"Although certain cases recognize that damages due to a loss of reputation may be recovered under New York contract law, these cases carefully limit such claims by requiring the plaintiff to allege specific business opportunities lost as a result of the plaintiff's diminished reputation" (I.R.V. Merchandising Corp. v Jay Ward Productions, Inc., 856 F.Supp. 168, 175 [SD NY 1994] [collecting cases]).
In New York, agents or brokers cannot recover on the basis of interference with the transactions or business relationships for which they are serving as an agent or broker. See Maruki, Inc. v. Lefrak Fifth Ave. Corp., 161 A.D.2d 264, 268, 555 N.Y.S.2d 293, 296 (1st Dep't 1990) ("[T]he law is well settled that tortious interference with contract does not extend to a broker who is a stranger to the contract purportedly interfered with."); Williamson, Picket, Gross, Inc. v. 400 Park Ave. Co., 63 A.D.2d 880, 881, 405 N.Y.S.2d 709, 711 (1st Dep't 1978) (holding that a broker could not state a claim for tortious interference against a landlord on the basis of the landlord's efforts to prevent a sublessor from leasing to a sublessee, whom the plaintiff-broker represented, on the ground that "[i]f there was actionable interference it was directed against the proposed sublease, not the brokerage agreement"); I.R.V. Merchandising Corp. v. Jay Ward Prods., 856 F.Supp. 168, 174 (S.D.N.Y. 1994) ("As a matter of law, the relationship between [the plaintiff] and prospective licensees cannot be construed as the sort of contractual business relationship protected by the tort of interference with prospective economic advantage. [The plaintiff] has failed to allege any relationship with these licensees other than acting solely as the agent for [the defendant].").
No. 96-cv-640, 1996 WL 221623, at *2-4 (S.D.N.Y. May 1, 1996) ("The retroactive effective date provision supports [the respondent's] contention that the parties intended to be bound by the [Letter]"); see also I.R.V. Merch. Corp. v. Jay Ward Prods., Inc., 856 F. Supp. 168, 173 (S.D.N.Y. 1994)(finding that although a more formal agreement was contemplated, the statement that the preliminary licensing agreement was effective as of its date, was evidence that the parties intended to be bound).
Nevertheless, the court notes that Hanover will be required to prove the reputational damages it seeks or face dismissal. See Saxton Commc'n. Grp. v. Valassis Inserts, Inc., 1995 WL 679256, at *2 (S.D.N.Y. Nov. 15, 1995) ("Absent specific proof, damages for loss of reputation are too speculative to be recovered under contract law."); AmTrust N. Am., Inc. v. KF&B, Inc., No. 17-cv-5340 (LJL), 2020 WL 5503479, at *2 (S.D.N.Y. Sept. 11, 2020) (granting summary judgment and dismissing claim for reputational damages where plaintiffs identified no evidence showing any reputational harm); I.R.V. Merch. Corp. v. Jay Ward Prods., Inc., 856 F. Supp. 168, 175 (S.D.N.Y. 1994) (granting summary judgment and dismissing claim for reputational damages where plaintiff had "not enumerated any specific harms arising from the alleged loss of reputation"). Accordingly, for the reasons set forth above, the court denies defendant's motion to dismiss plaintiff's damage to reputation claim at this time.
Anderson Grp., LLC v, City of Saratoga Springs, 805 F.3d 34, 55 (2d Cir. 2015); see also Smith v. Positive Prods., 419 F. Supp. 2d 437, 453 (S.D.N.Y. 2005) ("[V]ague assertions [of damage to reputation] will not suffice."); Saxton Commc'n. Grp. v. Valassis Inserts, Inc., 1995 WL 679256, at *2 (S.D.N.Y. Nov. 15, 1995) ("Absent specific proof, damages for loss of reputation are too speculative to be recovered under contract law."); I.R.V. Merch. Corp. v. Jay Ward Prods., Inc., 856 F. Supp. 168, 175 (S.D.N.Y. 1994) (dismissing claim for reputational damages where plaintiff had "not enumerated any specific harms arising from the alleged loss of reputation"). Plaintiffs do not dispute that reputational damage is not available for breach of contract claims under the law of New York but argue instead that they have asserted reputational damages arising from KF&B's alleged breach of its fiduciary duties to AmTrust.
Therefore, they are not "essential" as contemplated by the Statute of Frauds. See I.R.V. Merch. Corp. v. Jay Ward Prods., Inc., 856 F. Supp. 168, 174 (S.D.N.Y. 1994) ("The March 27 Memorandum specified the starting date and term of the agreement, the rate at which commissions would be paid, the characters that I.R.V. could seek licenses for, and included a list of licensees that I.R.V. could not contact. . . . At this stage of the proceedings, the court cannot conclude as a matter of law that the remaining issues regarding accounting and payment constituted essential and material terms to this contract."); Gittes v. Cook Int'l, 598 F. Supp. 717, 721 (S.D.N.Y. 1984) (holding that the plaintiff's "duties under the agreement are not essential terms of a contract within the context of this lawsuit because the significant evidentiary issue is not whether plaintiff performed adequately but rather whether the parties were obligated to perform at all"); Great Destinations, Inc. v. Transportes Aereos Portugueses S.A.R.L., 460 F. Supp. 1160, 1163-64 (S.D.N.Y. 1978) ("Omission of the price term here does not mean that the statute of frauds must apply, becaus
Saxton Commc'n Grp., Ltd. v. Valassis Inserts, Inc., No. 93 CIV. 0388 (MBM), 1995 WL 679256, at *2 (S.D.N.Y. Nov. 15, 1995); see also Smith v. PositiveProds., 419 F. Supp. 2d 437, 453 (S.D.N.Y. 2005). It does so only in exceptional cases and when plaintiff proves "specific business opportunities lost as a result of its diminished reputation"; vague assertions will not suffice. I.R.V. Merch. Corp. v. Jay Ward Prods., Inc., 856 F. Supp. 168, 175 (S.D.N.Y. 1994); Karestos v. Cheung, 670 F. Supp. 111, 115 (S.D.N.Y. 1987). "Absent specific proof, damages for loss of reputation are too speculative to be recovered under contract law."
However, damages to reputation may be available where a plaintiff can prove "specific business opportunities lost as a result of its diminished reputation." Smith, 419 F. Supp. 2d at 453 (quoting I.R.V. Merck Corp. v. Jay Ward Prods., Inc., 856 F.Supp. 168, 175 (S.D.N.Y. 1994)); see also Saxton Commc'n Grp., Ltd. v. Valassis Inserts, Inc., No 93-388, 1995 WL 679256, at *2 (S.D.N.Y. Nov. 15, 1995) ("Absent specific proof, damages for loss of reputation are too speculative to be recovered under contract law."). The only evidence submitted by Ainbinder regarding damage to his reputation is a letter from Jurgen Wessley of Caflo, describing the fraud perpetuated by Hingson and The Money Center, and concluding it would be "most difficult to recommend Mr. Ainbinder to any of our associates."
See Bisk v. Soko, Ltd., No. 98-cv-184, 2000 WL 974271 (N.D.N.Y. July 7, 2000) (citing Dember Constr. Co. V. Staten Island Mall, 56 A.D.2d 768 (App.Div. 1st Dep't 1977)). Under New York law, cases providing recovery for a loss of reputation stemming from a contract dispute "carefully limit such claims by requiring the plaintiff to allege specific business opportunities lost as a result of plaintiff's diminishing reputation." I.R.V. Merchandising v. Jay Ward Prod., 856 F.Supp. 168, 175 (S.D.N.Y. 1994). As Hemraj has not demonstrated a breach of contract, he cannot claim any damages for a loss of reputation from a contract dispute.
They are available only in exceptional cases when the plaintiff proves "specific business opportunities lost as a result of its diminished reputation"; vague assertions will not suffice. I.R.V. Merch. Corp. v. Jay Ward Prods., Inc., 856 F. Supp. 168, 175 (S.D.N.Y. 1994);Karetsos, 670 F. Supp. at 115. "Absent specific proof, damages for loss of reputation are too speculative to be recovered under contract law."