Summary
In Shear Enterprises, LLC v. Cohen, 189 A.D.3d 423, 424, 137 N.Y.S.3d 306 (App. Div. 1st Dep't 2020), the defendants-who knew that their business was defunct and unable to fulfill orders-still solicited orders from the plaintiff and used the money from plaintiff's down payments to reduce the defendants' personal guarantees on the business's debt.
Summary of this case from Power up Lending Grp. v. Parallax Health Scis.Opinion
Case No. 2020–01394 Index No. 154608/19 12301
12-01-2020
SHEAR ENTERPRISES, LLC, Plaintiff–Respondent, v. Sam COHEN, et al., Defendants–Appellants.
Heller Horowitz & Feit, P.C., New York (Eli Feit of counsel), for appellant. Louis Fogel & Associates, New York (Louis Fogel of counsel), for respondent.
Heller Horowitz & Feit, P.C., New York (Eli Feit of counsel), for appellant.
Louis Fogel & Associates, New York (Louis Fogel of counsel), for respondent.
Manzanet–Daniels, J.P., Kapnick, Mazzarelli, Moulton, JJ.
Order, Supreme Court, New York County (Arthur F. Engoron, J.), entered on or about December 17, 2019, which denied defendants' CPLR 3211(a)(7) motion to dismiss the amended complaint, unanimously modified, on the law, to grant the motion to dismiss the cause of action for unjust enrichment, and otherwise affirmed, without costs.
The court properly denied defendants' motion to dismiss the cause of action for breach of contract. Contrary to defendants' contention, the complaint sufficiently alleges that plaintiff did not agree to a novation (see Griggs v. Day, 136 N.Y. 152, 160, 32 N.E. 612 [1892] ; Wasserstrom v. Interstate Litho Corp., 114 A.D.2d 952, 954, 495 N.Y.S.2d 217 [2d Dept. 1985] ). In the original complaint, plaintiff made clear that it intended to recoup the original down payment and clarified in the amended complaint that it did not pay the additional $110,000 in order to relieve defendants of the obligation to repay the original down payment. On a motion to dismiss the complaint, we must accept plaintiff's allegations as true ( Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ).
The court also properly denied the motion to dismiss plaintiff's tortious interference claim against defendants Sam and Isaac Cohen, the owners of codefendant Tres Joli Accessories, Ltd. 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] ; 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 omitted] ). Here, plaintiff alleges that the Cohens, with the full knowledge that Tres Joli was out of business and unable to complete its orders, solicited cash down payments from plaintiff in order to enrich themselves by using the funds from plaintiff's down payments to reduce their personal guarantees to Tres Joli's factor. Thus, plaintiff alleges that, separate and apart from acting in the best interests of Tres Joli, the Cohens sought to personally profit by deceiving plaintiff and causing Tres Joli to breach its contract with plaintiff, without any legitimate business reason. The court should not have dismissed the cause of action for fraud as duplicative of the cause of action for breach of contract. The gravamen of the allegations supporting the claim is not, as in Cronos Group, Ltd. v. XComIP, LLC (156 A.D.3d 54, 62, 64 N.Y.S.3d 180 [1st Dept. 2017] ), that defendants "made a promise while harboring the concealed intent not to perform it." Rather, plaintiff asserts that defendants misrepresented their very "ability to perform," an allegation that supports a non-duplicative fraudulent inducement claim ( Man Advisors, Inc. v. Selkoe, 174 A.D.3d 435, 435, 101 N.Y.S.3d 843 [1st Dept. 2019] ). Defendants argue that, in any event, because the damages are the same under either theory, the fraud claim must give way. We hold that, under the circumstances, and given this early procedural stage of the action, plaintiff should be permitted to plead the cause of action in the alternative pursuant to CPLR 3014 (id. ).
However, the court should have dismissed as duplicative the cause of action for unjust enrichment. That cause of action repeats the same allegations as the cause of action for breach of contract almost verbatim (see Ullmann–Schneider v. Lacher & Lovell Taylor, P.C., 121 A.D.3d 415, 416, 994 N.Y.S.2d 72 [1st Dept. 2014] ).