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Catskill Associates, L.L.C. v. Benza

May 7, 2009

CATSKILL ASSOCIATES, L.L.C. PLAINTIFF,
v.
RITA K. BENZA, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF AUGUSTINE J. BENZA, DEFENDANT.



MEMORANDUM-DECISION AND ORDER

Plaintiff filed the instant Complaint on June 6, 2008, seeking damages stemming from Defendant's alleged breach of an executory real estate contract. Compl. (Dkt. No. 1). Defendant filed her Answer on August 22, 2008, asserting counterclaims for breach of contract, tortious interference with a prospective contractual relationship, and punitive damages. Answer (Dkt. No. 8). Presently before the Court is Plaintiff's Motion to Dismiss in part Defendant's Counterclaims. Mot. (Dkt. No. 11). For the reasons discussed below, the Motion is granted. However, the Court will grant Defendant leave to replead her counterclaim for tortious interference.

I. BACKGROUND

On February 15, 2008, Plaintiff and Defendant entered into a real property sale agreement which provided that Defendant would sell and Plaintiff would purchase commercial property located at 1179 Vestal Avenue in Binghamton, New York. Compl. ¶ 8 and Ex. 1; Answer ¶ 7. After the execution of the agreement, Plaintiff commissioned a survey of the property. Compl. ¶ 12. The survey revealed an encroachment of approximately one and a half feet arising from a structure located on the lands to the west of the property. Id. ¶ 13 and Ex. 2.

On April 1, 2008, Plaintiff's counsel provided Defense counsel with notice of the encroachment. Compl. ¶ 17 and Ex. 4. On April 21, 2008, Defense counsel responded that this encroachment was de minimus, did not make title to the property unmarketable, and requested that the closing occur as soon as possible. Compl. ¶ 18 and Ex. 5; Answer ¶ 9. On May 7, 2008, Plaintiff's counsel reasserted her belief that the encroachment rendered the property unmarketable and demanded the return of Plaintiff's deposit. Compl. ¶ 19 and Ex. 6; Answer ¶ 10. Defense counsel responded on May 23, 2008, asserting again that the encroachment was de minimus and that his client was unwilling to return the deposit. Compl. ¶ 20 and Ex. 7; Answer ¶¶ 11, 13. Defense counsel also offered that Defendant would negotiate a revocable license with the adjacent property owner to resolve any concerns Plaintiff had about the encroachment. Compl. ¶ 20 and Ex. 7; Answer ¶ 13.

In support of her Counterclaim for tortious interference with a prospective contractual relationship, Defendant alleges that during the period from November 2007 through February 2008, she had specific negotiations with Family Dollar, Inc. ("Family Dollar") as a prospective tenant of the subject building and property located at 1179 Vestal Avenue. Answer ¶ 17. Plaintiff is affiliated with a company that owns property immediately adjacent to the east of the property at issue in this case, and that affiliated company operates a small shopping center on that adjacent property. Compl. ¶ 7; Answer ¶ 18. Defendant alleges that Family Dollar has been a tenant in that shopping center for many years and that the lease agreement between Family Dollar and Plaintiff's affiliated company was about to expire in June 2008. Answer ¶ 19. Defendant further alleges that Family Dollar had begun negotiations with Defendant to lease the property located at 1179 Vestal Avenue, and that in response, "with the specific intent to terminate the defendant's agreement with Family Dollar Inc., [Plaintiff] fraudulently entered into the subject real estate purchase agreement with the defendant[.]" Answer ¶¶ 20-24. Defendant alleges that "plaintiff's actions in misrepresenting their intentions to purchase said property from the defendant were fraudulent and were specifically pursued in order to keep Family Dollar Inc. as a tenant at the shopping center owned by the plaintiff's affiliated company." Id. ¶ 26.

II. STANDARD OF REVIEW

When considering a motion to dismiss pursuant to Rule 12(b)(6), a district court must accept the allegations made by the non-moving party in its pleading as true and "draw all inferences in the light most favorable" to the non-moving party. In re NYSE Specialists Securities Litigation, 503 F.3d 89, 95 (2d Cir. 2007). A party seeking dismissal of a pleading under Rule 12(b)(6) bears a heavy burden, as the question presented by such a motion is not whether the claimant is ultimately likely to prevail, "'but whether the claimant is entitled to offer evidence to support the claims.'" Log On America, Inc. v. Promethean Asset Mgmt. L.L.C., 223 F. Supp. 2d 435, 441 (S.D.N.Y. 2001) (quoting Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d. Cir. 1995) (internal quotation and citations omitted)). Accordingly, counterclaims should be dismissed on a motion brought pursuant to Rule 12(b)(6) only where the defendant has failed to provide some basis for the allegations that support the elements of her claim. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-563, 570 (2007); see also Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir. 2007) ( "In order to withstand a motion to dismiss, a complaint must plead 'enough facts to state a claim for relief that is plausible on its face'") (quoting Twombly, 550 U.S. at 570). "While Twombly does not require heightened fact pleading of specifics, it does require enough facts to 'nudge [the non-moving party's] claims across the line from conceivable to plausible.'" In re Elevator Antitrust Litig., 502 F.3d 47, 50 (2d Cir. 2007) (quoting Twombly, 550 U.S. at 570).

When considering a motion to dismiss a pleading for failure to state a claim, a court "may consider all papers and exhibits appended to the [pleading], as well as any matters of which judicial notice may be taken." Hirsch v. Arthur Andersen and Co., 72 F.3d 1085, 1092 (2d Cir. 1995); see Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991) ("the complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference.") (citation omitted). "'[W]hen a plaintiff chooses not to attach to the complaint or incorporate by reference a [document] upon which it solely relies and which is integral to the complaint,' the court may nevertheless take the document into consideration in deciding the defendant's motion to dismiss[.]" Int'l Audiotext Network, Inc. v. American Tel. and Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995) (quoting Cortec Industries, 949 F.2d at 47); see Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (emphasizing that "a plaintiff's reliance on the terms and effect of a[n external] document in drafting the complaint is a necessary prerequisite to the court's consideration of the document on a dismissal motion; mere notice or possession is not enough."). If a court considers materials other than those listed above, "the motion must be treated as one for summary judgment under Rule 56." FED. R. CIV. P. 12(d); see Global Network Communications, Inc. v. City of New York, 458 F.3d 150, 154-56 (2d Cir. 2006).

In opposition to Plaintiff's Motion to dismiss the counterclaims, Defendant has submitted an affidavit by Domenic A. Mazza ("Mazza"), a licensed commercial real estate broker, along with two exhibits. Dkt. No. 15 and attached exhibits. In her Memorandum of law in opposition to Plaintiff's Motion, Defendant states that the allegations of her counterclaim for tortious interference with prospective contractual business relations "are factually substantiated by the affidavit of Domenic Mazza, the commercial realtor who was very much involved in this transaction." Def.'s Mem. in Opp'n at 5 (Dkt. No. 15). Defendant refers to the affidavit numerous other times throughout her Memorandum. See id.

The Mazza affidavit was not included with Defendant's Answer, and is not incorporated by reference or otherwise relied upon by Defendants in their Answer. Moreover, conversion of the pending Motion to a motion for summary judgment would not be appropriate at this stage of the litigation, as the parties are still conducting discovery on Plaintiff's claims. Accordingly, the Court will not consider the Mazza affidavit or the accompanying exhibits in its determination of Plaintiff's Motion to dismiss Defendant's counterclaims.

III. DISCUSSION

A. Punitive Damages

Under New York law, "[p]unitive damages are not recoverable for an ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights[.]" Rocanova v. Equitable Life Assur. Soc. of U.S., 83 N.Y.2d 603, 613 (1994). A party seeking punitive damages where the claim arises from a breach of contract must demonstrate that (1) defendant's conduct is actionable as an independent tort; (2) the tortious conduct is of an egregious nature; (3) the conduct was directed to the plaintiff; and (4) the conduct is part of a pattern directed at the public generally. New York University v. Continental Ins. Co., 87 N.Y.2d 308, 315-16 (1995) (citing Rocanova, 83 N.Y.2d at 613).

In her Answer, Defendant has not alleged that Plaintiff's conduct was part of a general pattern directed at the public. Nor do Defendant's allegations regarding Plaintiff's alleged wrongful conduct rise to the level of egregiousness necessary to sustain a punitive damages claim. See Rocanova, 83 N.Y.2d at 613 (punitive damages recoverable "where the breach of contract also involves a fraud evincing a high degree of moral turpitude and demonstrat[es] such wanton dishonesty as to imply a criminal indifference to civil obligations") (internal quotations and citations omitted). Defendant's Memorandum includes no argument to show why ...


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