Opinion
No. 22885/2011.
2012-11-14
ATLANTIC GAS & WASH LLC, Zehy Jeries and Joseph Ratner, Plaintiffs, v. 3170 ATLANTIC AVENUE CORP., Cary Wolf and Jericho Wholesale LLC, Defendants.
Steven Weissler, Brooklyn, Plaintiffs' Attorney. Salamon, Gruber, Blaymore & Strenger, Roslyn Hts, Defendant's Attorney.
Steven Weissler, Brooklyn, Plaintiffs' Attorney. Salamon, Gruber, Blaymore & Strenger, Roslyn Hts, Defendant's Attorney.
DAVID I. SCHMIDT, J.
Defendants 3170 Atlantic Avenue Corp. (3170) and Jericho Wholesale LLC (Jericho), and separately, defendant Carey Wolf (Wolf), move to dismiss the complaint, pursuant to, inter alia,CPLR 3211(a).
The thirteen causes of action asserted in the complaint are based, in part, on allegations that plaintiffs Atlantic Gas & Wash LLC (Atlantic), Zehy Jereis (Jereis), and Joseph Ratner (Ratner), operators of a gas station, were compelled to enter into unconscionable contracts that required them to purchase automobile gasoline from defendants at excessive rates. Plaintiffs allege that the contracts violate (unspecified) legislation enacted by Congress and New York State and should be declared null and void.
For the reasons that follow, the motions are granted.
I.Background
The background is drawn from the complaint and the relevant agreements. These are annexed as exhibits to the supporting affidavits of Sanford Strenger and Leonard Gretah.
Plaintiff Atlantic is a New York limited liability company that operates a gas station, convenience store, and car wash at 3170 Atlantic Avenue, in Brooklyn, New York. Atlantic was initially owned and operated by four non-parties, who purchased the necessary equipment and leased the premises from the landlord, 3170, under a lease agreement dated January 16, 2007 (the Lease).
On July 20, 2007, plaintiffs Jereis and Ratner entered into a membership purchase agreement (with amendments, the Purchase Agreement) with the then-partners of Atlantic to buy their membership interests in Atlantic, the rights to operate the gas station, and the equipment involved in the operation of the gas station. As set forth in the Purchase Agreement, the sale was conditioned on, among other things, the consent of 3170, the landlord, to the assignment of the lease to Jereis and Ratner. On February 10, 2009, plaintiffs entered into the assignment and assumption of the lease (the Lease Assignment) with the consent of 3170, through its president, Wolf.
Upon assuming the Lease, plaintiffs entered into a retail sales agreement, effective June 1, 2009, with non-party Motiva Enterprises LLC (Motiva) as the sole supplier of gasoline products (the Retail Sales Agreement).
On June 22, 2010, Motiva assigned its rights and obligations under the Retail Sales Agreement to Jericho. In addition to his role as president of 3170, Wolf is also an officer of Jericho.
The signature page of the retail sales agreement indicates that Shell Oil Products U.S. signed the agreement on behalf of Motiva.
According to the complaint, defendants undertook a series of actions to knowingly harm the profitability of plaintiffs' business operations by engaging in price gouging, fraud and other unlawful business practices. To support their price-gouging claim, plaintiffs allege that they were forced to buy gas products at an excessive or otherwise manipulated price from 3170 and/or Wolf, who, according to the terms of the Lease, were the exclusive suppliers of automobile gas to plaintiffs.
The complaint is referring to Article 48(b) of the rider to the Lease (annexed as Ex. D to the Strenger affidavit), which, more precisely, provides that “Tenant shall purchase or acquire from the company or companies duly designated by Landlord, all his requirements of gasoline ... which are or are to be ... offered for sale ... upon the Premises ... It is understood and agreed that a violation of this Article, by the Tenant will endanger the agreement between Landlord and the company designated by the Landlord, and it is agreed that such violation shall be deemed a breach of an essential part of this Lease ” (emphasis added).
The complaint also alleges that defendants committed fraud. In particular, defendants are alleged to have repeatedly stated that plaintiffs would profit at least twelve cents per gallon, to induce plaintiffs to enter into the Purchase Agreement and Lease Assumption. At the time they made these statements, defendants knew that they intended to charge plaintiffs excessive prices that would ensure no profit, thus, engineering a default of plaintiffs' obligations. This, according to the complaint, was part of a scheme perpetrated by defendants that would allow Wolf, upon plaintiffs' default, to reclaim the premises and profit from repeated transfers of the same stock.
In addition, plaintiffs claim (with scant detail) that defendants allegedly converted credit card receipts and payments belonging to plaintiffs. Plaintiffs maintain that these payments were unlawfully withheld by defendants, and were applied in an inconsistent manner.
Plaintiffs also assert several causes of action based on allegations that defendants unlawfully interfered with plaintiffs' attempt to assign their lease obligations, as permitted under the Lease, to third parties. Specifically, plaintiffs claim that while attempting to assign their lease and sell their membership interests in Atlantic to interested parties for $750,000, defendants advertised the gas station for a significantly lower price to thwart potential buyers.
II.Discussion
When determining a motion to dismiss, the court must “accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.” Arnav Indus., Inc. Retirement Trust v. Brown, Raysman, Millstein, Felder & Steiner, L.L.P., 96 N.Y.2d 300, 303 (2001). The court will not accept as true factual and legal conclusions that are “either inherently incredible or flatly contradicted by documentary evidence.” Ullmann v. Norma Kamali, Inc., 207 A.D.2d 691, 692 (1st Dept 1994). A. First Cause of Action : Price Gouging (against all defendants)
Plaintiffs' price-gouging claim is based on their contention that defendants coerced or otherwise compelled plaintiffs to buy gas products solely from defendants at an excessive or otherwise manipulated price, causing plaintiffs to operate at a loss.
However, a claim for price gouging under General Business Law § 396–r can only be brought by the Attorney General. Americana Petroleum Corp. v. Northville Industries Corp., 200 A.D.2d 646, 648 (2d Dept 1994).
Thus, plaintiffs do not have standing to assert this cause of action.
Even then, this claim can only be brought against merchants that are alleged to have charged excessive prices for essential consumer goods and services during periods of abnormal disruption of the market, such as hurricanes and winter storms. People v. Two Wheel Corp., 71 N.Y.2d 693, 697 (1988). Here, there is no allegation that any abnormal market conditions existed.
Accordingly, the first cause of action is dismissed as against all defendants. B.Second Cause of Action: Breach of the Covenant of Implied Good Faith (against all defendants)
Under this cause of action, plaintiffs allege that they entered into contracts with defendants for the purchase of gas products for sale to consumers. Plaintiffs further allege that the prices fixed by defendants were excessive and in bad faith as compared to the market price for such products. As a result, plaintiffs seek a declaration that the subject contracts are null and void and the return of their purchase price.
“Implicit in every contract is a promise of good faith and fair dealing, which is breached when a party acts in a manner that, although not expressly forbidden by any contractual provision, would deprive the other party of the right to receive the benefits under their agreement.” AJW Partners, LLC v. Cyberlux Corp., 21 Misc.3d 1109(A), 2008 N.Y. Slip Op 52020(U), *4,quoting Skillgames, LLC v. Brody, 1 AD3d 247, 252 (1st Dept 2003). To assert a cause of action for breach of an implied covenant of good faith and fair dealing, a plaintiff must “adequately allege that the defendant injured the plaintiff's right to receive the benefits of the parties' agreement” EBC 1, Inc. v. Goldman Sachs & Co., 5 NY3d 11, 22 (2005). Where no party has acted in a way to prevent the performance of or the rights under the contract, the claim must fail. Silvester v. Time Warner, Inc., 1 Misc.3d 250, 258 (Sup Ct, New York County 2003).
In moving to dismiss, defendants argue, persuasively, that this claim can only be asserted against Jericho, since, as borne out by the documentary evidence, Jericho is the only defendant that had a contractual obligation to sell gasoline to plaintiffs. Indeed, as is made clear from the Retail Sales Agreement between Motiva and plaintiffs and the assignment of that agreement by Motiva to Jericho (annexed as Exs. F and G to the Strenger affidavit, respectively), neither 3170 nor Wolf (in his individual capacity), had any contractual relationship with plaintiffs for the sale of gas products. Thus, the claim, as asserted against 3170 and Wolf, cannot be sustained.
Nor, in asserting this claim against Wolf, is it sufficient to allege that he is an officer of Jericho. It is well settled that a contract claim against a corporation cannot be maintained against its individual officers, at least not without invoking the doctrine of piercing the corporate veil. See Application of Brookside Mills (Raybrook Textile Corp.), 276 AD 357, 367 (1st Dept 1950); see alsoNew York Limited Liability Company Law § 609(a). As the complaint contains no allegations that would support veil piercing, the claim cannot be maintained against Wolf.
Even as against Jericho, defendants contend that the claim must fail. That is because the Retail Sales Agreement expressly provides that “[a]ny and all claims ... relating to this agreement ... must be submitted to non-binding mediation....” See Strenger affidavit, Ex. F, ¶ 31(a). Because mediation is a condition precedent that plaintiffs do not purport to have satisfied, defendants contend that the claim is not ripe for adjudication in a court of law.
In opposition, plaintiffs point to the Lease Assignment, which provides that legal actions arising from or connected to the assignment must be brought in Kings County Federal or State Court. Id., Ex. E, ¶ 11. Plaintiffs contend that when there is a conflict between the terms of the Lease Assignment and the Retail Sales Agreement, they can choose between the two. Not so.
In the first instance, the Lease Assignment was not executed by Jericho. Jericho had no role in drafting any of its provisions and was not even a party of interest at the time of its execution. Furthermore, the Retail Sales Agreement is fully integrated. Article 33 of the Retail Sales Agreement states that the agreement “supersedes all prior and contemporaneous representations, inducements, agreements, commitments, and undertakings with respect to the subject matter of this Agreement.” Id., Ex. F, ¶ 33(a). As such, the only terms agreed to by Jericho as assignee of the Retail Sales Agreement were the terms agreed upon between plaintiffs and Jericho's predecessor, Motiva. Any dispute plaintiffs had with Jericho arising from the Retail Sales Agreement, including the reasonableness of its pricing, should have been submitted to mediation first.
Accordingly, the second cause of action is dismissed as against all defendants. C.Third Cause of Action: Punitive Damages (against all defendants)
At the outset, it must be noted that New York does not recognize an independent cause of action for punitive damages. Muniz v. Mount Sinai Hosp. of Queens, 91 AD3d 612, 618 (2d Dept 2012). This alone is a sufficient reason to dismiss this cause of action.
In addition, this claim, predicated as it is on defendants' alleged sale of gas products to distributors at a lower price than sold to defendants, suffers from the same defects upon which the court based its dismissal of the second cause of action. Accordingly, the claim is dismissed. D.Fourth Cause of Action: Fraud (against all defendants) Eighth Cause of Action: Fraud (against Wolf)
The fourth cause of action is based on allegations that defendants engaged in a course of conduct to defraud plaintiffs by charging excessive prices for goods to cause a default on their obligations in order to allow defendants to recover possession of the premises. Plaintiffs anchor this claim on defendants' alleged oral representation that plaintiffs would receive profit of at least 12 cents a gallon, knowing that they intended to charge plaintiffs prices that would ensure no profit and a negative cash flow.
Succinctly stated, the elements of fraud are (1) a misrepresentation; (2) falsity; (3) scienter; (4) reliance; and (5) injury or damage. Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 421 (1996). Each element must be supported by sufficient factual allegations to satisfy CPLR 3016(b). Accordingly, for the complaint to be deemed sufficient to withstand a motion to dismiss, the name or names of the person or persons making the misrepresentations, when the misrepresentations were made and the circumstances constituting the wrong must be stated in sufficient detail to give a defendant a fair opportunity to prepare a defense. See e.g. New York Fruit Auction Corp. v. City of New York, 81 A.D.2d 159, 161 (1st Dept 1981), affd56 N.Y.2d 1015 (1982). Conversely, a cause of action for fraud must be dismissed where the complaint makes “bare allegations of fraud without any allegation of the details constituting the wrong.” Gervasio v. Di Napoli, 126 A.D.2d 514, 514 (2d Dept 1987).
Here, plaintiffs omit the most basic information about the alleged misrepresentation that is central to their fraud claim. For example, the complaint is completely silent as to when and where the misstatements were made. Indeed, one cannot even discern from the complaint when there would have been an occasion for direct communication between plaintiffs and defendants. This is especially problematic given that none of the agreements described in the complaint, i.e., the Purchase Agreement, Retail Sales Agreement, Lease and Lease Assumption, were between plaintiffs and defendants. That is not to say there isn't a reasonable explanation. However, the complaint does not provide it, as it must, to survive dismissal. See Eastman Kodak Co. v. Roopak Enters., 202 A.D.2d 220, 222 (1st Dept 1994) (dismissing fraud counterclaim because defendant failed to allege either the time or place of the alleged misrepresentations and failed to identify the person responsible for the misstatement).
Nor is it entirely clear which defendant plaintiffs hold responsible for the misstatement. In their “Facts Common to all Causes of Action,” plaintiffs allege that it was 3170 that made the misrepresentation to induce them to enter into the Purchase Agreement and Lease Assumption. Compl. ¶ 29. However, when alleging the fourth cause of action, plaintiffs do not distinguish among the defendants and claim that all of them were responsible for the misstatement. Id., ¶ 46. Adding to the confusion, Jericho was not even a party to any agreement before July 6, 2010 (the effective date of the assignment of the Retail Sales Agreement from Motiva to Jericho), long after the agreements plaintiffs claim they were fraudulently induced into entering, were executed.
In sum, the pleadings fall woefully short of the specificity requirement and are wholly inadequate to sustain a fraud claim.
Accordingly, the fourth cause of action is dismissed as against all defendants.
Because of this pleading defect, the court need not reach defendants' other argument that merger clauses in the relevant agreements bar this claim. Still, it is worth noting that only the Retail Sales Agreement clearly contains a merger clause that the courts recognize as sufficient to preclude a claim for fraudulent inducement. See Danann Realty Corp v. Harris, 5 N.Y.2d 317, 320–21 (1959) (distinguishing between general merger clauses and specific merger clauses).
The eighth cause of action is plead solely against Wolf and accuses him of civil and criminal (sic) fraud. Since this cause of action is based on the same misstatement as the fourth cause of action (plead against all defendants), it is redundant of, and suffers from the same pleading infirmity as that claim. Accordingly, the eighth cause of action is dismissed. E.Fifth, Sixth, and Tenth Causes of Action: Conversion (against all defendants)
In support of these claims, plaintiffs allege that defendants retained credit card receipts and payments from consumers without properly accounting to plaintiffs for receipt of those monies. Plaintiffs maintain that these payments were unlawfully withheld and were applied in an inconsistent manner by defendants.
Plaintiffs concede, in opposition, that the fifth, sixth, and tenth causes of action are inartfully plead and assert that they should be collapsed into a single cause of action for conversion.
Even so, plaintiffs' claim remains a mystery. Inexplicably, plaintiffs do not trouble to explain how or why defendants even came to possess credit card receipts and/or payments belonging to plaintiffs. Were the payments initially submitted to defendants and then supposed to be turned over to plaintiffs? Or did plaintiffs entrust the payments to defendants for some unexplained reason? Vaguely, plaintiffs allude to the application of said payments in an inconsistent manner; but do not explain who had the initial rights to the payments, what the payments were supposed to be applied to, when the payments were supposed to be applied, and who, specifically, was supposed to be applying these payments.
The sixth and tenth causes of action purport to bring a Truth in Lending Act claim, and a claim for civil and criminal petit larceny, respectively. As set forth in defendants' memoranda of law, these claims cannot survive because they either do not apply to commercial transactions (Truth in Lending Act claim), plaintiffs do not have standing to assert them (criminal petit larceny) or are not cognizable under New York law (civil petit larceny).
Plaintiffs' attempt to clarify the claim in their opposition does little to remedy this defect. Simply stating that defendants have “exercised dominion over the payments that rightfully belong to plaintiffs” merely begs the question as to how and why these payments were not in plaintiffs' hands from the outset if they did, in fact, rightfully belong to them. As the court cannot discern a claim for conversion from the allegations in the complaint (or from the opposition), it cannot be sustained as plead.
Accordingly, the fifth, sixth, and tenth causes of action are dismissed as against all defendants. F.Seventh Cause of Action: Tortious Interference with Contractual Rights
Under this cause of action, plaintiffs allege that defendants unlawfully interfered with plaintiffs' attempt to assign their lease obligations to third parties, which plaintiffs claim they are entitled to do pursuant to the terms of the Lease, and to sell Atlantic. Specifically, plaintiffs claim that while they were attempting sell the company for $750,000 to (unidentified) prospective buyers who were ready, willing and able, defendants advertised the gas station for significantly less money to thwart any prospective buyers and indicated that interested parties should contact defendants directly. The complaint further alleges that, upon information and belief, plaintiffs engaged in this conduct on several occasions, causing prospective purchasers to change their minds.
A claim for tortious interference with contract must show (1) an existing contract between plaintiff and a third party; (2) defendant's knowledge of the contract; (3) defendant's intentional inducement of the third party's breach of the contract or otherwise rendering performance impossible; and (4) damages to plaintiff. Pac. Carlton Dev. Corp. v. 752 Pac., LLC, 62 AD3d 677, 679 (2d Dept 2009).
Furthermore, “a plaintiff must allege that the contract would not have been breached but for' the defendant's conduct.” Burrowes v. Combs, 25 AD3d 370, 373 (1st Dept 2006), lv denied7 NY3d 704 (2006); see also Washington Ave. Assocs., Inc. v. Euclid Equip., Inc., 229 A.D.2d 486, 487 (2d Dept 1996). “Although on a motion to dismiss the allegations in a complaint should be construed liberally, to avoid dismissal of a tortious interference with contract claim a plaintiff must support his claim with more than mere speculation.” Burrowes, 25 AD3d at 373;see also M.J. & K. Co., Inc. v. Matthew Bender and Co., Inc., 220 A.D.2d 488, 490 (2d Dept 1995).In seeking to clarify this claim, Plaintiffs assert that this cause of action functions dually as a claim for breach of contract against 3170 for unreasonably withholding its consent to plaintiffs' assignment of the Lease to third parties, and for tortious interference with said contract against Wolf and Jericho. However, pursuant to CPLR 3014, separate causes of action must be separately stated and numbered, or are otherwise subject to dismissal. This is especially the case when, like here, the intertwined claims are raised against different defendants. Charitable Promotions v. Anka, 58 A.D.2d 165, 167 (1st Dept 1977) (affirming dismissal of combined breach of contract and tortious interference claims).
In any event, neither of these claims can be sustained as alleged. With respect to the breach of contract claim, plaintiffs' conclusory allegation that 3170 breached the Lease by unreasonably withholding its consent to an assignment to third parties, is insufficient in light of the contractual preconditions plaintiffs had to satisfy. See e.g. Arlu Associates, Inc. v. Rosner, 14 A.D.2d 272, 275 (1st Dept 1961) (finding, inter alia, that breach of contract claim against the landlord for unreasonably withholding consent to an assignment of a lease was deficient because it failed to allege performance of the conditions precedent).
In this regard, pursuant to Article 56(b) of the Lease, plaintiffs were first required to provide 3170 with a written notification of their intent to assign the Lease. Strenger affidavit, Ex. D. As well, plaintiffs were required to provide 3170 with certain documentation, including the proposed assignee's financials, business resume, and a detailed description of the consideration that the proposed assignee offered to plaintiffs. Id. However, none of these predicate acts, incumbent upon plaintiffs to invoke their right to assign, are alleged.
More significantly, even if plaintiffs had satisfied these conditions (and they do not allege that they have), 3170's consent to an assignment was not inevitable. Article 56(a) of the Lease provides that “Landlord agrees, not unreasonably, withhold its consent to an assignment of this Lease ... provided that the proposed assignee is satisfactory to the Landlord of which the Landlord shall be the sole and exclusive judge ....“ (emphasis added). Id. As a result, 3170 retained the right to withhold consent even if plaintiffs had satisfied all of the conditions set forth in Article 56(b). Given the contractual hurdles to assignment, it is simply not enough for plaintiffs to sustain this claim with a bare allegation that 3170 breached the Lease by unreasonably withholding consent. Accordingly, plaintiffs have failed to state a claim for breach of contract.
Because plaintiffs do not adequately allege a breach of the Lease, the tortious interference claim, of which an alleged breach of contract is a necessary element, must also fail. It additionally fails for the separate reason that plaintiffs do not provide a factual basis for the claim, and simply allege, upon information and belief, that defendants engaged in this conduct numerous times. See Burrowes, 25 AD3d at 373.
Furthermore, it is hard to imagine how plaintiffs can satisfy the “but for” causation requirement of this claim. Pursuant to Article 56(b) of the Lease, upon notice to the landlord of the tenant's desire to assign the lease, 3170 reserved for itself the option to retake the premises and terminate the Lease, “notwithstanding that the qualifications of the proposed assignee might conform to the reasonableness criteria....” Strenger aff., Ex. D. As 3170 had the final say on assignment and could even terminate the Lease, plaintiffs cannot, without more, allege that Wolf's and Jericho's conduct was the proximate cause of the breach of the Lease by 3170.
Accordingly, the seventh cause of action is dismissed as against all defendants. G.Ninth cause of Action: False Advertising (against Wolf and/or 3170)
Plaintiffs contend that the alleged actions taken by defendants, as described in the seventh cause of action, to offer the sale of the gas station at a significantly lower-than-reasonable price as a means to thwart potential buyers, constitutes false advertising and is prohibited by GBL §§ 349 and 350. GBL § 349 prohibits deceptive acts and practices. GBL § 350 prohibits false advertising.
To state a claim for deceptive practices under New York law, a plaintiff must allege (1) consumer-oriented conduct that was (2) materially misleading and (3) caused injury to plaintiff. City of New York v. Smokes–Spirits.Com, Inc., 12 NY3d 616, 621 (2009). To state a claim for false advertising, a plaintiff must allege the identical elements as a claim for deceptive practices. Reit v. Yelp!, Inc., 29 Misc.3d 713, 718 (Sup Court, New York County 2010); see also Andre Strishak & Assoc., P.C. v. Hewlett Packard Co., 300 A.D.2d 608, 609 (2d Dept 2002).
In moving to dismiss, defendants make the simple argument that plaintiffs are not the end consumer of the gasoline products, and therefore, have no standing to assert a consumer protection claim.
In opposition, plaintiffs, citing Reit, argue that a complainant need not be a consumer or a person standing in the shoes of a consumer to bring a consumer protection claim under sections 349 and 350. Reit, 29 Misc.3d at 718. Plaintiffs further argue that business competitors can assert a GBL § 349 claim without proving specific harm to the consumer. North State Autobahn, Inc. v. Progressive Ins. Group, 32 Misc.3d 798, 804 (Sup Ct, Westchester County 2011).
However, none of the authorities relied on by plaintiffs read out of the statute the base requirement that the specific acts or practices complained of, be consumer-oriented. Even if plaintiffs were to argue that the sale of gasoline to the public is consumer-oriented, the factual predicates of this claim bear no relation to any aspect of the gas station's regular business. Rather, this claim, which arises from a private contract dispute, implicating a one-time sale, cannot serve as the basis of a consumer protection claim, as a matter of law. Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25 (1995) (noting that private contract disputes, especially “single shot transactions” were not intended to fall under the ambit of the consumer-protection statutes).
Accordingly, the ninth cause of action is dismissed as against all defendants. H.Eleventh Cause of Action: Unconscionability (against all defendants)
Under this cause of action, plaintiffs seek a declaration that the terms of the Lease and Lease Assignment, requiring plaintiffs to buy gasoline products solely from defendants, are unconscionable. More specifically, plaintiffs take issue with Article 48(b) of the Lease, which requires plaintiffs to purchase gas from distributors designated by the landlord, 3170.
“In general, an unconscionable contract has been defined as one which is so grossly unreasonable as to be unenforcible [sic] because of an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” Simar Holding Corp. v. GSC, 87 AD3d 688, 689 (2d Dept 2011). Factors that the court will consider “include, but are certainly not limited to, high pressure commercial tactics, inequality of bargaining power, deceptive practices and language in the contract, and an imbalance in the understanding and acumen of the parties.” Id. (inner quotation marks and citation omitted).
In the case at bar, the parties are in the business of doing business. The agreements at issue were negotiated by sophisticated business parties. This court will not adopt the position that the bargaining power of parties involved in a $1.3 million purchase of a business was so unbalanced that an unambiguous provision in the Lease concerning the landlord's right to designate a distributor, clearly labeled as an “essential part of this Lease” ( see supra n. 3), should be held unenforceable.
Other provisions in the Lease also emphasize the importance of the complained-of clause to the essence of the contract. For example, Article 49 provides, in relevant part, that the “Landlord's income ... comes not only from the rent but from the commissions paid by each gasoline company designated by the Landlord.”
Nothing in the complaint suggests any evidence of duress or other high pressure tactics on the part of defendants. To the contrary, plaintiffs appear to have negotiated numerous agreements and amendments. Given the clearly expressed importance of these terms of the Lease and the demonstrated sophistication of the parties, it strains credulity to suggest that plaintiffs were not well aware of and did not voluntarily consent to the terms they now complain of.
Accordingly, the eleventh cause of action is dismissed. I.Twelfth Cause of Action: Impossibility
This cause of action is predicated on the theory that the terms of the Lease and Lease Assignment are impossible to perform, requiring rescission of these agreements.
“Impossibility excuses a party's performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible. Moreover, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract.” Kel Kim Corp. v. Central Mkts., 70 N.Y.2d 900, 902 (1987).
Plaintiffs make no effort to prove the aforementioned elements, and instead, focus primarily on rescission. However, rescission is not a cause of action, but a relief sought. As plaintiffs have made no showing that any portion of the aforementioned agreements are subject to the doctrine of impossibility, a prayer for rescission cannot be granted and the claim is dismissed.To[Slip Op. 10]complete the analysis, even if the court was to find that a case was properly made for impossibility, a plaintiff may not recover monetary damages and request rescission at the same time. Rather, a plaintiff must specifically elect the remedy sought. Vitale v. Coyne Realty, Inc., 66 A.D.2d 562, 563 (4th Dept 1979). Here, plaintiffs not only seek rescission, they demand a monetary judgment, specifically $2 million, thereby acknowledging that they have a remedy at law. Indeed, in their prayer for relief, plaintiffs entirely omit rescission and only request monetary damages.
Accordingly, the twelfth cause of action is dismissed as against all defendants.
J.Thirteenth Cause of Action: Tortious Interference with Prospective Economic Advantage (against all defendants)
For reasons that are not clear to the court, defendants treat this claim as if it were for tortious interference with existing contract, despite the fact that it is expressly designated as a claim for interference with prospective economic advantage. Adding to the confusion, plaintiffs argue that the claim is for unfair business practices. Nevertheless, the court will analyze this cause of action as it is denominated in the complaint. See Compl. ¶ 87.
Under this cause of action, plaintiffs allege that defendants interfered with plaintiffs' business relationships and deprived them of their ability to sell their company (which plaintiffs claim they are entitled to do under the Lease) by dishonest, unfair and improper means by allegedly telling unidentified prospective purchasers that the purchaser should not pay more than $350,000 for plaintiffs' business.
To state a claim for interference with prospective economic advantage, a plaintiff must allege: (1) an opportunity to enter into a contract with a third party, (2) “wrongful means” whereby defendant interfered with that opportunity, (3) that, but for defendant's conduct, the plaintiff would have entered the prospective contract, and (4) resulting damages. See e.g. Vigoda v. DCA Prods. Plus, 293 A.D.2d 265, 266–67 (1st Dept 2002). As well, the plaintiff must identify the specific business relationship that defendant's conduct impaired. Id.
Here, plaintiffs fail to plead all of the elements of this cause of action. Specifically, plaintiffs do not identify the potential buyers they would have entered into contracts with for the sale of Atlantic. This deficiency is fatal to plaintiffs' claim. Vigoda, 293 A.D.2d at 267;see also Mobile Training & Educ., Inc. v. Aviation Ground Schools of America, 28 Misc.3d 1226(A), 2010 N.Y. Slip Op 51501(U), *7 (Sup Ct, New York County 2010, Bransten, J.). Therefore, the claim is dismissed as against all defendants.
Accordingly, it is
ORDERED that the motion to dismiss of defendants 3170 Atlantic Avenue Corp. and Jericho Wholesale LLC is granted and the complaint is dismissed as against them, and it is further
ORDERED that the motion to dismiss of defendant Carey Wolf is granted and the complaint is dismissed as against said defendant.
The foregoing is the decision and order of the court.