Megaris Furs, Inc. v. Gimbel Bros., Inc.

• Decision Date: 04 April 1991
• Citation: 172 A.D.2d 209,568 N.Y.S.2d 581
• Parties: MEGARIS FURS, INC., Plaintiff-Appellant, v. GIMBEL BROTHERS, INC., Defendant-Respondent. Arthur EDELL, et al., Plaintiffs-Appellants, v. GIMBEL BROTHERS, INC., Defendant-Respondent-Counterclaim-Plaintiff, v. Arthur EDELL, et al., Counterclaim-Defendants.
• Court: New York Supreme Court — Appellate Division

Page 581

568 N.Y.S.2d 581

172 A.D.2d 209

MEGARIS FURS, INC., Plaintiff-Appellant, v. GIMBEL BROTHERS, INC., Defendant-Respondent.

[and one other action]

Arthur EDELL, et al., Plaintiffs-Appellants, v. GIMBEL BROTHERS, INC., Defendant-Respondent-Counterclaim-Plaintiff, v. Arthur EDELL, et al., Counterclaim-Defendants.

Supreme Court, Appellate Division First Department.

April 4, 1991.

Budd Larner Gross Rosenbaum Greenberg & Sade, P.C. (Marc Z. Edell, of counsel; Brian J. Levine and Mary Ellen Meyers with him on the briefs), Short Hills, N.J., for Megaris Furs, Inc., Arthur Edell and Ethel Edell, appellants and cross-respondents.

Chadbourne & Parke (Charles K. O'Neill, Robert S. Pruyne, Cheryl A. Hughes and Marla Hassner, of counsel), New York City, for Gimbel Brothers, Inc., BATUS Inc., and BATUS Retail, Inc., respondents and cross-appellants.

Before MILONAS, J.P., and ROSENBERGER, ASCH, SMITH and RUBIN, JJ.

MEMORANDUM DECISION.

Order of the Supreme Court, New York County (David H. Edwards, J.), entered December 19, 1989, which granted defendant's cross-motion for summary judgment as to plaintiff's first, second and third causes of action, granted plaintiff's motion to amend the complaint to assert the proposed fourth and fifth causes of action, and denied leave to amend the complaint to assert the proposed fourth and fifth causes of action, and denied leave to amend the complaint to assert the proposed first, second, third, sixth, seventh, eighth and ninth causes of action, unanimously modified, on the law, to the extent of denying leave to amend the complaint and, except as so modified, affirmed, without costs.

Order of the Supreme Court, New York County (Carmen Beauchamp Ciparick, J.), entered on or about November 16, 1989 which granted defendants' cross-motion for summary judgment as to plaintiffs' first, second and third causes of action, granted plaintiffs' motion to amend the complaint to assert the proposed third, fourth and seventh causes of action, and denied leave to amend the complaint to assert the proposed first, second, fifth, sixth, eighth and ninth causes of action, unanimously modified, on the law, to the extent of denying leave to amend the complaint and, except as so modified, affirmed, without costs.

While leave to amend a pleading is freely granted (CPLR 3025[b]; Edenwald Contr. Co. v. City of New York, 60 N.Y.2d 957, 471 N.Y.S.2d 55, 459 N.E.2d 164), this court has consistently held that, in order to conserve judicial resources, an examination of the underlying merits of the proposed causes of action is warranted (Brennan v. City of New York, 99 A.D.2d 445, 470 N.Y.S.2d 621; East Asiatic Co. v. Corash, 34 A.D.2d 432, 312 N.Y.S.2d 311). Leave to amend will be denied where the proposed pleading fails to state a cause of action (Crimmins Contr. Co. v. City of New York, 74 N.Y.2d 166, 544 N.Y.S.2d 580, 542 N.E.2d 1097; Stroock & Stroock & Lavan v. Beltramini, 157 A.D.2d 590, 550 N.Y.S.2d 337). To make out a cause of action for fraud, this court has stated that "a party must allege representation of a material existing fact, falsity, scienter, deception and injury [citing Reno v. Bull, 226 N.Y. 546, 550, 124 N.E. 144.] Furthermore, each of these essential elements must be supported by factual allegations sufficient to satisfy CPLR 3016(b), which requires, in the case of a cause of action based on fraud, that 'the circumstances constituting the wrong shall be stated in detail.' CPLR 3016(b) 'imposes a more stringent standard of pleading than the generally applicable "notice of the transaction" rule of CPLR 3013, and complaints based on fraud * * * which fail in whole or in part to meet this special test of factual pleading have consistently been dismissed'. (Lanzi v. Brooks, 54 A.D.2d 1057, 1058, 388 N.Y.S.2d 946, affd. 43 N.Y.2d 778, 402 N.Y.S.2d 384, 373 N.E.2d 278; see, 60 NY Jur2d, Fraud and Deceit, § 227.)" (Edison Stone Corp. v. 42nd St. Dev. Corp., 145 A.D.2d 249, 257, 538 N.Y.S.2d 249; see also, New York Fruit Auction Corp. v. City of New York, 81 A.D.2d 159, 161, 439 N.Y.S.2d 648; cf., Fidelity and Deposit Co. of Md. v. Arthur Andersen & Co., 131 A.D.2d 308, 515 N.Y.S.2d 791).

The respective pleadings in these two actions, consolidated for appeal, each state a cause of action for breach of contract which, with the addition of suitable verbiage, is transmogrified into eight additional causes of action which sound in tort, ranging from fraud to intentional interference with contractual relations. In each case, the underlying contract action is without merit, and amendment of the complaints should have been denied in the entirety and the complaints dismissed.

Plaintiffs operated concessions under license from defendant in its department stores--Megaris, a fur salon and the Edells, a health food department. These actions arise from the closing of Gimbel Brothers' ("Gimbels") department stores and termination of the agreements under which the respective plaintiffs operated. The gravaman of the dispute is the application of a clause contained in a paragraph entitled "Destruction of Space" which provides: "In the event of a fire or any other casualty of any kind whatsoever which may result in the substantial destruction of any Space then occupied by Licensee or if Gimbels shall discontinue or dispose of the business now conducted by it in any of the Stores, the license granted pursuant to this Agreement hereunder shall terminate * * * and * * * neither party shall be liable to the other for any loss or damage resulting therefrom." Plaintiffs argue that, simply because of the context, this clause should be applied only to discontinuance or disposal of Gimbels' business which results from fire or other casualty. However, the provisions respecting destruction of the space and discontinuance of the business are stated in the alternative, and no such limitation may be read into the contract language. Moreover, while the provision terminating any obligation under the contract upon cessation of business by Gimbels appears in an unexpected context, it would be highly surprising in view of the Court of Appeals' decision in 407 East 61st Garage v. Savoy Fifth Ave. Corporation, 23 N.Y.2d 275, 280, 296 N.Y.S.2d 338, 244 N.E.2d 37, if the contract failed to contain a provision expressly stating the obligor's intent to be bound only so long as viable commercial operations can be continued.

The remainder of plaintiff's respective complaints, which both assert the same causes of action and rely on the same theories to support them, represent an attempt to recast the breach of contract allegations as tort claims. As the Court of Appeals has stated, "It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated * * *. This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract * * *. Merely charging a breach of a 'duty of due care', employing language familiar to tort law, does not, without more, transform a simple breach of contract into a tort claim" (Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 389-390, 521 N.Y.S.2d 653, 516 N.E.2d 190, citations omitted).

Plaintiffs' second cause of action alleges negligent performance of the contract, a cause of action which simply does not exist (Hamilton v. Hertz Corp., 130 Misc.2d 1034, 1037, 498 N.Y.S.2d 706).

Plaintiffs' third cause of action, which alleges that it was fraudulently induced to enter into the agreement by defendant's fraudulent representation that "it would perform its obligations under the agreements for a ten year period", is barred by the Statute of Frauds. In view of the recitation in the respective agreements that the term of the contract is ten years "unless sooner terminated pursuant to another provision hereof", the statement constitutes a promissory representation and not a fraudulent inducement (Fisch on New York Evidence, § 53 [2d ed], and parol evidence may not be introduced to contradict the express provisions of the contract (Leumi Fin. Corp. v. Richter, 17 N.Y.2d 166, 173, 269 N.Y.S.2d 409, 216 N.E.2d 579; Buckthorn, Ltd. v. Rollins Burdick Hunter of New York, 109 A.D.2d 8, 10, 489 N.Y.S.2d 729; LeBovici v. Jamaica Sav. Bank, 81 A.D.2d 150, 439 N.Y.S.2d 688, affd. 56 N.Y.2d 522, 449 N.Y.S.2d 954, 434 N.E.2d 1332). The bar against the introduction of parol evidence is also fatal to the fifth cause of action asserted in the respective complaints, which restates the claim of fraudulent inducement, further...