| Siegmund Strauss, Inc. v East 149th Realty Corp. |
| 2013 NY Slip Op 01343 [104 AD3d 401] |
| March 5, 2013 |
| Appellate Division, First Department |
| Siegmund Strauss, Inc., Respondent, v East 149thRealty Corp., Defendant, and Windsor Brands, Ltd., et al.,Appellants. |
—[*1] Epstein Becker & Green, P.C., New York (Ralph Berman of counsel), forrespondent.
Upon remittitur from the Court of Appeals (20 NY3d 37 [2012]), judgment,Supreme Court, New York County (Bernard J. Fried, J.), entered April 7, 2009, declaringplaintiff Siegmund Strauss to be the lawful tenant of the subject premises, and bringingup for review an order (same court and Justice), entered August 6, 2007, which grantedplaintiff's motion to dismiss the amended answer of defendants Windsor Brands, Ltd.,Twinkle Import Co., Inc., Teresa Rodriguez and Robert Rodriguez (defendants) whichasserted counterclaims and a third-party complaint, unanimously modified, on the law, tothe extent of denying plaintiff's CPLR 3211 motion, finding viable claims for breach ofcontract, and otherwise affirmed, without costs.
The parties to this appeal negotiated to merge their corporations and operate out of abuilding at 520 Exterior Street in the Bronx. At the time, the building was leased bydefendant Windsor. Plaintiff and the individual defendants—who owned andoperated defendant corporations—drafted, but did not execute a written mergeragreement. It is undisputed that all of the parties began to perform under that agreement,which included a provision that contemplated Windsor helping Strauss to negotiate anew lease for the premises with 149th Street Realty, the landlord. However, after plaintiffmoved into the subject premises, the parties' relationship quickly soured, and plaintiffStrauss sought to buy out the appealing defendants. The offer was rejected, and plaintiffremoved the individual defendants from the merged corporation's payroll and changedthe locks on the premises.
Plaintiff commenced this action seeking, among other things, a declaratory judgmentthat it was the tenant entitled to possession of the property. In their answer, defendantsasserted counterclaims and a third-party complaint against the Strauss principals, allegingfraud, conversion, and tortious interference with a contractual relationship. The amendedanswer did not assert a claim for breach of contract.
Strauss and its principals moved, pursuant to CPLR 3211 (a) (7), to dismiss the [*2]counterclaims and third-party complaint. By order enteredAugust 7, 2007, the court granted the motion, finding that the factual allegationsunderlying the counterclaims and third-party complaint supported claims for breach ofcontract, but not the alleged torts. Defendants moved for clarification/modification andreargument, requesting permission to amend their counterclaims to assert a cause ofaction for breach of contract. By order entered December 10, 2007, the court denied themotion.
Defendants subsequently moved to amend their complaint to assert a claim forbreach of contract. This motion was denied by order entered February 25,2008.[FN1]A bench trial ensued, and the court declared plaintiff the lawful tenant of the premises.Defendants appealed from the final judgment, seeking review of the August 2007 andFebruary 2008 interlocutory orders pursuant to CPLR 5501 (a) (1).
We affirmed, holding that the appeal did not bring up for review either of theinterlocutory orders because neither "necessarily affected" the final judgment awardingplaintiff possession of the property (Siegmund Strauss, Inc. v East 149th Realty Corp., 81 AD3d260 [1st Dept 2010]). We concluded that the judgment declaring that Strauss wasentitled to possession would still stand regardless of whether defendants were permittedto pursue a claim for breach of contract (id. at 265).
The Court of Appeals granted leave,[FN2]modified, and remitted for our review of the motion court's determination in its August2007 order, which the Court of Appeals found "necessarily affected" the final judgment(20 NY3d at 43).
Given that the remand order permits review of the motion court's 2007 order, we finderror in the grant of plaintiff's CPLR 3211 motion to dismiss the counterclaims andthird-party complaint. It is settled that a motion for dismissal pursuant to CPLR 3211 (a)(7) "must be denied if from the pleadings' four corners factual allegations are discernedwhich taken together manifest any cause of action cognizable at law" (511 W. 232ndOwners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002] [internal quotationmarks omitted]). The pleading is to be liberally construed (id.). The court mustaccept the facts alleged in the pleading as true and accord the opponent of the motion,here defendants, "the benefit of every possible favorable inference [to] determine onlywhether the facts as alleged fit within any cognizable legal theory" (Leon vMartinez, 84 NY2d 83, 87-88 [1994]). "[T]he criterion is whether the proponent ofthe pleading has a cause of action, not whether he has stated one" (id. at88 [emphasis added and internal quotation marks omitted]).
Here, as the motion court recognized, defendants' answer and third-party complaintsufficiently alleged contract-based claims. Defendants asserted that plaintiff negotiatedthe [*3]merger agreement with them, and subsequentlytook the entirety of their food distribution business, including inventory, leased premises,clientele, and employees without making any payments therefor. Plaintiff's assertions insupport of its CPLR 3211 motion did not refute defendants' allegations. Accordingly, wefind that defendants have alleged facts sufficient to support contract-based claims,subject to challenge by plaintiff, and remand for further proceedings thereupon.Concur—Gonzalez, P.J., Saxe, Moskowitz and DeGrasse JJ.
Footnote 1: Defendants filed anotice of appeal from the Feb. 2008 order, but did not perfect and subsequently withdrewtheir appeal.
Footnote 2: The Court of Appealsgranted leave to appeal from that part of our order that affirmed the judgment andotherwise dismissed defendant's motion for leave to appeal from the remaining portion ofour order on the ground that it did not finally determine the action (17 NY3d 936[2011]).