106 N. Broadway, LLC v. Lawrence

• Decision Date: 02 December 2020
• Docket Number: Index No. 57543/17,2018–04389
• Citation: 137 N.Y.S.3d 148,189 A.D.3d 733
• Parties: 106 N. BROADWAY, LLC, Appellant, v. Houlihan LAWRENCE, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

189 A.D.3d 733

137 N.Y.S.3d 148

106 N. BROADWAY, LLC, Appellant,

v.Houlihan LAWRENCE, et al., Respondents.

2018–04389

Index No. 57543/17

Supreme Court, Appellate Division, Second Department, New York.

December 2, 2020

Argued—October 5, 2020

Montalbano, Condon & Frank, P.C., New City, N.Y. (John E. Finnegan of counsel), for appellant.

Jones, LLP, Scarsdale, N.Y. (Jeffrey Briem, Marcy Blake, and Stephen J. Jones of counsel), for respondents Houlihan Lawrence and Patricia Flood.

Clifford L. Davis, White Plains, NY, for respondent Hilary Chenel Levy.

ALAN D. SCHEINKMAN, P.J.,RUTH C. BALKIN, JEFFREY A. COHEN, HECTOR D. LASALLE, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract and breach of fiduciary duty, the plaintiff appeals from an order of the Supreme Court, Westchester County (Terry Jane Ruderman, J.), entered March 15, 2018. The order, insofar as appealed from, granted those branches of the motion of the defendant Hilary Chenel Levy which were pursuant to CPLR 3211(a) to dismiss the causes of action alleging breach of fiduciary duty and tortious interference with business relations and/or expectancies insofar as asserted against her, and granted those branches of the separate motion of the defendants Patricia Flood and Houlihan Lawrence which were pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against the defendant Houlihan Lawrence and to dismiss the causes of action alleging breach of fiduciary duty and tortious interference with business relations and/or expectancies insofar as asserted against the defendant Patricia Flood.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion of the defendants Patricia Flood and Houlihan Lawrence which was pursuant to CPLR 3211(a) to dismiss the third cause of action for breach of the implied covenant of good faith and fair dealing insofar as asserted as against the defendant Houlihan Lawrence, and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed insofar as appealed from, with one bill of costs to the defendant Hilary Chenel Levy payable by the plaintiff.

The plaintiff, as the owner of certain commercial real estate in Irvington, entered into an "Exclusive Right to Sell/Rent Agreement" (hereinafter the sales agreement), dated January 17, 2014, with the defendant Houlihan Lawrence, a commercial real estate broker. On August 26, 2014, the plaintiff entered into a "Land Purchase Agreement" (hereinafter the purchase agreement) with nonparty Shelter Development, LLC (hereinafter Shelter), as purchaser. The purchase agreement provided that Shelter would pay the plaintiff $6,125,000 for the subject property, provided, among other things, that Shelter obtained "final, unappealable zoning approval" for the construction of its intended senior living community at the subject property.

Shelter had the right to terminate the purchase agreement at any time if, despite good faith diligent efforts, it was unable to obtain the development approvals by the closing date or any extension thereof. The purchase agreement further provided that "no agent, broker or finder ... acted for [the plaintiff] in connection with this Agreement and the sale of the Property except for ... Elizabeth Hargraves of Houlihan Lawrence." On April 21, 2016, Shelter informed the plaintiff by letter (hereinafter the termination letter) that Shelter concluded that it would be unable to obtain the necessary approval and that it terminated the purchase agreement.

In a letter dated January 24, 2017, counsel for the plaintiff sent a demand letter (hereinafter the demand letter) to counsel for Houlihan Lawrence. The demand letter alleged that the defendant Hilary Chenel Levy, a Houlihan Lawrence agent and a member of the Planning Board of the Village of Irvington, informed the plaintiff that Shelter's application for zoning approval would be denied and that the plaintiff should keep the subject property on the market for other prospective buyers. The demand letter further alleged that the plaintiff had previously complained to Houlihan Lawrence about Levy's potential conflict of interest with the zoning approval and sale and that, while Levy's "inappropriate behavior was acknowledged," no other action was taken. According to the demand letter, Levy left Houlihan Lawrence but "continued her efforts to disrupt" the transaction.

The demand letter also asserted that the defendant Patricia Flood, another Houlihan Lawrence agent, and other, unnamed Houlihan Lawrence agents also "set out to divert and/or obstruct the sale" after a neighbor of the plaintiff, who had acquired his property in a transaction that Houlihan Lawrence had brokered, was "made aware by Houlihan Lawrence agents that a senior living community would take over the property" and threatened to sue Houlihan Lawrence for misrepresentation. The demand letter further claimed that Flood "used her personal ties in the political arena of Irvington to make significant efforts to prevent th[e zoning] approval .... [including] threatening [the plaintiff] to withdraw [sic] the zoning project and encouraging community members to speak out against the incoming senior-living community."

On May 15, 2017, the plaintiff commenced the instant action. The amended complaint asserts four causes of action against the defendants: (1) negligence; (2) breach of fiduciary duty; (3) breach of contract; and (4) tortious interference with business relationships and/or expectancies. The plaintiff annexed the sales agreement, purchase agreement, termination letter, and demand letter to the amended complaint. In sum and substance, the amended complaint recites the genesis of the plaintiff's engagement with Houlihan Lawrence, from its inception to Shelter's termination, and memorializes the allegations set forth in the demand letter.

Houlihan Lawrence and Flood moved, and Levy separately moved, pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against each of them. The Supreme Court granted the motions and directed dismissal of the amended complaint insofar as asserted against all defendants. The plaintiff appeals from so much of the order as directed dismissal of the amended complaint insofar as asserted against Houlihan Lawrence and directed dismissal of the causes of action alleging breach of fiduciary duty and tortious interference insofar as asserted against Flood and Levy.

"On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction. We accept the facts as alleged in the complaint as true and accord plaintiffs the benefit of every possible favorable inference" ( People v. Credit Suisse Sec. [USA] LLC, 31 N.Y.3d 622, 642, 107 N.E.3d 515 ). On a CPLR 3211(a)(7) motion to dismiss, the question is whether the facts as alleged fit within any cognizable legal theory (see Leon v. Martinez, 84 N.Y.2d 83, 88–89, 614 N.Y.S.2d 972, 638 N.E.2d 511 ). "A motion to dismiss pursuant to CPLR 3211(a)(7) will fail if ... the complaint states in some recognizable form any cause of action known to our law" ( Teller v. Galak, 162 A.D.3d 959, 960, 80 N.Y.S.3d 106 [internal quotation marks omitted] ).

"Under CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. In assessing a motion under CPLR 3211(a)(7), however, a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint and ‘the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one’ " ( Leon v. Martinez, 84 N.Y.2d at 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [citations omitted], quoting Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17 ). However, where the plaintiff elects to stand on its pleading, as is the case here, the plaintiff may not be penalized because it has not made an evidentiary showing in support of the complaint (see Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 636, 389 N.Y.S.2d 314, 357 N.E.2d 970 ).

As to the first cause of action, which alleged negligence, the plaintiff argues that it has a cause of action for negligent supervision against Houlihan Lawrence. "A necessary element of a cause of action to recover damages for negligent hiring, retention, or supervision is that the employer knew or should have known of the employee's propensity for the conduct which caused the injury" ( Shu Yuan Huang v St. John's Evangelical Lutheran Church, 129 A.D.3d 1053, 1054, 12 N.Y.S.3d 232 [internal quotation marks omitted] ).

Here, the amended complaint fails to sufficiently allege that Houlihan Lawrence knew or should have known of a propensity on the part of either Flood or Levy to commit the alleged wrongful acts (see id. at 1054, 12 N.Y.S.3d 232 ). Affording the pleading a liberal construction, the amended complaint fails to allege that Houlihan Lawrence had any reason to know, prior to the unspecified time when the plaintiff made a verbal complaint, of any propensity of either Levy or Flood to engage in the alleged conduct. The amended complaint fails to allege that Levy continued to engage, during her remaining tenure with Houlihan Lawrence, in the alleged conduct after the plaintiff complained to Houlihan Lawrence. While the amended complaint does allege that Levy continued her efforts to disrupt the sale, it states that she did so after she left Houlihan Lawrence. As to Flood, the amended complaint does not allege any specific conduct of Flood after the plaintiff complained to Houlihan Lawrence about her conduct. We therefore agree with the Supreme Court's determination directing dismissal of the first cause of action insofar as asserted against Houlihan Lawrence.

We also agree with the Supreme Court's determination to grant those branches of the defendants' separate ...