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MSL Productions, Inc. v. IMR Group LLC

Supreme Court of New York, Nassau County

September 4, 2013

MSL PRODUCTIONS, INC. and Gary Cioffi, Plaintiffs,
v.
IMR GROUP LLC d/b/a Jack Russell Group, Ira Waks, Richard Rathe, Glenn Mark, Jonathan Waks, individually and in his capacity as Executor of the Estate of Ira Waks and Brooks Nelson, Defendants.

[971 N.Y.S.2d 193] Jaspan Schlesinger, LLP, Linda S. Agnew, Esq., Garden City, for plaintiffs.

Garvey Schubert Barer, LLP, Andrew J. Goodman, Esq., New York, for defendants.

VITO M. DeSTEFANO, J.

Introduction

The Defendants move pursuant to CPLR 2221(d) to reargue that branch of their prior " motion for summary judgment dismissing the fifth cause of action" (breach of contract claim), which was denied in a Decision and Order of this court dated March 8, 2012 (" prior order" ), and, upon reargument, dismissing the fifth cause of action.

For the reasons that follow and to the extent outlined herein, the court grants reargument and, upon reargument, grants the branch of the Defendants' motion seeking dismissal of the fifth cause of action for breach of contract (CPLR 3211[a][5] ).

Background

Initially, the court notes that in the underlying motion, the Defendants sought dismissal of the breach of contract cause of action pursuant to, inter alia, CPLR 3212. However, the court, in its prior order, denied that branch of the motion which sought summary judgment inasmuch as the Defendants failed to annex a copy of the answer to their motion papers as required by CPLR 3212(b). The instant motion, therefore, to the extent that it seeks for reargument of the branch of the prior motion for summary judgment, cannot establish that the court overlooked or misapprehended the law in this regard. [1]

In the underlying motion, the Defendants also sought dismissal pursuant to CPLR 3211(a)(7). Specifically, the Defendants argued that the oral agreement which is the subject of this action violated the Statute of Frauds insofar as it could [971 N.Y.S.2d 194] not be performed within one year. The court denied this branch of the motion, analyzing it under CPLR 3211(a)(7) in accordance with the parties' arguments and submissions. However, the correct analysis should have been under CPLR 3211(a)(5), which specifically lists the Statute of Frauds as a defense thereunder.

Analysis

General Obligations Law § 5-701(a)(1) provides that every " agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith * * * if such agreement * * * by its terms is not to be performed within one year from the making thereof."

In its prior order, the court concluded that the subject agreement violated the Statute of Frauds considering that it was an oral agreement to pay commissions over a three-year period. The court, nevertheless, denied the branch of Defendants' motion seeking dismissal of the breach of contract cause of action in light of the potential applicability of the doctrine of part performance (Prior Order at pp. 4-5).

In the instant motion, the Defendants assert that the court should dismiss the breach of contract cause of action because of the numerous cases establishing that " the part performance exception does not apply to General Obligations Law § 5-701(a)(1)" (Affirmation in Support at ¶ 4).

The Defendants are correct that there is ample case law supporting the conclusion that the doctrine of part performance does not apply to General Obligations Law § 5-701, but, rather, is limited to real estate transactions (or other statutes which delineate the exception), and more specifically, to salvaging oral conveyances of real property otherwise invalid under General Obligations Law § 5-703.[2] In this regard, the Court of Appeals has explicitly stated that it has never treated the doctrine of part performance as an exception to General Obligations Law § 5-701. Specifically, in Messner Vetere Berger McNamee Schmetterer Euro RSCG v. Aegis Group, 93 N.Y.2d 229, fn. 1, 689 N.Y.S.2d 674, 711 N.E.2d 953 [1999] [" Messner " ], the Court of Appeals noted that the part performance exception to the Statute of Frauds is " wholly grounded upon General Obligations Law § 5-703" and " that it had not recognized a parallel judicially-created part performance exception to [General Obligations Law] § 5-701" .

In Stephen Pevner, Inc. v. Ensler, 309 A.D.2d 722, 766 N.Y.S.2d 183 [1st Dept. 2003], the First Department, citing Messner, stated that the part-performance exception to the Statute of Frauds " applies to General Obligations Law § 5-703, which deals with real-estate transactions, but it has not been extended to General Obligations Law § 5-701" ( but see Carey & Associates v. Ernst, 27 A.D.3d 261, 810 N.Y.S.2d 475 [1st Dept. 2006] [court applied a part performance exception analysis to ascertain whether the plaintiff's part performance was unequivocally referable to an oral agreement which would render the agreement enforceable notwithstanding its unenforceability pursuant to General Obligations Law § 5-701(a)(2) ]; Travis v. Fallani and Cohn, 292 A.D.2d 242, 739 N.Y.S.2d 675 [1st Dept. 2002] [parties' conduct demonstrated a non-real estate related oral agreement unequivocally referable to the agreement which was not barred by the Statute of Frauds] ).

[971 N.Y.S.2d 195] According to the Third Department in Valentino v. Davis, 270 A.D.2d 635, 637, 703 N.Y.S.2d 609 [3d Dept. 2000], " [t]o the extent that plaintiff attempts to avoid the Statute of Frauds defense by arguing that the doctrine of part performance should be applied, we reject this argument. The Court of Appeals has recently clarified that the doctrine of part performance cannot save contracts governed by General Obligations Law § 5-701" and that in view of the Court of Appeals' pronouncement in Messner, " we hold that part performance is not a viable option to salvage plaintiff's breach of contract claim."

And, in American Tower Asset Sub, LLC v. Buffalo-Lake Erie Wireless Systems Co., 104 A.D.3d 1212, 961 N.Y.S.2d 667 [4th Dept. 2013], the Fourth Department ruled that the doctrine of part performance was inapplicable to defeat a letter of intent agreement which was barred by General Obligations Law § 5-701(a)(1) of the Statute of Frauds. In so concluding, the Court stated that, to the extent it had held in the past that the doctrine of part performance was applicable to acts governed by section 5-701 of the General Obligations Law, " those cases are no longer to be followed" ( Id. at 1212-13, 961 N.Y.S.2d 667).

In contrast, the Second Department has applied the part performance doctrine to agreements that violated the Statute of Frauds insofar as such agreements could not be performed within one year.[3] Recently, in EDP Hospital Computer Systems, Inc. v. Bronx-Lebanon Hospital Center, 13 A.D.3d 476, 477-78, 789 N.Y.S.2d 50 [2d Dept. 2004] (" EDP " ), the Second Department held as follows:

The Supreme Court also properly denied the branch of the defendant's cross motion which was for summary judgment dismissing the plaintiff's remaining causes of action for failure to comply with the statute of frauds. In its amended complaint, the plaintiff averred that in or about December 1987 it entered into an oral agreement with the defendant to provide certain computer services. Although the original agreement allegedly was for an indefinite term and could be terminated upon reasonable notice, the plaintiff claimed that in November 1991 the parties orally agreed to continue the agreement for at least two additional years. After the defendant established it prima facie entitlement to summary judgment by tendering evidence that the alleged oral agreement failed to comply with the provisions of General Obligations Law § 5-701(a)(1), the plaintiff, in opposition, submitted evidence of partial performance in reliance upon, and unequivocally referable to, the oral agreement. Such evidence was sufficient to raise an issue of fact as to whether the oral agreement was removed from the statute of frauds ( see Gerry's Foods of Oceanside v. Blue Ridge Farms, 292 A.D.2d 417, 738 N.Y.S.2d 891 [2d Dept. 2002]; [4] [971 N.Y.S.2d 196] Brady v. Helmsley, 246 A.D.2d 486, 668 N.Y.S.2d 198 [1st Dept. 1998]; [5] cf. Messner Vetere Berger McNamee Schmetterer Euro RSCG v. Aegis Group, 93 N.Y.2d 229, 689 N.Y.S.2d 674, 711 N.E.2d 953 [1999] ).

Under the circumstances, the court would be constrained to follow EDP, especially considering that the Second Department specifically rejected appellant's argument therein that the " doctrine of part performance does not apply to contracts, such as the alleged contract in this case, that cannot be performed within one year of their making and that are therefore governed by General Obligations Law § 5-701. Rather, it is limited to conveyances and contracts concerning real property that are governed by General Obligations Law § 5-703" (Appellant's Reply Brief in EDP at pp. 11-12, 2004 WL 3392386). Also significant is the Second Department's " cf." citation to the Court of Appeals' decision in Messner Vetere Berger McNamee Schmetterer Euro RSCG v. Aegis Group, supra, thus underscoring the Second Department's expanded application of the part performance doctrine.

Notwithstanding the foregoing, the court notes that the doctrine of part performance is itself subject to an exception that precludes its application here. Significantly, it has been held that where an action " is pleaded as one at law, and seeks only money damages, without any specific prayer for equitable relief, the plaintiff cannot rely on the doctrine of part performance to defeat the statute of frauds defense" ( Zito v. County of Suffolk, 106 A.D.3d 814, 964 N.Y.S.2d 644 [2d Dept. 2013]; see also Sparks Associates, LLC v. North Hills Holding Co. II, LLC, 94 A.D.3d 864, 941 N.Y.S.2d 695 [2d Dept. 2012] [part performance may be sufficient in some circumstances to overcome the Statute of Frauds, " but only in an action for specific performance" ]; Stainless Broadcasting Co. v. Clear Channel Broadcasting Licenses, L.P., 58 A.D.3d 1010, 871 N.Y.S.2d 468 [3d Dept. 2009]; Farash v. Sykes Datatronics, Inc., 90 A.D.2d 965, 456 N.Y.S.2d 556 [4th Dept. 1982] [" equitable claim of part performance cannot be applied in an action at law" ]; AmJur Statute of Frauds § 296 [" doctrine of part performance is purely an equitable doctrine, unrecognized at law, and accordingly will not sustain an action at law based on a contract within the Statute of Frauds. Thus, the part performance exception to the Statute of Frauds is inapplicable in a suit where only money damages are sought" ] ).[6]

[971 N.Y.S.2d 197] At bar, the complaint does not seek specific performance of the relevant oral agreement but only money damages. This distinguishes the instant matter from EDP, wherein the plaintiffs advanced claims for both breach of contract and specific performance.[7]

Accordingly, it is hereby ordered that the Defendants' motion to reargue is granted and, upon reargument, the court grants that branch of the underlying motion seeking dismissal of the fifth cause of action for breach of contract and the cause of action is dismissed.

This constitutes the decision and order of the court.


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