Order, Supreme Court, New York County (Herman Cahn, J.), entered on or about July 31, 2008, which granted defendants' motion to dismiss the amended complaint, alleging, inter alia, breach of contract and fraudulent concealment, unanimously affirmed, with costs.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Gonzalez, P.J., Tom, Nardelli, Moskowitz, Renwick, JJ.
Plaintiff L.K. Station Group is a Florida limited liability company in the business of purchasing television stations, with a focus on Hispanic markets. In 2007 it undertook to purchase two television stations in Santa Rosa, California and Bellingham, Washington, for which it required $30 million in financing. On or about July 31, 2007 its broker received a letter from co-defendant Bulltick Capital Markets in which it was represented that co-defendant Quantek Asset Management, LLC, with which Bulltick was affiliated, was committed to provide a loan to fund the purchase of the television stations, and expressed the hope that a "mutually satisfactory asset purchase agreement" could be reached.
On August 20, 2007, Quantek Media and L.K. Station entered into a memorandum of understanding outlining the terms for them to pursue opportunities in the U.S. television and radio markets. Except for certain specified paragraphs, it was agreed that the memorandum of understanding was a "non-binding commitment [and was] submitted for discussion purposes only."
On August 30, 2007, co-defendant Tvestments Ltd., another Bulltick-affiliated defendant (all ten of the defendants are represented by the same law firm), provided L.K. Station with $2 million in initial financing. It is alleged that the next day, L.K. Station, in reliance on the July letter, entered into an asset purchase agreement for the two television stations for the price of $26.6 million.
In an October 1, 2007 letter, Tvestments advised L.K. Station of its commitment to provide the entire principal amount of the financing, up to the amount of $30 million. In pertinent part, the commitment letter contained the following clause:
"You further agree that no Indemnified Party [Tvestments or any of its affiliates] shall have any liability (whether in contract, tort or otherwise) to [L.K. Station] . . . for or in connection with the transactions contemplated hereby, except for direct damages (as opposed to special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings)) determined . . . to have resulted primarily from such Indemnified Party's gross negligence or willful misconduct."
Section 8 of the commitment letter also stated, "You should be aware that Tvestments or one or more of its affiliates may be providing financing or other services to parties whose interests may conflict with yours." Section 9 provided that the agreement was to be governed in accordance with New York law, and recited that "[t]his Commitment Letter sets forth the entire agreement between the parties with respect to the matters addressed herein and supersedes all prior communications, written or oral, with respect hereto."
When L.K. Station sought to close the loan on March 31, 2008, it was advised that Tvestments would not provide financing, purportedly because L.K. Station had failed to close the purchase pursuant to the deadlines set in the asset purchase agreement, and because certain anticipated collateral was impaired.
The foregoing facts form the essence of the claim for breach of contract, including a request for specific performance. Some additional details are necessary for resolution of the claim for fraudulent concealment. L.K. Station claims that when it first met with defendants' representatives, on July 24, 2007, they were emphatic that they had no interest in getting into the media or television business. Yet, it is alleged that in June 28, 2007, defendants had been in communication with representatives from a competitor of L.K. Station, CaribeVision Holdings, Inc., to acquire a competing economic interest in CaribeVision, and failed to disclose these negotiations, which ultimately did result in a partial acquisition in February 2008. L.K. Station claims that it was injured because it pursued its plans to purchase the two television stations in reliance on the belief that defendants were dealing with it alone, and that defendants' failure to lend it the money to complete the acquisition was a result of the surreptitious negotiations.
This action was filed on April 7, 2008. As amended, it alleged four causes of action, only two of which are at issue on this appeal*fn1. The first cause of action is for breach of contract, and seeks either specific performance or damages resulting from the breach and defendants' willful misconduct. The second alleges fraudulent concealment in that some of the defendants had superior knowledge concerning their intent to acquire a competing interest in CaribeVision which barred their obligation to L.K. Station, they deliberately failed to disclose this information, such information was material to L.K. Station's decisions, and L.K. Station reasonably relied and acted upon such mistaken knowledge to its detriment, because it would not have otherwise entered into the contracts.
Defendants moved to dismiss the amended complaint pursuant to CPLR 3211(a)(1) and (7). They sought dismissal of the breach of contract claim on the ground that it was barred by the terms of the commitment letter, as L.K. Station failed to allege facts to show willful ...