Opinion
Index No. 509272/2023 Motion Seq. No. 1
10-17-2023
TC SERVICES USA INC. a/k/a WOTC.COM, Plaintiffs, v. IDEAL HOME HEALTH INC., Defendant,
Unpublished Opinion
PRESENT: HON. LEON RUCHELSMAN J.
HON. LEON RUCHELSMAN JSC
The plaintiff has moved pursuant to CPLR §3211 seeking to dismiss counterclaims filed by the defendant. The defendant has opposed the motion. Papers were submitted by the parties and arguments held. After reviewing all the arguments this court now makes the following determination.
According to the complaint, on October 7, 2021 the defendant hired the plaintiff to obtain internal Revenue Tax Credits, specifically Federal Employee Retention Tax Credits [hereinafter ERTC])- Initially the parties agreed the plaintiff would be paid fifteen percent of all Credits recovered and later that amount was reduced; to twelve, percent.. The complaint alleges the plaintiff obtained credits in the amount Of $4,734,921.3:8 and sought a twelve percent fee in the amount of $568,190.56. The complaint alleges the plaintiff performed another similar service and was never paid: and that other similar services will, incur fees; to. the. plaintiff when the.-defendant files- their, tax returns. The complaint alleges defendant, refused to pay the amounts sought and instituted this lawsuit. The complaint alleges causes of action for breach of contract and account stated. The defendant answered the complaint and asserted counterclaims alleging fraud and deceptive business practices pursuant to General Business.. Law §34 9. The plaintiff has how moved seeking to dismiss.' those counterclaims and, as noted, the defendant opposes the motion.
Conclusions of Law
It is well settled that upon a motion to dismiss the court must determine, accepting the allegations of the counterclaims, as true, whether the defendant can succeed upon any reasonable view of those facts (Davids v, State, 159 A.D.3d 987, 74 N.Y.S.3d 288 [2d Dept., .2018] Further, all the., allegations, in the counterclaim are deemed true and all reasonable inferences may be drawn in favor- of the defendant (Dunleavy v. Hilton Hall-Apartments Co., LLC, 14 A.D.3d 479, 789 N.Y.S.2d 164 [2d Dept., 2005]).
To successfully plead on a claim of fraudulent inducement, it must be shown that there was a knowing misrepresentation of material present facts, which were intended to deceive another party and induce that party to act on it, resulting in injury (see, Piccoli v. Cerra The 216 A.D.3d 1188, 190 N.Y.S.3d 424 [2d Dept., 2023]). However, the party alleging the fraudulent inducement "is expected to exercise ordinary diligence arid may not claim to have reasonably relied on a defendant's representations [or silence], where he [or she] has means available to him [or her] of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation" (Feldman v. Bryne, 210 A.D.3d 646, 178 N.Y.S.3d 525 [2d Dept., 2022]). Therefore, where the party can verify the representations with due diligence there can be no cause of action for fraudulent inducement (Avery v. WJM Development Corp., 197 A.D.3d 1141, 153 N.Y.S.3d 511 [2d Dept., 2021]).
The fraud in the inducement counterclaim alleges that "plaintiff represented that it provided specialized skills and expertise in obtaining ERTC that could not be performed by Defendant in the ordinary course of its business" (see, Verified Answer with Counterclaims, ¶35 [NYSCEF Doc. No. 8]), The counterclaim alleges that in fact ho such specialized skill was required and thus the plaintiff induced the defendant to agree to the unnecessary contract.
However, the existence of the ERTC.- and the manner in which they could be obtained were matters of public record (see, Urstadt Biddle Properties Inc., v. Excelsior Realty Corp., 65 A.D.3d 1135, 885 N.Y.S.2d 510 [2d Dept., 2009]). Thus, the defendant Could have easily referred to such information to determine whether it was necessary to hire the plaintiff. The defendant argues that, in truth, at the time the agreement was entered on October 7, 2021 it[had no way of knowing it could obtain any of the credits without hiring plaintiff. However, the Internal Revenue Service guidance all predates the contract entered into between the parties and surely, with ordinary intelligence, the defendant could have discovered whether it could have engaged in the process itself
Next, the defendant argues that even if that guidance was available, the plaintiff never informed the defendant of the risks of seeking ERTC. The specific risks the defendants references is essentially the fact that taxes are required to be paid upon receipt of any credits and tax returns filed, therefore, required amendments. However, that can hardly be classified as a "risk". Rather, the fact taxes had to be paid upon, receipt of any credits merely means the credit was thereby reduced.. That is not a risk whereby the omission of that information amounts to: fraud. The defendant, may have an argument that the amount owed to the plaintiff should be reduced accordingly and this issue may be appropriate as a defense to the exact amount sought by plaintiff. Of course, the strength of that argument will: depend- or. the-, language of the agreement entered between the parties. Indeed, further discovery will clarify that issue-if at all. In any event a minimization of a credit received can hardly be termed a risk sufficient to create a claim of fraudulent representation.
Therefore, since the defendant could have easily discovered the nature of plaintiff's work and whether in fact such work was of an expert nature or even required at all, the motion seeking to dismiss this counterclaim is granted.
Turning to the motion seeking to dismiss the counterclaim based upon. General Business Law §34 9, it is well settled that to. pursue a claim based upon General Business Law §349 the plaintiff must establish the challenged act or practice was consumer oriented, that it was misleading in a material way and that the plaintiff suffered;harm as a. result of such practices (Stutman v. Chemical Bank, 95 N.Y.2d 24, 709 N.Y.S.2d 892 [2000]).
Concerning General Business Law §349 "in the case of omissions in particular...the statute surely does not require businesses to ascertain consumers' individual needs and guarantee that each consumer;has- .all relevant information specific to its situation. The scenario is quite different, however, where the business alone possesses material information that is relevant to the consumer and fails to provide this information" (see, Oswego; Laborer's Local 214 Pension Fund v. Marine Midland Bank N., A., 85 N.Y.2d 20, .623 N.Y.S.2d 529 [1995]) . Thus:, there car; be no .cause of action where "a consumer could not reasonably obtain such information" (Paradowski v. Champion Petfoods USA Inc., 2023. WL 3829559 [2d Cir. 2C23J. Thus, there really can be no deceptive practices where the information that supports allegations of deception were readily available to the defendant.
As already explained, the plaintiff's work was not 7 misleading at all where the defendant had the ability to consult with Internal Revenue guidelines and make an informed decision whether they still wised to hire the plaintiff. Therefore, the plaintiff did not engage in- any deceptive practices. at all. Consequently, this counterclaim is dismissed as well
Thus, the motion seeking to dismiss the counterclaims is hereby granted.
So ordered.