Opinion
Index No. 516534/2020
03-30-2023
Antoine REELS, Plaintiff, v. DYNAMICS IN PLAY, LLC, Joshua Lenoff, and Anthony Emezu, Defendants.
The following e-filed papers read herein : NYSCEF Doc Nos.:
Notice of Motion/Order to Show Cause/Petition/Cross Motion and Affidavits (Affirmations) Annexed 63-66 80-105 107-116
Opposing Affidavits (Affirmations) 133-135 108
Affidavits/ Affirmations in Reply 138-140
Other Papers: Memoranda of Law 67 117 117
Upon the foregoing papers, in this action by plaintiff Antoine Reels ("plaintiff") against defendants Dynamics In Play, LLC ("Dynamics"), Joshua Lenoff ("Lenoff"), and Anthony Emezu ("Emezu"), (collectively, "defendants"), Dynamics and Lenoff jointly move (in motion [mot.] sequence [seq.] number [no.] 4) for an order, pursuant to CPLR 3211 (a) (1) and (7), partially dismissing plaintiff's complaint for failure to state a claim upon which relief can be granted.
Plaintiff moves (in mot. seq. no. 6) for an order, pursuant to CPLR 3215, granting him a default judgment against defendants Dynamics and Lenoff.
Dynamics and Lenoff cross-move (in mot. seq. no. 7) for an order, pursuant to 22 NYCRR 130-1.1, awarding costs for all expenses reasonably incurred, including all legal fees connected with defending plaintiff's motion for a default judgment and for their cross-motion for sanctions, and imposing the maximum allowable sanction of $10,000 against plaintiff and his attorney for filing a frivolous motion for default judgment.
Facts and Procedural Background
Plaintiff and Dynamics entered into an agreement ("Consulting Agreement") on or about September 8, 2014, in which Dynamics agreed to develop plaintiff's idea for a digital application ("app"). Plaintiff was introduced to Dynamics by defendant Emezu, an employee of Dynamics, and close friend of its sole owner and managing member, Lenoff. In early 2014, plaintiff informed Emezu that he had an idea for an app relating to the sale of apparel products, but that he did not know anything about computers or developing an app because it was not his area of expertise. Emezu allegedly pitched Dynamics to plaintiff, saying that the company could develop the app for him in a 4 to 5-month timeframe and help him fulfill his dream of being a tech entrepreneur. Emezu allegedly told plaintiff that he was deeply knowledgeable about the technology necessary to produce an app. Plaintiff claims that Emezu's representations were made in a bid to steal as much money as possible from him and that Dynamics and Emezu never intended to do any actual work to develop the app. Plaintiff alleges that Emezu was a grifter, looking for his next mark, and that he teamed up with Lenoff and Dynamics to run a scam on plaintiff, and did so for the next five years after plaintiff entered into the Consulting Agreement with Dynamics. Plaintiff alleges that he believed Emezu's numerous misrepresentations which induced him to pay Emezu an initial $42,000.00 upon signing the Consulting Agreement. The Consulting Agreement provided that Dynamics would develop the app in no longer than 4 to 5 months, as time was of the essence. Plaintiff states that he expected the app to be ready for use as early as December 2014. Plaintiff avers that despite his payment, defendants did absolutely nothing for him in the ensuing five years. Plaintiff alleges that Dynamics materially breached the Consulting Agreement by failing to produce the app and also defrauded him, causing him to lose tens of thousands of dollars. Plaintiff states that these losses include not only the $42,000.00 payment he made to Dynamics upon signing the Consulting Agreement, but also a later $60,000.00 in additional payments he made to Dynamics, at the request of Emezu, who was working closely with Lenoff and Dynamics. Plaintiff alleges that Emezu informed him that he needed to pay additional monies above and beyond the amount contractually agreed upon ($42,000.00) or otherwise the app could not be completed.
Plaintiff further asserts that defendants were well aware that time was of the essence as plaintiff had a novel idea for his app and wanted it to be available for use by the public within 3 to 4 months after entering into the Consulting Agreement. Plaintiff states that even if the app were to be produced now, it would be worthless and no longer the viable business endeavor he initially intended in 2014 because the market is currently saturated with similar or identical apps to what plaintiff envisioned. Plaintiff claims that defendants strung him along for five years with promises to produce the app, never delivered any work product, and never returned plaintiff's $102,000.00 in total payments to Dynamics. According to the complaint, defendants worked in concert to defraud plaintiff by taking $102,000.00 of his money through false promises and outright lies regarding the app and its development. Plaintiff alleges that he has demanded that his money be returned on multiple occasions, but defendants have refused to refund any of the money plaintiff paid to Dynamics. According to plaintiff, Emezu, working in concert with Lenoff, told plaintiff that there were unforeseen development and production fees and costs for an app that plaintiff has never seen or been shown any original source code for. Plaintiff asserts that he is the victim of a scam or an outright fraud because defendants did not possess the necessary work ethic, creativity, or means to develop and produce the agreed upon app and after five years have delivered nothing of value to him in exchange for his $102,000.00 in payments.
On or about September 3, 2020, plaintiff commenced this action with the filing of a summons and verified complaint, asserting the following nine causes of action against defendants: fraud, breach of contract, unjust enrichment, declaratory judgment, accounting, conversion, fraudulent inducement, breach of the duty of good faith and fair dealing, and lost profit damages. Prior to filing the complaint, plaintiff initiated an arbitration proceeding against the defendants pursuant to a mandatory arbitration clause in the Consulting Agreement. Emezu moved to be dismissed from the arbitration as an improper party. By decision dated September 5, 2020, the arbitrator determined that Emezu could not be named as a respondent in the arbitration proceeding because the arbitrator did not have jurisdiction over Emezu since he was not a signatory to the Consulting Agreement. The arbitrator did not reach the merits of plaintiff's claims against Dynamics, Lenoff, and Emezu. Thereafter, plaintiff entered into a stipulation with Dynamics and Lenoff, dated October 19, 2020, wherein the parties elected to resolve all disputes and claims before this Court in lieu of any requirement to proceed through arbitration. On or about October 27, 2020, Dynamics and Lenoff entered into a stipulation with plaintiff extending their time to answer, move, or otherwise respond to the complaint through November 2, 2020. On November 26, 2020, Emezu filed a motion to dismiss the complaint. Plaintiff filed a cross-motion for default judgment against Dynamics and Lenoff on December 15, 2020. On or about July 14, 2021, the Court (Cohen J.) issued an order denying plaintiff's motion for default judgment without prejudice with leave to re-file the motion unless Dynamics and Lenoff served an answer on or before September 7, 2021.
On or about August 31, 2021, counsel for Dynamics and Lenoff requested, and were granted, an extension until September 24, 2021 to file a response to plaintiff's complaint. On or about September 24, 2021, Dynamics and Lenoff jointly filed the instant motion to dismiss plaintiff's complaint as asserted against them. On or about September 27, 2021, the Court (Cohen J.) issued an order partially granting Emezu's motion to dismiss by dismissing plaintiff's breach of contract, breach of the convenant of good faith and fair dealing, accounting, lost profits, and declaratory judgment causes of action but permitting the remaining causes of action against Emezu to proceed. On or about November 30, 2021, plaintiff again filed a motion for default judgment against Dynamics and Lenoff. Dynamics and Lenoff cross-moved, on or about December 14, 2021, for sanctions against plaintiff and his attorney for filing the second, allegedly frivolous, default judgment motion.
Plaintiff's Motion for Default Judgment
Plaintiff contends that in violation of this Court's July 14, 2021 order, Dynamics and Lenoff failed to file an answer to plaintiff's complaint on or before September 7, 2021, and after being granted an extension until September 24, 2021 to do so, they ultimately filed a motion to dismiss on that date. Plaintiff asserts that the Court ordered Dynamics and Lenoff to submit only an answer in response to the complaint otherwise, plaintiff had leave to refile his default judgment motion, which was initially denied by the Court without prejudice. Plaintiff argues that because defendants filed a motion to dismiss instead of an answer, which the court explicitly required, their motion to dismiss is a nullity and should be declared as such. Thus, plaintiff now seeks an order granting his second default judgment motion on the issue of liability and an order of reference for an inquest on damages.
Dynamics and Lenoff's Opposition
Dynamics and Lenoff argue that any argument that they failed to timely appear in this matter is "so absurd as to be sanctionable." Dynamics and Lenoff argue that their counsel, newly retained following Justice Cohen's July 14, 2021 order, applied for an extension of the Court's September 7, 2021 deadline imposed in that order. As evidence of this request, they submit an August 31, 2021 letter from their counsel addressed to the court in which they requested additional time to respond to plaintiff's complaint. They also submit a copy of an e-mail from Justice Cohen's law clerk, Joseph Beery ("Mr. Beery"), in which he wrote that the deadline to "file a reply" to the complaint is extended from September 7, 2021 to September 24, 2021, the date on which defendants’ instant motion was filed. Dynamics and Lenoff point out that the letter from counsel requesting an extension specifically states that they needed additional time to craft a motion to dismiss and that the reply from Judge Cohen's law clerk, which granted additional time to reply to the complaint, indicates that the Court, when issuing its July 14, 2021 order, did not intend to limit defendants’ reply to the complaint to that of an answer. Defendants further point to case law they claim establishes that when a defendant has received an extension of time to answer a complaint from the court, it must be understood to extend the time in which to move pursuant to CPLR 3211, unless the Court specifically states that the defendant is only permitted to submit an answer. They argue that if Justice Cohen intended to limit their ability to engage in motion practice, then Justice Cohen's law clerk would have made this known to the parties at the time of counsel's request for additional time to draft a motion to dismiss.
Plaintiff's Reply
Plaintiff reiterates his position that his default judgment motion should be granted because defendants have yet to file an answer which they were required by court order to do by September 7, 2021. Plaintiff contends that there is no ambiguity in the word "answer" and that an e-mail from a justice's law clerk cannot overrule an order of the court issued by that justice. Further, plaintiff avers that defendants misapprehend case law when they argue that courts have found an extension of time to answer to mean that same extension applies to a pre-answer motion to dismiss.
Discussion
"When a defendant has failed to appear, plead or proceed to trial of an action reached and called for trial, or when the court orders a dismissal for any other neglect to proceed, the plaintiff may seek a default judgment against him. If the plaintiff's claim is for a sum certain or for a sum which can by computation be made certain, application may be made to the clerk within one year after the default" ( CPLR 3215 [a] ).
Plaintiff's argument that Dynamics and Lenoff have failed to timely appear because they filed a motion to dismiss instead of an answer is unavailing. Pursuant to an email dated August 31, 2021 by Judge Cohen's law clerk, Dynamics and Lenoff were notified of the extension of time from the initial court-imposed September 7, 2021 deadline to September 24, 2021 for defendants to respond to plaintiff's complaint. In accordance therewith, Dynamics and Lenoff timely filed their motion to dismiss on September 24, 2021. Plaintiff's contention that the July 14, 2021 order of this Court limited their response to that of an answer is misguided. After counsel informed Judge Cohen's law clerk that they intended to file a motion to dismiss, the Court (via email) extended defendants’ time to file a reply. This supports Dynamics and Lenoff's contention that Judge Cohen did not specifically limit their reply to that of an answer. Moreover, plaintiff's argument also runs counter to well-established legal precedent that "a stipulation which extends the time in which to answer a complaint also extends the time in which to move pursuant to CPLR 3211 unless a contrary intent is clearly stated" ( Tatar v Port Auth. of NY & N.J., 291 AD2d 554, 554 [2d Dept 2002]citing Rich v Lefkovits , 56 NY2d 276, 278 [1982] ["Nor was defendant's right to move to dismiss the complaint for lack of jurisdiction waived by a stipulation which extended defendant's time to answer but made no reference to his right to move with respect to the complaint"]). Dynamics and Lenoff are not in default as they timely filed their motion to dismiss the complaint in accordance with the Court's revised deadline. Accordingly, plaintiff's motion for a default judgment is denied.
Dynamics and Lenoff's Motion to Dismiss
Dynamics and Lenoff move to dismiss all causes of action in the complaint except the breach of contract, breach of the covenant of good faith and fair dealing, and lost profits claims as asserted against Dynamics. They argue that plaintiff's claims for fraud and fraud in the inducement must be dismissed because they are not plead with the particularity required for fraud actions. In addition, the fraud claims, they argue, fail to satisfy the elements of a fraud cause of action in that they consist of allegations of mere puffery, which is not actionable, rather than any material misrepresentation of facts existing at the time the alleged fraud occurred, and plaintiff fails to plead scienter and justifiable reliance. Defendants further assert that the fraud claims fail to meet the heightened pleading standard of CPLR 3016 (b), which requires detail such as who made assurances and to whom, and when and where these assurances were made. According to Dynamics and Lenoff, plaintiff's fraud allegations are vague and conclusory and devoid of specifics as to what occurred between the parties, and to the extent that plaintiff pleads any specific details, they pertain to the actions of defendant Emezu only. Further, defendants contend that allegations that Emezu stated he was "deeply knowledgeable" or that defendants claimed to have the "requisite expertise," and "creativity" to produce the app, were generic expressions of optimism upon which plaintiff could not have reasonably relied. They aver that plaintiff fails to allege scienter because although he states in a conclusory manner that defendants did not intend to honor the Consulting Agreement at the time it was entered into, the complaint is devoid of any alleged facts tending to support this contention. Defendants also maintain that plaintiff fails to adequately plead justifiable reliance. In this regard, they contend that Dynamics was in material breach of the Consulting Agreement by early 2015, so soon after it was signed, that plaintiff should have suspected fraud, or that certain representations made following the breach could be false.
In addition, Lenoff contends that the breach of contract, breach of duty of good faith and fair dealing and lost profit claims should be dismissed as against him because, pursuant to the plain reading of the Consulting Agreement which plaintiff attaches to the complaint as an exhibit, Lenoff is not a party to the agreement but only signed in his capacity as an officer of Dynamics, a corporate entity. Defendants contend that since these three causes of action are contractual remedies, Lenoff, as a non-party to the Consulting Agreement, cannot be held liable.
As to plaintiff's unjust enrichment claim, defendants assert it must be dismissed as it is merely a restatement of plaintiff's breach of contract claim, and also sounds in quasi-contract which is inappropriate here, where a valid and enforceable written contract governing the subject matter exists. With respect to Lenoff specifically, they contend that because he is a non-party to the Consulting Agreement and only signed it as an officer, plaintiff should be precluded from bringing an unjust enrichment claim against him.
Lenoff and Dynamics further argue that plaintiff has not pled a proper claim for conversion. Claims for conversion, they assert, cannot be predicated on a mere breach of contract under New York law and plaintiff's claim for conversion sounds in breach of contract in that the facts alleged are simply a restatement of his breach of contract claim. In addition, defendants point out that the three-year statute of limitations, under CPLR 214, elapsed before plaintiff asserted this claim since the alleged conversion of his property occurred in 2014 and 2015, but plaintiff did not file his complaint asserting the conversion claim until 2020, more than three years after the alleged conversion occurred.
Dynamics and Lenoff further contend that plaintiff's claim for an accounting must be dismissed for failure to state a cause of action since plaintiff cannot, and has not, alleged a fiduciary relationship between himself and Dynamics or Lenoff. They argue that in this case there exists only a standard arms-length relationship between a client and a service provider, and thus the defendants were not plaintiff's fiduciaries. Lastly, defendants maintain that plaintiff's declaratory judgment claim is duplicative of the requests for relief asserted by plaintiff in his other causes of action and, to the extent that plaintiff's declaratory judgment claim is predicated on the same allegations that constituted the fraud claims, or breach of contract claim, it should be dismissed for the same reasons as those claims. They also contend that plaintiff's request, contained in his declaratory judgment claim, that defendants’ financial accounts be restrained and funds contained therein be distributed to him is a demand for specific performance of the contract which is a contractual remedy rather than a separate cause of action.
As noted above in relation to plaintiff's motion for a default judgment, this court has rejected plaintiff's argument that Dynamics and Lenoff's motion to dismiss is barred by Justice Cohen's July 14, 2021 order.
Plaintiff contends that Dynamics and Lenoff wrongly argue that plaintiff's claims are barred by an arbitration award and judgment which plaintiff claims was never issued. He further asserts that Dynamics and Lenoff improperly argue for dismissal of his claims based on disputed factual allegations. In this regard, he notes that on a motion to dismiss, the court is required to accept the allegations contained in the complaint as true and that defendants improperly contest factual allegations in their memorandum of law in order to confuse the court. Plaintiff requests that the court disregard Dynamics and Lenoff's factual allegations and instead accept his allegations in the complaint as true. In addition, he argues that Dynamics and Lenoff rely on scant documentary evidence which is insufficient to warrant dismissal of his claims. Lastly, plaintiff asserts that he has properly pled all of his causes of action. He maintains that he properly pled his unjust enrichment cause of action because he conferred the benefit of his own money by paying the defendants for an app that was never produced. He further argues that he has properly asserted a breach of contract claim because he has alleged the existence of a contract and defendants’ breach of same. Plaintiff contends that he has properly pled his conversion claim because he has shown that he owns and has a right to possession of his personal property and that said property is in the unauthorized possession of another who has acted to exclude his right to possession of it.
As to his fraud claims, plaintiff asserts that they have been properly pled because Dynamics and Lenoff made material misrepresentations to him and that he detrimentally relied on those statements. Plaintiff also maintains that he pled unjust enrichment and various intentional tort claims in the alternative to the breach of contract claim pursuant to CPLR 3014, and thus they are not subject to dismissal. Plaintiff asserts that CPLR 3014 authorizes the pleading of inconsistent allegations and defenses, and that the assertion of one claim does not constitute abandonment of the other.
Dynamics and Lenoff's Reply
Dynamics and Lenoff argue that plaintiff's opposition is untimely and should be disregarded by the Court. They contend that, pursuant to CPLR 2214 (b), an opposition should be served at least seven days before the return date in cases where the motion was filed at least 16 days before the return date. Plaintiff blatantly disregarded this rule, according to Dynamics and Lenoff, and did not file his opposition until November 7, 2022, nearly a year after the motion's original court-determined return date of January 19, 2022, more than a year after they filed the motion on September 24, 2021, and just two days before the latest return date of November 9, 2022. They also point out that plaintiff has offered no good cause to justify his lateness and argue that his opposition to the motion should therefore be stricken.
Further, Dynamics and Lenoff argue that plaintiff's opposition is meritless as he misconstrues the law and arguments defendants made in support of their motion. Contrary to plaintiff's assertion, defendants claim that they never argued that the arbitration decision bars plaintiff's claims herein. They also contend that they do not attempt to argue or dispute plaintiff's factual allegations asserted in his complaint to support their argument for its dismissal. They maintain that plaintiff's submission of the Consulting Agreement as an exhibit to the complaint is sufficient documentary proof that there were only two parties to the agreement—plaintiff and Dynamics—which is a fact that they argue supports dismissal of plaintiff's breach of contract, lost profits, and unjust enrichment claims against Lenoff individually. Dynamics and Lenoff reassert their position that plaintiff's unjust enrichment claim should be dismissed because the existence of a valid and enforceable written contract usually precludes recovery in quasi-contract for events arising out of the same subject matter. They argue that although CPLR 3014 permits the pleading of causes of action in the alternative, pleading both a contractual claim and a quasi-contractual claim in the alternative has only been found permissible in cases where there is a bona fide dispute regarding the existence, validity or scope of the contract. Plaintiff's conversion and fraud claims should also be dismissed, they argue, because the conversion claim stems from an alleged wrong that is not independent of a breach of contract, and the fraud claims are not plead with particularity, fail to satisfy all the elements of a fraud cause of action, consist of allegations of "puffery" that are not actionable rather than material misrepresentations of existing facts, and are duplicative of the breach of contract claim.
Discussion
In determining a motion to dismiss pursuant to CPLR 3211 (a) (7), a court must "accept the facts as alleged in the complaint as true, accord plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" ( Kolchins v Evolution Mkts., Inc. , 31 NY3d 100, 105-106 [2018] quoting Leon v Martinez , 84 NY2d 83, 87-88 [1994] ; see also Strujan v Kaufman & Kahn, LLP , 168 AD3d 1114, 1115 [2d Dept 2019] ; Gorbatov v Tsirelman , 155 AD3d 836, 837 [2d Dept 2017] ). Allegations consisting of bare legal conclusions must not be considered (see Connaughton v Chipotle Mexican Grill, Inc. , 29 NY3d 137, 141-142 [2017] ). "Whether the complaint will later survive a motion for summary judgment, or whether the plaintiff will ultimately be able to prove its claims, of course, plays no part in the determination of a prediscovery CPLR 3211 motion to dismiss" ( Gorbatov , 155 AD3d at 837, quoting Shaya B. Pacific, LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP , 38 AD3d 34, [2d Dept 2006] ).
A court may consider affidavits or deposition testimony submitted by plaintiff to remedy any defects in the complaint, but not for the purpose of determining whether there is evidentiary support for the pleading (see Leon , 84 NY2d at 88 ; Nonnon v City of New York , 9 NY3d 825, 827 [2007] ; Sokol v Leader , 74 AD3d 1180, 1181 [2d Dept 2010] ). "If the court considers evidentiary material, the criterion then becomes whether the proponent of the pleading has a cause of action, not whether he has stated one" ( Sokol , 74 AD3d at 1181-1182 ; see also Hendrickson v Philbor Motors, Inc., 102 AD3d 251, 257-258 [2d Dept 2012] ). "[U]nless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, again dismissal should not eventuate" ( Guggenheimer v Ginzburg , 43 NY2d 268, 275 [1977] ). Consideration of evidentiary materials "will almost never warrant dismissal under CPLR 3211 (a) (7) unless the materials establish conclusively that [the plaintiff] has no cause of action" ( Hendrickson , 102 AD3d at 258 [internal quotation marks omitted]; see also Lawrence v Graubard Miller , 11 NY3d 588, 595 [2008] ).
"A motion pursuant CPLR 3211(a) (1) to dismiss the complaint on the ground that the action is barred by documentary evidence may be granted only where the documentary evidence utterly refutes the plaintiff's factual allegations, thereby conclusively establishing a defense as a matter of law" ( Ruby Falls, Inc. v Ruby Falls Partners, LLC , 39 AD3d 619, 619 [2d Dept 2007] ).
CPLR 2214 (b)As a preliminary matter, Dynamics and Lenoff argue that, pursuant to CPLR 2214 (b), plaintiff's opposition is untimely and should be disregarded by the Court. Plaintiff did not file his opposition until November 7, 2022, nearly a year after the motion's original, Court-determined return date of January 19, 2022, more than a year after defendants filed their motion to dismiss on September 24, 2021, and just two days before the latest return date of November 9, 2022. CPLR 2214 (b) provides that, "[a] notice of motion and supporting affidavits shall be served at least eight days before the time at which the motion is noticed to be heard. Answering affidavits shall be served at least two days before such time. Answering affidavits shall be served at least seven days before such time if a notice of motion served at least twelve days before such time so demands; whereupon any reply affidavits shall be served at least one day before such time" ( CPLR 2214 [b] ). Plaintiff's opposition papers are therefore untimely. However, the Court may exercise its discretion and consider plaintiff's late papers in opposition to the motion (see CPLR 2004 ; CPLR 2214 [c] ). Furthermore, defendants do not allege that they had inadequate time to reply to plaintiff's opposition papers or that they were prejudiced by plaintiff's delay in submitting his opposition (see Dorme v Slingerland , 12 Misc 3d 815, 819 [Sup. Ct. Westchester Co. 2006] ). Therefore, this Court will consider plaintiff's opposition papers.
Fraud Claims
"In order to plead a prima facie case of fraud, a plaintiff must allege each of the elements of fraud with particularity and must support each element with an allegation of fact" ( Fink v Citizens Mortg. Banking, Ltd. , 148 AD2d 578, 578 [2d Dept 1989] ; see CPLR 3016 [b] ). "The elements of a cause of action sounding in fraud are a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation, and damages" ( Mesivta & Yeshiva Gedolah of Manhattan Beach v VNB NY, LLC , 197 AD3d 703, 705 [2d Dept 2021] [internal quotation marks omitted]; see Kastin v GEICO Gen. Ins. Co. , 190 AD3d 710, 712 [2d Dept 2021] ). "To state a [cause of action to recover damages] for fraudulent inducement, there must be a knowing misrepresentation of material present fact, which is intended to deceive another party and induce that party to act on it, resulting in injury" ( Tsinias Enterprises Ltd., v Taza Grocery, Inc. , 172 AD3d 1271, 1273 [2d Dept 2019] ).
In his first and seventh causes of action for fraud, and fraudulent inducement, respectively, plaintiff alleges that defendants "set forth a series of material misrepresentations", including claiming that they were deeply knowledgeable about how to develop and market the app that is the subject of the Consulting Agreement (Complaint at ¶¶ 44-45, 51, 93). Plaintiff alleges that defendants told him that they possessed the requisite expertise and creativity to develop and produce the app, and could produce it within a 4 to 5-month timeframe when they knew that they had no intention of ever producing the app. Plaintiff's allegations of fraud, however, are conclusory as he fails to allege any facts surrounding the defendants lack of expertise in producing or marketing the app tending to show that defendants were untruthful in their representations concerning their abilities. Plaintiff's allegation that defendants never intended to produce the app at the time they induced plaintiff into entering into the Consulting Agreement with Dynamics is similarly conclusory as plaintiff offers no additional facts or details to substantiate this allegation. Plaintiff's fraud allegations are too vague and conclusory to meet the pleading requirements of CPLR 3016 (b) which requires that fraud claims be pled with particularity. Plaintiff's complaint is devoid of any details or specifics regarding defendants’ alleged misrepresentations such as details concerning their substance, which defendants made certain false statements, when and where these false statements were made, and to whom they were made (see Meiterman v Corporate Habitat , 173 AD3d 593, 594 [1st Dept 2019] ["vague and general allegations that defendants misled plaintiff about defendant's financial abilities and defendant's intent to consummate the transaction being negotiated are conclusory and fail to satisfy the standard for pleading fraud under CPLR 3016 (b)"]).
Moreover, plaintiff's fraud allegations are merely a restatement of his breach of contract claim. The sum and substance of plaintiff's fraud claims are that defendants did not perform under the contract by failing to produce the app, misled him about their ability to perform, and have not refunded the money he paid to them. "A cause of action for fraud cannot stand where, as here, the only fraud alleged relates to a breach of contract. Nor may a breach of contract action be converted into one for fraud by the mere additional allegation that the contracting party did not intend to fulfill its contractual obligation" ( Blackman v Genova , 250 AD2d 561, 561-562 [2d Dept 1998] ). Accordingly, plaintiff's fraud, and fraudulent inducement claims against Dynamics and Lenoff are dismissed for failure to state a claim upon which relief can be granted.
Breach of Contract/Lost Profits/Breach of Covenant of Good Faith and Fair Dealing
The essential elements of a cause of action to recover damages for breach of contract are "the existence of a contract, the plaintiff's performance under the contract, the defendant's breach of that contract, and resulting damages" ( JP Morgan Chase v J.H. Elec. of New York, Inc. , 69 AD3d 802, 803 [2d Dept 2010] ).
Plaintiff alleges that he entered into the Consulting Agreement, paid defendants $102,000.00 for production of the app, defendants failed to produce the app, and plaintiff suffered financial harm as a result. Plaintiff, however, also alleges in the complaint that he entered into the Consulting Agreement with "defendants," presumably all of them (Complaint at ¶ 61). Plaintiff's allegations that he entered into the agreement with all of the defendants is flatly contradicted by the express terms of the contract, which in its first paragraph expressly identifies Dynamics—a corporate entity, and plaintiff as the only parties to the agreement. The language of the Consulting Agreement further distinguishes between Dynamics and its principals, as Lenoff is identified individually in paragraph 1(e) of the agreement only as a principal of Dynamics. A close reading of the Consulting Agreement reveals that Lenoff is not a party to the agreement and signed the contract only in his role as a principal of Dynamics. Thus, a conflict exists between plaintiff's allegations in the complaint and the documentary evidence plaintiff submitted. Since Lenoff is not a party to the Consulting Agreement, he cannot be held liable for its breach. Indeed, "[o]ne cannot be held liable under a contract to which he or she is not a party. Here, the documentary evidence fatally undermines the plaintiff's contention that the individual defendants should be held personally liable in connection with a contract to which they were not parties" ( Victory State Bank v EMBA Hylan LLC , 169 AD3d 963, 965-966 [2d Dept 2019] [citations omitted]; see also Ruti v Knapp, 193 AD2d 662, 663 [2d Dept 1993] [complaint dismissed against individual defendant where contract was entered into between the plaintiff and the corporate defendant]). Accordingly, plaintiff's breach of contract claim is dismissed as to Lenoff (see Daub v Future Tech Enter., Inc. , 65 AD3d 1004, 1005 [2d Dept 2009] ; see also Montefiore v Soja , 292 AD2d 241, 241 [1st Dept 2002] ["Dismissal of the complaint was proper, since plaintiff's material allegations against [defendant], even if facially sufficient, were flatly contradicted by the documentary evidence submitted by plaintiff as exhibits to the complaint"]).
Plaintiff's ninth cause of action for lost profits, and eighth cause of action for breach of the covenant of good faith and fair dealing, which are both contractual remedies, must also be dismissed as to Lenoff because he is not a party to the Consulting Agreement. "[A] party may not recover damages for lost profits unless they were within the contemplation of the parties at the time the contract was entered into and are capable of measurement with reasonable certainty" ( Ashland Mgt. Inc. v Janien , 82 NY2d 395, 403 [1993] ). Lenoff could not have contemplated lost profits because he was not a party to the Consulting Agreement (see Quatrochi v Citibank, N.A., 210 AD2d 53, 53-54 [1st Dept 1994] ["Court properly dismissed the individual plaintiff's complaint seeking to recover lost profits on the sale of a Renoir painting because the documentary evidence attached to the complaint flatly contradicted the allegations in the complaint by establishing that the corporate entity rather than the plaintiff individually, had contracted to sell the Renoir, and that any damages sustained as a result of the defendants’ alleged improper actions were therefore suffered solely by the corporate entity rather than the individual plaintiff"]). As a non-party to the Consulting Agreement that plaintiff alleges has been breached, Lenoff cannot be held liable for any lost profit damages plaintiff seeks under the agreement. Similarly, Lenoff cannot be held liable for a breach of the implied covenant of good faith and fair dealing. "In New York, all contracts imply a covenant of good faith and fair dealing in the course of performance" ( 511 W. 232nd Owners Corp. v Jennifer Realty Co. , 98 NY2d 144, 153 [2002] ). This covenant is predicated on a contractual relationship between the parties. Here, the only contract at issue is the Consulting Agreement of which Lenoff is not a party. Therefore, plaintiff's claim for breach of the implied covenant of good faith and fair dealing must be dismissed as to Lenoff (see Chai-Chen v Metropolitan Life Ins. Co., 190 Ad3d 635, 636 [1st Dept 2021] ). Accordingly, plaintiff's claims for breach of contract, lost profits, and breach of the covenant of good faith and fair dealing are dismissed as to Lenoff.
Unjust Enrichment
"[T]o recover for unjust enrichment, a plaintiff must show that (1) the [defendant] was enriched, (2) at [the plaintiff's] expense, and (3) that it is against equity and good conscience to permit [the defendant] to retain what is sought to be recovered. Such quasi contract only applies in the absence of an express agreement, and is not really a contract at all, but rather an equitable obligation imposed in order to prevent a party's unjust enrichment" ( UETA Latinamerica, Inc. v Zafir , 129 AD3d 704, 705-706 [2d Dept 2015] [internal quotation marks and citations omitted]).
In his third cause of action, plaintiff asserts a claim for unjust enrichment against Dynamics and Lenoff. Plaintiff alleges that he made payments to defendants to design the app but it was never developed. He claims that defendants refuse to return the money he paid under the Consulting Agreement for the development of the app which constitutes their unjust enrichment at his expense. "[P]laintiff's third cause of action sounding in quasi contract based on the doctrine of unjust enrichment must be dismissed on the ground that it arises out of the same subject matter governed by the agreement" ( Neos v Lacey , 2 AD3d 812, 814 [2d Dept 2003] ). Plaintiff's unjust enrichment claim is simply a restatement of his breach of contract claim and since there is a valid contract between Dynamics and plaintiff governing the development of the app and the payments plaintiff made for Dynamics’ services, plaintiff cannot recover in quasi contract against Dynamics. Plaintiff also cannot recover for unjust enrichment against Lenoff because, although he is not a party to the Consulting Agreement, the same principle applies to him. Plaintiff's unjust enrichment claim arises out of subject matter governed by an express contract which also precludes his unjust enrichment claim as to Lenoff (see Vitale v Steinberg , 307 AD2d 107, 111 [1st Dept 2003] ["[T]he existence of the plan agreement, an express contract governing the subject matter of plaintiff's claims, also bars the unjust enrichment cause of action as against the individual defendants, notwithstanding the fact that they were not signatories to that agreement"]). Accordingly, plaintiff's unjust enrichment claim is dismissed for failure to state a claim upon which relief can be granted.
Declaratory Judgment
In his fourth cause of action, plaintiff seeks a declaratory judgment from this Court. Plaintiff requests that the Court declare that "the funds paid by plaintiff to defendants were paid under false pretenses, "defendants never intended to, or actually developed and completed the digital application defendants promised to produce for plaintiff", and the "funds transferred to defendants by plaintiff belong to plaintiff and defendants’ financial accounts holding the money owed to plaintiff should be promptly restrained and the funds returned to plaintiff" (Complaint at ¶¶ 78-80).
Here, the court finds that the declaratory relief sought by plaintiff " ‘is unnecessary and inappropriate when the plaintiff has an adequate, alternative remedy in another form of action, such as breach of contract’ " ( 189 Schermerhorn Owners Co., LLC v Bd. of Managers of Be@Schermerhorn Condo. , 186 AD3d 1467, 1468 [2d Dept 2020], quoting Apple Records v Capital Records Inc., 137 AD2d 50, 54 [1st Dept 1988] [declaratory judgment unnecessary where plaintiff seeks declaration of same rights that are determined by breach of contract claim]). Indeed, plaintiff's breach of contract claim would ultimately resolve the plaintiff's claim that he is entitled to a return of the funds he transferred to defendants for services defendants never performed under the Agreement.
Accordingly, plaintiff's claim for declaratory judgment is hereby dismissed.
Accounting
"To obtain an accounting, a plaintiff must show that there was some wrongdoing on the part of a defendant with respect to the fiduciary relationship" ( Benedict v Whitman Breed Abbott & Morgan , 110 AD3d 935, 938 [2d Dept 2013] ). "The right to an accounting is premised upon the existence of a confidential or fiduciary relationship and a breach of the duty imposed by that relationship respecting property in which the party seeking the accounting has an interest" ( Dee v Rakower , 112 AD3d 204, 214 [2d Dept 2013] [internal quotation marks omitted]).
In his fifth cause of action, plaintiff "demands a full accounting of the funds paid by plaintiff to defendants" with respect to the development of the app (Complaint at ¶¶ 85-87). Plaintiff, however, does not allege a fiduciary relationship between him and Dynamics and Lenoff, and one cannot be inferred from the facts and circumstances of this action. Plaintiff entered into a contract with Dynamics for the provision of services. Lenoff is the principal of Dynamics. There is no fiduciary relationship between the parties in this instance, but rather a standard arms-length relationship between contracting parties. Consequently, plaintiff has no basis for his accounting claim. Accordingly, plaintiff's claim for an accounting is dismissed for failure to state a claim upon which relief can be granted.
Conversion
"A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession. Two key elements of conversion are (1) plaintiff's possessory right or interest in the property and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's right. Money, if specifically identifiable, may be the subject of a conversion action. [C]onversion occurs when funds designated for a particular purpose are used for an unauthorized purpose" ( Petrone v Davidoff Hutcher & Citron, LLP , 150 AD3d 776, 777 [2d Dept 2017] [internal quotation marks and citations omitted]).
In his sixth cause of action for conversion, plaintiff alleges that "defendants intentionally exercised control over the property of plaintiff which plaintiff paid to defendants, totaling no less than $102,000.00, and thereby interfered with plaintiff's right of possession in derogation of plaintiff's rights in his property" (Complaint at 89). Plaintiff alleges he paid Emezu $42,000.00 on or about September 8, 2014 upon the signing of the Consulting Agreement (Complaint at ¶¶ 17, 20). Plaintiff alleges that he later paid Emezu an additional $60,000.00 which Emezu requested for the completion of the app (Complaint at ¶ 31). Here, "[t]he plaintiff's claim alleging conversion merely restates [his] cause of action to recover damages for breach of contract and does not allege a separate taking. A claim to recover damages for conversion cannot be predicated on a mere breach of contract" ( Priolo Communications v MCI Telecom. Corp. , 248 AD2d 453, 454 [2d Dept 1998] ; see also Wolf v National Council of Young Israel , 264 AD2d 416, 417 [2d Dept 1999] ["Since the appellant's conversion counterclaim does not stem from a wrong which is independent of the alleged breach of [contract], it was properly dismissed"]). Accordingly, plaintiff's conversion claim is dismissed as to Dynamics and Lenoff for failure to state a claim upon which relief can be granted.
Dynamics and Lenoff's Motion for Sanctions
Dynamics and Lenoff maintain that plaintiff and his counsel, Darius Marzec, Esq. ("Mr. Marzec"), should be sanctioned for filing a frivolous default judgment motion. They contend that there is no factual or legal basis for the motion which ignores Second Department precedent that a stipulation which extends the time in which to answer a complaint also extends the time in which to move pursuant to CPLR 3211, unless a contrary intent is clearly stated. They argue that Mr. Marzec's conduct related to this motion is indicative of a litigant acting in bad faith and willing to overlook obvious facts and law. They argue that despite receiving Mr. Beery's e-mail, and responding to that e-mail with annoyance, Mr. Marzec never mentioned it in his initial affirmation in support of the default judgment motion in which he treats the initial September 7, 2021 deadline as the operative one so as to accuse the defendants of missing the court's mandated deadline by more than two weeks. Defendants point out that after alerting Mr. Marzec to Mr. Beery's e-mail extending the deadline to file a reply to the complaint until September 24, 2021, plaintiff's counsel refused to withdraw the frivolous motion. Mr. Marzec, defendants claim, displayed dishonesty by falsely claiming that defendants’ counsel sought to delay the case by setting January 19, 2022 as their motion's return date even though in the Notice of Motion filed by defendants, the return date is set for October 22, 2021. Defendants further note that it was the Court that subsequently set January 19, 2022 as the motion's return date. Defendants maintain that plaintiff and his counsel are uninterested in prosecuting this case and have engaged in frivolous, vexations litigation practice aimed at increasing litigation costs for the cash-strapped defendants. Dynamics and Lenoff request that the court award them costs for all expenses reasonably incurred, including all legal fees associated with the motion and this cross-motion, and that a sanction of $10,000 be imposed upon both plaintiff and his attorney.
Plaintiff's Opposition to Defendants’ Motion for Sanctions
Plaintiff's position is that even if Dynamics and Lenoff are correct that the Court granted them leave to file a motion to dismiss despite the unambiguous mandate of its July 14, 2021 order, plaintiff and his attorney could not possibly be subject to sanctions for their reliance on the Court's ruling. He argues that his default judgment motion was well-founded under the clear and unambiguous order of the Court and that it was neither procedurally nor legally defective. Plaintiff asserts that he is obligated to prosecute this action vigorously and defendants should not be immune from suffering a default judgment because they misapprehended the law and were under the misimpression that they had been granted additional time to move to dismiss plaintiff's complaint. Plaintiff reminds the Court, contrary to defendants’ assertions, that it did not move for default judgment a second time until defendants’ time to answer or otherwise respond to the complaint had elapsed and defendants still had not served an answer as ordered by the Court. Plaintiff contends that the court granting defendants’ request for the imposition of sanctions would, at best, be an improvident exercise of discretion. He maintains that he submitted documentation and law in support of a good faith attempt to demonstrate that a default judgment is warranted.
Discussion
"Pursuant to 22 NYCRR § 130-1.1, sanctions may be imposed against a party or the attorney for a party for frivolous conduct. Conduct is frivolous if it is completely without merit in law or fact and cannot be supported by a reasonable argument for the extension, modification, or reversal of existing law; it is taken to primarily delay or prolong the resolution of the litigation, or harass or maliciously injure another; or it asserts material factual statements that are false" ( Joan 2000, Ltd. v Deco Const. Corp. , 66 AD3d 841, 842 [2d Dept 2009] [citations omitted]).
Dynamics and Lenoff request that this Court impose sanctions pursuant to 22 NYCRR § 130-1.1 against plaintiff and his counsel, Mr. Marzec, for filing an allegedly frivolous motion for default judgment. Plaintiff and Mr. Marzec, however, relied on this court's July 14, 2021 order directing that defendants had until September 7, 2021 to file an "answer." Their understanding of the law with respect to whether this order precluded defendants from filing a motion to dismiss instead of an answer may have been wrong, but their literal interpretation of the court's order was not an unreasonable one. Plaintiff's motion for default judgment is therefore not frivolous. If their literal interpretation of the court's order had been correct, then filing a default judgment motion would have been an appropriate action to take in order to prevail in this case. Accordingly, Dynamics’ and Lenoff's motion for sanctions is denied.
Conclusion
Accordingly, it is hereby
ORDERED that Dynamics’ and Lenoff's motion (mot. seq. no. 4) is granted and plaintiff's entire complaint is hereby dismissed as against Lenoff and plaintiff's claims for fraud, unjust enrichment, declaratory judgment, accounting, conversion, and fraudulent inducement are dismissed as against Dynamics; and it is further
ORDERED that plaintiff's motion (mot. seq. no. 6) for a default judgment is denied; and it is further
ORDERED that Dynamics’ and Lenoff's motion (mot. seq. no. 7) for sanctions is also denied.
Defense counsel is directed to electronically serve a copy of this decision and order with notice of entry and to electronically file an affidavit of service thereof with the Kings County Clerk.
This constitutes the decision and order of the Court.