|Soldano v Precision CNC Corp.|
|2013 NY Slip Op 51633(U) [41 Misc 3d 1210(A)]|
|Decided on October 4, 2013|
|Supreme Court, Suffolk County|
|Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.|
|As corrected in part through October 16, 2013; it will not be published in the printed Official Reports.|
Edward Soldano and APEX INDUSTRIES, LTD, Plaintiffs,
Precision CNC Corp., ROHRBAUGH FIREARMS, GEOFFREY GLIEBE, SR., as an Individual and in his capacity as an officer and shareholder of the corporation, SAL NAPOLITANO, as an Individual and in his capacity as an officer and shareholder of the corporation, KARL ROHRBAUGH, as an Individual and in his capacity as an officer and shareholder of the corporation, and MICHAEL WARD, as an Individual and in his capacity as an officer and shareholder of the corporation, Defendants.
Upon the following papers numbered 1- 41read on these motions to dismiss ; Notice of Motion and supporting papers 1-16; 19-24; 27-36 ; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 17; 25; 37 ; Replying Affidavits and supporting papers 18; 26; 38 ; Other39-41 ; it is,
ORDERED that the motion by the defendants Karl Rohrbaugh and
Rohrbaugh Firearms for an order dismissing the complaint insofar as it is asserted against
them is granted to
the extent of dismissing the fifth cause of action and the sixth and tenth causes of action insofar as they are asserted against the defendants Karl Rohrbaugh and Rohrbaugh Firearms; and it is further
ORDERED that the motion by the defendants Karl Rohrbaugh and Rohrbaugh Firearms is otherwise denied; and it is further
ORDERED that the motion by the defendants Sal Napolitano and Precision CNC Corp., for an order dismissing the complaint insofar as it is asserted against them is granted to the extent of dismissing the first and second causes of action and the tenth cause of action insofar as it is asserted against the defendants Sal Napolitano and Precision CNC Corp.; and it is further
ORDERED that the motion by the defendants Sal Napolitano and Precision CNC Corp., is otherwise denied; and it is further
ORDERED that the branch of the motion by the defendant Michael Ward which is for an order dismissing the complaint insofar as it is asserted against him is granted; and it is further
ORDERED that the motion by the defendant Michael Ward is otherwise denied; and it is further
ORDERED that the plaintiffs are granted leave to serve and file an amended complaint in accordance herewith, if they be so advised, within 30 days after service upon them of a copy of this order with notice of entry. [*2]
The plaintiff Edward Soldano is the president and majority shareholder of the plaintiff Apex Industries, Ltd. ("Apex"), which manufactures parts for firearms and airplanes. The defendants Michael Ward and Geoffrey Gliebe are minority shareholders. Apex leased space in a commercial building located in Deer Park, New York (the "premises"). The defendants Rohrbaugh Firearms and Precision CNC, Inc. ("Precision") leased space in the same building. The defendant Karl Rohrbaugh is the president of Rohrbaugh Firearms (the "Rohrbaugh defendants"), and the defendant Sal Napolitano is Precision's sole officer, director, and shareholder. Apex manufactured firearms components for Rohrbaugh Firearms.
Apex fell behind in the rent, and the landlord commenced an action against it in Suffolk County District Court. That action was settled pursuant to a stipulation dated September 24, 2010. The parties agreed that Apex's failure to comply with the terms of the stipulation would result in judgment against Apex and the immediate issuance of a warrant of eviction. Apex defaulted by failing to make payments according to the terms of the stipulation. Apex entered into a subsequent stipulation of settlement with the landlord dated September 6, 2011, in which it consented to the immediate entry of a judgment in the amount of $40,000 and to the immediate issuance of a warrant of eviction. Apex also consented to provide access to the premises and to provide the landlord with the keys by October 31, 2011. Execution of the warrant was stayed until October 31, 2011. On October 26, 2011, Precision and the landlord entered into a lease for the premises for a period of three years commencing on November 1, 2011. The plaintiffs allege that Precision has taken over Apex's business, including its lease, its equipment, and its contracts, and that Precision is supplying Rohrbaugh Firearms with parts.
The plaintiffs commenced this action to recover damages, inter alia, for breach of contract, fraud, and tortious interference with contract. The gravamen of the plaintiffs' complaint is that the defendants, acting in concert, took advantage of Apex's eviction. The plaintiffs allege that Napolitano and Precision represented to Apex that they would take over Apex's lease and allow Apex to continue to do business on the premises (the purported "lease-takeover agreement"). The plaintiffs allege that they relied on these representations and agreed to allow Napolitano and Precision to renegotiate the lease; that Napolitano and Precision did not negotiate in good faith; and that, once the new lease was signed, Napolitano and Precision reneged on their promise to allow the plaintiffs to stay and took over the business. The plaintiffs allege that the other defendants conspired with Napolitano and Precision to force Apex out of business and/or tortiously interfered with the lease-takeover agreement. The defendants Karl Rohrbaugh and Rohrbaugh Firearms, Sal Napolitano and Precision, and Michael Ward separately move to dismiss the complaint insofar as it is asserted against them.
The plaintiffs commenced this action by filing a summons with notice on November 26, 2012. This court (Rebolini, J.) signed an order to show cause for injunctive relief, among other things, on December 10, 2012. The order to show cause directed that it be served, along with the summons with notice, on the individual defendants pursuant to CPLR (1) or (2). Ward was not served with the order to show cause and summons with notice. The Rohrbaugh defendants served a demand for a complaint on January 4, 2013, and the plaintiff served a [*3]verified complaint on or about January 25, 2013. Although Ward was not served, his attorney appeared at a conference with the court on February 15, 2013. At that conference, the parties entered into a stipulation in which they agreed that the plaintiff would serve an amended complaint on all defendants by March 22, 2013, and a summons on Ward by the same date.[FN1] Ward was served in Maryland pursuant to CPLR 308 (2) and 313 on April 8, 2013. Ward contends, inter alia, that he was not properly served with process.
CPLR 308 (2) authorizes service by delivery of the summons to a person of suitable age and discretion at a specified location where redelivery to the defendant is likely to occur, together with a mailing to the defendant at a similar, specified location (Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, C308:3 at 195). CPLR 308 (2), therefore, is a two-step form of service in which delivery and mailing are both essential (Id.). Jurisdiction attaches when the two steps of delivery and mailing are performed (Id. at 204).
The affidavit of service submitted to the court indicates that the amended complaint and exhibits were left with a person of suitable age and discretion at Ward's dwelling house or usual place of abode in Maryland on April 8, 2013. The affidavit of service does not indicate that a summons was left with the amended complaint and exhibits. A separate affirmation of service indicates that 20 days earlier, on March 19, 2013, "a true and accurate copy of the documents regarding the...action" was mailed to the defendants' attorneys, including Ward's attorney. Attached to the affirmation of service is a copy of the amended complaint and exhibits. A copy of the summons is not attached. The court finds that, under these circumstances, there is no evidence in the record indicting that a summons was either delivered or mailed to Ward. Thus, neither step required by CPLR 308 (2) to obtain personal jurisdiction over him was performed. Accordingly, the seventh action is dismissed and the sixth and tenth causes of action are dismissed insofar as they are asserted against Ward.
The first cause of action is for breach of contract against Napolitano and Precision. They move to dismiss this cause of action, inter alia, on the ground that the purported lease-takeover agreement, which was not reduced to writing, is barred by the statute of frauds.
The court finds that the lease-takeover agreement is unenforceable under the statute of frauds as a contract for an interest in real property for a period of more than one year (see, General Obligations Law § 5-703). The plaintiffs' contentions to the contrary notwithstanding, the purpose of the lease-takeover agreement was to obtain an interest in real property. According to the plaintiffs, they agreed to allow Napolitano and Precision to negotiate a new lease with the landlord so that they could continue to maintain their business at the same location after they were evicted. What the plaintiffs are describing is, in effect, a sublease with Napolitano and Precision as the tenants and the plaintiffs as the subtentants. Napolitano and Precision entered into a lease with the landlord for a period of three years. Thus, the alleged oral [*4]agreement between the plaintiffs and the defendants Napolitano and Precision to take over the lease is unenforceable (see, Gluck v New Amsterdam Estates, Inc., 192 Misc 134 [alleged oral contract between two plaintiffs for the exchange of their respective apartments was held to be unenforceable under the statute of frauds because the lease to one of the plaintiffs was for a term of three years]). Accordingly, the first cause of action is dismissed.
An agreement that is unenforceable under the statute of frauds is unenforceable for all purposes and cannot be the basis of another action (61 NY Jur 2d Frauds, Statute of § 312). Such a contract confers no rights and creates no obligations between the parties, and no claim can be founded on it against third persons (Id.). It cannot be enforced either directly or indirectly in an action for damages for breach, for specific performance, for fraud and deceit if that action depends on proof of the oral agreement, or for malicious interference therewith (Id.). In short, the ban of the statute of frauds extends to any device calculated to evade the legislative mandate rendering unenforceable the original obligation (Id.).
The purported lease-takeover agreement forms the basis of the second cause of action for fraud against Napolitano and Precision, the fifth cause of action for tortious interference with contract against the Rohrbaugh defendants, and the tenth cause of action for fraudulent inducement against all of the defendants. Accordingly, the second and fifth causes of action are dismissed, and the tenth cause of action is dismissed insofar as it is asserted against Napolitano, Precision, and the Rohrbaugh defendants.
The amended complaint contains factual allegations that, in addition to taking over the lease, Napolitano and Precision took over the plaintiffs' business without compensating the plaintiffs therefor. The plaintiffs allege that Napolitano and Precision used the plaintiffs' tools, machinery, and equipment without paying for them; that they took over the plaintiffs' contracts and accounts; and that they kept payments that should have been turned over to the plaintiffs, among other things. These factual allegations sound in conversion and do not depend on proof of the alleged oral lease-takeover agreement. Moreover, a corporate officer may be liable for torts committed by or for the benefit of the corporation if he participated in their commission (see, PDK Labs, Inc. v G.M.G. Trans West Corp., 101 AD3d 970, 973). Accordingly, the court grants the plaintiffs leave to amended the complaint, if they be so advised, to assert causes of action against Napolitano and Precision based on the aforementioned factual allegations, which are independent of the lease-takeover agreement.
The third cause of action for breach of contract alleges that the plaintiffs provided the Rohrbaugh defendants with parts for firearms for which the plaintiffs have not been paid. The Rohrbaugh defendants seeks dismissal of this cause of action insofar as it is asserted by the plaintiff Edward Soldano, individually, against the defendant Karl Rohrbaugh, individually. The Rohrbaugh defendants contend that all agreements were between Apex and Precision, that Soldano has not alleged any basis for recovery by him personally, and that the plaintiffs have not alleged any basis for piercing Rohrbaugh Firearms' corporate veil. In opposition, the plaintiffs refer the court to paragraph 44 of the amended complaint, which alleges that Soldano personally [*5]loaned Karl Rohrbaugh $48,000 that has never been repaid.
On a motion to dismiss pursuant to CPLR 3211, the sole criterion is whether the pleading states a cause of action and if, from its four corners, the factual allegations, taken together, manifest any cause of action cognizable at law (Guggenheimer v Ginzburg, 43 NY2d 268, 275). Moreover, the court is to liberally construe the complaint, accept the alleged facts as true, and give the plaintiff the benefit of every possible favorable inference (Leon v Martinez, 84 NY2d 83, 87-88). When evidentiary material is considered, the inquiry turns from whether the complaint states a cause of action to whether the plaintiff actually has one. Unless it can be shown that a material fact as claimed by the plaintiff is not a fact at all and unless it can be said that no significant dispute exists regarding it, the complaint should not be dismissed (Guggenheimer v Ginzburg, supra at 275).
Applying these principles, the court finds that the complaint states a cause of action by the plaintiff Edward Soldano, individually, against the defendant Karl Rohrbaugh, individually, for breach of contract. Moreover, there is a factual dispute as to whether Rohrbaugh Firearms still owes Apex money for parts. Accordingly, the court declines to dismiss any part of the plaintiffs' third cause of action for breach of contract against the Rohrbaugh defendants and grants the plaintiffs leave to amended the third cause of action, if they be so advised, to include therein the allegations found in paragraph 44.
The fourth cause of action for breach of contract alleges that the plaintiff Edward Soldano loaned Rohrbaugh Firearms $50,000 that has not been repaid. The Rohrbaugh defendants seeks dismissal of the complaint insofar as it is asserted by Edward Soldano on the ground that none of the plaintiffs' claims arise from or pertain to Soldano's activities as an individual, separate and apart from his role an officer or shareholder of Apex. Contrary to the Rohrbaugh defendants' contentions, this cause of action is clearly asserted by the plaintiff Edward Soldano in his individual capacity. Accordingly, the court declines to dismiss it.
The sixth cause of action for tortious interference with contract is asserted against all of the defendants. The plaintiffs allege that the defendants tortiously interfered with their agreement to supply Rohrbaugh Firearms by inducing Rohrbaugh Firearms to terminate that agreement. Specifically, the plaintiffs allege that Precision entered into direct negotiations with Rohrbaugh Firearms and offered it a deal that was more advantageous than the agreement it had with the plaintiffs.
The elements of a cause of action for tortious interference with contract are the existence of a valid contract between the plaintiff and a third party, the defendant's knowledge of that contract, the defendant's intentional procurement of the third-party's breach of the contract without justification, actual breach of the contract, and damages resulting therefrom (see e.g., Lama Holding Co. v Smith Barney, Inc., 88 NY2d 413, 424).
Liberally construing the complaint, accepting the alleged facts as true, and giving [*6]the plaintiff the benefit of every possible favorable inference (Leon v Martinez, 84 NY2d at 87-88), the court finds that the complaint states a cause of action for tortious interference with contract against Precision. Moreover, Napolitano may be held liable if he personally participated in Precision's alleged interference with the plaintiffs' agreement with Rohrbaugh Firearms (see, PDK Labs, Inc. v G.M.G. Trans West Corp., 101 AD3d at 973). The Rohrbaugh defendants, however, cannot be charged with tortiously interfering with their own contract. Asserting that a defendant tortiously interfered with its own contract does not state a legally sufficient cause of action (Ahead Realty LLC V India House, Inc., 92 AD3d 424, 425). Accordingly, the sixth cause of action is dismissed insofar as it is asserted against the Rohrbaugh defendants.
The branch of the motion by Ward which is to sanction the plaintiffs and their attorney for commencing a frivolous lawsuit is denied. The court is unpersuaded that sanctions are appropriate.
Dated:October 4, 2013