JF Capital Advisors, LLC v. Lightstone Grp., LLC
| Decision Date | 01 July 2015 |
| Docket Number | No. 112,112 |
| Citation | 25 N.Y.3d 759,16 N.Y.S.3d 222,2015 N.Y. Slip Op. 05622,37 N.E.3d 725 |
| Parties | JF CAPITAL ADVISORS, LLC, Appellant, v. The LIGHTSTONE GROUP, LLC, et al., Respondents. |
| Court | New York Court of Appeals Court of Appeals |
Weber Law Group LLP, Melville (Jason A. Stern of counsel), for appellant.
Emery Celli Brinckerhoff & Abady LLP, New York City (Elizabeth S. Saylor, Andrew G. Celli, Jr. and Hayley Horowitz of counsel), for respondents.
FAHEY
, J.
The primary issue on this appeal is whether the statute of frauds, as embodied in General Obligations Law § 5–701(a)(10)
, bars the causes of action set forth in the amended complaint. In that pleading, plaintiff claims to have rendered to defendants financial advisory services for what plaintiff characterizes as nine groups of investment opportunities,1 and plaintiff
seeks recovery for those services rendered based on theories of quantum meruit and unjust enrichment. We conclude that the statute of frauds does not bar the causes of action with respect to five of the nine project groups, to wit, with respect to what the amended complaint characterizes as the “Innkeepers Project,” the “Fitchburg and Omaha Projects,” the “Towneplace Suites Metairie Project,” the “Hotel Victor Project,” and the “ Crowne Plaza Somerset Project.” We therefore modify the Appellate Division's order by denying those parts of defendants' motion seeking to dismiss the amended complaint with respect to those project groups.
Inasmuch as this appeal had its genesis in a motion to dismiss pursuant to CPLR 3211(a)(7)
, we are bound to, inter alia, “accept the facts as alleged in the [amended] complaint as true” (Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ). Plaintiff alleges that it and its principals are hospitality industry consultants engaged in the business of providing investment and advisory services. In November 2010, defendants solicited plaintiff's assistance in analyzing an investment opportunity involving certain hotel/water park properties. The parties entered into a written agreement whereby plaintiff provided
financial and analytical services to defendants regarding that project, and defendants paid plaintiff for its work with respect to that opportunity.
Defendants did not purchase the hotel/water park properties, and those holdings eventually became the subject of an online auction. Based on the seller's willingness to dispose of the hotel/water park properties separately, defendants again sought plaintiff's services with the goal of acquiring only 2 of the 10 holdings that comprised the hotel/water park properties. Plaintiff provided continuing “advisory services” to defendants consisting of financial and market analyses with respect to the hotel/water park endeavor, as well as to other projects, and defendants accepted those services.
According to plaintiff, however, defendants did not compensate plaintiff for such work. Consequently, plaintiff commenced this action through the filing of a complaint in which it asserted six causes of action, including claims for quantum meruit and unjust enrichment. Defendants moved to dismiss the complaint, and Supreme Court granted the motion but afforded plaintiff “leave to serve and file an amended complaint alleging causes of action for quantum meruit and unjust enrichment” (2012 N.Y. Slip Op. 33788[U]
, *12, 2012 WL 12286514 [Sup.Ct., N.Y. County 2012] ).
Plaintiff availed itself of that leave, and the amended complaint lies at the core of this appeal. There, as noted, plaintiff asserts causes of action for quantum meruit and unjust enrichment, through which it seeks compensation for approximately $480,000 in services it rendered to defendants in connection with the nine project groups. Plaintiff generally alleges that its work with respect to each of the project groups consisted of the review, analysis, and modeling of the finances and operations of the assets in which defendants had the opportunity to invest. However, with respect to the “Waterpark Portfolio Project,” the “CBRE 7 Loan Portfolio Project,” and the “Allegria Hotel Loan Purchase,” i.e., what are respectively denominated as project groups Nos. 1, 6, and 7, plaintiff alleges that it performed work that was used to assist in defendants' negotiation of a business opportunity and
that was conducted in anticipation of a possible purchase bid.
In lieu of answering, defendants moved to dismiss the amended complaint pursuant to CPLR 3211(a)(7)
, contending that the claims for compensation for the “advisory services” plaintiff allegedly performed are subject to the statute of frauds
(see General Obligations Law § 5–701[a] [10]
). Supreme Court granted the motion in part by dismissing the amended complaint to the extent it seeks recovery for work performed with respect to the “Waterpark Portfolio Project,” the “CBRE 7 Loan Portfolio Project,” the “ Allegria Hotel Loan Purchase,” and the “Miscellaneous Projects,” i.e., what are denominated as project groups Nos. 1, 6, 7, and 9 (2012 N.Y. Slip Op. 33262 [U], 2012 WL 5947827 [Sup.Ct., N.Y. County 2012] ). The court denied the remaining parts of the motion.
On appeal, the Appellate Division modified by granting the motion in its entirety and dismissing the amended complaint based upon its conclusion that “investment analyses and financial advice regarding the possible acquisition of investment opportunities clearly fall within General Obligations Law § 5–701(a)(10)
” (115 A.D.3d 591, 592–593, 982 N.Y.S.2d 472 [1st Dept.2014] [internal quotation marks omitted] ). The Appellate Division subsequently granted plaintiff leave to appeal and certified the question whether the order of Supreme Court, as modified, was properly made (2014 N.Y. Slip Op. 78658 [U] [1st Dept.2014] ).
Having marshaled the relevant facts, our review turns to the pertinent principles of law. In addition to accepting the facts as alleged as true (see Leon, 84 N.Y.2d at 87, 614 N.Y.S.2d 972, 638 N.E.2d 511
), we “must give the pleading a liberal construction ... and afford ... plaintiff the benefit of every possible favorable inference” (Landon v. Kroll Lab. Specialists, Inc., 22 N.Y.3d 1, 5, 977 N.Y.S.2d 676, 999 N.E.2d 1121 [2013], rearg. denied 22 N.Y.3d 1084, 981 N.Y.S.2d 667, 4 N.E.3d 968 [2014] [internal quotation marks omitted] ). In other words, “[w]here the allegations are ambiguous, we resolve the ambiguities in plaintiff's favor” (Snyder v. Bronfman, 13 N.Y.3d 504, 506, 893 N.Y.S.2d 800, 921 N.E.2d 567 [2009] ) and, dissimilar to a motion for summary judgment, where we review the record to determine whether a cause of action or a defense has been established as a matter of law, here we “ ‘limit our inquiry to the legal sufficiency of plaintiff's claim[s]’ ” (Davis v. Boeheim, 24 N.Y.3d 262, 268, 998 N.Y.S.2d 131, 22 N.E.3d 999 [2014], quoting Silsdorf v. Levine, 59 N.Y.2d 8, 12, 462 N.Y.S.2d 822, 449 N.E.2d 716 [1983] ; see
Leon, 84 N.Y.2d at 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ).
). The statute ‘decrease[s] uncertainties, litigation, and opportunities for fraud and perjury,’ and primarily ‘discourage[s] false claims' (73 Am. Jur. 2d, Statute of Frauds § 403 ). ‘In short, the purpose of the Statute of Frauds is simply to prevent a party from being held responsible, by oral, and perhaps false, testimony, for a contract that the party claims never to have made’ (id. )” (William J. Jenack Estate Appraisers & Auctioneers, Inc., 22 N.Y.3d at 476, 982 N.Y.S.2d 813, 5 N.E.3d 976 ).
The same paragraph further states that “ ‘[n]egotiating’ includes procuring an introduction to a party to the transaction or assisting in the negotiation or consummation of the transaction” (id. ).
Applying these principles, we conclude that the statute of frauds does not bar the causes of action to the extent they pertain to what the amended complaint characterizes as the “Innkeepers Project,” the “Fitchburg and Omaha Projects,” the “Towneplace Suites Metairie Project,” the “Hotel Victor Project,” and the “Crowne Plaza Somerset Project,” i.e., what are denominated as project groups Nos. 2 through 5 and 8. The fundamental question on this appeal is whether the services for which plaintiff seeks compensation were tasks performed so as to inform defendants whether to negotiate for the properties
at issue, or whether those services were performed as part of or in furtherance of negotiation for the subject properties. As noted, General Obligations Law § 5–701(a)(10)
interdicts oral agreements to pay compensation for services rendered with respect to the negotiation of the purchase of real estate or of a business opportunity or business. Supreme Court recognized this in dismissing the causes of action pertaining to project groups Nos. 1, 6, and 7....
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