Opinion
12369 Index No. 152102/17 Case No. 2020-01992
02-09-2021
C.H.A. DESIGN EXPORT (H.K.) LTD., Plaintiff–Respondent, v. Alan MILLER, Defendant–Appellant John Does 1–10, et al., Defendants.
Sills Cummis & Gross, P.C., New York (Matthew P. Canini of counsel), for appellant. Louis Fogel & Associates, New York (Louis Fogel of counsel), for respondent.
Sills Cummis & Gross, P.C., New York (Matthew P. Canini of counsel), for appellant.
Louis Fogel & Associates, New York (Louis Fogel of counsel), for respondent.
Kapnick, J.P., Mazzarelli, Moulton, Mendez, JJ.
Order, Supreme Court, New York County (Shlomo S. Hagler, J.), entered December 3, 2019, which, to the extent appealed from, denied defendant-appellant Alan Miller's motion to dismiss plaintiff's tortious interference with contract claim, unanimously affirmed, with costs.
According to the First Amended Complaint, plaintiff C.H.A. Design Export (H.K.) Ltd. manufactures apparel and then sells it wholesale to distributers. Nonparty MM & R, Inc. (MMR) was one of those distributers and purchased apparel from plaintiff on credit. Defendant Alan Miller was an owner and/or officer of MMR, allegedly "controlled" MMR, and was plaintiff's primary contact. In 2011, MMR owed plaintiff an outstanding balance. Plaintiff alleges that Miller promised that MMR would make the payments to plaintiff, but needed more time to pay its debt. Ultimately, in 2015, a commercial factor that had a first priority lien on MMR's assets exercised its priority interest and took MMR's assets in a peaceful possession pursuant to UCC 9–609 . At the time MMR went out of business, it had an outstanding principal balance of nearly $1.2 million due to plaintiff. Prior to the 2015 takeover, plaintiff alleges that Miller used MMR's revenue to pay down the debt to the commercial factor, for which Miller had provided a personal guaranty, rather than to make payments to plaintiff.
The court properly denied the motion to dismiss plaintiff's tortious interference claim against defendant Miller. A claim of tortious interference with contract requires that four elements be pleaded: "(1) the existence of a valid contract between plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional procuring of the breach; and (4) damages" ( Foster v. Churchill, 87 N.Y.2d 744, 749–750, 642 N.Y.S.2d 583, 665 N.E.2d 153 [1996] ; see Shear Enters., LLC v. Cohen, 189 A.D.3d 423, 137 N.Y.S3d 306 [1st Dept. 2020] ; Hoag v. Chancellor, Inc., 246 A.D.2d 224, 228, 677 N.Y.S.2d 531 [1st Dept. 1998] ). "To establish a corporate officer's liability for inducing a breach of a contract between the corporation and a third party, the complaint must allege that the officers' acts were taken outside the scope of their employment or that they personally profited from their acts" ( Hoag, 246 A.D.2d at 228, 677 N.Y.S.2d 531 [internal quotation marks and ellipsis omitted]; see also Joan Hansen & Co. v. Everlast World's Boxing Headquarters Corp., 296 A.D.2d 103, 109–110, 744 N.Y.S.2d 384 [1st Dept. 2002] ). Here, plaintiff alleges that Miller used the company revenues to pay himself directly and/or indirectly and to pay for other benefits he personally received. Specifically, plaintiff alleges that Miller used the company revenues to pay down his own exposure, pursuant to a personal guarantee, to the commercial factor that provided financing to MMR, and that he did so in order to give himself time to secure new employment, which was with the company that subsequently purchased MMR's assets. Thus, plaintiff sufficiently alleges that separate and apart from acting in the best interests of MMR, Miller sought to personally profit by causing MMR not to pay plaintiff for the outstanding goods and services provided.
Defendant contends that a tortious interference claim will not stand where the alleged interference is merely "incidental to some other, lawful, purpose" ( Alvord & Swift v. Muller Constr. Co., 46 N.Y.2d 276, 281–282, 413 N.Y.S.2d 309, 385 N.E.2d 1238 [1978] ). However, the Alvord decision was based on a summary judgment motion. Here, defendant has moved pursuant to CPLR 3211(a)(7) for failure to state a claim, where the standard requires us to "[accept] the material allegations as true and [give] plaintiff the benefit of every reasonable inference" ( Kralic v. Helmsley, 294 A.D.2d 234, 235, 743 N.Y.S.2d 15 [1st Dept. 2002] ). Defendant's argument that his payment to a secured creditor with a first lien constituted a "required lawful act" is better addressed after discovery has taken place, rather than at the pleading stage.
We have considered defendant's remaining arguments and find them unavailing.