| Saivest Empreendimentos Imobiliarios E. Participacoes, Ltda vElman Invs., Inc. |
| 2014 NY Slip Op 03211 [117 AD3d 447] |
| May 6, 2014 |
| Appellate Division, First Department |
[*1]
| Saivest Empreendimentos Imobiliarios E. Participacoes,Ltda, Appellant, v Elman Investors, Inc., et al.,Respondents. |
Christelle Clement, New York, for appellant.
The Law Firm of Borstein & Sheinbaum, New York (James Sheinbaum ofcounsel), for respondents.
Order, Supreme Court, New York County (Paul G. Feinman, J.), entered September7, 2011, which granted defendants' motion to dismiss the complaint pursuant to CPLR3211, unanimously modified, on the law, to deny the motion as to the breach of contractclaim against defendant Elman Investors, Inc., and otherwise affirmed, withoutcosts.
Plaintiff is a Brazilian real estate development company whose business is to identifyand structure sale-leaseback transactions. In July 2009, it commenced negotiations withdefendant Elman Investors, Inc. (Elman Inc.) and other potential investors in connectionwith a transaction in which the investor would purchase a refrigerated warehouse builtfor Fresh Del Monte in Cabreuva, Brazil, and lease it to Frialto, a Brazilian company, ona long-term basis.
On August 19, 2009, Lee Elman, as Elman Inc.'s president, sent plaintiff anon-binding offer that outlined the terms under which Elman Inc. would be willing toenter into the transaction. The price stated at that time was 6.5 million Brazilian reais.Thereafter, the parties continued to negotiate the terms of the investment.
On October 15, 2009, Mr. Elman asked plaintiff to renegotiate the purchase price toa maximum of 5,300,000 reais. Plaintiff alleges that its principal, Reginald Nierynck,informed Mr. Elman that plaintiff would only reopen negotiations if Elman Inc.irrevocably committed to closing the transaction if plaintiff was able to secure thereduced price. In response, on October 16, 2009, Elman Inc. sent plaintiff a letter, signedby Mr. Elman, which stated that "Elman Investors LLC is willing to go forward and closethe Transaction, subject to a positive outcome of a due diligence on the underlyingdocumentation, based on the following assumptions:" a purchase price of 5,300,000;plaintiff's fee in the amount of 600,000; 500,000 for "refurbishments/coolinginstallation"; and closing costs of 200,000 (all amounts in Brazilian reais). The projectedclosing date was no later than December 31, 2009.
On November 5, 2009, plaintiff advised Mr. Elman that the seller had agreed toreduce the price to 5,200,000 reais. On November 11, 2009, Mr. Elman advised plaintiffthat he could not go forward, despite the price reduction, because he was in poor health,did not have final approval from his partners in Brazil, and had "pledged a substantialamount of capital here in the [*2]U.S. . . .(over 8 million)." On November 16, 2009, plaintiff forwarded Mr. Elman certaindocuments provided by the seller to start due diligence. On November 17, 2009, Mr.Elman replied that Elman Inc. would not go forward with the transaction because its"partners in Brazil have not been able to give me a 'thumbs up' on this deal becausecompeting alternative investments, with immediate higher yields are available," he was inpoor health, and "we have committed to a large transaction in this country which mustclose in early December." Plaintiff now seeks to recover its finder's fee from Elman Inc.under theories of breach of contract, based on the October 16, 2009 letter, or promissoryestoppel. Plaintiff also seeks to pierce the corporate veil and hold Mr. Elman individuallyliable.
At this procedural stage, the breach of contract claim against Elman Inc. should nothave been dismissed.
General Obligations Law § 5-701 (a) (10) requires that the agreementbe subscribed by the party to be charged, and that it contain the material terms of theagreement (see Allied Sheet Metal Works v Kerby Saunders, Inc., 206 AD2d 166[1st Dept 1994]). The motion court found that the breach of contract action must bedismissed against Elman Inc. because the October 16, 2009 letter would only bind ElmanInvestors, LLC, which is not named as a party. However, as defendants concede in theirbrief, Elman signed the letter on behalf of Elman Inc., the named corporate defendant.While the letter states that "Elman Investors LLC is willing to go forward and close theTransaction," it references the parties' ongoing negotiations, and the August 19, 2009non-binding offer expressly provided that the purchaser would be Elman Inc. or its"nominee," possibly "a Delaware limited liability company of which [Elman Inc.] willserve as the Managing Member." Read in this light, the October 16 letter may reasonablybe understood as a commitment by Elman Inc. to have its nominee enter into thetransaction.
Furthermore, taken together, the parties' various writings contained the materialterms necessary to satisfy the statute of frauds for a finder's fee agreement (seeCobble Hill Nursing Home v Henry & Warren Corp., 74 NY2d 475, 482[1989], cert denied 498 US 816 [1990]; Chan v Shew Foo Chin, 62 AD3d 471 [1st Dept 2009];Sorge v Nott, 22 AD2d 768 [1st Dept 1964]). To the extent it is not clear whenplaintiff's fee would be paid, where a contract does not set forth a time for payment, thelaw implies that payment is due within a reasonable time after performance (see Boone Assoc., L.P. vLeibovitz, 13 AD3d 267 [1st Dept 2004]). Plaintiff alleges that he obtained thereduced price, and at this procedural stage Elman Inc. cannot rely on its own failure toconduct due diligence or to perform a condition necessary for completion to avoid itsobligations to plaintiff (see Trylon Realty Corp. v Di Martini, 34 NY2d 899[1974]; Prime City Real Estate Co. v Hardy, 256 AD2d 80 [1st Dept 1998];see also Nuvest, S. A. v Gulf & W. Indus., Inc., 649 F2d 943, 947 [2d Cir1981]).
Plaintiff's promissory estoppel claim fails because it does not allege "a dutyindependent of the [contract]" (CARI, LLC v 415 Greenwich Fee Owner, LLC, 91 AD3d583, 583 [1st Dept 2012] [internal quotation marks omitted], lv dismissed in part,denied in part 19 NY3d 845 [2012]; see also Susman v Commerzbank Capital Mkts. Corp., 95 AD3d589, 590 [1st Dept 2012] ["to the extent the second cause of action was forpromissory estoppel, such a claim cannot stand when there is a contract between theparties"], lv denied 19 NY3d 810 [2012]). Furthermore, even if the contract werebarred by the statute of frauds, the claim would fail because the allegations in thecomplaint do not rise to the requisite level of unconscionability (see Steele vDelverde S.R.L., 242 AD2d 414, 415 [1st Dept 1997]; Dunn v B&HAssoc., 295 AD2d 396, 397 [2d Dept 2002]).
Plaintiff failed to state a cause of action against Mr. Elman personally (see 20 Pine St. [*3]Homeowners Assn. v 20 Pine St. LLC, 109 AD3d733, 735-736 [1st Dept 2013]). The conclusory allegations against Mr. Elman do notassert that any actions he took were outside the scope of his role as president of ElmanInc., and they describe ordinary negotiations between parties to a potential acquisition.Nor does plaintiff allege that Mr. Elman's actions in this transaction were made for hispersonal gain, as distinguished from gain for Elman Inc. (see Courageous Syndicate vPeople-To-People Sports Comm., 141 AD2d 599, 600 [2d Dept 1988]). Conclusoryallegations of Elman Inc.'s undercapitalization and intermingling of assets, and that Mr.Elman dominated the corporation, without additional facts, are insufficient to pierce thecorporate veil (see Andejo Corp.v South St. Seaport Ltd. Partnership, 40 AD3d 407 [1st Dept 2007]).Concur—Mazzarelli, J.P., Andrias, DeGrasse, Freedman and Gische, JJ. [PriorCase History: 2011 NY Slip Op 33869(U).]