McGinley v Allstate Ins.

[*1] McGinley v Allstate Ins. 2008 NY Slip Op 50218(U) [18 Misc 3d 1127(A)] Decided on February 7, 2008 Supreme Court, Richmond County Minardo, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 7, 2008
Supreme Court, Richmond County

Colleen McGinley, Plaintiff,

against

Allstate Insurance and Joseph Butler, Defendants.



103546/06

Philip G. Minardo, J.

This is an action sounding in breach of contract and tortious interference with a "business relation and/or contract". On May 31, 2000, plaintiff Colleen McGinley and defendant Allstate Insurance (hereinafter "Allstate") entered into a contract entitled "Allstate R3001S Exclusive Agency Agreement" (hereinafter referred to as the "Agreement") which essentially authorized plaintiff to conduct the business of accepting applications from prospective clients to obtain Allstate insurance policies. The Agreement further provided that plaintiff would select a sales location to conduct said business upon Allstate's approval. That section of the underlying contract reads as follows (Agreement, page 4, section V, subsection A):

V.SALES LOCATION:

A.You may select your sales location, within a geographical area specified by [Allstate], subject to [Allstate's] approval. Initially, you have selected the location at 1192A Forest Avenue and such sale location has been approved by [Allstate]. You agree that you will not establish any additional sale location without the prior written approval of [Allstate]. You understand that you have no exclusive territorial rights in connection with your sales location.

Subsequently, Allstate authorized co-defendant Joseph Butler to open a sales location approximately two doors away from plaintiff's storefront. Plaintiff objected unsuccessfully to Allstate about the proximity of Butler's location, and subsequently commenced this action on the ground, inter alia, that as a result of Allstate's actions regarding the co-defendant's sales location, she was "forced to surrender the lease" and "forced to sell her book and give up her business".

In moving to dismiss plaintiff's cause of action for breach of contract pursuant to CPLR 3211(a)(1), Allstate claims that the provisions of its Agreement with plaintiff constitute [*2]documentary evidence that directly contradicts the allegations of the complaint. In the alternative, Allstate moves to dismiss pursuant to CPLR 3211(a)(7) for failure to state a cause of action for either breach of contract or tortious interference "with a business relationship and/or contract". Co-defendant Butler has adopted Allstate's arguments in cross-moving to dismiss the complaint.

In opposition, plaintiff asserts that the motions are premature due to the lack of discovery. Further, plaintiff alleges that she had a contractual relationship with both defendants;[FN1] that each defendant was aware of said contractual relationship; and that "both defendants acted in... an intentional and improper manner to procure a breach".

To succeed on a motion to dismiss pursuant to CPLR 3211(a)(1) , the documentary evidence that forms the basis of the defense must resolve all factual issues as a matter of law, and conclusively dispose of plaintiff's claim (see New York Community Bank v. Snug Harbor Sq. Venture, 299 AD2d 329,330 [2nd Dept 2002]). Here, the uncontroverted terms of the Agreement between Allstate and plaintiff flatly contradict her allegations of breach of contract. To the extent relevant, the complaint alleges that when plaintiff "was advised that another store front for the defendant would be opened directly next to her the defendant's [sic] breached their contract with Plaintiff". However, her Agreement with Allstate clearly states that "you [plaintiff] have no exclusive territorial rights in connection with your sales location". Thus, the Agreement unambiguously refutes plaintiff's claim that her territorial rights have been violated (see New York Community Bank v. Snug Harbor Sq. Venture, 299 AD2d at 330), and to the extent that it is based upon allegations of territorial exclusivity, it must be dismissed.

Defendants also move to dismiss the complaint for failure to state a cause of action. In order to plead a cause of action for breach of contract, a plaintiff must allege: (1) the terms of the agreement; (2) consideration; (3) performance by plaintiff; and (4) the basis of the alleged breach (see Furia v. Furia, 116 AD2d 694 [2nd Dept 1986]). In moving to dismiss, defendants contend that plaintiff's breach of contract claim is deficient as a result of her failure to identify any provision of the Agreement that was purportedly breached. The Court disagrees.

In considering a motion to dismiss for failure to state a cause of action pursuant to CPLR 3211(a)(7), the court must (a) accept as true the facts as alleged in the complaint and submissions in opposition to the motion; (b) accord plaintiff the benefit of every possible favorable inference; and (c) determine only whether the facts as alleged fit within any cognizable legal theory (see Richmond Shop Smart v. Kenbar Dev. Ctr., 32 AD3d 423 [2nd Dept 2006]). In this context, the criterion is whether the proponent of the pleading has a cause of action, not whether he or she has stated one (id. at 423). Here, plaintiff alleges that Butler (1) "shared [an] office as [plaintiff's] partner"; (2) " was permitted by Allstate to open a competing business while still conducting business with [plaintiff]"; and (3) received Allstate's consent "to open an office just two doors away". Plaintiff further alleges that as a result of Allstate's actions regarding Butler's location, plaintiff lost her lease and was "forced to sell her book and give up her business". Although not separately stated as such, these allegations and the supporting evidence are sufficient to show that plaintiff has a viable cause of action for breach of the implied covenant of good faith and fair dealing at least against defendant Allstate, whose actions [*3]allegedly frustrated the rights and reasonable expectations of plaintiff under the terms of their Agreement (id. at 424).

It is familiar law that the covenant of good faith and fair dealing that is implied in every contract and that it takes the form of a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of his or her bargain (see 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144, 153 [2002]). Said covenant, which need not be expressed in the contract itself, is said to be breached whenever any party to a contract acts in a manner that would deprive the other party of the right to receive benefits under their agreement (see Aventine Inv. Mgt. v. Canadian Imperial Bank of Commerce, 265 AD2d 513, 514 [2nd Dept 1999]). Thus, while Allstate's action in allowing Butler to open a nearly identical business in close proximity to plaintiff's location is not a per se breach of their terms of the Agreement, the conduct alleged by plaintiff is more than sufficient to negate the benefit of her bargain with Allstate, especially since Allstate had the right to approve or disapprove the location of defendant's business. Accordingly, the dismissal of plaintiff's cause of action for breach of contract against Allstate is denied.

Plaintiff's complaint also contains a cause of action for tortious interference "with a business relationship and/or contract". Although pleaded in this fashion, the Court must note that plaintiff's claim for tortious interference with prospective business is legally a separate cause of action from that of tortious interference with contract, and will be analyzed as such.

A cause of action for tortious interference with contract requires the existence of a valid contract between plaintiff and a third party; defendant's knowledge of that contract; defendant's intentional procurement of the third-party's breach of said contract without justification; an actual breach of that contract; and damages resulting therefrom (see Beecher v. Feldstein, 8 AD3d 597, 598 [2nd Dept 2004]). Here, even the most liberal reading of the complaint affords no basis for concluding that either defendant induced the other to breach an existing contract with plaintiff (id. at 598). In this regard, it is worthy to note that while plaintiff alleges that she and co-defendant Butler are former partners, she fails to allege either the nature of their business relationship or any breach thereof (see Asgahar v. Tringali Realty, Inc., 18 AD3d 408, 409 [2nd Dept 2005]). Accordingly, plaintiff's cause of action for tortious interference with contract must be dismissed.

To state a claim for tortious interference with prospective business, a plaintiff must allege (1) the existence of a prospective business relationship with third parties; (2) that defendant knew of that relationship and intentionally interfered with it; (3) that defendant either acted solely out of malice or used wrongful means, and (4) that plaintiff was harmed by such interference (see Masefield AG v. Colonial Oil Indus., __FSupp3d___, 2006 US Dist LEXIS 5792 [SDNY 2006]). In this case, plaintiff alleges that she and Butler had previously "shared [an] office as... partner[s]," and that the latter, with Allstate's assent, subsequently opened a competing business just two doors away. Moreover, plaintiff alleges that "the Defendants intentionally and maliciously interfered with the existing business relationship between" herself and Allstate, and that as a result of their connivance, caused plaintiff to lose her lease, and "forced [her] to sell her book and give up her business". On this state of the pleadings, and according plaintiff "the benefit of every possible favorable inference" (Richmond Shop Smart v. Kenbar Dev. Ctr., 32 AD3d at 423), it is the opinion of this Court that she has sufficiently stated a cause of action for tortious interference with prospective business relationships against both [*4]Butler and Allstate to withstand dismissal under CPLR 3211(a)(7).

Accordingly, it is

ORDERED that so much of the motions of defendants Allstate Insurance and Joseph Butler as are to dismiss the complaint against them is granted with respect to the causes of action for tortious interference with contract and, as to defendant Joseph Butler only, breach of contract; and it is further

ORDERED that each of these causes of action are hereby severed and dismissed; and it is further

ORDERED that the balance of the motions are denied;

ORDERED that the Clerk enter judgment accordingly.

ENTER,

S/Hon. Philip G. Minardo

J.S.C.

DATED: February 7, 2008 Footnotes

Footnote 1:Apparently, Butler was plaintiff's former partner.