Opinion
7063 Index 650984/15
01-08-2019
NORMANDY REAL ESTATE PARTNERS LLC, Plaintiff–Appellant, v. 24 EAST 12 STREET ASSOCIATES LLC, et al., Defendants–Respondents.
Meister Seelig & Fein LLP, New York (Stephen B. Meister and Thomas L. Friedman of counsel), for appellant. Max Markus Katz, P.C., New York (Max Markus Katz of counsel), for 24 East 12 Street Associates LLC, respondent. Ellenoff Grossman & Schole LLP, New York (John B. Horgan and Fawn Lee of counsel), for Elie Tahari, Ltd., respondent.
Meister Seelig & Fein LLP, New York (Stephen B. Meister and Thomas L. Friedman of counsel), for appellant.
Max Markus Katz, P.C., New York (Max Markus Katz of counsel), for 24 East 12 Street Associates LLC, respondent.
Street Associates LLC (Associates) leased property with an option to purchase if certain conditions occurred. After the owner notified Associates that it would sell the property, Associates entered into a letter agreement with plaintiff whereby the parties agreed that they would negotiate plaintiff's purchase of Associates' lease and the option to purchase. The letter agreement included the purchase price and some relevant terms, provided for plaintiff to provide a deposit, and contemplated a further purchase and sale agreement. It included a confidentiality provision, and provided for an "Exclusivity Period" of 14 days, during which Associates could "continue discussions" with defendant Elie Tahari, Ltd. (Tahari) regarding the sale of the lease and the purchase option.
Plaintiff alleges that, within one day of entering into the letter agreement, Associates disclosed the letter agreement to Tahari in violation of the confidentiality provision and agreed to accept an offer from Tahari in violation of the exclusivity provision.
The complaint states a cause of action for breach of the letter agreement's exclusivity provision. The letter agreement provided only that Associates could "continue discussions" with Tahari, and did not provide that it could accept an offer, within the 14–day period, and therefore does not utterly refute the complaint's factual allegations or conclusively establish a defense for Associates as a matter of law (see Goshen v. Mut. Life Ins. Co. of N.Y. , 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 [2002] ).
The complaint states a cause of action for breach of the confidentiality provision by alleging the existence of the letter agreement, plaintiff's performance thereunder, Associates' breach of the letter agreement's confidentiality provision by disclosing the letter agreement to Tahari, and resulting damages (see Morris v. 702 E. Fifth St. HDFC , 46 A.D.3d 478, 479, 850 N.Y.S.2d 6 [1st Dept. 2007] ). Although the "lost profits" damages allegation is boilerplate and does not allege facts showing that the damages are attributable to Associates' conduct (see Gordon v. Dino De Laurentiis Corp. , 141 A.D.2d 435, 436, 529 N.Y.S.2d 777 [1st Dept. 1988] ), the complaint sufficiently alleges other damages, such as incurring expenses in performing due diligence and negotiating and drafting the letter agreement and an ultimately worthless escrow agreement. The complaint fails to state a cause of action for breach of the duty to negotiate in good faith, which was expressly included in a non-binding section of the letter agreement. Even considered a claim for breach of the implied duty of good faith and fair dealing, the claim was correctly dismissed, because it is "intrinsically tied to the damages allegedly resulting from a breach of the contract" (see MBIA Ins. Corp. v. Merrill Lynch , 81 A.D.3d 419, 420, 916 N.Y.S.2d 54 [1st Dept. 2011] [internal quotation marks omitted] ).
The complaint states a cause of action for tortious interference with contract by alleging that plaintiff entered into a valid contract (the letter agreement) with Associates, that Tahari had knowledge of the letter agreement, that Tahari intentionally and improperly induced Associates to breach the enforceable provisions of the letter agreement by entering into an agreement with it to purchase the lease and purchase option during the exclusivity period, and that as a result plaintiff suffered damages (see White Plains Coat & Apron Co., Inc. v. Cintas Corp. , 8 N.Y.3d 422, 426, 835 N.Y.S.2d 530, 867 N.E.2d 381 [2007] ). The allegations show that Tahari's inducement of Associates to breach the enforceable provisions of the letter agreement "exceeded a minimum level of ethical behavior in the marketplace" ( id. at 427, 835 N.Y.S.2d 530, 867 N.E.2d 381 [internal quotation marks omitted] ).
Tahari failed to establish the economic interest defense to tortious interference with contract at this time. The complaint alleges that Tahari was effectively plaintiff's competitor, that it did not appear to have a prior contractual or economic relationship with Associates, and that it had merely a generalized economic interest in soliciting Associates to sell the lease and the purchase option for profit (see id. at 426, 835 N.Y.S.2d 530, 867 N.E.2d 381 ; LNYC Loft, LLC v. Loo , 148 A.D.3d 552, 50 N.Y.S.3d 54 [1st Dept. 2017] ; Wells Fargo Bank, N.A. v. ADF Operating Corp. , 50 A.D.3d 280, 855 N.Y.S.2d 68 [1st Dept. 2008] ).
Since plaintiff can be adequately compensated for breach of contract and tortious interference by monetary damages, the cause of action for an equitable lien was correctly dismissed as not warranted (see Meehan v. Meehan , 227 A.D.2d 268, 269–270, 642 N.Y.S.2d 664 [1st Dept. 1996] ; see also Wolf v. National Council of Young Israel , 264 A.D.2d 416, 418, 694 N.Y.S.2d 424 [2d Dept. 1999] ).
The Decision and Order of this Court entered herein on July 5, 2018 ( 163 A.D.3d 424, 76 N.Y.S.3d 407 [1st Dept. 2018] ) is hereby recalled and vacated (see M–3892 decided simultaneously herewith).
Ellenoff Grossman & Schole LLP, New York (John B. Horgan and Fawn Lee of counsel), for Elie Tahari, Ltd., respondent.
Renwick, J.P., Richter, Manzanet–Daniels, Tom, Gesmer, JJ.
Defendant 24 East 12