United States District Court, S.D. New York
MITCHELL H. KOSSOFF, Plaintiff,
RICKEY S. FELBERBAUM and FLORIDA FORECLOSURE ATTORNEYS, PLLC, Defendants.
Eric R. Levin, Esq., EISEMAN, LEVINE, LEHRHAUPT & KAKOYIANNIS, P.C., New York, NY, Attorney for Plaintiff MITCHELL H. KOSSOFF.
Howard Essner, Esq., ESSNER & KOBIN, LLP, New York, NY, Attorney for Defendants RICKEY S. FELBERBAUM and FLORIDA FORECLOSURE ATTORNEYS, PLLC.
ROBERT W. STEET, District Judge.
Florida Foreclosure Attorneys ("FFA"), a Florida law firm, and it's owner, Rick S. Felberbaum ("Felberbaum") (collectively, the "Defendants") move to dismiss and strike certain portions of the Complaint of Mitchell Kossoff ("Kossoff" or "Plaintiff"), which alleges that the Defendants owe Plaintiff 22% of FFA's net profits pursuant to an agreement. Kossoff in turn moves for a declaratory judgment voiding a $575, 000 promissory note owed to Defendants.
For the reasons set forth below, Defendants' motion to dismiss is granted in part and denied in part, Defendants' motion to strike is denied, and Kossoff's motion to declare the promissory note void is denied.
Kossoff commenced this lawsuit in New York state court on January 28, 2014.
On February 24, 2014, Defendants removed the case to Federal Court, and on March 3, 2014, Defendants moved to dismiss Plaintiff's Complaint. This motion was heard and marked fully submitted on April 30, 2014.
Felberbaum, a Florida Attorney, is the president and owner of FFA, a default service law firm which represents banks, mortgage lenders, creditors, and mortgage servicing companies. Felberbaum is also the owner of Resource Title Co., Inc., a title insurance company, and Felberbaum & Associates P.A., a law firm specializing in real estate closings (referred to in the Complaint as "the Related Entitles"). (Compl. ¶¶ 10-12.)
Kossoff is a New York attorney specializing in real estate transactions and litigations, with experience in law firm development and management. (Compl. ¶¶ 7-8.)
Kossoff alleges that for almost 25 years, he served as Felberbaum's "trusted business advisor, " in which capacity he rendered certain services and business advice. (Compl. ¶ 15.) According to Kossoff, at the end of 2010, Felberbaum asked Kossoff to help address certain problems that FFA was facing and, in exchange for Kossoff's efforts, Felberbaum "indicated" that he would grant Kossoff 22% of any net profits generated by FFA (referred to in the Complaint as the "Consideration"). Under the agreement, FFA purportedly would not have to pay any money to Kossoff "unless and until FFA was profitable." (Compl. ¶¶ 19, 21, 23.)
In fulfillment of this agreement, Kossoff alleges that in or about May 2011 he agreed to become executive vice president of FFA and began working to resolve the issues that FFA and the Related Entities were facing. (Compl. ¶ 22.) His duties included day to day operation and management of FFA and the Related Entities; assisting in resolving certain litigation against Felberbaum, FFA and the Related Entities; negotiating and securing credit facilities; procuring malpractice insurance; organizing case management, timekeeping and vendor payment systems; and negotiating a lease for office space. As a result of these services, Plaintiff alleges that FFA's gross receipts increased from $3 million in 2010 to over $20 million by the end of 2013. (Compl. ¶¶ 26-27.)
Kossoff further alleges that on April 17, 2012, the parties "formalized their prior oral agreement in a writing which indicated that Kossoff would be paid twenty-two percent (22%) of the net profits of FFA as compensation for his services." (Compl. ¶ 23.)
Separately, Kossoff maintains that Felberbaum advanced payments to Kossoff and to other individuals at Kossoff's direction. These payments were memorialized in a promissory note executed on December 1, 2013, in the principal sum of $575, 000. Kossoff contends that the parties intended these funds to be a set off against money that would be owed under the agreement. (Compl. ¶¶ 24, 28.)
In April 2013, Felberbaum and FFA allegedly terminated Kossoff's position, denied that there was ever an agreement to pay Plaintiff 22% of FFA's net profits, and expected payment under the promissory note. (Compl. ¶ 29.) Kossoff commenced this lawsuit three days before full payment on the promissory note was due.
The Applicable Standard
On a motion to dismiss pursuant to Rule 12(b) (6), all factual allegations in the complaint are accepted as true, and all inferences are drawn in favor of the pleader. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993). The issue "is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 235-36 (1974)).
To survive a motion to dismiss pursuant to Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plaintiffs must allege sufficient facts to "nudge[ ] their claims across the line from conceivable to plausible." Twombly, 550 U.S. at 570. Though the court must accept the factual allegations of a complaint as true, it is "not ...