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Benderson v. Northwest Savings Bank

United States District Court, W.D. New York

July 8, 2015

RANDALL BENDERSON and BENDERSON DEVELOPMENT COMPANY, LLC, Plaintiffs,
v.
NORTHWEST SAVINGS BANK and THOMAS K. CREAL IV, Defendants.

DECISION AND ORDER

WILLIAM M. SKRETNY, District Judge.

I. INTRODUCTION

On January 10, 2014, Plaintiffs Randall Benderson and Benderson Development Company, LLC (collectively, "Plaintiffs") commenced this civil action against Northwest Savings Bank ("Northwest") and Thomas K. Creal IV (collectively, "Defendants") for breach of agreements between the parties related to the negotiation and purchase of certain notes and mortgages. Plaintiffs filed a Summons and Complaint in the Supreme Court for the State of New York, Erie County. Defendants removed the action to this Court, asserting federal subject matter jurisdiction based upon diversity of citizenship and amount in controversy. 28 U.S.C. § 1332(a). (Notice of Removal and Complaint, Docket No. 1). Pending before this Court are Defendants' Motions to Dismiss Plaintiffs' Complaint. (Docket Nos. 6, 7). The Motions are fully briefed and the Court finds that oral argument is not necessary. For the reasons stated below, Defendant Northwest's Motion is GRANTED IN PART and DENIED IN PART, and Defendant Creal's Motion is GRANTED.

II. FACTS[1]

The following facts, drawn from the Complaint and the Confidentiality and Non-Disclosure Agreement attached thereto ("Confidentiality Agreement"; Exh. A to Complaint), are assumed true for purposes of Defendants' Motions to Dismiss.[2]

Plaintiff Randall Benderson is the president of Plaintiff Benderson Development Company, LLC. (Confidentiality Agreement p. 5). Defendant Thomas K. Creal IV is a vice president of Defendant Northwest. (Complaint ¶¶ 3, 4). In July 2013, Plaintiffs contacted Northwest about the possibility of purchasing certain notes and mortgages, stated to be worth approximately $4, 000, 000. (Id. ¶¶ 11, 13). The notes and mortgages were secured by a property at 3770 Union Road in Cheektowaga, New York, owned by 3770 Union Road, LLC, and/or Paul F. Rosa (Rosa). (Id. ¶¶ 5, 12). In contemplation of their negotiations, the parties entered into the Confidentiality Agreement on or about July 31, 2013 (Id. ¶ 14), which was executed by Benderson and Creal (Confidentiality Agreement p. 5), and states that it is:

"by and between Northwest Savings Bank (including its parent, subsidiaries and affiliated companies, collectively, "Northwest"), and Mr. Randall Benderson... (including any affiliated companies, trusts or legal entities he has an interest in, collectively, the "Recipient")." (Id. p. 1)

It further provides, in relevant parts:

"WHEREAS, Northwest and the Recipient are exploring the possible sale of loans and of certain other assets of Northwest (the "Project")" (Id.)
"SECTION 4. Neither party will disclose to any person or entity the fact that the Confidential Information has been made available, that discussions or negotiations are taking place or have taken place between the parties concerning a possible sale or any of the terms, conditions, or other facts with respect to any such possible sale, including the status thereof." (Id. p. 2) ("Section 4").
"SECTION 13. This Agreement does not constitute an agreement or commitment to sell or to purchase any assets. Any arrangement relating to the Project is subject to approval by the senior management of Northwest and Recipient and the execution and delivery of a definitive agreement. Northwest and Recipient reserve the right to, in its sole discretion, reject any and all proposals regarding the Project and terminate discussions, and either may negotiate and enter into an agreement with another party with respect to any transaction, including one similar in nature to or containing part or all of the Project, at any time and without notice to the other." (Id. p. 4) ("Section 13").

The parties' negotiations took place primarily from August 2013 through December 2013. (Complaint ¶¶ 16-20). During the same time frame, Benderson and Rosa were in contact about an unrelated matter. (Id. ¶ 21). In an email to Benderson in December 2013, Rosa indicated that he knew Plaintiffs had been negotiating with Defendants regarding the "mortgage on Union Road." (Id. ¶ 22). Plaintiffs had not disclosed any information about the negotiations to third parties and thus believed that Rosa learned the information from Defendants. (Id. ¶ 23). Plaintiffs allege that Benderson "became concerned" that Defendants were using their negotiations with Plaintiffs as leverage to obtain a better deal elsewhere. (Id. ¶ 24). Later in December, Benderson called Creal, who confirmed that Defendants had told Rosa about their negotiations with Plaintiff. (Id. ¶ 25). Creal stated Defendants' position that the Confidentiality Agreement only limited Plaintiffs' ability to disclose confidential information but not Defendants' ability to do so. (Id. ¶ 26). Plaintiffs disagreed with this assertion, but continued to negotiate with Defendants for the purchase of the notes and mortgages. (Id. ¶ 27). Benderson asked Creal to get back to him with a proposed price. (Id.). On or before December 16, 2013, Benderson and Creal agreed to a deal over the phone: Creal made an offer to sell the notes and mortgages to Benderson Development Company, LLC for $3, 050, 000, with Plaintiffs to receive $70, 000 that was then being held in escrow. (Id. ¶ 28). Benderson told Creal that he had a deal, and they agreed to close as soon as possible. (Id. ¶ 29). The parties exchanged names of closing attorneys, who were subsequently in contact with each other about finalizing the deal and preparing closing documents. (Id. ¶¶ 30-34). Then, on or about December 30, 2013, Creal called Benderson to tell him that Northwest would not go forward with the agreement to sell the notes and mortgages and that the Defendants had decided to go "in a different direction." (Id. ¶ 35).

III. DISCUSSION AND ANALYSIS

Plaintiffs assert two causes of action. The first claim is against Northwest for breach of an oral contract for the purchase of the notes and mortgages. Plaintiffs maintain that Benderson and Creal reached an enforceable oral agreement, which Northwest subsequently breached by refusing to go forward with the sale. (Id. ¶¶ 38, 39). The second cause of action is for breach of the Confidentiality Agreement. Plaintiffs bring this claim against both Northwest and Creal for disclosing the fact of the parties' negotiations to ...


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