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PLAINTIFF REAL ESTATE BROKER’S CAUSES OF ACTION (SEEKING THE REAL ESTATE COMMISSION) AGAINST THE BUYERS WHO SUBSEQUENTLY BOUGHT THE PROPERTY USING A DIFFERENT BROKER SHOULD HAVE BEEN DISMISSED; THE QUANTUM MERUIT, TORTIOUS INTERFERENCE WITH CONTRACT AND FRAUD CAUSES OF ACTION WERE NOT MADE OUT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the quantum meruit, tortious interference with contract and fraud causes of action should have been dismissed. Plaintiff, a real estate broker, had made an offer on sellers’ property on behalf of the Sorkin defendants which was rejected. Subsequently the Sorkin defendants, using a different broker, made another offer on the sellers’ property which was accepted. Plaintiff sued for the brokerage commission. The tortious interference with contract cause of action should have been dismissed because the Sorkins did not procure a breach of contract. The quantum meruit cause of action should have been dismissed because plaintiff was not a proximate, as opposed to a remote and indirect, link to the consummation of the sale. The fraud cause of action should have been dismissed because plaintiff could not have detrimentally relied on any alleged misrepresentation by the Sorkins that they were not longer interested in the property:

… [T]he Sorkin defendants demonstrated … that the plaintiff’s sole efforts consisted of some brief contacts with the sellers and the Sorkin defendants, and that after the sellers rejected the offers obtained by the plaintiff from the Sorkin defendants, no further negotiations took place between the plaintiff and the sellers regarding a possible sale to the Sorkin defendants. Subsequently, the sellers negotiated a sale of the subject property to the Sorkin defendants through a different broker, and the sale was consummated. Consequently, the Sorkin defendants established, prima facie, that the plaintiff was “not the direct and proximate link, as distinguished from one that is indirect and remote, between the bare introduction of the sellers to the buyers and the consummation of the sale” … . * * *

[Re: fraud:] Even if the Sorkin defendants misrepresented to the plaintiff that they were no longer interested in purchasing the subject property, there could be no “specific detrimental reliance by plaintiff on this misrepresentation, inasmuch as plaintiff could not have compelled the [Sorkin defendants] to speak with plaintiff” … . City RE Group, LLC v 2633 Ocean Realty, LLC, 2023 NY Slip Op 05586, Second Dept 11-8-23

Practice Point: Although plaintiff real estate broker briefly introduced the buyers to the sellers and submitted an offer which was rejected, plaintiff could not sue for the real estate commission when the buyers submitted another offer through another broker which was accepted. Plaintiff could not make out causes of action for quantum meruit, tortious interference with contract or fraud (based upon the allegation the buyers misrepresented to plaintiff that the were no longer interested in the property).

 

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UNDER THE FACTS, PLAINTIFF CAN ASSERT A CLAIM FOR TORTIOUS INTERFERENCE WITH CONTRACT AGAINST DEFENDANT, EVEN THOUGH BOTH ARE SIGNATORIES TO THE MULTILATERAL CONTRACTS; THE PARTIES HAVE DIFFERENT RIGHTS AND DUTIES UNDER THE CONTRACTS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Singh, determined that, under the facts, plaintiffs should be allowed to state a claim for tortious interference with contract against another signatory to the multilateral agreements:

We are asked to decide whether a party to multilateral contracts may be sued by its contracting counterparty for inducing a breach of those contracts. Here, we answer that question in the affirmative. The rights and duties of defendants are separate from those of the breaching party. Plaintiffs also lack a contractual remedy against defendants. Under this narrow set of circumstances, plaintiffs should be permitted to assert a cause of action for tortious interference with contract, despite defendants being signatories to the multilateral agreements. * * *

The general principle that only a nonparty to a contract can be liable for tortious interference derives from cases involving either bilateral contracts or contracts under which all defendants had the same or similar contractual obligations … . * * *

This reasoning does not apply, however, if the inducing party is subject to duties that are different from those it allegedly encouraged another party to the contract to breach. Given such facts, the plaintiff cannot assert that the offending defendant breached a contractual obligation to it. “[T]he fact that one may derive rights under the same agreement as two other contracting parties does not excuse interference with their contractual rights” … . When breaching and inducing parties have different rights and duties, if the plaintiff is unable to recover fully from the breaching party, a tortious interference claim against the inducing party may be necessary for the plaintiff to be made whole. Arena Invs., L.P. v DCK Worldwide Holding Inc., 2023 NY Slip Op 02476, First Dept 5-9-23

Practice Point: Usually only a nonparty to a contract can be liable for tortious interference. Here plaintiff and defendant were both signatories to multilateral contracts. Because both had different rights and duties under the contracts, plaintiff was allowed to assert a claim  for tortious interference with contract against defendant.

 

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THE MAYOR’S STATEMENTS WERE TRUE AND DID NOT EVINCE MALICE; PLAINTIFF’S TORTIOUS INTERFERENCE WITH CONTRACT ACTION SHOULD HAVE BEEN DISMISSED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined plaintiff’s tortious interference with contract cause of action should have been dismissed. Plaintiff, was the head of a charter school, The mayor of Rochester (Warren) criticized the school for refusing to allow the school’s first African American valedictorian to give a speech at graduation:

To establish a tortious interference cause of action, a plaintiff must establish “(1) that [the plaintiff] had a business relationship with a third party; (2) that the defendant knew of that relationship and intentionally interfered with it; (3) that the defendant acted solely out of malice or used improper or illegal means that amounted to a crime or independent tort; and (4) that the defendant’s interference caused injury to the [plaintiff’s] relationship with the third party” … . …

Plaintiff testified that he did not allow the student to speak at the graduation ceremony, and the record establishes that Warren’s statements, i.e., that “[the student’s] school did not allow him to give his valedictorian speech. For some reason, his school, in a country where freedom of speech is a constitutional right, in the city of Frederick Douglass[,] turned his moment of triumph into a time of sorrow, and pain,” that the student would “never get that moment back,” and that “[t]his is not a time to punish a child because you may not like what they say,” were substantially true … . Moreover, in her statements, Warren did not mention plaintiff by name and referred only to the conduct of the “school,” and the statements were made during Warren’s introduction of the student in the context of providing him with an opportunity to present publicly the valedictory speech that the student was not permitted to give at his graduation ceremony. On that evidence, it cannot be said that defendants “acted solely out of malice” toward plaintiff … . Munno v City of Rochester, 2021 NY Slip Op 04830, Fourth Dept 8-26-21

 

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DEFENDANT TORTIOUSLY INTERFERED WITH PLAINTIFF’S CONTRACT BUT DID NOT TORTIOUSLY INTERFERE WITH PLAINTIFF’S BUSINESS RELATIONS OR ENGAGE IN UNFAIR COMPETITION; THE ELEMENTS OF THE THREE CAUSES OF ACTION EXPLAINED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined defendant was properly found to have tortiously interfered with plaintiff’s contract but should not have been found to have tortiously interfered with plaintiff’s business relations or to have engaged in unfair competition. The elements of each cause of action are clearly explained in the decision. With respect to tortious interference with business relations, the court wrote:

“While a cause of action for interference with prospective contract or business relationship is closely akin to one for tortious interference with contract, the former requires proof of more culpable conduct on the part of defendant” … . “This standard is met where the interference with prospective business relations was accomplished by wrongful means or where the offending party acted for the sole purpose of harming the other party” … . “Wrongful means” has been defined to include “physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure” … . “[A]s a general rule, the defendant’s conduct must amount to a crime or an independent tort. Conduct that is not criminal or tortious will generally be ‘lawful’ and thus insufficiently ‘culpable’ to create liability for interference with prospective contracts or other nonbinding economic relations” … . In addition, conduct which is motivated by economic self-interest cannot be characterized as solely malicious … . Stuart’s, LLC v Edelman, 2021 NY Slip Op 04569, Second Dept 7-29-21

 

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PLAINTIFFS SOUGHT TO FORECLOSE ON LOANS TO THE BORROWERS WHO THEN STARTED BANKRUPTCY PROCEEDINGS; PLAINTIFFS THEN SUED DEFENDANTS, WHO ARE NOT PARTIES TO THE FORECLOSURE/BANKRUPTCY ACTIONS, FOR TORTIOUS INTERFERENCE WITH THE LOAN AGREEMENTS; THE TORTIOUS INTERFERENCE WITH CONTRACT ACTIONS ARE NOT PREEMPTED BY FEDERAL BANKRUPTCY LAW (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, over a three-judge dissent, determined the tortious interference with contract claims, against defendants who are not parties in the foreclosure/bankruptcy proceedings, were not preempted by federal law. Plaintiff sought to foreclose on a loan and the borrowers commenced bankruptcy proceedings. Plaintiff then sued defendants, who are not parties to the foreclosure, alleging tortious interference with the loan agreements. The opinion focuses on the law of preemption:

It is not disputed that valid contracts existed between plaintiff and the borrowers. Plaintiff’s claims arising out of the borrowers’ breach of those contracts as asserted against the borrowers were resolved by the bankruptcy proceeding. Here, plaintiff alleges that defendants knew of the relevant contractual terms and deliberately induced the borrowers’ violations of those terms prior to the bankruptcy proceedings. In other words, plaintiff’s allegations state a claim for tortious interference with contract, and the remedy for that tort will not affect the debtor’s estate. As such, these claims will not encroach upon the province of the bankruptcy court. Stated simply, plaintiff’s claims “do[] not require the adjudication of rights and duties of creditors and debtors under the Bankruptcy Code” … . Sutton 58 Assoc. LLC v Pilevsky, 2020 NY Slip Op 06939, Ct App 11-24-20

 

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THE TORTIOUS INTERFERENCE WITH CONTRACT AND DEFAMATION CAUSES OF ACTION WERE NOT REFUTED BY DOCUMENTARY EVIDENCE AND WERE ADEQUATELY PLED (THIRD DEPT). ​

The Third Department, reversing (modifying) Supreme Court, determined that plaintiff had stated causes of action for tortious interference with contract and defamation and the actions should not have been dismissed on either the “documentary evidence” or “failure to state a cause of action” ground:

Turning first to CPLR 3211 (a) (1), a motion to dismiss pursuant to this provision “will be granted only if the documentary evidence resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff’s claim” … . What may be deemed “documentary evidence” for purposes of this subsection is quite limited. “Materials that clearly qualify as documentary evidence include documents . . . such as mortgages, deed[s], contracts, and any other papers, the contents of which are essentially undeniable” … . Here, Supreme Court relied upon the statements taken during defendant’s investigation, as well as its non-harassment policy. As plaintiff argues, even sworn affidavits have been held inadequate to meet this statutory standard, and defendant’s submissions here do not qualify as documentary evidence … . …

The grounds for dismissal under CPLR 3211 (a) (7) are also strictly limited; the court is not allowed to render a determination upon a thorough review of the relevant facts adduced by both parties, but rather is substantially more constrained in its review, examining only the plaintiff’s pleadings and affidavits … . …

To establish a claim for tortious interference with a contract, the plaintiff must allege “the existence of [his or her] valid contract with a third party, [the] defendant’s knowledge of that contract, [the] defendant’s intentional and improper procuring of a breach, and damages” … . Here, plaintiff’s complaint alleged that a valid contract existed between plaintiff and the distributor, that defendant intentionally spread “false, specious and salacious accusations against [p]laintiff,” and that such conduct “had no good faith or justifiable cause” and did not “protect an economic interest.” Liberally construing these allegations, as we must, taking all of the alleged facts as true, and giving plaintiff every favorable inference … , they do not fail to state a claim.

The defamation claim will ultimately require “proof that the defendant made ‘a false statement, published that statement to a third party without privilege, with fault measured by at least a negligence standard, and the statement caused special damages or constituted defamation per se'” … . Here, the complaint sets forth the particular words complained of and the damages plaintiff allegedly sustained … . Carr v Wegmans Food Mkts., Inc., 2020 NY Slip Op 02141, Third Dept 4-2-20

 

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DEFENDANT’S MOTION TO DISMISS THE COMPLAINT FOR LACK OF PERSONAL JURISDICTION SHOULD HAVE BEEN GRANTED, DEFENDANT’S ONLY CONNECTION TO THE CORPORATION WHICH HAD CONTACTS WITH NEW YORK WAS HIS SALARY; THEREFORE THE CORPORATION’S NEW YORK CONTACTS COULD NOT BE IMPUTED TO DEFENDANT (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant’s (Sprinkle’s) motion to dismiss the complaint for lack of personal jurisdiction should have been granted, noting that Sprinkle’s only connection with the corporation alleged to have breached the contract was his salary. The corporation’s contacts with New York could not, therefore, be imputed to Sprinkle:

The complaint fails to state a cause of action as against Sprinkle for tortious interference with contract, because there is no allegation that Sprinkle personally benefitted from the corporations’ alleged breach of contract; the only benefit he is alleged to have received is his salary from the corporations … .

Plaintiff failed to make a sufficient start on a showing of jurisdiction over Sprinkle to entitle it to jurisdictional discovery … . Because the conduct complained of involved the diversion of funds from outside New York to recipients outside New York, the “critical events,” and thus the situs of injury, were not in New York … . Moreover, plaintiff does not allege that Sprinkle received substantial revenue from interstate or international commerce (see CPLR 302[a][3][ii]). Because Sprinkle did not personally benefit from the breach of contract, the corporations’ contacts with New York cannot be imputed to him … .

Nor can Sprinkle be said to have “reasonably expected” his actions to have consequences in New York … as he neither did anything to avail himself of New York nor took any steps to project himself into New York. Given that Sprinkle had no contact with New York and did not purposefully avail himself of New York, the constitutional guarantee of due process bars New York courts from exercising personal jurisdiction over him. Greenbacker Residential Solar LLC v OneRoof Energy, Inc., 2019 NY Slip Op 05487, First Dept 7-9-19

 

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HANDWRITTEN PROVISION OF A LETTER OF INTENT CONTROLS, THE LETTER OF INTENT IS NOT A BINDING CONTRACT, BREACH OF A FIDUCIARY DUTY AND TORTIOUS INTERFERENCE WITH CONTRACT CAUSES OF ACTION PROPERLY DISMISSED IN THE ABSENCE OF A BINDING CONTRACT, UNJUST ENRICHMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE THE BENEFIT TO THE DEFENDANTS WAS UNIDENTIFIED (SECOND DEPT).

The Second Department determined that a letter of intent concerning the development of defendant-church’s property was not a binding contract because of a handwritten provision. Because there was no binding contract, the fiduciary duty, joint venture, covenant of good faith, and tortious interference with contract causes of action were properly dismissed. The unjust enrichment cause of action was properly dismissed because the benefit allegedly received by defendants was not identified:

“It is a fundamental principle of contract interpretation that when a handwritten or typewritten provision conflicts with the language of a preprinted form document, the former will control, as it is presumed to express the latest intention of the parties'” … . Here, there are inconsistent provisions in the letter of intent regarding whether the parties intended it to be a binding agreement. However, the parties modified the letter of intent, with a handwritten provision, to state that it is “not intended to constitute a binding contract.” Accordingly, this handwritten provision controls over the conflicting printed provisions stating that the letter of intent will become binding after a period of five days … . …

“To prevail on a claim of unjust enrichment, a party must show that (1) the other party was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered” … . A bare legal conclusion that it is against equity and good conscience to retain an unidentified benefit is insufficient to adequately allege that an asserted enrichment was unjust … . Here, the complaint does not identify the benefit the defendants allegedly obtained or explain why it is against equity and good conscience to allow the defendants to retain such benefit. FoxStone Group, LLC v Calvary Pentecostal Church, Inc., 2019 NY Slip Op 04916, Second Dept 6-19-19

 

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COMPLAINT STATED CAUSES OF ACTION FOR CONVERSION AND TORTIOUS INTERFERENCE WITH A CONTRACT (SECOND DEPT).

The Second Department, modifying Supreme Court, determined the complaint (supplemented with affidavits) stated causes of action for conversion and tortious interference with contract which should not have been dismissed. Plaintiff, a dog trainer, purchased a dog and allegedly entered a contract with the seller of the dog (America' Best) to train the dog. Plaintiff and defendant were in a relationship at the time they agreed to purchase the dog. The complaint alleged that defendant took possession of the dog:

Two key elements of conversion are the plaintiff's (1) legal ownership or an immediate superior right of possession to a specific identifiable thing, and (2) the defendant's unauthorized dominion over the thing in question or interference with it, to the exclusion of the plaintiff's right… . Here, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible favorable inference, the complaint sufficiently alleges that the plaintiff is the owner of the dog, that the defendant has unauthorized possession of the dog, and that the defendant has refused to return the dog.

… The elements of tortious interference with a contract are: “(1) the existence of a contract between plaintiff and a third party; (2) defendant's knowledge of the contract; (3) defendant's intentional inducement of the third party to breach or otherwise render performance impossible; and (4) damages to plaintiff” … . The complaint, as supplemented by the plaintiff's affidavits, sufficiently alleges the elements of a cause of action to recover damages for tortious interference with a contract, including that the defendant's intentional interference with the America's Best contract rendered performance impossible … . Nero v Fiore, 2018 NY Slip Op 06755, Second Dept 10-10-18

CONVERSION (COMPLAINT STATED CAUSES OF ACTION FOR CONVERSION AND TORTIOUS INTERFERENCE WITH A CONTRACT (SECOND DEPT))/TORTIOUS INTERFERENCE WITH CONTRACT (COMPLAINT STATED CAUSES OF ACTION FOR CONVERSION AND TORTIOUS INTERFERENCE WITH A CONTRACT (SECOND DEPT))/CIVIL PROCEDURE  (COMPLAINT STATED CAUSES OF ACTION FOR CONVERSION AND TORTIOUS INTERFERENCE WITH A CONTRACT (SECOND DEPT))/CPLR 3211 (COMPLAINT STATED CAUSES OF ACTION FOR CONVERSION AND TORTIOUS INTERFERENCE WITH A CONTRACT (SECOND DEPT))

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Rare Example of Sufficiently Pled Cause of Action for Prima Facie Tort—Elements of Tortious Interference with a Contract Outlined

The Second Department determined plaintiff had stated a cause of action for prima facie tort and tortious interference with a contract. The complaint alleged the defendant set up websites and organized public protests accusing plaintiff of child abuse and had communicated with plaintiff’s employer, causing plaintiff to be terminated without cause. The decision is noteworthy because it demonstrates the extreme nature of allegations deemed sufficient to support a prima facie tort cause of action. With respect to the tortious interference with contract cause of action, the court explained:

The elements of tortious interference with a contract are: “(1) the existence of a contract between plaintiff and a third party; (2) defendant’s knowledge of the contract; (3) defendant’s intentional inducement of the third party to breach or otherwise render performance impossible; and (4) damages to plaintiff” … . The amended complaint sufficiently sets forth a cause of action based on tortious interference with a contract, alleging, in pertinent part, that [defendant’s] intentional interference with the subject employment contract rendered performance impossible. Hersh v Cohen, 2015 NY Slip Op 06888, 2nd Dept 9-23-15

 

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