Opinion
4292/05
Decided June 7, 2005.
Law Offices of Kenneth M. Mollins, P.C., Melville, New York, COUNSEL FOR PLAINTIFFS.
Greenberg Traurig, LLP, New York, New York, Manatt, Phelps Phillips, LLP, New York, New York, COUNSEL FOR DEFENDANTS.
Defendants, Daily News, L.P. ("Daily News") and D.L. Blair ("Blair"), move for an order pursuant to CPLR 3211(a)(1) and (7) dismissing Plaintiffs' complaint.
BACKGROUND
Plaintiffs all claim to be winners of the Daily News "Scratch n' Match" game for the week of March 13 through 19, 2005. Plaintiffs Linda Greenwood, Rose Greenwood and Jerry Edwards each claim to be $100,000 winners. Plaintiff Umberto Comunale claims to have won not only the $100,000.00 prize but also the $10,000.00. Plaintiff Edith Horowitz claims to have won three separate prizes $100,000.00, $10,000.00 and $5,000.00. Plaintiff Maria Odery claims to have won the $10,000.00 prize as well as the $500.00 prize.
There is no $5,000.00 prize offered in this contest. It is assumed that Plaintiff Horowitz claims a $500.00 prize.
Scratch n' Match is a promotional game run by the Daily News. Its clear purpose is to promote greater newspaper circulation. A new game card is used each week. The weekly game card contains eight (8) individual games two (2) for Sunday and one for every other day of the week. Each game contains fifteen boxes numbered 1 through 15. The Daily News publishes ten (10) numbers each day. Participants rub off the daily numbers published in the Daily News from the game card for that day. If the cash amount under any three of the ten published numbers are identical, the participant wins that amount. Winning is subject to verification and validation.
Pursuant to the published rules of the contest which were printed on the reverse side of the game card, the following prizes were to be awarded on a weekly basis:
— one (1) $100,000 prize; — one (1) $10,000 prize; — ten (10) $500 prizes; — thirty (30) $100 prizes; — two hundred (200) $50 prizes; and — two thousand (2,000) $25 prizes.
The published rules also state that the maximum odds of winning prizes are: the $100,000 and $10,000 prizes -1 in 1,108,000; the $1000 prize -1 in 110,800; one of the $500 prizes -1 in 55,400; one of the $250 prizes -1 in 36,934; one of the $100 prizes -1 in 5540; one of the $50 prizes -1 in 3,694; and one of the $25 prizes -1 in 554.
Blair administers the game for the Daily News. Part of Blair's functions is to provide the Daily News with the numbers to be published on a daily basis. On March 19, 2005, the Daily News published the numbers it was provided by Blair. One of the published numbers as provided by Blair for that day was "13". The number which should have been published was "12." As a result of publishing this incorrect number, all of the Plaintiffs had three matching prize amounts leading them as well as thousands of other people who were playing the game that day to have "winning" game cards.
At oral argument, counsel for the Daily News contended, without objection, that Blair erred in the numbers given for publication.
When the Plaintiffs presented their game cards for verification and validation, the Daily News refused to pay them asserting that they had winning numbers because of an error in publishing the numbers. The Daily News further asserted that under the rules of the Scratch n' Match game, it did not have to pay these "winning" tickets. Instead, the Daily News claims that all persons presenting such tickets would be entered in a random drawing for the prizes in accordance with the following provision of the rules:
"In the event of printing, production or other error, or the distribution of an irregular game card occurs, neither the Daily News, LP, D.L. Blair, Inc., their affiliated companies and agents shall have any liability. If due to a printing, production or other error, more prizes are claimed than are intended to be awarded for any prize level per the above, the intended prizes will be awarded in a random drawing from among all the verified and validated prize claims received for that prize level. In no event will more than the stated number of prizes be awarded." (Emphasis added).
When the Daily News refused to pay each claimed winning ticket, the Plaintiffs sued.
The complaint sets forth two causes of action on behalf of each Plaintiff; one sounding in breach of contract and the other alleging negligence.
The Daily News and Blair have each moved to dismiss pursuant to CPLR 3211(a)(1) and (7).
DISCUSSION
A. CPLR 3211(a)(1) — Standard
CPLR 3211(a)(1) permits the court to dismiss an action based upon documentary evidence. To warrant dismissal on this ground, the court must find that the documentary evidence totally refutes plaintiff's claim and conclusively establishes a defense as a matter of law. Goshen v. Mutual Life Ins. Co. of New York, 98 NY2d 314 (2002); Leon v. Martinez, 84 NY2d 83 (1994); 730 J J LLC v. Fillmore Agency, Inc., 303 AD2d 486 (2nd Dept. 2003); and Berger v. Temple Beth-el of Great Neck, 303 AD2d 346 (2nd Dept. 2003).
Under the appropriate circumstances, a contract is documentary evidence sufficient to support dismissal pursuant to CPLR 3211(a)(1). 150 Broadway NY Assocs., L.P. v. Bodner, 14 AD3d 1 (1st Dept. 2004).
B. CPLR 3211(a)(7) — Standard
CPLR 3211(a)(7) permits the court to dismiss a complaint that fails to state a cause of action. When deciding such a motion, the court must determine whether the plaintiff has a legally cognizable cause of action; not whether the cause of action has been properly plead. Guggenheimer v. Ginzburg, 43 NY2d 268 (1977); and Rovello v. Orofino Realty Co., 40 NY2d 633 (1976); Well v. Yeshiva Rambam, 300 AD2d 580 (2nd Dept. 2002); and Frank v. DaimlerChrysler Corp., 292 AD2d 118 (1st Dept. 2002).
In addition, the complaint must be liberally construed giving the plaintiff the benefit of every favorable inference. Leon v. Martinez, supra; and Paterno v. CYC, LLC, 8 AD2d 544 (2nd Dept. 2002). The court must also accept as true all of the facts alleged in the complaint as well as any factual submissions made in opposition to the motion. 511 West 232rd Street Owners Corp. v. Jennifer Realty Co., 98 NY2d 144 (2002); Sokoloff v. Harriman Estates Development Corp., 96 NY2d 409 (2001); and Alsol Enterprises, Ltd. v. Premier Lincoln-Mercury, Inc., 11 AD3d 493 (2nd Dept. 2004).
C. Breach of Contract
The relationship between one running a contest and the participants in that contest is contractual. The rules of the contest constitute an offer and participation in the contest constitutes an acceptance of the terms and conditions of that offer. Ermolaou v. Flipside, Inc., 2004 WL 503758 (S.D.NY 2004); and Fujishima v. Games Management Services, 110 Misc 2d 970 (Sup.Ct., Queens Co. 1981). Plaintiffs concede that by participating in the Scratch n' Match game their relationship with the Daily News was contractual and that their eligibility to win prizes would be governed by the published rules. This is true even if Plaintiffs did not read the rules or understand them. Ermolaou v. Flipside, Inc., supra at * 4; and Craft v. Capital District Regional Off Track Betting Corp., 107 AD2d 952 (3rd Dept. 1985).
A clear and complete written agreement should be enforced in accordance with its terms. South Road Assocs., LLC v. International Business Machines Corp., 4 NY3d 272 (2005); Greenfield v. Philles Records, Inc., 98 NY2d 562 (2002); and W.W.W. Assocs. v. Giancontieri, 77 NY2d 157 (1990). In interpreting a contract, the court must give ". . . practical interpretation to the language employed and the parties reasonable expectations." Slamow v. Del Col, 174 AD2d 725, 726 (2nd Dept. 1991), aff'd., 79 NY2d 1916 (1992). See also, AFBT-II, LLC v. Country Village on Mooney Pond, Inc., 305 AD2d 340 (2nd Dept. 2003); and Del Vecchio v. Cohen 288 AD2d 426 (2nd Dept. 2001).
In this case, the language of the contract and the reasonable expectations of the parties are clear. The rules clearly and unequivocally state that no more than the stated number of prizes will be awarded each week. Anyone playing Scratch n' Match had the reasonable expectation that only the specified number of prizes in each prize category would be awarded for that game. Additionally, the participants knew, or should have known, from the published odds, that the chances of winning either the $100,000 or the $10,000 were exceptionally remote. Participants also had the reasonable expectation that if more winning tickets were verified and validated than there were prizes to be awarded due to a printing, production or other error, then the winner would be determined by a random drawing from the verified and validated tickets received for each prize level. Thus, anyone participating in the Scratch n' Match game would have a reasonable expectation that only one (1) $100,000 and one (1) $10,000 prize would be awarded each week.
The high degree of excitement on the part of Plaintiffs which was generated by having a "winning ticket" or their great disappointment resulting from Blair's error cannot shift this Court's focus from its duty to interpret the contract/rules according to its clear terms. The court may not add or delete provisions of an agreement under the guise of interpretation nor may the court interpret the language of an agreement in such a way as would be contrary to the intent of the parties. Petracca v. Petracca, 302 AD2d 576 (2nd Dept. 2003); and Tikotzky v. New York City Transit Auth., 286 AD2d 493 (2nd Dept. 2001). Further, the court should not interpret an agreement to impliedly contain provisions that are not specifically stated. Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 NY3d 470 (2004).
The interpretation of the contest rules proposed by the Plaintiffs by which more than the stated number of prizes would be awarded would require the Court under the guise of contractual interpretation to delete or ignore the provision of the rules which states, "In no event will more than the stated number of prizes be awarded." Alternatively, the interpretation proposed by the Plaintiffs would require the Court to imply a provision of the agreement that all winning tickets would be honored. The contest rules do not contain such a provision. In fact, the contract rules specifically contain provisions to the contrary by limiting the number of prizes to be awarded in each category.
In an attempt to overcome the unambiguous provisions of the rules, Plaintiffs assert that the Defendants breached the implied covenant of good faith and fair dealing; that the Plaintiffs are the third-party beneficiaries of the contract between the Daily News and Blair; that the Daily News and/or Blair intentionally printed the wrong numbers; and that Blair is not a party to the contract/rules.
New York has long recognized that implicit in every contract is a covenant of good faith and fair dealing. Wood v. Lucy, Lady Duff-Gordon, 222 NY 88, 90-1 (1917). See also, Dalton v. Educational Testing Service, 87 NY2d 384 (1995); Rowe v. Great Atlantic Pacific Tea Co., Inc., 46 NY2d 62 (1978); Skillgames, LLC v. Brody, 1 AD3d 247 (1st Dept. 2003); and 1-10 Industry Assocs, LLC v. Trim Corporation of America, 297 AD2d 630 (2nd Dept. 2002). Simply stated the covenant of good faith and fair dealing provides that ". . . the undertaking of each promisor in a contract must include any promise which a reasonable person in the position of the promisee would be justified in understanding were included (5 Williston, Contracts [rev ed, 1937], § 1293, p. 3682)." Rowe v. Great Atlantic Pacific Tea Co., Inc., supra at 69. The covenant of good faith and fair dealing requires that contracting parties will not take any action which will have the effect of destroying the rights of the other party to receive the benefit of the contract. 511 West 232rd Street Owners Corp. v. Jennifer Realty Co., supra; and Dalton v. Educational Testing Service, supra.
No contractual provision that is inconsistent with the terms of the agreement can be implied. Murphy v. American Home Products Corp., 58 NY2d 293 (1983). The implied covenant of good faith and fair dealing does not create any obligations beyond those stated in the contract. Sutton Assocs. v. Nexis-Lexis, 196 Misc 2d 30 (Sup.Ct., Nassau Co. 2003).
Those participating in the Scratch n' Match game had a reasonable expectation that only the number or prizes stated in the rules would be awarded. Any other hope or anticipation of instant riches on the part of Plaintiffs is unrealistic under the circumstances presented here. If the Court were to hold otherwise, it would be imposing an inconsistent reading of the established rules of the game and would foist upon the Daily News and Blair additional obligations not provided for by, and contrary to, the contest rules; to wit: paying the holders of all "winning" cards the amount stated thereon even though that would require the Daily News to pay far more than the stated number of prizes.
During oral argument on these motions, counsel for Plaintiffs argued that the motion should be denied so that Plaintiffs could conduct discovery on the issue of whether the Daily News and/or Blair intentionally printed incorrect numbers. This argument is without merit. In the first place, intent is not relevant to a cause of action for breach of contract. See, Amalfitano v. Spirit Corp., 4 Misc 3d 1027(A) (Sup.Ct. Kings Co. 2004). The only issue is whether the Defendants breached the contract. Neither the Daily News or Blair has done so.
Plaintiffs also asserted, at oral argument, that Blair is not a party to the contract/rules. Even if it is the case that Blair is not a party to the contract, then the breach of contract claims against Blair must be dismissed. The first element a party must plead and prove to establish a cause of action for breach of contract is the existence of a contract between the Plaintiff and Defendant. Atkinson v. Mobil Oil Corp., 205 AD2d 719 (2nd Dept. 2004); and Furia v. Furia, supra. Blair cannot be held liable for breaching a contract to which it was not a party.
Plaintiffs also assert that they are the third-party beneficiaries of the contract between the Daily News and Blair. This claim also must fail as a matter of law.
Although this theory was not plead in the complaint. Nevertheless, such issue should be considered here.
Plaintiffs are not the intended third-party beneficiaries of that contract. A third-party may sue to enforce a contract made for its benefit. Port Chester Electric Construction Corp v. Atlas, 40 NY2d 652 (1976); and Lawrence v. Fox, 20 NY 268 (1859). However, to bring an action to recover as the third-party beneficiary of a contract, the third-party must establish that it was the specific intent of the contracting parties to benefit the third-party. Port Chester Electric Construction Corp. v. Atlas, supra; Crown Wisteria, Inc. v. F.G.F. Enterprises, Corp., 168 AD2d 568 (1st Dept. 1990).
A third-party who is only an incidental beneficiary to the contract may not sue to enforce the contract. Amin Realty, LLC v. K R Construction Corp., 306 AD2d 230 (2nd Dept. 2003); and Board of Managers of the Riverview at College Point Condominium III v. Schorr Brothers Development Corp., 182 AD2d 664 (2nd Dept. 1992).
The agreement between the Daily News and Blair must establish their rights and obligations in connection with the Scratch n' Match game. Their agreement runs solely to their benefit; not specifically to the benefit of the Plaintiffs herein or any other game participant. Since the agreement benefits all participants in the game and specifically the Plaintiffs, the Plaintiffs are, at most, incidental beneficiaries of that contract. Id. See also, Port Chester Electric Construction Corp v. Atlas, where the Court of Appeals held:
"[A contract] which does not expressly state that the intention of the contracting parties is to benefit a third party does not give third parties who contract with the promise to enforce the latter's contract with another. Such third parties are generally considered mere incidental beneficiaries." supra at 656.
For the foregoing reasons, the causes of action for breach of contract on behalf of the Plaintiffs must be dismissed.
D. Negligence
Plaintiffs also assert that the Daily News and Blair were negligent in publishing the wrong numbers. If Plaintiffs' breach of contract claim fails, they assert that they can recover in negligence.
To the extent that Plaintiffs' negligence claim is premised upon the Defendants having negligently administered the contest, the complaint fails to state a cause of action. A breach of contract claim does not give rise to a separate cause of action in tort unless the Defendant breached a legal duty that is separate and apart from its contractual obligations. Clark-Fitzpatrick v. Long Island Rail Road Co., 70 NY2d 382 (1987); Old Republic National Title Ins. Co. v. Cardinal Abstract Corp., 14 AD3d 678 (2nd Dept. 2005); and Muldoon v. Blue Water Pool Services, Inc., 7 AD3d 496 (2nnd Dept. 2004).
The duties and obligations of the Daily News and Blair to the participants in the contest are established by the rules published on the game cards. To the extent that the Plaintiffs' respective negligence causes of action are premised upon the allegation that Blair provided, and the Daily News published, an incorrect scratch off number, the claim arises from their contractual obligations and do not form the basis of an independent cause of action for negligence.
For Plaintiffs to succeed on their negligence theory of recovery, they must establish that the Daily News and Blair had duties and obligations to them separate and apart from those contained in the rules. During oral argument, Plaintiffs' counsel asserted that the Daily News had a common law duty to publish accurately. In support of this claim, Plaintiffs' counsel cited James v. Gannett Co., Inc., 40 NY2d 415 (1976); and Rubinstein v. New York Post Corp., 128 Misc 2d 1 (Sup.Ct., NY Co. 1985).
Plaintiffs' reliance upon these cases is misplaced. James is a libel action and discusses the distinctions between libel per se and libel per quod as well as the necessity of a public figure to prove actual malice in order to establish a cause of action for libel and who is a public figure as provided in New York Times v. Sullivan, 376 U.S. 254 (1964).
Rubinstein holds contrary to Plaintiffs' assertion. The Plaintiff in Rubinstein commenced an action against the New York Post when it published an obituary notice even though he was still alive. The court specifically held that a newspaper had no legal duty to verify a death notice specifically holding:
"The newspaper here owed no duty to any individual to transmit the proper information. As a newspaper of general circulation, its obligation, if any, was to inform its readers of the news, and no special relationship existed towards any particular reader (citations omitted)." Supra at 4-5.
Thus, the Daily News did not have a common law duty to accurately report information. Its sole duty was contractual. Even if such common law duty exists, the contest rules contain an exculpatory provision which provides that neither the Daily News nor Blair would have any liability in the event of a printing, production or other error or the distribution of an irregular game card.
Absent a statute or public policy to the contrary, a party may contractually absolve itself from negligence. Sommer v. Federal Signal Corp., 79 NY2d 540 (1992); and Ciofalo v. Vic Tanney Gyms, Inc., 10 NY2d 294 (1961). Plaintiffs do not cite any statute or public policy which would bar either the Daily News or Blair from contractually insulating themselves from damages arising as a result of their providing or publishing incorrect "winning" numbers.
In an effort to circumvent this, Plaintiffs assert that they should be given the opportunity to conduct discovery to determine whether either the Daily News or Blair intentionally published the wrong numbers or whether the publishing of the wrong numbers were a result of gross negligence. Public policy in New York prohibits a party from contractually absolving itself from damages for gross negligence. Sommer v. Federal Signal Corp., supra; and Kalsch-Jarcho, Inc. v. City of New York, 58 NY2d 377 (1983).
In support of its assertion that the conduct of the Daily News and Blair was either intentional or grossly negligent, Plaintiffs point to the fact that a similar occurrence involving an error in reporting the winning numbers took place when the Daily News ran a Scratch n' Match contest in 1999. Prior similar occurrences are admissible to establish negligence. See, Coan v. Long Island R.R., 246 AD2d 569 (2nd Dept. 1998).
Gross negligence is the failure to use even slight care or involves conduct that is so careless as to demonstrate a complete disregard for the rights of others. Sommer v. Federal Signal Corp., supra; and Matter of Coniber v. Hults, 15 AD2d 252 (4th Dept. 1962).
Plaintiffs did not plead that the Defendants' conduct was intentional. While the complaint alleges "gross negligence", there are no factual allegations in the complaint from which the Court could infer that the Defendants' conduct constituted gross negligence.
Legal conclusions plead in a complaint are not entitled to the presumption of truth. Morris v. Morris, 306 AD2d 449 (2nd Dept. 2003); In re Loukoumi, Inc., 285 AD2d 595 (2nd Dept. 2001); and Doria v. Masucci, 230 AD2d 764 (2nd Dept. 1996). The complaint pleads gross negligence as a legal conclusion unsupported by any facts.
Deficiencies in the pleadings may be cured by factual allegations contained in affidavits made by parties with actual knowledge of the facts. Hoffman v. Unterberg, 9 AD3d 386 (2nd Dept. 2004); and Well v. Yeshiva Rambam, supra. However, that has not been done in this case. Plaintiffs oppose the motion solely with an attorney's affirmation and a memorandum of law. Thus, Plaintiff has not remedied this pleading defect. See, Zuckerman v. City of New York, 49 NY2d 557 (1980).
The complaint fails to state a cause of action for negligence. Therefore, the respective negligence causes of action must be dismissed.
E. Leave to Replead
Although not requested in the opposition papers, during the course of oral argument, Plaintiffs' attorney requested leave to replead to assert a cause of action asserting that the Plaintiffs are the third-party beneficiaries of the contract between the Daily News and Blair and to allege that the Defendants intentionally published incorrect winning numbers.
Since Plaintiffs cannot be held to be third-party beneficiaries of the contract between the Daily News and Blair, leave to replead such a cause of action cannot be granted.
To the extent that the Plaintiffs seek leave to replead to assert that the Defendants' conduct was intentional, the application must also be denied. CPLR 3211(e) requires a party seeking leave to replead to establish ". . . good grounds to support his cause of action." The evidence establishing the existence of grounds to warrant leave to replead should be in the form of an affidavit made by one with direct knowledge of the facts. Lesesne v. Lesesne, 292 AD2d 507 (2nd Dept 2002); and Cushman Wakefield, Inc. v. John David, Inc., 25 AD2d 133 (1st Dept. 1966). Factual allegations made in the affidavit of an attorney are insufficient to support an application for leave to replead. Lesesne v. Lesesne, supra.
Plaintiffs have not made even the most minimal of showing that they should be granted leave to replead to assert that the conduct of the Daily News and Blair which resulted in this situation was intentional.
In reaching the conclusion it has, this Court is not unmindful of the angst and disappointment this ruling will cause not only the named Plaintiffs herein but the hundreds, if not thousands, of other individuals who pinned their hopes of eliminating debt, obtaining home improvements, securing needed medical treatment, paying for college or just having a financial cushion or a nest egg on the "winning" game card in their possession. However, Defendants' error is, in reality, no different than a bank error resulting in extra money being deposited into one's account. Since one never had a legal or contractual right to that money, one cannot be heard to complain when the error is caught and corrected.
Counsel for Plaintiffs was forceful in his advocacy. However, colorful phrases such as "Teflon Tabloid" cannot negate this Court's duty and oath to apply the law fairly and ignore its genuine sympathies for the aggrieved class of Plaintiffs who are before the Court and those waiting in the wings.
The Court is comforted by the fact that each Plaintiff's chances of winning among those within the class of validated winning tickets is greatly enhanced. As a matter of law, this is the sole "remedy" available under the circumstances.
Accordingly, it is,
ORDERED, that the motion of Daily News L.P. to dismiss the complaint is granted; and it is further,
ORDERED, that the motion of D.L. Blair, Inc. to dismiss the complaint is granted; and it is further,
ORDERED, that Plaintiffs' application for leave to replead is denied.
This constitutes the decision and Order of the Court.