Defendant Elan Eliau ("defendant") moves pursuant to CPLR 3211(a)(1), (7), and (10) and 3016(b) to dismiss the complaint of the plaintiff, L.H. Charney Associates, LLC ("plaintiff") and pursuant to NYCRR 130-1.1 awarding defendant fees and expenses incurred in connection with the instant motion.

In response, plaintiff cross moves to amend the Complaint pursuant to CPLR 3025(b) to supplement his pleading regarding his fraud claim.

Factual Background

Plaintiff, as Landlord, and non-party X.E.S.NY Ltd, a New York corporation, as the tenant (the "Tenant"), entered into a ten and six month lease in July 2002 (the "Lease") of Unit 1502 (the "premises") in a building located at 1410 Broadway (the "Building"). According to the Complaint, defendant is the principal of the Tenant. The Tenant ceased paying rent and additional rent for July, August, and September 2008. Despite defendant's promises in July 2008 and August 11, 2008, in writing and orally respectively, that the July rent would be paid, rent was not paid by August 12th as promised, or on August 14th as promised on August 13th.

On August 28th, plaintiff filed a commercial non-payment petition against X.E.S.NY, Tharanco Group, and fictitious company identified as "XYZ Corporation" in Civil Court of the City of New York, Non-Housing Part 52 for rent and additional rent in the total amount of $70,188.00 (the "Rent").

Thereafter, plaintiff commenced this action against defendant to recover $1,081,253.33 for rent and additional rent due from October 1, 2008 through the end of the Lease. Plaintiff's sole cause of action alleges that defendant "intentionally defrauded" the plaintiff. In support, plaintiff alleges that the defendant's written and oral statements to plaintiff were material and false, and were made maliciously and with the intent to deceive plaintiff and cause plaintiff to delay enforcement of plaintiff's rights under the Lease. Specifically, plaintiff alleges that on July 31, 2008, defendant made oral promises to plaintiff's president and the owner of the Building to pay the then outstanding rent on August 8th. On the same day, defendant executed a written letter [*2]to this effect, on letterhead bearing the name "Joseph A." (According to defendant, "Joseph A" is the brand name of clothing marketed by the Tenant"). On August 11, 2008, defendant again made oral promises to plaintiff's president that the rent would be paid by noon on August 12th. At 4:00 p.m. on August 13th at 6:00 p.m., defendant again orally promised that July and August's rent would be paid on August 14th. However, rent was not paid by August 14th.

Defendant's Motion

In support of dismissal, defendant contends that the first cause of action for fraudulent misrepresentation is insufficiently pleaded. Defendant points out that plaintiff alleges only that defendant failed to pay plaintiff as promised. The failure to honor such a promise may give rise to an action for breach of contract, but never an action for misrepresentation or fraud. Defendant argues that fraud claim is not sufficiently stated where it alleges that a defendant did not intend to perform a contract with a plaintiff when he made. Further, the misrepresentation claim is insufficiently pleaded because plaintiff failed to allege that defendant's representations caused any additional losses; plaintiff included a breach of contract claim and also sought to recover contract damages in the Civil Court.

Further, even assuming defendant is personally liable for the Tenant's obligations under the Lease, he is not liable for fraud or misrepresentation. A misrepresentation claim cannot be predicated on a duty arising out of a contract; the duty must be independent of a contract, and here, the alleged fraud is nothing more than an allegation that the Lease was not honored. Moreover, any statements by defendant were solely made on behalf of the Tenant. Thus, even had the first cause of action been plead with sufficient particularity, the Tenant is not even before the Court. Because the first cause of action is duplicative of its second cause of action, and because the Tenant is not a party to this action, the Complaint should be dismissed pursuant to CPLR §§3016(b), and 3211(a)(7) and (10).

Additionally, the second cause of action for breach of contract is defective because the allegations are insufficient to demonstrate that defendant and plaintiff are in privity of contract. Nor do defendant's oral and written statements to the plaintiff constitute personal guarantees of the Tenant's Lease obligations. Every representation made by defendant was made in his capacity as president of the Tenant, and to the extent enforceable, are enforceable against the Tenant. The documentary evidence, i.e., the Lease and the July letter, flatly contradict the allegations that defendant personally assumed the Tenant's obligations. The Lease is between the plaintiff and the Tenant, and is signed by defendant in his capacity as "President." Also, the July letter appears on "Joseph A" letterhead, containing the Tenant's address.

Further, there are no allegations to permit this Court to pierce the corporation veil between the defendant and Tenant, which is not even a party to this proceeding.

Finally, because the Complaint is frivolous, has no merit in law, and contains material factual statements that are false, and was brought to harass and maliciously injure the defendant, the defendant is entitled to recover costs and legal fees he expended. Defendant's counsel requested that plaintiff's counsel withdraw the Complaint because the Lease and July letter were signed on behalf of the Tenant, to no avail.

Plaintiff's Opposition and Cross-Motion

Plaintiff points out that its Complaint only contains one cause of action based on false statements made by the defendant, and does not contain a breach of contract claim as defendant [*3]asserts.

In support of amendment, plaintiff contends that defendant has not refuted the fraud cause of action. The fraud claim involves knowingly made statements made by the defendant which were intended to cause plaintiff to delay enforcement of its rights to evict the Tenant, and thereby allow the Tenant to remain in the lease premises without paying rent. Plaintiff relied on defendant's misrepresentations and was damaged over and above the damages it would have sustained for the breach of contract alone had defendant not made the fraudulent misrepresentations. In further support, plaintiff submits an affidavit from plaintiff's president, Bruce Block ("Mr. Block"), wherein he states, inter alia, that (1) he spoke to defendant on July 10th, July 15th, July 31st, and August 11th, August 12th, and August 13th; (2) that defendant stated that the "late payment was caused by an employee embezzlement of funds from the corporate accounts," and (3) that defendant asked him to forebear from initiating legal proceedings for the late rent. According to the Mr. Block, he relied on defendant's fraudulent conduct and delayed initiation of legal proceedings to recover the premises and the overdue rent. Had Mr. Block initiated legal proceedings promptly, plaintiff's damages would have been mitigated sooner.

Plaintiff's fraud claim is sufficiently pleaded in accordance with CPLR 3016(b). However, if the Court requires further detail, plaintiff request that leave to amend its Complaint should be freely given as to the facts alleged by Mr. Block.

Further, defendant's argument regarding a purported claim based on a personal guarantee should be disregarded since plaintiff did not allege any such claim.

Defendant's Reply and Opposition to Cross-Motion

Plaintiff failed to address the proposition that the breach of an agreement does not constitute fraud unless there exists a legal duty independent of the agreement. Neither the Complaint nor the Amended Complaint include any allegations to suggest that the Tenant never intended to honor defendant's alleged promise to pay rent. Defendant's alleged promise, which plaintiff does not deny was made on behalf of the Tenant, related to the performance of a pre-existing obligation under the Lease and thus simply cannot be characterized as collateral to the Lease to constitute fraud.

Further, to the extent that plaintiff suffered damages for "diminution in the rental value of the Premises, because it relied on defendant's statements that rent would be paid, such damages are consequential damages arising out of the breach of the Lease, which may only be recovered in the Civil Court proceeding, provided for in the Lease. The only other damages plaintiff seeks are punitive damages, which, even assuming, arguendo, that plaintiff has asserted a cause of action for fraud, are unwarranted here.

Additionally, plaintiff's motion for leave to replead must be denied because the proposed Amended Complaint does not support a cause of action for fraud. Plaintiff submitted no evidence that Elan personally owed a duty to plaintiff or, even assuming such a duty existed, that defendant never intended to honor the promise to pay rent. Plaintiff has twice failed to sufficiently allege fraud and has presented no evidence to suggest that it could correct its

deficient pleading if afforded another opportunity.

Finally, the Complaint is frivolous within the meaning of 22 NYCRR § 130-1.1, and thus defendant is entitled to recover the costs of bringing this motion. Defendant also points out that plaintiff's attempt to re-plead its fraud allegations still falls far short of supporting a cause of [*4]action for fraud against defendant. Even plaintiff's second attempt to allege fraud is frivolous. Even assuming, that the Tenant had no intention of honoring defendant's alleged representation that rent would be paid, that representation alone is insufficient to support a fraud claim. And, the only relevant "circumstance" peculiarly within defendant's knowledge is whether he intended to honor the alleged promise — a promise indisputably made on behalf of the Tenant - to pay rent. As noted above, the breach of that promise gives rise to nothing more than a cause of action for breach of the Lease. As there is no remedy to which the plaintiff is entitled that is not available to it in the Civil Court proceeding, and thus this case is frivolous, should be dismissed, and defendant is entitled to the legal fees and costs incurred in bringing the within motion.The alleged statements concerning "embezzlement" appear only in the Amended Complaint and are in any case wholly irrelevant.

Analysis

CPLR 3211(a)(7)

In determining a motion to dismiss pursuant to CPLR 3211(a)(7), the Court's role is ordinarily limited to determining whether the complaint states a cause of action (Frank v DaimlerChrysler Corp., 292 AD2d 118, 741 NYS2d 9 [1st Dept 2002]). The standard on a motion to dismiss a pleading for failure to state a cause of action is not whether the party has artfully drafted the pleading, but whether deeming the pleading to allege whatever can be reasonably implied from its statements, a cause of action can be sustained (see Stendig, Inc. v Thom Rock Realty Co., 163 AD2d 46 [1st Dept 1990]; Leviton Manufacturing Co., Inc. v Blumberg, 242 AD2d 205, 660 NYS2d 726 [1st Dept 1997] [on a motion for dismissal for failure to state a cause of action, the court must accept factual allegations as true]). When considering a motion to dismiss for failure to state a cause of action, the pleadings must be liberally construed (see, CPLR § 3026), and the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit into any cognizable legal theory" (Nonnon v City of New York, 9 NY3d 825 [2007]; Leon v Martinez, 84 NY2d 83, 87-88, 614 NYS2d 972 [1994]).

On a motion to dismiss for failure to state a cause of action, where the parties have submitted evidentiary material, including affidavits, or where the bare legal conclusions and factual allegations are "flatly contradicted by documentary evidence" the pertinent issue is whether claimant has a cause of action, not whether one has been stated in the complaint (see Guggenheimer v. Ginzburg, 43 NY2d 268, 275 [1977]; R.H. Sanbar Projects, Inc. v Gruzen Partnership, 148 AD2d 316, 538 NYS2d 532 [1st Dept 1989]; Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81, 692 NYS2d 304 [1st Dept 1999], affd 94 NY2d 659, 709 NYS2d 861 [2000]; Kliebert v McKoan, 228 AD2d 232, 643 NYS2d 114 [1st Dept], lv denied 89 NY2d 802, 653 NYS2d 279 [1996]).

The Court notes that the Complaint herein does not allege a claim for breach of contract against defendant, nor could one be stated since it is clear that defendant was not a party to the Lease contract at issue. Instead, plaintiff alleges that defendant is personally liable for promising to pay rent that was due pursuant to the Lease. However, the record makes clear that the promises to pay rent due under the Lease were made by defendant in his corporate capacity, on behalf of the Tenant. Thus, the alleged "promises" to pay rent due under the Lease was [*5]essentially made by the Tenant, which is not a party to this action. Notwithstanding the fact that the Tenant is not a party to this action, the promise to tender payments due under the Lease cannot serve as a basis of a fraud cause action in any event, since the Lease contract at issue governs the rights and obligations between plaintiff and defendant, in his capacity as president of the Tenant.

In this regard, the Court of Appeals stated in Clark-Fitzpatrick, Inc. v Long Is. R. R. Co. (70 NY2d 382, 389-390):

It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated ... This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract ...

* * * * *

Merely charging a breach of a 'duty of due care', employing language familiar to tort law, does not, without more, transform a simple breach of contract into a tort claim.

It is well-settled that a cause of action for fraud does not arise "when the only fraud charged relates to a breach of contract" (Krantz v Chateau Stores of Canada, Ltd., 256 AD2d 186, 187 [1st Dept 1998]). Nor may a breach of contract claim be converted into a fraud claim by the mere additional allegation that the contracting party did not intend to meet his contractual obligation (Golub Assocs. Inc. v Lincolnshire Mgmt., Inc., 1 AD3d 237, 767 NYS2d 571 [1st Dept 2003]). Here, the promise allegedly made by defendant was nothing more than a promise on behalf of the Tenant to honor a pre-existing contractual obligation belonging to the Tenant and thus does not constitute fraud.

The Court notes that in the context of a breach of contract case, a separate cause of action for fraud does not lie where the only fraud alleged relates to the breach (see Tucker v AM Sutton Associates, 16 AD3d 670 [2d Dept 2005]; Lee v Matarrese, 17 AD3d 539 [2d Dept. 2005]; 34-35th Corp. v 1-10 Industry Assoc., LLC, 2 AD3d 711, 712 [2d Dept 2003]; Rocco v Town of Smithtown, 229 AD2d 1034 [4th Dept 1996]; 28 NY Prac., Contract Law § 21:7). And, a fraud claim should be dismissed as redundant when it merely restates a breach of contract claim, i.e., when the only fraud alleged is that the defendant was not sincere when it promised to perform under the contract (J.A.O. Acquisition Corp. v Stavitsky, 192 Misc 2d 7, 745 NYS2d 634 [Sup. Ct. New York County 2001], citing, First Bank of the Americas v Motor Car Funding, Inc. 257 AD2d 287, 291-92, 690 NYS2d 17 [1st Dept 1999]). By contrast, a cause of action for fraud may be maintained where a plaintiff pleads a breach of duty separate from, or in addition to, a breach of contract. For example, if a plaintiff alleges that it was induced to enter into a transaction because a defendant misrepresented material facts, the plaintiff has stated a claim for fraud even though the same circumstances also give rise to the plaintiff's breach of contract claim (J.A.O. Acquisition Corp. v Stavitsky, 192 Misc 2d 7, supra , citing, First Bank of the Americas v Motor Car Funding, Inc., supra ]). Here, there is no claim that defendant's alleged promises induced plaintiff to enter into the Lease or other transaction.

Therefore, plaintiff has failed to state a claim for fraud against the defendant.

CPLR 3211(a)(1) [*6]

The Court may also dismiss a cause of action pursuant to CPLR 3211 (a)(l) on the ground that "a defense is founded upon documentary evidence" where the "documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 88, 614 NYS2d 972, 638 NE2d 511 [1994]). The record contains a lease between the plaintiff and the Tenant, which governs the issue of whether plaintiff is entitled to the damages its seeks. Thus, such documentary evidence warrants dismissal of the Complaint, pursuant to CPLR 3211(a)(1), regardless of any extrinsic evidence or self-serving allegations offered by the plaintiff (Prichard v 164 Ludlow Corp., 14 Misc 3d 1202(A), 831 NYS2d 362 [Sup Ct New York County 2006] citing 150 Broadway NY Assoc., L.P. v Bodner, 14 AD3d 1 [1st Dept 2004]).^[FN1]

As to defendant's motion to dismiss based on CPLR 3211(a)(10), this section provides for dismissal on the ground that "the court should not proceed in the absence of a person who should be a party." Since there is no claim for breach of contract, and the alleged fraudulent misrepresentations made by defendant on behalf of the Tenant do not give rise to a fraud claim, defendant's claim is moot.

Sanctions

Part 130 of the Uniform Rules of the Chief Administrator (22 NYCRR § 130-1.1 et seq.), permits the court to impose sanctions, including reasonable attorney's fees, for conduct if it is found to be "frivolous," i.e., if (1) it is completely without merit in law or fact and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; or (2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another (130-1.1[c]; Solow v Bethlehem Steel Corp., 204 AD2d 227, 612 NYS2d 402 [1st Dept 1994]). Although the Complaint lacks merit, it cannot be said that it cannot be supported by a reasonable argument for an extension, modification or reversal of existing law. Therefore, plaintiff's request for sanctions is denied.

Plaintiff's Cross-Motion

Turning to defendant's cross-motion for leave, it is well settled that leave to amend an answer pursuant to CPLR §3025(b) should be freely granted provided there is no prejudice to the nonmoving party (Crimmins Contr. Co. v City of New York, 74 NY2d 166 [1989]; McCaskey, Davies & Assocs. v New York City Health & Hosps. Corp., 59 NY2d 755 [1983]; Lambert v Williams, 218 AD2d 618, 631 NYS2d 31 [1st Dept 1995]). Although leave to amend should be freely granted, the movant must make some evidentiary showing that the proposed amendment has merit, and a proposed pleading that fails to state a cause of action or is plainly lacking in merit will not be permitted (Hynes v Start Elevator, Inc., 2 AD3d 178, 769 NYS2d 504 [1st Dept 2003]; Tishman Constr. Corp. v City of New York, 280 AD2d 374 [1st Dept 2001]; Bencivenga & Co. v Phyfe, 210 AD2d 22 [1st Dept 1994]; Bankers Trust Co. v Cusumano, 177 AD2d 450 [1st Dept 1991], lv dismissed 81 NY2d 1067 [1993]; Stroock & Stroock & Lavan v Beltramini, [*7]157 AD2d 590 [1st Dept 1990]).

Plaintiff's Amended Complaint retains the sole cause of action for fraud but includes the allegations made by Mr. Block and adds a separate "second" cause of action, alleging that plaintiff

has been damaged by the Defendant's fraud due to the diminution in the rental value of the Premises during the period that Plaintiff delayed enforcement of his rights under the Lease in reliance on Defendant's fraudulent statements.

This claim is grounded in the allegation for fraud, but alleges additional damages flowing therefrom. Since this fraud claim likewise relates to and is connected with and dependent upon the Lease contract, it lacks merit. Like the Complaint, the proposed Amended Complaint alleges no separate duty by defendant toward the plaintiff, apart from defendant's (corporate) duty as president of the Tenant to make payments under the Lease entered into between the Tenant and plaintiff. Therefore, leave to amend the Complaint is denied.

Conclusion

Based on the foregoing, it is hereby

ORDERED that the branch of the motion by defendant to dismiss the Complaint pursuant to CPLR §§3211(a)(1) and (a)(7), is granted and the Complaint is hereby dismissed; and it is further

ORDERED that the branch of the motion by defendant to dismiss the Complaint pursuant

to CPLR §§3211(a)(10) and CPLR 3016(b), and for sanctions pursuant to NYCRR 130-1.1 is denied; and it is further

ORDERED that the cross-motion by plaintiff to amend the Complaint is denied; and it is further

ORDERED that the Clerk may enter judgment accordingly.

Dated: May 13, 2009_________________________________

Hon. Carol Robinson Edmead, J.S.C.