Opinion
13945/2009.
Decided April 9, 2010.
Stewart Wolf, Esq., Foster Wolkind, P.C., Plaintiffs Attorney.
Stephen J. McGiff, Esq., Stephen J. McGiff, P.C., Defendants Attorney.
The defendant, Wells Fargo Financial Leasing, Inc. ("Wells Fargo") moves for an order, pursuant to CPLR 3211 (a)(1), (2) and (8), dismissing the complaint as against it. The plaintiff, The Church of the Holy Redeemer (hereinafter "The Church") cross-moves to amend the complaint. Church commenced this action seeking to recover damages stemming from an equipment lease agreement No. 006-0027089-001 ("the lease") between the plaintiff and the co-defendant Wells Fargo which the parties entered into on or about March 31, 2009. Pursuant to the terms of the purported lease, Wells Fargo purchased equipment from vendor and co-defendant Long Island Business Solutions ("LIBS") and leased the equipment to plaintiff in exchange for sixty-three (63) monthly payments of five hundred dollars ($500.00). The plaintiff, however, alleges that the lease was completed without the Church's knowledge or assent and includes false and misleading information.
According to the complaint, on March 26, 2009, Don Florencio, a LIBS sales representative, met with church representative M. Rosina Major ("Major") to discuss the purchase or lease of a copier machine to the Church. The Church alleges that, during the March 26, 2009 meeting, Major informed Florencio that she had no authority to bind plaintiff and that a majority vote of the Church Council was needed to approve or otherwise ratify any contract before the Church could be bound to an agreement. According to plaintiff, Florencio fraudulently induced Major into signing partially completed documents with both the Wells Fargo letterhead and the LIBS letterhead, which turned out to be a Wells Fargo Equipment Lease Agreement, a Wells Fargo Delivery Conformation, and a LIBS document, based on Florencio's representations that he would only use the documents to hold the price and perform a credit check while waiting for formal approval from both the Church council and his own supervisor. The Church alleges that (1) Florencio stated to Major that, as a representative of LIBS and an agent for, on behalf of and for the benefit of Wells Fargo, he required authorization from a LIBS supervisor to approve the proposed terms he had memorialized on the lease; and (2) Major stated to Florencio that no agreement could be made without a vote to be taken of the Church Council with the results to be made known to LIBS on or about March 31, 2009.
The complaint alleges that, on or about March 31, 2009, Major notified Florencio that there had not been a complete vote by the Church Council. However, the plaintiff alleges that, on March 31, 2009, LIBS informed the Church that the contract was approved and in effect as of that date. The Church also alleges that LIBS submitted a Wells Fargo Equipment Lease Agreement dated March 31, 2009 to Wells Fargo. According to plaintiff, the lease agreement had been completed by an unknown person and contained false information, such as Major's title and a Federal Tax Identification number that does not belong to plaintiff. The plaintiff also alleges that the LIBS sales agreement is missing essential terms as to price of the unit. The complaint also alleges that LIBS submitted to Wells Fargo a fully executed Wells Fargo Delivery Confirmation even though no delivery had been made by LIBS to the Church. Major again notified Florencio, via telephone, that there had not been a completed vote by the Church Council, that the terms of the proposed agreement had not been ratified, and that the Church would not accept delivery of the Copy machine.
According to the complaint, a copy machine was delivered to the Church on April 5, 2009, and Major subsequently contacted LIBS to remove the machine from the premises. The Church alleges that LIBS sent a technician to the Church on April 9, 2009 to "install" the machine, at which time Major made another demand to remove the copy machine and the technician ultimately removed some internal components of the machine, rendering it inoperable. Lastly, plaintiff alleges that, despite numerous attempts by Major to have the copy machine removed, LIBS has refused to do so. The Church alleges that it subsequently received copies of Wells Fargo documents which erroneously indicate that the copy machine was delivered and signed for on March 31, 2009.
Wells Fargo seeks dismissal of the complaint based on lack of personal jurisdiction. In support, it cites to the forum selection clause in the lease, which states that all actions related to the lease "shall be filed exclusively in a state or federal court located in Polk County, Iowa" and that the parties "hereby consent to personal jurisdiction in such courts." Moreover, Wells Fargo contends that plaintiff's complaint fails to state a valid cause of action against Wells Fargo for fraud. It maintains that the complaint fails to sufficiently plead any misrepresentation of fact made by Wells Fargo to the plaintiff in connection with the lease or equipment. According to Wells Fargo, it had no conversations with the plaintiff regarding the lease, its terms, or the equipment. Lastly, Wells Fargo contends that LIBS is not the agent of Wells Fargo and cites to the lease, which states that "the Supplier is NOT Our [sic] agent and no statement made by the Supplier is binding on [Wells Fargo])." Wells Fargo also attaches the affidavit of Kelley Schneider, a Loan Adjuster employed by Wells Fargo, which states that "[n]either Long Island Business Solutions, Inc. nor any of their employees are agents of Wells Fargo." Schneider also states that "Wells Fargo has no relationship with Long Island Business Solutions, Inc. other than the fact that it purchased the Equipment at the plaintiff's request from Long Island Business Solutions, Inc."
The Church opposes the motion, and cross-moves to amend the complaint with respect to its third cause of action for fraud against Wells Fargo to "more fully establish the business relationship between Wells Fargo and LIBS." The Church alleges that, while the Church had no direct contact with Wells Fargo, LIBS is the agent of Wells Fargo and acted on behalf of and for the benefit of Wells Fargo, as evidenced by, inter alia, by the caption of the Wells Fargo lease. The Church seeks to amend the complaint to add allegations that Wells Fargo relied upon LIBS to (1) negotiate with potential customers; (2) memorialize negotiated terms into a Wells Fargo lease agreement; and (3) to execute the agreement with potential customers. The Church alleges that LIBS is under control of Wells Fargo in that LIBS utilizes Wells Fargo documents and adheres to Wells Fargo's rules for preparation and submission of these documents.
The Church alleges that the contract was procured by fraudulent means, which if found to be true, would render the Forum Selection Clause relied upon by Wells Fargo unenforceable. Accordingly, plaintiff argues that there is a question of fact as to whether the contract is void ab initio. The Church contends that defendant's documentary evidence, which consists of a Wells Fargo lease agreement and a Wells Fargo Delivery Confirmation, fails to resolve all factual issues as a matter of law. It argues that there is a question of fact as to the manner in which these documents were presented to plaintiff, submitted to Wells Fargo, and ultimately accepted by Wells Fargo. According to plaintiff, LIBS made misrepresentations for their own gain while acting as an agent for the benefit of and on behalf of Wells Fargo.
Leave to Amend
Leave to amend pleadings pursuant to CPLR 3025 rests within the sound discretion of the court and should be freely given unless the amendment sought is palpably improper or insufficient as a matter of law, or unless prejudice or surprise directly results from the delay in seeking such amendment ( Nissenbaum v Ferazzoli, 171 AD2d 654; Cipitelli Brothers Towing and Collision, Inc. v Rosenfeld, 171 AD2d 637; see also Adams v Jamaica Hospital, 258 AD2d 604; Zacher v Oakdale Islandia Ltd. Partnership, 211 AD2d 712; Centrifugal Assocs., Inc. v Highland Metal Industries, Inc., 193 AD2d 385).
As Wells Fargo's motion is addressed to the merits of the action as well as to the sufficiency of both the original and the proposed amended complaint, the Court will treat the dismissal motion as also encompassing the proposed amended complaint (see Sage Realty Corp. v Proskauer Rose LLP, 251 AD2d 25, 38; see also DiPasquale v Security Mut. Life Ins. Co. of New York, 293 AD2d 394, 395 2002]. The proposed amendments do not change the nature of this action, which has always alleged fraud on Wells Fargo's part.
Wells Fargo's Motion to Dismiss
At the outset, the Court rejects Wells Fargo's contention that the complaint must be dismissed for lack of jurisdiction based on the forum selection clause in the lease. A New York court may be precluded from exercising jurisdiction over a defendant when a valid forum selection clause designates another jurisdiction as the exclusive court to adjudicate controversies arising from the agreement (see Gio, Buton C., S.P.A. v. Mediterranean Importing Co., 125 AD2d 638). However, plaintiff alleges that the forum selection clause is unenforceable on the grounds that the lease was permeated with fraud. Since plaintiff's allegations of fraud pervading the lease would render the entire agreement void ab initio, the forum selection clause contained therein is unenforceable (see e.g., DeSola Group, Inc. v Coors Brewing Co., 199 AD2d 141).
On a motion to dismiss pursuant to CPLR 3211 (a) (7) for failure to state a cause of action, the pleading is to be afforded a liberal construction in the light most favorable to the plaintiff (see Leon v Martinez, 84 NY2d 83, 87). "The court must accept the facts alleged in the complaint as true, accord the plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" ( Kempf v Magida , 37 AD3d 763 , 764 [2d Dept 2007]). "The pleading is deemed to allege whatever can be implied from its statements by fair and reasonable intendment" ( Components Direct, Inc. v European Amn. Bank Trust Co., 175 AD2d 227, 232 [2d Dept 1991]).
To assert an actionable claim for fraud requires proof that a defendant made a misrepresentation of fact which was both false and known to be false. It also requires a showing that the misrepresentation was made with the specific intent to induce another party's reliance upon it (New York City Transit Authority v Eisen, P.C., 276 AD2d 78). The elements of fraud (misrepresentation of a material fact, scienter, justifiable reliance, and injury) must be alleged with particularity (see CPLR 3016 [b]; Sirohi v Lee, 222 AD2d 222; Stern v Consumer Equities Assocs., 160 AD2d 993).
A motion to dismiss for failure to state a cause of action pursuant to CPLR 3211(a)(7) must be denied if, from the four corners of the complaint, factual allegations are discerned which, taken together, manifest any cause of action cognizable at law (See Sheila C. v Ovich, 11 AD3d 130; Maldonado v Olympia , 8 AD3d 348 ) Shanley v Welch , 6 AD3d 1065 ). Although the complaint must sufficiently detail the allegedly fraudulent conduct, that requirement "should not be confused with unassailable proof of fraud. Section 3016(b) of the CPLR may be met when the facts are sufficient to permit a reasonable inference of the alleged conduct" ( Pludeman v Northern Leasing Systems, Inc. , 10 NY3d 486 , 492). Here, plaintiff's factual allegations, taken together, sufficiently assert a cause of action for fraud as against Wells Fargo. The Church asserts that Wells Fargo accepted the purported lease submitted by LIBS, who was acting as an agent for, on behalf of, and for the benefit of Wells Fargo. Specifically, plaintiff alleges that Wells Fargo relied on LIBS to adhere to the rules of Wells Fargo for preparation and submission of Wells Fargo documents and to negotiate terms of the lease with plaintiff for the benefit of and on behalf of Wells Fargo. Further, plaintiff alleges that LIBS obtained signatures on the Wells Fargo Equipment Lease (albeit under false representations) and submitted the document to Wells Fargo for acceptance. The Church has sufficiently stated a cause of action for fraud as against Wells Fargo by raising allegations that LIBS made misrepresentations for both its own gain and acting as an agent for the benefit of and on behalf of Wells Fargo. The motion to dismiss is denied.
Accordingly, plaintiff's motion to amend is granted, and Well's Fargo's motion to dismiss the complaint as against it is denied.
This constitutes the decision and order of the Court.