Opinion
477 Index No. 652094/20 Case No. 2022–00758
06-15-2023
PARKMERCED INVESTORS, LLC, Plaintiff–Appellant, v. WEWORK COMPANIES LLC, etc., Defendant–Respondent.
Kasowitz Benson Torres LLP, New York (Paul M. O'Connor, III of counsel), for appellant. Meister Seelig & Fein PLLC, New York (Stephen B. Meister of counsel), for respondent.
Kasowitz Benson Torres LLP, New York (Paul M. O'Connor, III of counsel), for appellant.
Meister Seelig & Fein PLLC, New York (Stephen B. Meister of counsel), for respondent.
Renwick, A.P.J., Kennedy, Mendez, Rodriguez, Higgitt, JJ.
Order, Supreme Court, New York County (Andrea Masley, J.), entered January 18, 2022, which granted defendant WeWork Companies LLC's motion to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7), unanimously affirmed, with costs.
The court correctly dismissed the breach of contract claim. A term sheet that "sets forth the general intent of the parties to discuss in good faith the terms and conditions" of a deal and states that "neither party shall be bound until the parties execute a more formal written agreement," does not constitute an enforceable contract ( Keitel v. E*TRADE Fin. Corp., 153 A.D.3d 1181, 1181, 61 N.Y.S.3d 218 [1st Dept. 2017], lv denied 31 N.Y.3d 903, 2018 WL 1597546 [2018] [internal quotation marks omitted]; see Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce, 70 A.D.3d 423, 426, 894 N.Y.S.2d 47 [1st Dept. 2010], lv denied 15 N.Y.3d 704, 2010 WL 3397330 [2010] ; Jordan Panel Sys. Corp. v. Turner Constr. Co., 45 A.D.3d 165, 170, 841 N.Y.S.2d 561 [1st Dept. 2007] ). Here, the inception sentence of the term sheet stated that what followed was a "non-binding indication of terms for a preferred equity investment" in plaintiff by WeWork and nonparty GMF Capital LLC. The final provision, titled "non-binding," reiterated that the parties understood and agreed that the term sheet was provided "solely for discussion purposes and is not a commitment or agreement of any kind on the part of WeWork...." In addition, since the exclusivity fee, or liquidated damages provision, pertained to the very breach for which plaintiff seeks recovery, i.e., the failure to proceed or consummate the proposed transaction, actual damages are unavailable (see X.L.O. Concrete Corp. v. Brady & Co., 104 A.D.2d 181, 184–185, 482 N.Y.S.2d 476 [1st Dept. 1984], affd 66 N.Y.2d 970, 498 N.Y.S.2d 799, 489 N.E.2d 768 [1985] ; Wechsler v. Hunt Health Systems, Ltd., 330 F.Supp.2d 383, 426 [S.D.N.Y.2004] ). The exclusivity fee, however, did not pertain to attorneys' fees, which were allowed if any party commenced any action against another in connection with the term sheet and prevailed (see Creative Waste Mgt., Inc. v. Capitol Envtl. Servs., Inc., 495 F.Supp.2d 353, 359 [S.D.N.Y.2007] ).
The cause of action based upon breach of the covenant of good faith and fair dealing cannot be sustained absent a contractual obligation between the parties (see Duration Mun. Fund, L.P. v. J.P. Morgan Sec. Inc., 77 A.D.3d 474, 474–475, 908 N.Y.S.2d 684 [1st Dept. 2010] ). Nor can the claim be used as a substitute for the nonviable breach of contract claim (see BREAA LLC v. Passarelli, 104 A.D.3d 542, 961 N.Y.S.2d 148 [1st Dept. 2013] ). Furthermore, plaintiff's vague assertions that WeWork refused to negotiate in good faith were conclusory (see Duration Mun. Fund, 77 A.D.3d at 475, 908 N.Y.S.2d 684 ).
The promissory estoppel claim was correctly dismissed as duplicative of the breach of contract claim (see Coleman & Assoc. Enters., Inc. v. Verizon Corp. Servs Group, Inc., 125 A.D.3d 520, 521, 5 N.Y.S.3d 369 [1st Dept. 2015] ). Moreover, the claim was undercut by the absence of a "sufficiently clear and unambiguous" promise ( Schroeder v. Pinterest Inc., 133 A.D.3d 12, 32, 17 N.Y.S.3d 678 [1st Dept. 2015] ).