Pace Communications, Inc v Amsale Aberra, LLC

[*1] Pace Communications, Inc v Amsale Aberra, LLC 2005 NY Slip Op 50158(U) Decided on January 25, 2005 Supreme Court, New York County Acosta, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 25, 2005
Supreme Court, New York County

PACE COMMUNICATIONS, INC, PLAINTIFF,

against

AMSALE ABERRA, LLC, DEFENDANTS.



101564/04



Wanda Borges, Esq.

Borges & Associates LLC

575 Underhill Blvd., Suite 110

Syosset, New York 11791

Attorneys for Plaintiff Brett J. Meyer, Esq.

Pryor Cashman Sherman & Flynn LLP

410 Park Avenue

New York, New York 10022

Attorneys for Defendant

Rolando T. Acosta, J.

Plaintiff's motion is granted to the extent of granting summary judgment on its breach of contract claim (1st and 2nd Causes of Action) and setting the matter down for a cost and attorney's fees hearing (4th Cause of Action), and dismissing defendant's counterclaims for failure to state a cause of action.[FN1]

Plaintiff has made out a prima facie entitlement to summary judgment on its breach of contract claim. Specifically, plaintiff, the publisher of now defunct Elegant Bride, established through admissible evidence that defendant, who describes itself as "one of the leading and most prestigious companies in the bridal business," owed it $67,000.00 in outstanding advertising fees.

On May 14, 2002, defendant signed a credit application with plaintiff, which clearly states: TERMS: Invoices are due upon receipt. Interest is assessed at 1.5% per month on invoices more than 30 days past due. . . . No amendment to the credit terms shall be effective unless the same is in writing and signed by Pace Communications. If a past due balance is placed with an outside collection service or attorney, advertiser/Agency agrees to reimburse all cost of collection.[*2]

Subsequently, defendant and plaintiff entered into the three contracts for advertising at issue. The first, dated October 14, 2003, for advertising in the Spring 2003 edition, was for $40,000.00. The second, dated January 21, 2003, for the Summer edition, was for $24,000.00, and the third, dated April 29, 2003, for the Fall edition, was for $8,000.00. Plaintiff placed the advertisements as promised, but defendant made only one payment of $5,000.00 on May 22, 2003. Based on these undisputed facts, plaintiff is entitled to summary judgement on its breach of contract claim for $67,000.00.

Defendant does not dispute the terms of the contracts (except for the fact that it crossed out some terms of the first contract, including the one dealing with costs and attorney's fees).[FN2] Rather, it argues that it was fraudulently induced into signing the contracts in the first place. According to defendant, given its position in the bridal industry, it would never have advertised in a "third-rate" magazine had it not been made specific promises not contained in the contract. These promises included, being told that plaintiff was committed to making the magazine a "leading venue"; that plaintiff had hired a new editor-in-chief and that the magazine would have a "new focus" and would operate on a long term and continuous basis under the new editor-in-chief; that defendant's competitors had agreed to advertise; and, that it was told that if it made a "large and continuing advertising commitment to the new Elegant Bride" it would become a "chartered initial advertiser" and receive long term benefits. Plaintiff allegedly made these promises and "falsely represented the circulation" even though it knew that the magazines' circulation was declining. In fact, Elegant Bride cease publication before its Winter 2003 edition. Defendant claims that had it known that Elegant Bride was in financial trouble, it would never have entered into the contracts or agreed to make a large initial investment.

Defendant's causes of action sounding in fraudulent inducement are dismissed. In evaluating a motion to dismiss for failure to state a claim under CPLR § 3211(a)(7), the Court must accept the allegations of the complaint as true, and accord plaintiff the benefit of every possible favorable inference and determine only whether the facts as alleged fit within a cognizable legal theory. CBS Corp. v. Dumsday, 268 [*3]AD2d 350 (1st Dept. 2000); see also Polonetsky v. Better Homes Depot, Inc., 97 NY2d 46 (2001)(motion must be denied if "from [the]four corners [of the pleading] factual allegations are discerned which taken together manifest any cause of action cognizable at law"); Weiner v. Lazard Freres & Co., 241 AD2d 114 (1st Dept 1998("so liberal is th[is] . . . standard that the test is simply 'whether the pleading has a cause of action,' not even 'whether he has stated one'").

Where a cause of action is based on misrepresentation, fraud, mistake, willful default, breach of trust or undue influence, "the circumstances constituting the wrong shall be stated in detail." CPLR § 3016(b). This provision "mandate[s] only that the complaint allege the misconduct complained of in sufficient detail to inform the defendants of the substance of the claims." Bernstein v. Kelso & Co, 231 AD2d 314 (1st Dept. 1997).

Fraud in the inducement requires that false representations of material facts have been communicated to the aggrieved party during the negotiations leading up to the contractual agreement, that the false representations have been made knowingly and intentionally by the deceiving other party, that the aggrieved reasonably relied upon the false representations in agreeing to the contract, and, generally, that the aggrieved party has been damaged. Thomas M. Geisler, Proof of Fraudulent Inducement of a Contract and Entitlement to Remedies, 48 AMJUR POF 3d 329 (2004).

A promise to commit to making a certain publication successful is not necessarily fraud. Thus, in Goldman v. Strough Real Estate, Inc, 2 AD3d 677 (2nd Dept. 2003), the court noted that "Representations that are mere expressions of opinion of present or future expectations are not to be considered promises when examining the issue of fraud in the inducement" (Crossland Sav. V. SOI Dev. Corp,[166 AD2d 495 (2nd Dept. 1990)]. Fraud is "not a case of prophecy and prediction of something which it is merely hoped or expected will occur in the future"(Channel Master Corp. v. Aluminum Ltd. Sales, [4 NY2d 403 (1958)].

See also, Fitzgerald v. Hudson Nat. Golf Club, 11 AD3d 426 (2nd Dept. 2004).

Applying these principles to the facts of this case, plaintiff's statements to defendant regarding Elegant Bride were not fraudulent or made to induce defendant fraudulently to sign the contracts. Indeed, defendant has not established that they were false. Pace was clearly attempting to turn Elegant Bride into a leading venue. It hired a new editor-in-chief and changed the focus of the magazine, solicited big [*4]named clients, such as defendant, and even used top-of-the-line paper. Its re-launch party was held at Bergdorf Goodman with Entertainment Tonight and CNBC providing coverage.

Defendant's claim, based on a Confidential Executive Summary (Exhibit A in its opposition), that throughout its negotiations with plaintiff, plaintiff knew that its circulation (between 2000 an 2002) and profit margin (between 1999 and 2002) were declining is unavailing inasmuch as the "new" Elegant Bride was not launched until the Spring of 2002. Moreover, plaintiff's representations were merely expressions of future expectations, which are not actionable as fraudulent inducement. Goldman v. Strough Real Estate, Inc, supra, 2 AD3d at 678. Last, it is clear to this Court that defendant, which considers itself a leading player in the bridal industry, knew exactly what it was getting into. Despite considering Elegant Bride a "third-rate" magazine, defendant agreed to advertize in it hoping that the new "Elegant Bride" would emerge as a leading venue and that it would have special privileges as a chartered advertiser. In essence, plaintiff took a gamble that this new venture would payoff in the long run, but it was just that, a gamble. The fact that the gamble did not pay off does not excuse defendant of its obligations under the contracts. Defendant's counterclaims are therefore dismissed.

Last, defendant's argument that the motion must be denied because discovery has not taken place is also without merit. CPLR §§ 3211(d), 3212(f). The "determination of a motion for summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence. Parisi v. Leppard, 237 AD2d 419 (2nd Dept. 1997); see also Johnson v. Phillips, 261 AD2d 269 (1st Dept. 1999); Perez v. Brux v. Cab, 251 AD2d 157 (1st. Dept. 1998). Here, defendant has offered no evidentiary basis to suggest that discovery would lead to evidence of fraud, thus CPLR §§ 3211(d) & 3212(f) do not preclude the granting of the relief requested.

This constitutes the Decision and Order of the Court.

Dated: January 25, 2005__________________________

Hon. Rolando T. Acosta, J.S.C Footnotes

Footnote 1:1. This decision was edited for publication.

Footnote 2:2. Defendant's claim that plaintiff is not entitled to attorney's fees because defendant crossed out that term from the contract dated October 14, 2002, is unavailing inasmuch as plaintiff's claim for attorney's fees is based on the terms in the credit application, which clearly states that the terms cannot be amended without plaintiff's signature. Defendant, however, has failed to submit evidence that plaintiff consented to eliminating the attorney's fees provision.