Opinion
No. 652696/11.
2013-01-15
Baba RAMPURI (also known as William A. Gans), Plaintiff, v. Edwin S. STERN, Kumbha Mela Foundation, Inc., and Ashtanga Yoga New York LLC, Defendants.
Ryan A. Becker, Esq., Hunton & Williams, New York, for Plaintiff. Julie A. McCane and Gregg M. Mashberg, Esqs., Proskauer Rose, LLP, New York, for Defendants.
Ryan A. Becker, Esq., Hunton & Williams, New York, for Plaintiff. Julie A. McCane and Gregg M. Mashberg, Esqs., Proskauer Rose, LLP, New York, for Defendants.
BARBARA R. KAPNICK, J.
This action involves the alleged breach of a contract pursuant to which plaintiff was to secure the commitment of an ancient religious society of monks and yogis in India to participate in, and lend their name to, a large spiritual event in New York City.
Background
Plaintiff Baba Rampuri (“Rampuri”), also known as William A. Gans, is a U.S. citizen residing primarily in India who is a senior leader and international representative of the religious society Shri Panch Dashnam Juna Akhara (the “Juna Akhara”).
Defendants Edwin S. Stern (“Stern”) and Ashtanga Yoga New York LLC (“AYNY”) operate a yoga business at the “Broome Street Temple” located at 430 Broome Street in Manhattan. Defendant Kumbha Mela Foundation, Inc. (“KMFI”) is a New York not-for-profit corporation organized in or about April 2011 and controlled by Stern. Complaint, ¶¶ 1–4, 8.
The Juna Akhara is India's oldest and largest society of monks and yogis whose lineages first appeared in or about the 5th Century B.C. The Juna Akhara was formalized into a society in or about 644 A .D. and is today revered by millions of Hindus. Complaint, ¶ 10.
Plaintiff was engaged by defendants to secure the commitment of the Juna Akhara to participate in, and lend their name to, a spiritual “Kumbha Mela” event in New York City in 2012 (the “NYC Event”). The NYC Event was intended to be a spiritual gathering of hundreds of thousands of people throughout New York City and in Central Park. Rampuri is the duly appointed representative with power-of-attorney for Juna Akhara in connection with the NYC Event. Id., ¶¶ 1–2.
On or about September 24, 2010, Stern sent an email to Rampuri asking for his participation in the NYC Event and requesting Rampuri's assistance in securing the Juna Akhara's participation therein. Id., ¶ 12. Plaintiff contends that “[s]ecuring the Juna Akhara's participation would lend immediate prestige and credibility to the NYC Event.” Id., ¶ 10.
Plaintiff claims that through a series of telephone calls, email messages and other documents, defendants promised to pay Rampuri a fee in the amount of $250,000 plus expenses (the “Agent Fee”) in exchange for Rampuri's assistance in securing the Juna Akhara's commitment to participate in, and lend their name to, the NYC Event. Id., ¶ 15. The Agent Fee was allegedly due and payable upon Rampuri's obtaining the Juna Akhara's commitment. Id., ¶ 18. Stern and AYNY raised $50,000 in initial funds and paid $24,000 of those funds to Rampuri as an advance on future expenses. Id., ¶ 16.
Plaintiff claims that, in reliance on Stern's promises and representations, he agreed to arrange meetings with the leadership of Juna Akhara in order to seek their sponsorship and participation in the NYC Event. In order to do so, he gave up various personal appearances and other revenue-generating activities that he would otherwise have conducted in order to support himself over the year. Id., ¶ 17.
Plaintiff argues that the Agent Fee became due on May 9, 2011 when he formally obtained Juna Akhara's commitment. Id., ¶ 18.
In addition to the Agent Fee, plaintiff contends that defendants promised through a series of documents, email messages and telephone calls to pay a fee, known as a “dakshina,” or donation (the “Dakshina”), in the amount of $1,325,967 in exchange for the Juna Akhara's commitment to lend their name to, and participate in, the NYC Event. Id., ¶ 19.
According to plaintiff, payment of the Dakshina was not contingent on the NYC Event actually occurring. Moreover, plaintiff claims that Stern, being knowledgeable of Hindu tradition, was aware of dakshina structure. In any event, Rampuri contends he explained the structure of the Dakshina to Stern in plain terms and Stern provided his consent thereto. Id., ¶ 20.
Starting in late 2010 and continuing into 2011, Rampuri, with the assistance of professional media consultants engaged by defendants, developed extensive written materials, presentations, logos, artwork, website design and content, and other materials for the conceptualization and promotion of the NYC Event (the “Event Materials”). Id., ¶ 22.
Further, Rampuri asserts he embarked on a six-month campaign across remote ashrams and monasteries throughout northern India to persuade Juna Akhara leaders (the “Leadership”) to support the NYC Event. He claims that the Leadership was always “on the road” with no fixed address, walking from kumbha mela to kumbha mela with elephants, horses, and 50–100 attendant monks. Thus, this enterprise required extended travel, overnight drives on unpaved roads, lodging in primitive conditions, and waiting. Id., ¶ 23.
Rampuri's efforts culminated in a final three-step process to secure the Juna Akhara's binding commitment to participate in the NYC Event. Id., ¶ 24. First, at an April 7, 2011 meeting, the Leadership set an initial dakshina amount of $25,300 to be paid to eleven key Juna Akhara officials in exchange for arranging the next step (the “First Dakshina Payment”). Rampuri notified Stern of this First Dakshina Payment; defendants advanced the amount to Rampuri who paid it to the Juna Akhara. Id., ¶ 25.
The second step consisted of two meetings, occurring on April 20 and 21, 2011, wherein the Leadership agreed to accept the Dakshina in exchange for their participation in the NYC Event. According to this agreement, the Dakshina was to be paid as follows: (1) $843,978 was to be paid through Rampuri to the larger Juna Akhara body (the “Second Dakshina Payment”); and (2) $441,989 was to be paid through Rampuri to a smaller group of leaders (the “Third Dakshina Payment”). Id., ¶ 26.
The third step was the formal convening of the Juna Akhara on May 9, 2011, at which the society formally committed to participate in the NYC Event. Further, the Juna Akhara appointed Rampuri as their representative and power of attorney in arranging their participation in the NYC Event. Id., ¶ 27.
Plaintiff claims that, throughout this process, Rampuri inquired several times of Stern whether he remained committed to the NYC Event and to the payment of the Agent Fee and Dakshina. Rampuri claims that, in response to each of his inquiries, Stern reaffirmed his commitment. Further, Rampuri maintains that he would not have risked his 42–year reputation were it not for such representations by Stern. Id., ¶ 29.
On or about June 6, 2011, Stern sent a letter to supporters confirming the “official” commitment of the Juna Akhara. Id., ¶ 30.
Thereafter, during a June 8, 2011 conference call with Stern, plaintiff reviewed all budget items line by line, including the Agent Fee and the Dakshina, and all items were verbally reaffirmed by Stern. Id., ¶ 31.
However, in a letter dated August 3, 2011 (the “Cancellation Letter”), Stern abruptly informed Rampuri that the NYC Event was cancelled. Stern stated in the letter that “[t]he economic climate in America has taken a great downturn and it is a situation beyond any of our control that the U.S. is on the brink of debt [sic], and to raise a large amount of money is untenable.” Id., ¶ 32.
After receiving the Cancellation Letter, Rampuri sought on numerous occasions to discuss the matter with Stern, but plaintiff claims that Stern refused to meet with or answer his calls and remained out of contact with him until August 12, 2011. Id.
At an August 13, 2011 meeting, Rampuri again asked Stern to honor his commitments to pay. Defendants have refused to pay both the Agent Fee and the Dakshina. Id., ¶ 33.
In an email dated August 22, 2011, Rampuri requested that Stern return the Event Materials but Stern has refused to do so. Id., ¶ 34.
Plaintiff claims that the foregoing events have caused significant damage to his reputation, as well as to that of the Juna Akhara. Id., ¶ 35.
On October 3, 2011, plaintiff filed a Summons and Complaint, alleging causes of action for (1) breach of contract for the Agent Fee; (2) breach of duty of good faith and fair dealing; (3) quantum meruit; (4) conversion; and (5) promissory estoppel. Plaintiff seeks actual and compensatory damages, as well as costs and attorneys' fees.
Defendants now move this Court pursuant to CPLR 3211(a)(5) and (a)(7) to dismiss the Complaint.
Discussion
It is well settled that
[o]n a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction. We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory ... In assessing a motion under CPLR 3211(a)(7), ... a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint and the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one.
Leon v. Martinez, 84 N.Y.2d 83, 87–88 [1994][internal citations and quotation marks omitted] ). Allegations consisting of bare legal conclusions, with no factual specificity, however, “are insufficient to survive a motion to dismiss.” Godfrey v. Spano, 13 NY3d 358, 373 (2009)(citing Caniglia v. Chicago Tribune–N.Y. News Syndicate, 204 A.D.2d 233, 233–34 [1st Dep't 1994] ).
Breach of Contract
In order to assert a claim for breach of contract, plaintiff must allege “the existence of a contract, the plaintiff's performance under the contract, the defendant's breach of that contract, and resulting damages.” JP Morgan Chase v. J.H. Elec. of NY, Inc., 69 AD3d 802, 803 (2d Dep't 2010).
The plaintiff here meets this pleading requirement by alleging that he entered into an agreement with the defendants to secure the commitment of the Juna Akhara to participate in the NYC Event in exchange for the payment of the Agent Fee, that he performed his duties thereunder by securing the Juna Akhara's commitment, that defendants breached the agreement by failing to pay the full amount of the Agent Fee, that he was harmed by losing the income which he otherwise would have earned from other engagements, and that his reputation (and the reputation of the Juna Akhara) has been damaged.
However, in support of their motion to dismiss plaintiff's breach of contract claim, defendants argue that the alleged agreement to pay the Agent Fee was an oral agreement related to a “business opportunity” and, as such, is barred by New York's Statute of Frauds. SeeGeneral Obligations Law (“GOL”) 5–701(a)(10). Further, they contend the contract is also barred to the extent it may not have been capable of being fully performed within one year. SeeGOL 5–701(a)(1).
.GOL 5–701 provides, in pertinent part, that
a.Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking:
1.By its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime;
* * * *
10.Is a contract to pay compensation for services rendered in negotiating a loan, or in negotiating the purchase, sale, exchange, renting or leasing or any real estate interest therein, or of a business opportunity, business, its good will, inventory, fixtures or an interest therein, including a majority of the voting stock interest in a corporation and including the creating of a partnership interest. “Negotiating” includes procuring an introduction to a party to the transaction or assisting in the negotiation or consummation of the transaction. This provision shall apply to a contract implied in fact or in law to pay reasonable compensation but shall not apply to a contract to pay compensation to an auctioneer, an attorney at law, or a duly licensed real estate broker or real estate salesman.
* * * *
Plaintiff, on the other hand, argues that its breach of contract claim is not barred by the Statute of Frauds because a contract related to the participation of monks and yogis in a spiritual event is not a “business opportunity.” Plaintiff also argues that to the extent the contract could be viewed as a contract for services, negotiations for these types of contracts fall outside the scope of section 5–701(a)(10). See Festa v. Gilston, 183 A.D.2d 525, 526 (1st Dep't 1992). Finally, plaintiff argues that the contract is not barred under the “performance within one year” requirement of the Statute of Frauds because that section only applies to agreements “which by their very terms have absolutely no possibility in fact and law of full performance within one year.” See D & N Boening v. Kirsch Beverages, 63 N.Y.2d 449, 454 (1984).
With regard to the meaning of the term “business opportunity” as it is employed in GOL 5–701(a)(10), the Court of Appeals has held that
[t]he term, as used in the statute, may not cover every situation which in common parlance might be called a “business opportunity.” But where, as in the instant case, the intermediary's activity is so evidently that of providing know-how' or know-who,' in bringing about between principals an enterprise of some complexity ... the statute is entitled to be read both in accordance with its plain meaning, its evident purpose, and to accomplish the prevention of the mischief for which it was designed.
Freedman v. Chemical Const. Corp., 43 N.Y.2d 260, 267 (1977)
Because the services performed by plaintiff in this case fall within the meaning of “negotiating,” as that term is specifically defined in GOL 5–701(a)(10), and because the crux of plaintiff's breach of contract claim is that he provided “know-how” and “know-who” in connection with negotiating a business opportunity, the Statute of Frauds is applicable and any agreement pertaining to these services must be evidenced by a writing to be enforceable. See Greene v. Ratner, 2008 WL 2937183, at *5 (Sup.Ct., N.Y. Co). Since plaintiff has put forth no writing evidencing a contract, the breach of contract cause of action must be dismissed.
Breach of the Duty of Good Faith and Fair Dealing
While plaintiff “believes this claim is adequately pled,” he nonetheless withdraws this claim “to focus on the other claims at issue and to streamline the litigation.” Plaintiff's Memo of Law in Opp. at 5, fn 3.
Quantum Meruit
Next, defendants argue that plaintiff cannot use its quantum meruit claim to attempt to circumvent the Statute of Frauds. Defendants rely on the language of GOL 5–701(a)(10) which provides that “[t]his provision shall apply to a contract implied in fact or in law to pay reasonable compensation.” See also Snyder v. Bronfman, 13 NY3d 504, 508–09 (2009)(finding that GOL 5–701[a] [10] barred plaintiff's quantum meruit claim). Further, they argue that a party may plead both breach of contract and quantum meruit claims, but only if done so in the alternative, and where there is a bonafide dispute concerning the existence of a contract or its application to the dispute. See Joseph Sternberg, Inc. v. Walber 36th St. Assoc., 187 A.D.2d 225, 228 (1st Dep't 1993) ( citing Clark–Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382 [1987] ). Finally, defendants argue that plaintiff's quantum meruit claim fails because it consists of bare legal conclusions.
For example, plaintiff claims that defendants “accepted” his services and “encouraged” him, (Complaint, ¶ 48), without providing factual support for these assertions.
Plaintiff rejects defendants' argument that his quantum meruit claim should be dismissed because it is not pled in the alternative. CPLR 3014 permits causes of action to be stated alternatively. See Saunders v. CFG/AGSCB Factory, LLC, 2011 WL 4903104 (Sup Ct, N.Y. Co 2011). Moreover, “[a] plaintiff may plead quantum meruit as an alternative to breach of contract if (1) the validity of the contract is disputed,” as it is here. Mascon Restoration, Inc. v. Granite Group, LLC, 2008 WL 542724 (Sup Ct., N.Y. Co.) ( citing Farash v. Sykes Datatronics, Inc., 59 N.Y.2d 500, 503–504 [1983] ).
Plaintiff next insists that the Complaint plainly states facts sufficient to support his quantum meruit cause of action. In particular, in paragraph 30 of the Complaint, plaintiff alleges that Stern, by letter dated June 6, 2011 addressed to supporters, stated that “[b]y cementing the commitments of the important traditional authority that will make this event grand and majestic ... this event is officially official,” and we “now have a signed letter of commitment from the ruling council members. In the minds of these great souls [the Juna Akhara], this event is happening, there is no uncertainty.”
Further, plaintiff maintains that even if his breach of contract claim is barred by the Statute of Frauds-as this Court has now found-defendants' motion to dismiss his quantum meruit claim should be denied because the Court of Appeals has held that a writing not sufficient to satisfy the Statute of Frauds for a contract claim could nevertheless be sufficient to sustain a quantum meruit claim. See Morris Cohon & Co. v. Russell, 23 N.Y.2d 569, 572 (1969). In Morris Cohon, the Court of Appeals held that
a memorandum sufficient to meet the requirements of the Statute of Frauds must contain expressly or by reasonable implication all the material terms of the agreement, including the rate of compensation if there has been agreement on that matter. In an action in quantum meruit, however, for the reasonable value of brokerage services, if it does not appear that there has been an agreement on the rate of compensation, a sufficient memorandum need only evidence the fact of plaintiff's employment by defendant to render the alleged services. The obligation of the defendant to pay reasonable compensation for the services is then implied. (internal citations omitted)
Id. at 575–576; see also Davis & Mamber, Ltd. v. Adrienne Vittadini, Inc., 212 A.D.2d 424, 426 (1st Dep't 1995)(in the absence of a signed, written fee agreement, defendants' letter evidencing the fact of plaintiff's employment, without the rate of compensation, was insufficient under the Statute of Frauds to sustain a breach of contract claim but was a sufficient basis to sustain a claim in quantum meruit ).
Plaintiff contends that the writings alleged in the Complaint are sufficient to sustain his quantum meruit claim, namely: Stern's September 24, 2010 email to plaintiff asking for his participation in the NYC Event, (Complaint, ¶ 12); a series of email messages and other documents in which defendants promised to pay plaintiff a fee in the amount of $250,000 plus expenses in exchange for his assistance in securing the Juna Akhara's commitment, (Complaint, ¶ 15); a written budget prepared for the NYC Event, (Complaint, ¶ 31); and Stern's June 6, 2011 letter to supporters acknowledging plaintiff's completion of services, (Complaint, ¶ 30).
However, while plaintiff has alleged the existence of certain writings as detailed above, and even went so far as to include quotes therefrom in the Complaint, plaintiff did not attach copies of any of the alleged writings to either the Complaint or in opposition to defendants' motion to dismiss the Complaint, and has not explained his reasons for failing to do so. For this reason, the Court is constrained to dismiss plaintiff's quantum meruit claim on this motion to dismiss. See Mendelsohn v. Levine, 24 A.D.2d 1007 (2d Dep't 1965)(holding that in order to defeat a motion to dismiss based on the Statute of Frauds, plaintiff must either produce a sufficient writing or otherwise explain its failure to do so).
Conversion
Under a traditional construct, conversion is the “unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights.” Thyroff v. Nationwide Mut. Ins. Co., 8 NY3d 283, 288–89 (2007) ( quoting State of New York v. Seventh Regiment Fund, 98 N.Y.2d 249, 259 [2002] ).
Defendants argue that plaintiff's conversion claim is deficient because it is unsupported by factual allegations and is duplicative of his breach of contract claim. Specifically, to the extent plaintiff is alleging conversion of the “Event Materials,” they contend it is impossible to discern what tangible personal property or intellectual property might be implicated. Moreover, they argue that plaintiff does not allege facts establishing that he owns and has superior rights to the Event Materials. In fact, defendants contend, plaintiff's statement that he developed the Event Materials “with the assistance of professional consultants engaged by the Defendants,” (Complaint ¶ 22), serves to undercut his claim of ownership in the Event Materials.
It appears to this Court that plaintiff has sufficiently alleged in paragraph 22 the materials he delineates as the Event Materials he claims were converted. Although they may have been developed with the assistance of consultants engaged by defendants, he has alleged they were his property. The claim is sufficiently pled so as to survive the motion to dismiss.
Promissory Estoppel
“The elements of a claim for promissory estoppel are: (1) a promise that is sufficiently clear and unambiguous; (2) reasonable reliance on the promise by a party; and (3) injury caused by the reliance.” MatlinPatterson ATA Holdings LLC v. Federal Express Corp., 87 AD3d 836, 841–42 (1st Dep't 2011).
Defendants argue that plaintiff has failed to establish all of these elements. In particular, the alleged agreement is not “clear and unambiguous” because it is uncertain who promised precisely what to plaintiff and when. Moreover, plaintiff has made no more than conclusory assertions of reasonable reliance, which is insufficient as a matter of law. In addition, defendants argue that where a plaintiff fails to allege a duty independent of the parties' alleged agreement, a claim for promissory estoppel must be dismissed as duplicative of plaintiff's breach of contract claim. See Celle v. Barclays Bank, PLC, 48 AD3d 301, 303 (1st Dep't 2008). Finally, defendants argue that promissory estoppel may not be utilized to avoid the application of the Statute of Frauds unless it would be “unconscionable” not to enforce the alleged promise. See Steele v. Delverde S.R.L., 242 A.D.2d 414, 415 (1st Dep't 1997). They contend that plaintiff fails to assert even a conclusory allegation of unconscionable injury.
In opposition, plaintiff argues that he has sufficiently pled his promissory estoppel claim and alleged the unconscionability which would result by not enforcing defendants' promises. In particular, plaintiff contends that the defendants promised to compensate him for his extensive work, travel and time-consuming negotiations, and that their partial payment for his services is proof of the reasonableness of his reliance. Moreover, plaintiff claims he was irreparably harmed by defendants' failing to compensate him for months of travel under difficult conditions to fulfill his contractual obligations, while foregoing personal appearances and other activities that he uses to support himself. Finally, plaintiff claims he has suffered harm to his reputation that may limit prospective opportunities to earn support for himself because of diminished standing within the Juna Akhara.
The Court finds that plaintiff has failed to allege either a duty independent of the parties' alleged agreement or “conduct or circumstances so egregious, as to render the application of the statute of frauds unconscionable.” Greene v. Ratner, 2008 WL 2937183, at *7 ( citing Long Island Pen Corp. v. Shatsky Metal Stamping Co., Inc., 94 A.D.2d 788 [2d Dep't 1983] ). As such, plaintiff's claim for promissory estoppel is dismissed.
Accordingly, defendant has 20 days to serve an Answer to plaintiff's one remaining cause of action for conversion.
Counsel shall appear for a preliminary conference in IA Part 39, 60 Centre St., Rm. 208 on March 6, 2013 at 10:00 am.
This constitutes the decision and order of this Court.