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Bruce Ovitz, &C v. Bloomberg L.P.

March 27, 2012


The opinion of the court was delivered by: Jones, J.:

This opinion is uncorrected and subject to revision before publication in the New York Reports.

In June 2000, plaintiff Bruce Ovitz, an Illinois resident, entered into a two-year subscription agreement with defendant Bloomberg L.P. (Bloomberg) to lease a desktop terminal, software and other equipment to access real-time financial information services offered by the company. The contract provided that it "shall be automatically renewed for successive two-year periods" unless either the lessee (plaintiff) or lessor (Bloomberg) decided to terminate prior to renewal "by giving not less than 60 days' prior written notice to the other."

After the term of the original agreement expired in June 2002, plaintiff continued to use the equipment and financial services, without complaint, until September 15, 2008 when he contacted a Bloomberg sales representative to apprise the company that he "no longer wished to subscribe to [Bloomberg's] services, and wanted to terminate as of the end of the month." According to plaintiff's complaint, he was informed by the Bloomberg representative that the agreement had automatically renewed until June 15, 2010 and plaintiff would be obligated to remit periodic payments through the termination date, or pay an early termination fee equivalent to a year's worth of service ($18,720). Plaintiff also alleges that Bloomberg declared that it was their "standard policy not to give its subscribers any advance notice of the automatic renewal provision or deadline."

Plaintiff sent written notice to Bloomberg on October 7, 2008, reiterating his desire to terminate the agreement. Bloomberg, in turn, did not terminate the subscription service or remove the equipment, but instead, reaffirmed its view that the agreement had automatically renewed and sent an invoice on October 23, 2008 requesting payment for the next three months of service. In an ensuing exchange of e-mails, Bloomberg sent plaintiff an invoice for past due payments in the sum of $5,699.70. Plaintiff replied "as [I] have said repeatedly since [S]ept 08, [I] no longer want to subscribe[] please disconnect my software and pick up your keyboard." Due to plaintiff's nonpayment, Bloomberg claimed that he had breached the terms of the contract and sent a notice of termination, advising that the nonpayment violated paragraph 3 (a) of the agreement and as such, "unless Bloomberg L.P. Accounting receives payment in full of all past due invoices by no later than 5:00 PM on 12/15/2008 the Agreement will be terminated and your Bloomberg equipment will be removed and returned." Bloomberg transmitted a subsequent e-mail demanding immediate payment for past due amounts, including an additional $16,470 charge for termination of the contract.

On December 16, 2008, plaintiff commenced the instant putative class action, alleging a violation of General Obligations Law §§ 5-901 and 5-903; breach of contract; unjust enrichment; negligent misrepresentation; violation of General Business Law § 349; and seeking declaratory and injunctive relief. Two weeks after plaintiff filed suit, Bloomberg "as an accommodation[,] waive[d] the early termination buy-out" and "waiv[ed] collection fees."

Supreme Court granted, in part, Bloomberg's pre-answer motion to dismiss pursuant to CPLR 3211 (a)(7), dismissing plaintiff's breach of contract, unjust enrichment and negligent misrepresentation claims. The court, however, found an implied private right of action under General Obligations Law §§ 5-901 and 5-903 that "support[ed] a claim that the agreement was not properly renewed beyond the expiration date of the initial term, even if plaintiff accepted Bloomberg services." Moreover, although acknowledging plaintiff's out-of-state residence, the court permitted his General Business Law § 349 cause of action to survive on the ground that the complaint contained sufficient factual allegations to support a claim of deceptive business acts by Bloomberg within the State of New York. Finally, the court concluded that plaintiff's claims for declaratory judgment and a permanent injunction, enjoining Bloomberg from engaging in the alleged conduct, were supported by the existence of a justiciable controversy and irreparable harm, respectively.

The Appellate Division unanimously reversed, granting Bloomberg's motion in its entirety and dismissing plaintiff's complaint (77 AD3d 515 [1st Dept 2010]). The court remarked that Bloomberg's failure to comply with the mandates of sections 5-901 and 5-903 rendered its automatic renewal provision inoperative and unenforceable, but observed that this alone did not warrant the maintenance of plaintiff's complaint as he failed to allege "that he paid for services he did not receive" (id. at 516) Plaintiff's General Business Law § 349 claim was deemed meritless because he was not deceived in New York State and failed to plead actual injury suffered as a result of the alleged deceptive practices. Finally, as Bloomberg did not commence enforcement proceedings against plaintiff and waived its collection of payments and fees, there was no justiciable controversy or irreparable harm supporting equitable relief.

This Court granted plaintiff leave to appeal (16 NY3d 705 [2011]), and we now affirm.

In the context of a CPLR 3211 motion to dismiss, even affording plaintiff every favorable inference, as we must, when reviewing the pleadings and factual allegations of his complaint (see Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 178 [2011]; Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Morone v Morone, 50 NY2d 481, 484 [1980]), plaintiff's failure to identify a cognizable injury proves fatal to his action against Bloomberg.

Assuming, without deciding, that an implied private right of action lies pursuant to General Obligations Law §§ 5-901 and 5-903,*fn1 plaintiff's claim was rightly dismissed because he has not suffered any harm as a result of Bloomberg's alleged practices. Plaintiff did not pay any service termination fees and, as the Appellate Division noted, he did not pay for services he did not receive; thus, no monetary damages were incurred (see Ludl Elecs. Prods. v Wells Fargo Fin. Leasing, 6 AD3d 397 [2d Dept 2004]; Concourse Nursing Home v Axiom Funding Group, 279 AD2d 271 [1st Dept 2001]). Plaintiff contends that he suffered damages because he sought to cancel his agreement as of September 15, 2008, but had pre-paid for services through September 30, 2008. However, his complaint belies this argument as it pleads that plaintiff had notified Bloomberg that he "wanted to terminate [services] as of the end of the month." Further, despite the complaint's allegation that plaintiff's credit rating was impaired, Bloomberg's concession that the automatic renewal provision clause was rendered unenforceable and waiver of its claims to termination fees ceased any threat of injury.

Plaintiff's General Business Law § 349*fn2 claim must be similarly dismissed for lack of injury. It is well settled that a prima facie showing requires allegations that a "defendant is engaging in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof" (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 [1995] [emphasis added]; see also City of New York v Smokes-Spirits.Com, Inc., 12 NY3d 616, 623 [2009]; Varela v Investors Ins. Holding Corp., 81 NY2d 958, 961 [1993]).

Finally, the Appellate Division properly dismissed plaintiff's claims for equitable relief. In light of the absence of actual injury and Bloomberg's waiver of its claims, there is neither a justiciable controversy upon which a declaratory judgment can be rendered, nor the irreparable harm necessary for injunctive relief (see American Ins. Assn. v Chu, 64 NY2d 379, 383 [1985]; Cuomo v Long Island Lighting Co., 71 NY2d 349, 354 [1988]; CPLR 6301; Kane v Walsh, 295 NY 198, 205-206 [1946]; Parry v Murphy, 79 AD3d 713, 715-716 [2d Dept 2010]).

Accordingly, the order of the Appellate Division should be ...

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