Daniel Newhouse v. Roy Donahue Peebles Breach of Contract Lawsuit

8/17/2019 Daniel Newhouse v. Roy Donahue Peebles Breach of Contract Lawsuit

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FILED: NEW YORK COUNTY CLERK 03/12/2015 04:14 PM INDEX NO. 653998/2014

NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 03/12/2015


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FILED: NEW YORK COUNTY CLERK 03/12/2015 04:14 PM

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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

DANIEL NEWHOUSE,

Plaintiff,

ORAL ARGUMENT REQ

- against —

Index No. 653998/2014

FILED: NEW YORK COUNTY CLERK 02/17/2015 04:26 PM NYSCEF DOC. NO. 9 RECEIV


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THE PEEBLES CORPORATION and

R. DONAHUE PEEBLES,

Defendants.

MEMORANDUM OF LAW IN SUPPORT OF DEFENDAN

MOTION TO DISMISS THE COMPLAINT


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TABLE OF AUTHORITIES

Cases

A&S Welding & Boiler Repair, Inc. v. Siegel,

93 A.D.2d 712, 460 N.Y.S.2d 582 (1st Dcp't 1983)

Aksman v. Xiongwei Ju

21 A.D.3d 260, 799 N.Y.S.2d 493 (1st Dep't 2005)

Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce,


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70 A.D.3d 423, 894 N.Y.S.2d 47 (1st Dep't 2010)

American-European Art Assocs. v. Trend Galleries, Inc.,

227 A.D.2d 170, 641 N.Y.S.2d 835 (1st Dep't 1996)

I3atas v. Prudential Ins. Co. of Am.,

281 A.D.2d 260, 724 N.Y.S.2d 3 (1st Dep't 2001)

Bernstein v. Felske,

143 A.D.2d 863, 533 N.Y.S.2d 538 (2d Dep't 1988)

Corsello v. Verizon N.Y, Inc.,

18 N.Y.3d 777 (2012)

Cunnison v. Richardson Greenshields Sec., Inc.,

107 A.D.2d 50, 485 N.Y.S.2d 272 (1985)

Eden v. St. Luke's-Roosevelt Hosp. Cir.,

96 A.1).3d 614, 947 N.Y.S.2d 457 (1st Dep't 2012)

Freedman v. Pearlman,

271 A.D.2d 301, 706 N.Y.S.2d 405 (1st Dep't 2000)

Georgia Malone & Co. v. Rieder,

86 A.D.3d 406, 926 N.Y.S.2d 494 (1st Dep't 20] 1)

Ginsberg y Fahlield-Noble Corp.,

81 A.D.2d 318, 440 N.Y.S.2d 222 (1st Dep't 1981)

Joan Hansen & Co. v. Everlast World's Boxing Headquarters Corp.,

296 A.D.2d 103, 744 N.Y.S.2d 384 (1st Dep't 2002)

Kaplan v. Capital Co. of Am.,

298 A.D.2d 110, 747 N.Y.S.2d 504 (1st De

p't 2002)

La Barca v. Altenkirch,

193 A.D.2d 586, 597 N.Y.S.2d 158 (2d Dep't 1993)

Leder v. Spiegel,

31 A.D.3d 266, 819 N.Y.S.2c126 (1st Dep't 2006)

Logan Advisors, LLC v. Patriarch Partners, LLC,


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63 A.D.3d 440, 879 N.Y.S.2d 463 (1st Dep't 2009)

Maas v. Cornell Univ.,

94 N.Y.2d 87 (1999)

Mary Matthews Interiors v. Levis,

208 A.D.2d 504, 617 N.Y.S.2d 39 (2d Dep't 1994)

Mode Contempo, Inc. v Raymours Furniture Co.,

80 A.D.3d 464, 915 N.Y.S.2d 528 (1st Dep't 2011)

Oladokun v. Ryan,

No. 06 cv 2330 (KMW), 2011 WL 4471882 (S.D.N.Y. Sept. 27, 2011)

Ovitz

v.

Bloomberg L.P.,

18 N.Y.3d 753 (2012)

Parsa v. State,

64 N.Y.2d 143, 485 N.Y.S.2d 27 (1984)

Peter Lampack Agency, Inc. v Grimes,

93 A.D.3d 430, 939 N.Y.S.2d 409 (1st Dep't 2012)

Pritsker v. Kazan,

132 A.D.2d 507, 518 N.Y.S.2d 143 (1st Dep't 1987)

Rogowsky v. McGarry,

Scheer v. Kahn,

221 A.D.2d 515, 634 N.Y.S.2d 148 (2d Dep't 1995)

Schully v. Speiser Krause P.C.,

86 A.D. 3d 484, 928 N.Y.S.2d 4 (1st Dep't 2011)

Tierney v. Capricorn Investors, L.P.,

189 A.D.2d 629, 592 N.Y.S.2d 700 (1st Dep't 1993)

Tribune Printing Co. v. 263 Ninth Ave Realty, Inc.,

88 A.D.2d 877, 452 N.Y.S.2d 590 (1st Dep't 1982)

Tsabbar v. Auld,


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289 A.D.2d 115, 735 N.Y.S.2d 31 (1st Dep't 2001)

Ullmann v. Norma Karnali,

207 A.D.2d 691, 616 N.Y.S.2d 583 (1st Dep't 1994)

US Bank NA. v. Lieberman,

98 A.D.3d 422, 950 N.Y.S.2d 127 (1st Dep't 2012)

Valentino v. Davis

270 A.D.2d 635, 703 N.Y.S.2d 609 (3d Del

A 2000)

Vitale v. Steinberg

307 A.D.2d 107, 764 N.Y.S.2d 236 (1st Dep't 2003)

Waldman v. Englishtown Sportswear, Ltd,

92 A.D.2d 833, 460 N.Y.S.2d 552 (1st Dep't 1983)

Weintraub v. Phillips, Nizer, Benjamin, Krim, & Ballon,

172 A.D.2d 254, 568 N.Y.S.2d 84 (1st Dep't 1991)

Zimmer v. Town of Brookhaven,

247 A.D.2d 109, 678 N.Y.S.2d 377 (2d Dep't 1998)

Zolotar v. New York Life Ins. Co.,

172 A.D.2d 27, 576 N.Y.S.2d 850 (1st Dep't 1991)

Statutes


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CPLR 3211. Nonetheless, each of these claims is fatally deficient. Finally, he adds

under Section 198 of the Labor Law that fails because he does not allege a substanti

of the Labor Law and thus cannot satisfy a mandatory prerequisite to any such claim

Plaintiff s 108-paragraph Complaint is devoid of any viable legal the

recovery based upon the facts he alleges. As such, the Complaint should be dismiss

entirety, with prejudice.


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FACTUAL BACKGROUND'

TPC is engaged in real estate investment and development throughou

States. Peebles is the sole shareholder of TPC and serves as its Chairman and Chief

Officer ("CEO"). (Ex. A, Complaint 'If 15, 17).

On or about May 31, 2011, TPC offered Plaintiff a role as a Senior A

Development and Investments. (Complaint II 17; Ex. B, Plaintiff s Employment Ag

dated May 31, 2011). Pursuant to his Employment Agreement, Plaintiff was provide

salary of $72,000 and was "eligible for a year-end discretionary performance bonus

(emphasis in original)). Plaintiff countersigned the Employment Agreement on May

(Id. at 2).

During the interview process, Peebles allegedly told Plaintiff that "h

that Plaintiff would assume a key role in his organization" and "there would be partn

opportunities for someone who could complete the deals generated by Peebles." (C

Solely for purposes of this motion, Defendants do not dispute the allegations pled

(ft 18). Plaintiff claims that Peebles "practically echoed" portions of Peebles' memo

his philosophy that people that work with him "can make much more" than their sal

"goal is to make sure that all of our employees are exposed to great opportunities an

our key executives can become multimillionaires."

(Id.

at 1119). Peebles supposed

they "would agree to additional and much more meaningful compensation arrangem

this statement was "integral to Newhouse's decision to work with Peebles." (Id.

at

Plaintiff and Peebles agreed that if the relationship developedftivorably

they wou


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"a more complete understanding as the opportunities and economics defined themse

( 21 (emphasis added)).

Throughout Plaintiff s employment, he provided advice, hired and m

employees, signed agreements, worked with TPC's lawyers, and attended "importan

all on behalf of TPC.

(Id. atli 3)

In September 2011, Peebles informed Plaintiff that he was being prom

Director of Development and Investments.

(Id.

at If 23). During the same conversa

asked Plaintiff to relocate to New York to work on development opportunities.

(Id

promised Plaintiff,

when the projects matured sufficiently,

development and confi

Newhouse's interests in the projects."

(Id.

(emphasis added)). Upon Plaintiff s relo

New York, his salary was increased to $115,000 — an increase of more than 35%.

In New York, Plaintiff focused on Requests for Proposals ("RFPs") s

the City of New York for the development of several properties.

(Id.

at 11126-28).

proposal, and on june 23, 2012, Plaintiff did so.

(id

at ¶ 29-30). In addition to ot

Plaintiff requested:

•

a salary increase to $150,000;

•

half a percentage of purchase price for each winning civic center

one percent ownership interest in each winning property.

(Id.

at

¶ 30; Ex C, at 2, E-mail Correspondence between Plaintiff and Peebles, dated

2012 and June 27, 2012).


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Peebles responded via e-mail on June 27, 2012 and wrote, "I do have

the concept and fee proposals," adding that Plaintiff s proposals "do not adequately

interests." (Complaint

i( 31, Ex. C, at 1). Among other potential terms, Peebles dis

"some of my initial thoughts" and in relevant part, wrote:

We are comfortable with an ownership interest of 5% of our

promote interest for deals that you are not the procuring cause. . . .

For deals in which you are the procuring cause you would receive

10% of our promote interest . . . 50% of the ownership interest

would vest at construction loan closing and the balance upon

completion of the project. You would need to be employed by

TPC [at the] time of each milestone in order to receive the

applicable ownership interest.

(Id.).

Peebles declined Plaintiff s request for a salary increase, given that his salary

increased only seven months earlier. (Id.).

Plaintiff alleges that at the time Peebles "anticipated employing the '

structure to acquire and develop the 'Civic Center' properties." (Complaint ¶33). I

structure, TPC would "partner with a funding, or equity partner, to obtain most of th

more favorable percentage of ownership.

(Id.). This percentage change is conside

"promote interest."

(Id.). Plaintiff acknowledges that neither he nor Peebles knew

Civic Center properties would utilize a promote structure. (Complaint IT 34).

Plaintiff alleges that he and Peebles met on June 29, 2012 "agreed th

would receive 5% of Defendants' interest" and that Peebles would generate a "fully

compensation agreement." (Complaint If 35). In the fall of 2012, Plaintiff s salary

to $150,000 — an increase of almost 25% within one year. (Id).


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Beginning in early 2012 and through 2013, Plaintiff worked on the a

and development of 346 Broadway, one of the Civic Center properties.

(Id.

at III 4

February 25, 2013, Civic Center Community Group Broadway LLC ("CCGB") ente

purchase agreement with the City of New York, without an

equity partner. (Id.

Thereafter, Peebles and Plaintiff sought to identify other entities interested in develo

Broadway. (Id

at ¶ 43).

Civic Center Community Group Broadway Mezzanine LLC ("CCGB

allegedly entered into a preliminary agreement with an entity representing the Elad

("Elad") to establish a joint venture.

(Id.

at ¶ 47). The terms of this joint venture w

allegedly involve CCGB II (i) receiving a credit of $60 million, (ii) receiving reimb

its initial capital investment and expenses, and (iii) the ability for CCGB II to reinve

million (of the $60 million credit) into the joint venture to acquire a 35% interest in

Plaintiff claims, incorrectly, that he was entitled to 5% of the $60 million credit and


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Plaintiff and TPC were unable to come to agreement regarding the p

compensation arrangements. (Complaint '1156-58). Ultimately, TPC terminated Pl

employment on January 21, 2014.

(Id. at If 59),

ARGUMENT

I

egal Standards

Courts afford plaintiffs favorable inferences when determining the ex

cognizable legal theory under Rule 3211 of the CPLR. See Ovilz v. Bloomberg L.P


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753, 758 (2012). However, it is also "axiomatic that factual allegations which fail t

viable cause of action, that consist of bare legal conclusions, or that are inherently i

unequivocally contradicted by documentary evidence, are not entitled to such consi

Leder v. Spiegel, 31 A.D.3d 266, 267, 819 N.Y.S.2d 26, 27 (1st Dep't 2006). Plain

causes of action fail to state any legal theories that may survive Defendants' motion

Plaintiff's Breach of Contract Claim Fails

To recover on his claim of breach of contract, Plaintiff must plead (i

existed, (ii) Plaintiff s performance under the contract, (iii) Defendants' breach of th

and (iv) resulting damages. See US Bank N.A. v. Lieberman 98 A.D.3d 422, 423, 9

127, 128-29 (1st Dep't 2012). Here, Plaintiff fails to sufficiently allege a claim for

contract in his first cause of action for a multitude of reasons: (i) the alleged agreem

convey an interest in real property is barred by the Statute of Frauds; (ii) he alleges a

agreement to agree in the future, and does not sufficiently allege that a meeting of th

A. he Alleged Oral Agreement is Barred by the Statute of Frauds

The supposed oral agreement to provide Plaintiff a percentage of De

interest in acquired properties is barred by the Statute of Frauds and thus must be d

pursuant to CPLR 3211(a)(5).

Plaintiff asserts that TPC orally agreed "to pay Plaintiff 5% of Defen

interest in 346 Broadway" — that is, that the alleged agreement awarded to Plaintiff a

in real property. (Complaintil 35, 62). Yet, under New York General Obligations


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703(1):

An . . . interest in real property . . . cannot be created, granted,

assigned, surrendered or declared, unless by act or operation of

law, or by a deed or conveyance in writing, subscribed by the

person creating, granting assigning, surrendering or declaring the

same, or by his lawful agent, thereunto authorized by writing.

Gen. Oblig. Law § 5-703(1). Defendants' interest in 346 Broadway — a property pu

the purposes of development — constitutes an "interest in real property."

See Prnsk

132 A.D.2d 507, 507, 518 N.Y.S.2d 143, 144 (1st Dep't 1987) (holding that a stock

constitutes an interest in real property when the only asset is realty).

Peebles' June 27, 2012 e-mail does not satisfy the writing required b

of Frauds, as it is clear by Peebles' language that he had no intention of binding TPC

of the e-mail. Indeed, he described it as "some of my initial thoughts" — clearly imp

additional considerations might be raised in the future and that the e-mail was mere

point for negotiations. (Ex. C, at 1). Because Plaintiff concedes that the parties nev

Statute of Frauds. See La Barca v. Ahenkirch,

193 A.D.2d 586, 586, 597 N.Y.S.2d

Dep't 1993) (rejecting contract claim based on mere negotiations where the parties i

enter into a "more complete and formal contract").

B.

here Was No Meeting of the Minds and, Therefore, No Contra

Even if Plaintiff s breach of contract claim is not barred by the Statu

it still cannot survive a motion to dismiss. Plaintiff alleges that Defendants breached

to (i) grant Plaintiff 5% of Defendants' interest in 346 Broadway and (ii) generate a


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writing. (Complaint I 62). However, Plaintiff s allegations and legal precedent dem

he has no claim for breach of contract.

The discussion upon which Plaintiff relies for his claim to an interest

Broadway occurred in June 2012.

(Id.

at III 29-31). Plaintiff requested an increased

half a percentage of the purchase price for each winning Civic Center property, of w

Broadway would qualify, and 1% of the ownership interest in each property.

(Id.

a

at 2). He concedes that Peebles rejected his request and e-mailed "initial thoughts" i

(Complaint ¶ 31, Ex. C, at 1 .

In relevant part, Peebles offered a counterproposal in

TPC would be "comfortable" with offering Plaintiff 5% of TPC's "promote interest

1).

Plaintiff alleges that he spoke with Peebles and they agreed that Plaintiff "would

of Defendants' interest" and Peebles would generate "a fully integrated compensatio

agreement." (Complaint I 35). But nowhere does Plaintiff allege that he and Peeble

regarding what constitutes "Defendants' interest" or the remaining terms addressed i

(Id.

at IfIf 50, 52, 59). The parties would not need a "fully integrated compensation

their oral agreement contained all the essential terms of their agreement.

Plaintiff s allegations amount, at best, to a mere agreement to agree a

— an agreement that as a matter of law cannot form the basis for a claim of breach of

"Generally, where the parties anticipate that a signed writing is required, there is no

until one is delivered."

Amcan Holdings, Inc. v. Canadian Imperial Bank of Comme

A.D.3d 423, 426, 894 N.Y.S.2d 47, 50 (1st Dep't 2010) (finding that even where th


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executed a written summary of terms and conditions, they were not bound by the ag

because they contemplated a future finalized agreement).

See also Aksman v. Xiong

A.D.3d 260, 261-62, 799 N.Y.S.2d 493, 495 (1st Dep't 2005) (reversing lower cour

and dismissing breach of contract claim because parties only agreed to agree). In a

presenting similar facts to those alleged here, the First Department dismissed a claim

employee that he was orally promised a percentage of fees earned on work he perfor

Schutt)) v. Speiser Krause P.C.,

86 A.D. 3d 484, 485, 928 N.Y.S.2d 4, 6 (1st Dep't

court found that the parties were unsuccessful in negotiating the terms of the emplo

contract, and the fact that the parties' correspondence contemplated the creation of a

employment contract established that (i) there was no intent to be bound until there

written contract and (ii) there was no meeting of the minds on all material terms of

agreement.

See id

Throughout the Complaint, Plaintiff repeatedly states that the pa

intended to enter into a "fully integrated compensation agreement." (Complaint'r 2

Furthermore, Plaintiff fails to allege consideration on his part. He me

that he "performed all of his obligations pursuant to his duties" (Complaint I 64), b

was already obliged to perform those duties pursuant to his employment with TPC a

no distinction as to what

he

was obligated to do differently in connection with the a

agreement. (Ex. B at 1). Indeed, Plaintiff concedes that when he took on the new ro

York, the parties had not even discussed the terms of any such arrangement — he firs

June 23, 2012, at least seven months later. (Complaint I 23, 29-30). "Neither a pro


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that which the promisor is already bound to do, nor the performance of an existing l

obligation constitutes valid consideration." Tierney v. Capricorn Investors, L.P.,

1

629, 631, 592 N.Y.S.2d 700, 703 (1st Dep't 1993) (affirming motion to dismiss a co

where plaintiff failed to allege consideration because he was continuing to perform

duties for his employer).

The parties simply never reached agreement regarding the terms of a

compensation that might become payable to Newhouse. ,As such, no contract ever e

Plaintiff s claim for breach of contract must therefore be dismissed.

C.

efendants Did Not Breach the Alleged Oral Agreement

Even if Plaintiff could rely upon an oral agreement, by the terms of t

and the documents incorporated therein, he does not assert of a breach of such agree

Plaintiff's description of the supposed oral agreement is vague and confusing; howe

that the parties agreed upon the essential terms necessary for an enforceable contrac

the procuring cause." (Ex. C, at 1). Plaintiff asserts that on June 28, 2012 the parti

that Plaintiff would "receive 5% of Defendants' interest" (Complaint ¶ 35), which, m

that Plaintiff agreed to receive 5% of Defendants' promote interest. Indeed, Plaint

that at the time Peebles "anticipated employing the 'promote' structure to acqtfire an

the 'Civic Center' properties." (Id. at I 33). However, Plaintiff concedes that a pro

never arose in connection with 346 Broadway. (Id. at ¶ 42, 47 .

As discussed above, the Complaint explains that in a promote structu


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partners with a "funding, or equity partner, to obtain most of the capital necessary to

property."

(Id.

at ¶ 33). Such agreement then provides for "an ownership split favo

substantial equity partner until that equity investor's capital investment is repaid" an

typically provide the equity partner with a preferred rate of return.

(Id.). Followin

repayment of the investment and payment of the preferred rate, TPC's ownership sp

more favorably and this percentage change is considered TPC's "promote interest."

Instead of entering into a promote structure, on February 25, 2013, C

executed a purchase agreement with the City of New York for 346 Broadway and d

an equity partner. (Id. at 1

1142). CCGI3 II later entered into a preliminary joint vent

agreement with an Elad-affiliated entity that provided CCGB II with certain cash pa

reimbursement of expenses, and a 35% interest in the property.

(Id. at IT 47). Beca

promote interest arose, Plaintiff cannot assert that Defendants breached the alleged o

agreement when it declined to pay Plaintiff a percentage of the promote interest.

Furthermore, Plaintiff does not — and cannot — allege that he met the

conditions under the June 27, 2012 e-mail: "You would need to be employed with T

time of each milestone in order to receive the applicable ownership interest." (Ex. C

For all of these reasons, Plaintiff fails to adequately allege a breach o

supposed oral agreement.

1).

eebles Cannot Be Held Personally Liable for Breach of Contrac

Even if the breach of contract claim were properly pled, Plaintiff fail


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facts upon which Peebles could be held personally liable. "[I]t is well established t

agents of a company are not personally liable on a contract if they do not purport to

themselves individually."

Georgia Malone & Co. v. Rieder,

86 A.D.3d 406, 408, 9

494, 496-97 (1st Dep't 2011) (affirming a motion to dismiss and finding no persona

where officer entered into the agreement on behalf of his company). Indeed, the gen

that an officer

Or director is liable when he acts for his personal, rather than the corp

interests." Joan Hansen & Co. v. Everlast World's Boxing Headquarters Corp.,

29

103, 110, 744 N.Y.S.2d 384, 390 (1st Dep't 2002) (dismissing claim of personal lia

breach of contract where plaintiff failed to allege that defendants "sought to obtain a

benefit, as opposed to a benefit to the corporation he represented").

The Complaint acknowledges that Peebles is the Chairman and CEO

(Complaint ¶ 17). Plaintiff nowhere alleges that any agreement existed between him

Peebles, rather than him and TPC — indeed, if that were the case then the claim again

company" and states that "[y]ou would need to be employed by TPC [at the] time o

milestone in order to receive the applicable ownership interest." (Ex. C, at 1 .

Because Plaintiff does not allege that Peebles intended to be personal

any agreement with Plaintiff and Peebles was acting in his capacity as Chairman an

TPC, his breach of contract claim against Peebles should be dismissed.

III. laintiffs Implied and Quasi Contract Claims Also Fail

Given that his claim for breach of contract cannot succeed, Plaintiff a


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Court to create a contract where none exists, asserting a kitchen sink of baseless and

quasi contract and implied contract claims. None of these allegations can survive di

A. laintiffs Implied Contract Claim Must Fail

An implied-in-fact contract requires the same elements as a

written

including "consideration, mutual assent, legal capacity, and legal subject matter."

Cornell Univ.,

94 N.Y.2d 87, 93-94 (1999). Here, the allegations in the Complaint

there was no mutual assent. As discussed above, it is clear that the parties intended

written agreement that would contain all of the as-yet-unnegotiated terms of a fully

agreement. Plaintiff rejected the Proposed Agreement proffered on January 9, 2014

claims an implied-in-fact contract, but "[a] contract may not be implied in fact from

of the parties where it appears that they intended to be bound only by a formal writt

agreement." Valeniino v. Davis,

270 A.D.2d 635, 638, 703 N.Y.S.2d 609, 612 (3d

(dismissing implied-in-fact claim where parties intended that agreement would be f

(analyzing the difference between implied-in-fact and implied-in-law or quasi contr

contract implied in fact contemplates not assurances or promises but conduct." Zim

of Brookhaven,

247 A.D.2d 109, 114, 678 N.Y.S.2d 377, 381 (2d Dep't 1998) (affir

dismissal of implied-in-fact contract claim in part because claim was based on assur

defendant Town would pay expenses for plaintiff). Plaintiff s claim for breach of im

contract merely lists "promises" allegedly made by Defendants. (Complaint ¶ 68).

Plaintiff uses the term "promise" or "promises" six times as the basis for this claim.


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asserts no actual conduct, but seeks to recast words as conduct. 3

In any event, Plaintiff's claim must fail given the existence of an act

contract covering the same subject matter as the alleged implied contract. Plaintiff s

were covered by the valid Employment Agreement (Ex. B), and thus the implied co

is precluded. See Peter Lampack Agency, Inc. v Grimes, 93 A.D.3d 430, 431, 939

410 (1st Dep't 2012) (dismissing implied contract claim "because there exists an ex

contract covering the same subject matter");

A&S Welding & Boiler Repair, Inc. v.

A.D.2d 712, 712, 460 N.Y.S.2d 582, 582 (1st Dep't 1983) ("A contract cannot be im

. . . where there is an express contract covering the subject-matter involved; or again

intention or understanding of the parties.") (internal citation omitted). Because Plain

duly compensated for the services he performed under the Employment Agreement

existence of that agreement bars any claim for breach of an alleged implied contract

B. laintiff Has Not Adequately Alleged a Breach of the

agreement that gives rise to an implied covenant claim; (ii) even if an agreement is

exist, he does not allege that Defendants acted in a way that while not forbidden by

agreement deprived him of his rights under the agreement; and (iii) he merely repeat

of contract claim in asserting the implied covenant allegations. Consequently, this c

survive a motion to dismiss.

A claim for breach of the implied covenant of good faith and fair dea

pursued only where Plaintiff establishes the existence of a valid and binding contrac


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American-European Art Assocs. v. Trend Galleries, Inc.,

227 A.D.2d 170, 171, 641

835, 836 (1st Dep't 1996) (dismissing claim where there was no valid contract). If

contract exists, then the implied covenant is breached "when a party to a contract ac

manner that, although not expressly forbidden by any contractual provision, would

other party of the right to receive the benefits under their agreement."

Jaffe v Para

Commc 'ns Inc. ,

222 A.D.2d 17, 22-23, 644 N.Y.S.2d 43, 47 (1st Dep't 1996) (upho

dismissal of claim where plaintiff failed to allege that defendant deprived him of an

their employment agreement).

Here, Plaintiff has no valid contract from which an implied covenant

His allegations.in support of this claim focus on Defendants' "refusal to negotiate [th

Agreement] in good faith." (Complaint '1174). Courts will not impute a duty to neg

terms of an agreement without "a clear set of guidelines against which to measure a

efforts."

Bernstein v. Felske,

143 A.D.2d 863, 865, 533 N.Y.S.2d 538, 540 (2d De

there is no violation of the obligation to negotiate in good faith simply because nego

failed.

See Mode Contempo, Inc. v Raymours Furniture Co.,

80 A.D.3d 464, 465, 9

528, 529 (1st Dep't 2011) (dismissing claim for implied breach of good faith and fa

because mere failure of negotiation does not state a claim).

Plaintiff's claim also is duplicative of his contract claim, as he simply

Defendants breached the oral agreement. However, when a claim for breach of the i

covenant of good faith and fair dealing arises from the same facts as the cause of ac


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breach of contract and seeks identical damages for each alleged breach, the claim m

dismissed.

See Amcan Holdings, Inc.,

70 A.D.3d at 426, 894 N.Y.S.2d at 49-50 (im

covenant claim "was properly dismissed as duplicative of the breach-of-contract cla

claims arise from the same facts and seek the identical damages for each alleged bre

Advisors, LLC v. Patriarch Partners, LLC,

63 A.D.3d 440, 443, 879 N.Y.S.2d 463,

Dep't 2009) (upholding dismissal of claim where it was "duplicative of the breach o

claim because both claims arise from the same facts"). Consequently, Plaintiff s cla

Defendants breached an implied covenant of good faith and fair dealing should be d

C.

laintiff Cannot Sustain His Claims Pleaded Under 'Theories of

Quantum Meruit, Unjust Enrichment, and Promissory Estoppel

Plaintiff fails to state claims for quantum meruit, unjust enrichment,

promissory estoppel because these claims are duplicative of the breach of contract c

three causes of action, Plaintiff merely alleges that his work benefitted Defendants a

Verizon N.Y Inc. 18 N.Y.3d 777, 790-91 (2012).

See also Rogowsky v. MCGarry

815, 816-17, 865 N.Y.S.2d 670, 672 (2d Dep't 2008) (dismissing claim for unjust e

because "the underlying basis for these claims was the alleged breach of the oral ag

Because Plaintiff s claims for quantum meruit and unjust enrichment completely mi

for breach of contract, these causes of action should be dismissed. Moreover, each p

claim fails for other, specific reasons described below.

1.

laintiff Does Not Properly Allege a Claim for Quantum Me


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To assert a claim for quantum meruit, Plaintiff must allege "the perfo

services in good faith, acceptance of the services by the person to whom they are ren

expectation of compensation therefor, and the reasonable value of the services."

G

Malone & Co.,

86 A.D.3d at 410, 926 N.Y.S.2d at 499. Plaintiff claims that he "pe

services for Defendants in the reasonable expectation that he would be compensated

work," Defendants "accepted the benefits" of his work, and he therefore is "entitled

the reasonable value of his services for Defendants, to the extent that he has not bee

compensated before." (Complaint

¶J

77-79). He also alleges that the compensation

identical to that alleged under his breach of contract claim.

(Id. at ¶ 80 .

However, "Mecovery in quantum meruit is not warranted when the s

rendered by the plaintiff were required by the terms of an express contract between

Mary Matthews Inferiors v. Levis,

208 A.D.2d 504, 506, 617 N.Y.S.2d 39,41 (2d D

In

Freedman v. Pearlman,

271 A.D.2d 301, 303-04, 706 N.Y.S.2d 405, 408 (1st D

Freedman's allegation that he performed services far greater than

defendants deserved for the compensation he actually received are

not sufficient to state a cause of action in quantum meruit where

none of the services allegedly performed are so distinct from the

duties of his employment and of such nature that it would be

unreasonable for the employer to assume that they were rendered

without expectation of further pay.

Freedman,

271 A.D.2d at 304, 706 N.Y.S.2d at 408 (citation omitted). Similarly, h

does not allege that he performed services beyond what was required by his employ

TPC, and his claim thus fails,


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Furthermore, Plaintiff knew, by the language of the Employment Ag

any bonus payment made to him would be subject to TPC's discretion. (Ex. B at 1)

Consequently, he cannot claim he had a contractual right to any bonus outside of TP

discretion when he acknowledged this fact in writing.

See Kaplan v. Capital Co. of

A.D.2d 110, 111, 747 N.Y.S.2d 504, 506 (1st Dep't 2002) (quantum meruit claim fa

plaintiff was aware that bonuses were discretionary). Consequently, even without th

discussed. above, Plaintiff cannot proceed with his claim of quantum meruit.

2.

laintiff s Unjust Enrichment Claim Fails

To state a claim for unjust enrichment, Plaintiff must allege that "the

has obtained a benefit which in equity and good conscience should be paid to the pl

Corsello,

18 N.Y.3d at 790 (citations and internal quotation marks omitted). The C

Appeals explained that unjust enrichment "is not a catchall cause of action to be use

others fail" and is "available only in unusual situations when, though the defendant

Plaintiff s allegations supporting his claim for unjust enrichment mer

that he performed work that benefited Defendants and they were unjustly enriched.

IN 82-83). Such a claim does not rise to the "unusual" situation contemplated by the

Appeals in

Corsello.

Instead, this is a common occurrence where Plaintiff performe

connection with his employment obligations and wanted to be paid more money, ev

salary rose quickly and exponentially throughout his brief tenure. (Ex. B; Complain

Indeed, as with his quantum meruit claim, Plaintiff s unjust enrichme


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barred precisely because he performed under, and received compensation pursuant t

written agreement.

See Zolotar v. New York Life Ins. Co.,

172 A.D.2d 27, 33, 576 N

854 (1st Dep't 1991) (upholding summary judgment dismissing unjust enrichment a

meruit claims where employee had "fully performed under a written contract, whose

undisputed, and whose terms cover the subject matter of the dispute");

Vitale v. Ste

A.D.2d 107, 111, 764 N.Y.S.2d 236, 239 (1st Dep't 2003) (dismissing unjust enrich

where express contract, a compensation plan, governed the subject matter of plaintif

As with his quantum meruit claim, there is no allegation that Plaintiff performed dut

of the scope of his regular employment.

3.

laintiff s Promissor 7

Esto el Claim Also Fails

Promissory estoppel is "reserved for a limited class of cases based on

circumstances," none of which are present in the instant matter.

Tribune Printing C

Ninth Ave. Rea lty, Inc.,

88 A.D.2d 877, 879, 452 N.Y.S.2d 590, 593 (1st Dept. 198

written, fully integrated agreement — something that never happened. Thus, Plaintif

demonstrate either the existence of a "clear and unambiguous promise" or reasonabl

any such promise.

Moreover, to make a claim for promissory estoppel, Plaintiff must al

"prejudicial change in his position." Tierney,

189 A.D.2d at 632, 592 N.Y.S.2d at

pleads only that he "relocated, worked diligently and otherwise performed services o

Defendants' behalf." (Complaint ¶ 87). However, the alleged oral promise concern

percentage interest he would earn from Defendants' activities did not occur until sev


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oiler

he relocated to New York, and thus he clearly did not relocate in reliance on a

promise.

(Id.

at '11123, 35). In fact, Plaintiff s supposed reliance consisted of him m

continuing to do his job — he flatly fails to allege a prejudicial change in position.

S

189 A.D.2d at 632, 592 N.Y.S.2d at 703-04 (noting that continuing to do one's job a

salary cannot support a claim for promissory estoppel);

Tsabbar v. Auld,

289 A.D.2

735 N.Y.S.2d 31, 32 (1st Dep't 2001) (to support a claim for promissory estoppel, p

must be "unequivocally referable to the alleged oral agreement")

Finally, Plaintiff s promissory estoppel claim cannot avoid the Statut

unless he demonstrates that it would be "unconscionable to deny" the oral promise u

allegedly relied.

See Ginsberg v. Fairfield-Noble Corp.,

81 A.D.2d 318, 320-21, 44

222, 224-25 (1st Dep't 1981) (barring contract claim due to Statute of Frauds and fin

plaintiff s decision to forego other employment based upon alleged oral promises di

failure to enforce the oral contract."

Cunnison v. Richardson Greenshields Sec., Inc.

A.D.2d 50, 53, 485 N.Y.S.2d 272, 276 (1985). Yet, Plaintiff's alleged reliance is sol

on his relocation and continued work for TPC. (Complaint at 1187). Neither fact even

approaches the level of injury required to avoid the Statute of Frauds. "[I]t has been c

held that a change of job or residence, by itself, is not sufficient to trigger invocation

promissory estoppel doctrine."

Cunnison,

107 A.D.2d at 53, 485 N.Y.S.2d at 276 (e

that the decisions based on "rosy promises" do "not put the stigma of unconscionabili

defendants' right to assert the Statute of Frauds.").


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D.

eebles Cannot Be Personally Liable for

Plaintiff's Alleged Implied or Quasi Contract Claims

As discussed above with respect to Plaintiff s breach of contract claim

cannot be held personally liable for any alleged breach of an implied or quasi contra

does not allege

that Peebles acted in his individual capacity, rather than as CEO of TP

directed Plaintiff to perform certain duties. Indeed, Plaintiff was employed by TPC an

times performed services for TPC alone. Similarly, Plaintiff does not allege that Peeb

any promises to Plaintiff in his personal capacity, such as promising to pay Plaintiff o

own pocket. Consequently, Peebles cannot be held liable for Plaintiff's causes of act

sounding in implied contract, the covenant of good faith and fair dealing, quantum m

enrichment, or promissory estoppel.

See Waldman v. Englishiown Sportswear, Ltd.,

833, 836-37, 460 N.Y.S.2d 552, 556-57 (1st Dep't 1983) (dismissing quantum merui

personal action by the individual defendant);

Oladokun v. Ryan,

No. 06 cv 2330 (KM

WL 4471882, at *13 (S.D.N.Y. Sept. 27, 2011) (applying New York law and dismis

of implied contract claim against an individual defendant because implied contract w

employee and employer).

IV

laintiff s Labor Law Claim Should Be Dismissed

Plaintiff's seventh cause of action fails as a matter of law because Plai

not allege a substantive violation of the Labor Law. Labor Law § 198 sets forth the r

available for a breach of the Labor Law but contains no substantive provisions:


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In any action instituted upon a wage claim by an employee . . . in

which the employee prevails, the court shall allow such employee

reasonable attorney's fees and, upon a finding that the employer's

failure to pay the wage required by this article was willful, an

additional amount as liquidated damages equal to twenty-five

percent of the total amount of the wages found to be due.

N.Y. Labor Law § 198(1-a).

The Court of Appeals has made clear that the remedies provided by Se

are available only in actions brought under the substantive provisions of Labor Law

are not available to individuals seeking recovery only under other theories, such as b

contract.

See Gottlieb v. Kenneth D. Laub & Co.,

82 N.Y.2d 457, 463 (1993). Plain

states that "the foregoing causes of action constitute wage claims as the Labor Law d

term." (Complaint 1193). He nowhere alleges how or why Plaintiff s claims are base

substantive violations of the Labor Law or which provisions of the Labor Law Defen

section 198 were intended to be limited to claims based upon substantive violations o

article."

Gottlieb,

at 463.

See also Scheer v. Kahn,

221 A.D.2d 515, 517, 634 N.Y.S

151 (2d Dep't 1995) (dismissing Section 198 claim because "the only causes of actio

the Labor Law are for costs, attorney's fees, and liquidated damages which do not co

the substantive provisions of Labor Law § 198(1-a)"). Because the Complaint does n

claim for a substantive violation of the Labor Law, this claim for remedies under Sec

should be dismissed.

V.

laintiff Fails to Adequately Allege the Existence of a Fiduciary


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Relationship, Thus His Claim for Breach of Fiduciary Duty Fails

Plaintiff's eighth cause, for breach of fiduciary duty, fails because no

relationship existed between the parties. A claim for breach of fiduciary duty requires

existence of a fiduciary relationship.

See Batas v. Prudential Ins. Co. of Am.,

281 A

264, 724 N.Y.S.2d 3, 7 (1st Dep't 2001) (no fiduciary duty arose between contracting

Indeed, lilt is well settled in New York that no fiduciary obligation is owed by an em

an at-will employee." Weintraub v. Phillips, Nizer, Benjamin, Krim, & Ballon,

172

254, 568 N.Y.S.2d 84, 85 (1st Dep't 1991) (upholding dismissal of claim for breach o

duty because an employer does not owe an employee a fiduciary obligation).

See als

307 A.D.2d at 108, 764 N.Y.S.2d at 237 ("An employer-employee relationship provi

division of profits will not give rise to a fiduciary obligation on the part of the emplo

an agreement to also share losses."). While Plaintiff asserts that Defendants caused hi

Plaintiff s relationship with Defendants' from that of employer and employee, and su

and subordinate, to that rare type of relationship that gives rise to fiduciary obligation

Eden v. St. Luke's-Roosevelt Hosp. Ctr.,

96 A.D.3d 614, 615, 947 N.Y.S.2d 457, 459

2012) ("Neither an agreement by an employer to share profits with an employee as c

for the latter's services nor a contract of mere hiring and providing for compensation

particular manner supposedly tending to induce greater energy and faithfulness on th

employee creates a fiduciary relationship between the employer and employee.").

CONCLUSION


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For the foregoing reasons, Defendants respectfully request that the Co

(i) dismiss the Complaint in its entirety, with prejudice and without leave to amend, p

CPLR 3211(a)(1), 3211(a)(5), and 3211(a)(7); and (ii) grant such other relief as the C

deem just and proper.

Dated: New York, New York

February 17, 2015

KRAMER LEVIN NAFTALIS & FRANKEL

By:

Robert N. Holtzman

Katrina L. Baker

1177 Avenue of the Americas

New York, New York 10036

(212) 715-9100

RHoltzman a kramerlevin.com

KBaker a kramerlevin.com

-against-

THE PEEBLES CORPORATION and R. DONAHUE PEEBLES

REQUEST FOR JUDICI L INTERVENTION

For Court

UCS-840 (7/2012)

Supreme

COURT, COUNTY OF

IAS

New York

Jud

Index No:

53998/2014

Date Index Issued:

12/31/2014

Enter the complete case caption. Do not use et al or et ano. If more space is required,

attach a caption rider sheet.

CAPTION:

DANIEL NEWHOUSE

Plaintiff(s)/Petitioner(s)

FILED: NEW YORK COUNTY CLERK 02/17/2015 04:26 PM NYSCEF DOC. NO. 10 RECEIV


188/190

(specify)

0 Medical, Dental, or Podiatric Malpractice

0 Motor Vehicle

0 Products Liability:

(specify)

0 Other Negligence:

(specify)

0 Other Professional M alpractice:

0 Other Tort:

0 Resi

0 Condemnation

0 Mortgage Foreclosure (specify):

Property Address:

NATURE OF ACTION OR PROCEEDING:

heck ONE box only and specify where indicated

MATRIMONIAL

()Contested

NOTE: For all Matrimonial actions where the parties have children under

the age of 18, complete and attach the M ATRIMONIAL RJI Addendum.

For Uncontested Matrimonial actions, use RJI form UD-13.

TORTS

sbestos

0 Breast Implant

0 Environmental:

(specify)

COMMERCIAL

0 Business Entity (including corporations, partne

0 Co ntract

0 Insurance (where insurer is a party, except arb

O

UCC (including sales, negotiable instruments)

0 Other Commercial:

spe

NOTE:

For Commercial Division assignment

202.70 d)], complete

and attach the COMME

REAL PROPERTY:

How many properties does th

(specify)

OTHER MATTERS

Street Address

NOTE:

For Mortgage F oreclosure actions inv

owner-occupied, residential property, or an ow

condominium, complete and attach the FOR

0 Tax Certiorari Section: Bl

0 Tax Foreclosure

0 Other Real Property:

spe

SPECIAL PROCEEDINGS

0 CPLR Article 75 (Arbitration)

[see NOTE un

o

OPLR Article 78 (Body or Officer)

[see NOTE under Commercial]

Certificate of Incorporation/Dissolution

0 Emergency Medical Treatment

0 Habeas Corpus


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FILED: NEW YORK COUNTY CLERK 03/05/2015 11:09 AM INDEX NO. 653998/2014



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Daniel Newhouse v. Roy Donahue Peebles Breach of Contract Lawsuit

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