Defendant Swig Equities, LLC ("Swig Equities") moves under CPLR 3211 (a) (1) and (a) (7) to dismiss the complaint in its entirety. Plaintiff Alison F. Root opposes the motion.

For the purposes of this motion to dismiss, the allegations in the complaint are to be accepted as true, and Root is to be afforded the benefit of every possible favorable inference (Zumpano v Quinn, 6 NY3d 666, 681 [2006]).

Root's Employment

Swig Equities hired Root as a sales agent (Compl at ¶ 8). The parties executed an agreement on January 4, 2007, titled 25 Broad, LLC Sales Agent's Agreement (the "Employment Agreement") (id. at ¶ 9).

The Employment Agreement provided that Root would receive a $50,000 annual salary and entitled her to a commission (the "Unit Sales Bonus")^[FN1] for each unit she sold (id. at ¶¶ 16, 17; Affirmation of J. Cody Fitzsimmons ["Fitzsimmons Aff"], Ex B at 3).

Section 3 (ii) of the Employment Agreement, titled "Unit Sales Bonus," states that "[n]o bonus shall be due unless title unconditionally passes to such Purchases while Agent is employed in good standing with Broker" (Fitzsimmons Aff, Ex B at 3). It further states [*2]that "[a]ny bonus earned by Agent shall be paid within thirty (30) days following such passing of title. Sponsor may reject a Purchaser or refuse to close title for any reason and no Commission shall be due to Agent" (id.).

Additionally, section 4 (ii) of the Employment Agreement, titled "Term and Termination," states that "[i]n the event Broker terminates Agent without cause, Agent shall be entitled to Commissions for any Unit sold by Agent and under contract or with an accepted offer of the date of termination, even if the closing of the Unit occurs after the date of termination" (id. at 4).

The Attorney General's Office and the Offering Plans

The Employment Agreement refers to a Sales Agency Agreement between Swig Equities and 25 Broad, LLC, reciting:

"Broker [Swig Equities] has entered into an Exclusive Sales Agency Agreement (the Sales Agency Agreement') with 25 Broad, LLC ( Sponsor') pursuant to which Broker has been engaged to act as exclusive sales agent for 25 Broad Street, New York, New York (the Project'), a property which Sponsor intends to develop for condominium ownership and sell units therein (the Units') pursuant to an offering plan accepted for filing by the Attorney General of the State of New York (the Plan')" (Fitzsimmons Aff, Ex B at 1).

The Plan accepted for filing by the Attorney General's Office as of the date of the Employment Agreement was known as a "Part 23 Plan," as it was a plan submitted pursuant to Part 23 of Title 17 of the Rules and Regulations of the State of New York ("NYCRR") (Compl at ¶ 12). Part 23 requires, among other things, that, in order for the plan to be declared effective, at least 15 percent of the condominiums must be sold to bona fide purchasers for their own occupancy — owner-occupiers (id. at ¶ 27).

In November 2007, Swig Equities submitted the Part 23 Plan to the New York Attorney General's Office for approval (id. at ¶ 28).

In 2008, Swig Equities abandoned the Part 23 Plan and withdrew the application from the Attorney General's Office (see id. at ¶ 39). As a result of Swig Equities' abandonment of the Part 23 Plan, all of the purchase agreements previously signed were rendered null and void (id. at ¶ 42).

After abandoning the Part 23 Plan, Swig Equities tried to revive the development and sale of condominiums at 25 Broad Street under a new plan pursuant to Part 20 of Title 17 of the NYCRR (the "Part 20 Plan") (id. at ¶ 42). On June 10, 2008, Swig Equities submitted the Part 20 Plan to the Attorney General's Office (id. at ¶ 70).

An offering plan under Part 20 is not subject to the requirement that fifteen percent of the condominium's units be owner-occupied (id. at ¶ 44). An offering plan under Part 20 requires only that the developer sell 15 percent of the building's units to purchasers, [*3]regardless of whether they are end-users, before the Plan will be approved by the Attorney General's Office (id.).

The Letter Agreement

In May 2008, Root was offered a managerial position by a competitor real estate development company (id. at ¶ 46). While informing her manager, Dorothy Sexton, of the offer, Root also expressed concern about receiving her commissions for the Part 23 sales (id. at ¶ 47).

Sexton raised Root's concerns with Swig Equities president Kent Swig and with another Swig Equities senior executive Steven Kirschenbaum (id. at ¶ 48). Sexton requested, on Root's behalf, that any commissions previously earned by Root be paid in a lump sum (id. at ¶ 48).

Swig and Kirschenbaum refused to make any lump sum payments to Root, but, instead, offered to raise Root's base salary, give her an annual draw and represented that Root would receive the commissions she had already earned under the Part 23 Plan, all upon the condition that Root agree to stay with Swig Equities through December 31, 2008 (id. at ¶ 49). Swig Equities and Root entered into a letter agreement memorializing Swig Equities' offer on July 31, 2008 (the "Letter Agreement") (id. at ¶ 52).

The Letter Agreement recited that all contracts under the Part 23 Plan were "null and void" and provided that "Agent [Root] will use reasonable efforts to cause each Purchaser who signed a purchase agreement through Agent under the Part 23 Contracts to re-execute a contract under the Part 20 Plan" (id. at ¶ 53).

The Letter Agreement further provided that Root's annual salary would increase to $80,000 per year and that she would be entitled to a draw against her Unit Sales Bonuses, up to $40,000 per year on a bi-weekly basis (id. at ¶ 55).

The Letter Agreement also stated that

"(i) [i]f a Purchaser under the Part 23 Plan does not re-execute a contract under the Part 20 Plan, Broker shall pay Agent 100% of the Unit Sales Bonus that would have been payable under the Agreement if the Unit had closed under the Part 23 Plan. Such Unit Sales Bones [sic] shall be payable within ninety (90) days ofthe first Unit that closes under the part 20 Plan.

(ii) [i]f a Purchaser under the Part 23 Plan does execute a contract under the Part 20 Plan, then Agent's Unit Sales Bonus shall be payable in accordance with the [Employment] Agreement" (id. at ¶ 54; Fitzsimmons Aff, Ex B at 3).

Root succeeded in causing about half of the original Part 23 Purchasers to re-execute contracts under the Part 20 Plan (Compl at ¶ 65). Root contends that she earned at least $115,500 in Unit Sales Bonuses for contracts executed under the Part 23 Plan, excluding a draw that she received in the amount of approximately $11,538 (id. at ¶¶ 67-69).

Additionally, Root presented ready, willing and able buyers that signed purchase [*4]agreements (counter-signed by Swig) pursuant to the Part 20 Plan for approximately 32 additional units (id. at ¶¶ 75-76). Root contends that she earned commissions associated with these Part 20 Plan sales equal to at least $117,000 (id. at ¶ 77).

Root and Fortune International Realty

In the summer of 2007, Root met Hernando Taboada, an employee of Fortune International Realty ("Fortune") (id. at ¶ 81). Taboada informed Root that he often sold real estate to Latin American investors (id. at ¶ 84). Root learned from Taboada that he was considering promoting Setai — a direct competitor of Swig Equities being developed across the street from 25 Broad Street (id. at ¶ 85). Root spent the summer of 2007 encouraging Taboada to promote the Swig Equities building, rather than Setai, to Latin American investors and she succeeded (id. at ¶ 86).

Root arranged a meeting between Taboada, Swig and Kirschenbaum (id. at ¶ 92). Taboada explained to Swig Equities that he wished to become the exclusive sales agent for 25 Broad Street for Latin America (id. at ¶ 93). After weeks of negotiations, Swig Equities agreed to this arrangement on a trial basis (id. at ¶ 94).

Swig Equities ultimately entered into a number of funding transactions and condominium sales, unrelated to 25 Broad Street, with Latin American investors procured by Fortune (id. at ¶¶ 107-08). Root contends that she played a large role in establishing and nurturing the relationship with Fortune so as to allow these various transactions to go forward (id. at ¶ 109).

Termination of Root's Employment

On October 7, 2008, Root was informed that her employment would be terminated in two weeks time and that the sales office for 25 Broad Street was being closed (id. at ¶ 120). Root requested a meeting to discuss the payment of the commissions she had purportedly earned, but had not yet been paid (id. at ¶ 121). Swig Equities acknowledged that Root is entitled to commissions, but took the position that the amount is payable only if closings occur, among other conditions (id. at ¶¶ 123, 124, 129). To date, Swig Equities has refused to pay the commissions (id. at ¶ 130).

On February 24, 2009, Root commenced this action. Root asserts causes of action against Swig Equities for breach of contract, violation of New York Labor Law Article 6 and quantum meruit.

Root alleges that she and Swig Equities "entered into the Employment Agreement" (Compl at ¶ 132); the "Employment Agreement was amended on July 31, 2008 pursuant to the [] Letter Agreement" (id. at ¶ 133); she "earned Unit Sales Bonuses when original Part 23 purchasers either re-executed a contract for sale under the Part 20 Plan, or chose not to re-execute under the Part 20 Plan"(id. at ¶ 134); she "complied with all of the terms of the agreements"(id. at ¶ 135); "Swig Equities is required to pay the Unit Sales Bonuses that have been earned by [her] for each ready, willing and able purchaser that she has presented" (id. at ¶ 136); "Swig Equities agreed to pay [] [*5]Root commissions for her sales to new purchasers under the Part 20 Plan, although such agreement was never reduced to writing"(id. at ¶ 137); and Swig Equities "has refused to pay [her] the Unit Sales Bonuses/commissions" (id. at ¶ 139).

If the contractual language is clear, unequivocal and unambiguous, the contract is to be interpreted by its own language (R/S Assocs. v NY Job Dev. Auth., 98 NY2d 29, 32 [2002]).

Swig Equities argues that the Employment Agreement makes plain that a condition to Root receiving any bonus or commission is a closing and a transfer of title.

Root responds that provisions concerning the parties' intent as to when a commission would be earned in the Employment Agreement are ambiguous.

Although a real estate broker is ordinarily entitled to a commission merely upon producing a buyer ready, willing and able to purchase the property upon terms acceptable to the seller (see Lane-Real Estate Dept. Store v Lawlet Corp., 28 NY2d 36, 43 [1971]), the "parties to a brokerage agreement are free to add whatever conditions they may wish to their agreement, including a condition that the contract of sale actually be consummated before the broker is deemed to have earned his commission" (Levy v Lacey, 22 NY2d 271, 274 [1968]). To that end, the brokerage agreement may specifically condition entitlement to the commission upon a closing (Lane, 28 NY2d at 43).

Swig Equities sets forth documentary evidence that the Employment Agreement conditioned Root's entitlement to a commission upon a closing of a sales transaction. Section 3 of the Employment Agreement states that "[n]o bonus shall be due unless title unconditionally passes while Agent is employed in good standing with Broker. Any bonus earned by Agent shall be paid within thirty (30) days following such passing of title" (Fitzsimmons Aff, Ex B at 3).

Root fails to allege that the transactions upon which she seeks commissions did close or that title in connection with those transactions did unconditionally transfer. Accordingly, the documentary evidence unequivocally demonstrates that Root agreed that she would be entitled to a commission only upon a closing and a transfer of title. Because Root does not allege that a condition precedent was met, she fails to state a cause of action for breach of contract under the Employment Agreement.

Even under the doctrine that a seller cannot avoid liability for a broker's commission based on the non-occurrence of a condition precedent if the seller is responsible for its non-performance (see Levy, 22 NY2d at 276), Root fails to state a claim for breach of contract under the Employment Agreement. A broker may choose to agree that even "if the sale falls through because of the seller's fault, he shall be entitled to nothing" (Colvin v Post Mortg. & Land Co., 225 NY 510, 516 [1919]). However, "an agreement should not be so construed unless such a result is clearly intended" (id.).

The Employment Agreement provides that "Sponsor [Swig Equities] may reject Purchaser or refuse to close title for any reason and no Commission shall be due to Agent" (Fitzsimmons Aff, Ex B at 3). This language provides even more reason that the parties clearly intended that Root would not be entitled to a commission prior to the closing and unconditional transfer of title.

Contrary to Root's assertion of ambiguity, the provisions in the Letter Agreement do not alter this conclusion. Assuming her argument to be true, Root's assertion that the Letter Agreement superceded Sections 3 and 4 of the Employment Agreement still fails to state a claim for breach of contract.

Section 3 of the Letter Agreement states that [*6]

"provided Agent remains employed and in good standing with Broker through and including December 31, 2008, Broker agrees as follows:

(i) [i]f a Purchaser under the Part 23 Plan does not re-execute a contract under the Part 20 Plan, Broker shall pay Agent 100% of the Unit Sales Bonus that would have been payable under the [Employment] Agreement if the Unit had closed under the Part 23 Plan. Such Unit Sales Bones [sic] shall be payable within ninety (90) days of the first Unit that closes under the Part 20 Plan.

(ii) [i]f a Purchaser under the Part 23 Plan does execute a contract under the Part 20 Plan, then Agent's Unit Sales Bonus shall be payable in accordance with the [Employment] Agreement" (Fitzsimmons Aff, Ex C at 1).

Under either scenario in the Letter Agreement (Part 23 Plan contracts re-executed or not re-executed under the Part 20 Plan), a closing of title, among other conditions, must occur in order for Root to be entitled to a commission. For contracts re-executed under the Part 20 Plan, the Letter Agreement expressly states that title must close. For contracts not re-executed under the Part 20 Plan, the requirement flows from the Employment Agreement, which the Letter Agreement expressly incorporates by reference. As discussed above, Root fails to allege a closing occurred and therefore fails to allege that a necessary condition precedent was met.

Root claims the existence of a separate agreement regarding Part 20 Plan sales beyond the Employment and Letter Agreements. Root alleges that the "parties intended and agreed . . . that [she] would be paid commissions for presenting purchasers under the Part 20 Plan, as is industry custom" (Compl at ¶ 74) and that she presented ready, willing and able buyers that signed purchase agreements for approximately 32 Units under the Part 20 Plan (id. at ¶¶ 75-76). Furthermore, Root alleges that "[t]here exists no written agreement concerning [her] commissions for the presentation of new purchasers under the Part 20 Plan" (id. at ¶ 71).

Swig Equities contends that that claim directly contradicts, and is precluded by, the no oral modification provision in the Employment Agreement.

Oral modification is prohibited if a contract requires any amendments to be evidenced by a writing subscribed by the parties (General Obligations Law § 15-301; Rose v Spa Realty Associates, 42 NY2d 338, 343 [1977] ["if the only proof of an alleged agreement to deviate from a written contract is the oral exchanges between the parties, the writing controls"]).

Section 7 (iv) of the Employment Agreement states that it "contains the entire agreement of the parties with respect to its subject matter and supercedes any previous discussions or negotiations" (Fitzsimmons Aff, Ex B at 6). It adds that "[n]o waiver, modification or change in any of its [the Employment Agreement's] provisions shall be valid unless in writing and signed by the party against whom such claimed waiver, modification or change is sought to be enforced" (id.).

Root cannot prevail on her claim based upon a theory of implied contract because the alleged terms would contravene the limitations contained in the Employment Agreement (B.P. Vance Real Estate, Inc. v Tamir, 42 AD3d 343, 344 [1st Dept 2007]).

Violation of the New York Labor Law, Article 6

Root alleges that the "Unit Sales Bonuses, or commissions, constitute wages' pursuant to New York Labor Law" (Compl at ¶ 145); she "demanded payment of the commissions" (id. at ¶ 147); "Swig Equities has failed to pay her such commissions in violation of the provisions of New [*7]York Labor Law, Article 6" (id. at ¶ 148); she "has been economically damaged" (id. at ¶ 149); and she "is entitled to double damages pursuant to New York Labor Law, Article 6, Section 191-c (3)" (id. at ¶ 150).

Swig Equities argues that Root has no contractual right to commissions for sales allegedly made by her and therefore she cannot assert a statutory claim for such commissions.Root counters that Article 6, section 191 (1) (c) requires employers reduce to writing all agreements concerning commissions and that, because Swig Equities violated the Labor Law by failing to do so, an agreement based on the terms asserted by Root arises.

In pertinent part, Article 6, Section 191 (1) (c) provides that

"The agreed terms of employment shall be reduced to writing, signed by both the employer and the commission salesperson, kept on file by the employer for a period of not less than three years . . . The failure of an employer to produce such written terms of employment . . . shall give rise to a presumption that the terms of employment that the commissioned salesperson has presented are the agreed terms of employment."

Root contends that an agreement relating to sales under the Part 20 Plan exists, in part, because the "original Employment Agreement does not address sales made under the Part 20 Plan" (Compl at ¶ 72). However, the Employment Agreement only refers to an offering plan generally. The Employment Agreement does not address sales made under the Part 20 Plan or the Part 23 Plan (see Fitzsimmons Aff, Ex B; Compl at ¶ 11). Indeed, the Employment Agreement simply recites that the Sponsor intends to sell condominium units "pursuant to an offering plan accepted for filing by the Attorney General of the State of New York" (Fitzsimmons Aff, Ex B at 1 [emphasis added]).

Root fails to create an agreement based on her alleged terms and therefore fails to vary the terms of the Employment Agreement. Because the Employment Agreement predicated commissions on closings — closings that Root fails to allege ever occurred — Root did not acquire a contractual right to those commissions. Without a contractual right to the commissions Root seeks to recover, she fails to state a violation of section 191 (1) (c) (see Kaplan v Capital Co. of Am. LLC, 298 AD2d 110, 111 [1st Dept 2002]).

Root also attempts to recover double damages under section 191-(c) (3) of the Labor Law as a "commissioned sales person."

Swig Equities maintains that Root fails to allege entitlement to double damages because she fails to allege that she is a "sales representative" or an "independent contractor."

"A principal who fails to comply with the provisions of this section [section 191] concerning timely payment of all earned commissions shall be liable to the sales representative in a civil action for double damages" (Labor Law § 191-c [3]).

In Deutschman v First Mfg. Co., the parties entered into an agreement that set forth the terms of plaintiff's employment, including his salary, 401 (k) plan, employer-provided health insurance, paid vacation, sick days and other benefits (7 AD3d 363, 364 [1st Dept 2004]). Stating that the "statutory definition of [s]ales representative' is clearly limited to independent contractors, as opposed to salaried or commissioned employees, the Appellate Division held that plaintiff, a salaried employee, was not an independent contractor and therefore that Labor Law § 191-c (3) did not apply (7 AD3d at 364 [reversing judgment in favor of plaintiff after non-jury trial] [citations omitted]; accord Derven v PH Consulting, Inc., 427 F Supp 2d 360, 369 [SD NY 2006] ["salaried employees [*8]who receive commissions are protected under § 191(1)(c), while independent contractors are covered by §§ 191-a through 191-c"]).

Here, Root alleges that she was an "employee" of Swig Equities, referring to her "employment" with Swig Equities throughout the complaint (see e.g. Compl at ¶¶ 1, 4, 22, 26, 47, 64, 66, 97, 11, 120, 123, 126, 152). Furthermore, the Employment Agreement provides the terms for Root's compensation, bonuses/commissions and other benefits (Fitzsimmons Aff, Ex B at 3). Conversely, Root nowhere alleges that she is an "independent contractor" or that Swig Equities is a "principal" to bring the claim within the scope of section 191-c (3) of the Labor Law. Accordingly, Root fails to state a claim based on a Labor Law § 191-c (3) violation and Swig Equities' motion to dismiss this cause of action is therefore granted.

Quantum meruit

Root alleges that she "provided services in connection with establishing and maintaining a business relationship with Fortune . . . outside the scope of her employment as a broker" (Compl at ¶ 152); she "performed these services in good faith" (id. at ¶ 154); she "expected to be compensated for her efforts" (id. at ¶ 155); and Swig Equities accepted and benefitted from Root's services (id. at ¶¶ 156-57).

Swig Equities argues that Root's quantum meruit claim must be dismissed because her regular employment duties with Swig Equities included providing services in connection with establishing and maintaining a business relationship with Fortune.

To state a cause of action to recover in quantum meruit, a plaintiff must allege: (1) the performance of services in good faith; (2) the acceptance of the services by the person to whom they are rendered;(3) an expectation of compensation therefor; and (4) the reasonable value of the services allegedly rendered (Tesser v Allboro Equip. Co., 302 AD2d 589, 590 [2d Dept 2003]). Allegations are insufficient "to state a cause of action in quantum meruit where none of the services allegedly performed are so distinct from the duties of [her] 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 v Pearlman, 271 AD2d 301, 304 [1st Dept 2000] [citation omitted]; LaJaunie v DaGrossa, 159 AD2d 349, 349 [1st Dept 1990] [such a claim requires "that the allegedly uncompensated duties (performed) were distinct in character from those duties for which plaintiff was compensated"]).

Swig Equities argues that Root's efforts in connection with Fortune were included among the duties of her regular employment — namely, promoting and selling Units at 25 Broad Street.

Root claims that she performed services outside the scope of the Employment Agreement in connection with Fortune by: (1) flying to Bogota, Columbia at the expense of Fortune, with Swig Equities requiring her to sign a statement that such trip was expressly not within the scope of her employment at Swig Equities (Compl. ¶¶ 96-98); and (2) traveling to Mexico City and attending meetings with prospective investors brought in by Fortune for projects unrelated to 25 Broad Street (id. at ¶¶ 106-109). Root also alleges that Swig Equities benefitted from her efforts in connection with Fortune in that Swig Equities entered into transactions, unrelated to 25 Broad Street, with Fortune pursuant to which it received or stands to receive substantial fees (id. at ¶¶ 107, 108, 110, 156).

On this pre-answer motion to dismiss, Swig Equities fails to show that, as a matter of law, [*9]none of the services allegedly performed by Root were "of such nature that it would be unreasonable for the employer to assume that they were rendered without expectation of further pay" (Robinson v Munn, 238 NY 40, 43 [1924]). Accepting as true the facts pleaded by plaintiff and according plaintiff the benefit of every favorable inference to be drawn from those facts, Root sufficiently states a cause of action for quantum meruit and Swig Equities' motion to dismiss this cause of action is denied.

2) MOTION TO STRIKE PARAGRAPHS FROM THE COMPLAINT

Swig Equities argues that certain allegations of wrongdoing must be stricken from the complaint because they are false, scandalous, prejudicial and irrelevant to Root's causes of action. Swig Equities maintains that Root's allegations that it persuaded purchasers to put false information on forms, submitted those false forms to the Attorney General's Office with the Part 23 Plan application and, once it was apparent that the Attorney General's Office may discover the falsehood, withdrew the application to avoid its rejection (Mem in Supp at 21, citing Compl at ¶¶ 27-41); and Root's allegations that Swig attempted to engage in discriminatory pricing by attempting to charge higher prices to international buyers of Units at 25 Broad Street (id., citing Compl at ¶¶ 115-119) should be stricken.

Root argues that the allegations relate to her causes of action in that (1) if there had in fact been a sufficient number of true owner-occupiers such that inaccurate schedule B's were not filed, the Part 23 Plan would likely not have been withdrawn, sales would have closed a long time ago, and Root would have been paid the commissions that she earned; and (2) the inconsistent price quotes in connection with the project contributed to the overall failure of the project.

CPLR 3024 (b) permits a party to "move to strike any scandalous or prejudicial matter unnecessarily inserted into a pleading." "Although the statute uses the word unnecessarily,' it is generally held that the test under this section is whether the allegation is relevant, in an evidentiary sense, to the controversy and, therefore, admissible at trial" (Wegman v Dairylea Cooperative, Inc., 50 AD2d 108, 111 [4th Dept 1975], citing Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, C3024:4, at 407).

Root's assertion that the disputed paragraphs relate to her claims is unavailing because those claims—breach of contract and violation of the Labor Law—are dismissed. Paragraphs 29-38 and 115-119 are irrelevant to Root's remaining viable claim for quantum meruit and Swig Equities' motion to strike those paragraphs is therefore granted.

Accordingly, it is

ORDERED that Swig Equities' motion to dismiss the complaint is granted insofar as the causes of action for breach of contract and violation of the Labor Law are dismissed; and it is further

ORDERED that Swig Equities' motion to strike paragraphs from the complaint is granted to the extent indicated above; and it is further

ORDERED that Swig Equities is directed to serve an answer to the complaint within 10 days after service of a copy of this order with notice of entry.

This constitutes the Decision and Order of the Court.

Dated: New York, New York [*10]

February ____, 2010

E N T E R

Hon. Eileen Bransten, J.S.C.