| Segal v Cooper |
| 2012 NY Slip Op 03562 [95 AD3d 545] |
| May 8, 2012 |
| Appellate Division, First Department |
| Josh Segal, Individually and Derivatively on Behalf of LighthouseReal Estate Advisors, LLC, et al., Respondents, v Paul Cooper et al.,Appellants. |
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Michael T. Sucher, Brooklyn, for respondents.
Order, Supreme Court, New York County (Milton A. Tingling, J.), entered April 28, 2011,which denied defendants' motion for summary judgment dismissing the amended complaint,unanimously modified, on the law, to grant the motion as to the third and sixth causes of action,and otherwise affirmed, without costs.
The court properly declined to dismiss plaintiff Segal's breach of contract claim. It is true that"[a] contract cannot be implied in fact . . . where there is an express contractcovering the subject-matter involved" (Miller v Schloss, 218 NY 400, 406-407 [1916][emphasis ommitted]). However, the Operating Agreement of Lighthouse Retail Partners L.L.C.,which later became plaintiff Lighthouse Real Estate Advisors, LLC (LREA), and the contractalleged in the amended complaint cover different subject matter. Defendants' arguments thatthere was no breach of contract and that Segal suffered no damages were considered and rejectedon a prior appeal (see Segal vCooper, 49 AD3d 467 [2008]).
Dismissal of Segal's fraud claim was also not warranted. As can be seen from his depositiontestimony and his affidavit in opposition to defendants' motion, this claim is not based solely onthe statements that defendant Cooper allegedly made at a December 2002 meeting; rather, it isalso based on the individual defendants' words and conduct after that date. For example, Segaltestified that the individual defendants represented that LREA had exclusive rights to market theproperties at issue. He also said Cooper told him that he (Cooper) was acting as a representativeof LREA when he met with the party that ultimately entered into the leases. These are factualstatements, as opposed to mere expressions of future intent.
Although Segal's deposition testimony shows that he did not rely on the allegedmisrepresentation (that LREA had an exclusive brokerage agreement for the properties at issue)when he entered into the business transaction with defendants, he was not asked whether hewould have continued to work for LREA for three years if he had known that defendantLighthouse Real Estate Management, LLC (LREM) had the exclusive brokerage. Segal wasentitled to rely on his fellow LLC members' statements and actions after LREA was formed (see Frame v Maynard, 83 AD3d599, 602 [2011]; Andersen vWeinroth, 48 AD3d 121, 136 [2007]; Brunetti v Musallam, 11 AD3d 280, 281 [2004]).
The motion court properly declined to dismiss Segal's unjust enrichment claim. Unjust [*2]enrichment is a quasi-contract claim and "[t]he existence of a validand enforceable written contract governing a particular subject matter ordinarily precludesrecovery in quasi contract for events arising out of the same subject matter"(Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987]). Here, however,LREA's Operating Agreement covers a different subject matter than Segal's unjust enrichmentclaim.
The record confirms the allegations of the complaint that Segal bestowed a benefit ondefendants (see Segal, 49 AD3d at 467). However, the record does not demonstrate whatbenefit LREA, as opposed to Segal, conferred on defendants. Therefore, we dismiss LREA'sunjust enrichment claim (sixth cause of action) (see Wiener v Lazard Freres & Co., 241AD2d 114, 119 [1998]).
Defendants' argument that the original complaint admitted that they "duly earned" thecommissions at issue is unavailing; the original complaint was superseded by the amendedcomplaint (see e.g. Baker v 16 SuttonPlace Apt. Corp., 2 AD3d 119 [2003]).
LREA's conversion claim (third cause of action) should have been dismissed because LREAdid not have a possessory right or interest in the commissions (see Colavito v New York Organ DonorNetwork, Inc., 8 NY3d 43, 49-50 [2006]). In opposition to defendants' summaryjudgment motion, Segal admitted that LREM, rather than LREA, had the exclusive brokerageagreement. Therefore, LREA had no right to commissions unless it actually procured a lease (see Parker Realty Group, Inc. vPetigny, 14 NY3d 864, 866 [2010]).
The motion court properly declined to dismiss the breach of fiduciary duty claims. It is truethat the Operating Agreement states, "The Managers are authorized to manage the affairs of theCompany in conjunction with the Managers' other business interests and activities, which may be. . . in direct competition with the business of the Company" and "Any Membermay engage in any other business ventures or activities which may be . . . in directcompetition with the business of the Company." However, Segal testified that the whole basis ofLREA's business was an exclusive agreement to market the properties at issue. Thus, by divertingthe exclusive brokerage agreement from LREA to LREM, defendants thwarted the very purposefor which LREA was formed (seePappas v Tzolis, 87 AD3d 889, 892-893 [2011]). Concur—Mazzarelli, J.P., Saxe,Moskowitz, Renwick and Freedman, JJ.