Supreme Court, New York County, April 7, 2023

Landy Wolf, PLLC, New York City (David A. Wolf of counsel), for defendant.

Jonathan R. Miller, Princeton, New Jersey, for plaintiff.

According to the complaint, defendant owns and operates a "Gateway Newstands" retail store at 200 Broadway, New York County. In 2016, plaintiff entered a construction contract with "Gateway Newstands c/o Tobmar Investments, Int., Inc.," to build out the store. Plaintiff completed the build-out, but in 2019 defendant discontinued its payments to plaintiff for its work. Plaintiff now sues to recover a remaining balance of $62,435.67 from defendant.

Notably, the complaint omits any reference to a New York County judgment, entered September 13, 2021, in plaintiff's favor against nonparty Tobmar Investments International, Inc., based on the same contract and work involved in this action. (Dworkin Constr. Corp. [USA] v Tobmar Invs. Intl., Inc., Sup Ct, NY County, index No. 653431/2020.) In light of this judgment, defendant moves to dismiss plaintiff's [*2]complaint based on documentary evidence and failure to state a claim (CPLR 3211 [a] [1], [7]), and requests sanctions and attorneys' fees. (22 NYCRR 130-1.1 [c].) In opposition to the motion, plaintiff withdrew its claims for quantum meruit and unjust enrichment, but still claims breach of the construction contract and breach of an alleged franchise agreement between defendant and Tobmar Investments, of which plaintiff maintains it is a third-party beneficiary. Plaintiff also agrees to vacate the New York County judgment against Tobmar Investments to pursue this action if the complaint is not dismissed. Nevertheless, the court grants defendant's motion as follows.{**80 Misc 3d at 365}

Upon a motion to dismiss the complaint, the court considers the factual allegations as true. (Sassi v Mobile Life Support Servs., Inc., 37 NY3d 236, 239 [2021]; Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v Matthew Bender & Co., Inc., 37 NY3d 169, 175 [2021]; Yovich v Montefiore Nyack Hosp., 212 AD3d 425, 426 [1st Dept 2023].) In a motion pursuant to CPLR 3211 (a) (7), defendant bears the burden to establish that the complaint "fails to state a viable cause of action." (Connolly v Long Is. Power Auth., 30 NY3d 719, 728 [2018].) Dismissal is warranted if the complaint fails to allege facts that "fit within any cognizable legal theory." (Sassi v Mobile Life Support Servs., Inc., 37 NY3d at 239.) A motion to dismiss the complaint based on documentary evidence pursuant to CPLR 3211 (a) (1) will succeed only if admissible documentary evidence completely refutes plaintiff's factual allegations, resolving all factual issues as a matter of law. (Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 30 NY3d 572, 601 [2017]; Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; Calpo-Rivera v Siroka, 144 AD3d 568, 568 [1st Dept 2016].)

Defendant maintains that plaintiff's claim for breach of the construction contract is barred for three reasons: (1) judicial estoppel, (2) the claim splitting doctrine, and (3) plaintiff's lack of actionable damages. Defendant also contends that plaintiff does not adequately plead a claim for breach of the franchise agreement as a third-party beneficiary. Plaintiff insists that Tobmar Investments either entered the construction contract as defendant's agent or assigned the contract to defendant. Plaintiff alternatively claims that Tobmar Investments entered the construction contract pursuant to a franchise agreement between Tobmar Investments and defendant, which obligated it to pay plaintiff for the build-out as a third-party beneficiary to that agreement.

A. Breach of the Construction Contract

Neither judicial estoppel nor the prior judgment against Tobmar Investments bars plaintiff's claim for breach of the construction contract, since defendant's liability is based on its alleged status as an undisclosed principal, which allows plaintiff to seek damages from both Tobmar Investments and defendant. (CPLR 3002 [b]; J.P. Endeavors v Dushaj, 8 AD3d 440, 442 [2d Dept 2004].) The construction contract's anti-assignment provision, however, contradicts plaintiff's allegations{**80 Misc 3d at 366} that Tobmar Investments assigned the contract to defendant, since the contract provides that "[n]either party to the Contract shall assign the Contract without written consent of the other." (Affirmation of David A. Wolf, exhibit 4, § 19.1.) As plaintiff fails to allege either that it provided consent to Tobmar Investments or waived this requirement, the construction contract's express terms would void any assignment by Tobmar Investments to defendant. (C.U. Annuity Serv. Corp. v Young, 281 AD2d 292, 292 [1st Dept 2001]; Macklowe v 42nd St. Dev. [*3]Corp., 170 AD2d 388, 389 [1st Dept 1991].)

Plaintiff's claim for defendant's breach of the construction contract in any event must be dismissed pursuant to the claim splitting doctrine. (Solow v Avon Prods., 56 AD2d 785, 786 [1st Dept 1977], affd 44 NY2d 711 [1978]; see Melcher v Greenberg Traurig LLP, 135 AD3d 547, 552 [1st Dept 2016]; Murray, Hollander, Sullivan & Bass v HEM Research, 111 AD2d 63, 66 [1st Dept 1985]; Matter of City of Troy v Assessor of the Town of Brunswick, 145 AD3d 1241, 1244 [3d Dept 2016].) To invoke the doctrine, defendant "must show that the challenged claim raised in the second action is based upon the same liability in the prior action, and that the claim was ascertainable when the prior action was commenced." (Melcher v Greenberg Traurig LLP, 135 AD3d at 552.) Thus "claims for damages spawned by the same liability on the same contract, and ascertainable at the time an action is commenced, must be demanded, if at all, in that action." (Solow v Avon Prods., 56 AD2d at 786, affd 44 NY2d 711.) Defendant's liability is based on nonpayment for plaintiff's work under the construction contract, the same liability and contract underlying plaintiff's previous action against Tobmar Investments. Plaintiff's current claim against defendant also was previously ascertainable, as plaintiff candidly admits that it simply failed to consider defendant's direct payment for the work that plaintiff performed as a viable reason to sue defendant in the first action, even though plaintiff received the payment well before plaintiff commenced that action.

Plaintiff also admits that a recent review of the contract prompted plaintiff's current claim, when plaintiff noticed "c/o" between Gateway Newstands and Tobmar Investments in the contract and determined that Tobmar Investments entered the contract as defendant's agent. Although an agency relationship is not determined solely because a party to a contract is "c/o" another entity, plaintiff's belated assessment of defendant's {**80 Misc 3d at 367}potential liability demonstrates that plaintiff's current claim was ascertainable in the previous action, since plaintiff's current theory of liability is not based on new information. Therefore the court dismisses plaintiff's claim against defendant for breach of the construction contract without prejudice to a claim against defendant in the previous action. (Solow v Avon Prods., 56 AD2d at 786, affd 44 NY2d 711.)

Plaintiff may move to join defendant and amend the complaint in the previous action (CPLR 3025 [b]), as the statute of limitations has not expired (CPLR 213 [2]), and plaintiff's allegations implicate defendant as an undisclosed principal. (CPLR 3002 [b]; J.P. Endeavors v Dushaj, 8 AD3d at 442.) To the extent that plaintiff's acceptance of defendant's payments might constitute a waiver of written consent to Tobmar Investments' alleged assignment, plaintiff may so allege in an amended complaint. Plaintiff bears the burden to justify its nearly three years of delay, however, in bringing an overdue motion. (CPLR 3025 [b].)

B. Breach of the Franchise Agreement

The court also dismisses plaintiff's claim for breach of the franchise agreement between defendant and Tobmar Investments. Although this claim is not duplicative because it arises from a different contract, plaintiff fundamentally fails to plead facts that show the agreement was intended for plaintiff's benefit. (Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011]; Board of Mgrs. of Fifth Ave. Condominium v 141 Acquisition Assoc., LLC, 179 AD3d 627, 628 [1st Dept 2020].) The complaint merely alleges that "Dworkin is a third party beneficiary of the Gateway Franchise Agreement" (Wolf affirmation, exhibit 1, ¶ 42), which not only is conclusory, but also fails to distinguish whether plaintiff is an intended rather than incidental [*4]beneficiary. (Levin v Salvini, 193 AD3d 426, 427-428 [1st Dept 2021]; Miller & Wrubel, P.C. v Todtman, Nachamie, Spizz & Johns, P.C., 106 AD3d 446, 446 [1st Dept 2013].) Plaintiff alleges no other facts that indicate the contracting parties' intent to benefit plaintiff. (Board of Mgrs. of Fifth Ave. Condominium v 141 Acquisition Assoc., LLC, 179 AD3d at 628.) Nor does plaintiff demonstrate the need for disclosure through an affidavit, as required under CPLR 3211 (d), rather than an attorney's affirmation. Consequently, plaintiff fails to sustain its claim for breach of the franchise agreement as a third-party beneficiary. (Mandarin Trading Ltd. v Wildenstein, 16 NY3d at 182; Board of Mgrs. of Fifth{**80 Misc 3d at 368} Ave. Condominium v 141 Acquisition Assoc., LLC, 179 AD3d at 628.)

During oral argument defendant did acknowledge that it is a party to a franchise agreement, yet refused to produce the agreement as documentary evidence to rebut plaintiff's claim. (CPLR 3211 [a] [1].) Despite this curious position, the deficient and conclusory pleadings in this action warrant dismissal of any claim based on the franchise agreement. (CPLR 3211 [a] [7]; Mandarin Trading Ltd. v Wildenstein, 16 NY3d at 182; Board of Mgrs. of Fifth Ave. Condominium v 141 Acquisition Assoc., LLC, 179 AD3d at 628.) Should plaintiff plead adequate allegations in a new complaint and demand disclosure of the franchise agreement, defendant likely will be required to produce the agreement.

Defendant also seeks sanctions and attorneys' fees incurred for this motion. Although defendant prevailed on its motion to dismiss the complaint, plaintiff's allegations were not so "completely without merit in law" as to warrant sanctions (22 NYCRR 130-1.1 [c] [3]), particularly because plaintiff still may move to amend the complaint in the previous action regarding defendant's alleged breach of the construction contract. (CPLR 3025 [b].) Therefore the court denies defendant's request for sanctions and attorneys' fees. (22 NYCRR 130-1.1 [c]; Bradley v Bradley, 167 AD3d 489, 489-490 [1st Dept 2018]; Korangy v Malone, 161 AD3d 645, 646 [1st Dept 2018]; Curtis v Tabak is Tribeca, LLC, 144 AD3d 509, 509-510 [1st Dept 2016]; Gordon Group Invs., LLC v Kugler, 127 AD3d 592, 594 [1st Dept 2015].)

For the reasons explained above, the court grants defendant Marcus Group Inc.'s motion to dismiss the complaint (CPLR 3211 [a] [7]), but denies its motion for sanctions. (22 NYCRR 130-1.1 [c].)