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Rapay v. Chernov

United States District Court, S.D. New York

March 6, 2017

EKATERINA RAPAY, Plaintiff,
v.
MICHAEL CHERNOV, GELSEY KIRKLAND, GELSEY KIRKLAND ACADEMY OF CLASSICAL BALLET INC., ANDRE TCHELISTCHEFF, NILAY SHAH, LEAH CAMPBELL, HARRIET TAMEN, KATHERINE REILAND, and GABRIEL BHARATLALL, Defendants.

          For the Plaintiff: Claudius O. Sokenu James Lee Shearman & Sterling LLP.

          For the Defendants: Jeffrey M. Eilender Vitali S. Rosenfeld Schlam Stone & Dolan LLP.

          OPINION AND ORDER

          DENISE COTE UNITED STATES DISTRICT JUDGE.

         Plaintiff Ekaterina Rapay (“Rapay”), a Russian citizen, brings this action premised on diversity jurisdiction against the defendants Michael Chernov (“Chernov”), Gelsey Kirkland (“Kirkland”) and their company, the Gelsey Kirkland Academy of Classical Ballet Inc. (“GKA”) for breach of contract, fraud, quantum meruit, unjust enrichment, and promissory estoppel. The defendants have moved to dismiss the First Amended Complaint (“FAC”) pursuant to Fed.R.Civ.P. 12(b)(6) and 12(b)(1). The defendants also move to strike the request for punitive damages and attorneys' fees from the pleadings pursuant to Fed.R.Civ.P. 12(f). For the reasons set forth below, the defendants' motion to strike is granted, and the motion to dismiss is granted in part.

         BACKGROUND

         The following facts are drawn from the FAC and are construed in favor of the plaintiff. See Keiler v. Harlequin Enters. Ltd., 751 F.3d 64, 68 (2d Cir. 2014).

         Rapay is a professional ballet costume designer. Chernov and his wife Kirkland are the founders of GKA, a New York dance education center. In December 2011, Chernov and Kirkland orally offered to employ Rapay as a costume and set designer for GKA's upcoming production of “The Nutcracker” at a “reasonable rate” and reimburse all her expenses. There was no written contract.

         Rapay began working for GKA in January 2012, but the parties continued to negotiate the terms and scope of her employment through April 2012. According to Rapay, GKA agreed that she would design costumes and sets for “The Nutcracker” and other productions in exchange for compensation at “a rate commensurate with her experience.” Rapay claims such compensation would range from $50, 000 to $75, 000 per year.

         Throughout 2012 and 2013, Rapay provided at least 51 separate costume design sketches and traveled on three separate occasions to GKA's offices in New York to oversee costume design and construction. During Rapay's first trip to New York in April 2012, Chernov took her to the law offices of Frenkel Hershkowitz & Safran LLP (“Frenkel”) to help her obtain a work permit. A Frenkel representative described the documents required to obtain an “O-1” work visa, which is a nonimmigrant visa for certain individuals in the arts and other fields. Chernov informed Rapay that once she assembled the required documents, he would provide the employment information necessary to complete her O-1 visa application.

         In March 2013, during her final visit to New York, Rapay informed Chernov that she had compiled the necessary documents. Accordingly, on March 13, 2013, Chernov's assistant sent Rapay an email containing specific instructions on how to complete the O-1 visa application (the “March 2013 email”). The March 2013 email stated that Rapay would be employed as a full-time “Costume Designer, ” whose job included “designing, sewing and creating various costumes for [GKA's] upcoming Nutcracker” production for “$25, 000.”

         Rapay contacted Chernov and demanded that he pay her $50, 000, not $25, 000. Chernov provided Rapay a “small payment” and, according to the FAC, assured her “that the rest of her compensation would be forthcoming and that they would sign a written contract” on a subsequent visit in the fall of 2013.

         On June 17, 2013, Chernov sent Rapay an email terminating her employment (the “June 2013 email”). In the email, Chernov wrote “I need to clarify for you the reality of GKA's situation in moving forward, ” and explained that GKA would not be using Rapay's designs “except for Arabian girls and Russian lead girl for which [GKA] will credit you of course.” He added that Rapay's designs “for the most part did not fall in with [GKA's] vision” and that “[t]his also means [GKA] will not be able to process your work visa application.” Chernov noted that he was “sure that this will impact our friendship.”

         GKA's production of “The Nutcracker” commenced in December 2013. According to Rapay, videos of the performance reveal that GKA used not only the costumes for the Arabian girls and the Russian lead girl, but also various other costumes designed by Rapay. Rapay sent Chernov a demand letter on January 31, 2014 seeking payment for her work for GKA. Chernov never responded.

         Rapay filed a complaint on June 24, 2016, seeking to recover her unpaid compensation under several contract and quasi-contract theories of liability, including breach of contract, quantum meruit, unjust enrichment, and promissory estoppel, as well as fraud. An amended complaint was filed on August 2, 2016. The defendants filed the present motion to dismiss pursuant to Rules 12(b)(6) and 12(b)(1) on August 17. The motion became fully submitted on November 16.

         DISCUSSION

         When deciding a motion to dismiss, a court must “accept all allegations in the complaint as true and draw all inferences in the non-moving party's favor.” LaFaro v. N.Y. Cardiothoracic Grp., PLLC, 570 F.3d 471, 475 (2d Cir. 2009) (citation omitted). “To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege sufficient facts which, taken as true, state a plausible claim for relief.” Keiler, 751 F.3d at 68. A claim has facial plausibility when “the factual content” of the complaint “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Tongue v. Sanofi, 816 F.3d 199, 209 (2d Cir. 2016) (citation omitted).

         I. Individual Liability of Chernov and Kirkland

         Chernov and Kirkland contend that the contract and quasi-contract claims alleged against them in their personal capacities must be dismissed because the FAC does not allege any personal wrongdoing by either Chernov or Kirkland. It is well-established under New York law that “[p]ersons may not be held personally liable on contracts of their corporations, provided they did not purport to bind themselves individually under such contracts.” Stern v. H. DiMarzo, Inc., 909 N.Y.S.2d 480, 480-81 (App.Div. 2010) (citation omitted). Put differently, “[w]hen an officer or director acts on behalf of his or her corporation, he or she may not be held liable for inducing the corporation to violate its contractual obligations unless his or her activity involves separate tortious conduct or results in personal profit.” Id. at 481 (citation omitted).

         The FAC does not include facts suggesting that Chernov and Kirkland engaged in tortious conduct or intended to bind themselves individually under the contract.[1] Accordingly, the breach of contract and quasi-contract claims against Chernov and Kirkland are dismissed.

         Rapay argues that Chernov and Kirkland benefitted personally from GKA's production of “The Nutcracker” through the advancement of their careers and receipt of salary and benefits from GKA. This is insufficient to support a claim against these individuals due to the alleged breach by their employer of its contract with Rapay.

         II. Breach of Contract

         The defendants argue that the alleged contract is unenforceable for two reasons. First, the defendants contend that it violates New York's statute of frauds because the oral contract was never reduced to writing even though Rapay's employment extended beyond one year. Second, the defendants allege that the contract is unenforceable for lack of definiteness.

         A. Statute of Frauds

         New York's statute of frauds renders void an agreement that has not been reduced to writing if “[b]y its terms [it] is not to be performed within one year from the making thereof.” N.Y. Gen. Obl. Law § 5-701(a)(1). “New York courts generally construe the statute of frauds narrowly, voiding only those oral contracts which by their very terms have absolutely no possibility in fact and law of full performance within one year.” Kroshnyi v. U.S. Pack Courier Servs., Inc., 771 F.3d 93, 110 (2d Cir. 2014) (citing D&N Boening, Inc. v. Kirsch Beverages, Inc., 63 N.Y.2d 449, 454 (1984)). “[W]herever an agreement has been found to be susceptible of fulfillment within that time, in whatever manner and however impractical, the New York Court of Appeals has held the one-year provision of the Statute to be inapplicable, a writing unnecessary, and the agreement not barred.” Id. (citation omitted).

         New York law presumes that an employment agreement that lacks a fixed duration is a “hiring at will, terminable at any time by either party.” Id. (citation omitted). Such agreements are “not covered by the statute of frauds, because they could theoretically be terminated by either party within one year of their making.” Id.

         The alleged oral agreement between Rapay and GKA is not void under the statute of frauds. Nothing in the alleged contract required that Rapay's employment extend beyond a year. She was not required, for example, to continue working for GKA up to and until the production of “The Nutcracker.” She was required to design costumes and sets -- a service which could theoretically have been completed within the course of a year and in advance of the ballet performances.

         GKA contends that the parties contemplated that the work would occur over the course of the 23 months preceding “The Nutcracker” performance. Even if this were the parties' expectation, that is insufficient to void a contract. It remained possible that Rapay's work ...


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