Opinion
No. 606079–14.
10-07-2015
The GERFFERT COMPANY, INC. and STEPHEN PANIGEL, Plaintiffs, v. FRATELLI BONELLA, SRL, Andrea Bonella, Mario Bonella, Gianfranco Bonella, "john Doe" and "jane Doe," d/b/a Fratelli Bonella, James Dean, Dolores King, William J. Hirten Co., LLC, and HMH Religious Manufacturing Co., Inc, Defendants.
Christopher Renke, Esq., Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Wolf, LLP, Lake Success, for Plaintiff. Michael P. Kandler, Esq., Goldberg Segall, LLP, White Plains, for Defendant (Dean). Jacqueline Criswell, Esq., Tressler, LLP, Chicago, IL, for Defendant (Hirten & HMH). AnnMarie Francesca DePrimo, Esq., Tressler, LLP, Newark, NJ, for Defendant (Bonella Defendants).
Christopher Renke, Esq., Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Wolf, LLP, Lake Success, for Plaintiff.
Michael P. Kandler, Esq., Goldberg Segall, LLP, White Plains, for Defendant (Dean).
Jacqueline Criswell, Esq., Tressler, LLP, Chicago, IL, for Defendant (Hirten & HMH).
AnnMarie Francesca DePrimo, Esq., Tressler, LLP, Newark, NJ, for Defendant (Bonella Defendants).
VITO M. DESTEFANO, J.
The following papers and the attachments and exhibits thereto have been read on this motion:
| Notice of Motion | 1 |
| Amended Memorandum of Law in Support | 2 |
| Affirmation in Opposition (Crosio) | 3 |
| Affirmation in Opposition (Didora) | 4 |
| Memorandum of Law in Opposition | 5 |
| Reply Memorandum of Law | 6 |
In an action to recover damages for, inter alia, breach of contract, the defendants move for an order pursuant to CPLR 3211(a)(1), (5), (7), and (8) dismissing "counts 1 through count 15" of the complaint.
Background
Defendant Fratelli Bonella, SRI ("Fratelli") is a family-owned, Italian corporation headquartered in San Giovanni, Italy which produces copyrighted, Christian-themed images and other religious products (Complaint at ¶¶ 1–3, 6–9, 20–26, 67). Codefendants Mario, Andrea and Gianfranco Bonella—who are citizens of Italy—are principals and owners of Fratelli and reside in Italy (Complaint at ¶¶ 9–12).
In April of 1962, Fratelli and The Gerffert Company, Inc. ("Gerffert") entered into a written, exclusive distribution agreement covering the "territory of the United States" (theF "Distribution Agreement"), pursuant to which Gerffert was authorized to market and distribute Fratelli's religious images and other products (Complaint at ¶¶ 21–23, 26–27). The Distribution Agreement (the record contains an English version translation), had an initial term of three years, "but automatically renewed thereafter for a similar period" (Exs. "A" and "B" to Motion). The plaintiffs claim that at some point thereafter, it was agreed that Gerffert would continue as Fratelli's exclusive distributor until the expiration of Fratelli's artwork copyrights (Complaint at ¶¶ 23–24).
The plaintiffs allege that "on numerous occasions" codefendants Mario and Gianfranco Bonella orally assured plaintiff Stephen Panigel–Gerffert's president and owner-that "Gerffert would remain Fratelli's ... exclusive distributor until the expiration of Fratelli's ... copyrights" (Complaint at ¶¶ 27–28, 31–34). Plaintiffs Panigel and Gerffert claim that they relied on these assurances and thereafter expended effort and expense in order to transform Fratelli's images into marketable products, i.e., they allegedly created product categories and catalogues which generated consumer awareness and demand for Fratelli's images (Complaint at ¶¶ 27–29, 31–36, 39). According to the plaintiffs, although Fratelli owned the copyrighted religious images, the images themselves possessed little or no value unless and until they were incorporated into saleable items. Since Fratelli did not itself create or manufacture these products, Gerffert's unique skill in manufacturing and promoting products lines incorporating the images was allegedly an indispensable, profit-generating component of the parties' relationship (Didora Affirmation in Opposition at ¶¶ 27–31).
In 2005, codefendant Andrea Bonella allegedly "began demanding that Gerffert expand its product lines and thereby increased Fratelli Bonella's sales through increased purchases from Gerffert" (Complaint at ¶ 34). In order to comply with Fratelli's alleged expansion directive, Gerffert claims that it entered into several agreements pursuant to which it would acquire the assets and resources of certain entities that were also engaged in the business of selling and/or manufacturing religious products. Specifically, Gerffert entered into agreements to acquire the assets of: (1) codefendant HMH Religious Manufacturing Co., Inc ("HMH"), a Rhode Island corporation owned by owned codefendant James Dean (Complaint at ¶¶ 18, 34, 98–101, 106); (2) codefendant William J. Hirten Company, LLC ("Old Hirten"), owned by codefendant Dolores King (Complaint at ¶¶ 35–36); and (3) Regina Manufacturing Company ("Regina"), a Rhode Island corporation which marketed religious jewelry and possessed substantial facility and staff resources (Complaint at ¶¶ 37–38).
Gerffert's ultimate objective in contracting with the foregoing companies was to create a new entity, whose assets would augment and be combined with Gerffert's existing product line, thereby transforming the new entity into a "dominant one-stop shop' in the Catholic [religious products] market" (Complaint at ¶¶ 38–39). With respect to Dean, it was allegedly agreed that Gerffert would acquire all of HMH's assets, for which Dean would then be given a 10% ownership stake in the new company to be created by the parties ("Dean–Gerffert" Agreement") (Complaint at ¶¶ 34–35). In exchange for Old Hirten's assets, King would be paid $250,000 and receive a two-year employment contract at an annual salary of $200,000 per year (Complaint at ¶¶ 35–36).
However, at some point in 2007, instead of performing the foregoing asset agreements, Dean and King allegedly caused HMH and Old Hirten to breach their respective contracts with Gerffert. More particularly, the plaintiffs contend that Dean and King—together with the other defendants, created their own new entity, "New Hirten" and, thereafter, replaced Gerffert as a party to the proposed Hirten arrangement (Complaint at ¶¶ 45–47, 88–91, 98–99). Later, and at the behest and direction of the defendants, New Hirten allegedly "announced itself to members of the religious articles industry" that it was Fratelli's new exclusive distributor. Prior thereto, New Hirten allegedly misappropriated and copied, among other things, Gerffert's proprietary "numbering system and its unique catalogue designs" (Complaint at ¶¶ 47–54, 139–140; Didora Affirmation in Opposition at ¶¶ 5–11). The plaintiffs further allege that Andrea Bonella made false statements to Dean (the former owner of HMH)—statements which purportedly induced Dean and HMH to breach their asset agreement with Gerffert (Complaint at ¶¶ 41–42,114–119).
Procedural History
On January 22, 2009, Gerffert and Panigel commenced an action in New York's Federal Court, entitled The Gerffert Company, Inc. and Stephen Panigel v. James Dean, Andrea Bonella, Dolores King, William J. Hirten Co., LLC, Mario Bonella, Gianfranco Bonella, "John Doe" and "Jane Doe", doing business as Fratelli Bonella, Fratelli Bonella, SRL and HMH Religious Manufacturing Co., Inc., Index No. 1:09 –cv–00266–MKB–CLP (the "New York federal action"). By order dated August 29, 2014, the Court dismissed the plaintiffs' federal Lanham Act claim and declined to exercise subject matter jurisdiction over the plaintiffs' remaining state law causes of action (Gerffert Co., Inc. v. Dean, supra, 41 FSupp3d 201, 204–205 [EDNY 2014] ).
In March 2010, Gerffert commenced an action in Rhode Island against New Hirten entitled The Gerffert Company, Inc. v. William J. Hirten, LLC, James Dean and ABC Companies, Index No. 1:10–cv–101–S–DLM (the "Rhode Island action"). The complaint in the Rhode Island action was subsequently dismissed (Gerffert Co., Inc. v. William J. Hirten Co., LLC, 815 FSupp2d 521 [DRI 2011] ] ).
On November 13, 2014, Gerffert and Panigel commenced the instant action against the individual Bonella defendants, Fratelli, Dean, King, HMH and New Hirten alleging, inter alia, causes of action sounding in breach of contract, unjust enrichment, tortious interference with contract, breach of fiduciary duty, fraud, and conversion.
The defendants move for an order dismissing the instant complaint pursuant to CPLR 3211(a)(1), (5), (7), and (8) arguing, inter alia, that the court lacks personal jurisdiction over the individual Bonella defendants, that the complaint should be dismissed on the grounds of res judicata and collateral estoppel, and that several of the causes of action are insufficiently pled to state a cause of action.
For the reasons that follow, the motion is granted in part and denied in part.
The Court's Determination
Personal Jurisdiction
With respect to the defendants' threshold jurisdictional claims relating to individual defendants Andrea, Mario and Gianfranco Bonella—all Italian citizens—these defendants contend, inter alia, that: (1) any and all work they performed relating to Gerffert was conducted exclusively in Italy and solely in their official capacities on behalf of the corporate entity, Fratelli; and (2) they have never, as individuals, conducted, solicited or otherwise done business in, or derived revenue from, the United States or New York (see Affidavits in Support annexed as Exs. "C"-"E" to Motion).
Under New York's long-arm statute, "a court may exercise personal jurisdiction over any non-domiciliary ... who in person or through an agent ... transacts any business within the state or contracts anywhere to supply goods or services in the state" (CPLR 302[a] ), regardless of whether that non-domiciliary has actually entered New York State (Fischbarg v. Doucet, 9 NY3d 375, 380 [2007] ; Deutsche Bank Sec., Inc. v. Montana Bd. of Invs., 7 NY3d 65, 71 [2006] ; Johnson v. Ward, 4 NY3d 516, 519–520 [2005] ). Long arm jurisdiction over a non-domiciliary exists under CPLR 302(a)(1) when a defendant has transacted business in New York and the cause of action asserted arose from that transaction (Pichardo v. Zayas, 122 AD3d 699, 701 [2d Dept 2014] ; Johnson v. Ward, 4 NY3d at 519, supra ; Paterno v. Laser Spine Instit., 24 NY3d 370, 376 [2014] ; Licci v. Lebanese Can. Bank, SAL, 20 NY3d 327, 338 [2012] ; Ehrenfeld v. Bin Mahfouz, 9 NY3d 501, 508 [2007] ). "If either prong of the statute is not met, jurisdiction cannot be conferred under CPLR 302(a)(1)" (Johnson v. Ward, 4 NY3d at 519, supra ). To establish that a cause of action arose from the transactions relied upon, there must be an articulable nexus, i.e., a "substantial relationship", between a defendant's in-state activity and the claim asserted (Id.; Licci v. Lebanese Can. Bank, SAL, 20 NY3d at 339, supra ). Courts also consider whether the defendant, by some act or acts, has "purposefully availed" itself of the privilege of conducting activities within New York" (Ehrenfeld v. Bin Mahfouz, 9 NY3d at 508, supra ; Licci v. Lebanese Can. Bank, SAL, 20 NY3d at 338, supra ). However, "[m]ore than limited contacts are required for purposeful activities sufficient to establish that the non-domiciliary transacted business in New York" (Paterno v. Laser Spine Instit., 24 NY3d at 376, supra ; Fischbarg v. Doucet, 9 NY3d at 380, supra ). It is the plaintiff who bears the ultimate burden of establishing personal jurisdiction (Wells Fargo Bank, N.A. v. Moza, 129 AD3d 946 [2d Dept 2015] ; Mejia–Haffner v. Killington, Ltd., 119 AD3d 912, 914 [2d Dept 2014] ).
With these principles in mind, the court concludes that the individual Bonella defendants have established their entitlement to dismissal of the complaint based upon the absence of personal jurisdiction. In opposition, the plaintiffs have failed to demonstrate that the Bonella defendants, as individuals, engaged in sufficiently purposeful activities in New York, or that, with respect to them individually, there exists "a substantial relationship between the transaction and the claim asserted" (Whitcraft v. Runyon, 123 AD3d 811, 812 [2d Dept 2014] ).
Preliminarily, the plaintiffs have identified Italy as the epicenter of the parties' underlying contractual relationship; specifically, they claim, inter alia, that the Italian language Distribution Agreement was "contemplated" and written in Italy; by an Italian drafting entity (Fratelli); which is headquartered and does business in Italy, where the objects of the agreement (the Bonella images) were exclusively created and printed and where, in fact, "[a]ll the creativity that goes into the production of [those] images" takes place (Complaint at ¶¶ 63–67; Memorandum of Law in Opposition at pp 10–12). Additionally, the individual defendants have each sworn in their respective affidavits, that, as individuals: they have never conducted any business within the State of New York; they do not maintain bank accounts or offices in New York; they do not own real property in New York; and they do not have any employees in New York (Ex. "D" to Motion; Complaint at ¶¶ 63–67).
To the extent that the complaint meaningfully refers to Mario and Gianfranco Bonella, those references primarily consist of vague, undifferentiated claims of wrongdoing, which neither particularly describe the misconduct relied upon nor detail precisely how Mario and Gianfranco individually engaged in purposeful activities within the State of New York (see Aetna Cas. & Sur. Co. v. Merchants Mut. Ins. Co., 84 A.D.2d 736 [1st Dept 1981] [causes of action pleaded against all defendants collectively without any specification as to the precise tortious conduct charged to a particular defendant were dismissed pursuant to CPLR 3013 ] ).
The complaint's allegations with respect to Andrea Bonella's alleged New York-based activities—including those relating to Dean and King—are similarly lacking in specificity and detail (Complaint at ¶¶ 42–44). In this regard, the complaint relies on allegations, made upon information and belief, that Andrea "orchestrated" in some unstated fashion, an undescribed "series of concerted acts"—which caused King and Dean to breach their respective transfer agreements with Gerffert (Complaint at ¶¶ 38–39, 40–46, 116–119). Notwithstanding the allegations, the complaint fails to describe how Andrea's acts created a viable, New York nexus or substantial relationship supporting the exercise of personal jurisdiction over Andrea in his individual capacity (Daniel B. Katz & Assoc. Corp. v. Midland Rushmore, LLC, 90 AD3d 977, 978 [2d Dept 2011] ; Peterson v. Spartan Indus, 33 N.Y.2d 463, 467 [1974] ). The court notes that the complaint's factual claims-and those made by plaintiffs' counsel, have not been supplemented or amplified through the submission of relevant affidavits.
Accordingly, the plaintiffs have failed to meet their burden of sharing that the court has personal jurisdiction over Mario, Gianfranco and Andrea Bonella (Brinkmann v. Adrian Carriers, Inc., 29 AD3d 615, 617 [2d Dept 2006] ; Daniel B. Katz & Assoc. Corp. v. Midland Rushmore, LLC, 90 AD3d at 979, supra [an individual cannot be subject to jurisdiction under CPLR 301 unless he is doing business in New York as an individual rather than on behalf of a corporation] ).
Res Judicata and Collateral Estoppel
The defendants also argue that the "entire complaint" should be dismissed on the grounds of res judicata and/or alternatively, collateral estoppel in light of the Rhode Island action which was dismissed. The court disagrees.
The claims made in the instant action and the Rhode Island action are distinct inasmuch as the two matters are, inter alia, ultimately contingent upon different facts and relate to different obligations (Kaygreen Realty Co., LLC v. IG Second Generation Partners, L.P., 78 AD3d 1010, 1013–1014 [2d Dept 2010] ; Specialized Realty Services, LLC v. Maikisch, 123 AD3d 801, 802–803 [2d Dept 2014] ).
More particularly, in the Rhode Island action, the plaintiff's claims focused primarily on the conduct of codefendant James Dean, who allegedly breached fiduciary duties and engaged in copyright infringement by acquiring a license to market a modified compilation of certain religious images (the "Modified Works"), originally created by artist Larry Ruppert-which images Ruppert had previously licensed to Gerffert (Ex. "F–1" to Motion in Support). As noted by the District Court, the main issue in the Rhode Island action was "whether Ruppert conferred to Hirten LLC a nonexclusive license to use the Modified Works" (Gerffert Co., Inc. v. William J. Hirten Co., LLC, 815 FSupp2d at 526, supra ).
While there are certain foundational facts common to both the instant action and the Rhode Island action, the essence of the plaintiffs' claim in the instant action is that the codefendants: (1) breached the alleged asset transfer agreement; and (2) that Fratelli and the individual Bonella defendants interfered with and/or wrongfully terminated the Distribution Agreement they had with Gerffert and substituted New Hirten for Gerffert. Accordingly, the court concludes that the "differences which exist between the issues raised in the prior [Rhode Island action] and those raised now, namely, the differences in the kind of relief sought, in the kind of facts to be proved, and in the kind of law to be applied, outweigh any similarities to such an extent as to render the doctrine of res judicata inapplicable" (Specialized Realty Servs., LLC v. Maikisch, 123 AD3d at 802–803, supra ). For essentially the same reasons—and with respect to "collateral estoppel, a narrower species of res judicata" (Breslin Realty Development Corp. v. Shaw, 72 AD3d 258, 263 [2d Dept 2010] ), the defendants have failed to carry their burden of demonstrating that the Rhode Island action actually decided matters and issues raised by the plaintiffs in this action (Courthouse Corporate Center LLC v. Schulman, 74 AD3d 725, 727 [2d Dept 2010] ).
Breach of Contract
(First and Fourth Causes of Action)
The defendants further allege, inter alia, that the first and fourth causes of action asserting claims for breach of contract are defective as a matter of law. The first cause of action alleges that Fratelli breached the Distribution Agreement (Complaint at ¶¶ 61–72), while the fourth cause of action avers that Dean violated the Dean–Gerffert asset transfer agreement (Complaint at ¶¶ 87–91). The defendants assert that New York law is applicable to both agreements, pursuant to which the plaintiffs' claims are barred by the statute of frauds (Memorandum of Law in Support at pp 19–22).
In opposition, the plaintiffs contend that Italian Law (which does not contain a contract bar analogous to New York's statute of frauds), applies under New York's "center of gravity," conflict-of-laws rules, pursuant to which a key inquiry is "which State has the most significant relationship to the transaction and the parties' " (Matter of Midland Ins. Co., 16 NY3d 536, 543–544 [2011] ; Zurich Ins. Co. v. Shearson Lehman Hutton, 84 N.Y.2d 309, 317 [1994] ; Matter of Allstate Ins. Co. [Stolarz–New Jersey Mfrs. Ins. Co. ], 81 N.Y.2d 219, 223 [1993] ).
In contract cases, in the absence of an express contractual provision designating the applicable law, New York courts apply the law of the forum which is the "center of gravity" or that has the most significant "grouping of contacts" (Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d at 317, supra ). Under this approach, courts may consider a variety of significant contacts, including the place of contracting, the places of negotiation and performance, the location of the subject matter, and the domicile or place of business of the contracting parties (Matter of Allstate Ins. Co. [Stolarz–New Jersey Mfrs. Ins. Co. ], 81 N.Y.2d at 227, supra ). The traditional choice of law factors of places of contracting and performance are given heavy weight in this analysis (Id. at 226 ).
The evidence before the court on the instant motion demonstrates that the defendants have failed to establish that the disputed agreements are governed by New York contract law principles (see Zurich Ins. Co. v. Shearson Lehman Hutton, supra, 84 N.Y.2d at 317, supra; Travelers Casualty and Surety Co. v. Honeywell Int'l Inc., 48 AD3d 225 [1st Dept 2008] [choice of law issues not yet adjudicated when court decided motion to dismiss for forum non conveniens ]; Smith v. Railworks Corp., 2011 WL 2016293 SDNY 2011 at fn 12] ["Because a choice of law analysis is fact intensive, courts often decline to make a choice of law determination at the motion to dismiss"]; Meserole v. Sony Corporation of America, Inc., 2009 WL 1403933 at fn 6 [SDNY 2009] [District Court stated that, given the "early stage of the litigation", where plaintiffs have adequately pled that sufficient business decisions were made at defendant's headquarters in California, "a detailed choice of law analysis would be premature"] ).
Accordingly, the branch of the motion seeking dismissal of the first and fourth causes of action is denied.
Tortious Interference with Contract
(Second, Ninth and Fifteenth Causes of Action)
The defendants further contend that the second, ninth and fifteenth causes of action—alleging tortious interference with contract—are defective primarily because, inter alia, the Distribution Agreement and the Dean–Gerffert Agreement are unenforceable under New York law (Memorandum of Law in Support at pp 23, 25). That specific claim fails, however, since the court has already declined to dismiss the plaintiffs' contract claims on this basis.
Notwithstanding this court's denial of the branch of the motion seeking dismissal of the first and fourth breach of contract claims on statute of frauds grounds, the court nevertheless concludes that the second cause of action sounding in "tortious interference with contract rights" must be dismissed as unduly vague and conclusory (Complaint at ¶¶ 73–77) (Ferrandino & Son, Inc. v. Wheaton Bldrs., Inc., LLC, 82 AD3d 1035, 1037 [2d Dept 2011] ; R.I. Is. House, LLC v. North Town Phase II Houses, Inc., 51 AD3d 890, 895–896 [2d Dept 2008] ; Schuckman Realty v. Marine Midland Bank, 244 A.D.2d 400, 401 [2d Dept 1997] ; Washington Ave. Assoc. v. Euclid Equip., 229 A.D.2d 486, 487 [2d Dept 1996] ). The "[f]ailure to plead in nonconclusory language facts establishing all the elements of a wrongful and intentional interference in the contractual relationship requires dismissal of the action" (Bonanni v. Straight Arrow Publs., 133 A.D.2d 585, 587 [1st Dept 1987] ; see also R.I. Is. House, LLC v. North Town Phase II Houses, Inc., 51 AD3d at 895–896, supra; Black Car & Livery Ins., Inc. v. H & W Brokerage, Inc., 28 AD3d 595 [2d Dept 2006] ).
A review of the complaint reveals that the plaintiffs' second cause of action contains generic allegations which vaguely refer to tortious interference perpetrated by the defendants through "wrongful means" (Complaint at ¶ 76). The foregoing averments, however, neither particularly describe the misconduct at issue nor disclose precisely how each defendant allegedly committed whatever wrongful acts are being relied upon (Washington Ave. Assoc. v. Euclid Equip., 229 A.D.2d at 487, supra ). Nor does the complaint allege that the Distribution Agreement contract would not have been otherwise breached "but for" the defendants' alleged misconduct (Ferrandino & Son, Inc. v. Wheaton Bldrs., Inc., LLC, 82 AD3d at 1037, supra ; Burrowes v. Combs, 25 AD3d 370, 373 [1st Dept 2006] ; Washington Ave. Assoc. v. Euclid Equip., 229 A.D.2d at 487, supra ).
The ninth cause of action, while it pleads specific factual averments that Andrea Bonella intentionally procured Dean's breach of the Dean–Gerffert contract (Complaint at ¶¶ 115–118), is nevertheless dismissed given this court's finding that it does not have personal jurisdiction over individual defendant Andrea Bonella (see discussion supra at pp 4–6).
To the extent discernable by the court, the plaintiffs' submissions do not refer to, or provide legal analysis opposing, dismissal of the fifteenth cause of action (Complaint at ¶¶ 157–161) (Burrowes v. Combs, 25 AD3d at 373, supra; Washington Ave. Assoc. v. Euclid Equip., 229 A.D.2d at 487, supra ; cf., Parekh v. Cain, 96 AD3d 812, 816–817 [2d Dept 2012] ).
Accordingly, the second, ninth, and fifteenth causes of action are dismissed.
Unjust Enrichment
(Third Cause of Action)
The third cause of action, sounding in unjust enrichment against defendant New Hirten alleges, inter alia, that as a result of Fratelli's breach of the Distribution Agreement, New Hirten was unjustly enriched at the plaintiffs' expense (Complaint at ¶¶ 79–86). The defendants contend that the third cause of action fails as a matter of law inasmuch as the Distribution Agreement governs the parties' rights and thereby bars any related claim for unjust enrichment (Memorandum of Law in Support at p 23). Here, however, the party identified as being unjustly enriched—New Hirten—was not a party to the Distribution Agreement and, thus, whatever rights the plaintiffs may possess as against New Hirten are not governed by that Agreement.
Accordingly, the third cause of action states a claim for unjust enrichment insofar as asserted against New Hirten.
Failure to Bargain in Good Faith/Misappropriation/Unjust Enrichment
(Fifth Cause of Action)
The fifth cause of action, denominated as one sounding in "Failure to Bargain in Good Faith/Misappropriation/Unjust Enrichment", alleges that Dean willfully failed to bargain faithfully in connection with the failed asset transfer agreement with Gerffert (the Dean–Gerffert Agreement), and he and HMH unjustly misappropriated and retained benefits derived from, and was enriched by, the plaintiffs' property and investment in HMH (Complaint at ¶¶ 93–95).
Accepting as true, and liberally construing the complaint's allegations, the court finds that the plaintiffs have sufficiently pleaded a claim for misappropriation since the complaint alleges, inter alia, that the defendants misappropriated the plaintiffs' facilities, equipment, supplies and personnel (Complaint at ¶¶ 56–60, 94–96), "and displayed some element of bad faith in doing so" (Parekh v. Cain, 96 AD3d at 816, supra; Out of Box Promotions, LLC v. Koschitzki, 55 AD3d 575, 578 [2d Dept 2008] ).
Breach of Fiduciary Duty and Accounting
(Sixth and Seventh Causes of Action)
The sixth cause of action, sounding in breach of fiduciary duty, alleges that Dean and Gerffert entered into a joint venture or partnership-type arrangement arising out of the alleged transfer agreement (the Dean–Gerffert Agreement), after which Dean allegedly engaged in misconduct which violated a fiduciary duty to Gerffert (Complaint at ¶¶ 101–102).
It is well settled that "[a] conventional business relationship, without more, does not become a fiduciary relationship by mere allegation" (Oursler v. Women's Interart Ctr., 170 A.D.2d 407, 408 [1st Dept 1991] ; Bitter v. Renzo, 101 AD3d 465 [1st Dept 2012] ; DiTolla v. Doral Dental IPA of NY, 100 AD3d 586, 587–588 [2d Dept 2012] ; Friedman v. Anderson, 23 AD3d 163, 166 [1st Dept 2005] ). Rather, a plaintiff must make a "showing of special circumstances' that could have transformed the parties' business relationship to a fiduciary one ... such as control by one party of the other for the good of the other" (L. Magarian & Co. v. Timberland Co., 245 A.D.2d 69, 70 [1st Dept 1997] ; DiTolla v. Doral Dental IPA of NY, 100 AD3d at 587–588, supra; AHA Sales, Inc. v. Creative Bath Products, Inc., 58 AD3d 6, 21–22 [2d Dept 2008] ; Oddo Asset Mgt. v. Barclays Bank PLC, 19 NY3d 584, 592–593 [2012] ; Faith Assembly v. Titledge of New York Abstract, LLC, 106 AD3d 47, 61–62 [2d Dept 2013] ). Notably, "[i]n order to succeed on a cause of action to recover damages for breach of fiduciary duty, a plaintiff must do more than make allegations of unscrupulous acts" (Robert I. Gluck, M.D., LLC v. Kenneth M. Kamler, M.D., LLC, 74 AD3d 1167 [2d Dept 2010] ).
Here, the complaint merely depicts an arm's length, commercial transaction pursuant to which, inter alia, Dean agreed to transfer HMH to a new entity in which Gerffert would posses a controlling 90% interest (Complaint at ¶¶ 87–91) (see Commander Terms. Holdings, LLC v. Poznanski, 84 AD3d 1005, 1009 [2d Dept 2011] ). The complaint does not contain particularized factual averments (CPLR 3016[b] ; Parekh v. Cain, 96 AD3d at 816, supra ), establishing that a fiduciary relationship arose out of the parties' contractual dealings (DiTolla v. Doral Dental IPA of NY, 100 AD3d at 587–588, supra ; Parekh v. Cain, 96 AD3d at 816, supra ; Woss, LLC v. 218 Eckford, LLC, 102 AD3d 860, 862 [2d Dept 2013] ). Additionally, the fiduciary duty claim is duplicative of the breach of contract claim set forth in the fourth cause of action (Mawere v. Landau, 130 AD3d 986, 987 [2d Dept 2015] ; Edem v. Grandbelle Intl., Inc., 118 AD3d 848, 849 [2d Dept 2014] ; Canzona v. Atanasio, 118 AD3d 841, 843 [2d Dept 2014] ).
Moreover, in the absence of a fiduciary relationship, the seventh cause of action for an accounting is fatally flawed (Goldman v. Rio, 62 AD3d 834 [2d Dept 2009] ; Town of New Windsor v. New Windsor Volunteer Ambulance Corps, Inc., 16 AD3d 403, 404 [2d Dept 2005] ; ["right to an accounting rests on the existence of a trust or fiduciary relationship regarding the subject matter of the controversy at issue"]; DiTolla v. Doral Dental IPA of NY, 100 AD3d at 586, supra ; Akkaya v. Prime Time Transp., Inc., 45 AD3d 616, 617 [2d Dept 2007] ).
Accordingly, the sixth and seventh causes of action must be dismissed.
Fraud/Conversion
(Eighth Cause of Action)
The branch of the defendants' motion which is to dismiss the combined fraud/conversion cause of action of action should also be granted. It is settled that "[n]either fraud nor conversion can be predicated upon breach of contract" (Parekh v. Cain, 96 AD3d at 812, supra; New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 318 [1995] ; Mawere v. Landau, 130 AD3d at 986, supra ; Edem v. Grandbelle Intl., Inc., 118 AD3d at 849, supra; MBL Life Assur. Corp. v. 555 Realty Co., 240 A.D.2d at 376–377, supra ). In substance, "a cause of action will be found to sound in tort rather than in contract only when the legal relations binding the parties are created by the utterance of a falsehood, with fraudulent intent and reliance thereon, and the cause of action is entirely independent of contractual relations between the parties" (Lee v. Matarrese, 17 AD3d 539, 540 [2d Dept 2005] ; see also Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., supra, 70 N.Y.2d 382, 390 [1987] ).
Here, the complaint's fraud allegations are predicated upon, and arise out of, the same operative facts relied upon in connection with the plaintiffs' fourth breach of contract cause of action (Refreshment Mgt. Servs., Corp. v. Complete Off. Supply Warehouse Corp., 89 AD3d 913, 914–915 [2d Dept 2011] )—namely, that Dean allegedly agreed and promised that he would transfer HMH to an entity primarily owned by Gerffert, but later declined or refused to do so, thereby causing damage and injury to the plaintiffs (Complaint at ¶¶ 105–110). These allegations do not establish the existence of a duty collateral or extraneous to that created by the parties' alleged contract; rather, they merely recast, as "an alternative theory of liability," the complaint's previously interposed breach of contract claim (A. Montilli Plumbing & Heating Corp. v. Valentino, 90 AD3d 961, 962 [2d Dept 2011] ; Village Group 30, Inc. v. Kyusung Cho, 83 AD3d 931 [[2d Dept 2011] ; McMorrow v. Angelopoulos, supra, 113 AD3d 736, 739 [2d Dept 2014] ).
Accordingly, the eighth cause of action is dismissed.
Finally, the court denies the plaintiffs' request for leave to replead their claims. The plaintiffs' request, which was set forth in a footnote in their memorandum of law in opposition to the motion, has been made without a formal motion and without submission of an amended complaint (Memorandum of Law in Opposition at p 1, fn1; see Chang v. First Am. Tit. Ins. Co. of NY 20 AD3d 502 [2d Dept 2005] ).
The standard to be applied on a motion for leave to replead' is the same as that applied for a motion to amend pursuant to CPLR 3025(b). Where there is neither a "motion for leave to replead" nor a proposed pleading subject to review by the court, the court is unable to ascertain whether it is devoid of merit or palpably improper (CPLR 3025[b] ; Chang v. First Am. Tit. Ins. Co. of NY 20 AD3d at 502, supra ).
Conclusion
Based on the foregoing, it is hereby
Ordered that the motion of the defendants is granted to the extent that the second, sixth, seventh, eighth, ninth and fifteenth causes of action asserted in the complaint are dismissed; and it is further
Ordered that the complaint is dismissed, insofar as asserted against Andrea Bonella, Mario Bonella, and Gianfranco Bonella; and it further
Ordered that the parties are directed to appear in Part 13 for a conference before the undersigned on November 13, 2015 at 9:30 am; and it is further
Ordered that the motion is, in all other respects, denied.
To the extent the defendants argue that the "lengthy Complaint" fails to comply with the requirements of CPLR 3013 and 3014 (Memorandum of Law in Support at pp 9–10), the court notes that these sections of the CPLR were not set forth as a basis for dismissal in defendants' notice of motion.
This constitutes the decision and order of the court.