| Art & Fashion Group Corp. v Cyclops Prod., Inc. |
| 2014 NY Slip Op 06008 [120 AD3d 436] |
| August 28, 2014 |
| Appellate Division, First Department |
[*1]
| Art and Fashion Group Corporation et al.,Appellants-Respondents, v Cyclops Production, Inc., et al.,Respondents-Appellants. |
Mark L. Cortegiano, Middle Village, for appellants-respondents.
Aaron Richard Golub, Esquire, P.C., New York (Nehemiah S. Glanc of counsel), forrespondents-appellants.
Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered on orabout February 24, 2012, which granted defendants' CPLR 3211 (a) motion to dismissthe complaint to the extent of dismissing the fraud cause of action and dismissing thecomplaint as against defendants Cyclops, Albert Watson, Elizabeth Watson and MichaelJurkovac, unanimously modified, on the law, to reinstate the breach of the joint ventureagreement and unjust enrichment causes of action as against the individual defendants, todismiss the conversion/property damage cause of action, and otherwise affirmed, withoutcosts.
In this action, plaintiffs Art and Fashion Group Corporation (AFG) and Pier 59Studios L.P. (Pier 59) allege that they entered into an oral joint venture agreement withdefendants Cyclops, Cyclops Production, Inc. (CPI), Cyclops, LLC (CL), Albert Watson,Elizabeth Watson and Michael Jurkovac. According to the complaint, plaintiffs anddefendants formed 359 Productions, LLC to operate a joint venture to producedefendants' photo shoots and advertising campaigns. The complaint alleges that theparties agreed to operate on a 50/50 basis, to share profits and losses equally, and to paytheir respective share of all the expenses of the joint venture, including rents and salaries.Additionally, the parties agreed that all of defendants' campaigns would be producedthrough 359 Productions and shot exclusively at Pier 59's studios.
The complaint further alleges that defendants breached the joint venture agreementby failing to produce their campaigns through 359 Productions and by conducting thephoto shoots at locations other than Pier 59's studios. Plaintiffs allege that Pier 59 paidthe salaries of the corporate defendants' employees, and that defendants used plaintiffs'offices, facilities and the services of plaintiffs' employees for their own exclusive benefit.Despite receiving these benefits, plaintiffs allege that defendants failed to remit plaintiffs'share of revenue from the campaigns. The complaint asserts causes of action for breachof the joint venture agreement, unjust enrichment, fraud and conversion/propertydamage.
Defendants moved to dismiss the complaint pursuant to CPLR 3211 (a) (1) and (7)for failure to state a claim and as barred by documentary evidence. The motion courtdismissed the [*2]complaint in its entirety as against theindividual defendants and defendant Cyclops, and dismissed the fraud cause of action asagainst all defendants. The court denied dismissal of the causes of action for breach ofthe joint venture agreement, unjust enrichment and conversion/property damage asagainst CPI and CL. This appeal and cross-appeal ensued.
The motion court correctly denied the portion of the motion seeking dismissal of theclaim for breach of the joint venture agreement as against CPI and CL. Accepting thefacts as alleged in the complaint as true and according plaintiffs the benefit of everypossible favorable inference (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]),the complaint sufficiently states a cause of action for breach of a joint venture agreementby alleging "acts manifesting the intent of the parties to be associated as joint venturers,mutual contribution to the joint undertaking through a combination of property, financialresources, effort, skill or knowledge, a measure of joint proprietorship and control overthe enterprise, and a provision for the sharing of profits and losses" (Richbell Info.Servs. v Jupiter Partners, 309 AD2d 288, 298 [1st Dept 2003]).
The court also properly denied dismissal on the basis of documentary evidence. Acause of action may be dismissed under CPLR 3211 (a) (1) "only where the documentaryevidence utterly refutes [the] plaintiff's factual allegations, conclusively establishing adefense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d314, 326 [2002]). In other words, the documents relied upon must "definitely dispose of[the] plaintiff's claim" (Blonder& Co., Inc. v Citibank, N.A., 28 AD3d 180, 182 [1st Dept 2006]). Emailcorrespondence can, in a proper case, suffice as documentary evidence for purposes ofCPLR 3211 (a) (1) (Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc.,Inc., 120 AD3d 431 [1st Dept 2014] [decided simultaneously herewith]). Factual affidavits, however, donot constitute documentary evidence within the meaning of the statute (Flowers v 73rd TownhouseLLC, 99 AD3d 431, 431 [1st Dept 2012]).
In support of the motion, defendants submitted three factual affidavits and a series ofemails exchanged between the parties. The affidavits, "which do no more that assert theinaccuracy of plaintiffs' allegations" (Tsimerman v Janoff, 40 AD3d 242, 242 [1st Dept 2007])cannot be considered, and the emails do not conclusively establish a defense as a matterof law. There is no merit to defendants' assertion that the emails show, as a matter of law,that no joint venture agreement was reached and that the parties were merely engaging inpreliminary negotiations. "Even where the parties acknowledge that they intend tohammer out details of an agreement subsequently, a preliminary agreement may bebinding" (Richbell, 309 AD2d at 298; accord Foster v Kovner, 44 AD3d 23, 27-28 [1st Dept2007]).
Although some parts of the emails suggest that all of the details of the joint venturewere not fully agreed upon, the emails, when read in their entirety, do not conclusivelyrefute plaintiffs' allegations that an oral joint venture agreement had in fact been reached.For example, a November 3, 2009 email states that "359 is already operating inAFG's [office] space" (emphasis added) and was expected to be "cashflow positive bythe end of 2009." This same email talks about "formalizing the establishment of. . . 359 Productions," suggesting that it was already in existence.Furthermore, in a May 1, 2010 email, plaintiffs' representative Federico Pignatelliaddresses defendant Michael Jurkovac as "[p]artner," makes reference to "stabiliz[ing]the [c]ompany," and expresses concern about two managerial changes within the pastyear.
In a May 13, 2010 email, written six months after the initial email submitted bydefendants, Pignatelli informs Jurkovac of his decision "not to proceed anymore with359P." Contrary to defendants' contention, this statement does not unequivocallyestablish that no joint [*3]venture agreement had beenreached in the first place. It can just as easily be read as indicating Pignatelli's decision toterminate an already-established joint venture. The email also discusses 359P's overheadand notes issues about the extent of the work that was brought into 359P, both of whichare consistent with plaintiffs' claim that a joint venture had been formed. The emails alsomake reference to other communications, not produced by defendants, identifying issueswith 359P's staff. Thus, it is clear that the emails submitted present only a partial pictureof the interactions between the parties.
Finally, although defendants contend that they did not intend to proceed with thealleged joint venture until they executed a formal written agreement, no such expressreservation is contained in any of the emails (see generally Kowalchuk v Stroup, 61 AD3d 118 [1st Dept2009]). Because the emails in question fail to definitely refute plaintiffs' claim that theparties had reached an oral joint venture agreement, dismissal at this stage is notwarranted (see Foster v Kovner, 44 AD3d at 27-28).
The motion court correctly declined to dismiss the unjust enrichment cause of actionas against CPI and CL. In light of defendants' contention that no joint venture agreementexisted, plaintiffs are permitted to plead unjust enrichment as an alternative basis forrelief (see Zuccarini v Ziff-Davis Media, 306 AD2d 404, 405 [2d Dept 2003]["(w)here . . . there is a bona fide dispute as to the existence of a contract. . . a plaintiff may proceed upon a theory of quasi contract as well ascontract, and will not be required to elect his or her remedies"]).
The complaint was properly dismissed as against defendant Cyclops. In thecomplaint, plaintiffs identify Cyclops as merely a trade name used by one or more ofdefendants, and thus it is not a legal entity. However, the motion court should not havedismissed the breach of the joint venture agreement and unjust enrichment claims asagainst the individual defendants. The complaint alleges that all of thedefendants, both corporate and individual, entered into the joint venture agreement andwere unjustly enriched. The individual defendants' claim that plaintiffs negotiated onlywith the corporate entities is contained in affidavits which, as previously noted, cannot beconsidered on this motion. Furthermore, the emails submitted shed no light on this issue.Thus, dismissal at this preanswer stage is not appropriate.
Plaintiffs' fraud claim was properly dismissed as duplicative of the cause of actionfor breach of the joint venture agreement (see Cole, Schotz, Meisel, Forman & Leonard, P.A. vBrown, 109 AD3d 764, 765 [1st Dept 2013]).
The motion court should have dismissed the claim for conversion since the complaint[*4]"[does] not identify the property allegedly converted"(Messiah's CovenantCommunity Church v Weinbaum, 74 AD3d 916, 919 [2d Dept 2010]). For thesame reason, plaintiffs' property damage claim fails. Concur—Moskowitz, J.P.,Richter, Manzanet-Daniels, Clark and Kapnick, JJ.