JF Capital Advisors, LLC, Appellant,v.The Lightstone Group, LLC, et al., Respondents.

Brief

N.Y.June 3, 2015

To be Argued by: JASON STERN (Time Requested: 30 Minutes) APL-2014-00203 New York County Clerk’s Index No. 651902/11 Court of Appeals of the State of New York   JF CAPITAL ADVISORS, LLC, Plaintiff-Appellant, – against – THE LIGHTSTONE GROUP, LLC, LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. and LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST II, INC., Defendants-Respondents. BRIEF FOR PLAINTIFF-APPELLANT WEBER LAW GROUP LLP Attorneys for Plaintiff-Appellant 290 Broadhollow Road, Suite 200E Melville, New York 11747 Tel.: (631) 549-2000 Fax: (631) 549-2015 Date of Completion: September 19, 2014 COURT OF APPEALS STATE OF NEW YORK JF CAPITAL ADVISORS, LLC, Plaintiff-Appellant-Respondent, -against- THE LIGHTSTONE GROUP, LLC, LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. and LIGHTS TONE VALUE PLUS REAL ESTATE INVESTMENT TRUST II, INC., Defendants-Respondents-Appellants. New York County Index No. 651902/2011 DISCLOSURE STATEMENT COURT OF APPEALS RULE 500.100 Pursuant to Section 500.l(t) of the Rules of Practice of the Court of Appeals, the undersigned counsel for Plaintiff-Appellant-Respondent JF Capital Advisors, LLC certifies that there are no corporate parents, or subsidiaries of said party, but the following are affiliates of said party: 1. JF Hotel Investors II, LLC 2. AIMCAP II LLC 3. AIMCAP IX LLC 4. JF Hotel Investors IX LLC 5. GTIS I-AIMCAP Midwest Hotel Partners, LLC 6. GTIS I-AIMCAP Brookfield LLC 7. GTIS I-AIMCAP Wood Dale LLC 8. GTIS I-AIMCAP Schaumburg LLC 9. GTIS I-AIMCAP Charlotte LLC 10. GTIS I-AIMCAP Novi LLC 11. GTIS 1-AIMCAP Overland Park LLC 12. GTIS I-AIMCAP Midwest Hotel Portofolio LLC 13. GTIS I-AIMCAP Midwest Hotel Junior Mezzanine LLC 14. GTIS I Midwest Hotel Portfolio LP 15. AIMCAP VII LLC 16. JF Hotel Investors VII LLC 17. JF Hotel Management LLC 18. AP AIMCAP Holdings LLC 19. GTIS-AIMCAP Dallas Hotel, LP 20. GTIS-AIMCAP Denver Hotel, LLC 21. GTIS-AIMCAP Dallas GP, LLC 22. GTIS-AIMCAP Denver Holdings, LLC 23. GTIS-AIMCAP Dallas Holdings, LLC 24. GTIS-AIMCAP Hotel Partners, LLC 25. AIMCAPLLC 26. JF Hotel Investors I, LLC 27. JFL Management LLC Dated: Melville, New York August 1, 2014 /} WEB1R~ GROUP~;~-.·-. .····' ,/ . /',/ / ' ' / ,• // / /,' I / L/ By/-/~ / ( ;/Jason A. Stem \j ,m Broadhollow Road, Suite 200E f Melville, New York, 11747 Tele: (631) 549-2000 Attorneys for Plaintiff-Appellant-Respondent 2 TABLE OF CONTENTS JURISDICTIONAL STATEMENT .......................................................................... I PRELIMINARY STATEMENT ............................................................................... 2 STATEMENT OF QUESTIONS PRESENTED ...................................................... 8 1. Did the First Department incorrectly apply the Statute of Frauds to Plaintiff's claims on the ground that "investment analysis and financial advice regarding the possible acquisition of investment opportunities" are per se covered by GOL§ 5-701[a][10]? ............................................. 8 2. Did the First Department apply the wrong standard in evaluating Plaintiff's quantum meruit and unjust enrichment claims under the Statute of Frauds in violation of this Court's holding in Morris Cohan & Co. v. Russel, 23 N. Y.2d 569, 297 N. Y.S.2d 947 (1969) that such claims may be proved by a writing that acknowledges plaintiff's peiformance? ... .......................................................................................... 9 3. Did the First Department prematurely dismiss Plaintiff's complaint on a pre-answer, pre-discovery CPLR 3211 motion to dismiss? ................... 9 FACTUAL BACKGROUND AND PROCEDURAL HISTORY ......................... 10 ARGUMENT .......................................................................................................... 15 I. THE APPELLATE DECISION SHOULD BE REVERSED BECAUSE IT APPLIED GOL § 5-701[a][10] TOO BROADLY ........... 15 A. The Appellate Decision Should Be Reversed Because It Creates a Per Se Category Of Services Subject to GOL § 5-701[a][10] In Violation Of This Court's Decisions in Freedman and Sporn .............................. 15 1 B. The Appellate Decision Should Be Reversed Because It Violates The Legislative Intent OfGOL § 5-701[a][JO] .............................................. 18 C. The Appellate Decision Should Be Reversed Because It Interprets GOL § 5-701[a][JO] Beyond The Scope Of Any Prior Decisions .......... 20 D. The Appellate Decision Should Be Reversed Because It Violates All of the Case Law Rejecting GOL §5-701[a][JO} Where Services Are Beyond Assisting In The Negotiation or Consummation of Business Opportunities ........................................................................................... 26 E. The Appellate Decision Should Be Reversed Because It Turns The Statute of Frauds On Its Head ................................................................. 28 II. THE FIRST DEPARTMENT'S APPLICATION OF THE BREACH OF CONTRACT STANDARD TO PLAINTIFF'S QUANTUM MERUIT AND UNJUST ENRICHMENT CLAIMS IS IN VIOLATION OF THIS COURT'S HOLDING IN MORRIS COHON .................................... .30 III. DISMISSAL OF JF CAPITAL'S CLAIMS WAS PREMATURE WITHOUT DISCOVERY OF CRITICAL FACTS ...................................... .35 CONCLUSION ....................................................................................................... 37 11 TABLE OF AUTHORITIES Cases Advisors, Inc. v. Coporacion Sidenor, S.A., 667 F. Supp. 2d 308 (S.D.N.Y. 2009) ................................................................. 6, 22 Ames v. Ideal Cement Co., 235 N.Y.S.2d 622 (Sup Ct, NY Co 1962) .................. 19 Ashwood Capital, Inc. v. OTG Management, 99 A.D.3d 1, 948 N.Y.S.2d 292 (1st Dep't 2012) .................................... 6, 26, 27, 28 Delgado v. Bretz & Coven, LLP, 109 A.D.3d 38, 967 N.Y.S.2d 371 (1st Dep't 2013) ............................................... 36 Ely v. Perthuis, 2013 WL 411348 (S.D.N.Y. 2013) .................................................................. 21, 22 Enfeld v. Hemmerdinger Estate Corp., 34 A.D.2d 980 (2d Dep't 1970), affd, 28 N.Y.2d 606 (1971) ........................ passim Festa v. Gilston, 183 A.D.2d 525,583 N.Y.S.2d451 (lstDep't 1992) ........................................ 26, 28 Flammia v. Mite Corp., 401 F.Supp. 1121, 1133 (E.D.N.Y. 1975) ............................................................... 33 Freedman v. Chemical Constr. Corp., 43 N.Y.2d 260,401 N.Y.S.2d 176,372 N.E.2d 12 (1977) .............................. passim GEM Advisors, Inc. v. Coporacion Sidenor, S.A., 667 F. Supp. 2d 308 (S.D.N.Y. 2009) ............................................. passim Gizara v. New York Times, Inc., 80 A.D.3d 1026,915 N.Y.S.2d (3d Dep't 2011) .................................................... 27 111 Gottesmen Co. v. Keystone Enters, Inc., 43 A.D.3d 696, 841 N.Y.S.2d 540 (1st Dep't 2007) .................................... 32, 35, 36 Gutkowski v. Steinbrenner, 680 F. Supp. 2d 602,604 (S.D.N.Y. 2010) ...................................................... 21, 22 Intercontinental Planning v. Daystrom, Inc., 24 N.Y.2d 372, 300 N.Y.S.2d 817 (1969) ......................................................... 5, 20 Kalfin v. United States Olympic Commn., 209 A.D.2d 279, 618 N.Y.S.2d 724 (1st Dep't 1994) ....................................... 32, 34 Ladenberg Thalmann & Co., Inc. v. Tim's Amusement, Inc., 275 A.D.2d at 247 ................................................................................................... 36 Lounsbury v. Bethlehem Steel Corp., 53 Misc.2d 151, 152-156,277 N.Y.S.2d 700, 701-704 .................................... 16, 29 Marcus v. Hemphill Harris Travel Corp., 193 A.D.2d 543, 598 N.Y.S.2d 195 (1st Dep't 1993) ........................................ 36, 37 Morris Cohon & Co. v. Russel, 23 N.Y.2d 569,245 N.E.2d 712,297 N.Y.S.2d 947 (1969) ........................... passim National Performing Arts v. Guettel, 46 Misc.2d 411, 259 N.Y.S.2d 527, 529-530 ......................................................... 16 Newmark & Compant Real Estate, Inc. v. 2615 East 17th Street Realty, LLC, 80 A.D.3d 476, 914 N.Y.S.2d 162 (1st Dep't 2011) ................................................ 35 Peters v. Sigma Data Computing Corp., 397 F.Supp. 1098, 1101 (E.D.N.Y.1975) ................................................................ 34 Prince v. Government of People's Republic of China, 2014 WL 1303417 (S.D.N.Y. 2014) ................................................................. 21, 22 Riley v. N.F.S. Services, Inc., 891 F. Supp. 972,978 (S.D.N.Y. 1995) ........................................................ 6, 27,28 Shapiro v. Dictaphone Corp., IV 66 A.D.2d 882, 411 N.Y.S.2d 669 (2d Dep't 1978) .......................................... 34, 35 Snyder v. Bronfman, 13 N.Y.2d 504, 507, 921 N.E.2d 567, 893 N.Y.S.2d 800 (2009) ....................... 5, 21 Sorge v. Nott, 22 A.D.2d 768, 253 N.Y.S.2d 546, revg. 34 Misc.2d 545, 226 N.Y.S.2d 57 ......... 16 Sporn v. Suffolk Marketing, 56 N.Y.2d 864,438 N.E.2d 1108 (1982) .................................................. 2, 5, 15, 17 Springwell Corp. v. Falcon Drilling Co., Inc., 16 F. Supp. 2d 300 (S.D.N.Y. 1988) ....................................................................... 33 Stevens v. Publicis, S.A., 50 A.D.3d 253, 854 N.Y.S.2d 690 (1st 2008), lv. dismissed, 10 N.Y.3d 930, 862 N.Y.S.2d 333, 892 N.E.2d 299 (2008) ..................................................... 35 Streit v. Bushnell, 424 F. Supp. 2d 633 (S.D.N.Y. 2006) ..................................................................... 27 Super v. Abdelazim, 108 A.D.2d 1040, 485 N.Y.S.2d 612 (3d Dep't 1985) ..................................... 26, 27 Tower Intern., Inc. v. Caledonian Airways, Ltd., 133 F.3d 908 (2d Cir. 1998) ................................................................................ 2, 17 Venetis v. Stone, 81 A.D.3d 503, 916 N.Y.S.2d 586 (1st Dep't 2011) ...................................... 6, 27, 28 Vioni v. American Capital Strategies, Ltd., 2009 WL 174937, *5 (S.D.N.Y. 2009) ................................................................... 33 Whitman, Heffernan, Rhein & Co. v. Griffin Co., 163 A.D.2d 86, 557 N.Y.S.2d 342 (1st Dep't 1990), app. den. 76 N.Y.2d 715at 87 ........................................................ passim Statutes v Statute ofFrauds, § 4, at 21 (1987) ......................................................................... 18 CPLR § 5602(a)(1)(i) .......................................................................................... 1, 15 GOL § 5-701[a][10] ......................................................................................... passim Other Authorities 1949 Report ofN.Y. Law Rev. Comm., pp. 634-636 ............................................. 16 4 Williston, Contracts [3d ed], Sec 567 A , pp. 19-20 ............................................. 32 Comment ofN.Y. Law Rev. Comm., March 9, 1964, p. 2 ..................................... 19 L.1949, ch. 203; 1949 Report ofN.Y. Law Rev.Comm., p. 615 ............................ 19 Vl JURISDICTIONAL STATEMENT This Court has jurisdiction over the appeal pursuant to CPLR § 5602( a)(l )(i) because it is an appeal in an action originating in the Supreme Court, from a decision and order of the Appellate Division, First Department, dated March 25, 2014 (the "Appellate Decision"), which finally determined the action by dismissing the complaint of Plaintiff-Appellant JF Capital Advisors, LLC ("Plaintiff' or "JF Capital") on a CPLR Rule 3211 pre-answer motion to dismiss, which is not appealable as of right. The First Department granted leave to this Court to hear the appeal on July 24, 2014. 1 PRELIMINARY STATEMENT This Court has repeatedly warned against the "pitfalls" of interpreting GOL § 5-701[a][10] too broadly. Freedman v. Chemical Constr. Corp., 43 N.Y.2d 260, 401 N.Y.S.2d 176 (1977); Sporn v. Suffolk Marketing, 56 N.Y.2d 864, 866, 453 N.Y.S.2d 393 (1982). The reason for this concern is that "too broad an interpretation would extend the writing requirement" to situations beyond those intended by the Legislature. Freedman, 43 N.Y.2d at 266-267. Thus, this Court has cautioned that the interpretation ofGOL § 5-701[a][10] should be decided on a "case-by-case basis" and to avoid "sweeping generalizations" about its scope. Freedman, 43 N.Y.2d at 267; Sporn, 56 N.Y.2d at 865; see also Tower Intern., Inc. v. Caledonian Airways, Ltd., 133 F.3d 908, 909 (2d Cir. 1998). In the Appellate Decision, however, such case-by-case analysis was eschewed and, instead, the First Department adopted a general rule, holding that "investment analysis and fmancial advice regarding the possible acquisition of investment opportunities" are per se covered by GOL § 5-701[a][10] as "assisting in the negotiation or consummation" of a "business opportunity," and dismissed Plaintiffs unjust enrichment and quantum meruit claims on a pre-answer CPLR Rule 3211 motion to dismiss. As set forth below, such a ruling extends the Statute of Frauds well beyond the intent of the Legislature, beyond the scope of any prior decision of this Court 2 or the intermediate courts on GOL § 5-701[a][10], contradicts those cases that reject the application ofGOL § 5-701[a][10] to services rendered for purposes beyond assisting in the negotiation or consummation of a business opportunity, disregards the language ofGOL § 5-701[a][10] itself, and unfairly enables Defendants-Respondents the Lightstone Group, LLC, Lightstone Value Plus Real Estate Investment Trust, Inc. and Lightstone Value Plus Real Estate Investment Trust II, Inc. (collectively, "Defendants" or "Lightstone") to avoid compensating Plaintiff for services Defendants admittedly requested, received and benefitted from. It is undisputed that JF Capital provided over 1 ,400 hours of financial advisory services to and exchanged over 7,000 e-mails with Lightstone in connection with Lightstone's evaluation of 18 (eighteen) independent hospitality industry investment projects (the "Projects");1 that such services involved "typical investment advisory services" (R. 16 (VAC, ~ 4)), such as "financial analysis and The Appellate Division incorrectly described Plaintiffs services as having been rendered "in connection with eight different projects" (see Record on Appeal filed by Plaintiff (hereafter, "R. _"), at R. 56), when, as set forth in the Verified Amended Complaint ("V AC"), Plaintiff worked on the following eighteen (18) different projects for Defendants: (1) the Waterpark Portfolio (R. 19-23 (VAC, ,, 20-40)); (2) the Innkeepers Project (R. 23-24 (V AC, ,, 41-45)); (3, 4) the Fitchburg and Omaha Projects (R. 24-25 (VAC, ,, 46-51)); (5) the Towneplace Suites Metairie Project (R. 25-26 (VAC, ,, 52-56)); (6) the Hotel Victor Project (R. 26-27 (VAC, ,, 57-61)); (7) the CBRE 7 Loan Portfolio Project (R. 27-28 (V AC, ,, 62-65)); (8) the Allegria Hotel Loan Purchase (R. 28 (V AC, ,, 66-71)); (9) the Crowne Plaza Somerset Project (R. 29 (V AC, ,, 72-75)); and nine "miscellaneous" smaller scale projects including: (1 0) Homewood Suites Jackson; (11) Longhouse Portfolio; (12) LIC Development; (13) Ramada Newark; (14) San Francisco Portfolio; (15) Ocean Place; (16) Radisson Orlando; (17) Doubletree Wilmington; and (18) LAM NYC Portfolio (R. 29-30 (V AC, ,, 76-79)). 3 modeling," "market research", "data analysis", "due diligence", "property tours", "site visits", and "investment analysis and evaluations," which included positive and negative evaluations (R. 16,21-31 (VAC, ~~ 4, 32, 37, 42-3,48-9, 54, 59, 63, 69, 73, 77, 91) ), including advice in favor of some investments and advice against other investments ~' where "significant mold problems" were discovered, etc. (R. 24 (VAC, ~ 48)), for "a series of independent projects" (R. 21 (VAC, ~ 32)), some of which were on "one days' notice" (R. 26 (VAC, ~59)) and were "last minute" "requests to review" (R. 25 (VAC, ~54)), but all of which were at Lightstone's discretion and request for Lightstone to do with as it saw fit- to pursue or not pursue, negotiate or not negotiate, consummate or not consummate (R. 15, 21, 25, 26 (VAC, ~~ 1, 2, 32, 54, 59)). Thus, it is clear that JF Capital's services were not provided in "assisting in the negotiation or consummation" of a transaction. Indeed, the parties had agreed that JF Capital would be paid for such work, independent of whether Lightstone pursued any such Project- just as it had been paid by Lightstone previously for such work on prior projects - and this was confirmed in writing by Lightstone's Chief Investment Officer who acknowledged JF Capital's performance of such services in a series of emails, stating: "no one expects [JF Capital] to work for free." (R. 31 (VAC, ~ 88)). 4 In its decision, however, the First Department ruled that Plaintiffs claims were barred by the Statute of Frauds, GOL § 5-701[a][10], on the ground that the provision of such investment advisory services constitutes "assisting in the negotiation or consummation" of business opportunities per se: "investment analysis and financial advice regarding the possible acquisition of investment opportunities 'clearly fall within' GOL § 5-701[a][10]." (R. 139-140; 137-141 (Appellate Decision)). However, this ruling should be rejected and the Appellate Decision reversed for each and every one of the following reasons: (a) the Appellate Decision creates a per se category of services subject to the Statute of Frauds in violation of this Court's admonitions against such "sweeping generalizations" (Freedman, 43 N.Y.2d at 267; Sporn, 56 N.Y.2d at 865) (see infra Point I( A)); (b) the Appellate Decision violates the legislative intent behind GOL § 5- 701 [a] [ 1 0] -- i.e., to prevent claims for brokerage and finder's fees based on oral testimony (see Intercontinental Planning v. Daystrom, Inc., 24 N.Y.2d 372, 300 N.Y.S.2d 817 (1969)) (see infra Point I(B)); (c) the Appellate Decision far exceeds any prior decisions on the scope of GOL § 5-701[a][10], which, at most, have ruled that advisory services provided for the purpose of facilitating the negotiation or consummation of a particular business opportunity constitutes "assisting in the negotiation or consummation" of such opportunity, as evidenced by the success-based payments sought in such cases (see Snyder v. Bronfinan, 13 N.Y.2d 504, 507, 893 N.Y.S.2d 800 (2009) ("The essence of plaintiffs claim is that he devoted years of work to finding a business [for defendant] to acquire and causing an acquisition to take place," for which he sought a "share of the value created" by such acquisition); see also the three principal decisions relied on in the Appellate Decision (R. 138-39): Whitman, Heffernan, Rhein & Co. v. Griffin Co., 163 A.D.2d 86, 557 N.Y.S.2d 342 (1st 5 Dep't 1990), app. den., 76 N.Y.2d 715 (1990) (purpose of plaintiffs services was to "succeed in the acquisition" of Resorts International, Inc. on defendant's behalf, for which he sought a "performance fee" based on a "percentage of the total acquisition price"); Enfeld v. Hemmerdinger Estate Corp., 34 A.D.2d 980, 981 (2d Dep't 1970), affd, 28 N.Y.2d 606 (1971) (plaintiff rendered services to facilitate the "sale of defendant's interest" in certain real property and sought a fee thereon); GEM Advisors, Inc. v. Coporacion Sidenor, S.A., 667 F. Supp. 2d 308, 324, n. 5 (S.D.N.Y. 2009) (plaintiff was "to provide various consulting services focused on finding companies with which [defendant] could engage in certain large transactions," for which he sought a "Transaction Success Fee")) (see infra Point I(C)); (d) the Appellate Decision contradicts all of the caselaw rejecting GOL § 5-701[a][10] for services rendered beyond "assisting in the negotiation or consummation" of a "business opportunity" (see, e.g., Ashwood Capital, Inc. v. OTG Management, 99 A.D.3d 1, 948 N.Y.S.2d 292 (1st Dep't 2012) (GOL §5-701 [a][1 0] did not apply to plaintiffs financial "consulting services" provided to defendant in connection with business opportunity); Venetis v. Stone, 81 A.D.3d 503, 916 N.Y.S.2d 586 (1st Dep't 2011) (GOL §5-701[a][10] did not apply because plaintiff "alleges far more than simply negotiating a business opportunity."); Riley v. N.F.S. Services, Inc., 891 F. Supp. 972, 978 (S.D.N.Y. 1995) (GOL §5-701[a][10] did not apply because plaintiff "was not engaged for the limited purpose of negotiating a business opportunity") (see infra Point I(D)); and (e) indeed, the Appellate Decision turns the language of GOL § 5- 701 [a][ 1 0] on its head: instead of covering services rendered to "assist in the negotiation or consummation" of a "business opportunity," the First Department's ruling extends GOL § 5-701 [a] [ 1 0] to cover all services rendered "in connection with" a "business opportunity" (see infra Point I(E)). Moreover, the Appellate Decision could have wide-ranging, unforeseen, and deleterious impacts on New York's financial services industry by potentially extending the Statute of Frauds to service providers throughout the financial 6 services industry - i.e., anyone who provides "investment analysis and financial advice regarding the possible acquisition of investment opportunities," such as financial analysts, securities analysts, research analysts, equity analysts, investment analysts, asset managers, investment advisors, stock brokers, etc. For all of the foregoing reasons, the Appellate Decision should be reversed. The First Department also ignored this Court's holding in Morris Cohon & Co. v. Russel, 23 N.Y.2d 569, 297 N.Y.S.2d 947 (1969), that, unlike breach of contract claims, for quantum meruit and unjust enrichment, GOL § 5-701[a][10] may be satisfied by a writing that "acknowledges plaintiffs performance," which Lightstone has done in this case in a series of e-mails about JF Capital's services from Lightstone's Chief Investment Officer stating: "no one expects [JF Capital] to work for free." Thus, even if the Statute ofFrauds applies, the Statute has been satisfied with respect to JF Capital's quantum meruit and unjust enrichment claims, and the Appellate Decision should be reversed for this additional reason. See infra Point II. Finally, the Appellate Decision is a pre-answer, pre-discovery CPLR 3211 dismissal on what are essentially fact-intensive disputes involving, inter alia, the purpose and intent of JF Capital's services, the parties reasonable expectation of such services, the scope of such services, the expected compensation for such services, whether Lightstone "acknowledged" JF Capital's performance to third- 7 parties, etc., requiring discovery of,~ Lightstone's internal memoranda, e-mails, communications with third-parties, depositions ofLightstone's directors and officers, etc. Accordingly, dismissal of JF Capital's claims was premature, and the Appellate Decision should be reversed for this reason as well. See infra Point III. STATEMENT OF QUESTIONS PRESENTED 1. Did the First Department incorrectly apply the Statute of Frauds to Plaintiff's claims on the ground that "investment analysis and financial advice regarding the possible acquisition of investment opportunities" are per se covered by GOL§ 5-701[a][JO]? Yes, because (a) this Court has warned against such "sweeping generalizations" on the scope ofthe Statue ofFrauds, (b) such a broad interpretation violates the legislative intent behind the Statute of Frauds, (c) the Statute of Frauds has been limited to cases where the services were rendered for the purpose of facilitating the negotiation or consummation of a particular transaction, (d) the Statute ofFrauds has been rejected where services are rendered in connection with business opportunities, but for purposes beyond "assisting in the negotiation or consummation" of such opportunities, and (e) the language of the Statute of Frauds itself limits its application to services rendered in "assisting in the negotiation or consummation" of business opportunities, whereas here, the 8 First Department has effectively applied the Statute of Frauds to all services rendered in "connection with" such opportunities. 2. Did the First Department apply the wrong standard in evaluating Plaintiff's quantum meruit and unjust enrichment claims under the Statute of Frauds in violation of this Court's holding in Morris Cohan & Co. v. Russel, 23 N. Y.2d 569, 297 N. Y.S.2d 947 (1969) that such claims may be proved by a writing that acknowledges plaintiff's performance? Yes, because under Morris Cohon, for quantum meruit and unjust enrichment claims, the writing requirement of the Statute of Frauds may be satisfied by a writing that "acknowledges plaintiffs performance," and, in this case, such acknowledgement is contained in a series of emails about JF Capital's services from Lightstone's Chief Investment Officer stating: "no one expects [JF Capital] to work for free." 3. Did the First Department prematurely dismiss Plaintiff's complaint on a pre-answer, pre-discovery CPLR 3211 motion to dismiss? Yes, because the dispute between JF Capital and Lightstone is essentially fact-intensive, and JF Capital should be given the opportunity to obtain discovery ofLightstone's internal memoranda, e-mails, communications with other parties, etc., on issues such as the purpose and intent of JF Capital's services, the parties reasonable expectation of such services, the scope of such services, the expected 9 compensation for such services, whether Lightstone "acknowledged" JF Capital's performance to third-parties, etc. FACTUAL BACKGROUND AND PROCEDURAL HISTORY On or about November 10, 2010, E. Jonathan Palik, JF Capital's managing member, was introduced to Arvind Bajaj, Lightstone's Executive Vice President in charge of investments through a mutual colleague from an investment bank. (R. 1 7 (VAC, ~ 13)). Impressed with Palik's prior work accomplishments, Bajaj asked Palik to present an overview of the hotel industry to the entire Lightstone acquisitions team. (R. 17 (VAC, ~ 14)). After Palik presented materials and information about his company demonstrating JF Capital's extensive industry knowledge and introduced its suite of services to the entire Lightstone acquisitions team, the Defendants began requesting JF Capital to perform advisory services for Defendants. (R. 18 (VAC, ~ 15, 17, 18)). At the time, JF Capital was a boutique investment advisory firm comprised of six hotel and hospitality industry experts able to provide a high level of service while focusing on a very small number of clients at any particular time. (R. 18 (VAC ~ 16)). From approximately November 2010 to May 2011, Defendants, a group of public and private real estate investment companies, requested services from Plaintiff to provide Lightstone with a broad range of investment advisory services such as market research, data analysis, financial analysis and modeling, 10 property tours, site visits, investment analysis and evaluation services on 18 (eighteen) independent hospitality industry investment projects. (R. 18-30 (V AC, ,18,20,32,37,42,49,54,59,63,69,73,77ll. All told, JF Capital provided over 1 ,400 hours of financial advisory services to and exchanged over 7,000 e-mails with Lightstone in connection with, and at the request ofLightstone, who accepted and benefited from such services. (R. 16-34 (VAC,, 4, 5, 33-35, 38, 40, 41, 44, 46, 50, 52, 55, 57, 60, 62, 64, 66, 70, 72, 74, 76, 78, 80, 82, 86, 92, 94, 101, 107, 108, 110)). However, Defendants have not compensated Plaintiff for its performance of those advisory services. (R. 16-31 (VAC,, 2, 5, 34, 35, 38, 39, 41, 44, 46, 52, 57, 62, 66, 72, 76, 80, 87)). The kinds of services performed by Plaintiff for which it is seeking compensation were requested by Defendants so that Defendants could, internally, better comprehend complex businesses and assess assets in the hospitality sector. That is, Plaintiffs role was to provide research and analysis to Lightstone for its internal use; Plaintiff did not play the role of"finder," "originator" or "introducer." Indeed, included among the "typical investment advisory services" Plaintiff rendered (R. 16 (V AC, , 4) ), was advice in favor of some investments and advice against other investments ~' where "significant mold problems" were discovered, etc. (R. 24 (VAC,, 48)); and other advisory services rendered on "one days' notice" (R. 26 (VAC,, 59)) and others were "last minute" "requests to 11 review" (R. 25 (VAC, ~54)), but all of which were at Lightstone's discretion and request (R. 15, 21 (VAC, ~~ 1, 2, 32)), for Lightstone to do with as it saw fit- to pursue or not pursue, negotiate or not negotiate, consummate or not consummate. Lightstone sought out JF Capital's advisory services in order for Lightstone to decide, as a threshold matter, whether to even pursue certain assets or transactions - the "work" performed by Plaintiff was the industry, market, and financial analysis, not procuring introductions, bringing principals together or negotiating deals. Lightstone understood that, specifically requested those services, benefitted from Plaintiffs work product, and expected to pay for those services, as evidenced by Defendants' Chief Investment Officer's admission that "no one expects you to work for free". (R. 31 (V AC, ~ 87 -89) ). Plaintiff filed its initial complaint on July 13, 2011, and, based upon an earlier decision of the trial court (R. 41-52), filed the VAC on May 18, 2012 (R. 15-36), alleging facts that state causes of action for quantum meruit and unjust enrichment based upon the specific services performed by Plaintiff on a project-by- project basis and seeking reasonable hourly fees for the work performed at the request, and to the benefit, of Defendants. Defendants filed a CPLR 3211 pre- answer motion to dismiss the VAC on June 28, 2012 (R. 37-93), which Plaintiff opposed on August 24,2012 (R. 94-116), and to which Defendants submitted reply papers on August 30,2012 (R. 117-132). The Supreme Court issued its Decision 12 and Order on November 21, 2012 (R. 6-14 ), and that Decision and Order was entered on November 28, 2012 (R. 5). In its decision, the Trial Court (Schweitzer, J. ), reviewed each Project Plaintiff performed services for and held that, to the extent the services rendered by Plaintiff may have resulted in the consummation of a transaction with respect to such Project, Plaintiffs claim was barred by the Statute of Frauds, and thus, dismissed claims based on three (3) of such Projects on this ground (and dismissed claims based on nine (9) other Projects for lack of sufficient pleading), but sustained Plaintiffs claims based on services performed on six (6) Projects where it "could not be said" that Plaintiff "assisted in the negotiation or consummation of a transaction": GOL § 5-701[a][10] applies to situations where the plaintiff assists in the negotiation or consummation of a business transaction, not to situations where negotiations do not occur at all or where business transactions are not pursued. In such instances, JF Capital, through its advisory services, could not be said to have assisted in the negotiation or consummation of a business transaction. 2 2 The six (6) sustained claims regard JF Capital's work on the following Projects: the Innkeepers Project (R. 23-24 (V AC, ~~ 41-45)); the Fitchburg and Omaha Projects (R. 24-25 (V AC, ~~ 46- 51)); the Towneplace Suites Metairie Project (R. 25-26 (VAC, ~~52-56)); the Hotel Victor Project (R. 26-27 (VAC, ~~ 57-61) and the Crowne Plaza Somerset Project (R. 29 (V AC, ~~ 72- 75)). The twelve (12) dismissed claims regard JF Capital's work on the following projects: the Waterpark Portfolio (R. 19-23 (V AC, ~~ 20-40)); the Innkeepers Project (R. 23-24 (V AC, ~~ 41- 45)); the Fitchburg and Omaha Projects (R. 24-25 (VAC, ~~ 46-51)); the Towneplace Suites Metairie Project (R. 25-26 (V AC, ~~52-56)); the Hotel Victor Project (R. 26-27 (VAC, ~~57- 13 (R. 3, 7-14). Plaintiff appealed from the Trial Court decision and Lightstone cross- appealed. The Appellate Division, First Department, in its Decision and Order, dated March 25, 2014, modified the Trial Court decision, by affirming that part of the decision that dismissed Plaintiffs claims, and modified the decision by dismissing the remainder of Plaintiffs complaint. The essence of the Appellate Division decision is that the type of services provided by Plaintiff --i.e., "investment analysis and financial advice regarding the possible acquisition of investment opportunities" -made such services per se subject to GOL § 5- 701 [a][ 1 0], regardless of whether such services were provided to Defendants in "assisting in the negotiation or consummation" of business opportunities: The statute of frauds also barred plaintiffs unjust enrichment and quantum meruit claims for the financial advisory services it allegedly performed on the remaining five investment opportunities that defendants considered, for which defendants allegedly requested that plaintiff provide certain investment analyses. At the very least, plaintiffs services in this context amount to "assisting in the negotiation or consummation of the transaction" (GOL§ 5-701 [a][10]). The motion court erroneously declined to dismiss those claims on the basis that the information plaintiff provided defendants was not ultimately used to assist in the negotiation or consummation of those investment opportunities. 61)); the CBRE 7 Loan Portfolio Project (R. 27-28 (VAC, ~~ 62-65)); the Allegria Hotel Loan Purchase (R. 28 (V AC, ~~ 66-71 )); the Crowne Plaza Somerset Project (R. 29 (V AC, ~~ 72-75)); and the nine "miscellaneous" smaller scale projects: Homewood Suites Jackson; Longhouse Portfolio; LIC Development; Ramada Newark; San Francisco Portfolio; Ocean Place; Radisson Orlando; Doubletree Wilmington; and LAM NYC Portfolio (R. 29-30 (V AC, ~~ 76-79)). 14 Indeed, investment analyses and financial advice regarding the possible acquisition of investment opportunities "clearly fall within" GOL 5-70 l[a][1 OJ (Enfeld v. Hemmerdinger Estate Corp., 34 A.D.2d 980, 981 (2d Dep't 1970), affd, 28 N.Y.2d 606 (1971); see also Whitman, 163 A.D.2d at 87; GEM Advisors, Inc. v. Coporacion Sidenor, S.A., 667 F. Supp. 2d 308, 324, n. 5 (S.D.N.Y. 2009)). (R. 139-140) (emphasis added). Plaintiff moved the First Department for leave to appeal the Appellate Decision to this Court pursuant to CPLR § 5602(a)(l)(i), and by decision and order dated March 25, 2014, the First Department granted such leave on the following certified question: "Was the order of the Supreme Court, as modified and otherwise affirmed by this Court, properly made?" (R. 135). ARGUMENT I. THE APPELLATE DECISION SHOULD BE REVERSED BECAUSE IT APPLIED GOL § 5-701[a][10] TOO BROADLY A. The Appellate Decision Should Be Reversed Because It Creates a Per Se Category Of Services Subject to GOL § 5-701[a][10] In Violation Of This Court's Decisions in Freedman and Sporn. This Court has repeatedly warned against the "pitfalls" of interpreting GOL § 5-701[a][10] too broadly. See Freedman, 43 N.Y.2d at 266-267; Sporn, 56 N.Y.2d at 865. The reason for this concern is that "too broad an interpretation would extend the writing requirement" to situations beyond the intent of the 15 Legislature; for example too broad an interpretation could apply the Statute of Frauds to "typical stockbroker's dealings." Freedman, 43 N.Y. 2d at 267: Until 1949, there was no requirement that agreements with business brokers be in writing. To protect principals from "unfounded and multiple claims for commissions", and in response to the substantial number of cases involving sales of businesses and business opportunities, the predecessor to subdivision 10 of section 5-701 was enacted (L 1949, ch 203; 1949 Report ofNY Law Rev Comm., p 615). Since enactment of the statute, however, the scope of the term "business opportunity" has been differentially applied (see, e. g., Lounsbury v. Bethlehem Steel Corp., 53 Misc.2d 151, 152-156, 277 N.Y.S.2d 700, 701- 704 (does not include contract to sell floating dry dock); National Performing Arts v. Guettel, 46 Misc.2d 411, 413-414, 259 N.Y.S.2d 527, 529-530 (includes contract to sell or lease packaged productions to theatre owners); Sorge v. Nott, 22 A.D.2d 768, 253 N.Y.S.2d 546, revg. 34 Misc.2d 545, 226 N.Y.S.2d 57 (includes contract to procure purchaser of working interest in oil wells); 1964 Report ofN.Y. Law Rev. Comm., p. 178, n. 26). The scope is still to be fully resolved. Too broad an interpretation would extend the writing requirement to unintended situations. For instance, the typical stockbroker's dealings might be covered. (See Lounsbury v. Bethlehem Steel Corp., supra, 53 Misc.2d p. 153, 277 N.Y.S.2d p. 701; see, generally, 1949 Report ofN.Y. Law Rev. Comm., pp. 634-636.) It is for these reasons that this Court has warned against "sweeping generalizations" about the scope of the Statute of Frauds and cautioned that the 16 interpretation ofGOL § 5-701[a][10] should be decided on a "case-by-case" basis. See Sporn, 56 N.Y.2d at 865: In Freedman v. Chemical Constr. Corp., 43 N.Y.2d 260, 401 N.Y.S.2d 176, 372 N.E.2d 12, we noted the potential pitfalls in making sweeping generalizations concerning the scope of the term "business opportunity" contained within the statute. The difficulties inherent in a judicial declaration of the ultimate scope of this statute require that these situations be approached substantially on a case-by-case basis. See also Tower Intern., Inc. v. Caledonian Airways, Ltd., 133 F.3d 908, 909 (2d Cir. 1998) ("Although the Court of Appeals declined to delineate the exact scope of the term business opportunity, ... The reach of§ 5-701[a][10] is to be decided on a case-by-case basis."). In this case, however, the First Department eschewed such a case-by-case analysis, and, instead, has adopted precisely such a "sweeping generalization" about the application of GOL § 5-701 [a] [ 1 0] -that "investment analysis and financial advice regarding the possible acquisition of investment opportunities 'clearly fall within' GOL § 5-701 [a][10]"- which applies the Statute of Frauds well beyond its intent and language - i.e., services rendered in "assisting in the negotiation or consummation" of a business opportunity. The result of such a broad per se rule is that all such services, including the "typical advisory services" rendered by Plaintiff here, which were provided as, when, and with regard to those Projects, as specified by Defendants, (in favor of some Projects and against others), 17 occasionally on "one days' notice" from Defendants, and some "last minute" "requests to review", all of which were provided for Defendants to do with as they saw fit - to pursue or not pursue, negotiate or not negotiate, consummate or not consummate- are swept under the umbrella ofGOL § 5-701[a][10], without regard to the fact that such services were not rendered for the purpose of "assisting in the negotiation or consummation" of a "business opportunity" as required by the statute. Thus, the very danger identified by this Court of such per se rules has been realized in this case: the Statute of Frauds has been applied to a situation unintended by the Legislature. B. The Appellate Decision Should Be Reversed Because It Violates The Legislative Intent OfGOL § 5-701[a][10]. The Statute of Frauds was originally promulgated in the seventeenth century to protect against the dangers of perjury and uncertain memory inherent in oral testimony. 61 N.Y. Jur. 2d, Statute of Frauds, § 4, at 21 (1987). The particular Statute ofFrauds at issue, GOL § 5-701[a][10], was enacted in 1949 by the New York Legislature to address a specific, growing concern - - to protect against unfounded business broker claims for commissions: "Until 1949, there was no requirement that agreements with business brokers be in writing. To protect principals from 'unfounded and multiple claims for commissions,' and in response to the substantial number of cases involving sales of businesses and business opportunities, the predecessor to subdivision 10 of section 5-701 was 18 enacted." Freedman, 43 N.Y.2d at 266 (citing L.1949, ch. 203; 1949 Rep. ofN.Y. Law Rev. Comm. 615). The statute was amended in 1964 by adding the following sentence: "'Negotiating' includes procuring an introduction to a party to the transaction or assisting in the negotiation or consummation of the transaction." The additional language was added for a very particular purpose. Lower courts had been applying the statute only to "brokers" and not to other kinds of intermediaries - "finders," "originators" and "introducers". Comment ofN.Y. Law Rev. Comm., March 9, 1964, p. 2. The amendment to add this language was: [Prompted by] the decision in Ames v. Ideal Cement Co., 235 N.Y.S.2d 622 (Sup Ct, NY Co 1962), in which the court held the statute inapplicable to a contract for 'an originating commission for services rendered merely in bringing a buyer and seller together. ' The court said it might appear to be anomalous to hold contracts for negotiating services barred if not in writing while permitting oral contracts for compensation of a finder, and suggested that the subject should be reviewed so that the matter of "negotiating" could be cleaned up. Hence, the 1964 language relating to "assisting in the negotiation or consummation of the transaction" was intended by the Legislature at the time to simply "clean up" the anomalous situation and ensure that "finders," "originators" and "introducers" alike are covered by the Statute and not merely "brokers." Id. ("The proposed bill leaves no doubt that the Commission intended that contracts of 19 'finders,' 'originators' and 'introducers' should be within the operation of subdivision 10 of section 5-70 1."). See also Intercontinental Planning v. Daystrom, Inc., 24 N.Y.2d 372, 300 N.Y.S.2d 817 (1969) (reviewing legislative history and noting purpose was to prevent the "danger of erroneous verdicts in allowing juries to determine claims for brokerage and finder's fees on oral testimony.") Although the courts have expanded the application ofGOL § 5-701[a][10] since its enactment, there can be no dispute that Plaintiff in the instant case was in no sense a "broker " "finder " "originator " or "introducer " that Plaintiff is not ' ' ' ' seeking a "commission," nor is Plaintiff seeking a fee based on "the introduction" of Defendants to a transaction, or for "assisting in the negotiation or consummation" of the transaction. Rather, Plaintiff is simply seeking to recover for the value of the investment advisory services it rendered to Defendants, which Defendants requested, accepted and benefitted from but for which Defendants have failed to pay for, and thus, the application ofGOL § 5-701[a][10] to Plaintiffs claims violates the Legislative intent behind this Statute of Frauds. C. The Appellate Decision Should Be Reversed Because It Interprets GOL § 5-701 [a] [ 1 0] Beyond The Scope Of Any Prior Decisions. Although the scope ofGOL § 5-701[a][10] has expanded, the courts have consistently focused on the purpose of the services rendered to determine its applicability, which is fully consistent with the legislative intent and the language 20 of the statute itself- i.e., to cover services provided in "assisting in the negotiation or consummation" of a transaction. See, e.g., Snyder v. Bronfman, 13 N.Y.3d 504, 893 N.Y.S.2d 800 (2009) ("the essence of plaintiffs claim is that he devoted years of work to finding a business [for defendant] to acquire and causing an acquisition to take place" and "persuaded defendant of [the] merits" of such acquisition); Freedman v. Chemical Const. Corp., 43 N.Y.2d 260, 401 N.Y.S.2d 176 (1977) (plaintiff "arranged the meeting to interest [defendant] Chemical in constructing in Saudi Arabia a plant that would convert flared off natural gas into fertilizer. "); Prince v. Government ofPeople's Republic of China, 2014 WL 1303417 (S.D.N.Y. 2014) (plaintiff"helped facilitate a development project"); Ely v. Perthuis, 2013 WL 411348 (S.D.N.Y. 2013) (plaintiff"worked to facilitate the completion of the transaction" involving a $60 million commission on the sale of gold); Gutkowski v. Steinbrenner, 680 F. Supp. 2d 602, 604 (S.D.N.Y. 2010) (plaintiff "present[ ed] defendant with the idea of creating what ultimately became" YES Network). This "purpose" - to "facilitate" or "assist in" the "negotiation or consummation" of a transaction -- is evident from the means by which the plaintiffs in such cases seek to be compensated --- i.e., by commission, performance fee, or other percentage of the proceeds from the completed transaction. See Snyder, 13 N.Y.3d 504 (plaintiff sought a "share of the value 21 created" by defendant's $2.6 billion acquisition of Warner Music); Freedman, 43 N.Y.2d 260 (plaintiff sought a "5% fee" from defendant's "$41 million construction contract"); Prince, 2014 WL 1303417, * 4 (plaintiff sough a "3% finder's fee" from defendant's Ethiopian development project); Ely, 2013 WL 411348 (plaintiff sought a split of a "five-percent commission" on a $60 million commission on the sale of gold); Gutkowski, 680 F. Supp. 2d 602 (plaintiff sought a "2-3% equity interest" from creation of the YES Network). In its decision, the First Department held that Plaintiffs unjust enrichment and quantum meruit claims for investment advisory services were barred under GOL § 5-701[a][10] because such services were per se covered by the Statute of Frauds: At the very least, plaintiffs services in this context amount to 'assisting in the negotiation or consummation ofthetransaction' (GOL § 5-701[a][10]). The motion court erroneously declined to dismiss those claims on the basis that the information plaintiff provided defendants was not ultimately used to assist in the negotiation or consummation of those investment opportunities. Indeed, investment analyses and financial advice regarding the possible acquisition of investment opportunities 'clearly fall within' GOL § 5-701 [a][10] (Enfeld v. Hemmerdinger Estate Corp., 34 A.D.2d 980, 981 (2d Dep't 1970), affd, 28 N.Y.2d 606 (1971); see also Whitman, 163 A.D.2d at 87; GEM Advisors, Inc. v. Coporacion Sidenor, S.A., 667 F. Supp. 2d 308, 324, n. 5 (S.D.N.Y. 2009). 22 In other words, the Appellate Division found that, regardless of the purpose of Plaintiffs services- i.e., regardless of whether or not such services were provided by Plaintiff for the purpose of facilitating or assisting Defendants in the negotiation or consummation of a transaction - whenever such investment analyses and financial advice are rendered, they are per se covered by GOL § 5-701[a][10]. However, there is no basis in the Statute for such a broad reading, and, notably, no prior court has so broadly interpreted the Statute. Indeed, the three cases on which the First Department relied for its decision applied GOL§ 5-107[a][10] under much more limited circumstances: in each of Whitman, Enfeld, and GEM, the plaintiff provided investment advisory services to the defendant for the purpose of facilitating and assisting in the defendants' negotiation or consummation of particular transactions, as encompassed by the Statute. See Enfeld, 34 A.D.2d at 981 (plaintiff was to "suggest possible terms and conditions and consult with and advise defendant with respect to the possible sale of defendant's interest in a premises known as Terminal Warehouse."); Whitman, 162 A.D.2d at 87 (plaintiff rendered services "in connection with defendant's acquisition of Resorts International, Inc.," including to "assist defendant in analyzing and considering options in connection with the proposed transaction."); GEM, 667 F. Supp. 2d at 315 (plaintiffwas to "provide various consulting 23 services focused on finding companies with which [defendant] could engage in certain large transactions" involving the sale of Mexican steel mills.) Moreover, in each of these cases- consistent with the Statute of Frauds requirement that the plaintiffs purpose in rendering such services is to facilitate in the negotiation or consummation of a business transaction - the plaintiffs all sought a commission or percentage of the value created by the completed transaction. See Whitman Heffernan Rhein & Co., 163 A.D.3d 86 (plaintiff sought "performance fee" based on the "percentage of the total acquisition price" and of "financing obtained"); Enfeld, 28 N.Y.2d 606 (plaintiff would be paid $25,000 "if the deal went through"); GEM Advisors Inc., 667 F. Supp. 2d 308 (plaintiff sought a "Transaction Success Fee"). 3 Though, admittedly, the kinds of services provided by each of these plaintiffs do broadly constitute investment evaluation and analysis, the controlling point is that in each of these cases, such services were provided by a plaintiff for the purpose of facilitating or assisting the defendant in negotiating or consummation of particular transactions. And each such plaintiffs purpose in rendering such services is evident from the manner in which such plaintiffs were to be compensated - i.e., based on the completion of such transactions. Thus, the 3 Further supporting the need for a full record on the issue of the purpose of such services, among other things, (see infra Point III) is that both Enfeld and Whitman were determined on post- answer, post-discovery CPLR Rule 3212 motions for summary judgment, and in GEM, the plaintiffs unjust enrichment and quantum meruit claims were sustained. 667 F. Supp. 2d 308, 330. 24 plaintiffs in all such cases indisputably "assisted in the negotiation or consummation" of transactions by actively seeking to have the transactions they advised on be completed; as with any broker, finder, or originator, and as the Statute of Frauds originally intended. To the contrary, in the instant case, Plaintiff provided services- not for the active purpose of facilitating the completion of certain transactions on which they would earn a commission- but rather, such services were rendered, from time-to- time, on eighteen (18) different projects, at the selection and request ofLightstone, sometimes on last minute or one day's notice, sometimes in favor of certain projects, and sometimes against certain projects, and such information was provided to Lightstone by JF Capital, without regard to whether any such investment was pursued, negotiated, or consummated, by Lightstone; and JF Capital's expectation, and Lightstone's promise, was that JF Capital would be compensated for the time put in to rendering such services. Accordingly, in no sense was JF Capital's purpose in providing such services to facilitate or assist in the negotiation or consummation of a transaction, and the Statute of Frauds does not apply. 25 D. The Appellate Decision Should Be Reversed Because It Violates All of the Case Law Rejecting GOL §5-701[a][10] Where Services Are Beyond Assisting In The Negotiation or Consummation of Business Opportunities. Even in cases where a party has assisted in the negotiation or consummation of a business opportunity, the Statute of Frauds will not apply where such services are only part of the work rendered by a plaintiff. See Ashwood Capital, Inc. v. OTG Management, 99 A.D.3d 1, 948 N.Y.S.2d 292 (1st Dep't 2012) (although plaintiff provided some "intermediary work" to defendant, Statute of Frauds did not apply to unjust enrichment claim based on financial "consulting services" plaintiff provided to defendants); Festa v. Gilston, 183 A.D.2d 525, 583 N.Y.S.2d 451 (1st Dep't 1992) (plaintiff"hired" as a "project manager" for electrical contracting corporation in connection with performance of electrical work at job site, but was promised added compensation "for any extra work" plaintiff "was able to locate on the job site"; Statute of Frauds did not apply to such work because "plaintiff was not employed as a 'finder' or negotiator for the sale of a business"); Super v. Abdelazim, 108 A.D.2d 1040, 1041,485 N.Y.S.22d 612 (3d Dep't 1985) (plaintiff was hired to "find a suitable location and then act as a construction manager in converting a former school building into a medical office complex"; thus, there were "allegations" that "plaintiffs role" was "more extensive than merely negotiating a business opportunity"; rather, he was to render a wide variety 26 of services" and Statute of Frauds did not apply.); Streit v. Bushnell, 424 F. Supp. 2d 633 (S.D.N.Y. 2006) (plaintiff was hired as "manager" of defendant Candice Bushnell, author of the book Sex and the City, and as such was involved in the deal with HBO's television production of such book; however, the Statute of Frauds did not apply because plaintiffs services were not "limited to" "procuring or promoting a particular business transaction"); Riley v. N.F.S. Services, Inc., 891 F. Supp. 972, 978 (S.D.N.Y. 1995) (plaintiff was hired as a "Senior Vice President" of defendant and had "numerous responsibilities" for defendant's "asset recovery" business, which included some "intermediary" work; Statute of Frauds did not apply because plaintiff "was not engaged for the limited purpose of negotiating a business opportunity."); see also Venetis v. Stone, 81 A.D.3d 503, 916 N.Y.S.2d 586 (1st Dep't 2011) ("because [plaintiff] alleges far more than simply negotiating a business opportunity, his claims are not barred by GOL 5-701[a][10]"); Gizara v. New York Times, Inc., 80 A.D.3d 1026, 915 N.Y.S.2d (3d Dep't 2011) (plaintiff provided "sales tax recovery services"; thus, plaintiff was "not negotiating a business opportunity for defendant or providing know-how in bringing a business enterprise to fruition.") Likewise here, JF Capital was retained to provide Lightstone with a wide variety of financial-related investment advisory services (Super, 108 A.D.2d at 1041-42 (plaintiff was to render a "wide variety of services"); Ashwood Capital, 27 99 A.D.3d at 11 (financial "consulting services")); JF Capital was not retained for the limited purpose of acting as a "finder or negotiating a business opportunity" (Festa, 183 A.D.2d at 526 (plaintiff was "not employed as a finder or negotiator")); Riley, 891 F. Supp. at 978 (plaintiff was "not engaged for the limited purpose of negotiating a business opportunity"); Venetis, 81 A.D.3d 503, 916 N.Y.S.2d 586 (1st Dep't 2011) (plaintiff"alleges far more than simply negotiating a business opportunity"); accordingly, the Statute of Frauds does not apply.4 E. The Appellate Decision Should Be Reversed Because It Turns The Statute of Frauds On Its Head. GOL § 5-701[a][10] applies the Statute ofFrauds to services rendered in "assisting in the negotiation or consummation" of a "business opportunity." The First Department's ruling, that "investment analysis and financial advice regarding the possible acquisition of investment opportunities" are per se covered by this section, effectively re-writes GOL § 5-701 [a][ 1 0] to cover any services rendered "in connection with" a "business opportunity." In essence, the Appellate Division has written out the requirement that such services be rendered for the purpose of "assisting in the negotiation or consummation" of a business opportunity, and applies the Statute of Frauds to any services rendered in connection with a business opportunity. 4 Notably, and as set forth below, Lightstone never disputed that JF Capital performed such services, at its request, and, indeed, Lightstone repeatedly acknowledged JF Capital's performance of such services verbally and in writing. See infra Point II. 28 Whereas initially, the Statute of Frauds applied to brokers claims for commissions on a consummated business opportunity, now, pursuant to the Appellate Decision, any preliminary analysis or advice about a possible investment opportunity is likewise covered. The potential impact of this decision on the financial services industry is seismic: anyone who provides "investment analysis and financial advice regarding the possible acquisition of investment opportunities,"~' financial analysts, securities analysts, research analysts, equity analysts, investment analysts, asset managers, investment advisors, stock brokers, etc.- is now per se subject to the Statute of Frauds, and, accordingly, will need a signed writing before it can be compensated under the law. Incredibly, and ironically, this precise situation was contemplated, and warned against, by this Court, over 35 years ago in Freedman: "too broad an interpretation would extend the writing requirement to unintended situations. For instance, the typical stockbroker's dealings might be covered" 43 N.Y.2d at 267 (emphasis added) (citing Lounsbury v. Bethlehem Steel Corp., 53 Misc. 2d 153, 277 N.Y.S.2d 701 (Civ. Ct. N.Y. Co. 1967)) (emphasis added): [S]tockbrokers, who take orders on the telephone for millions of dollars in securities, sales of which quite literally represent the sale of a business or 'an interest therein,' would be unable to charge their normal commissions without an agreement in writing - an interpretation which would deal a serious blow to long- standing financial practices in New York. 29 * * * For all of these reasons, the First Department applied GOL § 5-701[a][10] too broadly in his case, and the Appellate Decision should be reversed. II. THE FIRST DEPARTMENT'S APPLICATION OF THE BREACH OF CONTRACT STANDARD TO PLAINTIFF'S QUANTUM MERUIT AND UNJUST ENRICHMENT CLAIMS IS IN VIOLATION OF THIS COURT'S HOLDING IN MORRIS COHON In Morris Cohon & Co. v. Russel, 23 N.Y.2d 569,297 N.Y.S.2d 947 (1969), this Court held that the requirements to satisfy the Statute of Frauds are lower for quantum meruit and unjust enrichment claims than for breach of contract claims. Specifically, for Statute of Frauds purposes, a writing by the defendant that "acknowledges" performance by the plaintiff of the services at issue will be sufficient. The rationale for this lowered requirement for quantum meruit claims is because a quantum meruit claim itself will imply terms otherwise required for written contracts, such as the amount of compensation: The writing relied upon by plaintiff identifies the parties to the contract, the subject matter of the contract and establishes that plaintiff in fact performed. By every reasonable construction of the writing, [plaintiff] Morris Cohon & Co. negotiated the transaction 'without the intervention of any other broker or finder" (emphasis added). Standing alone, the contract clause constitutes an admission by the defendant that plaintiff performed services and that an obligation to plaintiff actually existed. * * * 30 We specifically note that in reaching this conclusion we do no violence to the well-established rule that in a contract action a memorandum sufficient to meet the requirement of the Statute of Frauds must contain expressly or by reasonable implication all the material terms of the agreement, including the rate of compensation if there has been agreement on that matter. In an action in quantum meruit, however, for the reasonable value of brokerage services, if it does not appear that there has been an agreement on the rate of compensation, a sufficient memorandum need only evidence the fact of plaintiffs employment by defendant to render the alleged services. The obligation of the defendant to pay reasonable compensation for the services is then implied. * * * Thus, in our opinion, the memorandum herein is sufficient to support a claim for compensation in quantum meruit, it identifies the buyer, it identifies the defendant as one of the sellers, it establishes the fact of plaintiffs employment, it identifies the plaintiff as the broker, it establishes the subject matter of the transaction and, most importantly it acknowledges performance by the plaintiff in bringing about the sale of defendant's stock. Morris Cohon, 23 N.Y.2d at 570-572 (emphasis added). The Morris Cohon court found such a rule comported with traditional notions of fairness to prevent defendants from using the Statute of Frauds as a bar to a contract "fairly" and "admittedly" made: The Statute of Frauds was not enacted to afford persons a means of evading just obligations; nor was it intended to supply a cloak of immunity to hedging litigants lacking integrity; nor was it adopted to enable defendants to 31 interpose the Statute of Frauds as a bar to a contract fairly, and admittedly made. Id. at 574 (quoting 4 Williston, Contracts [3d ed], Sec 567A, pp. 19-20) (emphasis added); see also Gottesman Co. v. Keystone Enters., Inc., 43 A.D.3d 696, 841 N.Y.S.2d 540 (1st Dep't 2007) ("the applicable Statute of Frauds (General Obligations Law Sec. 5-701 [a] [ 1 0]) was satisfied by the acknowledgement of plaintiffs performance of brokerage services in the [subsequent] asset purchase agreement between" defendant and non-party acquired company; "accordingly, plaintiff was entitled to prove and recover the reasonable value of its services on a theory of quantum meruit"); Davis & Mamber v. Adrienne Vittadini, Inc., 212 A.D.2d 424, 622 N.Y.S.2d 706 (1st Dep't 1995) (letters by defendant authorizing plaintiff to perform certain work were sufficient; "in an action for quantum meruit ... for the reasonable value of services, 'a sufficient memorandum need only evidence the fact of plaintiffs employment by defendant to render the alleged services."); Kalfin v. United States Olympic Commn., 209 A.D.2d 279, 618 N.Y.S.2d 724 (1st Dep't 1994) (letters "acknowledging defendant's obligation to compensate plaintiff for his 'involvement' in bringing about the agreement .... satisfy the Statute of Frauds" on plaintiffs claims for quantum meruit and unjust enrichment"); Vioni v. American Capital Strategies, Ltd., 2009 WL 174937, *5 (S.D.N.Y. 2009): 32 The emails are clearly sufficient to establish that Defendants ( 1) retained Vioni to perform services on their behalf; and (2) recognized their obligation to compensate Vioni, even if the parties had not reached an agreement on what form this compensation would take. This is sufficient to allow Vioni' s quantum meruit claims to survive Defendant's motion to dismiss. See also, Springwell Corp. v. Falcon Drilling Co., Inc., 16 F. Supp. 2d 300, 305 (S.D.N.Y. 1998) (Sotomayor, J.): [A] review of the cases applying Morris Cohon indicates that courts have, at a minimum, required the writing relied upon to establish clearly the existence of the alleged finder's agreement and its subject matter. While written acknowledgment by the defendant of the plaintiffs performance has been found to be persuasive evidence of an agreement's existence, courts have not uniformly required it. See Flammia v. Mite Corp., 401 F. Supp. 1121, 1133 (E.D.N.Y.1975) (quantum meruit claim satisfied Statute of Frauds where writings "sufficiently identif[ied] seller, identif[ied] and establish[ ed] plaintiffs role in the negotiations, establish [ ed] the subject matter of the transaction; and most, important, acknowledge [ d] performance by and obligation to the plaintiff as a consequence of his assistance"); Blye v. Colonial Corp. of America,102 A.D.2d 297, 299, 476 N.Y.S.2d 874, 875 (1st Dep't 1984) (quantum meruit claim permitted where "[e]xcept for the absence of a firm agreement as to the amount of plaintiffs' compensation, the letter adequately sets forth the terms of the contract claimed by plaintiffs"); Shapiro v. Dictaphone Corp., 66 A.D.2d 882, 884-85, 411 N.Y.S.2d 669, 672-73 (2d Dep't 1978) (quantum meruit claim not barred where writings evidenced the agreement's "subject matter, plaintiffs role, and the fact that the plaintiffs services were never intended to be gratuitously furnished," as well as defendant's acknowledgment of plaintiffs performance); Kalfin v. 33 United States Olympic Comm., 209 A.D.2d 279, 281, 618 N.Y.S.2d 724, 725 (1st Dep't 1994) (letters in which defendant acknowledged obligation to compensate plaintiff for his role in bringing about transaction satisfied Statute of Frauds for purposes of quantum meruit claim); Peters v. Sigma Data Computing Corp., 397 F. Supp. 1098, 1101 E.D.N.Y.1975) (quantum meruit action not precluded by Statute of Frauds where letter agreement identified seller, established the fact of plaintiffs employment, identified the plaintiff as the exclusive finder, and where plaintiffs performance was not disputed). In this case, there is at least one such series of writings by which Lightstone has "acknowledged" JF Capital's performance: bye-mails exchanged between JF Capital's Chief Executive Officer, E. Jonathan Falik, and Lightstone's Chief Investment Officer, William Scully, dated May 17, 2011, JF Capital advised Lightstone of all the work it had performed but which it had "not been compensated" for (R. 31 (VAC, ~ 87)), by responding e-mail sent later on May 17, 2011, William Scully wrote to Mr. Falik: "no one expects [JF Capital] to work for free." (R. 31 (V AC, ~ 88)). Indeed, Lightstone verbally acknowledged JF Capital's work on numerous occasions, and has never disputed that JF Capital performed all such services for Lightstone at its request. (R. 31-32 (VAC, ~~ (91- 93)). These e-mails are an "acknowledgement" of JF Capital's "performance" of services (Gottesmen, 43 A.D.3d at 698), they "identify the parties" as JF Capital and Lightstone (Morris Cohon, 23 N.Y.2d at 575-76), they "establish the fact" of 34 JF Capital's retention by Lightstone (id. at 576); and demonstrate the parties' "reasonable expectations" that JF Capital's services were not "performed gratuitously." Davis & Mamber, 212 A.D.2d at 426; Shapiro, 66 A.D.2d at 885; see also Newmark & Company Real Estate, Inc. v. 2615 East 17th Street Realty, LLC, 80 A.D.3d 476, 477, 914 N.Y.S.2d 162 (1st Dep't 2011) ("e-mail" constitutes writing for purposes of Statute ofFrauds) (citing Stevens v. Publicis, S.A., 50 A.D.3d 253, 255-256, 854 N.Y.S.2d 690 (1st Dep't 2008), lv. dismissed, 10 N.Y.3d 930, 862 N.Y.S.2d 333 (2008)). Accordingly, the Statute of Frauds has been satisfied as to JF Capital's quantum meruit and unjust enrichment claims, and the Appellate Decision should be reversed. III. DISMISSAL OF JF CAPITAL'S CLAIMS WAS PREMATURE WITHOUT DISCOVERY OF CRITICAL FACTS The First Department's dismissal of JF Capital's claims was premature because JF Capital has not had the opportunity to take discovery on facts critical to its claims, such as Lightstone's understanding of the purpose of JF Capital's services (see supra Point 1), whether Lightstone subsequently "acknowledged" JF Capital's work in writings to non-parties or otherwise (see supra Point II), Lightstone's "reasonable expectations" as to JF Capital's services, whether Lightstone expected JF Capital would provide its services "gratuitously", whether 35 other writings by Lightstone may satisfy the Statute of Frauds (see supra Point II), etc., and all such facts can only be discovered through depositions of Lightstone directors and officers and/or document productions ofLightstone internal memoranda and/or communications by and between Lightstone and non-parties, and/or other discovery. See,~ Gottesman, 43 A.D.3d at 698 (acknowledgment" of plaintiffs services in "agreement" between defendant and third-party); Shapiro, 66 A.D.2d at 884 ("Internal memoranda of [defendant] indicating that plaintiffs services were used"); Ladenburg Thalmann & Co., Inc. v Tim's Amusements, Inc., 275 A.D.2d 243, 247, 712 N.Y.S.2d 526 (1st Dep't 2000) ("letter" from defendant to third-party acknowledging agreement with plaintiff); see also R. 24 (V AC, ~ 43 (on the "Innkeepers Project," Lightstone "requested permission to present JF Capital as their financial advisor, verbally and in writing, to the other parties to the deal.")) Accordingly, dismissal of JF Capital's claims on a pre-answer pre-discovery CPLR Rule 3211 motion is premature. See Delgado v. Bretz & Coven, LLP, 109 A.D.3d 38, 44, 967 N.Y.S.2d 371 (1st Dep't 2013) (CPLR Rule 3211 dismissal reversed "without discovery" on critical facts); Marcus v. Hemphill Harris Travel Corp., 193 A.D.2d 543, 544, 598 N.Y.S.2d 195 (1st Dep't 1993) (CPLR Rule 3211 dismissal reversed because "plaintiffs have not yet been afforded the opportunity to complete discovery as to critical facts in the exclusive possession of defendants"). 36 CONCLUSION For the foregoing reasons, Plaintiff respectfully requests that this Court vacate and reverse the Appellate Decision, that the Verified Amended Complaint be reinstated in its entirety, that Plaintiff be permitted to proceed with the prosecution of this action, and for such other and further relief as this Court deems just and proper. Dated: Melville, New York September 19, 2014 37 Jason A. Stem 90 Broadhollow Road, Suite 200E Melville, New York 11901 Tele: (631) 549-2000 Attorneys for Plaintiff-Appellant