Upon the foregoing papers in this action by plaintiff Natural Stone Warehouse, Inc. (Stone Warehouse) to recover damages based upon claims of breach of contract, breach of warranties, fraudulent misrepresentations, and conversion, defendant AKG Yahtim Ve Insaat Malzemeiri Sanayi Ve Ticaret A.S. d/b/a Cimstone (Cimstone) moves, pursuant to CPLR 3211, to dismiss Stone Warehouse's complaint as against it. [*2]

On December 18, 2006, Cimstone, a company located in Turkey, which is engaged in the manufacturing, marketing, and selling of engineered stone counter top products, entered into a written Sales Agreement with Natural Stone Trading, Inc. (Stone Trading), as buyer, to sell to Stone Trading certain stone products needed by it for a construction project located at 360 Furman Street, in Brooklyn, New York. Cimstone had been involved in prior dealings with Stone Trading where similar sales agreements had been executed by Stone Trading.

The December 18, 2006 Sales Agreement describes the colors and specifications of the stone products in detailed drawings annexed to it. Paragraph 2 of the Sales Agreement sets forth the price of the stone products, and states the terms of payment as requiring an advance payment of 30% of the total price and payments for each shipment of 70% of the total shipment value by bank transfer to Cimstone's bank account, immediately after the documents announcing the date of delivery of the products to the carrier for shipment by Cimstone. It states that Cimstone would issue invoices for the products in each shipment. A second paragraph 2 of the Sales Agreement states that each shipment was to be made by Cimstone FOB, Izmir port basis. Paragraph 3 of the Sales Agreement provides for three shipments, with the first shipment to take place not later than the end of February 2007, and the last shipment to be completed by the end of April 2007. Paragraph 4 of the Sales Agreement provides for the inspection and testing of the stone products to determine if they meet the specifications under the drawings annexed as exhibits to it. Paragraph 6 of the Sales Agreement states that the warranties set forth therein are exclusive and in lieu of all other warranties.

Paragraph 8 of the Sales Agreement contains a choice of law and agreement to submit to arbitration, which provides as follows:

"APPLICABLE LAW AND ARBITRATION

This Agreement is to be construed and conducted in accordance with the laws of Switzerland to the exclusion of any reference to the conflict of law rules and to the exclusion of the provisions of the Vienna Convention on contracts for the international Sale of Goods.

Any disputes which may arise of or relate to this Agreement, and which the parties would not be able to settle conciliably, shall be finally settled by Arbitration under the Rules of Arbitration of International Chamber of Commerce in Zurich, Switzerland and conducted according [to] the rules and regulations of Switzerland."

Paragraph 9 (1) of the Sales Agreement requires any changes and amendments to it to be in writing and accepted by both parties. Paragraph 9 (4) of the Sales Agreement provides:

"Neither party shall have the right to assign this Agreement or any of its rights and privileges hereunder to any other person, firm or corporation without the prior written consent of the other party."

Paragraph 9 (5) of the Sales Agreement requires that all correspondence be addressed to Stone Trading at 343 Stagg Street, in Brooklyn, New York, where its primary corporate office is located. The Sales Agreement is executed on behalf of Cimstone, by Ali Ihsan Aksu, who is its general manager, and on behalf of Stone Trading, by Simon Cohen (who is also known as Shimon Cohen), as its president.

E-mails were sent by Stone Trading to Cimstone regarding measurement changes and updated drawings in February 2007 and March 2007, and a facsimile transmittal dated March 12, 2007 was sent by Stone Trading to Cimstone, forwarding the updated drawings. After the first shipment was sent from Cimstone to Stone Trading and Stone Trading was required to remit payment for that shipment, a letter dated March 26, 2007 was faxed to Cimstone from Stone Trading. This March 26, 2007 letter is signed, on behalf of Stone Trading, by Simon Cohen, but it is on the letterhead of Stone Warehouse. This March 26, 2007 letter states:

"Please correct the following error:

All containers m[u]st be shipped under the name of . . . Stone Warehouse. . . not . . . Stone Trading. . ."

The address, telephone number, e-mail address, and fax number listed for Stone Warehouse in the faxed March 26, 2007 letter are identical to those of Stone Trading. In fact, the logo of Stone Trading and the logo of Stone Warehouse, which both list each of them as importers of "fine marble, granite, limestone, slate, slabs and tiles" are identical with the only difference being the word Warehouse, instead of Trading, in their names.

The commercial invoices, dated May 14, 2007, May 29, 2007, June 29, 2007, July 11, 2007, July 12, 2007, July 28, 2007, August 11, 2007, and September 4, 2007, and the accompanying packing lists from Cimstone were addressed to Stone Warehouse. In addition, wire transfers were made from Stone Warehouse's bank account to Cimstone, and were accepted by Cimstone.

Simon Cohen claimed that the stone products were delivered in a defective condition, and he contacted Erkan Aksa, a representative of Cimstone. On September 28, 2007, Erkan Aksa and Mehmet Ardali, another representative of Cimstone, inspected the goods with Simon Cohen at the 360 Furman Street project job site. A memorandum on Stone Warehouse stationery dated September 28, 2007 and executed by Erkan Aksa and Mehmet Ardali, as representatives of Cimstone, acknowledges that on September 27 and 28, 2007, they, together with Lior Freistadt, a representative from Stone Warehouse, were at the 360 Furman Street project job site in order to inspect defects in the stone products that were claimed by Stone Warehouse, and that they found several types of defects or abnormalities on the fabricated pieces of the product. The memorandum further stated that Cimstone's technical staff would decide which defects arose from the production or fabrication or from transportation or installment, and would argue as to how to solve the problem. [*4]

On December 26, 2007, Stone Warehouse filed this action against Cimstone. Stone Warehouse's first cause of action for breach of contract alleges that Stone Warehouse entered into an agreement with Cimstone for Cimstone to supply it with certain goods consisting of stone products, and that it fully paid Cimstone for these goods, and that the goods sent by Cimstone to it were defective. It further alleges that Cimstone acknowledged the defects in the goods, and promised to replace the defective stone goods, but failed to do so. Stone Warehouse asserts that it was required to obtain replacement goods elsewhere due to Cimstone's failure to replace the defective goods, and that it incurred damages of $500,000, commencing on or about September 28, 2007.

Stone Warehouse's second cause of action alleges that Cimstone breached its warranties with regard to the goods, causing it to sustain damages of $500,000. Stone Warehouse's third cause of action for fraudulent misrepesentations asserts that Cimstone knew that it was unable to supply the goods as required in the agreement, that Cimstone knew that it was unable to cure the defects in the goods, and that Cimstone knew that Stone Warehouse was relying upon its representations as to its abilities to supply the goods and to correct the defects in the goods, and its representations as to its intentions to cure the defects in the goods. Stone Warehouse claims that this caused it to sustain compensatory damages of $500,000, and it seeks punitive damages of $1,000,000. Stone Warehouse's fourth cause of action alleges that Cimstone converted its funds, and it also seeks compensatory damages of $500,000 and punitive damages of $1,000,000.

Cimstone, in support of its instant motion, argues that Stone Warehouse's complaint as against it must be dismissed because no contractual privity exists between it and Stone Warehouse. It is well established that a plaintiff may not maintain a cause of action for breach of contract where it had no contractual relationship with the defendant, and was not in privity with it (see Grinnell v Ultimate Realty, LLC, 38 AD3d 600, 600 [2007]; Cinderella Holding Corp. v Calvert Ins. Co., 265 AD2d 444, 444 [1999]; M. Paladino, Inc. v Lucchese & Son Contr. Corp., 247 AD2d 515, 515 [1998]; Decker v Chuang, 185 AD2d 613, 614 [1992]).

Here, as noted above, the December 18, 2006 Sales Agreement was entered into solely between Cimstone and Stone Trading and, at no time, was Stone Warehouse made a party to the Sales Agreement. Stone Warehouse was not a signatory to the Sales Agreement nor was it named or referred to therein (see Grinnell, 38 AD3d at 600; DeLine v CitiCapital Commercial Corp., 24 AD3d 1309, 1311 [2005]).

In addition (as previously set forth), paragraph 9 (4) of the Sales Agreement explicitly precluded Stone Trading from assigning the Sales Agreement to any third party without the prior written consent of Cimstone, and it is undisputed that Cimstone did not consent, in writing, to any assignment by Stone Trading. Stone Trading's complaint is also devoid of any allegation that Stone Warehouse was to be a third-party beneficiary of the Sales Agreement, and (as noted above) Stone Warehouse is not mentioned anywhere in the Sales Agreement between Stone Trading and Cimstone. [*5]

In response to Cimstone's motion, Stone Warehouse concedes that it was not a party to any contract between Cimstone and Stone Trading. Stone Warehouse opposes Cimstone's motion by arguing that Cimstone has no proof that any assignment occurred between it and Stone Trading. Stone Warehouse states that it was not assigned any contract that may exist between Cimstone and Stone Trading, and that no assignment of the written Sales Agreement occurred between it and Stone Trading.

Stone Warehouse's argument with respect to a lack of any assignment by Stone Trading, however, in no way serves to support Stone Warehouse's claim since Cimstone does not contend that an assignment of the Sales Agreement by Stone Trading to Stone Warehouse occurred. Rather, Cimstone's argument is that since Stone Warehouse is neither a party, an assignee, nor a third-party beneficiary of the Sales Agreement, its complaint in this action cannot be maintained due to its lack of privity and standing to sue.

Stone Warehouse further argues that since Cimstone cannot show that the Sales Agreement with Stone Trading was assigned to it, the explicit choice of law and broad arbitration clause contained in paragraph 8 of the Sales Agreement, which required that "[a]ny disputes which may arise [out] of or relate to th[e Sales] Agreement . . . be finally settled by Arbitration . . . [in and] according [to] the rules and regulations of Switzerland," does not apply to it. However, Stone Warehouse cannot circumvent this choice of law and arbitration clause simply by bringing this action under a different modified corporate name.

Stone Warehouse also attempts to concoct an estoppel argument by arguing that despite the fact that the Sales Agreement prohibited the assignment of the contract, Cimstone, after receiving the faxed letter of March 26, 2007, made no inquiry to determine if an assignment of the Sales Agreement had occurred. Stone Warehouse contends that since Cimstone continued to do business with it after entering into a contract with Stone Trading and after being notified by Simon Cohen to ship the goods to it and not Stone Trading, Cimstone should be estopped from making a privity of contract argument.

Stone Warehouse's argument must be rejected. Since Stone Warehouse concedes that there was no assignment of the Sales Agreement to it (which, in any event, was prohibited by paragraph 9 (4) of the Sales Agreement), there is no issue of fact raised with respect to any alleged waiver of the nonassignment clause by Cimstone (see DeLine, 24 AD3d at 1312).

Stone Warehouse additionally argues that it entered into an oral agreement with Cimstone. In support of this argument, Stone Warehouse has submitted the affidavit of Simon (a/k/a Shimon) Cohen (who, as noted above, is the president of Stone Trading and the one who executed the December 18, 2006 Sales Agreement on behalf of Stone Trading), who states that he is also the president of Stone Warehouse. Simon Cohen asserts that in his capacity as an officer of Stone Warehouse, he personally contacted Erkan Aksa (who, as noted above, is a representative of Cimstone) to order the stone products (i.e., marble) for the 360 Furman Street project, that these goods were delivered to Stone Warehouse in a defective condition, and that Cimstone, therefore, entered into an oral agreement with Stone Warehouse by knowingly doing business with it. Stone Warehouse contends that this oral [*6]agreement is the foundation of its claim, and that the invoices directed to it by Cimstone and the payments made by it via wire transfers to Cimstone, evidence its direct involvement (as opposed to an assignment of Stone Warehouse's written Sales Agreement) with Cimstone.

Stone Warehouse's argument is rejected. The mere fact that Cimstone sent invoices to Stone Warehouse for the goods ordered for the 360 Furman Street project and that Stone Warehouse made payments via wire transfers to Cimstone which were accepted by Cimstone, is insufficient to establish any privity of contract between Cimstone and Stone Warehouse (see Grinnell, 38 AD3d at 600-601; DeLine, 24 AD3d at 1310-1311). As previously noted, there was no assignment of the December 18, 2006 Sales Agreement, and Stone Warehouse does not allege that there was any other separate agreement which included different stone products ordered for a different project or pursuant to other specifications or terms. The stone products which Stone Warehouse claims are defective in this action are the very same products which were ordered, manufactured, and delivered for the 360 Furman Street project, pursuant to the terms of the December 18, 2006 Sales Agreement entered into between Cimstone and Stone Trading. Thus, inasmuch as there was no privity of contract between Stone Warehouse and Cimstone, Stone Warehouse lacks standing to sue for breach of contract and dismissal of its first cause of action is mandated (see CPLR 3211 [a][3]; Grinnell, 38 AD3d at 600; DeLine, 24 AD3d at 1311; Cinderella Holding Corp., 265 AD2d at 444; M. Paladino, Inc., 247 AD2d at 515).

With respect to Stone Warehouse's second cause of action, which purports to allege that Cimstone breached its warranties with regard to the stone products, Stone Warehouse could not have relied upon any express warranty since the Sales Agreement expressly excluded all warranties. Furthermore, since Stone Warehouse had no privity of contract with Cimstone, any claim of breach of implied warranties cannot be sustained as a matter of law (see Arthur Jaffee Assoc. v Bilsco Auto Serv., 58 NY2d 993, 995 [1983]; Arthur Glick Leasing, Inc. v William J. Petzold, Inc., 51 AD3d 1114, 1116 [2008]; Adirondack Combustion Tech., Inc. v Unicontrol, Inc., 17 AD3d 825, 827 [2005]). Therefore, dismissal of Stone Warehouse's second cause of action must be granted (see CPLR 3211 [a][1], [3], [7]).

As to Stone Warehouse's third cause of action, which purports to assert a claim of fraudulent misrepresentations, it is well settled that no viable fraud claim is stated where the only fraud alleged is a misrepresentation of the ability to perform under a contract and the failure to perform under the contract (see Biancone v Bossi, 24 AD3d 582, 583 [2005]; Hadari v Leschinsky, 242 AD2d 557, 558 [1997]). A breach of contract claim may not be converted into a fraud claim by the mere additional allegation that the contracting party did not intend to meet its contractual obligation (see Blackman v Genova, 250 AD2d 561, 562 [1998]; Hadari, 242 AD2d at 558). To plead a viable cause of action for fraud arising out of the contractual relationship, the plaintiff must allege a breach of duty which is collateral or extraneous to the contract (see Marshel v Farley, 21 AD3d 935, 936 [2005]; Non-Linear Trading Co. v Braddis Assoc., 243 AD2d 107, 118 [1998]). "A failure to perform promises [*7]of future acts is merely a breach of contract . . . [and a] cause of action for fraud does not arise when the only fraud charged relates to a breach of contract" (Tesoro Petroleum Corp. v Holborn Oil Co., 108 AD2d 607, 607 [1985]; see also Biancone, 24 AD3d at 583).

Here, Stone Warehouse's third cause of action for fraud is based upon the very same facts as underlie its alleged breach of contract claim (see J.E. Morgan Knitting Mills v Reeves Bros., 243 AD2d 422, 423 [1997]). Stone Warehouse does not allege that Cimstone breached any duty owed to it separate and apart from the contractual duty it owed to Stone Trading when it misrepresented its intent to perform as promised (see Biancone, 24 AD3d at 583; Non-Linear Trading Co., 243 AD2d at 118; Hadari, 242 AD2d at 558). Stone Trading merely alleges that Cimstone misrepresented its ability to perform under the agreement and that Cimstone misrepresented its ability to, and its intention to cure the alleged defects in the stone products. Thus, inasmuch as the only fraud charged is a breach of contract, no cognizable claim of fraud is stated by it (see Biancone, 24 AD3d at 583; Blackman, 250 AD2d at 562). Dismissal of Stone Warehouse's third cause of action must, therefore, be granted (see CPLR 3211 [a][7]).

Stone Warehouse's fourth cause of action for conversion merely alleges that its funds were converted based upon Cimstone's failure to perform under the agreement. Conversion, however, is an "unauthorized assumption and exercise of the right of ownership [over] goods belonging to another, to the exclusion of the owner's rights" (Soviero v Carroll Group Intl., Inc., 27 AD3d 276, 277 [2006]). "[A] claim of conversion cannot be predicated on a mere breach of contract" or where the plaintiff's claim does not allege a wrong independent from the plaintiff's contract claim (MBL Life Assur. Corp. v 555 Realty Co., 240 AD2d 375, 376-377 [1997]).

Here, Stone Warehouse does not allege a wrong independent from its claim based upon breach of contract, and the existence of the Sales Agreement precludes recovery in conversion for the money paid by Stone Warehouse to Cimstone (see Welch Foods v Wilson, 277 AD2d 882, 885 [2000]). "[A]n action for conversion cannot be validly maintained where damages are merely being sought for breach of contract" (Peters Griffin Woodward, Inc. v WCSC, Inc., 88 AD2d 883, 884 [1982]). While Stone Warehouse's fourth cause of action requests punitive damages, the basis of Stone Warehouse's claim is merely grounded in its claim of a breach of contract by Cimstone and punitive damages are not recoverable for ordinary breach of contract (see Soviero, 27 AD3d at 277). Consequently, dismissal of Stone Warehouse's fourth cause of action is required (see CPLR 3211 [a][7]).

Accordingly, Cimstone's motion to dismiss Stone Warehouse's complaint as against it, is granted in its entirety.

This constitutes the decision and order of the court.

E N T E R,

J. S. C.