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Travelsavers Enterprises, Inc. v. Analog Analytics, Inc.

Supreme Court of New York, Second Department

April 19, 2017

Travelsavers Enterprises, Inc., doing business as Travelsavers Partner Services, appellant,
v.
Analog Analytics, Inc., et al., respondents, et al., defendant. Index No. 602696/13

          Kasowitz, Benson, Torres & Friedman LLP, New York, NY (Michael Paul Bowen, Bradley Peter Lerman, and Stephen P. Thomasch of counsel), for appellant.

          Hogan Lovells U.S. LLP, New York, NY (Marc J. Gottridge, Ira M. Feinberg, and Marisa H. Lenok of counsel), for respondents Analog Analytics, Inc., Barclays Bank Delaware, and Barclays, PLC, and Ropers Majeski Kohn Bentley P.C., New York, NY (Geoffrey W. Heineman and Jung H. Park of counsel), for respondent Analog Analytics, Inc. (one brief filed).

          MARK C. DILLON, J.P., SANDRA L. SGROI, SYLVIA O. HINDS-RADIX, JOSEPH J. MALTESE, JJ.

          DECISION & ORDER

         In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals from (1) so much of an order of the Supreme Court, Nassau County (Driscoll, J.), entered December 4, 2015, as denied its cross motion to compel the production of additional documents, (2) an order of the same court entered February 24, 2016, which granted the motion of the defendants Analog Analytics, Inc., Barclays Bank Delaware, and Barclays, PLC, for summary judgment dismissing the first and third causes of action, and (3) a judgment of the same court entered March 17, 2016, which, upon an order of the same court entered July 22, 2014, granting those branches of the motion of the defendants Analog Analytics, Inc., Barclays Bank Delaware, and Barclays, PLC, which were pursuant to CPLR 3211(a) to dismiss the second, fourth, fifth, sixth, and seventh causes of action insofar as asserted against them, and to strike the plaintiff's demands for damages in excess of damages recoverable pursuant to a damages limitation clause in the contract, and granting the motion of the defendant Kenneth Kalb to dismiss the complaint insofar as asserted against him, and upon the order entered February 24, 2016, is in favor of the defendants Analog Analytics, Inc., Barclays Bank Delaware, Barclays, PLC, and Kenneth Kalb and against it dismissing the complaint insofar as asserted against them.

         ORDERED that the appeals from the orders entered December 4, 2015, and February 24, 2016, are dismissed; and it is further, ORDERED that the judgment is modified, on the law, by deleting the provisions thereof dismissing the first, second, fifth, sixth, and seventh causes of action insofar as asserted against the defendants Analog Analytics, Inc., Barclays Bank Delaware, and Barclays, PLC, and striking the plaintiff's demands for damages in excess of damages recoverable pursuant to a damages limitation clause in the contract; as so modified, the judgment is affirmed, those branches of the motion of the defendants Analog Analytics, Inc., Barclays Bank Delaware, and Barclays, PLC, which were pursuant to CPLR 3211(a) to dismiss the second, fifth, sixth, and seventh causes of action insofar as asserted against them, and to strike the plaintiff's demands for damages in excess of damages recoverable pursuant to a damages limitation clause in the contract, and that branch of the motion of the defendants Analog Analytics, Inc., Barclays Bank Delaware, and Barclays, PLC, which was for summary judgment dismissing the first cause of action are denied, the first, second, fifth, six, and seventh causes of action are reinstated against the defendants Analog Analytics, Inc., Barclays Bank Delaware, and Barclays, PLC, and the orders entered July 22, 2014, and February 24, 2016, are modified accordingly; and it is further, ORDERED that the plaintiff is awarded one bill of costs payable by the defendants Analog Analytics, Inc., Barclays Bank Delaware, and Barclays, PLC.

         The appeals from the orders must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 N.Y.2d 241, 248). The issues raised on the appeals from the orders are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).

         In January 2012, the plaintiff, a travel marketing company, entered into a contract with the defendant Analog Analytics, Inc. (hereafter Analog), in which they agreed to work together to advertise and market travel deals to consumers through electronic and other media. The defendant Kenneth Kalb is the former chief executive officer of Analog. The defendant Barclays Bank Delaware acquired Analog in May 2012. The defendant Barclays, PLC, is the corporate parent of Barclays Bank Delaware and Analog.

         The plaintiff claims that Analog misrepresented its capabilities prior to entering into the contract. Following the execution of the contract, the plaintiff made technical personnel available to Analog to enable electronic communication between marketing systems. The plaintiff claims that Analog failed to distribute offers prepared by the plaintiff, and ultimately attributed its inability to perform to the fact that it was required to cater to the needs of its parent companies. The plaintiff further alleges that Analog then engaged in competition with the plaintiff, allegedly using the plaintiff's trade secrets.

         The plaintiff commenced this action asserting, inter alia, causes of action alleging breach of contract, breach of the covenant of good faith and fair dealing, tortious interference with contract, fraudulent inducement, unjust enrichment, misappropriation of trade secrets, and unfair competition. Analog, Barclays Bank Delaware, and Barclays, PLC (hereinafter collectively the defendants), and Kalb separately moved pursuant to CPLR 3211(a)(7), inter alia, to dismiss the complaint insofar as asserted against each of them. In an order entered July 22, 2014, the Supreme Court granted Kalb's motion to dismiss the complaint insofar as asserted against him, and granted those branches of the defendants' motion which were pursuant to CPLR 3211(a)(7) to dismiss the second cause of action, which alleged breach of the covenant of good faith and fair dealing, the fourth cause of action, which alleged fraudulent inducement, the fifth cause of action, which alleged unjust enrichment, the sixth cause of action, which alleged misappropriation of trade secrets, and the seventh cause of action, which alleged unfair competition, insofar as asserted against them. The court further ruled that the plaintiff's damages for breach of contract, alleged in the first cause of action, if any, would be limited by a limitations clause in the contract, and therefore, granted that branch of the defendants' motion which was to strike the plaintiff's damages in excess of the limitations clause. The court further granted dismissal of the fourth cause of action, which alleged fraudulent inducement, as barred by a disclaimer clause in the contract against representations and warranties not expressly set forth in the contract.

         Thereafter, the defendants moved for summary judgment dismissing the first cause of action, which alleged breach of contract, and the third cause of action, which alleged tortious interference with contract insofar as asserted against them. The Supreme Court granted that motion in an order entered February 24, 2016. Judgment was entered accordingly in favor of the defendants and Kalb, dismissing the complaint insofar as asserted against them.

         On a motion to dismiss pursuant to CPLR 3211(a)(7), a court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 N.Y.2d 83, 87-88; Neckles Bldrs., Inc. v Turner, 117 A.D.3d 923, 924; Robertson v Wells, 95 A.D.3d 862; Sinensky v Rokowsky, 22 A.D.3d 563, 564). " Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss'" (Landon v Kroll Lab. Specialists, Inc., 91 A.D.3d 79, 82, affd 22 N.Y.3d 1, quoting EBC I, Inc. v Goldman, Sachs & Co., 5 N.Y.3d 11, 19). Rather, a court must "determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 N.Y.2d at 87-88; see Sokoloff v Harriman Estates Dev. Corp., 96 N.Y.2d 409, 414).

         Contrary to the Supreme Court's conclusion, the cause of action alleging breach of the covenant of good faith and fair dealing is not duplicative of the cause of action alleging breach of contract, or the other causes of action in the complaint, since it alleges that Analog engaged in conduct with Barclays Bank Delaware and its parent corporation to realize gains from the plaintiff, while depriving the plaintiff of all benefits of the contract (see Elmhurst Dairy, Inc. v Barlett Dairy, Inc., 97 A.D.3d 781, 784).

         The elements of a cause of action to recover for unjust enrichment are " (1) the defendant was enriched, (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'" (GFRE, Inc. v U.S. Bank, N.A., 130 A.D.3d 569, 570, quoting Mobarak v Mowad, 117 A.D.3d 998, 1001). " [T]he theory of unjust enrichment lies as a quasi-contract claim' and contemplates an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties'" (Georgia Malone & Co., Inc. v Rieder, 19 N.Y.3d 511, 516, quoting IDT Corp. v Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132, 142 [internal quotation marks omitted]). "Although privity is not required for an unjust enrichment claim, a claim will not be supported if the connection between the parties is too attenuated" (Mandarin Trading Ltd. v Wildenstein, 16 N.Y.3d 173, 182, citing Sperry v Crompton Corp., 8 N.Y.3d 204, 215). Here, the plaintiff alleged that Barclays Bank Delaware acquired 100% of the shares of Analog. The complaint further alleged that in usurping and diverting Analog personnel and resources away from the contract, Barclays Bank Delaware obtained the plaintiff's trade secret information that had been shared by the plaintiff in good faith with Analog, using the contract between Analog and the plaintiff as a ruse to do so. These allegations were sufficient, on the motion to dismiss pursuant to CPLR 3211(a), to support a cause of action to recover damages for unjust enrichment.

         Further, the allegations in the complaint were sufficient to state a cause of action to recover damages for unfair competition (see Parekh v Cain, 96 A.D.3d 812, 816; Beverage Mktg. USA, Inc. v South Beach Beverage Co., Inc., 20 A.D.3d 439) and ...


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