Opinion
1509 Index No. 652152/22 Case No. 2023–00137
01-23-2024
EASTERN EFFECTS, INC., Plaintiff–Appellant, v. 3911 LEMMON AVENUE ASSOCIATES, LLC, et al., Defendants–Respondents.
Kasowitz Benson Torres LLP, New York (Jennifer S. Recine of counsel), for appellant. Fox Rothschild LLP, New York (Brett Berman of counsel), for 3911 Lemmon Avenue Associates, LLC, Esbond Realty LLC and Eponymous Gowanus, LLC, respondents. Duane Morris LLP, New York (Kevin J. Fee of counsel), for Gowanus Canal Environmental Remediation Trust #2, respondent.
Kasowitz Benson Torres LLP, New York (Jennifer S. Recine of counsel), for appellant.
Fox Rothschild LLP, New York (Brett Berman of counsel), for 3911 Lemmon Avenue Associates, LLC, Esbond Realty LLC and Eponymous Gowanus, LLC, respondents.
Duane Morris LLP, New York (Kevin J. Fee of counsel), for Gowanus Canal Environmental Remediation Trust #2, respondent.
Webber, J.P., Kern, Gonza´lez, Kennedy, Rosado, JJ.
Order, Supreme Court, New York County (Barry R. Ostager, J.), entered on or about November 30, 2022, which, to the extent appealed from as limited by the briefs, granted defendant 3911 Lemmon Avenue Associates, LLC, Esbond Realty LLC, and Eponymous Gowanus, LLC's (collectively, landlord) motion to dismiss plaintiff's cause of action for fraud and its request for punitive damages against landlord, and granted defendant Gowanus Canal Environmental Remediation Trust # 2's (the trust) motion to dismiss plaintiff's cause of action for breach of contract against the trust, unanimously modified, on the law, to reinstate plaintiff's breach of contract cause of action against the trust, and otherwise affirmed, without costs.
A fraudulent inducement cause of action is duplicative of a breach of contract claim where it is based on the same facts, seeks the same damages, and fails to allege a breach of an independent duty outside of the contract (see Havell Capital Enhanced Mun. Income Fund, L.P. v. Citibank, N.A., 84 A.D.3d 588, 589, 923 N.Y.S.2d 479 [1st Dept. 2011] ). A fraud claim is subject to dismissal when it is duplicative of a contract claim, such as where there is an insincere promise of future performance of the contract itself (see Cronos Group Ltd. v. XComIP, LLC, 156 A.D.3d 54, 64–65, 64 N.Y.S.3d 180 [1st Dept. 2017] ; HSH Nordbank AG v. UBS AG, 95 A.D.3d 185, 206, 941 N.Y.S.2d 59 [1st Dept. 2012] ; Metropolitan Life Ins. Co. v. Noble Lowndes Intl., Inc., 192 A.D.2d 83, 88, 600 N.Y.S.2d 212 [1st Dept. 1993] ).
Here, plaintiff identifies no independent duty outside the contract to support a fraud claim. The fraud claim is based on alleged misrepresentations and omissions regarding the timing and performance of the bulkhead work, plaintiff's compensation for vacating the premises and lost business, landlord's duty to make repairs, and the termination of the lease. These are all issues that are contemplated by the settlement agreement, the lease, or both, which can be relied upon to make plaintiff whole if it prevails on its breach of contract cause of action.
As to plaintiff's request for punitive damages, it has not pleaded an independent tort nor a pattern of conduct directed at the public generally, both of which are required to recover punitive damages on a breach of contract claim (see New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 316, 639 N.Y.S.2d 283, 662 N.E.2d 763 [1995] ; Eisenberg v. Weisbecker, 190 A.D.3d 549, 550, 136 N.Y.S.3d 714 [1st Dept. 2021] ). As to the breach of contract claim against the trust, "a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" ( Dreisinger v. Teglasi, 130 A.D.3d 524, 527, 13 N.Y.S.3d 432 [1st Dept. 2015] ). However, "[a] contract is ambiguous if ‘language is susceptible of two reasonable interpretations’ " ( Ladder Capital Fin. LLC v. 1250 N. SD Mezz LLC, 211 A.D.3d 608, 608, 181 N.Y.S.3d 213 [1st Dept. 2022] ). If "a contract is ambiguous, it cannot be construed as a matter of law, and dismissal ... is not appropriate" ( Telerep, LLC v. U.S. Intl. Media, LLC, 74 A.D.3d 401, 402, 903 N.Y.S.2d 14 [1st Dept. 2010] ). Here, pursuant to the settlement agreement, in order for the "construction period to end," plaintiff must be restored to possession. However, there are multiple reasonable interpretations of the settlement agreement regarding whether the "construction period" would survive a wrongful termination of the tenancy. That ambiguity forecloses dismissal of the breach of contract claim at this time.
We have considered the remaining arguments and find them unavailing.