VFP Invs. I LLC v. Foot Locker, Inc.

• Decision Date: 14 February 2017
• Citation: 48 N.Y.S.3d 27,147 A.D.3d 491
• Parties: VFP INVESTMENTS I LLC, Plaintiff–Appellant, v. FOOT LOCKER, INC., Defendant–Respondent, Kathleen Smith, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

147 A.D.3d 491

48 N.Y.S.3d 27

VFP INVESTMENTS I LLC, Plaintiff–Appellant,

v. FOOT LOCKER, INC., Defendant–Respondent,Kathleen Smith, et al., Defendants.

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

Feb. 14, 2017.

Whiteford Taylor & Preston L.L.P., Baltimore, MD (William F. Ryan, Jr. of the bar of the State of Maryland, admitted pro hac vice, of counsel), for appellant.

Kelley Drye & Warren LLP, New York (John M. Callagy of counsel), for respondent.

FRIEDMAN, J.P., RENWICK, RICHTER, MOSKOWITZ, KAPNICK, JJ.

Order, Supreme Court, New York County (Charles E. Ramos, J.), entered October 26, 2015, which granted defendant Foot Locker, Inc.'s motion to dismiss the complaint as against it pursuant to CPLR 3211(a)(7), unanimously affirmed, without costs.

The fraudulent misrepresentation claim based on the theory of respondeat superior fails to state a cause of action. The allegations reasonably permit the inference that the verification of accounts receivable issued to Foot Locker by nonparty G3K, a provider of marketing materials, fell within the scope of defendant Smith's employment as Foot Locker's "Director of In–Store Marketing," although they do not support a finding that verification was within the scope of defendant Rainier's employment as "Divisional Vice President of Franchise Development." However, nothing in the complaint permits the inference that Smith engaged in this fraudulent verification in furtherance of Foot Locker's business, rather than solely for personal motives (see Judith M. v. Sisters of Charity Hosp., 93 N.Y.2d 932, 693 N.Y.S.2d 67, 715 N.E.2d 95 [1999] ).

The fraudulent misrepresentation claim based on implied actual authority fails to state a cause of action. The allegation that Smith procured marketing materials directly from G3K permits the inference that Smith could reasonably have believed that she had implied authority to verify G3K's accounts receivable (see Greene v. Hellman, 51 N.Y.2d 197, 204, 433 N.Y.S.2d 75, 412 N.E.2d 1301 [1980] ). However, she could not reasonably have believed that she had the authority to verify receivables falsely, and Foot Locker is not bound by the conduct in which she engaged that "exceed[ed] [her] authority" (Riverside Research Inst. v. KMGA, Inc., 108 A.D.2d 365, 370, 489 N.Y.S.2d 220 [1st Dept.1985], affd.68 N.Y.2d 689, 506 N.Y.S.2d 302, 497 N.E.2d 669 [1986] ). The allegations do not support a finding that Rainier could reasonably have believed he had authority to verify G3K's accounts receivables.

The fraudulent misrepresentation claim based on apparent authority also fails to state a cause of action. As the trial court correctly noted, Smith's and Rainier's job titles were insufficient, by themselves, to convey that they had authority over accounting matters. Moreover, the complaint fails to allege any misleading facts or words by Foot Locker (see DLJ Mtge. Capital, Inc. v. Kontogiannis, 102 A.D.3d 489, 489, 959 N.Y.S.2d 18 [1st Dept.2013] ). The fraudulent misrepresentation claim based on authority by estoppel fails to state a cause of action. The complaint does not allege that Foot Locker intentionally or carelessly caused plaintiff to believe that Smith or Rainier had the authority to verify receivables on its behalf (see Restatement [Second] of Agency § 8B ). It alleges only that Foot Locker knew or should have known of Smith's fraudulent...