Levy v Lee Finkel OP Digital LLC

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Levy v Lee Finkel OP Digital LLC 2012 NY Slip Op 31894(U) July 13, 2012 Supreme Court, Suffolk County Docket Number: 11-25374 Judge: Emily Pines Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] INDI:X NO. 11-25374 SUPREME COURT - STATE OF NEW YORK I.A.S. PART 46 - SUFFOLK COUNTY PRES tion. [T: MO? ION DATE 12-29-1 1 ADJ. DATE 3-27-12 Mot. Seq. ## 001 - MG; CASEDISP EMILY PINES Justice of the Supreme Court X ROFiER I S. LEVY, SMITH, CARROAD, LEVY & FINKEL. LLP, Plaintiffs , - against - LEE FINKEL OP DIGITAL LLC, i SMITH CARROAD LEVY & WAN, F .C. Attorney for Plaintiffs 5036 Jericho Turnpike Cornmack, New York 1 1725 BIANCO, BYRNES & FINKEL, LLP Attorney for Defendant 5036 Jericho Turnpike, Suite 208 Cornmack, New York 1 1725 Defendants. ................................................................ X Upon the following papers numbered 1 to 1 read on this motion to dismiss ;Notice of Motion/ Order to Show Cause 6 and supporting papers I - 7 ; Notice of Cross Motion and supporting papers -; Answering Affidavits and supporting papers 3 - 3 R eplying Affidavits and supporting papers 14 - 16 ; Other -; (aid-& 1 ; e ¬b-#te mekim) it is, ORDERED that the motion by defendants Lee Finkel and OP Digital LLC seeking to dismiss plainti ffs complaint is granted. On August 9, 201 I , plaintiffs Robert Levy and Smith, Carroad, Levy & Finkel commenced this action against defendants Lee Finkel and OP Digital LLC to recover damages for breach of contract, fraud, uii.just enrichment. conversion, and tortious interference with their right to contract. Plaintiffs also seek an order directing Finkel to return the ownership, operation, registral ion and control of the URL sclf.com to plainti fik Initially, the Court notes that on a motion to dismiss a complaint pursuant to CPLR 321 l(a)(5), the court ; function is to determine whether the causes of action alleged in the complaint have expired based upon their accrual dates. In addition, a CPLR 321 1 motion to dismiss a complaint requires that a court take all thc allegations in the complaint as true and resolve all inferences in favor of the plaintiff (see Sabtrdie v Burke. 47 AD3d 913. 849 NYS2d 440 [2d Dept 20081). In order to per6srm such a task, the complaint must be before the court (see generally Souke v Lozndn, 232 ADid 825, 648 NYS2d 790 [3d Dept 19961). I Iere. kfendants have failed to include a copy of the complaint with their motion papers. However, since the co nplaint is contained in the record before this Court, defendants mation shall be considered on the r merits in the interest ofjudicial economy (see CPLR 2001; O Brien v V ~ s nBros. Hosp., 207 AD2d 169, [* 2] I,w> \ F i n k 1 Index \lo 11-25374 Page No. 2 622 NYS2d 284 [2d Dept 19951; cf Aleksarztlrowicz v Cclritella & Co., ASK.. 913 [4th Dept 20101). 72 AD3d 1580, 898 Nk S2d Plaintiffs. by their complaint, allege that Robert Levy owned all of the assets of Smith, Carroad, Levy t% Finkel. I L P , including the URL sclf.com. and that on September 15, 1998, Louis Squeo of Squeo Graphics, Inc. (hereinafter referred to as Squeo ) was retained to create and manage the content of plaintiff s URI, sclf.com. Plaintiffs allege that Squeo designed the firrn s web page, and, with Levy s approTdal, published the website, utilizing the services of Timothy Sailer of Coastal Internet, Inc., as the domain s host. Plaintiffs allege that Squeo ensured that the regislrant of the URL sclf.com was Smith, Carroad, Levy & Finkel, LLP. Plaintiffs allege that in August 2005, Finkel offered to redesign plaintii fs web page, and that during such time, Finkel discovered that the registration for sclf.com was set to expire on or h o u t September 15, 2005. Plaintiffs allege that Finkel misrepresented his authority to Squeo and obtained all of the information for the subject URL, without advising plaintiffs that he would be registering the L R L in his name. Plaintiffs allege that on or about September 15,2005, Finkel registered the URL in his name, through his company OP Digital LLC, and then published the redesigned web page without plaintiffs knowledge or consent. Plaintiffs allege that upon their discovxy of Finkel s publication of the redesigned web page, Levy demanded that Finkel remove said page, which Finkel did, restoring Squeo s designed page. Plaintiffs allege that during this time they continued to make payments to Coastal Internet, Inc. for hosting the domain with Squeo s design and that they we:re una-rare that Finkel had registereld the site in his name. Plaintiffs filrther allege that in September 2008 they engaged a new company, Top Ten Marketing, to redesign the web page, but when Top Ten Marketing attempted to acczss the website it was discovered that Finkel had registered the URL in his name. Thereafter, plaintiffs allege that they requested that I%kel provide Top Ten Marketing access to the web page, but that said request was refused. Plaintiffs allege that they never consented or agreed to permit Finkel to host, manage, or have any ownership or control over the URI, sclfxorn, and that Finkel refused plaintiffs request to return the URL. Plaintiffs further allege that Finkel continues to renew the URL in his name and currently is the registrant. Defendants now move for dismissal of the complaint on the basis that plaintiffs failed to commence their action within the applicable statute of limitations period. More spe~;ifically,defendants contend that they obtained ownership to the sclf.com domain name on August 3, 2Ci05 after being given permission to do so, and, therefore, plaintiffs causes of action, which are grounded in :ontract law, expired on August 3, 201 1 . In support of the motion. defendants submit Lee Finkel s affidavil, and copies of the GoDsddy.com receipt transferring ownership of the URL sclf.com to Lee Finkel and OP Digital LLC, dated August 3. 2005, and copies of the domain s Whois ownei-ship history. Plaintiffs oppose the motion on the ground that the date of the breach is September 12, 2008, which is the date that Finkel refused a requcst to return ownership of the website to plaintiffs. Plaintiffs further assert that the statute of liniita ions has not run on their causes of action for fraud. unjust enrichment, conversion, and tortious interfc rence Lvith their contractual right. On a motion to dismiss a complaint pursuant to CPLR 32 1 l(a)(5 I on statute of limitations grounds. the moving defendant must establish, prima facie, that the time in which to commence the action has expired (,see C ilsnck vMeyer, AD3d 2012 NY Slip Op 04736 [2d Dept 20121; East Hamptun Union Free :ichool Dist. v S n n r ~ ~ b b ~ R l r l r s .90 AD3d 821, 935 VYS2d 616 [2d Dept 201 11). If the ,~~c., [* 3] 1,evy \ Fiiihel Index Vo 11-15374 f age No. 3 tno~~aiit meets the initial burden of establishing prima facie that the time in which to sue has expired, the burden then shifts to the plaintiff to raise a triable issue of fact as to whel her the statute of limitations is tolled or is otherwise inapplicable (see Zaborowski v Local 74, Serv. Empls. Zntl. Union, AFL-CZO, 91 AD3d 768,936 NYS2d 575 [2d Dept 20121: Baptiste v Harding-Mariti. 88 AD3d 752,930 NYS2d 670 12d DI:pt 201 i ] : Williams v New York City Heriltli & Hosps. Corp.. 84 AD3d 1358. 923 NYS2d 908 [2d r k p t :!0 1 1 1). Plaintiffs first cause of action is for breach of contract. A breach of contract cause of action is governed by a six-year statute of limitations (see CPLR 213 (2); Gibraltm Mgt. Co., Inc. v Grand Etztrarzce Gates, Ltd., 46 AD3d 747, 848 NYS2d 684 [2d Dept 20071 ). In particular, a breach of contract cause of action accrues at the time of the breach (see Ely-Cruiskslrank C o. v Bank of Montreal, 81 NY2d 399, 599 NYS2d 501 [1993]; see also CPLR 203[a]). In general, accrual occurs when all of the factual cleinents necessary to maintain the lawsuit and obtain relief come into existence (see HP Capital, LL,C v Village of Sleepj) Hollow, 68 AD3d 928, 891 NYS2d 443 [2d Dept 20091). Here, the six-year statute of limitations on the breach of contract cause of action began to run when F inkel registered the URL in his name. Finkel has submitted evidence demonstrating that to make updates to a domain one has to be the owner of the domain, that his last update to the domain occurred ,311August 5 , 2005, and that the transfer of the domain into his name occurred on August 3,2005. Thus, the statute of limitations had already expired by the time plaintiffs instituted their cause of action on August 9, 201 1 ( x e HP Capital, LLC v Village of Sleepjj Hollow. supra; Brandenberg v Waters Place Assocs., 17 AD3d 615, 794 NYS2d 80 [2d Dept 20051; cJ: FleetwoodAgency, Znc. v Verne Elec. Corp., 85 AD3cL 850, 925 NYS2d 576 [2d Dept 201 11). In opposition. plaintiffs failed to present any evidence establishing that ihe action was commenced within the applicable limitations period, or to raise a triable issue of fact as to whether the six-year statute of limitations was tolled or was otherwise inapplicable (see Rakusiri v Miarzo, 84 AD3d 105 1, 923 NYS2d 334 [2d Dept 201 13; Kirclrmar v Sclter, 82 AD3d 1164,919 NYS2d 378 [2d Dept 201 11; see also Sears, Roebuck & Go. v Patcliogue Assoc.,LLC., 87 AD3d 629, 928 NYS2d 4 76 [2d Dept 2001 1I). Specifically, plaint ffs failed to rebut defendants contention that Finkel became owner of the domain on August 3,2005. Plaintiffs second cause of action sounding in fraud also must be dismissed, because plaintiffs have failed to allege with the particularity necessary to survive the heightened pleading requirements of CI LR -301 6 any specific misrepresentations by Finkel upon which they justifiably relied (see Zntrona v Huntington Learning Ctrs., Itzc., 78 AD3d 896, 91 1 NYS2d 44;: [2d Dept 20101). CPLR 3016 (b) requires that a party seeking to assert a cause of action for fraud must set forth the circumstances constituting tlie wrong with particularity (see Euryclein Partners, LP v tieward & Kissel, LLP, 12 NY2d 553, 883 NYS2d 147 [2009]; National Union Fire Ins. Co. of Pittsburgh, Pa v Clrristopher Assoc., 257 AD2d 1, 691 NYS2d 35 [lst Dept 19991; Bank Leumi Trust Co. of N.Y. vD Evori Zntl., 163 AD2cl 26, 558 NYS2d 909 [lst Dept 19901). To plead a cause of action for fraudulent misrepresentation, a plaintiff must show misrepresentation or a material omission offact which was false and known to be false by the defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance by that party, and injury as a result of such reliance (see Lama Holding Co. v Smitlt Barney, 88 NY2d 413, 646 NYS2d 76 [1496]; CliartelMnster Corp. v Aluminum Ltd. Sales, 4 NY2d 403, 176 NYS2d 259 [1958]; Intronn v Himtirigton Learning Ctrs., Ztic., supra; Deutsclte Bank Natl. Trust Co. v Sinclair, 68 AD3d 914, 891 NYS2d 445 [2d Dept 20091). [* 4] Leby \ Finkel Index No. 1 1-35374 Page L o . 3 Moreover. plaintiffs claim for fraud is time-barred. An action alleging fraud must be commenced six ycars of the fraud or within two years from the time tht. plaintiff discovered the fraud or could with reasonable diligence have discovered it, whichever is later (see CPL,R 2 13 (8); Carbon Capital fkfgt., LLC 1. Anzericntz Express Co., 88 AD3d 933. 932 NYS2d 488 [2d Dept 201 I]; New York City Tr. Autii. v Morrir. J. Eisen, P.C.. 276 AD2d 78, 715 NYS2d 232 [2d Dept 2000l). A plaintiff will be held to have disco1 ercd thr: fraud when it is established that he or she was possessed with knowledge of facts from which the fraud could be reasonably inferred (see Trepuk v Frank, 44 NY2d 723, 405 NYS2d [ 19783; Erbe v Lincoltz Rochester Trust Co., 3 NY2d 321, 165 NYS2d 107 [1057]). Plaintiffs state that in September 2008 they became aware of the fact that Finkel was the registered owner of the URL sclf.com; ; that plaintiffs requested that Top Ten Marketing be given the website s access information in order to rediesign the WEb page. which Finkel refused to do; and that Finkel refused their request that he return the URI, to their ownership. Thus, plaintiffs had two years from the discovery of the alleged fraud in 2008 to commence their action. However, plaintiffs action was not commenced until August 201 1, well outside the statute of limitations for fraud. Additionally, the alleged fraudulent act that Finkel allegedly committed was the registration of the URL in his name, through his corporatLon, OP Digital, LLC, on September 15, 2005. However, defendants have submitted evidence establishing that the URL was registered in Finkel s name 3n August 3, 2005 and, therefore, the action is barred by the statute of limitations, since it was commenced more than six years after the alleged fraudulent act occurred (see Robertson v Wells, 94 AD3d 951,942 NYS2d 194 [2012]; cf: Sargiss vMagarelli, 12 NY3d 527,881 NYS2d 651 [2009]). n ithin Regarding plaintiffs third cause of action, the theory of unjust er richment is a quasi-contract claim, which rests upon the principle in equity that a person should not be permitted to enrich himself or herself f f unjustly at the expense of another person (State o New York v Bnrcfays Bank o A!Y., 76 NY2d 533, 540, 561 NYS2d 697 [1990]; see IDT Corp. vMorgan Stanley Dean Witter & Co., 12 NY3d 132, 879 NYS2d t 355 [2009], I denied 12 NY3d 889, 883 NYS2d 793 [2009], quoting Miller v Sclzloss, 218 NY 400,407, 1 13 NE 337 [ I91 61; see also Restatement [First] of Restitution tj 1). It creates an obligation imposed by equity to prevent injustice in the absence of an actual agreement between the parties concerned (see Golrlnzan metropolitan Life Ins. Co., 5 NY3d 561, 807 NYS2cL 583 [2005]). Where the parties executed a valid and enforceable written contract governing a particular subject matter, recovery on a theory of unjust enrichment for events arising out of that subject matter is ordinarily precluded (see IDT Corp. v Morgan Stmiley Dean Witter & Co., szipra; Clark-Fitzpatrick v Long Is. R. R. C o., 70 NY2d 382, 521 NYSM 653 [ I987 1). A claim for unjust enrichment has a statute of limitations of six years (see CPLR 21 3). Plaintiffs allege that defendants were unjustly enriched, because plaintiffs have been unable to utilize the URI, sclf.com, and seek pecuniary damages in the arnount of $250,000.00. Under the instant circumstances, plaintiffs allegation that defendants have been unjustly enriched at their expense, because Finkel is the registered owner of the URL sclf.com, cannot stand. Notwithstanding the fact that the URL is registered in Finkel s name and plaintiffs continued to pay Coastal Internet, Inc. to host the domain, using the Squeo web design, plaintiffs have derived all the benefits from the existence of the web page. Plaintiffs allcgc that it was not until they engaged Top Ten Marketing to redesign the website in September ;!008 that they discovered Finkel was the registered owner of the URL. However, plaintiffs website had been active and continues to be active despite the fact that Finkel remains listed as the registered owner. I11 fact, plaintiffs state that Finkel continues to renew the URL. Fui-thermorc, no where in plaintiffs complaint do they a lege that they have paid any fees to Finkel or OP Digital LI,C to maintain the website, despite the websilc remaining operable. [* 5] L x v q \ Finkel Index Yo. 11-25374 Page No. 5 Turning to plaintiffs fourth cause of action, a claim for conversion has a three-year statute of limitations (,we Davidson v Fasnnella, 269 AD2d 351, 702 NYS2d 384 [2d Dept 20001; Erdlzeim v Mrrtkins. 259 AD2d 5 15, 686 NYS2d 108 [2d Dept 19991) and tccrues on the date that the conversion occurs (see CPLR 214 (3); Vigilant Ins. Co. v HoirsingAutlz., 8 7 NY2d 36. 637 NYS2d 342 [1995]). The actions by Finkel that plaintiffs allege resulted in the conversion oftheir property all occurred in 2005, and the in,jtant action was not commenced until 201 1. Consequently, plainti fs claim that Finkel conven:ed the I JRL. sclf.com for his own use and benefit is time-barred. Finally, plaintiffs allege in the fifth cause of action that defendarm tortiously interfered with their right to contract. 1 0 establish a claim for tortious interference with contractual relations, a plaintiff must plead and prove four elements: (1) the existence of a contract between the plaintiff and a third party; (2) defendant s knowledge of the contract; (3) defendant s intentional inducement of the third party breach or otherwise render performance impossible; and (4) damages to the plaintiff (see Kronos, Inc. v A KX Corp., 81 NJ 2d 90, 595 NYS2d 931 [1993]). Since damage is an essential element of the tort, the claim is not enforceable until damages are sustained (see Kronos, Inc. v Am Corp., supra). A claim for tortious interference with contractual relations has a three-year statute of limitations (see CPLR 21 4; Pursnavzi v S y i h Move Sportswear, Inc., 92 AD3d 663,938 NYS2d 333 [:!d Dept 20121; Cltung v Wang, 79 AD3d tls 693, S 12 NYS2d 647 [2d Dept 20101). Here, the damages would be those resulting from defendants interference with plaintiffs contracts with Squeo and Coastal Internet, Inc. Plaintiffs allege that Finkel, through misrepresentations of his authority. induced Squeo and Coastal Internet, Inc. to provide him with a 11 of the necessary information to access the website page and register the URL under his name through his company OP Digital LLC. However. it must be concluded that plaintiffs first suffered a loss as a result of Finkel s alleged interference with their contractual relations when the information was provided to Finkel to access the website. Altho Jgh the exact date of the injury is not alleged in plaintiffs complaint, it must have occurred before September 15, 2005, which is the date that plaintiffs allege that Finkel registered the URL in his name, through his corporation OP Digital LLC. Therefore, the claim for tortious interference is time-barred. In any event, even if the claim was timely brought, plaintiffs allegations fail to demonstrate that Finkel tortiously interfered with their right to contract with either Squeo or Coaistal Internet, Inc., because plaintiffs state that they continued to pay Coastal Internet, Inc. for hosting the site snd that Squeo s web design remained in place. Accordingly, defendants motion for an order dismissing plaintifl s complaint on the grounds that all the causes of action set forth therein are time-barred is granted. I>ated:-.luly 13. 2012

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