Opinion
Index No. 503183/2022
12-07-2023
RUTHI KURIS, A/K/A RUTHINUDELMAN Plaintiff(s) v. WIZ KIDS CENTER INC., EUGENE PISHCHIKER, LARISA ZALVESKY, Defendant(s)
Unpublished Opinion
PRESENT: HON. INGRID JOSEPH, J.S.C.
ORDER
Ingrid Joseph Judge
The following e-filed papers read herein: NYSCEF Nos.:
Notice of Motion/Affirmation in Support/Affidavits Annexed
Exhibits Annexed/Reply........... 5-8;
16 AffIrmation in Opposition/Affidavits Annexed/Exhibits Annexed............ 1-4; 10-11
In this matter, Wiz Kids Center Inc. ("Wiz Kids"), Eugene Pishchiker ("Pishchiker") and Larisa Zalevsky ("Zalevsky)) (Collectively "Defendants") move (Motion Seq. 1) for an order to dismiss Ruthi Kuris, A/K/A Ruthi Nudelmans's ("Plaintiff) complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action. Plaintiff has opposed the motion.
This action arises out of an alleged contractual dispute wherein Plaintiff and Defendants entered into an agreement to own and operate a day care center named Wiz Kids Center Inc. located at 2403 Avenue X, Brooklyn, New York 11235.
In support of its motion, Defendants argue that Plaintiffs complaint must be dismissed for failure to state a cause of action because Plaintiff has failed to present claims sufficiently particular to provide the Defendants notice of the transactions and/or occurrences intended to be proved or the material elements of each cause of action as required by CPLR 3013. Defendants state that six of Plaintiff s causes of action are predicated on the allegation of the existence of a contract between parties, however Plaintiff has failed to allege whether the contract being relied on is oral or written. Furthermore, Defendants asserts that Plaintiff has failed to attach the relevant agreement, if written, or reference the specific provisions of the contract upon which liability is predicated, warranting dismissal of those claims. Additionally, Defendants claim that Plaintiffs cause of action to pierce the corporate veil must be denied as moot because a cause of action for piercing the corporate veil cannot stand alone without an underlying wrong to form the basis for an allegation of liability and Plaintiffs other causes of action sounding in breach of contract are insufficient. In the event that Plaintiffs causes of action survive, Defendants contend that the individual claims against Pishchiker and Zalevsky should be dismissed because the complaint does not allege that they acted outside of their capacity as officers of Wiz Kids or had any involvement with Plaintiffs dealings. Moreover, Defendants argue that since the complaint fails to state viable causes of action sounding in breach of contract, that Pischchiker and Zalevsky cannot be said to have executed any form of a contract with the Plaintiff. Defendants request costs and attorney's fees for its preparation and participation in this matter.
In opposition, Plaintiff argues that she has provided ample documentary evidence annexed to her affidavit in opposition, demonstrating that there was a joint venture in place and an agreement existed between all parties to this suit. Plaintiff states that Defendants have failed to submit any evidence in support of their motion and that there are genuine issues of fact and law that need to be resolved, warranting denial of Defendants' motion. In her affidavit, Plaintiff states that she and Defendants agreed to jointly own and operate the subject day care center now known as Wiz Kids Center Inc. Plaintiff claims that she and Defendant Zalevsky were the signatories of a certain lease dated on or about April 17, 2018 and the guarantors of the lease obligations, using Plaintiffs licensure as a basis for the lease obligations and a permit that was issued in February of2019. Plaintiff contends that on or about January 13, 2021, she terminated her employment with Wiz Kids and informed the Defendants that they should find a replacement. for her, and the partnership was to be dissolved. Plaintiff states that she was denied all access to cameras, emails, and accounts related to the day care, while Defendants continued to use her license to operate the business. Consequently, Plaintiff alleges that Defendants materially breached the subject agreements between the parties and violated statutory laws.
Pursuant to CPLR 3025, a party may amend his pleading once without leave of court within twenty days after its service, or at any time before the period for responding to it expires, or within twenty days after service of a pleading responding to it. Under CPLR 3012, service of an answer or reply shall be made within twenty days after service of the pleading to which it responds. At any time before service of the responsive pleading is required, a party may move on one or more of the grounds set forth in subdivision (a) of CPLR 3211. Service of a notice of motion under subdivision (a) or (b) before service of a pleading responsive to the cause of action or defense sought to be dismissed extends the time to serve the pleading until ten days after service of notice of entry of the order (CPLR 3211[f]).
Here, Plaintiff filed its initial summons and complaint on February 1, 2022, and served a copy of the summons and complaint upon Defendants on March 28, 2022. Defendants timely filed and served their pre-answer motion to dismiss pursuant to CPLR 3211(a)(7) on April 8, 2022. On October 11, 2022, Plaintiff filed an Amended Verified Complaint without leave of the court. Pursuant to CPLR 3211(f), the Defendants' motion to dismiss the complaint pursuant to CPLR 3211(a)(7) extended the defendants time to answer and thus extended the time in which the plaintiffs could amend their complaint as of right (see also Rosas v Petkovich, 218 A.D.3d 814 [2d Dept. 2023]; Estate of Feenin v Bombace Wine & Spirits, Inc., 188 A.D.3d 1001 [2d Dept. 2020]).
Accordingly, Plaintiffs Amended Verified Complaint is deemed timely.
When a party moves to dismiss a complaint pursuant to CPLR 3211(a)(7), the standard is whether the pleading states a cause of action, not whether the proponent of the pleading has a cause of action (Leon v. Martinez, 84 N.Y.2d 83, 87 [1994]; Skefalidis v China Pagoda NY, Inc., 210 A.D.3d 925 [2d Dept. 2022]); Oluwo v Sutton, 206 A.D.3d 750 [2d Dept. 2022]; Sokol v Leader, 74 A.D.3d 1180 [2d Dept. 2010]). Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss (Eskridge v Diocese of Brooklyn, 210 A.D.3d 1056 [2d Dept. 2022]; Zurich American Insurance Company v City of New York, 176 A.D.3d 1145 [2d Dept. 2019]; EBCI Inc. v Goldman, Sachs & Co., 5 N.Y.3d [2005]).
On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the burden never shifts to the non-moving party to rebut a defense asserted by the moving party (Sokol at 1181; Rovello v Orofino Realty Co. Inc., 40 N.Y.2d 970 [1976]). CPLR 3211 allows a plaintiff to submit affidavits, but it does not oblige him or her to do so on penalty of dismissal (Id.; Sokol at 1181). Affidavits may be received for a limited purpose only, serving normally to remedy defects in the complaint and such affidavits are not to be examined for the purpose of determining whether there is evidentiary support for the pleading (Id.; Rovello at 635; Nonon at 827). Thus, a plaintiff will not be penalized because he has not made an evidentiary showing in support of its complaint.
Unlike on a motion for summary judgment, where the court searches the record and assesses the sufficiency of evidence, on a motion to dismiss, the court merely examines the adequacy of the pleadings (Davis v. Boeheim, 24 N.Y.3d 262, 268 [2014]). The appropriate test of the sufficiency of a pleading is whether such pleading gives sufficient notice of the transactions, occurrence, or series of transactions or occurrences intended to be proved and whether the requisite elements of any cause of action known to our law can be discerned from its averments (V. Groppa Pools, Inc. v. Massello, 106 A.D.3d 722, 723 [2d Dept 2013]; Moore v Johnson, 147 A.D.2d 621 [2d Dept 1989]).
To plead a cause of action for breach of contract, a plaintiff must allege (1) the existence of a contract, (2) plaintiffs performance pursuant to the contract, (3) defendant's breach of the contractual obligation; and (4) damages resulting from that breach (34-06 73, LLC v Seneca Insurance Company, 39 N.Y.3d 44 [2022]). Plaintiffs allegations must identify the provisions of the contract that were breached (Id.).
To plead a cause of action for unjust enrichment, a plaintiff must show (1) the defendant was enriched, (2) at the plaintiffs expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered (Mobarak v Mowad, 117 A.D.3d 998 [2d Dept. 2014]; Mandarin Trading Ltd. v Wildenstein, 16 N.Y.3d 173 [2011]). In instances where the complaint contains two counts for the same services, one under contract and one on quasi-contract, the plaintiff is not compelled on motion in advance of the trial to elect upon which count he will proceed, since plaintiff is entitled to plead inconsistent causes of action in the alternative (see generally CPLR § 3014; Katcher v Browne, 19 A.D.2d 744 [2d Dept. 1963]; Gold v 29-15 Queens Plaza Realty, LLC, 43 A.D.3d 866 [2d Dept. 2007]; Pickering v State. 30 A.D.3d 393 [2d Dept. 2006]; Perkins v Volpe, 146 A.D.2d 617 [1989]; Breslin Realty Dev. Corp. v 112 Leaseholds, 270 A.D.2d 299 [2d Dept. 2000]; Rubin v Cohen, 129 A.D. 395 [1908]). The statute of frauds does not bar unjust enrichment cause of action where it does not seek to enforce a promise but rather seeks to recover the reasonable value of property or services rendered in reliance on the promise (Kearns v Mino, 83 A.D.2d 606 [2d Dept. 1981]; Castellotti v Free, 138 A.D.3d 198 [1st Dept. 2016]).
Here, Plaintiff submits text messages that she alleges constitute the contractual agreement between parties. It is unclear from the submitted messages whether any explicit or oral agreement between the parties ever existed. Additionally, Plaintiff fails to identify the provisions of the contract which were breached nor were the particular terms of the contract upon which Plaintiffs claim is based specified in her Affidavit. The allegations made by Plaintiff are vague and speculative and are insufficient to support a claim for breach of contract. However, there remains the possibility of recovery under quasi-contractual, equitable theories.
Accordingly, that branch of Defendants' motion to dismiss Plaintiffs cause of action for breach of contract is granted, and Defendant's motion to dismiss Plaintiffs cause of action for unjust enrichment is denied.
To establish a viable cause of action sounding in promissory estoppel, a plaintiff must allege (1) a clear and unambiguous promise, (2) reasonable and foreseeable reliance by the party to whom the promise is made, and (3) an injury sustained in reliance on the promise (Rogers v Town of Islip, 230 A.D.2d 727 [2d Dept. 1996]; Castellotii v Free, 138 A.D.3d 198 [1st Dept. 2016]). The existence of a valid and enforceable contract governing a particular subject matter precludes recovery under a promissory estoppel cause of action arising out of the same subject matter (Bent v St. John's University, New York, 189 A.D.3d 973 [2d Dept. 2020]; Bennett v State Farm Fire & Cas. Co., 181 A.D.3d 777 [2d Dept. 2020]). A plaintiff may not assert a cause of action sounding in unjust enrichment or quantum meruit to circumvent the statute of frauds (Bent at 203; Matter of Zelouf, 183 AD3D 900 [2d Dept. 2020]). Where, however, an oral agreement violates the statute of frauds, promissory estoppel may preclude application of the statute of frauds if its application would result in unconscionability (Id.). An "unconscionable injury" is "injury beyond that which flows naturally ... from the non-performance of the unenforceable agreement" (Id.).Promissory estoppel is an equitable form of action in which equitable rights alone are recognized (Merex A.G. v Fairchild Weston Systems, Inc., 29 D3.d 821, 826 [2d Cir. 1994]).
Here, Plaintiffs alleged oral agreement with Defendants is unenforceable as it is violative of the statute of frauds (see Uniform Commercial Code 2-201[1]; General Obligations Law 5-701[a][1]; Martin Greenfield Clothiers, Ltd. v Brooks Brothers Group, Inc., 175 A.D.3d 636 [2d Dept. 2019]). To the extent that the plaintiffs promissory estoppel cause of action may have been asserted to circumvent the statute of frauds, the plaintiff was required, but failed to, assert that it suffered unconscionable injury in reliance on the defendant's alleged promise (Id. at 638; Carvel Corp. v Nicolini, 144 A.D.2d 611 [2d Dept. 1988]). Additionally, Plaintiff fails to allege what promises she relied on to her detriment.
Accordingly, that branch of Defendants' motion to dismiss Plaintiffs cause of action for promissory estoppel is granted.
A joint venture is an association of two or more persons to carry out a single business enterprise for profit, for which purpose they combine their property, money, effects, skill and knowledge (Kaufman v Torkan, 51 A.D.3d 977 [2d Dept. 2008]; Calcagno v Graziano, 200 A.D.3d 1248 [3d Dept. 2021]). To plead the existence of a joint venture, the plaintiff must allege that there was "an agreement manifesting the intent of the parties to be associated as joint venturers, a contribution by the coventurer to the joint undertaking (i.e. a combination of property, financial resources, effort, skill or knowledge, some degree of joint proprietorship and control over the enterprise and a provision for the sharing of profits and losses (Id; Slabakis v Schik, 164 A.D.3d 454 [1st Dept. 2018]). An agreement to enter into a joint venture may be oral and may be inferred from the totality of the parties' conduct in performance of the joint venture (Schultz v Sayada, 133 A.D.3d 1015 [3d Dept. 2015]). The ultimate inquiry is whether the parties have so joined their property, interests, skills and risks that for the purpose of the particular adventure their respective contributions have become as one and the commingled property and interests of' the parties have thereby been made subject to each of the associates on the trust and inducement that each would act for their joint benefit (MacKay v Paesano, 185 A.D.3d 915 [2d Dept. 2020]; Richebell Information Services, Inc. v Jupiter Partners, L.P., 309 A.D.2d 288 [1st Dept. 2003]; Mendelson v Feinman 143 A.D.2d 76 [2d Dept. 1988]). Members of a joint venture owe a fiduciary duty to one another (Meinhard v Salmon, 249 NY 458 [1928]; AG. Homes, LLC v Gerstein, 52 A.D.3d 546 [2d Dept. 2008]).
Here, the court finds, giving Plaintiff the benefit of every favorable inference that such intent to enter into a joint venture may be implied from the totality of the conduct alleged here by the parties. Specifically in Plaintiffs affidavit, she states that there was an agreement between herself and the Defendants wherein it was agreed that Plaintiff would invest "her efforts and resources in furtherance of the business and in exchange, she would receive shares and dividends." Plaintiff also asserts that it was agreed that any loans, expenses, and monies advanced by Plaintiff would be paid back to her along with her salary. It is undisputed that Plaintiff and Zalevsky entered into a lease agreement for the subject business and signed as guarantors of the lease obligations using Plaintiffs licensure as a basis for the lease obligations. Additionally, Plaintiff has submitted text messages between herself and Zalevsky wherein it is acknowledged that Plaintiff invested at least $15,000.00 into the business. The submitted messages also suggest the parties negotiated the profit split for the business, joint control and management, and the combining of their property, skills, or knowledge for the benefit of the business.
Accordingly, that branch of Defendants' motion to dismiss Plaintiffs cause of action for the existence of a joint venture is denied.
The elements of a constructive trust are a confidential relationship, a promise, a transfer in reliance on that promise and unjust enrichment (Sanxhaku v Margetis, 151 A.D.3d 778 [2d Dept. 2017]; Baker v Harrison, 180 A.D.3d 1210 [3d Dept. 2020]). As a constructive trust is an equitable remedy, courts do not rigidly apply the elements but use them as flexible guidelines (Baker at 1211; Tyree v Henn, 109 A.D.3d 906 [2d Dept. 2013]). An express promise is not required to impose a constructive trust as the parties' relationship and Circumstances may be construed to suggest an implied promise (Baker at 1212; Moak v Raynor, 28 A.D.3d 900 [3d Dept. 2006]). A fiduciary relationship arises when one is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation (Oddo Asset Mgt. v Barclays Bank PLC, 19 N.Y.3d 584 [2012]; Saul v Cahan, 153 A.D.3d 947 [2d Dept. 2017]) It is grounded in a higher level of trust than normally present in the marketplace between those involved in arm's length business transaction,, therefore a conventional business relationship, without more, is insufficient to create a fiduciary relationship (Saul at 949; AHA Sales, Inc. v Creative Bath Prods., Inc., 58 A.D.3d 6 [2d Dept. 2008]).
Here Plaintiff has alleged a fiduciary relationship by virtue of her status as a member in a joint venture (See Plumitallo v Hudson Atlantic Lando Co., LLC, 74 A.D.3d 1038 [2d Dept. 2010]). Additionally, The Plaintiffs allegations of an initial investment into the business, contributions towards project expenses and supplies which have not been repaid, and contribution of guarantying the lease and using her license as a basis for the lease obligations and a permit sufficiently alleges the elements of a cause of action for a constructive trust against the Defendants.
Accordingly, that branch of Defendants' motion to dismiss Plaintiffs cause of action for constructive trust is denied.
Plaintiffs cause of action for "money damages and consequential damages" alleges that Defendants failed to perform their contractual allegations and as a result Plaintiff was damaged due to the cost of money that was paid to Defendants. Additionally, Plaintiff alleges that as a result of Defendants unjust enrichment, Plaintiff was deprived of the use of valuable resources and incurred legal fees to protect her rights entitling Plaintiff to actual damages, expectancy damages, salaries and lost profits. These allegations are duplicative of the relief sought in Plaintiffs previous causes of action.
Accordingly, that branch of Defendants' motion to dismiss Plaintiffs cause of action for monetary damages and consequential damages is granted.
In general, a corporation has a separate legal identity from its owners and the owners are not personally liable for the obligations of the corporation (Open Door Foods, LLC v Pasta Machines, Inc., 136 A.D.3d 1002 [2d Dept. 2016]; East Hampton Union Free School Dist. V Sandpebble Builders, Inc., 66 A.D.3d 122 [2d Dept. 2009]). The concept of piercing the corporate veil is an equitable exception that permits, in certain circumstance,, the imposition of personal liability on owners for the obligations or wrongs of their corporation (Open Door Foods, LLC at 1004; Matter of Morris v New York State Dept. of Taxation & Fin., 82 N.Y.2d 135 [1993]). A party seeking to invoke the doctrine of piercing the corporate veil must demonstrate that a court in equity should intervene because the owners of the corporation exercised complete domination over it in the transaction at issue and, in doing so, abused the privilege of doing business in the corporate form, thereby perpetrating a wrong that resulted in injury to the plaintiff (East Hampton Union Free School Dist. At 126; Love v Rebecca Development, Inc., 56 A.D.3d 733 [2d Dept. 2008]). Additionally, a party must allege that the owners, through their domination, abused the privilege of doing business in the corporate form (Id.). Conduct constituting an abuse of the privilege of doing business in the corporate form is a material element of any cause of action seeking to hold an owner personally liable for the actions of his or her corporation under the doctrine of piercing the corporate veil (Id.; Morris at 142; Gateway I Group, Inc. v Park Ave. Physicians, P.C., 62 A.D.3d 141 [2d Dept. 2009]). Factors to be considerd in determining whether the owner has "abused the privilege of doing business in the corporate form" include whether there was a "failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and use of corporate funds for personal use" (Id; (Millennium Constr., LLC v. Loupolover, 44 A.D.3d 1016 [2d Dept. 2007]).
Here, the complaint alleges that Defendants Pishchiker and Zalevsky, who are the principals of Wiz Kids had complete and total domination over the business and used their domination to harm Plaintiff by failing to perform their contractual obligation.. The complaint further alleges that Defendants Pishchiker and Zalevsky abused the corporate form by using money paid into the corporation for personal expenses or other clients, rather than using the funds to honor agreements with Plaintiff or other legitimate purposes. These allegations however are conclusory, and mere conc1usory statements or assertions that a corporation is completely dominated by the owners or that the corporation acted as their "alter ego" without more is insufficient to support the equitable relief of piercing the corporate veil (Morris at 141-142; JGK Industries, LLC v Hayes NY Business, LLC, 145 A.D.3d 979 [2d Dept. 2016]; Goldman v Chapman, 44 A.D.3d 938 [2d Dept. 2007]). Plaintiffs complaint fails to set forth sufficient factual allegations that the defendants exercised domination and control over Homeland "which is so complete that the corporation has no separate mind, will, or existence of its own" (Sky-Track Technology Company Limited v HSS Development, Inc., 167 A.D.3d 964 [2d Dept. 2018]). Furthermore, the complaint fails to allege that the individual Defendants failed to observe corporate formalities or abused the privilege of doing business in the corporate form, thereby perpetrating a wrong that resulted in the injury allegedly suffered by the Plaintiff.
Accordingly, that branch of Defendants' motion to dismiss Plaintiffs cause of action to pierce the corporate veil is granted.
Pursuant to 22 NYCRR 130-1.1, a court in a civil action may award reasonable attorney's fees resulting from frivolous conduct. Conduct is frivolous within the meaning of 22 NYCRR 130-1.1, inter alia, where it is completely without merit in law or is undertaken primarily to harass or maliciously injure another" (22 NYCRR 130-1.1[c][1]; Stanecky v Stanecky, 200 A.D.3d 819 [2d Dept. 2021]). Even in instances where a Plaintiffs complaint fails to state a cause of action, it cannot be said that the complaint is completely without merit in law (Id.; Matter of Lebron v Lebron, 101 A.D.3d 1009 [2d Dept. 2012]).
Here, contrary to Defendants contention, Plaintiff has asserted viable causes of action in her complaint. Additionally, Defendants have failed to demonstrate that the action was commenced primarily to harass or maliciously injure them.
Accordingly, it is hereby, ORDERED, that Defendants' motion to dismiss Plaintiffs complaint pursuant to CPLR 3211(a)(7) is granted to extent that Plaintiffs first (breach of contract), second (promissory estoppel/detrimental reliance), sixth (monetary and consequential damages), and seventh (pierce the corporate veil) causes of action are dismissed, and it is further, ORDERED, that Defendants' motion to dismiss Plaintiffs third (unjust enrichment), fourth (joint venture), fifth (constructive trust) are denied, and it is further, ORDERED, that Defendants' request for costs and attorney's fees is denied.
This constitutes the decision and order of the court.