Global Consulting Enters., Ltd. v Il Makiage, Inc.
Annotate this CaseDecided on February 27, 2012
Supreme Court, Kings County
Global Consulting Enterprises, Ltd. and David Khteeb, Plaintiffs,
against
Il Makiage, Inc., Mordechai Rumpler, Mmm Group, Inc., Avigal Henna USA, LLC Mitchell Fenton, Esq., Troutman Sanders LLP, Defendants.
15049/10
Attorney for Plaintiffs:
Ilya Novofastovsky, Esq.
Novo Law Firm, P.C.
299 Broadway, 17th Floor
New York, NY 10007Attorneys for Defendants:
Elliot Hahn, Esq.
The Law Office of Sheldon Eisenberger
30 Broad Street, 27th Floor
New York, NY 10004
Mark A. Longo, Esq.
Longo & D'Apice Esqs.
26 Court Street, Suite 1700
Brooklyn, NY 11242
Carolyn E. Demarest, J.
In this action by plaintiffs Global Consulting Enterprises, Ltd. (Global) and David Khteeb (Khteeb) (collectively, plaintiffs) against defendants Il Makiage, Inc. (Il Makiage), Mordechai Rumpler (Rumpler), MMM Group, Inc. (MMM), and Avigal Henna USA, LLC (collectively, the Rumpler defendants) and Mitchell Fenton, Esq. and Troutman Sanders LLP arising out of an alleged breach of a joint venture agreement, the Rumpler defendants move for an order, pursuant to CPLR 3211 (a) (1) and (7), dismissing portions of the first and ninth causes of action of plaintiffs' amended verified complaint for failure to state a cause of action and based on a defense founded upon documentary evidence.
BACKGROUND
Khteeb is the principal shareholder and officer of Global, a domestic corporation, and he utilized Global for all of the business dealings and transactions at issue. On June 17, 2010, plaintiffs filed this action against the Rumpler defendants, Mitchell Fenton, Esq., and Troutman Sanders LLP, seeking to redress certain wrongs and breaches which they allege were committed in the course of their business dealings. Specifically, plaintiffs claim that Rumpler referred to them as full business partners with the same level of ownership as him in various multi-million dollar deals and ventures, that they dedicated time, money, contacts, and resources to advance the enterprises at issue in reliance upon these representations, and that just at the time when their interests vested, individuals claiming to be associated with Rumpler threatened Khteeb for pursuing his claims. Plaintiffs assert that since that time, the Rumpler defendants have refused to recognize their interests in these business deals and have provided no compensation to them or an accounting.
Among the business deals alleged in plaintiffs' complaint was the acquisition of an equal interest with Rumpler in Il Makieage, a corporation which was in the business of developing, manufacturing, and selling at wholesale a wide range of cosmetics and skin care products. In addition, plaintiffs claimed that in January 2008, they joined with Rumpler and MMM in a Brazilian transaction (the Brazilian transaction) involving real estate development and its financing. Plaintiffs also claimed that they joined with Rumpler and MMM in the sale of a property with Shimmy Weiss, which they refer to as the Owls Nest Golf project, and that they further joined with Rumpler and MMM in a venture known as Hallet's Point.
Plaintiffs' original complaint purported to allege 13 causes of action. Plaintiffs' first cause of action sought an accounting from all of the defendants of business [*2]performed and monies received in connection with Il Makiage, the Brazilian transaction, the Owls Nest Golf project, and Hallet's Point. Plaintiffs' ninth cause of action for breach of contract alleged that the Rumpler defendants breached their contract with them by failing to recognize their alleged 50% interest with respect to these business ventures.
By a decision and order dated November 23, 2010, the court granted a motion by the Rumpler defendants insofar as it sought dismissal of several of the causes of action set forth in plaintiffs' original complaint. Among the causes of action dismissed were plaintiffs' first cause of action for an accounting with respect to the Brazilian transaction, the Owls Nest Golf project, and Hallet's Point, and their ninth cause of action for breach of contract with respect to the Brazilian transaction, the Owls Nest Golf project, and Hallet's Point.[FN1]
In dismissing plaintiffs' first cause of action for an accounting with respect to the Brazilian transaction, the Owls Nest Golf Project, and Hallet's Point, the court, in its November 23, 2010 decision and order, noted that "[t]he right to an accounting is premised upon the existence of a confidential or fiduciary relationship and a breach of the duty imposed by that relationship respecting property in which the party seeking the accounting has an interest" (AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d 6, 23 [2008] [internal quotation marks and citation omitted]; see also Adam v Cutner & Rathkopf, 238 AD2d 234, 242 [1997]; Palazzo v Palazzo, 121 AD2d 261, 265 [1986]). The Rumpler defendants, in support of their motion to dismiss, argued that there was no joint venture between them and plaintiffs with respect to the Brazilian transaction, the Owls Nest Golf project, and Hallet's Point, and that, therefore, no fiduciary relationship existed between them and plaintiffs so as to entitle them to an accounting.
In considering this argument, the court found that plaintiffs' first cause of action, as alleged, did not contain sufficient detail to make out a claim for a joint venture with respect to the Brazilian transaction, the Owls Nest Golf project, and Hallet's Point. Specifically, the court determined that the complaint did not contain sufficient allegations as to the Rumpler defendants' role in these alleged transactions, the dates on which they occurred, or the terms thereof. The court thus held that since plaintiffs had not sufficiently alleged a joint venture with respect to these transactions, they were not entitled to an accounting as pertained to them.
In dismissing plaintiffs' ninth cause of action for breach of contract with respect to the Brazilian transaction, the Owls Nest Golf project, and Hallet's Point, the court, in its November 23, 2010 decision and order, noted that the requisite elements of a breach of contract claim are: the formation of an agreement, the performance by one party, breach of the agreement by the other party, and damages (see Furia v Furia, 116 AD2d 694, 695 [*3][1986]). In this regard, the Rumpler defendants had asserted that an e-mail sent by Khteeb showed that the Brazilian transaction was never consummated. Plaintiffs, in response, failed to address this assertion, and also did not specify the terms of the contract with respect to the Brazilian transaction or how the Rumpler defendants breached this contract. Plaintiffs also failed to address the Rumpler defendants' role with respect to the Owls Nest Golf project and Hallet's Point, and their original complaint was completely devoid of any allegations regarding the specific terms of these alleged contracts and how they were breached by the Rumpler defendants.
Since plaintiffs, in opposition to the Rumpler defendants' prior motion, had requested leave to replead, the court granted them such leave to replead their first and ninth causes of action insofar as they related to the Brazilian transaction, the Owls Nest Golf Project, and Hallet's Point. Plaintiffs, in an amended verified complaint, have now repleaded their first and ninth causes of action. The Rumpler defendants, however, by their instant motion, seek to dismiss these causes of action insofar as plaintiffs attempt to replead their claims with respect to the Brazilian transaction, the Owls Nest Golf Project, and Hallet's Point on the ground that plaintiffs have not remedied the deficiencies in their original complaint and still fail to state a cause of action as to these three transactions. Mitchell Fenton, Esq, and Troutman Sanders LLP, who had interposed an answer to plaintiffs' original complaint and took no position on the Rumpler defendants' prior motion to dismiss, appeared at the oral argument of the Rumpler defendants' instant motion to dismiss, and, again, took no position with respect to this motion.
DISCUSSION
Dismissal Standard
"It is well settled that, as a general rule, on a motion to dismiss the complaint for failure to state a cause of action under CPLR 3211 (a) (7), the complaint must be construed in the light most favorable to the plaintiff" (Gruen v County of Suffolk, 187 AD2d 560, 562 [1992]; see also Rosen v Watermill Dev. Corp.,1 AD3d 424, 425 [2003]). The court must also accept the facts as alleged in the complaint and submissions in opposition to the motion as true and "accord plaintiffs the benefit of every possible favorable inference" (Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409, 414 [2001] ). The court, in accepting the facts alleged in the complaint to be true, must " determine only whether the facts alleged fit within any cognizable legal theory'" (Ruffino v New York City Tr. Auth., 55 AD3d 817, 818 [2008], quoting Morris v Morris, 306 AD2d 449, 451 [2003]). "[I]f from the four corners [of the complaint] factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail" (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Thus, when evaluating whether a complaint is sufficient to survive a motion to dismiss pursuant to CPLR 3211 (a) (7), " the sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail'" (Ruffino, [*4]55 AD3d at 818, quoting Morris, 306 AD2d at 451).
"[B]are legal conclusions are not entitled to the benefit of the presumption of truth and are not accorded every favorable inference" (id.). However, dismissal of the complaint pursuant to CPLR 3211 (a) (7) "will be warranted only in those situations in which it is conclusively established that there is no cause of action" (Town of N. Hempstead v Sea Crest Constr. Corp., 119 AD2d 744, 746 [1986]).
A dismissal pursuant to CPLR 3211 (a) (1) is warranted on the basis that a defense based upon documentary evidence exists where the documentary evidence submitted "definitively contradicts the plaintiff's factual allegations and conclusively disposes of the plaintiff's claim" (Berardino v Ochlan, 2 AD3d 556, 557 [2003]; see also Leon v Martinez, 84 NY2d 83, 87 [1994]; Forftis Fin. Servs.v Fimat Futures USA, 290 AD2d 383, 383 [2002]). The documentary evidence submitted must conclusively establish a defense to the asserted claim as a matter of law and utterly refute the complaint's factual allegations (see Leon, 84 NY2d at 88).
Plaintiffs' Amended Complaint
In attempting to cure the deficiencies in their original complaint, plaintiffs, in their amended complaint, add paragraph 54 to their first cause of action for an accounting, which alleges:
"In addition, plaintiffs joined with Rumpler and MMM in a joint venture with others on or about January of 2008 with [the] purpose of owning and managing real property in Brazil, as evidenced by the letter confirming the Venture attached hereto and marked as Exhibit 4.'"
Plaintiffs, in their amended complaint, also add paragraphs 115 and 116 to their ninth cause of action for breach of contract, which allege:
"115. Rumpler and MMM breached the Joint Venture Agreement entered into by the parties with regards to ownership and management of real property in Brazil when Rumpler and MMM acted to deprive the plaintiffs of their agreed-upon share of ownership and control of the property and the rights to profit and income therefrom.
"116. Plaintiffs are entitled to receive at least 50% of any profits derived by Rumpler or MMM from the properties in [the] Brazil venture."
In addition, plaintiffs, in their amended complaint, add to paragraph 118 the allegation that "Rumpler caused MMM to enter into transactions, including the Brazilian Joint Venture Agreement outlined herein, which resulted in the injustices complained of herein, that lacked legitimacy, consideration or proper documentation."
Hallet's Point
Notably, plaintiffs' amended complaint does not contain any additional allegations with respect to Hallet's Point. Plaintiffs, in their opposition papers, assert that they have ceased to pursue any claim regarding Hallet's Point and request that their claims with respect to Hallet's Point be discontinued without prejudice. Therefore, since plaintiffs' first and ninth causes of action with respect to Hallet's Point were already dismissed by the court's November 23, 2010 decision and order and plaintiffs have elected not to replead such claims, they shall remain dismissed. Inasmuch as plaintiffs' amended complaint continues to contain allegations relating to Hallet's Point, such allegations and all remaining claims with respect thereto must be dismissed.
While the Rumpler defendants argue that such claims regarding Hallet's Point should be dismissed with prejudice (as opposed to without prejudice as requested by plaintiffs), this argument is rejected. A dismissal pursuant to CPLR 3211 (a) (7) for failure to state a cause of action (which is based upon a deficiency in pleading) with leave to replead does not constitute a determination on the merits and does not preclude the commencement of a subsequent action since the issues have not actually been litigated (see Sullivan v Nimmagadda, 63 AD3d 908, 909 [2009]; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 41 AD3d 584, 585 [2007]; Asgahar v Tringali Realty, Inc., 18 AD3d 408, 408-409 [2005]; Hodge v Hotel Empls. & Rest. Empls. Union Local 100 of AFL-CIO, 269 AD2d 330, 330 [2000]). Thus, the dismissal of these claims shall be without prejudice.
The Owls Nest Golf project
With respect to the Owls Nest Golf project, plaintiffs had alleged in their original complaint and continue to allege, in their amended complaint, upon information and belief, that they joined with Rumpler and MMM in a sale of a property associated with Shimmy Weiss, that the proceeds from the sale of this property were to be equally split three ways, with one share to them, another to Rumpler and MMM, and the third share to Shimmy Weiss, and that Rumpler and MMM sold this property for $3,600,000, but failed to distribute any share thereof to them. In opposition to the Rumpler defendants' instant motion regarding dismissal of their first and ninth causes of action as pertains to the Owls Nest Golf project, plaintiffs assert that they have uncovered a letter indicating that they had an interest in this deal involving real property. This letter, dated July 25, 2007, is from Shimmy Weiss, and provides as follows:
"This Letter is to confirm that, effective immediately, I, Shimmy Weiss, hereby transfer my rights in the Owls Nest Golf project, located in New Hampshire to Global . . . Global . . . shall act on my behalf in all decisions regarding the above-mentioned project."
However, this letter, written by a non-party, Shimmy Weiss, is the very same letter which was previously included with plaintiffs' opposition to the Rumpler defendants' [*5]prior motion to dismiss their original complaint. None of the repleaded portions of plaintiffs' amended verified complaint (as set forth above) concern the Owls Nest Golf project. Thus, with respect to plaintiffs' first cause of action, the amended complaint still fails to contain sufficient allegations as to the Rumpler defendants' role in the Owls Nest Golf project and fails to articulate the terms and details of the alleged joint venture concerning the Owls Nest Golf project so as to entitle plaintiffs to an accounting. With respect to plaintiffs' ninth cause of action, plaintiffs' amended complaint remains completely devoid of any allegations regarding the specific terms of any alleged contract and how it was breached by the Rumpler defendants.
Consequently, plaintiffs' amended complaint still suffers from the same deficiencies in pleading which necessitated the prior dismissal of the first and ninth causes of action with respect to the Owls Nest Golf project pursuant to CPLR 3211 (a) (7) for failure to state a cause of action. Dismissal of plaintiffs' first and ninth causes of action insofar as they are based upon the Owls Nest Golf project must, therefore, be granted (see CPLR 3211 [a] [7]).
The Brazilian transaction
As set forth above, plaintiffs' amended complaint now adds allegations that they joined with Rumpler and MMM in a joint venture on or about January of 2008 with the purpose of owning and managing real property in Brazil, as evidenced by a letter, which they have annexed as Exhibit 4. This letter, dated February 21, 2008, was from Lass Salt Garvin, a law firm in Brazil, and was addressed to Global and Rumpler. This letter stated that Lass Salt Garvin was acting for William Brower Moseley (Mr. Moseley) and Javad Zeinolabedin-Zadeh (Mr. Zadeh), and set forth Lass Salt Garvin's understanding that Global and Rumpler had "entered into an agreement with Mr. Moseley and Mr. Zadeh in relation to a proposed joint venture involving land at Acara in Brazil and a property there belonging to Mr. Moseley." This letter provided that Global and Rumpler's attorneys, Troutman Sanders LLP, were to send to Lass Salt Garvin $100,000 initially, and, subsequently, $900,000 to be paid into an escrow account, and that Global and Rumpler "agree[d] that the Escrow Monies w[ould] only be paid to [Lass Salt Garvin] through [their] attorneys, Troutman Sanders LLP." This letter further provided that Mr. Zadeh would deposit a bearer bond with Lass Salt Garvin, and they would pay the monies received from Troutman Sanders LLP, on behalf of Global and Rumpler, to Mr. Zadeh, unless notice that they did not intend to proceed with the joint venture was served on them not later than March 24, 2008.
Plaintiffs have also annexed e-mails which were sent by Robert L. Bourguignon, who was Mitchell Fenton, Esq.'s partner at Troutman Sanders LLP, which details an arrangement to set up a wire transfer in connection with the Brazilian transaction. Plaintiffs have annexed a Balance & Transaction detail report dated February 22, 2008 from JP Morgan Chase, which shows that $100,000 was transferred from an IOLA account purportedly belonging to Troutman Sanders LLP (who, as noted above, acted as [*6]both plaintiffs and Rumpler's attorneys in the Brazilian transaction) to an account controlled by Lass Salt Garvin with a remark referring to "Rumpler Agreement per M Fenton." In addition, plaintiffs have annexed a chain of e-mails from Mitchell Fenton, Esq. to Rumpler and Khteeb listing recommended lawyers in Brazil.
Plaintiffs assert that these submissions indicate the parties' relationship, and show that a transaction secured by a bond was initiated with a down payment. Plaintiffs maintain that this letter, along with the e-mails, show that a joint venture agreement existed between the parties. They assert that even if this deal collapsed, money was circulating in a deal in which Khteeb believes that he was "cut out." They note that the letter and all of the e-mails from the attorneys were sent to both Rumpler and Khteeb, which indicates that they were acting collectively as partners represented by the same attorney.
Notably, in opposition to the Rumpler defendants' original motion, plaintiffs had annexed a letter (which is annexed as Exhibit 2 to plaintiffs' amended complaint) from Raphael Siqueira, a lawyer, addressed to Mr. Zadeh, a key individual to the arrangement, which described the property of Acara and the island of Mucurutu. Plaintiffs claim to have developed the Brazilian transaction and brought it to the attention of Rumpler. Plaintiffs also claim that in the course of the Brazilian transaction, at least $3,000,000 was received by the Rumpler defendants. Plaintiffs assert that they traveled to London on or about January 29, 2008 and February 21, 2008, and arranged the financing of the Brazilian transaction to be secured by an 1875 gold bond number 1038 issued by Peru, and guaranteed by the United States, with a face value of $1,000 and seven percent annual interest.
Plaintiffs, in opposition to the Rumpler defendants' original motion, also had submitted an e-mail dated June 4, 2007 from Rumpler to Mr. Schlaepfer regarding the Brazilian transaction, in which Rumpler stated that they were ready, willing, and able to invest $3,000,000, that Khteeb and Mr. Zadeh would be directly arranging it, and that he and Khteeb would share an equal 50% of all properties in Brazil, the United States, and the United Kingdom. Plaintiffs further claim that regardless of the success of the Brazilian transaction, they incurred substantial expenses that had to be paid from the funds received, and that they succeeded in securing financing for it. Plaintiffs maintain that the Rumpler defendants have failed to distribute any funds or account for funds related to the Brazilian transaction.
As previously noted, when assessing the adequacy of a complaint in light of a CPLR 3211 (a) (7) motion to dismiss, the court must afford the pleadings a liberal construction, accept the allegations of the complaint as true and provide the plaintiff "the benefit of every possible favorable inference" (Leon, 84 NY2d at 87; see also Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 [2002]). "Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss" (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). Furthermore, [*7]"any deficiencies in the complaint may be amplified by supplemental pleadings and other evidence" (AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 591 [2005]; see also Rovello v Orofino Realty Co., 40 NY2d 633, 635-636 [1976]). Thus, in opposing a motion to dismiss under CPLR 3211 (a) (7), a plaintiff may submit evidence to remedy defects in the complaint and preserve inartfully pleaded but potentially meritorious claims (see Rovello, 40 NY2d at 635), and the plaintiff's additional submissions are likewise to "be given their most favorable intendment" (see Arrington v New York Times Co., 55 NY2d 433, 442 [1982], cert denied 459 US 1146 [1983]; see also Katz v American Mayflower Life Ins. Co. of NY, 14 AD3d 195, 209 [2004], affd 5 NY3d 561 [2005]; Pharmhealth Infusion v Rohm Servs. Corp., 249 AD2d 950, 950 [1998]).
The court notes that Rumpler asserts that no property in Brazil was ever purchased by him or any company associated with him and that the joint purchase with plaintiffs with respect to properties in Brazil was never consummated. The Rumpler defendants, in support of their prior motion, submitted an e-mail to Hal Branch (who they stated was the proposed seller's attorney with respect to the Brazilian properties), dated May 26, 2008, in which Khteeb had stated "[a]s you know and I know the deal didn't go through" and that the cash and the bond should not be released to anyone but Global. Rumpler did not assert that the cash and bond were released to Global, but claimed that plaintiffs did not contribute any funds to the Brazilian transaction. According to Rumpler, the only funds contributed were an initial $100,000 deposit, which were contributed by MMM by wire transfer, as evidenced by MMM's February 2008 bank statement which reflects that the $100,000 wire transfer was sent to Troutman Sanders LLP by MMM.
Plaintiffs, however, have sufficiently alleged that there was a joint venture for the purchase of property in Brazil, which was secured by a bond, and that steps in furtherance of the deal, including the transfer of money, were undertaken. Plaintiffs assert that they wish to confirm the result of the Brazilian transaction and demand their share to any benefit derived from the Brazilian transaction. They state that they wish to be allowed to commence discovery to uncover what occurred.
Thus, while there are disputed issues of fact with respect to what actually transpired with the Brazilian transaction, at this early pleadings stage of this action, the court finds that plaintiffs have adequately pleaded the existence of a joint venture with respect to the Brazilian transaction and have, therefore, stated a cognizable cause of action for an accounting with respect to it (see First Keystone Consultants, Inc. v DDR Constr. Servs., 74 AD3d 1135, 1139 [2010]; Silver v Silver, 63 AD3d 903, 903 [2009]; Wesselmann v International Images, 259 AD2d 448, 449-450 [1999]; Spodek v Riskin,150 AD2d 358, 360 [1989]). Consequently, dismissal of plaintiffs' first cause of action as pertains to the Brazilian transaction must be denied.
With respect to plaintiffs' ninth cause of action for breach of contract with respect to the Brazilian transaction, plaintiffs (as set forth above) now allege that Rumpler and [*8]MMM breached the joint venture agreement entered into between them with respect to the ownership and management of real property in Brazil when Rumpler and MMM acted to deprive them of their agreed-upon share of the ownership and control of the property and the rights to profit and income therefrom, and that they are entitled to receive at least 50% of any profits derived by Rumpler or MMM from the Brazilian transaction. Thus, plaintiffs have sufficiently alleged the requisite elements of a breach of contract claim since they allege the formation of a joint venture agreement, its performance, a breach by Rumpler and MMM, and a loss by them (see generally Furia, 116 AD2d at 695). Consequently, dismissal of this cause of action with respect to the Brazilian transaction must be denied.
CONCLUSION
Accordingly, the Rumpler defendants' motion is granted to the extent that it seeks to dismiss plaintiffs' first and ninth causes of action with respect to the Owls Nest Golf project and Hallet's Point, and it is denied to the extent that it seeks to dismiss plaintiffs' first and ninth causes of action with respect to the Brazilian transaction. Defendants shall answer within 20 days.
This constitutes the decision and order of the court.
E N T E R,
J. S. C.
Footnotes
Footnote 1:The court denied the Rumpler defendants' motion insofar as it sought dismissal of plaintiffs' first cause of action for an accounting with respect to Il Makiage and their ninth cause of action for breach of contract with respect to Il Makiage.
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