Opinion
26396/03.
Decided December 1, 2004.
Upon the foregoing papers, defendants Eddie Slinim (Slinim), Advantage Advertising (Advantage), Nora Orezzoli (Orezzoli) and Scott Belodoff (Belodoff) move, pursuant to CPLR 3212, for an order granting summary judgment dismissing the plaintiffs' complaint. Plaintiffs Alexander Gavrilov (Gavrilov), Ronald Velocci (Velocci) and Concord Limousine, Inc. (Concord) oppose the instant motion on the grounds that: (1) the motion is properly a motion to dismiss pursuant to CPLR 3211 (a) (7), rather than a motion for summary judgment pursuant to CPLR 3212, (2) dismissal is not appropriate because the complaint adequately pleads causes of action for unfair competition, injurious falsehood, subornation of perjury, tortious interference with contract, tortious interference with business relationships and a civil RICO claim, and (3) summary judgment is premature as little or no discovery has occurred to date in the action. Plaintiffs also cross-move to amend their complaint.
In their complaint, plaintiffs allege, among other things, that on February 20, 2003, Concord, which is in "the business of providing vehicular transportation to individuals throughout the tri-state area," discovered that Belodoff, an employee of Concord who "serv[ed] as a liaison between Concord and its drivers . . . had been shaking drivers down and using his economic position to force Concord drivers to pay him cash and check payments in order for Belodoff to complete what he was already being paid by Concord to do . . . and [he] also took kickbacks . . . in order that the . . . drivers would be passed through the Concord driving program without having properly completed the program." As a result of those alleged "frauds," Concord terminated Belodoff's employment.
The complaint further alleges that Slinim, a competitor of Concord, met with Belodoff and Orezzoli, former employee of Concord, and they agreed that Orezzoli and Belodoff would work for Slinim even though both Belodoff and Orezzoli had entered into restrictive covenants with Concord whereby they were not permitted to work for Slinim or his companies for three years after the cessation of their employment with Concord. Plaintiffs further allege that Slinim "promised to pay Orezzoli and Belodoff litigation costs and other remuneration for the creating [sic] of untrue testimony against plaintiffs." With regard to such allegedly false statements, the complaint asserts that "Slinim and Orezzoli conspired to publish untrue statements against Gavrilov and Velocci as to violating Orezzoli's rights."
With regard to Belodoff, plaintiffs allege that he "agreed to participate with Slinim in this conspiracy to create false testimony relating to his employment with Concord." Plaintiffs claim that such false testimony occurred "[a]t a hearing held before the Unemployment Board Administrative Law Judge." Based upon the foregoing allegations, plaintiffs' complaint asserts causes of action for unfair competition, injurious falsehood, subornation of perjury, tortious interference with contractual relationship, tortious interference with business relationships and a civil RICO claim.
In support of defendants' motion, Belodoff submits an affidavit stating, in relevant part, that:
Following my termination from Concord . . . I filed a claim for Unemployment Insurance Benefits, and on March 31, 2003 filed a statement with the New York State Department of Labor in support of my claim for benefits . . . stat[ing] that I had been told I was being terminated by Concord because "I said an adverce [sic] remark regarding the management of Concord. This comment was heard by a Concord employee.
By notice dated April 8, 2003, the New York State Department of Labor, Unemployment Insurance Division, issued a determination that I was eligible for unemployment insurance benefits. . . . thereafter Concord, on April 14, 2003, requested a hearing regarding my entitlement to benefits before an Administrative Law Judge. . . .
On April 14, 2003, I called . . . Slinim as to employment opportunities with his company. On April 15, 2003, I was interviewed for a position with Allstate Private Car and Limousine Company (hereinafter referred to as Allstate). Allstate is owned by . . . Slinim. Thereafter, on April 16, 2003, I was hired by Allstate. Prior to my telephone call to . . . Slinim on April 14, 2003, I had not yet, nor have [sic] I ever talked to . . . Slinim.
* * *
I appeared and testified at [an unemployment benefits] hearing on June 16, 2003. As noted in the Decision of Administrative Law Judge, Joan Corbo, dated July 1, 2003, I testified that "the owner terminated me for allegedly insulting the owner during a telephone conversation with his wife and that [I] was not fired for taking money." The testimony in question was consistent with the prior statement that I provided to the Department of Labor on March 31, 2003, some two weeks before I spoke to . . . Slinim for the first time."
Belodoff also submits copies of his March 31, 2003 unemployment benefits statement and the decision of Administrative Law Judge Joan Corbo, dated July 1, 2003.
Defendants also submit a copy of an amended answer, counterclaims and third-party claims interposed by Orezzoli and Advantage which were served in a prior related action entitled Concord Limousine v. Orezzoli, index no. 19347/03. In that action, Orezzoli alleged, inter alia, claims against Gavrilov and Velocci for sexual harassment and gender discrimination under the New York State and New York City Human Rights Laws.
Insofar as plaintiffs assert that this motion is procedurally improper, the court notes that the instant motion has been made after joinder of issue and is supported by an affidavit by a person with knowledge of the relevant facts and accompanying documentary evidence ( see Colonresto v. Good Samaritan Hospital, 128 AD2d 825 ["A defendant moving for summary judgment has the initial burden of coming forward with admissible evidence, such as affidavits by persons having knowledge of the facts, reciting the material facts and showing that the cause of action has not merit"]). Therefore, the court will treat the instant motion as one for summary judgment.
Summary judgment should only be granted where there are no triable issues of fact ( Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395, 404). In order to prevail on a motion for summary judgment, the movant must present a prima facie case demonstrating entitlement to judgment as a matter of law (Prince v. Di Benedetto, 189 AD2d 757, 759; Zarr v. Piccio, 180 AD2d 734, 735). Once the movant has established its prima facie case entitling it to summary judgment as a matter of law, the party opposing a motion for summary judgment bears the burden of "produc[ing] evidentiary proof in admissible form sufficient to require a trial of material questions of fact . . . mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" ( Zuckerman v. City of New York, 49 NY2d 557, 562; see also Romano v. St. Vincent's Medical Center of Richmond, 178 AD2d 467, 470; Tessier v. New York City Health Hospitals Corp., 177 AD2d 626). The evidence presented on summary judgment must be scrutinized in the light most favorable to the party opposing the motion ( Goldstein v. Monroe County, 77 AD2d 232, 236). Accordingly, summary judgment is only appropriate where the movant satisfies his or her initial burden of proof and the nonmovant's opposition to the motion is "entirely conjectural and there is no genuine issue [of fact] to be resolved" ( Cassidy v. Valenti, 211 AD2d 876, 877).
Under the circumstances, defendants are entitled to summary judgment and dismissal of the complaint herein. The gravamen of plaintiffs' complaint is that defendants conspired to provide false testimony and false statements in order to injure defendants' business and that defendant Slinim, in soliciting such false statements and false testimony, interfered with restrictive employment covenants which he knew existed between Orezzoli, Belodoff and Concord. The false testimony complained of is not specified, but is alleged to have occurred at a hearing held before an Unemployment Board Administrative Law Judge. Belodoff submits an affidavit which states that at the hearing, which occurred on May 15, 2003, he testified that "the owner [of Concord] terminated me for allegedly insulting the owner during a telephone conversation with his wife and that [I] was not fired for taking money."
It is well settled that "due to compelling public policy reasons, statements uttered in the course of judicial or quasi-judicial proceedings are absolutely privileged so long as they are material and pertinent to the questions involved notwithstanding the motive with which they were made" ( Dunn v. Ladenburg Thalmann Co., 259 AD2d 544, 545, lv denied 93 NY2d 810; see also Ashe v. Mohawk Valley Nursing Home, 262 AD2d 960 [statements made in the context of a proceeding involving plaintiffs' applications for unemployment insurance were "absolutely privileged irrespective of motive as long as they were material to the issues involved therein"). Parties, witnesses, judges, jurors and attorneys are considered "protected participants" in such judicial or quasi-judicial proceedings ( Caplan v. Winslett, 218 AD2d 148, 152). Defendants have established that the allegedly "false testimony," which is not specifically identified in the complaint, refers to testimony made by Belodoff while he was a party to a quasi-judicial proceeding before an Administrative Law Judge. Such testimony concerned the reason for Belodoff's termination, the very subject of the unemployment hearing, and so was relevant and pertinent for purposes of absolute privilege. Accordingly, Belodoff's testimony cannot serve as the basis for any of the causes of action alleged in the complaint.
The court notes Belodoff's undisputed claim in his affidavit, that, in consideration of the discontinuance of a prior action between Concord and Belodoff, Gavrilov, as president of Concord, executed a general release in Belodoff's favor which released and discharged all claims that "Concord, its subsidiaries, affiliates, directors and officers . . . ever had, now have or hereafter can, shall or may have for, upon or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of the release." Although such release has not been submitted to the court and the court has based its decision granting summary judgment to defendant on other grounds, such release would also serve as a basis for summary judgment at least as to Concord's claims against Belodoff in the instant action (see Murray-Gardner Mgt., Inc. v. Iroquois Gas Transmission Syst. L.P., 229 AD2d 852 [1996] ["It is well settled that releases are contracts that, unless their language is ambiguous, must be interpreted to give effect to the intent of the parties as indicated by the language employed . . . and that releases bar suits on causes of action arising on or prior to the date of their execution but will not bar subsequent claims unless they are specifically embraced within the release or fall within the fair import of its terms"]; see also Stone v. Nat. Bank and Trust Co., 188 AD2d 865, 867 [1992] ["a general release bars an action on any cause of action arising prior to its execution"] [internal quotation marks and citation omitted]).
Similarly, the alleged false statements attributed to Orezzoli, which again are not specified in the complaint, appear to refer to allegations of gender discrimination and sexual harassment which served as the basis for counterclaims interposed by Orezzoli in a related action, Concord Limousine, Inc. v. Nora Orezzoli, et al., Index No. 19347/03. Like testimony given during the course of judicial or quasi-judicial proceedings, "allegations made in . . . complaints [are] absolutely privileged [where such allegations are] pertinent and relevant to those proceedings" ( Ticketmaster Corp. v. Lidsky, 245 AD2d 142; see also Mack v. Olsen, 90 AD2d 482 [statements made in complaint and affidavit during course of litigation deemed "absolutely privileged"]. Such "protection is complete, irrespective of the motive with which [the complained of statements] were used" ( Ticketmaster Corp., 245 AD2d at 142]) [internal quotation marks and citation omitted]. As defendants have demonstrated that the alleged false statements made by Orezzoli consisted of allegations contained within counterclaims which were served upon defendants in the context of pending litigation, such statements are absolutely privileged and cannot form the basis for any of the causes of action contained within the complaint.
In addition to being improperly based upon the privileged testimony and statements of defendants, plaintiffs' claims are deficient in a number of other respects.
In order to prevail in an action for unfair competition, a plaintiff must establish that a competitor has misappropriated his or her skill, expenditures and labor for the competitor's advantage and to the plaintiff's detriment ( see Electrolux v. Val-Worth, Inc., 6 NY2d 556, 567). In the instant matter, plaintiffs' conclusory assertions that "defendants' action [in] soliciting and/or fraudulent testimony was done to injure the business of plaintiff" not only refers to absolutely privileged testimony and statements of defendants, as previously discussed, but also fails to demonstrate how such statements injured plaintiffs' business or how solicitation of such statements, even if it occurred, constituted the misappropriation of the skills, expenditures and labor of plaintiffs. Therefore, no triable issues of fact exist with regard to plaintiffs' unfair competition claim which would preclude the grant of summary judgment to defendants.
With respect to plaintiffs' claim of injurious falsehood, there are likewise no triable issues of fact which would allow plaintiffs to avoid summary judgment as to this cause of action. "The action for injurious falsehood lies when one publishes false and disparaging statements about another's property under circumstances which would lead a reasonable person to anticipate that damage might flow therefrom" ( Cunningham v. Hagedorn, 72 AD2d 702). The particular falsehood allegedly uttered must be specified ( see Kevin Spence Sons, Inc. v. Boar's Head Provisions Co., Inc., 5 AD3d 352; Alexander Alexander of New York, Inc., 114 AD2d 814, affd 68 NY2d 968). Moreover, special damages are a necessary element of an action for injurious falsehood and must be plead with particularity ( see Lesesne v. Lesesne, 292 AD2d 507; Rall v. Hellman, 284 AD2d 113; Wasserman v. Maimonides Medical Center, 268 AD2d 425; DiSanto v. Forsythe, 258 AD2d 497). Here, plaintiffs' allegations as to special damages are wholly conclusory, the complained of false statements are not specifically identified and described, and the absolutely privileged statements made by Belodoff and Orezzoli concern, respectively, the circumstances of Beledoff's termination and Orezzoli's sexual harassment claims against the individual defendants Gavrilov and Velocci and do not specifically disparage plaintiffs' property and business.
Plaintiffs' remaining claims of subornation of perjury, tortious interference with contract and tortious interference with business relationships, as well their civil RICO claims, must also fail. Allegations of subornation of perjury cannot form the basis for a civil action seeking damages except where said alleged perjury "is merely a means to the accomplishment of a larger fraudulent scheme" (Newin Corp. v. Hartford Acc. Ind. Co., 37 NY2d 211, 217; see also Retina Assocs. of Long Island, P.C. v. Rosberger, 299 AD2d 533; Yalkowsky v. Shedler, 94 AD2d 684; Bradt v. White, 190 Misc 2d 526; cf. Andrews v. Steinberg, 122 Misc 2d 468 ["Within the context of current law, a fair balance can only be struck if a right of civil action is permitted to the victim of perjured testimony, but only if it is limited to those cases where the perjury has already been proven by a criminal conviction"). In the instant case, although the Administrative Law Judge who presided over the unemployment hearing characterized Belodoff's testimony as not credible, Belodoff was not charged with, or convicted for, perjury in relation to such testimony, nor has it been demonstrated by plaintiffs, other than by conclusory allegation, that such alleged perjury was made in furtherance of a fraudulent scheme.
"The essential elements of [an action for tortious interference with contract] are the existence of a valid contract between plaintiff and a third party, defendants' knowledge of that contract, defendant's intentional procurement of the third party's breach of that contract without justification, and damages" ( see Weaver v. Town of Rush, 1 AD3d 920). "Tortious interference with business relations applies to those situations where the third parties would have entered into an extended or contractual relationship with plaintiff but for the wrongful acts of the defendant" and "[i]n such an action the motive for the interference must be solely malicious" ( MJ K Co. v. Matthew Bender Co., Inc., 220 AD2d 488). Belodoff submits an unrefuted affidavit in which he avers that he made statements identical to those at his unemployment hearing in his initial application for benefits, which was completed prior to his acquaintance with Slinim. Therefore, plaintiffs have failed to raise a triable issue of fact as to whether Slinim interfered with Belodoff's restrictive covenant with Concord and whether such covenant was, in fact, valid. Plaintiffs have also not demonstrated any damage to their business by reason of such alleged interference or that any third parties have not engaged plaintiffs' services as a result of said alleged interference.
Finally, plaintiffs' civil RICO claims are also insufficient as a matter of law. As an initial matter, statements which are entitled to the protection of absolute privilege cannot provide the basis for a civil RICO action ( see Singh v. HSBC Bank, 200 F Supp 2d 338). Moreover, absent evidence of a fraudulent scheme, a civil RICO action will not lie ( see generally CFJ Assocs. of New York, Inc. v. Hanson Industries, 274 AD2d 892; The Board of Managers of Executive Plaza Condominiums v. Jones, 251 AD2d 89). As any civil RICO claim in this case is based, perforce, upon the absolutely privileged testimony and statements of Belodoff and Orezzoli, no triable issue of fact exists as to such claims. Moreover, there is no evidence, other than the conclusory allegations of plaintiffs and plaintiffs' counsel, many of which are asserted only "upon information and belief," of any underlying fraudulent scheme which utilized or stemmed from such allegedly false statements and testimony.
In response to defendants' motion, plaintiffs have submitted an affirmation of counsel which reiterates the allegations of the complaint, many of them couched as being made "upon information and belief" ( see Indig v. Finkelstein, 23 NY2d 728 ["The burden upon a party opposing a motion for summary judgment is not met merely by a repetition of incorporation by reference of the allegations contained in pleadings . . . verified or unverified]). Plaintiffs' opposition also fails to include an affidavit of anyone with personal knowledge of the facts ( see e.g. S.J. Capelin Assocs. v. Globe Mfg. Corp., 34 NY2d 338, 342 [opposition to summary judgment adequately supported where "opposing affidavit . . . is being made by one having personal knowledge of the facts"]). It is axiomatic that the affidavit of counsel alone, unsupported by any documentary or testimonial evidence, is of no probative value in opposing a motion for summary judgment ( see Hasbrouck v. City of Gloversville, 102 AD2d 905 affd 63 NY2d 916; Farragut Gardens No. 5 v. Milrot, 23 AD2d 889). Although plaintiffs maintain that more discovery is needed, they have failed to identify any specific material and relevant fact which would be gleaned through further discovery ( see Campbell v. City of New York, 220 AD32d 476 [The mere hope that evidence to defeat the summary judgment motion may be revealed upon further discovery is not enough to forestall summary judgment; rather, the information sought from additional discovery must be clearly specified and relevant to the issues raised in the motion]; see also Smith v. Fishkill Health-Related Center, Inc., 169 AD2d 309, 316, lv denied 78 NY2d 864 [Speculation or surmise that material information will be revealed upon further discovery will not suffice as a ground to deny a motion for summary judgment]).
In addition, although plaintiffs have cross-moved to amend their complaint and have purported to attach a copy of the proposed amended verified complaint to the cross motion, it appears that the proposed amended complaint is identical to the original complaint served and filed by plaintiffs. Moreover, the only verification contained therein is that of plaintiffs' counsel. In any event, a motion for leave to amend a pleading which is made in response to a motion for summary judgment "must be supported by an affidavit of merits and evidentiary proof that could be considered upon a motion for summary judgment" ( see Marinelli v. Shifrin, 260 AD2d 227, 229). Moreover, "an amended pleading, verified by counsel, together with counsel's opposing affirmation are insufficient to defeat a summary judgment motion" ( see id.; see also Cheung v. City of New York, 234 AD2d 91; Martinez v. Columbia Presbyterian Medical Center, 238 AD2d 286). Accordingly, plaintiffs' opposition to defendants' motion for summary judgment is insufficient to defeat summary judgment as a matter of law. Additionally, as plaintiffs' cross motion to amend the complaint is unsupported by the necessary affidavit of merit and an adequate proposed verified amended complaint, such relief must be denied.
The court notes that, although plaintiffs assert that they are moving for leave to amend the complaint in response to a motion to dismiss, as opposed to a motion for summary judgment, a contention which, in any event, this court rejects, the standard for a motion for leave to amend a complaint is the same whether made in response to a motion to dismiss or to a motion for summary judgment ( see Traveler's Ins. Co. v. Ferco, Inc., 122 AD2d 718, 719-720 [1986] ["Although leave to amend is freely given pursuant to CPLR 3025(b), when leave is sought to amend pleadings properly dismissed pursuant to CPLR 3211(a), the court must be satisfied that there are sufficient grounds to support the proposed amended pleading"]; see also SRW Assocs. v. Bellport Beach Property Owners, 129 AD2d 328, 330 [1987] ["Where a cross motion for leave to amend a complaint to correct a defect in pleading is made in response to a motion to dismiss the complaint for failure to state a cause of action . . . CPLR 3211(e) requires the court to focus attention on whether the pleader has a cause of action rather than on whether he has properly stated one"] [internal quotation marks and citations omitted]); Cushman Wakefield, Inc. v. John David, Inc., 25 AD2d 133, 135 [1966]; see also Walter Rosen, Inc. v. Pollack, 101 AD2d 734 [1984] ["this court has construed CPLR 3211(e), respecting leave to replead should a complaint be dismissed on motion, to require that the proposed new pleading be supported by evidence as on a motion for summary judgment"]).
In summary, defendants' motion for summary judgment is granted and the complaint is dismissed. Plaintiffs' cross motion for leave to amend the complaint is denied.
The foregoing constitutes the order, decision and judgment of this court.