Opinion
00 Civ. 6136 (LAK).
January 22, 2001.
ORDER
This at root is a simple collection action. Plaintiff acted as defendant's advertising agency and media advisor. It seeks to collect an alleged unpaid balance. Defendant resists payment. It alleges, broadly speaking, that it was a babe in the woods when it hired plaintiff, that plaintiff told it that "it would realize a three hundred percent (300%) increase in loan inquiries" if it did so (Ans. ¶ 37), and that the increase never materialized. It asserts counterclaims based generally on this scenario for breach of contract, breach of warranty, fraud, and constructive fraud as well as affirmative defenses including fraud in the inducement and breach of contract excusing performance. Plaintiff moves to dismiss the counterclaims and the two aforementioned affirmative defenses.
1. The essence of the breach of contract counterclaim and second affirmative defense is that plaintiff was incompetent and/or negligent in unspecified ways in performing under its agreement with defendant. (Pl. Mem. 7) Plaintiff rejoins that this amounts to a claim of malpractice and that there is no such thing as "advertising agency malpractice" under New York law.
"A person undertaking to perform work is charged with the common law duty to exercise reasonable care and skill in the performance of the work. [citations omitted] Negligent performance of the work gives rise to an action . . . for breach of contract." Trans Caribbean Airways, Inc. v. Lockheed Aircraft Service- International, Inc., 14 A.D.2d 749, 220 N.Y.S.2d 485, 486 (1st Dept. 1961). The lack of specificity of the counterclaim and affirmative defenses may be addressed through discovery.
2. Plaintiff seeks dismissal of the breach of warranty claim, asserting that such a claim may not be grounded on a service contract. Defendant does not resist this branch of the application.
3. The fraud claim is manifestly deficient for a host of reasons. It rests, for the most part, on "forecasts and projections." (Ans. ¶¶ 69, 73) There is no legally sufficient assertion that plaintiff knew, when the statements were made, that they were false, as the pleading does not comply with FED. R. CIV. P. 9(b) and the wealth of authority in this circuit establishing the parameters of a sufficient allegation of scienter. Moreover, the only reliance alleged is that defendant relied upon plaintiff's statements concerning "the increase in consumer inquiries that would result from its services." (Ans. ¶ 73; see id. ¶¶ 71, 74-75) Any reliance on such obviously self interested, speculative predictions would have been unjustifiable as a matter of law.
4. The counterclaim for constructive fraud rests upon an assertion that plaintiff, by reason of its superior knowledge of advertising, owed defendant a fiduciary duty. Plaintiff disputes this, arguing that no fiduciary duty arises from an ordinary commercial relationship. Defendant does not resist dismissal of this claim.
Accordingly, plaintiff's motion is granted to the extent that the second, third and fourth counterclaims, the second affirmative defense, and defendant's prayer for punitive damages (which rests exclusively on the counterclaim for actual fraud) all are dismissed. The motion is otherwise denied.
SO ORDERED.