Mochitto LLC v. Gurung

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Mochitto LLC v Gurung 2024 NY Slip Op 34261(U) December 3, 2024 Supreme Court, Kings County Docket Number: Index No. 506534/2024 Judge: Leon Ruchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

FILED: KINGS COUNTY CLERK 12/03/2024 09:00 AM INDEX NO. 506534/2024 NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 12/03/2024

SUPREME COURT OF THE STATE OF NEW YOR.k COUNTY OF KINGS : CIVIL TERM: COMMERCIAL PART 8 --·-------------·--·· ----.------ .. - - - .. ----·--·-x MOCH.ITTO LLC, . Plaintiff, Deqision and order

- against - Index No. 506534/2024

MIMI GORUNG; JOHN DOES 1-lD; and BUSINESS ENTITIES A-K, Def endarits , December 3, 2024 -·- .. -- - - -·----- - - - - - - -·- - -. - - - - . -·- - - - -- - --- . .:x ·PRESENT: HON. LEON RUCHELSMAN MotionSeq. #2

The defendants have moved pursuant to CPLR §3211 seeking to

dismiss the lawsuit. The plaintiff has opppsed the motion.

Papers were submitted hy the parties and argI1ments held. After

reviewing all the arguments, this court no,w makes the :following

determination.

On October 5, 2023 the plaintiff and defendant entered into

an asset purchase agreement whereby the pl;aintiff agreed to

purchase all the assets of four of defe·nctant' s businesses, namely

cof.fe e shops in New York City. The pl<¹ in t:i ff paid $ 200, 0 0 0 .

Paragraph 5.lO(d} of the asset purchase agreement provides that

"with respect to the Leases pertaining tolthe Business locations

described in Article 1. 01 (I) through Art:iqle l. 01 (iv) of this

Agreement, for each of them, Seller shall provide either an

assignment arid assumption executed by the respective landlord, or 1

shall provide documentation sufficient toishow that no such ' .

assignment and assumption is required" (see, Asset Purchase

Agreement, g[S.10 (d) [NYSCEF Doc. No. 3]). : According to the

complaint, the defendant failed to secure 'assignrnehts of the

FILED: KINGS COUNTY CLERK 12/03/2024 09:00 AM INDEX NO. 506534/2024 NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 12/03/2024

Footnotes

[1] of 5 [* 1] leases for two.from two bf the landlords which essentially required the plaintiff to pay the security: deposits anew. Further, the plaintiff all.eges the defendapt ntisrepresented the potential profits of each location. This lawsuit was commenced and the plaintiff has alleged causes of .. . action .. . ! . . . for breach of contract, fraud an.ct conversion. The defe:ndarit has' now moved seeking to dismiss the lawsuit on the grounds it f:ails to allege arty cause of action. As .rioted the motion ls opposed. Conclusions of Law: It is well settled that Upon a motion tO dismiss the court must determine, accepting the allegations :of the complaint as true, whether the party can succeed upon any reasonable view of those facts ( Davids v. State, 159 AD3d 987, 7 4 NYS3d 288 [ 2d Dept,, 2018)). Further; all the allegation;s in the .complaint are deemed true and all reasonable inferenc.es may be drawn in favor of the plaintiff (Dunleavy v. Hilton Hall Apartments Co., LLC, 14 AD3d 4T9, 789 NYS2d 164 [2d Dept., 2005]) .: It is further well settled that to sudceed upon a claim of breach of contract the plaintiff must establish the existence of a contract, the plaintiff's performance, the defendant's breach and resulting damages (Harris V; Seward Park Housing Corp., 79 P,.D3d 425, 913 NYS2d 161 [Pt Dept., 2010]). The defendant argues that while the asset purchase 2

[2] of 5 [* 2] agreement did require the plaintiff to secure i3.ssignments of the leases prior to closin•g the plaintiff waiv:ed that requirement by closing anyway. The agreement contains a i"condition precedent'' ' . namely, that the leases of the locations a1re "duly' .assigned" . . . . I . . . . (see, Asset Purchase Agreement, '.!LS. 01 [NYs:cEF Doc. No. 3]) • Howevf2r, that paragraph also states that '\the failure to obtain landlord consent for any such assignment/a:ssumption shall be grounds for either Party to terminate this! Agreement without further recourse. This section survive [sic] Closing, and shall be enforceable regardless of whether or not a Closing takes place" (id). Thus, the agreement express1y ex.tends the right to secure the assignments even past closing. Thus, the mere closing, even without the assignments from the landlords, is not a waiver at all. MOreover, the words "without recoursie" in a :honnegot iabl e instrument really has "no defined legal meaning" (Binswanqer v. Hewitt, 79 Misc 425, 140 NYS 143 [Pt Dept . 1 , 1913]). Therefore, the court "must imbue the phrase with 'such meaning as the parties themselves intended to give it which must be determined as a: question of fact taking into considetiation all the surroµnding circumstances'" (U.S. for Use and Benefit of Ever.green Pipeline Construction Cbtrt'partv I~c., v. Merritt Meridian Construction corp.,. 1998 WL 549570 [S, D~ N.:Y. 1998]).. In addition, the complaint alleges the defendant 3

[3] of 5 [* 3] :triisrepresen:t ed thE::. acb,1al worth of the ·_bus1ne·S$. es \a·nd also breached the contract by shutting down de.livery ; se:rvices. . These factual assertions cannot be decided on a inotion t.o dismiss, The:ref.ore, there· are surely ·questionjs, which cannot be decided at this time, whether the p1aintifif mainta:ins a c.ause of action for -breach ·of contract-. Consequenti}y , the. !motion -seeking· to dismiss ·this cause o.-f act.;Lon is·-' deni_~.d.i The cl~ims for fraud and fraudulent i:nducement.rii .ere1y rei tera.te the cont tact ciaim c;once-;rning the worth ,of tn:e busin~s.ses: _.and wh~_ther delivery was ceaseq. It is well settled that ·iii'.here a cla·im to recover damages for ifrai.Jd "is premised upon alleged breach o:f contra.ctua],. q.ut.i.e_s and. tjhe suppqrting alleg.ations do not concern: misrepresent ations which are collateral or extraneous to the terms of t,he parties. ;;igreement, a c-ause _o,f action .;;oµndin_g in fraud does riotj lie." (McKernin v. Fanny Farmer CandV Shops Inc., 176 AD2d 233, 57 4 NYS2d 58, [2 nd Dept., 1991]}. Clearly where the misrepriasenta t,~ops that g_ive r-i:se t;o tp.e fraud a.re ciuties contained in the contract no fr.:i.ud cl_a:irtt is viabie. (see·, Wyle Inc .• v. ITT Corporation, 130 AD3-.d 438, 13 ··NYS:3d . 375 [Pt Dept... , 20'15]). The· fraud -ciaims are -.duplicative of the contract cause of action ano consequently they are ·dismiss,ed. La.st.ly, the ca/use of act:i,o_n for conyElrsion is duplicative ' of the b.reach of cor:1tract claim (AJW Partners LLC ·: v. Itroni.cs 4

[4] of 5 [* 4] Inc., 68 AD3d 567, 892 NYS2d 46 [Pt Dept. ,i 2009]) .• Consequently, that cause of ·action are dismissed. Therefore, the motion seeking to dismiss the complaint except for the breach of contract cause oe action is granted. The motion seeking· to dismiss tbe breach O!f contract claim is denied. So ordered. ENTER: DATED: DeOemb~r 3, 2024 Brooklyn N.Y. Hori:, JSC 5

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