In an action seeking damages for breach of contract, professional negligence, and negligent misrepresentation, defendant Microsoft Corporation (hereinafter "Microsoft") moves to dismiss the complaint, pursuant to CPLR 3211(a)(1) and (7).

I. Factual History and Party Arguments

Plaintiff Colgate Scaffolding & Equipment (hereinafter "Plaintiff") has brought an action against Microsoft for negligent misrepresentation. Plaintiff alleged in its verified complaint that it entered into a contract with defendant computer consultants Albrecht, Viggiano, Zureck & Company, d/b/a AVZ Tech ("AVZ"). Colgate alleges that it entered into an agreement with AVZ whereby AVZ agreed to install and customize certain accounting software. Colgate alleges that AVZ did a poor job and as a consequence, Colgate was required to hire additional consultants to correct and customize the software at considerable delay and expense. Colgate thereafter brought this action against AVZ, alleging breach of contract and professional negligence. Colgate has also asserted a claim against Microsoft for negligent misrepresentation, based allegedly on AVZ's representations that it was a "Gold Level Partner" authorized to sell and install Microsoft software. Microsoft argues that these claims must be dismissed, since Colgate cannot establish the required privity or sufficiently similar relationship between Microsoft and Colgate that is necessary to state a cause of action for negligent misrepresentation. Microsoft was simply not a party to the contract at issue here.

Microsoft argues that there is no indication or allegation in the complaint, however, that Microsoft had any awareness of Colgate or any interaction with Colgate. There is no showing that Microsoft entered into a "Gold Certified Partnership" with AVZ for the purposes of inducing this particular plaintiff to enter into the subject contract. There has been no acknowledgment whatsoever by Microsoft of Plaintiff's existence alleged in the complaint. Plaintiff therefore does not and cannot allege that Microsoft engaged in conduct linking them to Plaintiff, which evinces Microsoft's understanding of Plaintiff's reliance.

In opposition, Plaintiff submits the affidavit of Michael O'Farrell, its vice president. In the affidavit, he states that Plaintiff entered into a "license agreement" issued directly from Microsoft in July 2008 as part of the software purchase agreement between Colgate and AVZ. Through that license agreement, Plaintiff was assigned an individual account number by Microsoft. As a result, Mr. O'Farrell argues that Plaintiff was in a contract with Microsoft when it was "signed up" through AVZ. Further, Plaintiff entered into a second contract with Microsoft some time later, known as a "Business Ready Advantage Plan." Plaintiff argues that these submissions indicate that Plaintiff had actual or "the functional equivalent" of privity with Microsoft at relevant times. Notably, however, Plaintiff states "[i]t is conceded at the outset of the misrepresentation to the [*2]marketplace about AVZ's qualifications, Colgate was not yet Microsoft's customer." Plaintiff further states in opposition that "the entire purpose of Microsoft appointing AVZ as its 'certified gold' sales dealer/partner was to provide a contracting entity to 'sell' the Microsoft product and customize it for the end user's individual business purpose." Accordingly, Plaintiff argues that Microsoft "knew" Plaintiff when it made the alleged misrepresentations and Plaintiff detrimentally relied on those statements.

II. Standard of Review

In determining a motion to dismiss, the Court's role is ordinarily limited to determining whether the complaint states a cause of action. Frank v. DaimlerChrysler Corp., 292 AD2d 118 (1st Dept. 2002). In other words, the determination 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. Thorn Rock Realty Co., 163 AD2d 46 (1st Dept. 1990); Leviton Manufacturing Co., Inc. v. Blumberg, 242 AD2d 205 (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). 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". Leon v. Martinez, 84 NY2d 83/87-88 (1994). The motion should be denied if, from the pleading's four corners, factual allegations are discerned which taken together manifest any cause of action cognizable at law. McGill v. Parker, 179 AD2d 98 (1st Dept. 1992). Factual allegations normally presumed to be true on a motion pursuant to CPLR 3211 (a)(7) may properly be negated by affidavits and documentary evidence. Wilhemlina Models, Inc. v. Fleisher, 19 AD3d 267 (1st Dept. 2005).

Factual allegations normally presumed to be true on a motion pursuant to CPLR 3211 (a)(7) may properly be negated by affidavits and documentary evidence. Wilhemlina Models, Inc. v. Fleisher, 19 AD3d 267 (1st Dept. 2005). Indeed, such a motion may be granted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. Id., citing Leon v. Martinez., supra. Evidentiary material may also be considered on a motion to dismiss for failure to state a cause of action to remedy defects in a complaint. Beyer v. DaimlerChrysler Corp., 286 AD2d 103 (2nd Dept. 2001). On a motion to dismiss for failure to state a cause of action, any deficiency on the part of the complaint because of detailed pleadings of the facts and circumstances relied upon may be cured by details supplied in the affidavits submitted by plaintiff, resort to which is proper for the limited purpose of sustaining a pleading against a motion under CPLR 3211(a)(7). Ackerman v. Vertical Club Corp., 94 AD2d 665 (1st Dept. 1983).

III. Analysis

To make out a prima facie case of negligent misrepresentation, the plaintiff must show "(1) the [*3]existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information" U.S. Express Leasing, Inc. v. Elite Technology (NY) Inc., 87 AD3d 494 (1st Dept 2011), citing J.A.O. Acquisition Corp. v. Stavitsky, 8 NY3d 144, 148, 831 N.Y.S.2d 364, 863 N.E.2d 585 [2007]).

The New York Court of Appeals takes a "cautious approach" to determining whether a relationship necessary to support a claim for negligent misrepresentation exists (see Ossining Union Free School Dist. v. Anderson LaRocca Anderson, 73 NY2d 417, 424, 541 N.Y.S.2d 335, 539 N.E.2d 91 [1989] ["[w]e have defined this duty narrowly, more narrowly than other jurisdictions"]). This narrow approach developed out of concern for the "limitless liability" that could result that otherwise would stop with the contracting parties (Parrott v. Coopers & Lybrand, LLP., 95 NY2d 479, 483 (2000), citing Prudential Ins. Co. v. Dewey Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 382, 590 N.Y.S.2d 831, 605 N.E.2d 318 [1992].

Therefore, before a stranger to a contract can claim harm from negligent misrepresentation, there must be: "(1) an awareness by the maker of the statement that it is to be used for a particular purpose; (2) reliance by a known party on the statement in furtherance of that purpose; and (3) some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance". Credit Alliance Corp. v. Arthur Andersen & Co., 65 NY2d 536 (1985), Parrott, 95 NY2d at 484.

In this matter, the allegedly actionable "statement", according to the complaint, was a portion of the contract between Plaintiff and AVZ that stated "AVZ has achieved Gold Level Partnership Status" with Microsoft" [and that] "Gold status is based on the competencies of the individual AVZ team members, references from customers, sales and various other criteria."

There is no indication in the complaint that Microsoft knew this specific entity would rely on those statements or even knew of Plaintiff's existence before certifying AMZ as a "Gold Level" partner. The Court in Sykes v. RFD Third Ave. 1 Assoc, LLC. specifically held that "[t]he words 'known party or parties' in the Credit Alliance test mean what they say." Therefore, a negligent misrepresentation claim cannot stand unless the defendant actually knows the identity of the specific nonprivy party who would be relying." 15 NY3d 370, 374 (2010). Indeed, in this matter, Plaintiff conceded that it was not Microsoft's customer "at the outset of the misrepresentation" and the purpose of Microsoft's "Gold Level" certification was to provide dealers a way to sell software to "end users." At best, Plaintiff was part of an indeterminate class of "end users" who would presently or in the future rely on Microsoft's "Gold Level Partner" statement, and was thus not a "known party" at the time the statement was made. See Ford v. Sivilli, 2 AD3d 773, 774-75 (2nd Dept. 2003).

Plaintiff's attempted reliance on agreements or other contact with Microsoft that took place some time after Microsoft bestowed "Gold Level" status on AMZ is misplaced. Events that occured subsequent to the allegedly actionable statement by Microsoft, and thus subsequent to Microsoft's [*4]allegedly negligent misrepresentation is inapposite. What is relevant for the purposes of Plaintiff's claim that Microsoft knew or had the means of knowing Plaintiff's existence "when it made the statements for which it is being sued." Syke, supra, at 373. There is no indication in the complaint or any of Plaintiff's documentary evidence that this was true. In accordance with Credit Alliance, therefore, Plaintiff's claim for negligent misrepresentation against Microsoft must fail as a matter of law.

IV. Conclusion

Accordingly, it is hereby

ORDERED, that Microsoft's motion to dismiss Plaintiff's complainit pursuant to CPLR 3211(a)(1) and (7) is granted, and it is further,

ORDERED, that Plaintiff's claims against Microsoft only are dismissed with prejudice.

This constitutes the Decision and Order of this Court.

Dated: March 20, 2012

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Hon. Mary Ann Brigantti-Hughes, J.S.C.

NCAS

Colgate Scaffolding & Equipment Corp v. Albrecht, Viggiano, Zureck & Co., P.C.