Private One of NY, LLC v JMRL Sales & Serv., Inc.

[*1] Private One of N.Y., LLC v JMRL Sales & Serv., Inc. 2008 NY Slip Op 51989(U) [21 Misc 3d 1106(A)] Decided on October 6, 2008 Supreme Court, Kings County Demarest, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through October 21, 2008; it will not be published in the printed Official Reports.

Decided on October 6, 2008
Supreme Court, Kings County

Private One of New York, LLC et ano., Plaintiffs,

against

JMRL Sales & Service, Inc. d/b/a Craftsmen Limousine, et al.,, Defendants.



13411/08



Attorney for Plaintiffs

Joel S. Schneck, Esq.

Goldberg & Rimberg PLLC

115 Broadway, 3rd Floor

New York, NY 10006

Attorney for Defendants

Elio Forcina, Esq.

Forcina & Maimone, PC

148-29 Cross Island Pkwy

Whitestone, New York 11357

Carolyn E. Demarest, J.

Upon the foregoing papers, in this action by plaintiffs Private One of New York, LLC (Private One) and New York Airport Service LLC (NY Airport Service) (collectively, plaintiffs) against defendants JMRL Sales & Service, Inc. d/b/a Craftsmen Limousine (JMRL), Specialty Bus Manufacturers, LLC (Specialty Bus), Robert J. Haswell, and Robert Mark Haswell (collectively, defendants) alleging, among other things, breach of a procurement contract dated April 17, 2007, plaintiffs move, by order to show cause, for an order enforcing the terms of the April 17, 2007 [*2]contract and enjoining defendants from: (1) breaching section 13 of the contract, (2) selling any double or single decker buses as provided under the contract, and (3) selling buses or vehicles containing chassis numbers 4UZACSDT98CZ91507 (507), 4UZACSDT98CZ91508 (508), 4UZACSDT98CZ91509 (509), and 4UZACSDT98CZ91506 (506), other than to them and in conformity with the contract. Plaintiffs also separately move for an order, pursuant to CPLR 3211 (a) (7), dismissing defendants' first, second, third, and fourth counterclaims, and, pursuant to CPLR 8303-a, awarding them reasonable attorney's fees.

Plaintiffs are related limited liability companies, which own various motor vehicles, such as buses and vans used as public carriers. In conjunction with MCIZ Corp., plaintiffs run CitySights NY LLC (CitySights), a tour bus company based in Manhattan. CitySights runs multiple buses through certain loops (such as lower Manhattan, midtown Manhattan, etc.) around Manhattan's tourist spots. CitySights' vehicles are "open air" top decker and double-decker buses.

JMRL is a manufacturer of buses. On May 11, 2007, plaintiffs, as the buyer, and JMRL, as the seller, executed a procurement contract dated April 17, 2007, in which JMRL agreed to sell certain buses manufactured by it to plaintiffs. Plaintiffs intended to use the buses sold to it by JMRL for CitySights.

Section 1.3 of the contract provided:

"The Specification[s] and the Technical Drawings which shall be provided within ten (10) days of the execution of this Agreement shall be provided by Seller and will need to be signed or initialed and appended at Appendix A and Appendix B respectively to the Contract form part of the Contract before this Agreement can take effect and shall not be binding till then on either party."

No Appendix A or B is annexed to the contract submitted to the court. Section 2.1 of the contract provided:

"The Seller shall sell and deliver to the Buyer, as ordered, Double Deck Buses as more fully described in Appendix 'A' and 'B.' The Buyer shall buy and take delivery of the Vehicles from the Seller on the terms and conditions contained in this Contract, the Specification[s] and the Technical Drawings."

Section 2.4 of the contract provides:

"Seller agrees that the sole customer for the Vehicles described herein shall be exclusive to Buyer and Seller shall not be permitted either directly or indirectly to sell the Vehicles described herein to any other party. Seller understands that this provision is a material inducement for Buyer to enter into this Agreement and that if Seller violates this provision in any manner or acts in bad faith to circumvent this provision Buyer shall suffer irreparable harm and shall be permitted to seek [*3]injunctive relief from the Courts of New York without the posting of a bond or other security."

Section 13 of the contract, entitled "Exclusivity," in section 13.1, provided:

"13. Exclusivity

13.1 Buyer with the purchase of the initial six (6) buses shall have for a term of seven (7) years from when this Agreement goes into effect the sole and exclusive right to be the dealer and the recipient for all sightseeing buses (double and single decker) in the continental United States and Canada including any existing customers of Seller. Seller acknowledges and agrees that any sightseeing bus (single or double decker) manufactured by Seller MUST be sold through Buyer and Buyer has the absolute right to mark up the price. The material consideration for the money paid hereunder was for the exclusive right by Buyer to have the exclusivity of all sightseeing vehicles (single or double decker) produced by Seller. Buyer agrees that this exclusivity will not apply to any of the other kinds of buses Seller presently builds, or may develop in the future. Sellers are presently developing a double decker bus that buyers agree is not to be included under this exclusivity agreement [and] said bus has been described in 2.5 of this Agreement. Seller acknowledges that a violation of this provision will substantially damage Buyer. In case of a breach or anticipatory breach of this exclusivity, Buyer shall have the right, upon ten (10) days notice to Seller to file for injunctive relief, from a court of Buyer's choosing, in New York State if Seller violates or is about to violate this Exclusivity, without the posting of a bond or other security. Seller agrees to such drastic relief as it acknowledges that it has caused serious harm and damage to Buyer should any such breach occur."

In 2007, plaintiffs paid for and accepted delivery of five buses under the terms of the contract. Plaintiffs then purchased four additional buses with chassis numbers 507, 508, 509, and 506, paying defendants an $80,000 deposit. In March 2008, JMRL delivered two buses, one with chassis number 507 (the 507 Bus).

Plaintiffs immediately submitted the 507 Bus to the New York State Department of Transportation (the NYSDOT) for inspection. The Defect Report by the NYSDOT reported that the bus failed an April 2, 2008 inspection and could not be used to carry passengers until certain reported defects were repaired. JMRL, consequently, attempted to make the proper adjustments to the 507 Bus so it would pass inspection. The 507 Bus was then reinspected, but it, again, failed the inspection. Robert J. Haswell, who is the president and a 50% owner of JMRL, ordered the two buses to be returned to JMRL's offices in Missouri, and allegedly refused to redeliver these buses to plaintiffs. [*4]

According to Zev Marmurstein, who is plaintiffs' vice-president, Robert J. Haswell, on April 1, 2008, admitted to plaintiffs that JMRL has sold and continues to sell sightseeing buses without plaintiffs' participation or consent in violation of the April 17, 2007 contract. Specifically, plaintiffs claim that JMRL has been selling buses to Grayline of Chicago and a company called Doung Bo Tours in New York.

On April 16, 2008, defendants faxed plaintiffs a proposed "Addendum to Double Deck Bus Procurement Contract made on the 17th of April in the year of 2007" (the Addendum). The Addendum provides that "[t]he drawings and specifications in section 1.3 of the . . . [c]ontract completely describe the bus that JMRL . . . gives Private One the exclusive rights to in New York City." The Addendum specifies that the contract "expressly does not apply to any other buses or coaches JMRL . . . shall build even though they may be equipped with removable roofs, sliding windows, or used as touring buses showing the passengers the sights of New York City or any other city in the United States or Canada." The Addendum limits the applicability of the exclusivity clause of section 13.1 of the contract by providing that JMRL only "will not build the buses as described in section 1.3 for any other customers using as [its] business model hop on and hop off in the City of New York which is the model of Private One."

The Addendum thus attempts to make a change in the terms of the April 17, 2007 contract since the Specifications and the Technical Drawings of the double decker buses referred to in section 1.3 only related to the buses which JMRL was required to sell and deliver to plaintiffs pursuant to section 2.1. As set forth above, while section 2.4 of the contract contains an exclusivity clause with respect to the sale of the vehicles described in the contract, the exclusivity clause in section 13.1 more broadly grants plaintiffs "the sole and exclusive right to be the dealer and recipientfor all sightseeing buses (double and single decker) in the continental United States and Canada, including any existing customers of [JMRL]" (emphasis added).

The Addendum also attempts to change the seven-year term of the contract by stating that while JMRL "granted Private One an exclusivity to their [sic] particular bus as described in section 1.3 used anywhere in [t]he United States or Canada," this exclusivity was given "with the understanding that Private One would establish franchises and purchase buses from JMRL." It provides that "[b]ecause there have been no franchises established or buses ordered for franchises the nationwide exclusivity agreement will be terminated as of May 1, 2008."

The Addendum also attempts to impose new payment terms on the claimed basis that Private One "failed to exercise any commercial reasonable diligence to have the two vehicles delivered in March 2008 inspected." These new payment terms would require that Private One pay not "less than 50% of any remaining balance related to each bus prior to delivery" with the remaining balance related to each bus to be paid in accordance with section 5.1 (B)" of the April 17, 2007 [*5]contract. Section 5.1 (B) of the April 17, 2007 contract, which sets forth the payment terms, had only required a 10% deposit at the time of order. The Addendum additionally imposes requirements that Private One "will not build the bus referred to in section 1.3 of the April 17, 2007 . . . [c]ontract for anyone else in New York City," and that "Private One agrees to purchase all new or used buses for their [sic] hop on and hop off sightseeing business from JMRL . . . exclusively."

The Addendum further provides, under "Effective Date," that "[i]n order to expedite redelivery of the two buses refused in March 2008, this [A]ddendum shall be considered valid and binding immediately following signatures from both parties via Fax Transfer." Plaintiffs refused to sign this Addendum, and, on May 2, 2008, plaintiffs filed this action against JMRL, Specialty Bus (a related company), Robert J. Haswell (who, as noted above, is the president and a 50% owner of JMRL, and is also the president and a 50% owner of Specialty Bus), and Robert Mark Haswell (the other 50% owner of, and a manager of JMRL and Specialty Bus).

Plaintiffs' complaint asserts that defendants' acceptance of orders from third parties and manufacturing for them of buses covered by the April 17, 2007 contract is a direct breach of JMRL's contract with them. Plaintiffs' complaint alleges a breach of contract claim, and seeks a permanent injunction, enjoining defendants from accepting orders and/or manufacturing buses in violation of the contract. Plaintiffs' complaint also purports to allege causes of action for conversion, unjust enrichment, anticipatory breach, fraud, and intentional interference with business relationships. Plaintiffs' claims as against Specialty Bus, Robert J. Haswell, and Robert Mark Haswell are predicated on their allegation that these parties "do not respect the corporate entity of [JMRL] and intermingle personal and corporate assets."A temporary restraining order, enjoining defendants from selling any double or single decker buses as provided under the April 17, 2007 contract and enjoining defendants from selling buses or vehicles containing chassis numbers 507, 508, 509, and 506, other than to plaintiffs and in conformity with the contract, was granted. On May 28, 2008, defendants interposed an answer, which sets forth counterclaims for tortious interference with contractual affairs, intentional infliction of emotional distress, fraud, and unfair competition.

In addressing plaintiffs' motion for a preliminary injunction, it is noted that "in order to prevail on a motion for a preliminary injunction, the movant has the burden of demonstrating (1) a likelihood of ultimate success on the merits, (2) irreparable injury absent the granting of the preliminary injunction, and (3) that a balancing of equities favors the movant's position" (Walter Karl, Inc. v Wood, 137 AD2d 22, 26 [1988]; see also Aetna Life Ins. Co. v Capasso, 75 NY2d 860, 862 [1990]; W. T. Grant Co. v Srogi, 52 NY2d 496, 517 [1981]; Hightower v Reid, 5 AD3d 440, 440-441 [2004]).

Defendants contend that plaintiffs have not made the requisite showing of a likelihood of ultimate success on the merits. In support of this contention, defendants [*6]rely upon section 1.3 of the April 17, 2007 contract, which, as set forth above, provided that the Specifications and the Technical Drawings were to be provided by JMRL within 10 days of the execution of the contract and were to be signed or initialed and appended at Appendix A and Appendix B to the contract before the contract "c[ould] take effect and shall not be binding [until] then on either party."

Defendants, citing to section 1.3 of the contract, point to the fact that plaintiffs have refused to execute the Addendum which they had faxed to plaintiffs on April 16, 2008. They state that "the Addendum is the most critical clause of the contract because it describes in detail the buses to which this contract is subject," and that by not signing the Addendum, plaintiffs are attempting to have an overinclusive monopoly on all the buses that are manufactured by them. Defendants contend that as a result of plaintiffs' refusal to execute the Addendum, the contract is not in effect and is not binding on them.

Defendants' contention is devoid of merit. As noted above, the Addendum was faxed to plaintiffs on April 16, 2008, almost one year after the April 17, 2007 contract was executed on May 11, 2007 and after the first five and the two additional buses had already been delivered to plaintiffs pursuant to the contract. Moreover (as discussed above), the Addendum makes substantial modifications to the original April 17, 2007 contract, including changes in the exclusivity provision and payment terms. Thus, the Addendum could not possibly have been a clause which was a part of the April 17, 2007 contract nor could it have been an agreement which was required to be executed before the contract could take effect.

Indeed, the Addendum, which was drafted by defendants, itself acknowledges the existence of a binding contract by referring to the "first year of the . . . [c]ontract" in which "Private One has . . . purchased five buses from JMRL." Robert J. Haswell, in his affidavit in opposition to plaintiffs' motion to dismiss, also concedes, that "JMRL entered into a contract for Private One . . . to purchase buses manufactured by JMRL." He states only that "Private One failed to ratify the contract by not executing [the A]ddendum, as agreed." There is no provision in the April 17, 2007 contract, however, which required Private One to execute the Addendum, which (as previously noted) substantially modifies material terms of the April 17, 2007 contract, approximately one year after the date of that contract.

Section 1.3 of the contract, upon which defendants rely, makes no reference to the Addendum, but only refers to the initialing of Specifications and Technical Drawings which were to be appended as Appendix A and Appendix B. As noted above, there is no Appendix A or Appendix B, containing a description of the buses, annexed to the contract submitted to the court. However, even if defendants' contention can be construed as arguing that the Specifications and Technical Drawings were not provided by them within 10 days and were not signed or initialed by plaintiffs or annexed as Appendix A and Appendix B as required by section 1.3 [*7]of the contract, and that this constituted a condition precedent to contract formation, such an argument would be unavailing.

" A condition precedent is an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises'" (Klewin Bldg. Co., Inc. v Heritage Plumbing & Heating, Inc., 42 AD3d 559, 560 [2007], quoting Argo Corp. v Greater NY Mut. Ins. Co., 4 NY3d 332, 337 n 2 [2005] [internal quotation marks omitted]; see also Preferred Mtge. Brokers v Byfield, 282 AD2d 589, 590 [2001]). "To make a provision in a contract a condition precedent, it must appear from the contract itself that the parties intended the provision to so operate" (22 NY Jur 2d, Contracts § 262; see also Inwood Tower v Fireman's Fund Ins. Co., 309 AD2d 540, 540 [2003]). "[I]t is for the court to decide, as a matter of law, whether an express condition precedent to performance exists under the terms of a contract" (Rooney v Slomowitz, 11 AD3d 864, 865 [2004]).

"In an action on a contract, the obligation to raise the issue of compliance with [a] condition[] precedent rests on the party disputing [its] performance or occurrence" and, therefore, "the burden to plead 'specifically and with particularity' that any condition precedent has not been fulfilled rests on the party resisting [the] enforcement of the contract" (1199 Hous. Corp. v International Fid. Ins. Co., 14 AD3d 383, 384 [2005], quoting CPLR 3015 [a]). Here, there is no sworn affidavit by defendants denying that JMRL and plaintiffs did agree upon the specifications of the buses which the contract covered, or that the buses which JMRL delivered were manufactured pursuant to these agreed upon specifications. In addition, the Addendum makes reference to the drawings and specifications in section 1.3 of the contract without noting whether these drawings and specifications had, in fact, been sent to plaintiffs within 10 days after the execution of the contract pursuant to that section.

Moreover, a party for whose benefit a condition precedent is included in a contract may expressly or impliedly waive the performance of that condition precedent by another party to the contract (see W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1996]; Fundamental Portfolio Advisors, Inc. v Tocqueville Asset Mgt., L.P., 7 NY3d 96, 104 [2006]; Edbar Corp. v Sementilli, 4 Misc 3d 1003 [A], 2004 NY Slip Op 50648 [U],*2 [2004]). "A waiver may be express or implied from the acts of the parties" (22A NY Jur 2d, Contracts § 379; see also Jordan Panel Sys. Corp. v Turner Constr. Co., 45 AD3d 165, 175 [2007]; Peter A. Camilli & Sons v State of New York, 41 Misc 2d 218, 223 [1963]). It has been held that a waiver may be established as a matter of law by the party's undisputed acts or language so inconsistent with a purpose to stand on the contract provisions "as to leave no opportunity for a reasonable inference to the contrary" (Alsens Am. Portland Cement Works v Degnon Contr. Co., 222 NY 34, 37 [1917]; see also Empire Fin. Servs., Inc. [*8]v Bellantoni, 53 AD3d 1095, 1096 [2008]; International Shared Services Inc. v McCoy, 259 AD2d 668, 669 [1999]).

A party loses a defense of excuse for its nonperformance if it "continues to carry out the contract in spite of a known excuse for nonperformance" (Computer Possibilities Unlimited v Mobil Oil Corp., 301 AD2d 70, 80 [2002] [internal quotation marks and citation omitted]). Thus, "[i]f a performance differing from that required by the contract is . . . accepted, such action may constitute a waiver of performance in accordance with the contract" (22A NY Jur 2d, Contracts § 382). In this regard, a waiver of the time provision of a contract may result from commencing or continuing performance after the time limit has expired (see Leahy v Lucius Eng'g Co., 186 App Div 354, 357 [1919], affd 227 NY 660 [1920]). Furthermore, a party to a contract who accepts partial performance thereof waives the right to insist upon conditions whose fulfillment the party might have required prior thereto(see Grant v Pratt & Lambert, 52 App Div 540, 548 [1990]; Naylor Eng'g, P.C. v Lucches, Eng'g, P.C., 9 Misc 3d 1109 [A], 2005 NY Slip Op 51463 [U], *4 [2005]).

Here, there is ample evidence that the purported condition of providing Specifications and Technical Drawings within 10 days of the execution of the contract and the signing or initialing and appending of them to the contract, was excused or waived by defendants. As noted above, defendants, in Robert J. Haswell's affidavit and in the Addendum, explicitly acknowledged that there was an existing April 17, 2007 contract, under which JMRL performed. Plaintiffs have also submitted a letter from Robert J. Haswell dated April 8, 2008, in which he specifically denies that JMRL is breaching "the agreement," referring to several sections of the April 17, 2007 contract, thereby acknowledging the existence of a binding agreement between the parties. Moreover, actual performance of the contract occurred since plaintiffs paid for and received five buses in 2007, and thereafter received two additional buses, pursuant to the terms of the contract.

Based upon this performance of both parties to the contract, pursuant to its terms, without annexing the initialed Appendix A and B, this condition was necessarily waived by them. Where, as here, a party, waives the performance of a condition, it cannot rely on it to prevent recovery or enforcement of the contract (see O'Neil Supply Co. v Petroleum Heat & Power Co., 280 NY 50, 53 [1939]).

Defendants, in opposing plaintiffs' motion for a preliminary injunction, note that where key facts are in dispute, a preliminary injunction will be denied (see Faberge Intl. v Di Pino, 109 AD2d 235, 240 [1985]). Defendants argue that key facts are in dispute. They contend that these disputed key facts are the validity of the existence of the contract itself. This contention is without merit. "[T]he issue of the validity of the contract[ ] is [one] of law," not fact (Town of Eden v American Ref-Fuel Co. of Niagara, 284 AD2d 85, 86 [2001]), and the court finds that a binding contract was formed. [*9]

While it is noted, in passing, that the exclusivity provision of section 13.1 of the contract, pursuant to its terms, became effective for a seven-year period "with the purchase of the initial six (6) buses" and plaintiffs did not complete payment for their purchase of the sixth bus, here (as noted above), it is undisputed that plaintiffs ordered and received seven buses, and that the last two buses were only returned to defendants due to defects found by the NYSDOT. In any event, it is well established that where the performance of a condition would have occurred except for the other party's hindrance of its occurrence, the condition is excused or waived (see Sunshine Steak, Salad & Seafood v W.I.M. Realty, 135 AD2d 891, 892 [1987]; Lieberman Props. v Braunstein, 134 AD2d 55, 60 [1987]). Consequently, the exclusivity provision of section 13.1 of the contract for a seven-year term became effective.

The question of whether plaintiffs have shown a likelihood of ultimate success on the merits with respect to the enforcement of the exclusivity provision of the contract thus turns on the interpretation of section 13.1 of the contract. Where there is a written contract, clear and explicit in its terms, and the intention of the parties may be gathered from the four corners of the instrument, the interpretation of the contract is a question of law for the court to decide (see Abramo v HealthNow NY, Inc., 23 AD3d 986, 987 [2005]; Sunrise Mall Assoc. v Import Alley of Sunrise Mall, 211 AD2d 711, 711 [1995]; Waring v Dynamics Corp. of Am., 101 AD2d 772, 773 [1984]).

"In construing a contract, the document must be read as a whole to determine the parties' purpose and intent . . . giving a practical interpretation to the language employed so that the parties' reasonable expectations are realized" (Sunrise Mall Assoc., 211 AD2d at 711; see also Abramo, 23 AD3d at 987; Benderson v Wiper Check, 266 AD2d 903, 904 [1999], affd 96 NY2d 855 [2001]). "In cases of contract interpretation, it is well settled that "when parties set down their agreement in a clear, complete document, their writing should . . . be enforced according to its terms"'"(South Rd. Assoc., LLC v International Bus. Machs. Corp., 4 NY3d 272, 277 [2005], quoting Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004], quoting W.W.W. Assoc., 77 NY2d at 162). In this case, section 13.1 is expressly applicable to "any sightseeing bus (single or double decker)" and only excludes other kinds of buses (non-sightseeing or commuter buses) and the commuter double decker bus specifically described in section 2.5 of the contract (which describes, in detail, "a newly designed double decker bus . . . designed for the sole use by commuters" that will be 12 feet and six inches high, 45 feet long, 102 inches wide, and carry 80 passengers, and will be "equipped with WiFi computer hookups, wireless headsets, and many other items distinguishing it from the [sight]seeing bus[es]").

Defendants contend that plaintiffs have failed to show that any potential contracts with Grayline of Chicago or Doung Bo Tours are for buses that are [*10]encompassed by the exclusivity provision of the contract. Defendants point to section 2.5 of the contract, which excludes from section 2.4 (and which, as noted above, is excluded from section 13.1) a newly designed double decker commuter bus which (as previously stated) is 12 feet and six inches high, 45 feet long, 102 inches wide, and carries 80 passengers, and which is equipped with WiFi computer hookups and many other items distinguishing it from the sightseeing bus described in section 2.4. Defendants, however, have not actually introduced any evidence, nor do they even assert, that the buses sold to Grayline or Doung Bo Tours are the type of buses described in section 2.5 of the contract.

Defendants, in claiming that JMRL is not in breach of section 13.1 of the contract, only submit their attorney's affirmation. Their opposition papers are, thus, devoid of any evidence or any affidavit from anyone with personal knowledge of the facts. An affirmation by an attorney without personal knowledge of the facts lacks probative value (see Zuckerman v City of New York, 49 NY2d 557, 563 [1980]; Stahl v Stralberg, 287 AD2d 613, 614 [2001]; Williams v Citibank, 247 AD2d 49, 54 [1998]).

Plaintiffs, on the other hand, have submitted the affirmation of Zev Marmurstein, wherein Zev Marmurstein states that JMRL has been selling buses to Grayline and Doung Bo Tours. Plaintiffs have submitted a picture of a bus which it alleges was sold by JMRL to Doung Bo Tours. The photographs show this sightseeing bus as having a removable roof (and, thus, as being the type of sightseeing bus encompassed by the exclusivity clause of section 13.1), and it is photographed with the removable roof on and off. Although the name listed on the bus is "Hyundai Travel & Tours," and not Doung Bo Tours, plaintiffs have submitted the New York Department of State corporate filing for "Hyundai Tours & Travel, Inc." (an almost identical name as that on the bus), which lists that its address is the same as that of Dong Bu Tour and Travel Inc. (a similar name and allegedly the same entity referred to by the parties as Doung Bo Tours).

Thus, defendants' bare conclusory allegation that the buses being sold by them to third parties are different from those covered by the exclusivity provision of section 13.1 fails to sufficiently refute plaintiffs' proof (see Sylmark Holdings Ltd. v Silicone Zone Intl., Ltd., 5 Misc 3d 295, 296-297 [2004]). Plaintiffs have, therefore, satisfied their burden of showing a likelihood of ultimate success on the merits with respect to their claim as to section 13.1 of the contract.

Plaintiffs also request that defendants be enjoined from selling the four buses with chassis numbers 507, 508, 509, and 506, on which they already paid an $80,000 deposit. As set forth above, pursuant to section 2.4 of the contract, JMRL agreed that plaintiffs would be the sole exclusive customer for these buses, that JMRL was prohibited from selling these buses to any other party, and that plaintiffs could obtain injunctive relief in the event that this provision were violated. This [*11]provision is clear and explicit in its terms (see Abramo, 23 AD3d at 987; Sunrise Mall Assoc., 211 AD2d at 711; Waring, 101 AD2d at 773).

Defendants, in opposing plaintiffs' motion for a preliminary injunction, assert, however, that plaintiffs violated section 4.3 of the contract, which provides:

"Buyer shall use all commercially reasonable diligence to have the vehicles inspected by all City and State agencies needed so the vehicles may be operated in the desired City and State and payment shall be governed as stated in Section 5.1."

Defendants argue that plaintiffs did not use any commercially reasonable diligence to have the two buses which JMRL delivered in March 2008 inspected, but, instead, obstructed the inspections because "plaintiffs held the buses hostage for weeks and further obstructed [their] representatives from entering the premises to fix the buses." Specifically, defendants state that plaintiffs did not allow their mechanic on the premises to cure the defects found by the NYSDOT.

Defendants' argument is unavailing. The NYSDOT Defect Report shows that plaintiffs had the vehicles inspected on April 2, 2008, shortly after their delivery in March 2008, in compliance with section 4.3 of the contract. Defendants do not deny that they repossessed the buses or that plaintiffs made an $80,000 deposit on these buses. While an April 8, 2008 letter from Robert J. Haswell states that plaintiffs had one bus in their possession for five weeks and a second one in their possession for two weeks, no affidavit is submitted which sets forth any details as to the dates plaintiffs allegedly did not allow their mechanic on the premises or on what date they repossessed the buses. In any event, this issue relates to whether the vehicles and the vehicles' performance conformed to the contract, as required by section 4.1 of the contract, and whether JMRL satisfied its obligation to use its best endeavors to rectify any nonconformity, as required under section 4.2 of the contract, rather than to the issue of whether JMRL breached its agreement to sell these vehicles exclusively to plaintiffs pursuant to section 2.4. Thus, the court finds that plaintiffs have shown a likelihood of ultimate success on the merits with respect to their right to enjoin the sale of these vehicles to anyone other than them.

Defendants argue that plaintiffs have shown no evidence of any irreparable injury to them if the requested preliminary injunction is not granted. Defendants assert that plaintiffs have not proven that they will be harmed if the preliminary injunction is not granted. JMRL, however, in section 13.1 of the contract, expressly "acknowledge[d] that a violation of th[at] provision w[ould] substantially damage [plaintiffs]," and in section 2.4 of the contract, agreed that if it "violate[d] th[at] provision in any manner . . . [plaintiffs] shall suffer irreparable harm and shall be permitted to seek injunctive relief." Furthermore, plaintiffs have shown that they will suffer harm due to their loss of the exclusivity of the potential market for its unique [*12]design of buses, for which it bargained in the contract (see Sylmark Holdings Ltd., 5 Misc 3d at 299).

With respect to a balancing of the equities, defendants assert that they will suffer possible bankruptcy and the loss of business if the preliminary injunction is granted. Defendants, however, have not explained why enforcing the terms of the contract would force them into bankruptcy. While it is possible that defendants may lose some business of third parties by the enforcement of the exclusivity clause of the contract, these are the terms for which defendants bargained and to which they expressly agreed. The requested preliminary injunction would maintain the status quo and prevent any further alleged breach of the contract by defendants and result in no demonstrated harm or prejudice to defendants (see Icy Splash Food & Beverage, Inc. v Henckel, 14 AD3d 595, 596 [2005]; Mr. Natural v Unadulterated Food Prods., 152 AD2d 729, 730 [1989]; Abed v Zach Assoc., 124 AD2d 531, 532 [1986]). Thus, plaintiffs have shown that the injuries sustained by them without the preliminary injunction would be more burdensome than any alleged harm caused to defendants by the imposition of the preliminary injunction, and that a balancing of the equities favor their position (see Mr. Natural, 152 AD2d at 730; Sylmark Holdings Ltd., 5 Misc 3d at 299-300).

Consequently, an order granting plaintiffs the requested preliminary injunction must be granted (see CPLR 6301). While ordinarily an undertaking is required for the granting of a preliminary injunction (see CPLR 6312 [b]), JMRL, pursuant to sections 2.4 and 13.1 of the contract (as set forth above), expressly waived the necessity of the posting of a bond or other security in the event of the granting of such injunctive relief.

The court now turns to plaintiffs' motion to dismiss defendants' four counterclaims. With respect to defendants' first counterclaim for tortious interference with contractual affairs, it is noted that the elements of a cause of action for tortious interference with contractual relations are "(1) the existence of a contract between plaintiff and a third party; (2) defendant's knowledge of the contract; (3) defendant's intentional inducement of the third party to breach or otherwise render performance impossible; and (4) damages to plaintiff" (M. J. & K. Co. v Matthew Bender & Co., 220 AD2d 488, 490 [1995]).

Defendants' first counterclaim only generally alleges that plaintiffs tortiously interfered with contracts that they had entered into with third parties. Defendants, in their pleading, do not allege any facts whatsoever to support this counterclaim. They fail to specifically allege that a valid contract was entered into with a third party which was breached as a result of plaintiffs' conduct. Robert J. Haswell, in his affidavit in opposition to plaintiffs' motion, only generally states that Private One has tortiously interfered with contracts he has entered into with third parties without naming these third parties, the dates on which these contracts were executed, or how Private One obstructed or interfered with their performance. A cause of action [*13]alleging tortious interference with contractual relations must be dismissed if it is devoid of a factual basis and the allegations are vague and conclusory (see Schuckman Realty v Marine Midland Bank, 244 AD2d 400, 401 [1997]).

Defendants, in their attorney's affirmation, also generally claim that plaintiffs have tortiously interfered with contracts between them and Doung Bo Tours and other companies, and argue that they need to engage in discovery to determine which contracts have been obstructed by plaintiffs' allegedly tortious conduct. Such argument is rejected. If plaintiffs interfered with any of defendants' contracts, this should be within defendants' own knowledge. As previously noted, defendants' first counterclaim is entirely devoid of any allegations naming any specific existing contract, the date upon which it was entered, plaintiffs' knowledge of these contracts, and in what way plaintiffs intentionally induced the third party to breach or otherwise render performance impossible. Furthermore, defendants' counterclaim of tortious interference with contractual relations is predicated on their contention that plaintiffs have no right to enforce the exclusivity provision of the subject contract, which, as discussed above, is devoid of merit. Thus, dismissal of defendants' first counterclaim is mandated (see CPLR 3211 [a] [1], [7]; 3212 [b]; M. J. & K. Co., 220 AD2d at 490; Schuckman Realty, 244 AD2d at 401).

Defendants' second counterclaim for intentional infliction of emotional distress alleges that plaintiffs intentionally tried to cause emotional harm to them by filing a frivolous lawsuit (i.e., this action). It is well settled that in order to state a claim for intentional infliction of emotional distress, a defendant's conduct must be " "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community"'" (Benyo v Sikorjak, 50 AD3d 1074, 1077 [2008], quoting Murphy v American Home Prods. Corp., 58 NY2d 293, 303 [1983], quoting Restatement [Second] of Torts § 46, Comment d; see also Siegel v Smith, Panish & Shapiro, P.C., 136 AD2d 620, 621 [1998]).

Defendants claim that plaintiffs' conduct in trying to destroy their business by bringing this action is egregious conduct. Defendants' conduct in bringing this action, however, does not constitute the type of outrageous conduct required to entitle it to assert a cognizable counterclaim to recover for intentional infliction of emotional distress. Furthermore, to the extent that this counterclaim may purport to allege an abuse of process claim, there is no allegation that plaintiffs used judicial process for an unlawful purpose or acted in an irregular or unlawful manner in commencing this action against defendants (see Aluminum Mill Supply Corp. v Larkin, 129 AD2d 542, 542-543 [1987]). Dismissal of defendants' second counterclaim is, therefore, required (see CPLR 3211 [a] [7]; 3212 [b]; Benyo, 50 AD3d at 1077; Siegel, 136 AD2d at 621).

Defendants' third counterclaim for fraud alleges that defendants agreed to sell the buses to plaintiffs and relied on the agreement with plaintiffs, and that plaintiffs [*14]did not intend to purchase the buses or sign the Addendum. CPLR 3016 (b) requires that when a cause of action is based on fraud, "the circumstances constituting the wrong shall be stated in detail." Here, defendants' bare allegations of fraud, without any allegations of the details constituting the wrong, are insufficient to sustain a counterclaim for fraud (see Michaelson v Scaduto, 205 AD2d 507, 508 [1994]). Moreover, no viable fraud claim is stated where the only fraud charged is that the contracting party did not intend to meet its contractual obligation (see Blackman v Genova, 250 AD2d 561, 562 [1998]; Non-Linear Trading Co. v Braddis Assoc., 243 AD2d 107, 118 [1998]; Hadari v Leshchinsky, 242 AD2d 557, 558 [1997]). Thus, defendants' third counterclaim for fraud must be dismissed (see CPLR 3016 [b], 3211 [a] [7]; 3212 [b]; Blackman, 250 AD2d at 562; Hadari, 242 AD2d at 558).

Defendants' fourth counterclaim for unfair competition alleges that plaintiffs are purposely destroying their business for the purpose of stopping them from selling buses, and that plaintiffs plan to sell the buses to the same market and want to eliminate their competition. To assert a counterclaim for unfair competition, however, a defendant must allege "the bad faith misappropriation of a commercial advantage which belonged exclusively to [it]" (LoPresti v Massachusetts Mut. Life Ins. Co., 30 AD3d 474, 476 [2006]). In addition, a defendant must allege special damages (see Waste Distillation Tech. v Blasland & Bouck Engrs., 136 AD2d 633, 634 [1988]), and there must also be a confidential relationship between the parties or a valid agreement to refrain from unfairly competing (see V. Ponte & Sons v American Fibers Intl., 222 AD2d 271, 272 [1995]).

In the case at bar, defendants do not allege a commercial advantage belonging exclusively to them which has been misappropriated by plaintiffs nor do they allege special damages. The subject contract also contains no agreement by plaintiffs not to compete with defendants. Although defendants claim that they had a personal relationship because they discussed confidential corporate secrets, such as clientele, business plans, marketing plans, and other corporate matters, such an arms-length business transaction does not constitute the requisite confidential relationship as necessary to sustain this counterclaim. Consequently, dismissal of defendants' fourth counterclaim for unfair competition is warranted (see CPLR 3211 [a] [7]; 3212 [b]; LoPresti, 30 AD3d at 476; V. Ponte & Sons, 222 AD2d at 272; Waste Distillation Tech., 136 AD2d at 634).

Plaintiffs' motion also seeks an award of reasonable attorney's fees, pursuant to CPLR 8303-a, based upon their contention that defendants engaged in frivolous conduct by interposing meritless counterclaims. The court does not find that defendants' assertion of these counterclaims warrants such a sanction and declines to award this relief.

Accordingly, plaintiffs' motion for a preliminary injunction is granted in its entirety. Plaintiffs' motion for an order dismissing defendants' first, second, third, [*15]and fourth counterclaims is granted; that motion is denied insofar as it seeks an order, pursuant to CPLR 8303-a, awarding plaintiffs reasonable attorney's fees.

The parties are directed to appear for a conference in Commercial Part I at 10 am on November 6, 2008.

This constitutes the decision and order of the court.

E N T E R,

J. S. C.