Ullmannglass v. Oneida

• Decision Date: 21 July 2011
• Citation: 927 N.Y.S.2d 702,86 A.D.3d 827,2011 N.Y. Slip Op. 06001
• Parties: ULLMANNGLASS et al., Respondents,v.ONEIDA, LTD., et al., Appellants.
• Court: New York Supreme Court — Appellate Division

86 A.D.3d 827

927 N.Y.S.2d 702

2011 N.Y. Slip Op. 06001

ULLMANNGLASS et al., Respondents,

v.ONEIDA, LTD., et al., Appellants.

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

July 21, 2011.

Bond, Schoeneck & King, P.L.L.C., Syracuse (Louis Orbach of counsel), for appellants.Hinman Straub, P.C., Albany (David T. Luntz of counsel), for respondents.Before: PETERS, J.P., SPAIN, LAHTINEN, MALONE JR. and McCARTHY, JJ.MALONE JR., J.

Appeal from an order of the Supreme Court (Cerio, J.), entered November 4, 2010 in Madison County, which partially denied defendants' motion to dismiss the complaint.

Plaintiff Ullmannglass is a German company and plaintiff Norbert Ullmann is its owner and president. As alleged in the complaint, defendants Oneida, Ltd., Oneida Silversmiths, Ltd. and Oneida Silversmiths, Inc. are corporations doing business in New York, and defendant James E. Joseph is their chief executive officer.¹ The parties had a business relationship that ended in 2005, following which plaintiffs entered into a contract with Inn Crystal Glass. The contract became effective on December 1, 2005, and was renewable on an annual basis. Plaintiffs allege that, in October 2006, prompted by communications with Joseph or other representatives of the Oneida corporations, Inn Crystal informed them that it would discontinue their agreement. Thereafter, plaintiffs commenced this action against defendants in October 2009 asserting three causes of action, namely tortious interference with a contract, tortious interference with economic relations, prospective contractual relations and/or business expectancy (hereinafter collectively referred to as tortious interference with prospective contractual relations), and injurious falsehood and business disparagement. Defendants made a preanswer motion to dismiss the complaint on statute of limitations grounds and for failure to state a cause of action. Supreme Court partially granted the motion, by dismissing only the third cause of action for injurious falsehood and business disparagement on statute of limitations grounds. Defendants now appeal.

Defendants first argue that the remaining two causes of action should have been dismissed on statute of limitations grounds, asserting that the one-year limitation period applicable to defamation applied. A one-year statute of limitations applies to a claim sounding in defamation ( see CPLR 215[3]; Ramsay v. Mary Imogene Bassett Hosp., 113 A.D.2d 149, 151, 495 N.Y.S.2d 282 [1985], lvs. dismissed 67 N.Y.2d 608, 502 N.Y.S.2d 1026, 494 N.E.2d 113, 67 N.Y.2d 1028, ––– N.Y.S.2d ––––, ––– N.E.2d –––– [1986] ), whereas a claim for tortious interference with a contract is governed by a three-year statute of limitations ( see CPLR 214[4]; Andrew Greenberg, Inc. v. Svane, Inc., 36 A.D.3d 1094, 1099, 830 N.Y.S.2d 358 [2007] ), as is a tortious interference with prospective contractual relations claim ( see CPLR 214[4]; see e.g. Besicorp Ltd. v. Kahn, 290 A.D.2d 147, 150, 736 N.Y.S.2d 708 [2002], lv. denied 98 N.Y.2d 601, 744 N.Y.S.2d 761, 771 N.E.2d 834 [2002] ). In determining which statute of limitations is applicable to a cause of action, it is “ ‘the essence of the action and not its mere name’ ” that controls ( Morrison v. National Broadcasting Co., 19 N.Y.2d 453, 459, 280 N.Y.S.2d 641, 227 N.E.2d 572 [1967], quoting Brick v. Cohn–Hall–Marx Co., 276 N.Y. 259, 264, 11 N.E.2d 902 [1937]; see Ramsay v. Mary Imogene Bassett Hosp., 113 A.D.2d at 151, 495 N.Y.S.2d 282).

Here, plaintiffs' first cause of action clearly describes the existence of a “specific contract[ ] with which ... defendant[s] allegedly successfully interfered, albeit by words,” thereby causing economic injury to plaintiffs ( Classic Appraisals Corp. v. DeSantis, 159 A.D.2d 537, 537, 552 N.Y.S.2d 402 [1990]; see Amaranth LLC v. J.P. Morgan Chase & Co., 71 A.D.3d 40, 48, 888 N.Y.S.2d 489 [2009], lv. dismissed and denied 14 N.Y.3d 736, 898 N.Y.S.2d 74, 925 N.E.2d 73 [2010] ). The gravamen of plaintiffs' claim is an economic injury, not a reputational one and, accordingly,

[927 N.Y.S.2d 705 , 86 A.D.3d 829]

we agree with Supreme Court's conclusion that a three-year statute of limitations is applicable and plaintiffs' first cause of action is not time-barred ( see Amaranth LLC v. J.P. Morgan Chase & Co., 71 A.D.3d at 48, 888 N.Y.S.2d 489; Mannix Indus. v. Antonucci, 191 A.D.2d 482, 483, 594 N.Y.S.2d 327 [1993], lv. dismissed 82 N.Y.2d 846, 606 N.Y.S.2d 597, 627 N.E.2d 519 [1993]; Classic Appraisals Corp. v. DeSantis, 159 A.D.2d at 537, 552 N.Y.S.2d 402). Similarly, the gravamen of plaintiffs' tortious interference with prospective contractual relations claim is defendants' interference with plaintiffs' ongoing relationship with Inn Crystal resulting in lost commissions and sales and service revenues and not, at its essence, reputational harm. As such, a three-year statute of limitations is also applicable to this claim and it also was not time-barred.

Turning to defendants' next contention, they assert that plaintiffs failed to sufficiently plead causes of action for tortious interference with a contract and tortious interference with prospective contractual relations. Liberally construing the complaint, treating all its allegations as true and giving plaintiffs the benefit of every favorable inference ( see Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994]; Clearmont Prop., LLC v. Eisner, 58 A.D.3d 1052, 1054, 872 N.Y.S.2d 725 [2009] ), we find that plaintiffs stated viable claims for tortious interference with a contract and tortious interference with prospective contractual relations.

“ ‘[T]o sustain a claim for tortious interference with a contract, it must be established that a valid contract existed which a third party knew about, the third party intentionally and improperly procured the breach of the contract and the breach resulted in damage to the plaintiff’ ” ( Clearmont Prop., LLC v. Eisner, 58 A.D.3d at 1055, 872 N.Y.S.2d 725, quoting Bradbury v. Cope–Schwarz, 20 A.D.3d 657, 659, 798 N.Y.S.2d 207 [2005]; see Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94, 595 N.Y.S.2d 931, 612 N.E.2d 289 [1993]; Butler v. Delaware Otsego Corp., 218 A.D.2d 357, 360, 638 N.Y.S.2d 805 [1996] ). In their complaint, plaintiffs alleged that a valid contract existed between Ullmann and Inn Crystal, defendants were aware of the contract and they wrongly induced Inn Crystal to terminate it. Further, plaintiffs alleged that the contract was entered into in December 2005, and operated “on an annual basis,” that they were informed by Inn Crystal in October 2006 that Joseph had advised it to terminate the contract and it “would have to discontinue the valid services agreement” with Ullmann due to “information ... received from ... Joseph.” As a result, plaintiffs allege, they “suffered ... substantial monetary loss from lost commissions and sales of goods and services.”...