Opinion
November 23, 1993
Appeal from the Supreme Court, New York County (William Davis, J.).
In this action brought by a number of radio car service drivers against the service franchisor and several related entities and their officers, the IAS Court properly dismissed as untimely those claims brought under the Franchise Sales Act as are based on franchise agreements that were executed more than three years prior to commencement of the action (General Business Law § 691; see, Zaro Licensing v Cinmar, Inc., 779 F. Supp. 276, 287). No issues of fact as to timeliness are raised by the statements in the verified complaint asserting different dates of execution from those appearing on the face of the agreements, where the dates in question are not specified and the verified statements are left unexplained. The fraud claims based upon alleged oral misrepresentations concerning the number of franchises to be sold are barred by the parol evidence rule, any claim of reliance being dispelled by the express provision in the franchise agreements that the number of franchises was to be unlimited (see, Abraham v New York Univ. Coll. of Dentistry, 190 A.D.2d 567). Those claims of fraud based upon advertisements promising that substantial income could be earned by the franchisees are not viable absent a showing that such statements were made with the knowledge that they were false and unreasonable (see, East 32nd St. Assocs. v Jones Lang Wootton USA, 191 A.D.2d 68, 71). Moreover, since, as plaintiffs concede, they made a profit, the element of pecuniary loss necessary to support a claim of fraud is lacking (see, Halkedis v Two E. End Ave. Apt. Corp., 161 A.D.2d 281, 282, lv denied 76 N.Y.2d 711). Neither the alleged coercion (see, United States v Private Sanitation Indus. Assn., 793 F. Supp. 1114, 1131-1133) nor the alleged fraud in the sale of franchises amounts to a predicate act under the Racketeer Influenced and Corrupt Organizations statute ( 18 U.S.C. § 1961 et seq.). These labor-intensive franchises, though controlled to a large extent by the franchisor, were not investment contracts through which profits were to be obtained substantially from the efforts of others, and thus were not securities within the meaning of the Federal statutes (see, Securities Exch. Commn. v Turner Enters., 474 F.2d 476, cert denied 414 U.S. 821). The rescission claim in the third cause of action should have been dismissed as against all defendants for failure to submit any evidence that the alleged violations were willful, as required by General Business Law § 691 (1) (see, Baker Boy v 35-63 82nd St. Corp., 166 A.D.2d 397, 398-399, lv denied 77 N.Y.2d 807). We have considered plaintiffs' other arguments, some of which were improperly raised for the first time on appeal (see, Mount Vernon Fire Ins. Co. v William Georgia Corp., 194 A.D.2d 366, 367) and find them to be without merit.
Concur — Murphy, P.J., Carro, Ellerin and Nardelli, JJ.