Opinion
604106/07.
March 9, 2009.
DECISION/ORDER
Plaintiff, Ex Machina LLC ("DXM"), a New Jersey limited liability company, provides customized design and marketing services to various businesses throughout the United States.
Defendant Cobius Healthcare Solutions LLC ("Cobius"), an Illinois limited liability company, is a technology company specializing in document imaging and electronic document storage products, which it offers to healthcare providers.
Defendant Douglas Weinberg, the President of Cobius, resides in Illinois. Defendant Robert Tropfenbaum, an employee of Cobius, resides in Alabama.
Background
According to the Verified Complaint, in 2006, Cobius retained DXM to design, construct, install, staff and operate an exhibitor's booth (the "Marketing Exhibit") for a health care technology convention sponsored by the American Health Information Management Association ("AHIMA").
The purpose of the Marketing Exhibit was to showcase imaging and electronic document products and services offered by Cobius to prospective customers visiting the AHIMA trade show in Denver, Colorado between October 7 and October 12, 2006.
Ex Machina and Cobius entered into a written agreement concerning the terms and specifications of the Marketing Exhibit (the "Agreement").
Weinberg signed the Agreement on behalf of Cobius. Tropfenbaum's name does not appear in the Agreement, and it is not clear from the record what role, if any, Tropfenbaum played in connection with either the contract negotiations or the Trade Show Exhibit.
Plaintiff claims that the Agreement actually contains three parts: (a) a counter-signed letter agreement dated September 15, 2006 pertaining to design and construction of the physical Marketing Exhibit itself (the "Exhibit Component"); (b) a separate counter-signed letter agreement dated September 15, 2006 pertaining to the associated marketing and operational tasks defendants hired DXM to perform (the "Marketing Component"); and (c) the Standard Contract Addendum which the Exhibit and Marketing Components allegedly incorporate by reference.
The Standard Contract Addendum provides, in relevant part, as follows:
This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of New York. . . .
* * *
Any action relating to or arising out of this Agreement shall be brought only in a court of competent jurisdiction located in New York County, New York. The parties herewith submit irrevocably to personal jurisdiction for that purpose and agree not to assert any affirmative defense to any action brought hereunder based on the absence of personal jurisdiction and/or the adequacy of service.
Cobius negotiated the Agreement in Illinois, and the Agreement was performed in Colorado. The contract capped DXM's compensation at $25,000, consisting of a maximum of $20,000 for the Trade Show Exhibit and $5,000 for fees associated with installing, dismantling and shipping the Trade Show Exhibit, as well as onsite fees.
Plaintiff claims to have transmitted to Cobius a final invoice dated November 27, 2006 in which it demanded payment of the balance of the contract price and reimbursement of additional post-production costs, but that Cobius refused to pay.
Plaintiff's Complaint seeks to recover compensatory damages for breach of contract based on Cobius' refusal to pay DXM (first cause of action) and quantum meruit based on plaintiff's claim that Cobius was unjustly enriched to the extent it failed to pay DXM the fair and reasonable value of the goods and services it provided (second cause of action).
Plaintiff also seeks to recover compensatory and punitive damages against Cobius for fraud, claiming that Cobius entered into the Agreement never intending to pay DXM, that Cobius affirmatively misrepresented to DXM its willingness to pay DXM the stipulated price, while harboring the undisclosed intention to pay nothing once DXM had performed its obligations in full, and that DXM entered into the Agreement in reliance on that deliberate misrepresentation, which reliance was reasonable under the circumstances presented (third cause of action).
In addition, plaintiff seeks to recover compensatory and punitive damages against Weinberg, who is sued herein both individually and in his representative capacity as a director and officer of Cobius, and Tropfenbaum, for: (i) tortious interference, claiming that Weinberg and Tropfenbaum knew that Cobius and DXM had entered into a binding contract (i.e., the Agreement) and caused Cobius to breach that Agreement (fourth cause of action); (ii) aiding and abetting fraud (fifth cause of action); and (iii) breach of contract, claiming that Weinberg and Tropfenbaum undertook personal responsibility to pay DXM the amount stipulated in the Agreement (sixth cause of action).
Defendants now move for an order pursuant to CPLR §§ 3211(a)(1), (7) and (8):
(1) dismissing the Complaint based on insufficiency of process and lack of personal jurisdiction; and
(2) dismissing the second, third, fourth, fifth and sixth causes of action based on documentary evidence and failure to state a cause of action.
Discussion
Defendants argue that the Complaint must be dismissed in its entirety against the individual defendants because (a) plaintiff attempted to serve process via Federal Express, a method not authorized by the CPLR; and (b) Weinberg and Tropfenbaum are out-of-state residents who did not subject themselves to the jurisdiction of this Court, i.e., they do not own or lease any property in New York and do not conduct business in New York.
On or about December 13, 2007, DXM allegedly sent copies of the Summons and Complaint to Weinberg and to Tropfenbaum c/o Cobius Healthcare Solutions LLC, 149 Dundee Road, Suite 302, Northbrook, Illinois 60062, and c/o Cobius, 853 Sanders Road, Suite 313, Northbrook, Illinois 60062, via Federal Express overnight delivery. Additional copies were sent to Weinberg at his home address, 1932 Deercrest Lane, Northbrook, Illinois 60062, and to Tropfenbaum at his home address, 48 Avenue of the Waters, Pike Road, Alabama 36064, also via Federal Express overnight delivery.
The Federal Express Tracking Results indicate that the packages sent c/o Cobius were signed for by J. Waz, at the front desk on December 17, 2007 at 11:10 a.m., and that the envelopes sent to the individual defendants' home addresses were delivered on December 17, 2007 and "[l]eft at front door. Package delivered to recipient address — release authorized".
Pursuant to CPLR § 313,
[a] person . . . subject to the jurisdiction of the courts of the state under section 301 or 302, . . . may be served with the summons without the state, in the same manner as service is made within the state, by . . . any person authorized to make service by the laws of the state . . . in which service is made . . .
Service by Federal Express overnight mail is not one of the permitted methods of service within the state. See, generally, Singer Asset Fin. Co., L.L.C. v Scott, 10 Misc 3d 1070 (A) (Sup Ct, Rensselaer County 2006), aff'd 38 AD3d 1120 (3rd Dept 2007) (service via Federal Express is not an authorized method of obtaining personal jurisdiction over a natural person under CPLR § 308); New York Central Mut. Fire Ins. Co. v Czumaj, 9 AD3d 833 (4th Dep't 2004) (service of demand for arbitration by Federal Express is not one of the methods of service set forth in CPLR § 7503 [c]) .
Although the Standard Contract Addendum authorized service of "[a]ll notices and other communications in connection with [the] Agreement" to be sent by, inter alia, Federal Express, neither Tropfenbaum nor Weinberg in his individual capacity is a signatory to the Agreement.
Accordingly, that portion of defendants' motion seeking to dismiss the Complaint against defendants Weinberg and Tropfenbaum for lack of jurisdiction is granted.
Defendants next argues that the Complaint must also be dismissed against Cobius, an Illinois company, on the grounds that there is no basis to assert long-arm jurisdiction against it and that service of process was ineffective.
Defendants argue that plaintiff may not rely on the forum selection provision of the Standard Contract Addendum because the Addendum did not contain a separate signature page and was not initialized by any of the parties. Weinberg claims that DXM first sent him the Addendum at the time it sent him the contract for signature, and defendants deny that the Addendum, including the forum selection provision, was made part of the contract.
Plaintiff, however, claims that Weinberg, who is also a lawyer, personally reviewed and repeatedly demanded revisions to the Standard Contract Addendum beginning as early as March 2006.
Moreover, the letter agreement, which was signed by both parties, states, in relevant part, that the amounts set forth therein "will be billed back to Cobius as incurred, in keeping with the standard contract addendum [emphasis supplied], every two weeks." Thus, the Standard Contract Addendum is incorporated by reference into the parties' Agreement.
Notably, defendants rely on the first paragraph of the Standard Contract Addendum which provides that "[t]he contract, 'Design Contract Final 091506' and this 'Standard Contract Addendum' make up the entire 'Agreement' between Ex Machina, LLC (DXM) and Cobius Healthcare Solutions (Cobius)" — in support of their argument that there is no basis under the terms of the Agreement to impose personal liability against the individual defendants.
Accordingly, those portions of defendants' motion seeking to dismiss the Complaint against defendant Cobius for lack of long-arm jurisdiction and for inadequacy of service are denied.
Defendants next move to dismiss the second cause of action for quantum meruit on the ground that this action is based on a contract.
It is well settled that "[t]he existence of a valid and enforceable written contract precludes a quantum meruit claim." Aviv Constr. Inc. v Antiquarium, 259 AD2d 445, 446 (1st Dep't 1999), citing Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY 2d 382, 388 (1987). See also, HGCD Retail Svcs. v 44-45 Broadway Realty Co., 37 AD3d 43, 54 (1st Dept 2006); Sheiffer v Shenkman Capital Mgt., 291 AD2d 295, 295 (1st Dept 2002).
Here, there is no dispute that the parties entered into an Agreement concerning Ex Machina's services for Cobius' trade booth at the AHIMA convention, which set forth how payment for those services would be determined and capped Ex Machina's compensation at $25,000.
Although plaintiff contends that Cobius agreed to reimburse it for thousands of dollars of additional expenses, the Appellate Division, First Department has held that "[a] contractor cannot bring a quantum meruit claim for extra payments beyond the original contract price where there exists a contract governing how payment for [the] work will be determined (citation omitted) ." Aviv Constr. v Antiquarium, Ltd., supra at 446. Therefore, that portion of defendants' motion seeking to dismiss the second cause of action is granted.
Defendants next argue that this Court should dismiss the third cause of action for fraud on the ground that it is duplicative of plaintiff's claim for breach of contract.
A fraud claim should be dismissed as redundant when it merely restates a breach of contract claim, i.e., when the only fraud alleged is that the defendant was not sincere when it promised to perform under the contract (citation omitted). By contrast, a cause of action for fraud may be maintained where a plaintiff pleads a breach of duty separate from, or in addition to, a breach of the contract (citation omitted).
First Bank of the Ams. v Motor Car Funding, Inc., 257 AD2d 287, 291 (1st Dep't 1999). See also, Mañas v VMS Assoc., LLC 53 AD3d 451 (1st Dep't 2008) .
Here, DXM merely alleges that Cobius misrepresented its willingness to pay DXM the contracted price, with the intention not to pay once DXM performed its obligations under the Agreement. The Complaint does not allege a breach of duty separate from, or in addition to, a breach of the parties' Agreement.
"General allegations that a party entered into a contract with the intention not to perform it are insufficient to support a claim for fraud (citations omitted)." Town House Stock LLC v Coby Hous. Corp., 36 AD3d 509 (1st Dept 2007). That portion of defendants' motion seeking to dismiss the third cause of action is, therefore, granted.
Accordingly, the Clerk may enter judgment (i) dismissing plaintiff's Complaint against defendants Douglas Weinberg and Robert Tropfenbaum (i.e., the fourth, fifth and sixth causes of action in their entirety) without costs or disbursements; and (ii) dismissing the second and third causes of action against defendant Cobius Healthcare Solutions LLC with prejudice and without costs or disbursements.
Plaintiff's first cause of action against defendant Cobius is severed and continued.
Defendant Cobius shall serve an Answer to the first cause of action within 20 days of service of a copy of this Decision with Notice of Entry.
This constitutes the decision and order of this Court.