann continuously delayed and stalled any meeting. Eventually, on January21, 2008, Mann met with the plaintiff, at which time the plaintiff demanded reasonablecompensation pursuant to their letter agreement. The parties could not agree on a compensationsum. The plaintiff alleged that, shortly thereafter, it learned that the Mann defendants andNorthbrook Partners, LLC, a real estate investment, development, and management company,together had acquired AVJ and that Northbrook Partners, LLC, had been founded by Mann andthat he was authorized to bind Northbrook Partners, LLC.
The plaintiff commenced this action on July 21, 2008, asserting 11 causes of action againstthe Mann defendants, as well as Northbrook Partners, LLC, and Northbrook Management, LLC(hereinafter together the Northbrook defendants), seeking reasonable compensation for theservices leading up to the acquisition, as well as compensation pursuant to the letter agreement,and damages as a result of the defendants' breach of the letter agreement. The plaintiff furtheralleged that Mann was a founder and managing partner of the Northbrook defendants, and thatthe Northbrook defendants were involved in the acquisition and were specifically formed toassist in depriving the plaintiff of compensation under the letter agreement. The Northbrookdefendants moved to dismiss the complaint pursuant to, inter alia, CPLR 3211 (a) (1) based upondocumentary evidence, and CPLR 3211 (a) (7) for failure to state a cause of action. In support oftheir motion, the Northbrook defendants submitted, among other things, the letter agreement. Inthe order appealed from, the Supreme Court granted the Northbrook defendants' motion todismiss the complaint insofar as asserted against them in its entirety. The plaintiff appeals fromso much of the order as granted those branches of the Northbrook defendants' motion which wereto dismiss the first, second, fifth, sixth, seventh, eighth, and tenth causes of action insofar asasserted against them.
A motion to dismiss a complaint pursuant to CPLR 3211 (a) (1) may be granted only if thedocumentary evidence submitted by the moving party utterly refutes the factual allegations of thecomplaint and conclusively establishes a defense to the claims as a matter of law (see Goshenv Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; Granada Condominium III Assn. vPalomino, 78 AD3d 996, 996 [2010]; Fontanetta v John Doe 1, 73 AD3d 78, 83 [2010]). "In order forevidence to qualify as 'documentary', it must be unambiguous, authentic, and undeniable"(Granada Condominium III Assn. v Palomino, 78 AD3d at 996-997, quotingFontanetta v John Doe 1, 73 AD3d at 84-86).
On a motion to dismiss for failure to state a cause of action pursuant to CPLR 3211 (a) (7),"the sole criterion is whether the pleading states a cause of action, and if from its four cornersfactual allegations are discerned which taken together manifest any cause of action cognizable atlaw[,] a motion for dismissal will fail" (Guggenheimer v Ginzburg, 43 NY2d 268, 275[1977]; see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Hense v Baxter, 79 AD3d 814,815 [2010]; Sokol v Leader, 74AD3d 1180, 1180-1181 [2010]). "The complaint must be construed liberally, the factualallegations deemed to be true, and the nonmoving party granted the benefit of every possiblefavorable inference" (Hense v Baxter, 79 AD3d at 815; see Leon v Martinez, 84NY2d at 87; Sokol v Leader, 74 AD3d at 1181; Breytman v Olinville Realty, LLC, 54 AD3d 703, 703-704 [2008])."A court may freely consider affidavits submitted by the plaintiff to remedy any defects in thecomplaint" (Well v Yeshiva Rambam, 300 AD2d 580, 580 [2002]; see Rovello vOrofino Realty Co., 40 NY2d 633, 635 [1976]), and upon considering such an affidavit, thefacts alleged therein must also be assumed to be true (see Pike v New York Life Ins. Co., 72 AD3d 1043, 1049 [2010]).Where a party offers evidentiary proof on a motion pursuant to CPLR 3211 (a) (7), the focus[*3]of the inquiry turns from whether the complaint states a causeof action to whether the plaintiff actually has one (see Guggenheimer v Ginzburg, 43NY2d at 275).
Contrary to the plaintiff's contention, the Supreme Court properly granted those branches ofthe Northbrook defendants' motion which were to dismiss the first and second causes of actioninsofar as asserted against them. The first and second causes of action sounded in breach ofcontract, and the plaintiff sought to recover damages from the Northbrook defendants on theground that they breached the letter agreement by wrongfully disclosing certain confidentialinformation to third parties, and by failing to reasonably compensate it for introducing them tothe party that led them to the acquisition. However, even assuming that the letter agreement isvalid and enforceable, the Northbrook defendants conclusively demonstrated by documentaryevidence (the letter agreement itself) that they were not parties to the letter agreement. Since theNorthbrook defendants established that they were not parties to the letter agreement, they cannotbe bound by it (see Pacific Carlton Dev.Corp. v 752 Pac., LLC, 62 AD3d 677, 678 [2009]; HDR, Inc. v InternationalAircraft Parts, 257 AD2d 603, 604 [1999]; National Survival Game of N.Y. v NSG of LICorp., 169 AD2d 760, 761 [1991]). Although the complaint alleges that Mann is a memberof, and authorized to bind, Northbrook Partners, LLC, there is nothing in the letter agreement tosuggest that, in signing it, Mann was also binding Northbrook Partners, LLC, to the terms of theletter agreement. Thus, the Supreme Court properly granted those branches of the Northbrookdefendants' motion which were to dismiss these causes of action pursuant to CPLR 3211 (a) (1).
In addition, the Supreme Court properly granted those branches of the Northbrookdefendants' motion which were pursuant to CPLR 3211 (a) (7) to dismiss the seventh and eighthcauses of action, which sought damages for breach of fiduciary duty and to impose a constructivetrust, respectively, insofar as asserted against them. A necessary element of both of these causesof action is a fiduciary relationship between the plaintiff and the defendant (see Rut v Young Adult Inst., Inc., 74AD3d 776 [2010]; Williams vEason, 49 AD3d 866, 868 [2008]). Here, although the complaint includes a conclusorystatement that the "defendants entered into a fiduciary relationship with [the] plaintiff," it doesnot allege any facts that would give rise to such a fiduciary relationship between the plaintiff andthe Northbrook defendants. On a motion to dismiss a complaint pursuant CPLR 3211 (a) (7),"bare legal conclusions are not presumed to be true" (Kupersmith v Winged Foot Golf Club, Inc., 38 AD3d 847, 848[2007]). Thus, the complaint did not state causes of action to recover damages for breach offiduciary duty or to impose a constructive trust.
The Supreme Court also properly granted that branch of the Northbrook defendants' motionwhich was to dismiss the tenth cause of action, which sought damages based on the doctrine ofequitable estoppel, insofar as asserted against them, since equitable estoppel is not a basis torecover damages. In any event, there are no allegations in the complaint to the effect that theplaintiff relied on any conduct on the part of the Northbrook defendants in changing its positionto its detriment (see Airco Alloys Div. v Niagara Mohawk Power Corp., 76 AD2d 68,81-82 [1980]).
However, the Supreme Court erred in granting those branches of the Northbrook defendant'smotion which were pursuant to CPLR 3211 (a) (7) to dismiss the fifth and sixth causes of action,which sounded in unjust enrichment and quantum meruit, respectively. The Supreme Courtreasoned that "with the absence of any evidence of a business relationship between plaintiff and[the Northbrook defendants], it cannot be shown how [the Northbrook defendants were] enrichedat plaintiff's expense." (23 Misc 3d 1112[A], 2009 NY Slip Op 50712[U], *8 [2009].) However,the existence of a business relationship is not an element necessary to prove unjust enrichment orquantum meruit (see Cruz vMcAneney, 31 AD3d 54, 59 [2006]; Wehrum v Illmensee, 74 AD3d 796, 797 [2010]). Thus, theplaintiff's failure to plead such a relationship was not fatal to its complaint. The facts alleged bythe plaintiff sufficiently pleaded the elements of those two causes of action (see generally Corsello v Verizon N.Y.,Inc., 77 AD3d 344 [2010]).
The Supreme Court further reasoned that, pursuant to Real Property Law § 442-d, theplaintiff could not sustain causes of action to recover damages for unjust enrichment and inquantum meruit because it was not a licensed real estate broker at the time any services wererendered. Real Property Law § 442-d bars an entity from maintaining an action for therecovery of compensation for services rendered in facilitating the sale of real estate, if it was not"a duly licensed [*4]real estate broker or real estate salesman" onthe date the cause of action arose (Real Property Law § 442-d; see Kavian v Vernah Homes Co., 19AD3d 649, 650 [2005]). However, in an affidavit submitted in response to the Northbrookdefendants' motion, the plaintiff's principal alleged that he was not acting as a broker, but ratheras a potential principal in the acquisition or, alternatively, as a "finder" intent on introducing AVJto a potential buyer and collecting a "finder's fee," and thus, was not subject to Real PropertyLaw § 442-d. Accepting this contention as true, as the court must, the Supreme Courtshould not have granted those branches of the Northbrook defendants' motion which were todismiss the fifth and sixth causes of action insofar as asserted against them on the ground that theplaintiff was barred from seeking recovery pursuant to Real Property Law § 442-d.
Accordingly, we modify the order by denying those branches of the Northbrook defendants'motion which were pursuant to CPLR 3211 (a) (7) to dismiss the fifth and sixth causes of actioninsofar as asserted against them. Mastro, J.P., Florio, Leventhal and Sgroi, JJ., concur. [PriorCase History: 23 Misc 3d 1112(A), 2009 NY Slip Op 50712(U).]