supposed to be; nor what type of corporate entity was to be created; nor how that entity would be capitalized; nor how or to whom the alleged advance was to be paid.
The indefiniteness of the Letter, however, does not require that the Court conclude that the purported agreement reached at the Meeting must be viewed as an unenforceable agreement to agree. Cf. N.F.L. Insurance by Lines v. B & B Holdings, 874 F. Supp. 606, 614 (S.D.N.Y. 1995) (Leisure J). Benevento v. RJR Nabisco, Inc., 1993 U.S. Dist. LEXIS 6226, 1993 WL 126424 at *4 (S.D.N.Y. April 1, 1993) (Leisure, J.); De Vecchi v. De Vecchi, 34 A.D.2d 790, 311 N.Y.S.2d 530, 531 (2d Dep't 1970).
It is possible that an oral contract was entered into at the Meeting, as plaintiffs maintain, and the Letter merely broadly recites the understanding reached rather then attempting to precisely document the contract.
In the instant motion for summary judgement, viewing the facts alleged by plaintiffs to be true, and viewing those facts in the light most favorable to plaintiffs, this Court cannot conclude, as a matter of law, that the parties did not enter into an oral contract at the Meeting.
The Court, however, finds that defendants' motion to dismiss the first cause of action of plaintiff's complaint should be granted to the extent that the first count names Zacharius as a defendant. Defendants maintain that Zacharius was, at all times, acting in his capacity as an officer of Kensington. Defendants "cannot be held individually liable for a breach of contract [if] they acted in their capacities as officers." Puma Indus. Consulting, Inc. v. DAAL Assocs., Inc., 808 F.2d 982, 986 (2d Cir. 1987); see also Value Time, Inc. v. Windsor Toys, Inc., 709 F. Supp. 436, 438 (S.D.N.Y. 1989) ("Because he was acting in his capacity as an officer, [defendant] cannot be held individually liable for the corporation's alleged breach of contract."); cf. Grappo v. Alitalia Linee Aeree Italiane, S.p.A., 56 F.3d 427, slip op. at 4517 (2d Cir. 1995) ("Immunity extends to officers or employees who induce their corporation to breach a contract."). Plaintiffs merely assert that it is impossible to determine the extent to which Zacharius was acting in a personal or in a corporate capacity. Plaintiffs, however, adduce no evidence indicating that Zacharius was acting in a personal capacity.
Accordingly, this Court must deny defendants' motion for summary judgment dismissing count one of plaintiffs' action as concerns Kensington, but must grant the motion as regards Zacharius.
II. The Other Six Claims
A. The Standard for a Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6) provides for dismissal of an action where a plaintiff has failed to state a claim upon which relief may be granted. In reviewing a motion to dismiss, a court must assume the facts alleged by the plaintiff to be true and must liberally construe them in the light most favorable to the plaintiff. Easton v. Sundram, 947 F.2d 1011, 1014 (2d Cir. 1991), cert. denied, 504 U.S. 911, 112 S. Ct. 1943, 118 L. Ed. 2d 548 (1992). Therefore, "the court should not dismiss the complaint for failure to state a claim 'unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Ricciuti v. N.Y.C. Transit Authority, 941 F.2d 119, 123 (2d Cir. 1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). "The court's task on a Rule 12(b)(6) motion is not to rule on the merits of plaintiffs' claims, but to decide whether, presuming all factual allegations of the complaint to be true, and drawing all reasonable inferences in the plaintiff's favor, the plaintiff could prove any set of facts which would entitle him to relief." Weiss v. Wittcoff, 966 F.2d 109, 112 (2d Cir. 1992) (citations omitted).
B. Claims 2 and 6
Plaintiff's second and sixth claims seek to recover expenses that plaintiffs' allegedly incurred in reliance on the purported agreement. Plaintiffs assert that if there is found to be no contract, then O'Neill should recover, based upon her reasonable reliance upon defendants' promises, her out-of-pocket expenses incurred (the second claim) and the value of the promotional opportunities lost by virtue of her undertaking to promote defendants' books (the sixth claim). The two claims are based on promissory estoppel.
"In New York the elements of a claim for promissory estoppel are: a clear and unambiguous promise; a reasonable and foreseeable reliance by the party to whom the promise is made; and an injury sustained by the party asserting the estoppel by reason of his reliance." Reprosystem, B.V. v. SCM Corp., 727 F.2d 257, 264 (2d Cir.), cert. denied, 469 U.S. 828, 83 L. Ed. 2d 54, 105 S. Ct. 110 (1984) (citations omitted).
Defendants first contend that the absence of a clear and unambiguous promise is a fatal flaw to plaintiff's claim of promissory estoppel.
Secondly, defendants argue that there was no reasonable or foreseeable reliance on plaintiffs' part because O'Neill did not make the expenditures at issue in expectation of reimbursement from defendants.
This Court is unable to conclude, as a matter of law, that no clear promise was made at the Meeting. O'Neill attests that such a promise was made, and she submits subsequent statements by Zacharius and others that could be considered evidence of such a promise. Accordingly, plaintiffs have satisfied adequately their burden of raising a material issue of fact as to whether defendants made an unambiguous promise.
In addition, O'Neill avers that she reasonably relied on the alleged promise in incurring expenses to write the proposed novel and in foregoing endorsement opportunities upon which she otherwise would have capitalized. She maintains that such expenditures and foregone earnings constitute reliance on the purported promise irrespective of whether or not there was a specific promise that particular expenses would be reimbursed or a specific requirement that she could not endorse other products. O'Neill asserts that she incurred the costs at issue in reasonable reliance on the promise of a $ 75,000 advance, and that her sacrifice of other endorsement opportunities in reliance on the promise was reasonable due to the inherent limitations in the number of products which a celebrity can endorse meaningfully. This Court finds that plaintiffs have satisfied adequately their burden of raising a material issue of fact as to whether they reasonably relied on defendants' purported promise.
Consequently, assuming all of the allegations of plaintiffs' complaint to be true and drawing all reasonable inferences in plaintiffs' favor, this Court must find that material issues of fact exist concerning both whether or not an unambiguous promise was made to O'Neill and whether or not she reasonably relied on that promise in incurring expenses and forfeiting endorsement opportunities. Accordingly, defendants' motion to dismiss plaintiffs' second and sixth causes of action must be denied.
C. Claim 3
Plaintiffs' third cause of action asserts a claim in quantum meruit. In order to make out a claim in quantum meruit, plaintiffs must establish (1) plaintiffs' performance of services in good faith; (2) acceptance of the services by the persons to whom such services were rendered; (3) expectation of compensation; (4) and the reasonable value of such services. See Paper Corp. of United States v. Schoeller Technical Papers, 773 F. Supp. 632, 640-41 (S.D.N.Y. 1991); Martin H. Bauman Assocs., Inc. v. H & M Int'l Transp. Inc., 171 A.D.2d 479, 484, 567 N.Y.S.2d 404, 408 (1st Dept. 1991).
Defendants contend that plaintiffs did not perform any services, and that defendants did not receive any benefit. Plaintiffs respond that O'Neill endorsed the Series on various television programs and through nationally distributed print media. If true, such endorsements would constitute services performed by O'Neill, and, further, it is likely that defendants benefited from such services. This Court finds that plaintiffs' pleadings with respect to the third claim are sufficient to withstand defendants' instant motion to dismiss and that issues of fact exist as to whether plaintiffs did furnish services from which defendants benefited.
D. Claim 4
Plaintiffs' fourth claim is one for unjust enrichment. Defendants contend that there can be no unjust enrichment because O'Neill did not confer any benefit upon Kensington. As discussed in this Court's analysis of plaintiffs' third claim, however, this Court determines that material questions of fact exist concerning whether or not plaintiffs conferred a benefit upon defendants. Accordingly, defendants' motion to dismiss plaintiffs' fourth cause of action must be denied.
E. Claim 5
Plaintiffs' fifth cause of action sounds in fraud. Specifically, plaintiffs' complaint states in substance, "by reason of the foregoing, Defendants have defrauded plaintiffs." Complaint at P 45. As the Second Circuit held in Apex Oil Co. v. Belcher Co. of New York, Inc., 855 F.2d 997, 1008 (2d Cir. 1988):
Under New York law, a plaintiff claiming fraud must prove, by clear and convincing evidence, (1) that the defendant made a misrepresentation, (2) as to a material fact, (3) which was false, (4) and known to be false by the defendant, (5) that the representation was made for the purpose of inducing the other party to rely upon it, (6) that the other party rightfully did so rely, (7) in ignorance of its falsity (8) to his injury.
Id. (citations omitted).
Defendants contend that plaintiffs' fraud claim fails to allege the elements of a fraud under New York law, and that under New York law, there is no fraud cause of action based on a breach of contract. Plaintiffs respond that the fifth claim seeks, upon a finding that there is no contract, a determination that defendants are liable for the damages plaintiffs suffered in reliance upon defendants' intentionally deceptive statements about the necessary prerequisites to author a novel for Kensington. Plaintiffs state that had O'Neill known that she needed novel-writing experience to author a book for Kensington, she would not have incurred the expenses at issue nor would she have promoted Kensington and the Series.
The Court notes, however, that plaintiffs' complaint is not pled in the alternative, and the complaint appears to plead a fraud cause of action based on breach of contract. In addition, this Court finds that despite plaintiffs' creative interpretation of their complaint in their memorandum of law, they have failed to plead the necessary elements of a fraud claim.
Accordingly, defendants' motion to dismiss plaintiffs' fifth cause of action must be granted.
F. Claim 7
Plaintiffs' seventh cause of action is for negligent infliction of emotional distress. Plaintiffs state that while damages may not be awarded for an emotional distress claim in a contract action, such damages may be properly sought on fraud claims. See Mon-Shore Management, Inc. v. Family Media, Inc., 584 F. Supp. 186, 195 (S.D.N.Y. 1984). This Court, having found that plaintiffs have not properly stated a cause of action for fraud, must therefore also dismiss plaintiffs' claim for negligent infliction of emotional distress. In addition, in order to show negligent infliction of emotional distress, a plaintiff must establish that the defendant owed her a duty; that the duty was breached; and that emotional harm resulted. See Orzechowski v. Perales, 153 Misc. 2d 464, 475, 582 N.Y.S.2d 341, 349 (Sup. Ct. N.Y. Co. 1992). In the instant action, plaintiffs do not make such allegations in their pleadings.
Accordingly, defendants' motion to dismiss should be granted as to plaintiffs' seventh cause of action.
For the reasons stated above, defendants' motion for summary judgment as to plaintiffs' first cause of action is denied as to defendant Kensington but is granted as to defendant Zacharius. Defendants' motion to dismiss all of plaintiffs' other causes of action is granted with regard to plaintiffs' fifth and seventh causes of action. The parties are advised to appear in Courtroom 18b for a pre-trial status conference at 10:00 a.m. on July 28, 1995.
Dated: June 28, 1995
New York, New York
Peter K. Leisure