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In the Context of a Pre-Answer Motion to Dismiss, the Statute of Frauds Barred Actions Stemming from Advising Defendants in the Actual Negotiation of a Business Opportunity, But Did Not Bar Actions Stemming from Advising Defendants Whether to Negotiate a Business Opportunity

The Court of Appeals, in a full-fledged opinion by Judge Fahey, determined, in the context of a pre-answer motion to dismiss, the statute of frauds did not bar the causes of action which stemmed from plaintiff’s advising defendants whether to negotiate a business opportunity, as opposed to the causes of action stemming from plaintiff’s advising defendants in the actual negotiation of a business opportunity (which were barred by the statute of frauds).

Here we are specifically concerned with General Obligations Law § 5-701 (a) (10), which “appl[ies] to a contract implied in fact or in law to pay reasonable compensation” and which provides that “[e]very 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, or by his lawful agent, if such agreement, promise or undertaking . . . [i]s a contract to pay compensation for services rendered in . . . negotiating the purchase . . . of any real estate or interest therein, or of a business opportunity, business, its good will, inventory, fixtures or an interest therein . . . .” … . * * *

… [T]he allegations with respect [some of the projects] could be construed as seeking recovery for work performed so as to inform defendants whether to partake in certain business opportunities, that is, whether to negotiate. (emphasis added) To the extent the causes of action are based on such allegations, they are not barred by the statute of frauds.  JF Capital Advisors, LLC v Lightstone Group, LLC, 2015 NY Slip Op 05622, CtApp 7-1-15

 

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