| Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc.,Inc. |
| 2014 NY Slip Op 06007 [120 AD3d 431] |
| August 28, 2014 |
| Appellate Division, First Department |
[*1](August 28, 2014)
| Amsterdam Hospitality Group, LLC,Respondent, v Marshall-Alan Associates, Inc.,Appellant. |
Ohrenstein & Brown, LLP, Garden City (Cherice P. Vanderhall of counsel), forappellant.
Cozen O'Connor, New York (Michael C. Schmidt of counsel), for respondent.
Order, Supreme Court, New York County (Jeffrey K. Oing, J.), entered July 16,2012, which, insofar as appealed from, denied defendant's motion to dismiss the thirdand fourth causes of action for fraudulent misrepresentation and negligentmisrepresentation, affirmed, without costs.
Plaintiff alleges that defendant, a senior executive search firm retained by plaintiff torecruit senior level executives to help it develop its hotel division, misrepresented that apotential placement, nonparty David Bowd, was not subject to a nonsolicitationagreement with his former employer. Plaintiff further alleges that it relied on thismisrepresentation in hiring Bowd, and subsequently incurred legal expenses to defend alawsuit brought by his former employer against plaintiff and the employee for breach of arestrictive covenant between the employee and his former employer.
The allegations set forth in the complaint state causes of action for fraudulentmisrepresentation and negligent misrepresentation (Guggenheimer v Ginzburg,43 NY2d 268, 275 [1977]). In support of its argument that plaintiff cannot establishreasonable reliance on the alleged misrepresentation, defendant submits an affidavit andemail showing that Bowd informed plaintiff of the nonsolicitation agreement with hisformer employer prior to the effective date of his employment with plaintiff. Inopposition, plaintiff submits an affidavit and letter showing that the employee hadaccepted plaintiff's offer of employment days before the email disclosing the restrictivecovenant. The dissent contends that the affidavit and email submitted by defendant, takentogether, constitute "documentary evidence" that "negates the element of justifiablereliance as a matter of law." As a result, the dissent argues, defendant's motion to dismisspursuant to CPLR 3211 (a) (1) should have been granted.
The courts of this state have grappled with the issue of what writings do and do notconstitute documentary evidence, since the term is not defined by statute. "Judicialrecords, such as judgments and orders, would qualify as 'documentary', as should theentire range of documents reflecting out-of-court transactions, such as contracts, deeds,wills, mortgages, and even correspondence" (David D. Siegel, Practice Commentaries,McKinney's Cons Laws of NY, Book 7B, CPLR C3211:10 at 22). To qualify as"documentary," the paper's content must be "essentially undeniable and . . . ,assuming the verity of [the paper] and the validity of its [*2]execution, will itself support the ground on which themotion is based. (Neither the affidavit nor the deposition can ordinarily qualify undersuch a test.)" (Id.)
We have held that affidavits that "do no more than assert the inaccuracy of plaintiffs'allegations . . . may not be considered, in the context of a motion to dismiss,for the purpose of determining whether there is evidentiary support for the complaint. . . and do not otherwise conclusively establish a defense to the assertedclaims as a matter of law" (Tsimerman v Janoff, 40 AD3d 242, 242 [1st Dept 2007];see also Fontanetta v John Doe1, 73 AD3d 78, 85 [2d Dept 2010]).
The cases cited by the dissent do not require us to reach a different result in this case.In WFB Telecom. v NYNEX Corp. (188 AD2d 257, 259 [1st Dept 1992], lvdenied 81 NY2d 709 [1993]), the documentary evidence submitted by defendantsincluded letters from both parties' counsel, which, taken together, constituted "undisputedproof that defendants' actions were motivated, at least in part, by legitimate businessgoals" sufficient to defeat plaintiffs' claims for prima facie tort. This is wholly consistentwith the rule that to constitute documentary evidence, the papers must be "essentiallyundeniable" and support the motion on its own (Siegel at 22). Nor is our conclusion thatthe email in Advanced GlobalTech., LLC v Sirius Satellite Radio, Inc. (44 AD3d 317, 318 [1st Dept 2007])did not constitute documentary evidence translate into a blanket rejection of emails asdocumentary evidence. As Professor Siegel recognizes, "even correspondence" may,under appropriate circumstances, qualify as documentary evidence (Siegel at 22). In ourelectronic age, emails can qualify as documentary evidence if they meet the "essentiallyundeniable" test (see Art & Fashion Group Corp. v Cyclops Prod., Inc., 120 AD3d 436 [1st Dept 2014] [decided simultaneously herewith]; see also Langer v Dadabhoy,44 AD3d 425 [1st Dept 2007], lv denied 10 NY3d 712 [2008]). The email atissue here simply fails this test.
Significantly, we note that a motion to dismiss under CPLR 3211 (a) (1) obliges thecourt "to accept the complaint's factual allegations as true, according to plaintiff thebenefit of every possible favorable inference, and determining only whether the facts asalleged fit within any cognizable legal theory" (Weil, Gotshal & Manges, LLP v Fashion Boutique of ShortHills, Inc., 10 AD3d 267, 270-271 [1st Dept 2004] [internal quotation marksomitted]). Dismissal is warranted only if the documentary evidence submitted "utterlyrefutes plaintiff's factual allegations" (Goshen v Mutual Life Ins. Co. of N.Y., 98NY2d 314, 326 [2002]; seeGreenapple v Capital One, N.A., 92 AD3d 548, 550 [1st Dept 2012]), and"conclusively establishes a defense to the asserted claims as a matter of law" (Weil,Gotshal, 10 AD3d at 270-271 [internal quotation marks omitted]).
Schutty v Speiser KrauseP.C. (86 AD3d 484, 485 [1st Dept 2011]), also cited by the dissent, is similarlydistinguishable. There we found multiple drafts of a contemplated new employmentagreement, the parties' correspondence and plaintiff's written letter of resignation to besufficient to undeniably establish "that the parties did not intend to be bound until therewas a signed written contract and that there was never a meeting of the minds on allmaterial terms of the new agreement." (Id.)
The emails in this particular case, aside from being not otherwise admissible, are notable to support the motion to dismiss. The "documentary evidence" here, unlike theemails in Langer, do not, standing on their own, conclusively establish a defenseto the claims set forth in the complaint. While they may indicate that Bowd putdefendants on notice of potential employment restrictions, other letters indicate thatBowd had, in fact, accepted the offer of employment days before he sent the emails inquestion. Because defendant has not "negated beyond substantial [*3]question" the allegation of reasonable reliance, and thesubmissions raise factual issues concerning the circumstances and communicationsunderlying plaintiff's hiring of Bowd, it cannot be concluded that plaintiff has no causesof action for fraudulent and negligent misrepresentation (Guggenheimer vGinzburg, 43 NY2d at 275). Concur—Sweeny, J.P., Manzanet-Daniels andClark, JJ.
DeGrasse, J., dissents in a memorandum as follows: As related to this appeal,defendant's motion was for an order pursuant to CPLR 3211 (a) (1) and (7) dismissingthe third and fourth causes of action for fraud and negligent misrepresentation,respectively. I agree that the motion was properly denied insofar as it called for adismissal under CPLR 3211 (a) (7). I respectfully dissent because the motion shouldhave been granted pursuant to CPLR 3211 (a) (1) on the basis of documentary evidencethat negates the element of reasonable reliance with respect to each cause of action.
Defendant is an executive search firm. Plaintiff alleges in the complaint that "[a]t theconclusion of the negotiations and discussions, and specifically on the recommendationof [d]efendant, [plaintiff] hired [nonparty David] Bowd as its President of HotelOperations, effective on or about June 29, 2009." Bowd had been employed by plaintiff'scompetitor, Morgans Hotel Group Management LLC (MHG), at the time of hisnegotiations with plaintiff. In support of the instant fraud and negligentmisrepresentation causes of action, plaintiff further alleges that it reasonably relied ondefendant's false representation that "Bowd did not have any agreements with hisemployer prior to [plaintiff] that would prohibit or otherwise restrict Bowd's ability tofully perform his anticipated job duties and responsibilities with [plaintiff]." Accordingto plaintiff, those responsibilities included the utilization of Bowd's contacts withinMHG to identify potential talent for plaintiff's business.
On September 4, 2009, MHG brought an action against Bowd, plaintiff and itsprincipals in the Supreme Court, New York County. The causes of action alleged againstplaintiff sounded in tortious interference with contract, aiding and abetting breach offiduciary duty and unfair competition. MHG alleged in its complaint that plaintiffwrongfully induced Bowd to breach his employment agreement with MHG by havinghim recruit two MHG employees to work for plaintiff. The instant complaint cites asdamages legal fees plaintiff was forced to incur before MHG's suit was voluntarilydiscontinued in May 2010.
Justifiable reliance on a misrepresentation or material omission is an element of fraud(Mandarin Trading Ltd. vWildenstein, 16 NY3d 173, 178 [2011]), as well as negligent misrepresentation(see Murphy v Kuhn, 90 NY2d 266, 270 [1997]). Reliance, however, is notjustified where the true facts have been made known to the party claiming to have beendeceived or misled (see 200 E. End Ave. Corp. v General Elec. Co., 5 AD2d 415,417 [1st Dept 1958], affd 6 NY2d 731 [1959]). I submit that documentaryevidence consisting of an email sent by Bowd to plaintiff 19 days before Bowd was hirednegates the element of justifiable reliance as a matter of law.
A June 10, 2009 email from Bowd to Stuart Podolsky, one of plaintiff's principals,reads as follows:
"Morning Stuart, just wanted to keep you in the loop, Meeting went well [*4]yesterday, they are still refusing to accept my resignationand want to counter offer. I have confirmed this is not my intention and I WILL bejoining you.
"There are a couple of things that came up yesterday that I wanted you to be awareof:
"1. The Corporate Legal team contacted me to confirm my knowledge of my contractconfirming that I cannot approach any member of MHG staff to offer them a role withinAmsterdam Hospitality. Obviously you were talking to Blake before me/or without myknowledge so there is no issue there. Although I think once you have done the deal withBlake we need to be strategic on when he resigns as I would like my role announcedwithin MHG before Blake resigns. I am pushing for this to happen today. . . ."
One hour later, Podolsky replied: "Good luck. Anything we could do to help theprocess we are there for you." Twenty minutes later, Bowd responded: "I think that if Igive them 1 extra week it would ease the process—how do you feel about mestarting with yweou on the 29th?"
A motion pursuant to CPLR 3211 (a) (1) may be appropriately granted wheredocumentary evidence utterly refutes a complaint's factual allegations, conclusivelyestablishing a defense as a matter of law (Goshen v Mutual Life Ins. Co. of N.Y.,98 NY2d 314, 326 [2002]). Bowd's first email on June 10, 2009 plainly put plaintiff onnotice of the restrictions imposed upon him by his employment agreement with MHG.The email therefore dispels any notion that plaintiff hired Bowd on June 29, 2009 injustifiable reliance on defendant's alleged representation that Bowd was not subject tosuch restrictions.
I am not persuaded by plaintiff's argument that correspondence such as Bowd's emaildoes not suffice as documentary evidence for purposes of CPLR 3211 (a) (1). Decisionsof this Court hold otherwise. For example, in Schutty v Speiser Krause P.C. (86 AD3d 484, 484-485 [1stDept 2011]), we found drafts of an agreement and correspondence sufficient forpurposes of establishing a defense under the statute. In WFB Telecom. v NYNEXCorp. (188 AD2d 257, 259 [1st Dept 1992], lv denied 81 NY2d 709 [1993]),we granted a CPLR 3211 (a) (1) motion on the basis of a letter from the plaintiff'scounsel that contradicted the complaint. Therefore, there is no blanket rule by whichemail is to be excluded from consideration as documentary evidence under the statute. Advanced Global Tech., LLC vSirius Satellite Radio, Inc. (44 AD3d 317 [1st Dept 2007]), which plaintiff cites,does not warrant a contrary conclusion. In Advanced we held that an email couldnot serve as documentary evidence conclusively establishing a defense simply because itwas "not otherwise admissible" (id. at 318, citing Aetna Cas. & Sur. Co.v Island Transp. Corp., 233 AD2d 157 [1st Dept 1996]). Here, by contrast, Bowd'saffidavit provided the necessary evidentiary foundation for the motion court'sconsideration of the email. Moreover, in Langer v Dadabhoy (44 AD3d 425, 426 [1st Dept 2007],lv denied 10 NY3d 712 [2008]), we found "documentary evidence in the form ofe-mails" to be sufficient to carry the day for a defendant on a CPLR 3211 (a) (1)motion.
There is also no merit to plaintiff's argument that the email does not establish adefense because it was sent after the parties signed a letter of employment dated June 4,2009. By its own terms, the "letter is not to be construed as an implied contract ofemployment." It therefore did not obligate plaintiff to hire Bowd on June 29, 2009. Thesame limitation set forth in the [*5]letter of employmentrefutes the majority's position that "defendant has not 'negated beyond substantialquestion' the allegation of reasonable reliance . . . ." Accordingly, I wouldreverse the order entered below and grant defendant's motion for an order dismissing thethird and fourth causes of action pursuant to CPLR 3211 (a) (1).