Bitter v Renzo

[*1] Bitter v Renzo 2012 NY Slip Op 52455(U) Decided on April 12, 2012 Supreme Court, New York County Schweitzer, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 12, 2012
Supreme Court, New York County

Adriana Bitter, MARK BITTER, and ROBERT BITTER, Plaintiffs,

against

Louis N. Renzo, CHARLES RAICH, RONKONKOMA OPERATIONS LLC, RAICH ENDE MALTER & CO. LLP, and 300 TRADE ZONE DRIVE LLC, Defendants.



652003/11



Motion 001

For plaintiffs:

Adam J. Gana

Napoli Bern Ripka Shkolnik, LLP

350 Fifth Avenue

New York, NY 10118

For defendants:

Mark A. Berman

Arthur M. Lieberman

Anne D. Taback

Ganfer & Shore, LLP

360 Lexington Avenue

New York, NY 10017

Motion 002

For plaintiffs:

Adam J. Gana

Napoli Bern Ripka Shkolnik, LLP

350 Fifth Avenue

New York, NY 10118

For defendants:

Thomas R. Manisero

Peter J. Larkin Gregory W. Gilliam

Wilson, Elser, Moskowitz, Edelman & Dicker LLP

3 Gannett Drive

White Plains, NY 10604

Melvin L. Schweitzer, J.

Motion sequence numbers 001 and 002 are consolidated for disposition.

This action and its companion action, Ronkonkoma Operations LLC v Bitter, Index No. 652006/11 (Sup Ct, NY County) (hereinafter, the ROL Action), arise out of the asset foreclosure of Scalamandre Silks, Inc. (Scalamandre), a world-renowned manufacturer and importer of textiles, decorative textile trims, wall covering, and carpeting. Scalamandre was owned by plaintiffs' family. Defendant Louis N. Renzo allegedly owns defendants Ronkonkoma Operations LLC (ROL) and 300 Trade Zone Drive LLC (TZD), which purchased the assets of Scalamandre in the foreclosure.

In motion sequence number 001, defendants Louis N. Renzo, ROL, and TZD (collectively, the ROL defendants) move for an order: (1) pursuant to CPLR 3211 (a) (4), dismissing the complaint on the ground that there is a prior action pending; and (2) pursuant to CPLR 3211 (a) (1) and (7), dismissing the first, second, third, fourth, fifth, sixth, eighth, and tenth causes of action in plaintiffs' complaint, based upon documentary evidence and for failure to state a cause of action.

In motion sequence number 002, defendants Charles Raich and Raich Ende Malter & Co. LLP (collectively, the Raich defendants) move, pursuant to CPLR 3211 (a) (7), for dismissal of the fourth, fifth, seventh, ninth, and tenth causes of action as against them.

Factual Allegations

Scalamandre was founded in 1929 and is a manufacturer and importer of traditional and decorative textile trims, wall covering, and carpeting (Complaint, ¶ 1). Scalamandre is widely known in the textile industry, having outfitted many famous locations such as the White House, the United States Capitol, many state houses, governors' mansions, the Metropolitan Museum of Art, and Hearst Castle in San Simeon, California (id.).

As the design industry changed and the market diminished, Scalamandre adapted its business and obtained debt financing in order to sustain the company's operations (id., ¶ 2). Scalamandre financed its operations through loans made to the company by the factor Rosenthal & Rosenthal, Inc. (Rosenthal) (id.). The loans were secured using company assets and personal assets as collateral (id.).

Plaintiffs allege that Raich of the accounting firm Raich Ende Malter & Co. LLP explained to the Bitters that Scalamandre could no longer finance its debts in the souring economy (id., ¶ 16). According to plaintiffs, Raich had always been a "voice of calm" when advising Scalamandre's board of directors on financial matters (id.). In early 2009, Raich allegedly pressured Scalamandre's board of directors to take drastic and immediate action to solve the company's financial difficulties (id., ¶ 17). Raich allegedly told Adriana Bitter that the [*2]only way to resolve Scalamandre's financial difficulties would be by selling all of Scalamandre's assets (id.). Raich strongly recommended against restructuring the company through bankruptcy; Raich allegedly advised Adriana Bitter that a bankruptcy would be extremely costly for Scalamandre, and that she would be exposed to personal liability because Scalamandre's debt would exceed the collateral she had offered to secure the loans taken out by the company (id., ¶ 18).

To persuade the Bitters not to enter bankruptcy, Raich recommended that the Bitters meet Renzo, one of his clients who had expressed an interest in acquiring Scalamandre's assets (id., ¶ 19). At a meeting held at Raich's office, the Bitters asked for Raich's opinion about Renzo's integrity in order to determine whether to do business with Renzo (id.). Raich allegedly told the Bitters that Renzo was "extremely honorable" and that the Bitters would be "fortunate" to have Renzo take over the company if negotiations were successful (id.). Raich allegedly admitted that Renzo had been indicted for an illegal act a number of years before, but insisted that Renzo was innocent of the charges and was forced to plead guilty in order to make the charges go away (id., ¶ 20). According to plaintiffs, Raich failed to inform them that Renzo had pled guilty to a felony in which he had bribed a public official and entered into quid pro quo arrangements in order to gain favorable treatment and privileged information from a New York State Banking Department bank examiner (id., ¶ 21). A press release issued by the New York State Banking Department stated that Renzo paid "a civil fine of over $2.3 million dollars to the New York State Banking Department prior to [his] sentencing, the largest fine ever levied against a check casher" (id.). In addition, according to Manhattan District Attorney Robert Morgenthau, as reported by the Associated Press, the Bank Examiner also "insert[ed] himself into contract negotiations between CLB, Renzo's company and a rival check casher that resulted in a purchase price far less than fair market value" (id., ¶ 22).

Plaintiffs allege that Raich knew that they were under emotional distress due to Adriana Bitter's spouse's deteriorating medical condition, and created a false sense of urgency to reach an agreement with Renzo (id., ¶ 23). Plaintiffs assert that they told Renzo that they wanted an attorney to be involved in the negotiations, to review any agreements, and to help draft any contracts, but Renzo told the Bitters that he "did not like to work with lawyers" and insisted that the parties come to an agreement and draft the agreements themselves (id.). Raich allegedly agreed with Renzo that attorneys would not be necessary, and told the Bitters that if they moved forward without an attorney he would represent both parties' interests and promised to advise the Bitters without any conflicts of interest (id., ¶ 24).

According to plaintiffs, they were unaware of the true extent of Raich's business and personal relationship with Renzo (id., ¶ 25). Plaintiffs allege, upon information and belief, that Raich was being compensated by Renzo on a number of other business ventures and may have been compensated as one of Renzo's employees (id.). After consummation of the sale, Raich e-mailed Adriana Bitter using an e-mail address connected to one of Renzo's other businesses (id.).

In early 2009, the parties agreed to a set of proposals that would result in ROL acquiring the Rosenthal loan and foreclosing on the collateral (id., ¶ 26). According to plaintiffs, this arrangement would effectively convey Scalamandre to ROL under Renzo's control upon the acquisition of Rosenthal's loan to Scalamandre (id.). In addition, the parties agreed that TZD would acquire plaintiffs' interest in property held by Wemart Associates, LLC aafter Renzo [*3]acquired an outstanding loan from State Bank of Long Island (id.). Plaintiffs allege that Renzo initially agreed to return to Adriana Bitter $1,250,000 of $1,500,000 of her cash collateral at the foreclosure (id., ¶ 27). However, a few days later, Raich called Adriana Bitter and told her that Renzo could not return her collateral (id.). Raich told Adriana Bitter that Renzo had determined that he would have to invest more money into the company than he had originally anticipated and, therefore, could not pay back her collateral at the foreclosure (id.). Rather, the remaining $1,250,000 in cash collateral would remain as a loan to be repaid to Adriana Bitter over the course of three years (id.).

The parties entered into a Term Sheet, executed on April 10 and 14, 2009, which memorialized ROL's intent to purchase Rosenthal's secured position in Scalamandre at "par," being approximately $3,200,000 (Complaint, ¶ 28, Exh. A). Pursuant to the Term Sheet, ROL was to proceed with the declaration of default by Rosenthal, and then retain the collateral in full satisfaction of the loan if no objection was received (id.). The Term Sheet further provided, among other things, as follows:

Cash Collateral: $1,250,000 of the $1,500,000 cash collateral would be deemed a loan to ROL, which would bear interest at the rate of 3% per annum, and would be repaid to Adriana Bitter on the first, second, and third anniversaries of the closing date, in the amounts of $500,000, $500,000, and $250,000, respectively, together with interest accrued to that date, subject to subordination by ROL's senior lender;

Small Business Administration Loan: ROL would repay Scalamandre's $50,000 indebtedness to the Small Business Administration after the closing;

Commissions: Adriana Bitter, Edwin Bitter, Mark Bitter, Robert Bitter, Therese Bitter Cook, and Robert Iomazzo, through employment agreements or consulting agreements, would collectively receive commissions, as follows: "during each of the 6 years beginning on the Closing Date, if annual net sales are greater than $12,000,000, the commission will be an aggregate (i.e., the foregoing group would collectively receive) 3% of the first $12,000,000 of net sales, and an aggregate 5% of net sales in excess of $12,000,000. No commission will be paid for any year in which net sales are less than $12,000,000. If at the end of the six-year commission period less than an aggregate of $1,800,000 of commissions have been paid, the commission period will be extended until aggregate commissions reach $1,800,000, provided that the commission period will end in any event on the eleventh anniversary of the Closing Date regardless of the amount of the aggregate commissions paid prior to that date";

Membership Interest in TZD: Adriana Bitter, Edwin Bitter, Mark Bitter, Robert Bitter, and Theresa Bitter Cook "will collectively receive an aggregate 10% membership interest in 300 Trade Zone Drive, but will collectively receive an aggregate 20% membership interest if the building is sold within six months of the date of this Term Sheet";

Non-Binding: The Term Sheet was "intended only to provide a basis for the preparation of definitive agreements, . . . and is non-binding. None of the parties shall be obligated to enter into any agreement or to agree to any specific term of any agreement"

(id.).

The complaint alleges that the parties subsequently entered into various written and oral agreements concerning: (i) returning Adriana Bitter's cash collateral with interest; (ii) reimbursing Adriana Bitter for inventory she purchased for Scalamandre; (iii) paying plaintiffs a 10% interest in the sale of the TZD property; (iv) paying plaintiffs commissions; (v) reimbursing plaintiffs for a Small Business Administration loan; (vi) reimbursing Adriana Bitter's American Express bill; and (vii) allowing Adriana Bitter to search through Scalamandre's archives for family artifacts and keepsakes (Complaint, ¶ 28).

The complaint alleges the following 10 counts: (1) breach of contract; (2) quantum meruit; (3) promissory estoppel; (4) fraud in the inducement; (5) negligent misrepresentation; (6) conversion; (7) breach of fiduciary duty; (8) aiding and abetting a breach of fiduciary duty; (9) tortious interference with contractual relationship; and (10) civil conspiracy.

Discussion

I.CPLR 3211 (a) (4): Prior Action Pending

CPLR 3211 (a) (4) provides that:

"[a] party may move for judgment dismissing one or more causes of action asserted against him on the ground that . . . there is another action pending between the same parties for the same cause of action in a court of any state or the United States; the court need not dismiss upon this ground but may make such order as justice requires."

To warrant dismissal, there must be sufficient identity as to both the parties and the causes of action asserted in the respective actions (White Light Prods. v On The Scene Prods., 231 AD2d 90, 93 [1st Dept 1997]). "With respect to the parties, the requirement is that there be substantial identity" (id. at 93-94). As for the subject of the action, "the relief sought must be the same or substantially the same" (id. at 94 [internal quotation marks and citation omitted]). In this regard, the precise legal theories presented in the first proceeding need not also be presented in the second proceeding (Simonetti v Larson, 44 AD3d 1028, 1029 [2d Dept 2007]). Rather, it is necessary that " both suits arise out of the same subject matter or series of alleged wrongs'" (White Light Prods., 231 AD2d at 94, quoting Kent Dev. Co. v Liccione, 37 NY2d 899, 901 [1975]). The court has broad discretion in considering whether to dismiss an action on the ground that there is another action pending between the same parties for the same causes of action (Whitney v Whitney, 57 NY2d 731, 732 [1982]).

The ROL defendants argue that this action should be dismissed because there is a substantial identity of parties and causes of action, given that all of plaintiffs' causes of action relate to the foreclosure and Term Sheet, and because the complaint in the ROL Action was filed on July 21, 2011, the day before the complaint in this action was filed.

Although an action is commenced by the date of filing (CPLR 304), New York courts have held that "[t]he practice of determining priorities between pending actions on the basis of [*4]dates of filing is a general rule, not to be applied in a mechanical way, regardless of other considerations" (AIG Fin. Prods. Corp. v Penncara Energy, LLC, 83 AD3d 495, 496 [1st Dept 2011] [internal quotation marks and citation omitted]). Indeed, technical priority is not controlling where the actions were commenced reasonably close in time (see San Ysidro Corp. v Robinow, 1 AD3d 185, 186 [1st Dept 2003] ["(W)hile such technical priority in the commencement of actions is a factor to be considered, it is not necessarily dispositive, particularly where both actions are at the earliest stages of litigation . . ."]; Flintkote Co. v American Mut. Liab. Ins. Co., 103 AD2d 501, 505 [2d Dept 1984], affd 67 NY2d 857 [1986] ["While priority in the bringing of actions is a factor to be considered . . . it is not controlling, especially when commencement of the competing actions has been reasonably close in time"]).Here, the ROL Action was commenced the day before the Bitter Action. Thus, temporal priority is not controlling given that the two actions were commenced around the same time. Moreover, the ROL defendants have failed to show that both actions seek the same or substantially the same relief. Although there is some overlap, it cannot be said that both actions "arise out of the same subject matter or series of alleged wrongs" (White Light Prods., 231 AD2d at 94 [internal quotation marks and citation omitted]). In this action, plaintiffs seek to recover for breach of contract, quantum meruit, and fraudulent inducement arising out of the asset foreclosure of Scalamandre. However, in the ROL Action, ROL seeks to recover for the Bitters' allegedly improper utilization of intellectual property and goodwill after the foreclosure. Accordingly, the ROL defendants' motion to dismiss pursuant to CPLR 3211 (a) (4) is denied.

II.CPLR 3211 (a) (1) and (7): Failure to State a Cause of Action and Based Upon Documentary Evidence

On a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d 83, 87-88 [1994]). However, "bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence, are not presumed to be true and accorded every favorable inference" (Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000] [internal quotation marks and citation omitted]). Where extrinsic evidence is submitted in connection with the motion, the appropriate standard of review "is whether the proponent of the pleading has a cause of action, not whether he has stated one" (IIG Capital LLC v Archipelago, L.L.C., 36 AD3d 401, 402 [1st Dept 2007] [internal quotation marks and citation omitted]). This entails an inquiry into whether or not a material fact claimed by the pleader is " fact at all'" and whether a " significant dispute exists regarding it'" (Simkin v Blank, 80 AD3d 401, 403 [1st Dept 2011], quoting Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]).

Dismissal is warranted pursuant to CPLR 3211 (a) (1) where the documentary evidence "resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim" (Fortis Fin. Serv. v Fimat Futures USA, 290 AD2d 383 [1st Dept 2002] [internal quotation marks and citation omitted]).

[*5]Breach of Contract (Count I)

The first count of the complaint alleges that Renzo and ROL breached seven distinct contracts with respect to: (1) Adriana Bitter's cash collateral; (2) reimbursement for Adriana Bitter's inventory purchases; (3) commissions; (4) reimbursement for the Small Business Administration loan; (5) reimbursement for Adriana Bitter's American Express bills; (6) plaintiffs' 10% interest in the TZD property sale; and (7) return of family keepsakes and artifacts (Complaint, ¶¶ 68, 70, 72).

"To create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms" (Matter of Express Indus. & Term. Corp. v New York State Dept. of Transp., 93 NY2d 584, 589, rearg denied 93 NY2d 1042 [1999]). An agreement to agree, which leaves material terms of a proposed contract for future negotiations, is unenforceable (Joseph Martin, Jr., Delicatessen v Schumacher, 52 NY2d 105, 109 [1981]).

The ROL defendants argue that plaintiffs' entire breach of contract claim is predicated upon the Term Sheet, which states that it "is intended only to provide a basis for the preparation of definitive agreements, and . . . is non-binding" (Complaint, Exh. A). Thus, according to the ROL defendants, the contractual obligations are unenforceable as a matter of law because the parties never entered into such a definitive agreement.[FN1]

" It is well settled that, if the parties to an agreement do not intend it to be binding until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed'" (Jordan Panel Sys. Corp. v Turner Constr. Co., 45 AD3d 165, 166 [1st Dept 2007], quoting Scheck v Francis, 26 NY2d 466, 469-470 [1970]). Here, given that the Term Sheet states that it is "non-binding" and only provides a "basis for the preparation of definitive agreements," it is an agreement to agree, rather than an enforceable contract (see Prospect St. Ventures I, LLC v Eclipsys Solutions Corp., 23 AD3d 213 [1st Dept 2005] [letter agreement was a mere "agreement to agree," rather than an enforceable contract because it was expressly conditioned on execution of a definitive agreement satisfactory to both sides]; Chatterjee Fund Mgt. v Dimensional Media Assoc., 260 AD2d 159 [1st Dept 1999] [no enforceable contract created by written summary of intention which indicated that any agreement was "subject to legal and tax counsel," and to all requirements of outlined paragraph, including "negotiation of a definitive agreement and documentation"]). However, plaintiffs allege that the parties entered into subsequent written and oral agreements (Complaint, ¶ 28).

1.Commissions

The complaint alleges that, pursuant to the Term Sheet, ROL was obligated to pay the Bitters commissions over a six-year period through employment agreements or consulting agreements (Complaint, ¶ 52, Exh. A). Plaintiffs allege that the terms of the Term Sheet were copied nearly verbatim into a draft commission agreement effective May 15, 2009 (id., Exh. J).

The ROL defendants contend that the draft commission agreement violates the statute of [*6]frauds. General Obligations Law § 5-701 (a) (1) provides that "[e]very agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking . . . [b]y its terms is not to be performed within one year from the making thereof. . ." The statute has been narrowly construed to encompass only those contracts which have absolutely no possibility of performance within a year (D & N Boening v Kirsch Beverages, 63 NY2d 449, 455 [1984]). The draft commission agreement provides, by its terms, that during each of the six years beginning on May 15, 2009, ROL would pay Adriana Bitter a commission of 3% of the first $12,000,000 in net sales, and 5% of net sales in excess of $12,000,000 (Complaint, Exh. J). Thus, the draft commission agreement was incapable of performance within one year, and was required to be executed by the party to be charged. Since the draft commission agreement was not executed by ROL, it is unenforceable.

In opposition to the motion, plaintiffs argue that the Term Sheet is a federal type II preliminary agreement. However, in Amcan Holdings, Inc. v Canadian Imperial Bank of Commerce (70 AD3d 423 [1st Dept 2010]), the First Department wrote that:

"our Court of Appeals recently rejected the federal type I/type II classifications as too rigid, holding that in determining whether the document in a given case is an enforceable contract or an agreement to agree, the question should be asked in terms of whether the agreement contemplated the negotiation of later agreements and if the consummation of those agreements was a precondition to a party's performance"

(id. at 427, quoting IDT Corp. v Tyco Group, S.A.R.L., 13 NY3d 209, 213 n 2 [2009]). As noted above, the Term Sheet states that it is "non-binding" and only provides a basis for the preparation of definitive agreements. Thus, the parties clearly expressed an intent not to be bound until execution of definitive agreements. Because a definitive agreement with respect to commissions was never executed, plaintiffs are not entitled to commissions.

2.Cash Collateral

The complaint alleges that ROL and Adriana Bitter entered into a cash collateral agreement dated April 21, 2009 with respect to the repayment of her cash collateral (Complaint, ¶ 29, Exh. G).

The cash collateral agreement states that:

"[i]f ROL is able to retain the collateral, ROL shall make payments used by Scalamandre to secure the debt, then the Cash Collateral will be repaid to you with interest at a rate of three (3%) per annum and shall be paid over three (3) years as follows: on the first, second and third anniversary of the closing on the collateral, ROL shall make payments of principal in the amounts of $500,000.00, $500,000.00, and $250,000.00, respectively, together with all interest that is unpaid and accrued to that date. . .

***

"You [Adriana Bitter] agree that the payment of such amounts, and your exercise of any remedies regarding such payment, will be subordinate to ROL's future senior debt, provided that the terms of such subordination are reasonably acceptable to you, and provided further that the amount of such senior debt may not exceed $2,000,000 so long as the Cash Collateral has not been repaid to [*7]you"

(id. [emphasis supplied]). Plaintiffs allege that ROL has only made $34,000 in payments towards her cash collateral over the course of the past two years (id., ¶ 30). Plaintiffs further allege that the parties attempted to renegotiate the terms of the cash collateral agreement, but such terms were never finalized (id., ¶¶ 33-37, Exhs. O-Q).The ROL defendants argue that Renzo's wife is such a senior lender in the amount of $500,000, as evidenced by a secured promissory note (Berman Aff., Exh. I). The ROL defendants maintain that Adriana Bitter is not entitled to payments regarding her cash collateral because Renzo's wife has not been repaid. However, the court concludes that this evidence is not conclusive with respect to Adriana Bitter's claim for repayment of her cash collateral (see Simkin, 80 AD3d at 403). Plaintiffs allege that Adriana Bitter was unaware of the loan from Renzo's wife (Complaint, ¶ 32). Moreover, the secured promissory note indicates that it was made to Renzo personally and not to ROL (Berman Aff., Exh. I). Furthermore, although the ROL defendants argue that Adriana Bitter is not entitled to any payments because they were required to contribute $8,840,000 to the business (Berman Aff., Exh. J), these documents do not conclusively dispose of plaintiffs' claim. As result, the ROL defendants are not entitled to dismissal of plaintiffs' breach of contract claim with respect to repayment of cash collateral.

3.10% Interest in Sale of TZD Property

The complaint alleges that the parties entered into an agreement dated April 28, 2009 with respect to plaintiffs' interest in the sale of the TZD property (Complaint, ¶ 45, Exh. I). The agreement, executed by Louis N. Renzo as managing member of TZD, states that:

"[w]ith regard to the Assignment of Lease, between [TZD] . . . and Wemart Associates, LLC . . . this will confirm that [TZD] agrees with you as follows. . . [y]ou will collectively receive an aggregate 10% membership interest in [TZD], but will collectively receive an aggregate 20% membership interest if the leasehold interest being assigned pursuant to the Assignment is sold prior to October 16, 2009"

(id., Exh. I). According to plaintiffs, in early 2011, Renzo found an interested buyer for the TZD property (id., ¶ 47). Renzo allegedly contacted plaintiffs and informed them that he intended to breach the April 28, 2009 agreement because the property required too much work to renovate and would only pay plaintiffs $100,000 (id.). Plaintiffs allege that, on January 11, 2011, the parties agreed that TZD or ROL would pay plaintiffs $100,000 on an anticipated sales price of $1,460,000 for the underlying property, but that the January 11, 2011 agreement did not modify the existing obligations under the April 28, 2009 agreement (id., ¶¶ 48, 49, Exh. R).

The ROL defendants argue that plaintiffs are not entitled to 10% of the sales price of the property because: (1) the April 28, 2009 agreement is only signed by one of the plaintiffs; and (2) an e-mail dated January 18, 2011 from plaintiffs' counsel confirmed that plaintiffs agreed to accept $100,000 as full satisfaction of any monies owed in connection with the sale of the property.

Contrary to the ROL defendants' assertion, the agreement is signed by Louis N. Renzo as managing member of TZD, and is thus signed by the party to be charged. Moreover, the court cannot determine as a matter of law that plaintiffs agreed to accept $100,000 as full satisfaction [*8]of any monies owed in connection with the sale of the TZD property (Berman Aff., Exh. K). Those e-mails apparently indicate that plaintiffs agreed to accept a $100,000 "payout" at the closing (id.). Indeed, a draft agreement dated January 11, 2011 states that ROL and TZD promised to pay plaintiffs $100,000 upon the sale of the leasehold interest of TZD, based upon a sales price of $1,450,000, but does not reference the April 28, 2009 agreement (Complaint, Exh. R). Accordingly, the ROL defendants have not demonstrated entitlement to dismissal of the breach of contract claim for sale proceeds of the TZD property.

4.Reimbursement for Adriana Bitter's Inventory Purchases

In the complaint, plaintiffs allege that the parties entered into an oral agreement that ROL would reimburse Adriana Bitter for inventory purchases she made from July 16, 2007 through September 6, 2007 for Scalamandre (Complaint, ¶¶ 28, 41).

The ROL defendants contend that they have no obligation to reimburse Adriana Bitter for these purchases because: (1) the inventory purchases occurred prior to ROL's foreclosure of the company's assets; and (2) the inventory purchases are not mentioned in the Term Sheet.

However, as pointed out by the ROL defendants, the inventory purchases were not contemplated by the Term Sheet. Thus, the parties could have entered into an oral agreement for the reimbursement of Adriana Bitter's inventory purchases (compare Jordan Panel Sys. Corp., 45 AD3d at 169). An oral agreement may be enforced as long as the terms are sufficiently definite to be enforceable (see Ruppert v Long Is. R.R. Co., 281 AD2d 466, 467 [2d Dept 2001]). Thus, the ROL defendants are not entitled to dismissal of the breach of contract claim for reimbursement of inventory purchases.

5.Reimbursement for Adriana Bitter's American Express Charges

The complaint alleges that the parties entered into an oral agreement to reimburse Adriana Bitter for her American Express charges (Complaint, ¶¶ 28, 58). Plaintiffs allege that ROL's controller sent Adriana Bitter an e-mail on March 15, 2010 stating that her American Express bill was $31,440.71 and that ROL had fully reimbursed her for that amount (id., Exh. H). Plaintiffs allege that they are "unable to verify" whether ROL fully reimbursed them for the bill (id., ¶ 61).

The ROL defendants contend that the American Express charges are not mentioned in the Term Sheet. Nevertheless, the parties could have entered into an oral agreement relating to a subject matter not covered by the Term Sheet (compare Jordan Panel Sys. Corp., 45 AD3d at 169). It also appears that ROL may have at least partially reimbursed these charges (Complaint, Exh. H). "[T]he subsequent conduct of the parties [may] be used to indicate their intent [to be bound]" (United States Fid. & Guar. Co. v Delmar Dev. Partners, LLC, 14 AD3d 836, 838 [3d Dept 2005] [internal quotation marks and citation omitted]). Accordingly, the ROL defendants have not demonstrated entitlement to dismissal of the breach of contract claim for reimbursement of American Express charges.

6.Scalamandre's Archives

The complaint alleges that the parties entered into an oral agreement to allow Adriana Bitter to search for and retain certain family artifacts and keepsakes located at Scalamandre's warehouse (Complaint, ¶¶ 28, 62). Plaintiffs allege that Adriana Bitter sought to enforce this promise in an e-mail dated October 9, 2010 (id., Exh. L).

The ROL defendants argue that neither the Term Sheet nor the October 9, 2010 e-mail are [*9]legally enforceable documents. However, as previously noted, the parties could have entered into an oral agreement relating to a subject matter not covered by the Term Sheet (compare Jordan Panel Sys. Corp., 45 AD3d at 169). Therefore, the ROL defendants are not entitled to dismissal of plaintiffs' breach of contract claim concerning the archives.

Quantum Meruit (Count II)

The second count of the complaint alleges, in the alternative, that ROL has failed to compensate plaintiffs for the reasonable value of services (Complaint, ¶ 74). Specifically, plaintiffs seek recovery in quantum meruit with respect to: (1) reimbursement for Adriana Bitter's inventory purchases; (2) commissions; (3) reimbursement for the Small Business Administration loan [FN2]; and (4) reimbursement for Adriana Bitter's American Express bills (id.).

To state a cause of action based upon quantum meruit, the "plaintiff must allege (1) the performance of services in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefor, and (4) the reasonable value of the services" (Fulbright & Jaworski, LLP v Carucci, 63 AD3d 487, 488-489 [1st Dept 2009]). To succeed on a claim of unjust enrichment, the plaintiff must prove the following elements: (1) the other party was enriched, (2) at that party's expense, and (3) that it is against good conscience and equity to permit the other party to keep what is sought to be recovered (Cruz v McAneney, 31 AD3d 54, 59 [2d Dept 2006] [internal quotation marks and citations omitted]). Generally, the existence of a valid and enforceable written contract precludes recovery in quasi-contract governing the same subject matter (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987]). However, "if there is a bona fide dispute as to the existence of a contract . . . a plaintiff may proceed upon a theory of quasi contract as well as contract'" (Foster v Kovner, 44 AD3d 23, 29 [1st Dept 2007], quoting Zuccarini v Ziff-Davis Media, 306 AD2d 404, 405 [2d Dept 2003]).

The ROL defendants contend that this cause of action fails because the complaint is devoid of any allegations concerning the services rendered, that ROL failed to pay for such services, or the value of such services. The court finds this argument to be without merit. Given that there is a dispute as to the existence of the oral agreements, plaintiffs have adequately pleaded causes of action in quasi-contract in the alternative.

Promissory Estoppel (Count III)

The third count alleges that Renzo and ROL made clear and unambiguous promises that induced reasonable and foreseeable reliance on plaintiffs' part and caused injury to plaintiffs (Complaint, ¶ 76). As with plaintiffs' quantum meruit claim, plaintiffs seek recovery with respect to commissions and reimbursement for Adriana Bitter's inventory purchases, the Small Business Administration loan, and Adriana Bitter's American Express bills (id.).

The ROL defendants argue that the promissory estoppel claim should be dismissed because: (1) it is duplicative of plaintiffs' flawed breach of contract claim; (2) plaintiffs fail to allege reasonable reliance in light of the fact that the Term Sheet states that it is "non-binding" and that "[n]one of the parties shall be obligated to enter into any agreement or to agree to any [*10]specific term of any agreement" (Complaint, Exh. A); and (3) plaintiffs fail to allege unconscionable injury.

To apply the doctrine of promissory estoppel, the plaintiff must allege: (1) a sufficiently clear and unambiguous promise; (2) reasonable reliance on the promise by a party; and (3) injury caused by the reliance (MatlinPatterson ATA Holdings LLC v Federal Express Corp., 87 AD3d 836, 841-842 [1st Dept 2011]; New York City Health & Hosps. Corp. v St. Barnabas Hosp., 10 AD3d 489, 491 [1st Dept 2004]). In the absence of a duty independent of an agreement, a promissory estoppel claim is duplicative of a breach of contract claim (Celle v Barclays Bank P.L.C., 48 AD3d 301, 303 [1st Dept 2008]). Since plaintiffs do not allege a duty independent of the agreements, the promissory estoppel claim is duplicative of the breach of contract claims (see Brown v Brown, 12 AD3d 176, 176-177 [1st Dept 2004] [dismissing promissory estoppel theory where there was no legal duty independent of contract]). Moreover, with respect to plaintiffs' claim for commissions (which has been held to be barred by the statute of frauds), plaintiffs fail to plead an unconscionable injury (see Foster, 44 AD3d at 29-30). Accordingly, the third count must be dismissed.

Breach of Fiduciary Duty (Count VII)

The seventh count alleges that Raich had a fiduciary duty to Scalamandre and plaintiffs, and breached his fiduciary duty by, among other things, advising plaintiffs to enter into the asset foreclosure (Complaint, ¶ 86).

To state a claim for breach of fiduciary duty, the plaintiffs must allege that (1) the defendant owed them a fiduciary duty; (2) the defendant committed misconduct; and (3) they suffered damages as a result of the misconduct (Burry v Madison Park Owner LLC, 84 AD3d 699, 699-700 [1st Dept 2011]; Rut v Young Adult Inst., Inc., 74 AD3d 776, 777 [2d Dept 2010]). In addition, a cause of action sounding in breach of fiduciary duty must be pleaded with particularity (CPLR 3016 [b]). "A fiduciary relationship exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation" (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005] [internal quotation marks and citation omitted]). "Such a relationship . . . is grounded in a higher level of trust than normally present in the marketplace between those involved in arm's length business transactions" (id.).

Generally, "accountants are not fiduciaries as to their clients, except where the accountants are directly involved in managing the client's investments" (Caprer v Nussbaum, 36 AD3d 176, 194 [2d Dept 2006]). For instance, in Lavin v Kaufman, Greenhut, Lebowitz & Forman (226 AD2d 107, 108 [1st Dept 1996]), a plaintiff sufficiently stated a cause of action for breach of fiduciary duty against an accountant where the plaintiff alleged that she placed total trust and reliance upon her accountant's advice, that the accountant made all investment decisions for her, and that she always followed his advice.

The Raich defendants submit an affidavit from Raich, in which he avers that, for many years, his firm prepared corporate tax returns and financial statements for Scalamandre as well as individual tax returns for certain individuals of the Bitter family (Raich Aff., ¶ 3). Additionally, Raich states that, when called upon, he provided advice to the Board of Directors (id., ¶ 4). Raich indicates that, in early 2009, Robert Iommazzo, Scalamandre's president, approached him, seeking a loan on behalf of Scalamandre to avoid foreclosure of Scalamandre's Ronkonkoma [*11]headquarters (id., ¶ 7). Raich suggested that another client of his firm, Louis Renzo, might be interested in acquiring Scalamandre (id., ¶ 9). Raich states that, at a meeting held at Adriana Bitter's residence, he explained to her that Renzo had a felony conviction, and that Renzo was also a client of his firm, but never represented to plaintiffs that they should not be represented by counsel (id., ¶¶ 14-16). In fact, Raich understood that Adriana Bitter and Scalamandre were represented by the law firm Edwards Angell Palmer & Dodge LLP (id., ¶ 17).

Here, the complaint alleges that plaintiffs "entered into a contractual relationship with [Raich Ende Malter & Co. LLP]'s agent who agreed to provide accounting and consulting services for Scalamandre and for Scalamandre's board of directors" (Complaint, ¶ 86). As indicated above, the duty owed by an accountant to a client is generally not fiduciary in nature, and plaintiffs have failed to plead any of the limited circumstances in which such a duty would arise (see Caprer, 36 AD3d at 194).

Although plaintiffs argue that Raich was an advisor to Scalamandre's board of directors (Complaint, ¶ 3), a conventional business relationship, without more, does not become a fiduciary relationship by mere allegation (see Friedman v Anderson, 23 AD3d 163, 166 [1st Dept 2005] [accountant's recommendation of money manager to client did not establish a fiduciary relationship]; Atkins Nutritionals v Ernst & Young, 301 AD2d 547, 548 [2d Dept 2003] [fiduciary relationship did not exist between customer and accounting firm, where accounting firm performed personal accounting services for a principal of its customer but had a conventional business relationship regarding computer consulting services]; VTech Holdings, Ltd. v Pricewaterhouse Coopers, LLP, 348 F Supp 2d 255, 268 [SD NY 2004] [no fiduciary duty owed by accountant to client where services it undertook did not suggest that it gained superiority or influence over client]). Accordingly, the seventh count is dismissed.

Fraud in the Inducement (Count IV)

The fourth count, labeled fraud in the inducement, alleges that plaintiffs entered into their contracts based upon the false representations made Raich and Renzo, that Raich and Renzo knew that these representations were false when made, that the representations were made in order to induce plaintiffs to enter into the contracts, and that plaintiffs relied upon these representations (Complaint, ¶¶ 78, 79).

To state a cause of action for fraudulent inducement of contract, the plaintiff must allege " a material representation, known to be false, made with the intention of inducing reliance, upon which [it] actually relie[d], consequentially sustaining a detriment'" (Frank Crystal & Co., Inc. v Dillmann, 84 AD3d 704 [1st Dept 2011], quoting Merrill Lynch, Pierce Fenner & Smith, Inc. v Wise Metals Group, LLC, 19 AD3d 273, 275 [1st Dept 2005]). Fraudulent concealment requires a duty to disclose material information, which arises where a fiduciary or confidential relationship exists between the parties (Dembeck v 220 Cent. Park S., LLC, 33 AD3d 491, 492 [1st Dept 2006]; Kaufman v Cohen, 307 AD2d 113, 119-120 [1st Dept 2003]). "To plead reliance, the plaintiff[s are] required to allege that [they were] induced to act or refrain from acting to [their] detriment by virtue of the false representation" (Ideal Steel Supply Corp. v Anza, 63 AD3d 884 [2d Dept 2009]). Further, where a cause of action is based upon fraud, "the circumstances constituting the wrong shall be stated in detail" (CPLR 3016 [b]). However, CPLR 3016 (b) should not be so strictly interpreted "as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting [*12]the fraud'" (Lanzi v Brooks, 43 NY2d 778, 780 [1977], quoting Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187, 194 [1968]).

(a)ROL defendants

The ROL defendants argue that plaintiffs' fraud claim is not pleaded with particularity as required by CPLR 3016 (b). They further contend that plaintiffs' fraud claim is duplicative of the breach of contract claim, because it merely alleges that the ROL defendants did not intend to perform their contractual obligations. The ROL defendants maintain that plaintiffs were, in fact, represented by counsel, as evidenced by several e-mails (Berman Aff., Exh. C). Finally, according to the ROL defendants, plaintiffs fail to allege any specific damage.

A cause of action alleging breach of contract may not be converted into one for fraud merely by alleging that the contracting party did not intend to meet its contractual obligations (New York Univ. v Continental Ins. Co., 87 NY2d 308, 318 [1995]). And a claim for fraudulent inducement of contract can only be predicated upon an insincere promise of future performance of the contract itself where the alleged false promise is collateral to the contract the parties executed; otherwise the fraud claim concerning performance is to be dismissed as duplicative of the claim for breach of contract HSH Nordbank AG v UBS AG, et al., 2012 NY App Div LEXIS 2243, 2012 NY Slip Op 2276 (March 2012).

The complaint alleges that Renzo made the following misrepresentations: (a) "the Bitters did not need to consult an attorney"; (b) "Renzo could not, upon the sale of Scalamandre, return Adriana Bitter's collateral as agreed upon in negotiations"; (c) "Renzo would repay Adriana Bitter's inventory purchases" (Complaint, ¶ 79). Additionally, the complaint alleges that "Renzo knew that Raich's representation that Raich would represent both the Bitters' and Renzo's best interests and without conflict in the sale of Scalamandre if the Bitters agreed to proceed without an attorney was false and misleading when made" (id.).

In the instant case, plaintiffs fail to allege a misrepresentation of present facts sufficient to support the fraudulent inducement claim against the ROL defendants. Although Renzo allegedly misrepresented that he would repay Adriana Bitter's inventory purchases and that he could not return her cash collateral, these statements only amount to "[g]eneral allegations that defendant entered into a contract while lacking the intent to perform it," which are insufficient to allege a claim of fraudulent inducement (New York Univ., 87 NY2d at 318). To the extent that plaintiffs allege that Renzo concealed that Raich could not faithfully represent their interests, there is no allegation that Renzo had a duty to disclose (see Kaufman, 307 AD2d at 119-120). In addition, Renzo's alleged statement that plaintiffs did not need an attorney does not constitute a "material misrepresentation" (see Eastern Sav. Bank, FSB v Aguirre, 30 Misc 3d 1230 [A], *9, 2011 NY Slip Op 50285 [U] [Sup Ct, Queens County 2011] [advice that plaintiff did not "need" an attorney to represent her in relation to a mortgage loan was not a material misrepresentation, since there was no constitutional, regulatory or statutory requirement that a borrower be represented by counsel in connection with such a transaction]). Therefore, the fourth count is dismissed against the ROL defendants.

(b)Raich defendants

The Raich defendants move to dismiss the fraud claim, arguing that the complaint fails to plead any false statements by Raich or reasonable reliance upon such statements.

"To constitute actionable fraud, the false representation relied upon must relate to a past [*13]or existing fact, or something equivalent thereto, as distinguished from a mere estimate" (Zanani v Savad, 217 AD2d 696, 697 [2d Dept 1995]). "In general, a representation of opinion . . . will not sustain an action for fraud" (id.).

The complaint alleges that Raich made the following misrepresentations: (a) "the only way out of Scalamandre's financial difficulties was by selling all of Scalamandre's assets"; (b) "any bankruptcy filing would be extremely costly for Scalamandre"; (c) "Adriana Bitter would be exposed to personal liability for Scalamandre's debt in excess of the collateral offered against Scalamandre's loans"; (d) "the Bitters needed to sell the company quickly" and "Renzo's proposal was the only solution to Scalamandre's financial difficulties"; (e) "Renzo's integrity was good, that Renzo was extremely honorable,' and the Bitters would be fortunate' to have Renzo run their company"; (f) "Renzo was innocent of the charge he pled guilty [to]"; (g) "the Bitters did not need to consult an attorney"; (h) "he would represent both the Bitters' and Renzo's best interests faithfully and without conflict in the sale of Scalamandre if the Bitters agreed to proceed without an attorney"; and (i) "Raich's representation that Renzo could not, upon the foreclosure of Scalamandre, return Adriana Bitter's collateral as agreed upon in negotiations" (Complaint, ¶ 78).

As previously noted, the statements in categories (g) and (h), that the Bitters did not need an attorney, do not constitute material misrepresentations of any facts (see Eastern Sav. Bank, 30 Misc 3d 1120 [A] at *9). Similarly, as to the statements in categories (e) and (f), Renzo's alleged statements about Renzo's integrity and innocence are not actionable statements of fact (see Zanani, 217 AD2d at 697). Significantly, plaintiffs allege that Raich told the Bitters that Renzo had been indicted for an illegal act (Complaint, ¶ 20).

With respect to the statements in categories (a), (b), and (d), Raich's statements about Scalamandre's business options also cannot be deemed actionable statements of fact (see Longo v Butler Equities II, 278 AD2d 97 [1st Dept 2000] [alleged misrepresentations that company was seriously undervalued and could be profitably broken up were mere expressions of opinion]; American Food & Vending Corp. v International Bus. Machs. Corp., 245 AD2d 1089, 1090 [4th Dept 1997], lv dismissed 91 NY2d 956 [1998] [alleged misrepresentation that national vending contract was "most unlikely" and that "there was nothing to worry about" was not statement of fact]; DH Cattle Holdings Co. v Smith, 195 AD2d 202, 208 [1st Dept 1994] [alleged representation that a product was a "safe investment" was not "actionable statements of fact, but mere opinion and puffery"]).

As to the statements in category (i), that Raich made false representations that Renzo would return Adriana Bitter's collateral, the court concludes that this statement fails to allege a misrepresentation of any present facts. A cause of action for fraud "may not be based upon a statement of future intentions, promises or expectations which were speculative, or an expression of hope at the time when made, rather than a misrepresentation of fact" (Tutak v Tutak, 123 AD2d 758, 760 [2d Dept 1986]).

Finally, as to the statements in category (c), these statements do not constitute misrepresentations of any facts. A false statement concerning the law is generally not considered a factual representation which will support a cause of action for fraud (Cucchiaro v Cucchiaro, [*14]165 Misc 2d 134, 140 [Sup Ct, Orange County 1995]). Therefore, the fourth count is dismissed.[FN3]

Negligent Misrepresentation (Count V)

The fifth count alleges that plaintiffs entered into their contracts based upon the negligent misrepresentations made by Renzo and Raich, that both Renzo and Raich had a duty to correct information, that Renzo and Raich made false representations that they should have known were incorrect, and that plaintiffs reasonably relied upon Renzo's and Raich's representations to their detriment (Complaint, ¶ 81).

The ROL defendants argue that plaintiffs' negligent misrepresentation claim fails, because plaintiffs fail to allege a special relationship to provide correct information. The Raich defendants contend that this claim should be dismissed because Raich's statements constitute opinions. The court agrees.

The elements of a claim for negligent misrepresentation are: "(1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information" (J.A.O. Acquisition Corp. v Stavitsky, 8 NY3d 144, 148, rearg denied 8 NY3d 939 [2007]). Generally, a special relationship does not arise out of an ordinary arm's length transaction between two parties or ordinary business relationships (Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 180 [2011]). A negligent misrepresentation claim may not be based on opinions or statements of future intention (Schwalb v Kulaski, 29 AD3d 563, 564 [2d Dept 2006]; Sheth v New York Life Ins. Co., 273 AD2d 72, 74 [1st Dept 2000]). Here, plaintiffs fail to allege a fiduciary or special relationship between plaintiffs and the ROL defendants arising out of these arm's length transactions. Moreover, the court finds that the statements attributed to Raich constitute opinions or statements of future intention. Accordingly, the fifth count is dismissed.

Conversion (Count VI)

The sixth count alleges that Renzo and ROL have converted Adriana Bitter's inventory by taking possession and dominion over Scalamandre's inventory assets without agreement or authorization to do so (Complaint, ¶¶ 83-84).

The ROL defendants argue that the sixth count fails to state a cause of action, because Adriana Bitter does not claim to want the inventory back, but rather, is only seeking the return of her loan.

Conversion "takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession" (Colavito v New York Organ Donor Network, Inc., 8 NY3d 43, 49-50 [2006] [citations omitted]). "Two key elements of conversion are (1) plaintiff's possessory right or interest in the property and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's rights" (id.). However, a cause of action for conversion cannot merely restate a breach of contract claim, and must allege independent facts sufficient to give rise to tort liability (Fesseha v TD Waterhouse Inv. Servs., 305 AD2d 268, 269 [1st Dept 2003]). Because the conversion claim does not allege any independent facts, it is wholly duplicative of plaintiffs' [*15]breach of contract claim and is dismissed.

Aiding and Abetting a Breach of Fiduciary Duty (Count VIII)

The eighth count alleges that the Renzo aided and abetted Raich in his breach of fiduciary duty (Complaint, ¶ 89).

"[A]iding and abetting a breach of fiduciary duty requires: (1) a breach by a fiduciary of obligations to another, (2) that the defendant knowingly induced or participated in the breach, and (3) that plaintiff suffered damage as a result of the breach" (Kaufman, 307 AD2d at 125). "A person knowingly participates in a breach of fiduciary duty only when he or she provides substantial assistance' to the primary violator" (id. at 126). "Actual knowledge, as opposed to merely constructive knowledge, is required and a plaintiff may not merely rely on conclusory and sparse allegations that the aider or abettor knew or should have known about the primary breach of fiduciary duty" (Bullmore v Ernst & Young Cayman Is., 45 AD3d 461, 464 [1st Dept 2007] [internal quotation marks and citation omitted]). Given that the court has found that Raich did not owe a fiduciary duty to plaintiffs, the cause of action for aiding and abetting a breach of fiduciary duty cannot stand. Accordingly, the eighth count is dismissed.

Tortious Interference with Contractual Relationship (Count IX)

The ninth count alleges that the Raich defendants intentionally procured a breach of Scalamandre's contract with Adriana Bitter to repay her for inventory she purchased for the company (Complaint, ¶¶ 91-93).

A cause of action for tortious interference with contractual relations requires: (1) the existence of a valid contract; (2) defendant's knowledge of the contract; (3) defendant's intentional procuring of a breach of that contract; (4) actual breach of the contract; and (5) damages (Lama Holding Co. v Smith Barney, 88 NY2d 413, 424 [1996]). An essential element of the claim is that the breach would not have occurred "but for" the activities of the defendant (Cantor Fitzgerald Assoc. v Tradition N. Am., 299 AD2d 204 [1st Dept 2002], lv denied 99 NY2d 508 [2003]).

Here, the complaint alleges that "Raich made numerous promises to Adriana Bitter that her $440,000 investment would be returned at foreclosure" (Complaint, ¶ 41). Plaintiffs further allege that "Raich knew that his advice to Adriana Bitter would interfere with her contract with Scalamandre to repay its debt to her" and that "Raich actively sought the procurement of contracts to effectuate the sale of Scalamandre to Renzo and ROL" (id., ¶ 92). However, because plaintiffs fail to allege that a breach would not have occurred absent Raich's advice, and given that plaintiffs have not opposed this branch of the motion, the ninth count is dismissed.

Civil Conspiracy (Count X)

The tenth count alleges that Raich and Renzo schemed to deprive plaintiffs of their rights under the contracts (Complaint, ¶¶ 95-96).

New York does not recognize civil conspiracy to commit a tort as an independent cause of action; rather, the claim stands or falls with the underlying tort (Abacus Fed. Sav. Bank v Lim, 75 AD3d 472, 474 [1st Dept 2010]). "[T]o establish a claim of civil conspiracy, the plaintiff must demonstrate the primary tort, plus the following four elements: (1) an agreement between two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties' intentional participation in the furtherance of a plan or purpose; and (4) resulting damage or injury" (id., quoting World Wide Wrestling Fedn. Entertainment, Inc. v Bozell, 142 F Supp 2d 514, 532 [*16][SD NY 2001] [internal quotation marks omitted]). Plaintiffs have failed to plead a viable underlying tort. Accordingly, the tenth count is dismissed.

Conclusion and Order

Based upon the foregoing, it is

ORDERED that the motion (sequence number 001) of defendants Louis N. Renzo, Ronkonkoma Operations LLC, and 300 Trade Zone Drive LLC to dismiss is granted to the extent of dismissing the third count (promissory estoppel), fourth count (fraud in the inducement), fifth count (negligent misrepresentation), sixth count (conversion), eighth count (aiding and abetting a breach of fiduciary duty), and tenth count (civil conspiracy), and is otherwise denied; and it is further

ORDERED that the motion (sequence number 002) of defendants Charles Raich and Raich Ende Malter & Co. LLP to dismiss is granted and the complaint is hereby severed and dismissed as against said defendants, and the Clerk is directed to enter judgment in favor of said defendants with costs and disbursements; and it is further

ORDERED that the remainder of the action shall continue; and it is further

ORDERED that defendants Louis N. Renzo, Ronkonkoma Operations LLC, and 300 Trade Zone Drive LLC shall answer the complaint within 30 days of service of a copy of this

order with notice of entry.

Dated:April 12, 2012

ENTER:

/s/Melvin L. Schweitzer

J.S.C. Footnotes

Footnote 1:In reply, the ROL defendants also contend that "Louis N. Renzo" cannot be held liable for breach of contract, quantum meruit, promissory estoppel or conversion. However, "[t]he function of reply papers is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new arguments in support of, or new grounds for the motion" (Dannasch v Bifulco, 184 AD2d 415, 417 [1st Dept 1992]). Accordingly, the court does not consider this new argument.

Footnote 2:The ROL defendants argue, for the first time in reply, that they are not obligated to reimburse plaintiffs for the Small Business Administration loan. Therefore, the court does not consider this argument (see Dannasch, 184 AD2d at 417).

Footnote 3:Although plaintiffs also argue that Raich made false statements that Renzo would compensate Adriana Bitter for her inventory purchases and that he could not repay her collateral at the foreclosure, these statements constitute statements of future intention.