[*1]
DeCristofaro v Nest Seekers E. End, LLC
2014 NY Slip Op 51477(U) [45 Misc 3d 1206(A)]
Decided on October 6, 2014
Supreme Court, Suffolk County
Emerson, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on October 6, 2014
Supreme Court, Suffolk County


Joseph DeCristofaro, Plaintiff,

against

Nest Seekers East End, LLC, NEST SEEKERS CORP., NEST SEEKERS INTERNATIONAL, LLC, NEST SEEKERS, LLC, and EDDIE SHAPIRO, Defendants.




35876-11



LIEB AT LAW, P.C.



Attorneys for Plaintiff



376 A Main Street



Center Moriches, New York 11934



LEWIS JOHS AVALLONE AVILES, LLP



Attorneys for Defendants



1 CA Plaza, Suite 225



Islandia, New York 11749


Elizabeth H. Emerson, J.

Upon the following papers numbered 1-52 read on this motion for summary judgment ; Notice of Motion and supporting papers 1-45 ; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 46-50 ; Replying Affidavits and supporting papers51-52 ; it is,



ORDERED that this motion by the defendants for summary judgment is granted as to the sixth, fourteenth, fifteenth, and seventeenth causes of action; and it is further



ORDERED that the motion is otherwise denied.



The plaintiff is a licensed real-estate salesperson. On or about May 9, 2011, he entered into a Contractor and Association Agreement ("CAA") with the defendant Nest Seekers LLC, a real-estate brokerage with an office in Southampton, New York. The CAA was signed by the defendant Eddie Shapiro, as the president of Nest Seekers LLC. Pursuant to the terms of the CAA, the plaintiff became an independent contractor/real-estate salesperson affiliated with Nest Seekers LLC who was paid a commission based entirely on sales. Also on or about May 9, 2011, the plaintiff entered into an addendum to the CAA ("ACAA") with the defendant Nest Seekers East End LLC. The ACAA was signed by the defendant Eddie Shapiro, as the president and



CEO of Nest Seekers East End LLC. The ACAA provided that the parties would split commissions 80% to the plaintiff and 20% to Nest Seekers East End LLC on all exclusive listings and 90% to the plaintiff and 10% to Nest Seekers East End LLC on all non-exclusive sales and rentals. In addition, the ACAA reflected the parties' agreement that the plaintiff assume responsibility for operations and sales leadership of Nest Seekers' Southampton office for which he would receive a bonus. The ACAA provided, in pertinent part, as follows:



Nestseekers agrees to give Joseph DeCristofara a "bonus" or share in commission on new agents brought into the [N]estseekers group of 25% of net earnings of the office and future offices opened together in the Town of Southampton....



On Friday May 13th, 2011, Mr. DeCristofaro will be introduced to the team under the marketing title of EVP, Managing PARTNER and will take over operations and sales leadership for the office listed below.



The parties shall make best efforts to convert this agreement into an operating partnership agreement formed as [a] single purpose entity for the management and ownership structure of the office located at 20 Main Street Southampton, NY. AND OTHER OFFICES IN THE TOWN OF SOUTHAMPTON INCLUDING BUT NOT LIMITED TOO [sic] WATERMILL BRIDGEHAMPTON, SAGHARBOR, AND NORTH SEA. Said agreement must be signed and agreed to by May 16th, 2011.



The Nest Seekers office located at 20 Main Street, Southampton, was the only Nest Seekers office in the Town of Southampton when the CAA and ACAA were executed.



Although the ACAA contained no provision for its termination, the CAA provided as follows:



The contract and the association created hereby may be terminated by either party hereto at any time upon ten (10) days written notice given to the other. This agreement shall be for a period of no longer then [sic] one year and must be renewed annually in writing.



No operating partnership agreement was ever executed by the parties, although one was drafted. By the summer of 2011, Nest Seekers was dissatisfied with the plaintiff's management of its Southampton office. In an e-mail to the plaintiff on September 30, 2011, Eddie Shapiro advised the plaintiff that he was being relieved of his responsibility for the management of the Southampton office, but that he could remain with Nest Seekers as a real-estate agent with the same compensation as before. The plaintiff continued to work at Nest Seekers until November 2011 when, according to the defendants, he left voluntarily.[FN1] He subsequently commenced this action.



The amended complaint contains 17 causes of action for breach of contract, an accounting, unjust enrichment, and defamation, among other things. The defendants answered the amended complaint and asserted seven counterclaims for breach of contract and declaratory judgment. The parties stipulated to discontinue with prejudice the first, second, fourth, seventh, eighth, ninth, tenth, eleventh, and sixteenth causes of action, as well as the first, second, and third counterclaims. The plaintiff also stipulated that, with regard to the third and fifth causes of action, he was seeking an accounting and a judgment awarding him a percentage of the net earnings of the Nest Seekers offices located in the Town of Southampton only and that he was not seeking any unpaid commissions earned by him or any Nest Seekers agents recruited by him. The defendants now move for summary judgment in their favor on the remaining causes of action and counterclaims.



The Third and Fifth Causes of Action



The third cause of action for breach of contract alleges that the defendant Nest Seekers East End LLC breached the ACAA by failing to remit to the plaintiff the net earnings to which he was entitled under that agreement. The fifth cause of action seeks an accounting of such net earnings.



To obtain summary judgment it is necessary that the movant establish his cause of action or defense sufficiently to warrant the court, as a matter of law, directing judgment in his favor (see, CPLR 3212[b]), and he must do so by tendering evidentiary proof in admissible form (see, Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067). The failure of the proponent of a summary judgment motion to make a prima facie showing of entitlement to judgment as a matter of law requires denial of the motion regardless of the sufficiency of the opposing papers (see, Winegrad v New York Univ. Med. Center, 64 NY2d 851, 853).



The court finds that the defendants have failed to establish, prima facie, their entitlement to judgment as a matter of law on the third and fifth causes of action. The defendants contend that the only office for which the plaintiff may have a claim for net profits is the office located at 20 Main Street, Southampton, which operated at a net loss of $221,866 during the plaintiff's tenure there. In support thereof, the defendants rely on a one-page document entitled "Expenses Hamptons 5/1/11-11/1/11" which is not in admissible form.[FN2] The defendants attempt to cure this deficiency by submitting with their reply papers an affidavit from Eddie Shapiro in which he avers that the document was prepared by Nest Seekers' bookkeepers from Nest Seekers' business records and that it accurately reflects that Nest Seekers' Southampton office operated at a net loss of $221,866 from May 1, 2011, through November 1, 2011, the term of the plaintiff's tenure there. The defendants, as the proponents of a motion for summary judgment, may not remedy a fundamental deficiency in their moving papers by submitting evidentiary material with their reply papers (Dipalma v Metropolitan Trans. Auth., 20 Misc 3d 1128[A] at *12 [and cases cited therein]; see also, Batista v Santiago, 25 AD3d 326 [reply affidavit may not be considered for the purpose of showing prima facie entitlement to summary judgment]). Moreover, Shapiro's deposition testimony, upon which the defendants also rely, is without probative value because it is conclusory and devoid of factual details.



The defendants' alternate argument in support of summary judgment on the third and fifth causes of action is that the plaintiff cannot recover from Nest Seekers East End LLC for breach of the ACAA because the plaintiff failed to perform his obligations thereunder. Specifically, the defendants contend that the plaintiff failed to disassociate his license from his former employer by May 20, 2011, as required by the ACAA, and that he failed to provide the operations and sales leadership for which he was retained.



The court finds that the papers submitted in support of and in opposition to the motion raise questions of fact regarding whether the plaintiff breached the ACAA. Even if the plaintiff breached the ACAA, Nest Seekers East End LLC would be excused from further performance thereunder only if the breach were material, which is also a question of fact (see, Metropolitan Natl. Bank v Adelphi Academy 23 Misc 3d 1132[A] at *3-*4). Moreover, Nest Seekers East End LLC may have waived its right to assert that a breach by the plaintiff discharged its obligations under the ACAA by continuing to perform or by insisting that the plaintiff continue to perform thereunder (Casita, LP v Maplewood Equity Partners (Offshore) Ltd., 17 Misc 3d 1137[A] at *6-*7).



In view of the foregoing, the motion is denied as to the third and fifth causes of action.



The Sixth Cause of Action



The sixth cause of action alleges that the defendants have been unjustly enriched [*2]by their failure to remit to the plaintiff the net profits to which he is entitled. As the defendants correctly contend, the plaintiff may not recover in quasi-contract when, as here, there is a valid and enforceable contract between the parties (see, Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388). Moreover, the plaintiff does not oppose the motion insofar as it seeks summary judgment dismissing the sixth cause of action. Accordingly, that branch of the motion is granted.



The Twelfth and Thirteenth Causes of Action



The twelfth cause of action alleges that the plaintiff was defamed by an article published in the "Rumors & Innuendo" section of a website entitled Curbed Hamptons. The thirteenth cause of action is for punitive damages based on the twelfth cause of action. The plaintiff alleges that the defendants made the following statements in the Curbed Hamptons article:



An in-the-know Curbed reader dropped us a note over the weekend informing us of some personnel changes (see firings) over at Nest Seekers International. According to our tipster...Joseph DeCristofaro...was given the boot....He had been relieved of his newfound managerial duties weeks ago "but refused to accept [it] and kept acting as if he was still manager and kept telling everyone that he was an owner/partner."



The defendants seek summary judgment dismissing this cause of action on the grounds that it is not pled with the requisite particularity, that the article fails to identify the source of the statements as Nest Seekers or an employee of Nest Seekers authorized to speak on its behalf, that the plaintiff cannot prove the statements were made by Nest Seekers, and that the statements are truthful and accurate or constitute non-actionable opinion.



CPLR 3016 (a) provides that, in an action for libel or slander, the particular words complained of shall be set forth in the complaint. The plaintiff satisfied this requirement by attaching the purportedly libelous article to the original complaint (see, Polish Am. Immigration Relief Comm. v Relax, 172 AD2d 374; Sassower v New York News, 101 AD2d 1020; Pappalardo v Westchester Rockland Newspapers, 101 AD2d 830).



The essence of the tort of libel is the publication of a statement about an individual that is both false and defamatory (Guerrero v Carva, 10 AD3d 105, 111). Whether particular words are defamatory presents a legal question to be resolved by the court in the first instance (Golub v Enquirer/Star Group, Inc., 89 NY2d 1074, 1076). If not reasonably susceptible of a defamatory meaning, they are not actionable and cannot be made so by a strained or artificial construction (Id.). It is well settled that a written statement may be defamatory if it [*3]tends to expose a person to hatred, contempt or aversion, or to induce an evil or unsavory opinion of him in the minds of a substantial number of the community (Id.). A false statement constitutes defamation per se when it charges another with a serious crime or tends to injure another in his business, trade, or profession (Konig v CSC Holdings, LLC, 112 AD3d 934, 935). A statement is actionable if it affects a person in his profession by imputing to him any kind of fraud, dishonesty, misconduct, incapacity, unfitness, or want of any necessary qualification in the exercise thereof (Haugh v Schroder Investment Mgt. N. Am., Inc., US Dist Ct., SDNY, May 15, 2003, Cote, J. at *1 [and cases cited therein] [2003 WL 21136096]). Statements to the effect that someone was "derelict in his professional duties" or that someone was discharged for "misconduct," for "lack of professional competence," or for "cause" may be actionable (Id.). When the statements are defamatory per se, there is no need for the plaintiff to allege special damages (Sprewell v NYP Holdings, Inc., 1 Misc 3d 847, 849).



Since falsity is a necessary element of a libel claim, and only facts are capable of being proven false, it follows that a libel action cannot be maintained unless it is premised on published assertions of fact (Guerrero v Carva, supra.). Conversely, expressions of opinion are cloaked with the privilege of speech afforded by the First Amendment (Id.). False or not, libelous or not, they are constitutionally protected and may not be the subject of private damage actions (Id.). However, even statements that fall within the protective shield of expressions of opinion lose their protection and become actionable when they imply that they are based on facts which justify the opinion, but are unknown to those reading or hearing it (Id. at 112). These are known as "mixed opinions" and are actionable not because of the false opinion itself, but because of the implication that the speaker knows certain facts, unknown to his audience, which support his opinion and are detrimental to the person about whom he is speaking (Id.).



Applying these standards to the present case, the court finds the Curbed Hamptons article to be both false and defamatory per se. Contrary to the defendants' contentions, the statements contained therein are not truthful and accurate, nor do they constitute non-actionable opinion. A reasonable reader could interpret the article as implying that the plaintiff was fired from his position at Nest Seekers because of poor performance of his managerial duties and because of insubordination (i.e., his refusal to relinquish those duties). However, the record reflects that, although the plaintiff was relieved of his managerial duties, he was not fired. Rather, he was allowed to stay on and left Nest Seekers voluntarily shortly after being relieved of responsibility for the management of the Southampton office.[FN3] A reasonable reader could also interpret the article as implying that it is based on facts that would justify it, but that are unknown to the audience.



The defendants contend that the plaintiff has no evidence that the statements in the Curbed Hamptons article were made by Nest Seekers or Shapiro, who has submitted an affidavit in which he denies that he or anyone authorized to speak on behalf of Nest Seekers [*4]made the statements. The defendants also contend that the plaintiff cannot prove the statements were made by Nest Seekers because, pursuant to Civil Rights Law § 79-h (b), Curbed Hamptons cannot be compelled to identify its source.



Civil Rights Law § 79-h, otherwise known as New York's Shield Law, protects professional journalists from contempt citations when they refuse to disclose information obtained by them during the course of their reporting (Guice-Mills v Forbes, 12 Misc 3d 852, 854). When the information obtained by the journalist is confidential, the privilege is absolute (Id., citing Civil Rights Law § 79-h [b]). By contrast, if the information obtained is non-confidential in nature, the privilege afforded to the journalist is qualified, and the information gathered may be subject to disclosure (Id.). Courts will compel disclosure of nonconfidential information only upon a showing that the information sought is (1) highly material or relevant; (2) critical or necessary to the maintenance of a party's claim, defense, or proof of an issue material to that claim or defense; and (3) not obtainable from any other source (Id., citing Civil Rights Law § 79-h [c]). In the absence of meeting this three-pronged test, the only other way to obtain nonconfidential information gathered by a professional journalist in preparation of a news story is to demonstrate that the journalist voluntarily disclosed or consented to disclosure of the information to someone who was not entitled to claim the exemptions of Civil Rights Law § 79-h (Id.;67 Civil Rights Law § 79-h [g]).



A party does not carry its burden in moving for summary judgment by pointing to gaps in its opponent's proof, but must affirmatively demonstrate the merits of its claim or defense (see, Corrigan v Spring Lake Building Corp., 23 AD3d 604, 605). The defendants have failed to proffer any evidence in admissible form to establish that the information obtained by Curbed Hamptons was obtained by a professional journalist during the course of his reporting and that the information was obtained confidentially and, therefore, cannot be disclosed. In opposition to the motion, the plaintiff argues that the source of the statements in the Curbed Hamptons article is exclusively within the knowledge of Curbed Hamptons. The plaintiff made a motion to compel Curbed Hamptons to disclose its source, which was referred to conference by an order of this court dated October 16, 2012. The issues discussed at that conference and at subsequent conferences with the court have not yet been resolved. As the plaintiff correctly contends, until the issues raised by the motion to compel are resolved, it cannot be determined whether Nest Seekers was the source of the statements in the Curbed Hamptons article. When, as here, it appears from the affidavits submitted in opposition to the motion that facts essential to justify opposition may exist, but cannot then be stated, the court may deny the motion, order a continuance to permit affidavits to be obtained or disclosure to be had, or make such other order as may be just (CPLR 3212 [f]).



In view of the foregoing, the motion is denied without prejudice as to the twelfth and thirteenth causes of action. The parties are directed to be prepared to discuss a plan to resolve the issues raised by the motion to compel at their next conference with the court on November 13, 2014.



The Fourteenth and Fifteenth Causes of Action



The fourteenth cause of action alleges that the plaintiff was defamed by statements made by agents of the defendants on or after November 11, 2011, to several of his former Nest Seekers clients that he had been "fired," that he had "disappeared," that he was "not around anymore", that he was "never a manager or partner," and that he was "not doing a good job." All of the former clients are identified by name, and three of the speakers are identified as agents of the defendants. They are Jeff Steinhorst, Joanne Kane, and Christopher Collins. The other speakers are identified only as "a female agent of the defendants" and "an agent of the defendants." The fifteenth cause of action is for punitive damages based on the fourteenth cause of action.



Summary judgment is warranted when there are no issues of fact to be resolved by the trier of fact (see, Hartford Accident & Indemnity Co. v Wesolowski, 33 NY2d 169, 172; Sillman v Twentieth Century Fox Film Corp., 3 NY2d 395, 404). The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issue of fact (see, Winegrad v New York Univ. Med. Center, 64 NY2d 851, 853; Zuckerman v City of New York, 49 NY2d 557, 562; Sillman v Twentieth Century Fox Film Corp., supra at 404). To defeat the motion, the opponent must present evidentiary facts sufficient to raise a triable issue of fact (see, Freedman v Chemical Constr. Co., 43 NY2d 260, 264).



The court finds that the defendants have established, prima facie, their entitlement to judgment as a matter of law on the fourteenth and fifteenth causes of action. The defendants have produced affidavits from Maria Crotty, Christopher Collins, Joanne Kane, and Jeff Steinhorst, who are the Nest Seekers agents that took over the plaintiff's listings and contacted his clients after the plaintiff left Nest Seekers. They deny making the alleged defamatory statements to the Nest Seekers clients identified by the plaintiff. The plaintiff has failed to produce any evidence in opposition thereto. The affirmation of the plaintiff's attorney is without evidentiary value (see, Zuckerman v City of New York, supra at 563), and the plaintiff's affidavit does not address the substance of his defamation claims. The plaintiff merely avers that his professional reputation has been damaged by the alleged defamatory statements made by Nest Seekers' agents. While the complaint is verified by the plaintiff and may be used as an affidavit (see, CPLR 105[u]), the factual allegations of the fourteenth cause of action are based upon information and belief. Moreover, the plaintiff has failed to demonstrate that facts essential to justify opposition may exist, but cannot now be stated (CPLR 3212 [f]). Accordingly, the motion is granted as to the fourteenth and fifteenth causes of action.



The Seventeenth Cause of Action



The seventeenth cause of action seeks to hold all of the defendants jointly and severally liable under the theory of piercing the corporate veil. Piercing the corporate veil is not, in an of itself, an independent cause of action, but a procedural device through which a plaintiff [*5]may assert facts and circumstances to persuade the court to impose a subsidiary's obligation on a parent (Sahu v Union Carbide Corp., 418 F Supp 2d, 407,408 n 1) or to permit the assertion of claims against the individuals who control the corporation in order to avoid fraud or injustice (Hagan v J.P. Morgan Chase Bank, N.A., 33 Misc 3d 1211[A] at *19).



The defendants seek summary judgment dismissing the plaintiff's claims against the defendants Eddie Shapiro, Nest Seekers Corp., and Nest Seekers International LLC on the ground that they have no privity of contract with the plaintiff. The plaintiff's only remaining contractual claim is the third cause of action for breach of the ACAA, which is asserted against Nest Seekers East End LLC only.



In order for someone to be liable for a breach of contract, that person must be a party to the contract. Privity or its equivalent remains the predicate for imposing liability for nonperformance of a contractual obligation (see, Danica Plumbing & Heating v Amoco Constr. Co., 18 Misc 3d 1137[A], at *3 [and cases cited therein]). The parties to the ACAA are the plaintiff and Nest Seekers East End LLC, and Eddie Shapiro signed the ACAA as the president and CEO of Nest Seekers East End LLC. Neither Nest Seekers Corp. nor Nest Seekers International LLC are parties to the ACAA. Moreover, since Shapiro signed the ACAA in his corporate capacity, he is not subject to personal liability thereunder (Metro. Switch Bd. Co., Inc. v Amici Assocs, Inc., 20 AD3d 455). Thus, without piercing the corporate veil, Nest Seekers Corp., Nest Seekers International LLC, and Shapiro cannot be held liable for breach of the ACAA.



A party seeking to pierce the corporate veil must establish that the parent corporation or owner, through domination and control of the corporation, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against the plaintiff (Id.; Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135, 141-142).



The court finds that there is no evidence in the record to support piercing the corporate veil. Accordingly, the motion is granted as to the seventeenth cause of action.



The Counterclaims



The defendants make no arguments in support of summary judgment on the fifth, sixth, and seventh counterclaims. Accordingly, the motion is denied as to those counterclaims.



The fourth counterclaim seeks a judgment declaring that the ACAA does not entitle the plaintiff to 25% of the net earnings derived from all of the defendants' earnings. The defendants contend that the plaintiff's recovery of net earnings, if any, is limited to the Nest Seekers' office located at 20 Main Street, Southampton, and does not include any other Nest Seekers' offices on the East End of Long Island.



In interpreting a contract, the intent of the parties governs (Kaung v Bd. of Mgrs. of Biltmore Towers Condominium Assoc. 22 Misc 3d 854, 866, affd 70 AD3d 1004). The agreement should be read as a whole to give full meaning and effect to all of its material provisions and to ensure that undue emphasis is not placed upon particular words and phrases (Id.; Rosenthal v Quadriga Art, Inc., 69 AD3d 504, 507; CNR Healthcare Network, Inc. v 86 Lefferts Corp., 59 AD3d 486, 489) ) The court's reading of the contract should not render any portion thereof meaningless (Id.). Any interpretation that gives effect to all of the terms of an agreement is preferable to one that ignores terms or accords them an unreasonable interpretation (Ruttenberg v Davidge Data Systems Corp., 215 AD2d 191, 196).



The court finds that the defendants' interpretation of the ACAA ignores the language therein that Nest Seekers agreed to give the plaintiff a bonus of 25% of the net earnings of "the office and future offices opened together in the Town of Southampton" (emphasis added). While it is undisputed that the only Nest Seekers' office in the Town of Southampton was the one at 20 Main Street when the ACAA was executed, the ACAA clearly contemplated that additional Nest Seekers' offices would be opened in Watermill, Bridgehampton, Sag Harbor, and North Sea. The ACAA also contemplated the negotiation of another agreement. However, contrary to the defendants' contentions, the ACAA does not clearly provide that the plaintiff's entitlement to bonuses for the additional Nest Seekers' offices was contingent on the consummation of another agreement. Whether that was the parties' intent cannot be determined on record presently before the court. Accordingly, the motion is denied as to the fourth counterclaim.



Conclusion



The defendants' motion for summary judgment is granted as to the sixth, fourteenth, fifteenth, and seventeenth causes of action only. The parties are directed to proceed to trial on the remaining causes of action and counterclaims.

Dated:October 6, 2014

J.S.C.

Footnotes


Footnote 1:The plaintiff does not dispute the defendants' version of events leading to his separation from Nest Seekers.

Footnote 2:It is also barely legible.

Footnote 3:As previously noted, the plaintiff does not dispute the defendants' version of events leading to his separation from Nest Seekers.