| JF Capital Advisors, LLC v Lightstone Group, LLC |
| 2014 NY Slip Op 01984 [115 AD3d 591] |
| March 25, 2014 |
| Appellate Division, First Department |
| JF Capital Advisors, LLC,Appellant-Respondent, v The Lightstone Group, LLC, et al.,Respondents-Appellants. |
—[*1] Emery Celli Brinckerhoff & Abady LLP, New York (Elizabeth S. Saylor of counsel),for respondents-appellants.
Order, Supreme Court, New York County (Melvin L. Schweitzer, J.), entered on orabout November 27, 2012, which granted in part defendants' motion to dismiss thecomplaint for failure to state a cause of action under CPLR 3211 (a) (7), unanimouslymodified, on the law, defendants' motion as to the remainder of the complaint granted,and otherwise affirmed, without costs. The Clerk is directed to enter judgment dismissingthe complaint.
Plaintiff is an investment advisory firm composed of hotel and hospitality industryexperts, and defendants are real estate investment companies. Plaintiff commenced thisaction seeking compensation from defendants for financial advisory services it providedunder an alleged oral contract in connection with defendants' acquisition of certain hotelsand other investment opportunities.
Specifically, the complaint alleges that from November 2010 until May 2011, inconnection with eight different projects that defendants were "interested in pursuing,"plaintiff performed a broad range of advisory services for which defendants have notcompensated plaintiff; these services allegedly include financial analysis and modeling,market research, data analysis, due diligence, property tours, site visits, investmentanalysis and evaluation services. The complaint asserts causes of action for quantummeruit and unjust enrichment in connection with these services. Plaintiff generally doesnot seek compensation for negotiations that it performed on defendants' behalf, but doesseek compensation for the other services it allegedly performed for example, preparinginvestment committee materials and reviewing documents for loan portfolios.
The parties disagree on whether the statute of frauds applies to plaintiff's claims. Therelevant provision of the statute of frauds states that a contract to pay compensation for"negotiating the purchase, sale, exchange, renting or leasing of any real estate or. . . of a business opportunity" is void unless it is in writing (GeneralObligations Law § 5-701 [a] [10]). The statute also provides that " '[n]egotiating'includes procuring an introduction to a party to the transaction or assisting in thenegotiation or consummation of the transaction" (id.).
The motion court correctly granted in part defendants' motion to dismiss plaintiff'sclaims for quantum meruit and unjust enrichment with regard to three of the eightinvestment [*2]opportunities that defendants considered,because plaintiff acknowledged either participating in negotiations or preparingdocuments for bidding, i.e., assisting in negotiations of business transactions. In thosecases, plaintiff plainly acted as an intermediary as the statute of frauds contemplates(see Freedman v Chemical Constr. Corp., 43 NY2d 260, 266 [1977]).
That plaintiff provided other services in addition to negotiating deals is notdispositive here. On the contrary, plaintiff undertook those other services to assistdefendants' negotiations, largely by determining the value to defendants of pursuing thedeal (see e.g. Whitman Heffernan Rhein & Co. v Griffin Co., 163 AD2d 86 [1stDept 1990], lv denied 76 NY2d 715 [1990]; Gutkowski v Steinbrenner,680 F Supp 2d 602, 613 [SD NY 2010]). The statute of frauds thus squarely covers thefinancial advisory services plaintiff performed on those projects.
The statute of frauds also barred plaintiff's unjust enrichment and quantum meruitclaims for the financial advisory services it allegedly performed on the remaining fiveinvestment opportunities that defendants considered, for which defendants allegedlyrequested that plaintiff provide certain investment analyses. At the very least, plaintiff'sservices in this context amount to "assisting in the negotiation or consummation of thetransaction" (General Obligations Law § 5-701 [a] [10]). The motion courterroneously declined to dismiss those claims on the basis that the information plaintiffprovided defendants was not ultimately used to assist in the negotiation or consummationof those investment opportunities. Indeed, investment analyses and financial adviceregarding the possible acquisition of investment opportunities "clearly fall within"General Obligations Law § 5-701 (a) (10) (Enfeld v Hemmerdinger EstateCorp., 34 AD2d 980, 981 [2d Dept 1970], affd 28 NY2d 606 [1971]; seealso Whitman, 163 AD2d at 87; GEM Advisors, Inc. v Corporacion Sidenor,S.A., 667 F Supp 2d 308, 324 n 5 [SD NY 2009]).
Finally, contrary to plaintiff's assertions, dismissal of its claims before discovery isnot premature, because it had available all of the facts necessary to describe the servicesit allegedly performed, and thus to establish whether its claims fell outside of the statuteof frauds. It also acknowledged in the complaint that no written agreement ever came tofruition and no amount of discovery will remedy that. Concur—Saxe, J.P.,Moskowitz, DeGrasse and Clark, JJ. [Prior Case History: 2012 NY Slip Op33262(U).]