Plaintiff SUBMISSION DATE: 07/11/06. Defendants. Defendant' s/respondent' s...

(1)

SHORT FORM ORDER

SUPREME COURT STATE OF NEW YORK

Present:

HON. KENNETH A. DA VIS.

Justice

TRIAL/lAS, PART

NASSAU COUNTY

ADVO, INC.,

Plaintiff

SUBMISSION DATE:

07/11/06

INDEX No. : 15107/05

against-THE B. C. CORPORATION OF NY and

MATT ROSENCRANS, MOTION SEQUENCE #1

Defendants.

The following papers read on this

motion:

Notice of Motion/ Order to Show Cause. . . .

An s we ring P a pe r s. .

Reply. . .

Briefs: Plaintiff'

s/Petitioner

s...

Defendant' s/Respondent' s. . .

Upon the foregoing papers, the defendants

' motion dismissing

the causes of action as against defendant Matt Rosencrans in his

personal capacity pursuant to CPLR

3211

(a) (1) is

granted.

The

defendants

' motion to dismiss for failure to

state a

cause of

action pursuant to CPLR

3211

(a) (7) is denied as to the breach of

contract and the breach of the implied covenant of good faith and

fair

dealing, and is

granted

as to

the

causes of

action for

conversion

, violation of New York General Business Law

349,

tortious interference with

contract, and inj

uncti ve

relief.

The instant

action

seeks monetary

damages and

inj uncti ve

relief arising out of disputes involving two

(2) contracts.

The action was commenced by the filing of a summons and complaint on September 22,

2005.

The plaintiff, ADVO,

creates and

owns

residential mailing lists formatted by zip code which it sells and leases for

profit.

All About Lists and Dunhill International List

Co.

(hereinafter

Dunhill) are two of the companies that distribute and sub-license

(2)

into the lists to identify improper use of the

lists.

The United

States Postal Service (hereinafter

USPS) disqualifies submissions

for Computerized Delivery Sequencing

(hereinafter

CDS) containing

seed addresses.

On February 21, 2003, defendant Rosencrans, on behalf of The

B. C.

Corp., purchased lists for at least seven (7) zip codes from

All About

Lists.

The lists sold to the defendants by All About

Lists were owned and licensed by

ADVO. The terms of

the agreement

stated that the lists would be used " in connection with my own

marketing

programs, mailing, or telemarketing only, and for no

other purpose. On that same day, defendant Rosencrans sent an

email to

Jason, an

employee of

All About

Lists,

that

stated,

please provide us with a residential list for the following

zip

codes in cds format - for submission for cds qualification. The invoice on February 21, 2003 listed " format in CDS format" under

the "

Description

" heading.

On February 26, 2003, the defendants

submi tted the zip codes to the USPS for CDS

qualification.

The

USPS disqualified their submission due to the presence

of the "

seed

addresses. "

On September 30, 2003, defendant Rosencrans, on behalf of

the

B. C.

Corp., ordered lists for at least twenty-two (22) zip codes

from Dunhill.

The lists sold to the defendants by Dunhill were owned and licensed by ADVO. The terms of the

agreement stated,

Unless

DILCO specifies otherwise in writing all

names are

furnished for one time use only by the mailer for whom the list was

rented, and

are

not

to

be

duplicated,

reproduced, retained,

disclosed, transferred, resold, or reused. On an order form dated

September 25,

2003, "

CDS use" is hand-written, allegedly by Andy

Dunhill

the

Vice

President of

Dunhill, under

the

category,

Additional selections.

The same order form, dated September

30,

2006, submitted by the plaintiff , does not have the hand written

CDS use. On February 17, 2004, Valerie Pellerin, an employee of

Dunhill, sent an email to defendant Rosencrans that

stated, "

This

email should reconfirm that the BC Corp. of New York has

purchased...

the

rights

for

unlimited usage and

any

other

type of

postal

processing.

On that

same day, Andy Dunhill hand wrote on a

printed version of the

email, "

Including CDS Processing, Thank

you,

Andy Dunhill, 2-

17-

5:24

and

faxed it

to

defendant

(3)

that Andy Dunhill thought that "CDS" meant "

ci ty delivery service.

In late 2003 or early 2004, the defendants once again

submitted the

zip codes to the USPS for CDS qualification. The USPS disqualified their submission due to the presence of the "

seed addresses.

Defendant Rosencrans, in his affidavit, states that neither

Andy Dunhill or Jason Cohen of All About Lists ever mentioned that they were acting as an agent for ADVO, and that he believed that he was contracting only with All About Lists and Dunhill.

Also in his

affidavit, Matt Rosencrans states that he has been president and

sole shareholder of the New York corporation known as The B. C.

Corporation of New York since April

10, 1987.

(Wendy Berliner, a

member of

the

firm representing

the plaintiff,

stated in

her

affidavit that Matt Rosencrans was not mentioned on the corporate records of The

B. C.

Corp. of N. Y. )

The plaintiff alleges six (6) causes of action:

(1) breach of

contract,

(2) breach of the implied

covenant of good faith and fair

dealing,

(3) conversion (4) violation of New York'

General

Business Law ~34

9,

(5) tortious

interference with contract, and (6)

inj uncti ve

relief.

As

for

threshold

question, plaintiff

claims

that

defendants

' motion to dismiss should be denied because they failed

to answer or respond to

the complaint wi

thin the

requisite time

period.

CPLR ~

320 (a) states that

defendant must

appear by serving an answer or notice of appearance, or by making a motion

which has the effect of extending the time to answer, wi thin twenty

(20) days after

the

service of

the

summons. The

summons and

complaint was personally served upon defendants on

September 23,

2005.

Defendants did not respond by October 13, 2005, as required.

The instant motion was filed on October 24

, 2005.

However, a

defaul t judgment should not be granted in light of the shortness of

the

delay, the absence of

prej udice to

plaintiff, the

potential

meri

torious nature of the defense, the absence of any willfulness

on defendants' part, and the public policy in favor of

resolving

cases on the merits. Goodman v.

N. Y.

City of

Health

Hosps.

Corp.

, 2 A.

3d 581

(2d Dept. 2003).

Accordingly, the court will decide this matter on the

merits.

(4)

capacity, they are

_dismissed.

Pursuant to CPLR ~ 3211 (a) (1),

party may move for dismissal of one or more causes of action on the

ground that a defense is founded upon documentary evidence. principal of a _{corporation, while acting in his capacity as an}

officer of the corporation_{, will not be held}

personally liable

under a contract

unless he

_{intends to personally bind}

_himself.

Worthy v. N. Y. City

Hous. Auth.

, 21 A.

3d 284 (1st

Dept. 2005).

This rule is

equally

applicable to corporations with a

single

shareholder, as it is perfectly legal to incorporate to _{limit the} personal liability of corporate owners.

Id.

Matt Rosencrans is

the single shareholder of The

_{B. C.}

Corporation of

NY.

Yet in all the correspondence between Matt Rosencrans and All About Lists and

Dunhill

, his name is followed by "

The

B. C.

Corporation of NY. Plaintiff in his complaint even states that Rosencrans was acting

on behalf of the BC Corp. Also in his

affidavit,

_Rosencrans

states that he has been the president and single shareholder of the

corporation since

1987. At

no time did he exhibit an intent to be

personally bound by the contracts, and the documentary

_evidence

does show that Rosencrans was acting on behalf of his

_corporation.

Therefore, defendants

motion to

dismiss

the

complaint

as to

defendant Matt Rosencrans in his personal capacity pursuant to CPLR

~ 3211

(a)

(1) is granted.

As for the first cause of action against The

_{B. C.}

_Corporation

of New York, breach of contract, and the second cause of

_action,

breach of the

implied

covenant of good faith and

fair

dealing,

defendants

' motion to dismiss is

denied.

Defendants claim that

plaintiff

lacks pri vi

ty to

the contracts and can therefore not sustain this cause of action. Plaintiff claims that no privity is

required because it has a principal- agency relationship with All About Lists and Dunhill. A principal- agency relationship legally exists when there is a manifestation of consent of one person to

allow another to act on his or her behalf and subject to his or her

control, and consent by the other to so act. Maurillo v. Park

Slope U-Haul

194 A.

2d

142 (2d Dept.

1993).

_{The complaint}

alleges that the lists sold belonged to plaintiff_{, ADVO, and that}

All

About Lists

and

Dunhill did

act

as

_{agents of}

_{ADVO in}

distributing the

lists.

Furthermore, the terms and conditions of

the contract with All About Lists

states, "

_{All About Lists agrees}

to provide information from recognized industry compilers and other

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ADVO and believed he was contracting only with All About Lists and

Dunhill.

These pieces of evidence result in a dispute of _{fact as}

to whether plaintiff was the undisclosed principal. " Upon a motion

to dismiss

_{, the}

_{sole criterion is whether}

the

_{subj ect}

_pleading

states a cause of

action, and if

, from the four corners of

the

complaint, factual allegations are discerned which , taken together

manifest any cause of action cognizable at law , then the motion

will fail.

Id.

In this case, plaintiff has alleged

sufficient

facts

to

demonstrate the possibility of

a principal-

_agency

relationship.

Assuming that plaintiff is an undisclosed principal, we turn

to the question of whether

_{defendants would be prej udiced}

_{by the}

lawsui t. An undisclosed principal may sue on a contract made in

its agent' name unless

defendants would be prej

udiced.

Leon

Bernstein Comm. Corp. v. Pan Am. World Airways. , 72A.

2d 707 (1st

Dept.

1979).

Defendants claim

_{that they}

would be prej

_udiced

because their defense is that they did act wi thin the scope of the

contracts and the parties to the contract, All About Lists and Dilco, are not parties to the _{lawsuit. However}_{, if upon trial it} can be established that ADVO is the undisclosed principal and had

ti tle

to the lists

, then

there would be no prej

_{udice to}

_the

defendants. See

Id.

As for

the third

_{cause of action , conversion, defendants} motion to dismiss is

granted.

_{Conversion is " any unauthorized}

exercise of dominion or control over property by one who is not

_the

owner of the property which interferes with and is in defiance of

superior

possessory right

of

another in

the

_{property. "}

Citipostal

Inc.

v.

Unistar Leasing , 283 A.

2d

916 (4th

_Dept.

2001). A

cause of action for conversion must fail where damages are merely being sought for breach of _contract. _{Retty Fin.,}

_Inc.

v. Morqan Stanley Dean Witter

_{& Co.}

, 293 A.

2d 341

(1st Dept.

2002).

Such is the

case here. Plaintiff'

_{s allegation fails to}

demonstrate a wrong independent from the contract claim, therefore

it should be dismissed. See MBL Life Assur. Corp. v. 555 Realty Co. , 240 A.

2d 375

(2d Dept. 1997).

As for the _{fourth cause of action , violation of New York'}

General

Business Law ~

349, defendant'

s motion

to

dismiss is

(6)

decepti ve acts or practices in the conduct of any business,

trade,

or

commerce are

unlawful.

_{To state a cause of}

_{action for a}

violation of General Business Law ~ 349, plaintiff must show that

defendants

' practices

are "

consumer oriented"

, misleading in a

material

way, and that plaintiff was

inj ured by these practices.

Med. Soc v v. Oxford Health

Plans, Inc.

, 15 A.

3d 206 (1st

Dept.

2005) .

The practice

must be likely

to

mislead a

reasonable

consumer. Stutman v. Chemical Bank, 95 N.

2d 24

(2000).

The

statute

s consumer orientation does not preclude its application to

disputes between businesses per se, but it does severely limi

t it.

Cruz v. NYNEX Info. Resources, 263 A.

2d 285 (1st

Dept.

2000).

Defendants

practices must be "

directed

towards consumers

potentially

affect

similarly

situated consumers. Osweqo

Laborers

' Local 214 Pension Fund v. Marine Midland Bank, N . , 85

2d 20

(1995).

Here, the transactions were strictly business to business and

plaintiff has not alleged any facts to support that defendant'

conduct would be likely to mislead a

reasonable

consumer.

_The

transactions do involve consumer mailing lists, but not consumers.

The presence of the "seed addresses" ensure

that

consumers are

never involved in these types of

contracts.

As for the fifth cause of action tortious interference with

contract, defendant' s motion to dismiss is

granted. A

claim of

tortious interference requires proof of (1) the existence of a

valid contract between plaintiff and a third

party,

(2) defendant'

knowledge of that

contract,

(3) defendant' s intentional procuring

of

the breach

of that

contract, and

(4) damages. Foster

Churchill

, 87 N.

Y. 2d 744

(1995).

Here, plaintiff has not alleged

any facts to support the contention that defendant knew of the

existence of a contract with ADVO, if there even was _{one. As such}

the cause of action must fail.

As for

the

sixth

cause of

action for

inj uncti ve relief

defendants

' motion to dismiss is granted.

To establish entitlement

to

preliminary inj unction

plaintiff must

establish

(1) a

likelihood or probability of success on the

merits,

(2) irreparable

harm in the absence of an

inj unction,

and

(3) a balance of the

equi ties

in favor of granting the inj

unction.

Matos v. Ci

tv of New

York

, 21 A.

3d 936

(2d Dept. 2005).

Furthermore, when a litigant

can fully

be

recompensed by a

monetary award

preliminary

(7)

2002). In

Matos

, the Appellate Division upheld the Supreme Court'

denial of

inj uncti ve

relief

because plaintiff'

_{request for}

monetary damages undercut her claim of irreparable

inj ury.

Matos

at

937. Here, plaintiff alleges that defendant used the

_address

data inappropriately on two _{(2) occasions. However}_{, both times the}

USPS denied their request for CDS _{submission. Plaintiff}

_{has not}

alleged what harm it has faced that is ongoing and furthermore, is requesting monetary damages for breach of contract.

The New York Codes_{, Rules}_{, and Regulations ~130-1.}

1 states,

The court

, in its discretion, may award to any party or attorney

in any civil action or proceeding before the court, except where

prohibi ted

by

law, costs in the form of reimbursement for

_actual

expenses reasonably

incurred

and

reasonable attorney

_fees,

resulting

from

frivolous

conduct. " Defendant'

request for

sanctions is denied as plaintiff has established a prima facie case

for breach of contract and breach of the implied covenant of good

fai th

and fair dealing and had a good faith basis for filing

_the

complaint.

Based on the

above, defendant'

s motion to .

_{dismiss the}

_{causes of}

action as

against

defendant

Matt

Rosencrans in

his

personal

capaci ty pursuant to CPLR ~

3211 (a) (1)

is granted. Defendant'

motion to dismiss or failure to state a cause of action pursuant to

CPLR ~ 3211 (a) (7) is denied as to the breach of contract and the

breach of the implied covenant of good faith and fair dealing, and is granted as to the causes of action for conversion, violation of