Thus, the Court finds that GSGSB is incorrect in suggesting that there was "literally nothing left to negotiate."
D. Business Practice
Finally, the Court must determine whether the proposed agreement concerns a complex transaction which as a practical business matter normally would be reduced to writing. Winston v. Mediafare Entertainment Corp., 777 F.2d at 83; R.G. Group, Inc. v. Horn & Hardart Co., 751 F.2d at 76. GSGSB contends that it has undertaken any number of projects with reputable clients without having a signed contract in place. According to GSGSB, its clients have tight time constraints, similar to the Yankees' original schedule, and cannot wait for attorneys to negotiate a contract over several months.
In the case at hand, however, the proposed renovations to Yankee Stadium entailed a budget of several million dollars and involved major renovations, including the addition of thirty-six superboxes and a new 300-seat restaurant. See Winston v. Mediafare Entertainment Corp., 777 F.2d at 83 (where $ 62,500 was at issue, payment was to be made over several years and the parties engaged in substantial redrafting, the fact that the agreement was only four pages in length did not necessarily mean that the settlement agreement was not the type that required a written contract); R.G. Group, Inc. v. Horn & Hardart Co., 751 F.2d at 71 ("When substantial sums of money are at stake it is neither unreasonable nor unusual for parties to require that their contract be entirely in writing and signed before binding obligations will attach."). Moreover, McHale contends that the Yankees made it a practice to ensure that their contracts were eventually reduced to writing. McHale Aff. at P 12.
In addition, the Project at issue was of a substantially complex nature. This is reflected in the fact that at least five draft agreements were negotiated between the parties in 1984 and 1985. Moreover, the parties' understanding was continually reflected in a series of letters and invoices sent between them. Thus, the Court finds that the parties simply could not have intended that the various draft documents and oral understandings constituted a legally enforceable contract. See Retrosystem, B.V. v. SCM Corp., 727 F.2d at 262-63 ("These drafts . . . reflect a practical business need to record all the parties' commitments in definitive documents."). Accordingly, as the Court finds that the instant case involved a complex transaction that, as a practical business matter, would have been reduced to writing, the fourth factor also weighs in the Yankees' favor.
In sum, in light of the fact that (1) the documentary evidence clearly establishes that the parties did not intend to be bound prior to the execution of a written agreement; (2) the sworn deposition testimony provides additional support that a written agreement was intended; (3) several significant open terms were left unresolved; and (4) the size and complexity of the Project evidenced the type of contract that is generally committed to writing, the Court finds that there is no genuine issue of material fact that the parties intended to be bound only upon the execution of a signed, written agreement. Accordingly, the Yankees' motion for summary judgment dismissing Count I of the complaint is granted.
IV. Account Stated Cause of Action
In its complaint, GSGSB seeks recovery for damages on account stated. GSGSB contends that the Yankees are liable for the amounts set forth in the invoices received by the Yankees between 1985 and 1987. Specifically, GSGSB argues that the Yankees' failure timely to object to the invoices or to refuse credits ascribed therein provides a basis for their claim. GSGSB now moves for summary judgment on its account stated claim.
The Yankees disagree with GSGSB's contentions and argue that they are entitled to judgment as a matter of law. Specifically, relying on Bauman Assocs., Inc. v. H & M Int'l Transp., Inc., 171 A.D.2d 479, 567 N.Y.S.2d 404 (1st Dep't 1991) ("Bauman") and Gurney, Becker & Bourne, Inc. v. Benderson Dev. Co., 47 N.Y.2d 995, 394 N.E.2d 282, 420 N.Y.S.2d 212, 213 (1979) ("Gurney"), the Yankees cross-move for summary judgment on GSGSB's account stated claim on the grounds that (1) the existence of the underlying contract or indebtedness to GSGSB is disputed; and (2) they did not expressly agree to treat the invoices as an account stated. Specifically, the Yankees maintain that GSGSB's account stated claim is nothing more than an attempt by it to collect under an otherwise disputed contract, and that, as this underlying agreement is in dispute, the account stated claim must fail as a matter of law.
In Bauman, the New York Appellate Division, First Department, dismissed a claim for account stated, holding that a party may not use an account stated claim as a means to collect under a disputed contract. The court explained that:
An account stated cannot be made an instrument to create liability when none otherwise exists but assumes the existence of some indebtedness between the parties or an express agreement to treat the statement in question as an account stated. Here, defendant has objected to the purported account stated, and the existence of the underlying contract between the parties has not yet been established . . . . If plaintiff can prove an enforceable contract, then it will be able to recover under the first cause of action [for breach of contract]. However, as is the situation with the second cause of action in quantum meruit, a claim for an account stated may not be utilized simply as another means to attempt to collect under a disputed contract.
567 N.Y.S.2d at 408-09 (citation omitted); see also Gurney, Becker & Bourne, Inc. v. Benderson Dev. Co., 47 N.Y.2d 995, 394 N.E.2d 282, 420 N.Y.S.2d 212, 213 (1979) ("The rule that an account which has been rendered and to which no objection has been made within a reasonable time should be regarded as admitted by the party charged as prima facie correct assumes that there exists some indebtedness owing between the parties or an express agreement between the parties to treat the statement as an account stated.") (emphasis in original).
Gurney, upon which Bauman relies, stands for the proposition that a claim for account stated may not create liability where none exists. See Mount Sinai Hosp. v. Burns, 133 Misc. 2d 707, 507 N.Y.S.2d 964, 968 (Civ. Ct. 1986) ("An account stated only determines the amount of debt where a liability exists, but it cannot be made to create a liability where none before existed."), rev'd on other grounds, 138 Misc. 2d 381, 527 N.Y.S.2d 678 (1st Dep't 1988).
Thus, pursuant to Bauman and Gurney, the Yankees are entitled to summary judgment if they can demonstrate that (1) the existence of the underlying contract is disputed; and (2) they did not expressly agree to treat the invoices as an account stated. As the Court has found that there is no genuine issue of material fact regarding the underlying indebtedness owing between the parties, the Yankees have proven that the existence of the underlying contract is in dispute. Further, although GSGSB forwarded invoices to the Yankees setting forth various amounts claimed, the record is clear that the Yankees did not agree to treat the invoices as an account stated. The Court finds, therefore, that GSGSB cannot succeed on its claim for account stated as a matter of law. Accordingly, the Yankees' motion for summary judgment with respect to this cause of action is granted and GSGSB's motion is denied.
V. Failure to Plead Fraud with Particularity
In Count III of the complaint, GSGSB alleges that "GSGSB rendered the professional services to the Yankees in reliance upon numerous promises that the Yankees would pay for the services performed." Complaint at P 29. The complaint suggests further that unnamed persons made various unspecified misrepresentations on behalf of the Yankees "to defraud GSGSB out of its fees and/or otherwise to induce GSGSB to perform and to continue to perform architectural services and engineering services on an expedited basis for the benefit of the Yankees." Id. at P 30. Thus, the allegations of fraud consist of references to the Yankees' unspecified representations presumably designed to induce performance by GSGSB.
The Yankees move to dismiss Count III on the grounds that GSGSB has failed to plead fraud with sufficient particularity. Pursuant to Rule 9(b) of the Federal Rules of Civil Procedure, a plaintiff must allege with specificity facts which give rise to a strong inference that the defendants had an intent to defraud, and knew that their representations were false when made. Connecticut Nat'l Bank v. Fluor Corp., 808 F.2d 957, 962 (2d Cir. 1987); Ross v. A.H. Robins Co., 607 F.2d 545, 553 (2d Cir. 1979), cert. denied, 446 U.S. 946, 64 L. Ed. 2d 802, 100 S. Ct. 2175 (1980); Crystal v. Foy, 562 F. Supp. 422, 425 (S.D.N.Y. 1983). Specifically, to satisfy the particularity requirement, a plaintiff is required to indicate "(1) precisely what statements or omissions were made and in what documents or through what oral representations those statements were made; (2) the time and place of each such statement and the persons responsible for making (or, in the case of omissions, for not making) each such statement; (3) the content of such statements and manner in which the statements misled plaintiffs; and (4) what defendants obtained as a consequence of fraud." Manela v. Gottlieb, 784 F. Supp. 84, 87 (S.D.N.Y. 1992); see also Hotel Constructors, Inc. v. Seagrave Corp., 574 F. Supp. 384, 388-89 (S.D.N.Y. 1983) ("Rule 9(b) requires the pleader to specify precisely what statements were made, when, where and by whom they were made, in what manner the plaintiff was misled, and what the defendant obtained as a consequence.") (citation omitted). Conclusory allegations are insufficient. Armstrong v. McAlpin, 699 F.2d 79, 93 (2d Cir. 1983) ("Generalized and conclusory allegations of fraudulent concealment did not satisfy requirements of [Rule 9(b) of the] Federal Rules of Civil Procedure.").
Moreover, New York courts have rejected allegations that attempt to convert breach of contract actions into fraud claims.
Breach of promise sounds in contract, not fraud. A contract action may not be converted into one for fraud by the mere additional allegation that the contracting party did not intend to meet his contractual obligation.
Comtomark, Inc. v. Satellite Communications Network, Inc., 116 A.D.2d 499, 497 N.Y.S.2d 371 (1st Dep't 1986); see also Paper Corp. of United States v. Schoeller Technical Papers, Inc., 759 F. Supp. 1039 at 1044-45 ("a claim for fraud will be dismissed when the only fraud charge relates to a breach of contract") (citing Trusthouse Forte (Garden City) Management, Inc. v. Garden City Hotel, Inc., 106 A.D.2d 271, 483 N.Y.S.2d 216, 218 (1st Dep't 1984)); Spellman v. Columbia Manicure Mfg. Co., 111 A.D.2d 320, 489 N.Y.S.2d 304, 307-08 (2d Dep't 1985) ("no cause of action for fraud arises 'when the only fraud charged relates to a breach of contract.'") (citation omitted).
The Yankees contend that GSGSB's fraud claim consists of nothing more that a restated contract claim. In fact, GSGSB's claim is merely a vague and unspecified allegation that it relied "upon numerous promises that the Yankees would pay for the services performed," and that the "Yankees directed GSGSB to continue performance of its work while the Yankees incorporated into the parties agreement various understandings and directions between GSGSB and the Yankees." Complaint at P 29. GSGSB nowhere specifies the precise content of the representations on which it is entitled to relief, the time and place of such representations, the persons responsible for making them or the manner in which they were misled. Aside from a bare, conclusory allegation that "the Yankees knowingly, maliciously, fraudulently, designedly and deceitfully made false representations of material fact to GSGSB," id. at P 38, the complaint is literally devoid of any factual allegations to support an inference that the Yankees knowingly made any fraudulent misrepresentations.
Non-compliance with Rule 9(b) is not fatal, however, in view of the liberal amendment policy underlying Rule 15, which states that leave to amend "shall be freely given when justice so requires." See Hunter v. H.D. Lee Co., 563 F. Supp. 1006, 1012 (N.D.N.Y. 1983). Accordingly, Count III of the complaint is dismissed without prejudice and GSGSB is granted leave to file an amended complaint within twenty days from the date of this Memorandum Opinion and Order.
For the reasons stated above, GSGSB's motion for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, on the grounds that there is no genuine issue of material fact as to Count II (quantum meruit) and Count IV (damages on account stated), is denied. The Yankees' cross-motion for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, with respect to Count I (breach of contract) and Count IV (account stated), is granted. The Yankees' cross-motion for partial summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, with respect to Count II (quantum meruit), is denied. GSGSB's motion to dismiss Count III (fraud), pursuant to Rule 9(b) of the Federal Rules of Civil Procedure, is granted and Count III is dismissed without prejudice. GSGSB is granted leave to amend its complaint within twenty days from the date of this Memorandum Opinion and Order. The parties are directed to appear before this Court for a pre-trial conference on Wednesday, November 2, 1994, at 2:00 p.m.
SHIRLEY WOHL KRAM
UNITED STATES DISTRICT JUDGE
Dated: New York, New York
September 28, 1994