Opinion
Index No. 656522/2022
04-07-2023
DWORKIN CONSTRUCTION CORP. (USA), Plaintiff, v. MARCUS GROUP INC. d/b/a Gateway Newstands, Defendant.
For Plaintiff, Jonathan R. Miller Esq., 100 Overlook Center, Princeton NJ 08540 For Defendant, David A. Wolf Esq., Landy Wolf, PLLC, 270 Madison Avenue, New York, NY 10016
For Plaintiff, Jonathan R. Miller Esq., 100 Overlook Center, Princeton NJ 08540
For Defendant, David A. Wolf Esq., Landy Wolf, PLLC, 270 Madison Avenue, New York, NY 10016
Lucy Billings, J.
I. BACKGROUND According to the complaint, defendant owns and operates a "Gateway Newstands" retail store at 200 Broadway, New York County. In 2016, plaintiff entered a construction contract with "Gateway Newstands c/o Tobmar Investments, Int., Inc.," to build-out the store. Plaintiff completed the build-out, but in 2019 defendant discontinued its payments to plaintiff for its work. Plaintiff now sues to recover a remaining balance of $62,435.67 from defendant.
Notably, the complaint omits any reference to a New York County judgment, entered September 13, 2021, in plaintiff's favor against nonparty Tobmar Investments International, Inc., based on the same contract and work involved in this action. Dworkin Construction Corp. (USA) v. Tobmar Investments International, Inc. d/b/a Gateway Newstand , Index No. 653431/2020 (Sup. Ct. NY Co.). In light of this judgment, defendant moves to dismiss plaintiff's complaint based on documentary evidence and failure to state a claim, C.P.L.R. § 3211(a)(1) and (7), and requests sanctions and attorneys’ fees. 22 N.Y.C.R.R. § 130-1.1(c). In opposition to the motion, plaintiff withdrew its claims for quantum meruit and unjust enrichment, but still claims breach of the construction contract and breach of an alleged franchise agreement between defendant and Tobmar Investments, of which plaintiff maintains it is a third party beneficiary. Plaintiff also agrees to vacate the New York County judgment against Tobmar Investments to pursue this action if the complaint is not dismissed. Nevertheless, the court grants defendant's motion as follows. II. DEFENDANT'S MOTION TO DISMISS THE COMPLAINT
Upon a motion to dismiss the complaint, the court considers the factual allegations as true. Sassi v. Mobile Life Support Servs., Inc. , 37 N.Y.3d 236, 239, 154 N.Y.S.3d 290, 175 N.E.3d 1246 (2021) ; Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc. , 37 N.Y.3d 169, 175, 150 N.Y.S.3d 79, 171 N.E.3d 1192 (2021) ; Yovich v. Montefiore Nyack Hosp. , 212 A.D.3d 425, 426, 181 N.Y.S.3d 241 (1st Dep't 2023). In a motion pursuant to C.P.L.R. § 3211(a)(7), defendant bears the burden to establish that the complaint "fails to state a viable cause of action." Connolly v. Long Island Power Auth. , 30 N.Y.3d 719, 728, 70 N.Y.S.3d 909, 94 N.E.3d 471 (2018). Dismissal is warranted if the complaint fails to allege facts that "fit within any cognizable legal theory." Sassi v. Mobile Life Support Servs., Inc. , 37 N.Y.3d at 239, 154 N.Y.S.3d 290, 175 N.E.3d 1246. A motion to dismiss the complaint based on documentary evidence pursuant to C.P.L.R. § 3211(a)(1) will succeed only if admissible documentary evidence completely refutes plaintiff's factual allegations, resolving all factual issues as a matter of law. Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, Inc. , 30 N.Y.3d 572, 601, 69 N.Y.S.3d 520, 92 N.E.3d 743 (2017) ; Goshen v. Mutual Life Ins. Co. of NY , 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 (2002) ; Calpo-Rivera v. Siroka , 144 A.D.3d 568, 568, 42 N.Y.S.3d 19 (1st Dep't 2016).
Defendant maintains that plaintiff's claim for breach of the construction contract is barred for three reasons: (1) judicial estoppel, (2) the claim splitting doctrine, and (3) plaintiff's lack of actionable damages. Defendant also contends that plaintiff does not adequately plead a claim for breach of the franchise agreement as a third party beneficiary. Plaintiff insists that Tobmar Investments either entered the construction contract as defendant's agent or assigned the contract to defendant. Plaintiff alternatively claims that Tobmar Investments entered the construction contract pursuant to a franchise agreement between Tobmar Investments and defendant, which obligated it to pay plaintiff for the build-out as a third party beneficiary to that agreement.
A. Breach of the Construction Contract
Neither judicial estoppel nor the prior judgment against Tobmar Investments bars plaintiff's claim for breach of the construction contract, since defendant's liability is based on its alleged status as an undisclosed principal, which allows plaintiff to seek damages from both Tobmar Investments and defendant. C.P.L.R. § 3002(b) ; J.P. Endeavors v. Dushaj , 8 A.D.3d 440, 442, 778 N.Y.S.2d 531 (2d Dep't 2004). The construction contract's anti-assignment provision, however, contradicts plaintiff's allegations that Tobmar Investments assigned the contract to defendant, since the contract provides that "neither party to the Contract shall assign the Contract without written consent of the other." Aff. of David A. Wolf Ex. B § 19.1. As plaintiff fails to allege either that it provided consent to Tobmar Investments or waived this requirement, the construction contract's express terms would void any assignment by Tobmar Investments to defendant. C.U. Annuity Serv. Corp. v. Young , 281 A.D.2d 292, 292, 722 N.Y.S.2d 236 (1st Dep't 2001) ; Macklowe v. 42nd St. Dev. Corp. , 170 A.D.2d 388, 389, 566 N.Y.S.2d 606 (1st Dep't 1991).
Plaintiff's claim for defendant's breach of the construction contract in any event must be dismissed pursuant to the claim splitting doctrine. Solow v. Avon Products, Inc. , 56 A.D.2d 785, 786, 392 N.Y.S.2d 618 (1st Dep't 1977), aff'd , 44 N.Y.2d 711, 405 N.Y.S.2d 449, 376 N.E.2d 921 (1978). See Melcher v. Greenberg Traurig LLP , 135 A.D.3d 547, 552, 24 N.Y.S.3d 249 (1st Dep't 2016) ; Murray, Hollander, Sullivan & Bass v. Hem Research, Inc. , 111 A.D.2d 63, 66, 489 N.Y.S.2d 187 (1st Dep't 1985) ; City of Troy v. Assessor of Town of Brunswick , 145 A.D.3d 1241, 1244, 43 N.Y.S.3d 210 (3d Dep't 2016). To invoke the doctrine, defendant "must show that the challenged claim raised in the second action is based upon the same liability in the prior action, and that the claim was ascertainable when the prior action was commenced." Melcher v. Greenberg Traurig LLP , 135 A.D.3d at 552, 24 N.Y.S.3d 249. Thus "claims for damages spawned by the same liability on the same contract, and ascertainable at the time an action is commenced, must be demanded, if at all, in that action." Solow v. Avon Products, Inc. , 56 A.D.2d at 786, 392 N.Y.S.2d 618, aff'd , 44 N.Y.2d 711, 405 N.Y.S.2d 449, 376 N.E.2d 921. Defendant's liability is based on nonpayment for plaintiff's work under the construction contract, the same liability and contract underlying plaintiff's previous action against Tobmar Investments. Plaintiff's current claim against defendant also was previously ascertainable, as plaintiff candidly admits that it simply failed to consider defendant's direct payment for the work that plaintiff performed as a viable reason to sue defendant in the first action, even though plaintiff received the payment well before plaintiff commenced that action.
Plaintiff also admits that a recent review of the contract prompted plaintiff's current claim, when plaintiff noticed "c/o" between Gateway Newstands and Tobmar Investments in the contract and determined that Tobmar Investments entered the contract as defendant's agent. Although an agency relationship is not determined solely because a party to a contract is "c/o" another entity, plaintiff's belated assessment of defendant's potential liability demonstrates that plaintiff's current claim was ascertainable in the previous action, since plaintiff's current theory of liability is not based on new information. Therefore the court dismisses plaintiff's claim against defendant for breach of the construction contract without prejudice to a claim against defendant in the previous action. Solow v. Avon Products, Inc. , 56 A.D.2d at 786, 392 N.Y.S.2d 618, aff'd , 44 N.Y.2d 711, 405 N.Y.S.2d 449, 376 N.E.2d 921.
Plaintiff may move to join defendant and amend the complaint in the previous action, C.P.L.R. § 3025(b), as the statute of limitations has not expired, C.P.L.R. § 213(2), and plaintiff's allegations implicate defendant as an undisclosed principal. C.P.L.R. § 3002(b) ; J.P. Endeavors v. Dushaj , 8 A.D.3d at 442, 778 N.Y.S.2d 531. To the extent that plaintiff's acceptance of defendant's payments might constitute a waiver of written consent to Tobmar Investments’ alleged assignment, plaintiff may so allege in an amended complaint. Plaintiff bears the burden to justify its nearly three years of delay, however, in bringing an overdue motion. C.P.L.R. § 3025(b).
B. Breach of the Franchise Agreement
The court also dismisses plaintiff's claim for breach of the franchise agreement between defendant and Tobmar Investments. Although this claim is not duplicative because it arises from a different contract, plaintiff fundamentally fails to plead facts that show the agreement was intended for plaintiff's benefit. Mandarin Trading Ltd. v. Wildenstein , 16 N.Y.3d 173, 182, 919 N.Y.S.2d 465, 944 N.E.2d 1104 (2011) ; Board of Mgrs. of Fifth Ave. Condominium v. 141 Acquisition Assoc., LLC , 179 A.D.3d 627, 628, 118 N.Y.S.3d 571 (1st Dep't 2020). The complaint merely alleges that "Dworkin is a third party beneficiary of the Gateway Franchise Agreement," Wolf Aff. Ex. 1 ¶ 42, which not only is conclusory, but also fails to distinguish whether plaintiff is an intended rather than incidental beneficiary. Levin v. Salvini , 193 A.D.3d 426, 146 N.Y.S.3d 100 (2021) ; Miller & Wrubel, P.C. v. Todtman, Nachamie, Spizz & Johns, P.C. , 106 A.D.3d 446, 446, 965 N.Y.S.2d 408 (1st Dep't 2013). Plaintiff alleges no other facts that indicate the contracting parties’ intent to benefit plaintiff. Board of Mgrs. of Fifth Ave. Condominium v. 141 Acquisition Assoc., LLC , 179 A.D.3d at 628, 118 N.Y.S.3d 571. Nor does plaintiff demonstrate the need for disclosure through an affidavit, as required under C.P.L.R. § 3211(d), rather than an attorney's affirmation. Consequently, plaintiff fails to sustain its claim for breach of the franchise agreement as a third party beneficiary. Mandarin Trading Ltd. v. Wildenstein , 16 N.Y.3d at 182, 919 N.Y.S.2d 465, 944 N.E.2d 1104 ; Board of Mgrs. of Fifth Ave. Condominium v. 141 Acquisition Assoc., LLC , 179 A.D.3d at 628, 118 N.Y.S.3d 571.
During oral argument defendant did acknowledge that it is a party to a franchise agreement, yet refused to produce the agreement as documentary evidence to rebut plaintiff's claim. C.P.L.R. § 3211(a)(1). Despite this curious position, the deficient and conclusory pleadings in this action warrant dismissal of any claim based on the franchise agreement. C.P.L.R. § 3211(a)(7) ; Mandarin Trading Ltd. v. Wildenstein , 16 N.Y.3d at 182, 919 N.Y.S.2d 465, 944 N.E.2d 1104 ; Board of Mgrs. of Fifth Ave. Condominium v. 141 Acquisition Assoc., LLC , 179 A.D.3d at 628, 118 N.Y.S.3d 571. Should plaintiff plead adequate allegations in a new complaint and demand disclosure of the franchise agreement, defendant likely will be required to produce the agreement.
III. SANCTIONS
Defendant also seeks sanctions and attorneys’ fees incurred for this motion. Although defendant prevailed on its motion to dismiss the complaint, plaintiff's allegations were not so "completely without merit in law" as to warrant sanctions, 22 N.Y.C.R.R. 130-1.1(c)(3), particularly because plaintiff still may move to amend the complaint in the previous action regarding defendant's alleged breach of the construction contract. C.P.L.R. § 3025(b). Therefore the court denies plaintiff's request for sanctions and attorneys’ fees. 22 N.Y.C.R.R. § 130-1.1(c) ; Bradley v. Bradley , 167 A.D.3d 489, 489-90, 89 N.Y.S.3d 171 (1st Dep't 2019) ; Korangy v. Malone , 161 A.D.3d 645, 646, 78 N.Y.S.3d 303 (1st Dep't 2018) ; Curtis v. Tabak Is Tribeca, LLC , 144 A.D.3d 509, 509-10, 41 N.Y.S.3d 41 (1st Dep't 2016) ; Gordon Group Invs., LLC v. Kugler, 127 A.D.3d 592, 594, 8 N.Y.S.3d 115 (1st Dep't 2015).
IV. CONCLUSION
For the reasons explained above, the court grants defendant Marcus Group Inc.’s motion to dismiss the complaint, C.P.L.R. § 3211(a)(7), but denies its motion for sanctions. 22 N.Y.C.R.R. § 130-1.1(c). This decision constitutes the court's order.