Daniel Newhouse v. Roy ("Don") Peebles - Motion to Dismiss

8/17/2019 Daniel Newhouse v. Roy ("Don") Peebles - Motion to Dismiss

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SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK

DANIEL NEWHOUSE,

Plaintiff,

ORAL ARGUMENT REQUESTED

- against — Index No. 653998/2014

THE PEEBLES CORPORATION andR. DONAHUE PEEBLES,

Defendants.

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS'MOTION TO DISMISS THE COMPLAINT

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LED: NEW YORK COUNTY CLERK 02/17/2015 04:26 PM INDEX NO. 653998/2014SCEF DOC. NO. 9 RECEIVED NYSCEF: 02/17/2015


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TABLE OF CONTENTS

PAGE

PRELIMINARY STATEMENT

FACTUAL BACKGROUND 2

ARGUMENT 7

I. egal Standards 7

Plaintiff s Breach of Contract Claim Fails 7

A. The Alleged Oral Agreement is Barred by the Statute of Frauds 8

B. There Was No Meeting Of the Minds and, Therefore, No Contract 9

C. Defendants Did Not Breach the Alleged Oral Agreement 11D. Peebles Cannot Be Held Personally Liable for Breach of Contract 13

III. laintiff s Implied and Quasi Contract Claims Also Fail 14

A. laintiff s Implied Contract Claim Must Fail 14

B. laintiff Has Not Adequately Alleged a Breach of theImplied Covenant of Good Faith and Fair Dealing 15

C. laintiff Cannot Sustain His Claims Pleaded Under Theories ofQuantum Meruit, Unjust Enrichment and Promissory Estoppel 17

1. Plaintiff Does Not Properly Allege a ClaiM for Quantum Meruit 182. Plaintiff s Unjust Enrichment Claim Fails 19

3. Plaintiff s Promissory Estoppel Claim Also Fails 20

D. eebles Cannot Be Personally Liable for Plaintiff sAlleged Implied or Quasi Contract Claims 22

IV. laintiff s Labor Law Claim Should Be Dismissed 23

V. ecause Plaintiff Fails to Adequately Allege the Existenceof a Fiduciary Relationship, His Claim for Breach of Fiduciary Duty Fails 24

CONCLUSION 25

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TABLE OF AUTHORITIES

Page(s)

Cases

A&S Welding & Boiler Repair, Inc. v. Siegel,93 A.D.2d 712, 460 N.Y.S.2d 582 (1st Dcp't 1983) 15

Aksman v. Xiongwei Ju21 A.D.3d 260, 799 N.Y.S.2d 493 (1st Dep't 2005) 10

Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce,70 A.D.3d 423, 894 N.Y.S.2d 47 (1st Dep't 2010) 10, 17

American-European Art Assocs. v. Trend Galleries, Inc.,227 A.D.2d 170, 641 N.Y.S.2d 835 (1st Dep't 1996) 16

I3atas v. Prudential Ins. Co. of Am.,281 A.D.2d 260, 724 N.Y.S.2d 3 (1st Dep't 2001) 24

Bernstein v. Felske,143 A.D.2d 863, 533 N.Y.S.2d 538 (2d Dep't 1988) 16

Corsello v. Verizon N.Y, Inc.,18 N.Y.3d 777 (2012)

Cunnison v. Richardson Greenshields Sec., Inc.,107 A.D.2d 50, 485 N.Y.S.2d 272 (1985)

17, 19,20

22

Eden v. St. Luke's-Roosevelt Hosp. Cir.,96 A.1).3d 614, 947 N.Y.S.2d 457 (1st Dep't 2012) 25

Freedman v. Pearlman,271 A.D.2d 301, 706 N.Y.S.2d 405 (1st Dep't 2000) 18, 19

Georgia Malone & Co. v. Rieder,86 A.D.3d 406, 926 N.Y.S.2d 494 (1st Dep't 20] 1) 13, 18

Ginsberg y Fahlield-Noble Corp.,

81 A.D.2d 318, 440 N.Y.S.2d 222 (1st Dep't 1981) 21

Gottlieb v. Kenneth D. Laub & Co.,82 N.Y.2d 457 (1993) 23, 24

Jalk. v Paramount Commc'ns Inc.,222 A.D.2d 17, 644 N.Y.S.2d 43 (1st Dep't 1996) 16

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Joan Hansen & Co. v. Everlast World's Boxing Headquarters Corp.,296 A.D.2d 103, 744 N.Y.S.2d 384 (1st Dep't 2002) 13

Kaplan v. Capital Co. of Am.,298 A.D.2d 110, 747 N.Y.S.2d 504 (1st De p't 2002) 19

La Barca v. Altenkirch,193 A.D.2d 586, 597 N.Y.S.2d 158 (2d Dep't 1993) 9

Leder v. Spiegel,31 A.D.3d 266, 819 N.Y.S.2c126 (1st Dep't 2006) 7

Logan Advisors, LLC v. Patriarch Partners, LLC,63 A.D.3d 440, 879 N.Y.S.2d 463 (1st Dep't 2009) 17

Maas v. Cornell Univ.,94 N.Y.2d 87 (1999) 14

Mary Matthews Interiors v. Levis,208 A.D.2d 504, 617 N.Y.S.2d 39 (2d Dep't 1994) 18

Mode Contempo, Inc. v Raymours Furniture Co.,80 A.D.3d 464, 915 N.Y.S.2d 528 (1st Dep't 2011) 17

Oladokun v. Ryan,No. 06 cv 2330 (KMW), 2011 WL 4471882 (S.D.N.Y. Sept. 27, 2011) 23

Ovitz v. Bloomberg L.P.,18 N.Y.3d 753 (2012) 7

Parsa v. State,64 N.Y.2d 143, 485 N.Y.S.2d 27 (1984) 14

Peter Lampack Agency, Inc. v Grimes,93 A.D.3d 430, 939 N.Y.S.2d 409 (1st Dep't 2012) 15

Pritsker v. Kazan,132 A.D.2d 507, 518 N.Y.S.2d 143 (1st Dep't 1987) 8

Rogowsky v. McGarry,

55 A.D.3d 815, 865 N.Y.S.2d 670 (2d Dep't 2008) 18

Rosenberg v. Home Box Office, Inc.,33 A.D.3d 550, 822 N.Y.S.2d 921 (1st Dep't 2006) 22

Rosenberg v. Home Box Office, Inc.,No. 0601924/2005, 2006 WL 5436822 (Sup. Ct. N.Y. Cnty. Jan. 30, 2006) 2 n.1

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Scheer v. Kahn,221 A.D.2d 515, 634 N.Y.S.2d 148 (2d Dep't 1995) 24

Schully v. Speiser Krause P.C.,86 A.D. 3d 484, 928 N.Y.S.2d 4 (1st Dep't 2011) 10,20

Tierney v. Capricorn Investors, L.P.,189 A.D.2d 629, 592 N.Y.S.2d 700 (1st Dep't 1993) 11 21

Tribune Printing Co. v. 263 Ninth Ave Realty, Inc.,88 A.D.2d 877, 452 N.Y.S.2d 590 (1st Dep't 1982) 10 20

Tsabbar v. Auld,289 A.D.2d 115, 735 N.Y.S.2d 31 (1st Dep't 2001) 21

Ullmann v. Norma Karnali,207 A.D.2d 691, 616 N.Y.S.2d 583 (1st Dep't 1994) 2 n.1

US Bank NA. v. Lieberman,98 A.D.3d 422, 950 N.Y.S.2d 127 (1st Dep't 2012) 7

Valentino v. Davis270 A.D.2d 635, 703 N.Y.S.2d 609 (3d Del A 2000) 14

Vitale v. Steinberg307 A.D.2d 107, 764 N.Y.S.2d 236 (1st Dep't 2003) 20, 24

Waldman v. Englishtown Sportswear, Ltd,

92 A.D.2d 833, 460 N.Y.S.2d 552 (1st Dep't 1983)22

Weintraub v. Phillips, Nizer, Benjamin, Krim, & Ballon,172 A.D.2d 254, 568 N.Y.S.2d 84 (1st Dep't 1991) 24

Zimmer v. Town of Brookhaven,247 A.D.2d 109, 678 N.Y.S.2d 377 (2d Dep't 1998) 15

Zolotar v. New York Life Ins. Co.,172 A.D.2d 27, 576 N.Y.S.2d 850 (1st Dep't 1991) 20

Statutes

N.Y. C.P.L.R. 3211 1, 2, 7, 8, 25

N.Y. Labor Law § 198 2, 23, 24

N.Y. Gen. Oblig. Law § 5-703(1) 8

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Defendants The Peebles Corporation ("TPC") and R. Donahue Peebles ("Peebles"

and, together with TPC, "Defendants") respectfully submit this memorandum in support of their

motion, pursuant to CPLR 3211(a)(1), 3211(a)(5), and 3211(a)(7), to dismiss the Complaint of

Plaintiff Daniel Newhouse ("Plaintiff' or "Newhouse") dated December 29, 2014 ("Complaint").

PRELIMINARY STATEMENT

Plaintiff seeks to transform a series of communications in which he and Peebles,

acting on behalf of TPC, discussed possible terms of an incentive compensation arrangement into

an enforceable contract which he claims entitles him to "5% of Defendants' interest" in a

development project to occur at 346 Broadway in Manhattan. But the facts alleged in the

Complaint confirm that no contract ever was concluded. Though proposals were exchanged and

refined, Plaintiff concedes that the parties always planned to enter into a written agreement that

would be fully integrated and include other terms not yet negotiated. There was never a meeting

of the minds sufficient to support the creation of a contract, and thus Plaintiff s claims must fail.

Moreover, Plaintiff s claim to a percentage of Defendants' interest in 346

Broadway is barred by the Statute of Frauds, which requires that transfers of interest in real

estate be made in writing — and no such writing exists. Further, Plaintiff s supposed interest was

to be attached to any "promote" earned by Defendants, but there is no "promote" with respect to

this property, and accordingly nothing due to Plaintiff. And, in any event, Plaintiff never

satisfied the conditions necessary to receive any portion of such promote, as he was not

employed by TPC on the date any construction loan closed or the project was completed.

Plaintiff thus resorts to the usual kitchen sink of quasi-contractual claims — unjust

enrichment, quantum meruit, and promissory estoppel — as well as claims for breach of an

implied contract, breach of the covenant of good faith and fair dealing, and breach of fiduciary

duty, in an effort to find some theory upon which this case might survive dismissal pursuant to

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CPLR 3211. Nonetheless, each of these claims is fatally deficient. Finally, he adds a claim

under Section 198 of the Labor Law that fails because he does not allege a substantive violation

of the Labor Law and thus cannot satisfy a mandatory prerequisite to any such claim.

Plaintiff s 108-paragraph Complaint is devoid of any viable legal theories of

recovery based upon the facts he alleges. As such, the Complaint should be dismissed in its

entirety, with prejudice.

FACTUAL BACKGROUND'

TPC is engaged in real estate investment and development throughout the United

States. Peebles is the sole shareholder of TPC and serves as its Chairman and Chief Executive

Officer ("CEO"). (Ex. A, Complaint 'If 15, 17).

On or about May 31, 2011, TPC offered Plaintiff a role as a Senior Associate for

Development and Investments. (Complaint II 17; Ex. B, Plaintiff s Employment Agreement,

dated May 31, 2011). Pursuant to his Employment Agreement, Plaintiff was provided an annual

salary of $72,000 and was "eligible for a year-end discretionary performance bonus." (Ex. B at 1

(emphasis in original)). Plaintiff countersigned the Employment Agreement on May 31, 2011.

(Id. at 2).

During the interview process, Peebles allegedly told Plaintiff that "he anticipated

that Plaintiff would assume a key role in his organization" and "there would be partnership

opportunities for someone who could complete the deals generated by Peebles." (Complaint

Solely for purposes of this motion, Defendants do not dispute the allegations pled in and as partof the Complaint. The factual background set forth above is based on the Complaint and thedocuments incorporated by reference therein, which are attached as exhibits to the affirmation ofRobert N. Holtzman, Esq. dated February 17, 2015. See Rosenberg v. Home Box Wee, Inc.,No. 0601924/2005, 2006 WL 5436822, at *6 (Sup. Ct. N.Y. Cnty. Ian. 30, 2006) ("[W]hendeciding a motion to dismiss under CPLR 3211 (a) (7), the court may consider documentsreferenced in or attached to the complaint") (citation omitted); Ullmann v. Norma Kamali,207 A.D.2d 691, 692, 616 N.Y.S.2d 583, 583-84 (lst Depit 1994) (considering employmentapplication submitted by defendant on motion to dismiss pursuant to CPLR 3211 (a)(7)).

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(ft 18). Plaintiff claims that Peebles "practically echoed" portions of Peebles' memoir concerning

his philosophy that people that work with him "can make much more" than their salaries and his

"goal is to make sure that all of our employees are exposed to great opportunities and that all of

our key executives can become multimillionaires." (Id. at 1119). Peebles supposedly stated that

they "would agree to additional and much more meaningful compensation arrangements" and

this statement was "integral to Newhouse's decision to work with Peebles." (Id. at II 20).

Plaintiff and Peebles agreed that if the relationship developedftivorably they would enter into

"a more complete understanding as the opportunities and economics defined themselves." (Id. at

( 21 (emphasis added)).

Throughout Plaintiff s employment, he provided advice, hired and managed

employees, signed agreements, worked with TPC's lawyers, and attended "important meetings,"

all on behalf of TPC. (Id. atli 3)

In September 2011, Peebles informed Plaintiff that he was being promoted to

Director of Development and Investments. (Id. at If 23). During the same conversation, Peebles

asked Plaintiff to relocate to New York to work on development opportunities. (Id.). Peebles

promised Plaintiff, when the projects matured sufficiently, development and confirmation of

Newhouse's interests in the projects." (Id. (emphasis added)). Upon Plaintiff s relocation to

New York, his salary was increased to $115,000 — an increase of more than 35%. (Id. at I 24).

In New York, Plaintiff focused on Requests for Proposals ("RFPs") solicited by

the City of New York for the development of several properties. (Id. at 11126-28). Included in

these "Civic Center" properties was 346 Broadway. (Id. at 'II 26). Plaintiff claims that, from

January to May 2012, he asked Peebles to fulfill his promise "to formulate and then memorialize

Newhouse's interest in Defendants' projects." (Id. at I 29). Peebles asked Plaintiff to submit a

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proposal, and on june 23, 2012, Plaintiff did so. (id at ¶ 29-30). In addition to other items,

Plaintiff requested:

• a salary increase to $150,000;

• half a percentage of purchase price for each winning civic center property andone percent ownership interest in each winning property.

(Id. at ¶ 30; Ex C, at 2, E-mail Correspondence between Plaintiff and Peebles, dated June 23,

2012 and June 27, 2012).

Peebles responded via e-mail on June 27, 2012 and wrote, "I do have issues with

the concept and fee proposals," adding that Plaintiff s proposals "do not adequately align our

interests." (Complaint i( 31, Ex. C, at 1). Among other potential terms, Peebles discussed

"some of my initial thoughts" and in relevant part, wrote:

We are comfortable with an ownership interest of 5% of ourpromote interest for deals that you are not the procuring cause. . . .For deals in which you are the procuring cause you would receive10% of our promote interest . . . 50% of the ownership interestwould vest at construction loan closing and the balance uponcompletion of the project. You would need to be employed by

TPC [at the] time of each milestone in order to receive theapplicable ownership interest.

(Id.). Peebles declined Plaintiff s request for a salary increase, given that his salary had

increased only seven months earlier. (Id.).

Plaintiff alleges that at the time Peebles "anticipated employing the 'promote'

structure to acquire and develop the 'Civic Center' properties." (Complaint ¶33). In a promote

structure, TPC would "partner with a funding, or equity partner, to obtain most of the capital

necessary to acquire the property." (Id.). The agreement with the equity partner provides for "an

ownership split favoring the more substantial equity partner until that equity investor's capital

investment is repaid" and a "preferred rate" that provides a "return on capital." (Id.) After the

investments are repaid and the preferred rate is paid, the structure changes and TPC receives a

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more favorable percentage of ownership. (Id.). This percentage change is considered TPC's

"promote interest." (Id.). Plaintiff acknowledges that neither he nor Peebles knew whether the

Civic Center properties would utilize a promote structure. (Complaint IT 34).

Plaintiff alleges that he and Peebles met on June 29, 2012 "agreed that Newhouse

would receive 5% of Defendants' interest" and that Peebles would generate a "fully integrated

compensation agreement." (Complaint If 35). In the fall of 2012, Plaintiff s salary was increased

to $150,000 — an increase of almost 25% within one year. (Id).

Beginning in early 2012 and through 2013, Plaintiff worked on the acquisition

and development of 346 Broadway, one of the Civic Center properties. (Id. at III 40-41). On

February 25, 2013, Civic Center Community Group Broadway LLC ("CCGB") entered into a

purchase agreement with the City of New York, without an equity partner. (Id. at If 42-43).

Thereafter, Peebles and Plaintiff sought to identify other entities interested in developing 346

Broadway. (Id at ¶ 43).

Civic Center Community Group Broadway Mezzanine LLC ("CCGB II")

allegedly entered into a preliminary agreement with an entity representing the Elad Group

("Elad") to establish a joint venture. (Id. at ¶ 47). The terms of this joint venture would

allegedly involve CCGB II (i) receiving a credit of $60 million, (ii) receiving reimbursement of

its initial capital investment and expenses, and (iii) the ability for CCGB II to reinvest $33

million (of the $60 million credit) into the joint venture to acquire a 35% interest in it. (Id.).

Plaintiff claims, incorrectly, that he was entitled to 5% of the $60 million credit and the

opportunity to reinvest in Defendants' ownership interest in the joint venture. (Id. at'll'1148-49).

On October 17, 2013, Peebles allegedly asked Plaintiff "what he wanted as

compensation for 346 Broadway." (Id. at If 50). Plaintiff stated that he wanted "the 5% that he

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was promised." (Id.). Peebles allegedly agreed that Newhouse earned the 5%, but indicated that

such a percentage would "likely net Newhouse $5-7 million, an amount Peebles considered a

windfall." (Id.). During conversations soon after, Plaintiff "offered to make some minor

concessions in writing and orally if Peebles would cause his lawyers to generate a fully •

integrated compensation agreement promptly." (Id. at1151). On October 21, 2013, Peebles

allegedly told Plaintiff "that his concessions made the 5% deal acceptable" and that one of TPC's

attorneys would provide a formal agreement. (Id. at1152).

The closing of the 346 Broadway transaction occurred on December 11, 2013 and

the joint venture agreement went into effect on January 2, 2014. (Id. at ¶ 5, 53). Plaintiff

allegedly "continuously followed up" from October through December 2013 regarding the

requested compensation agreement. (Id. at 1152).

On January 9, 2014, Peebles sent Plaintiff a draft Agreement (the "Proposed

Agreement"). (Id. at If 55; Ex. D, E-mail from Peebles to Plaintiff, attaching a draft agreement,

dated January 9, 2014). As to the bonus lanatage related to 346 Broadway, the Proposed

Agreement provided that Plaintiff would be eligible for:

a bonus of Three Hundred Thousand ($300,000) Dollars plus 1%of TPC's Net Profits of up to $100 million and 1.5% of TPC's NetProfits in excess of $100 million. Further in the event TPCreceives its Hotel Holdback payment, NEWHOUSE will beeligible for an additional bonus of One Hundred and FiftyThousand ($150,000) Dollars. . . . Finally, if there is a Developer'sFee then Newhouse will be eligible up to a maximum of 5% of theDeveloper's Fee as defined herein.

(Ex. D, at 1-2). The Proposed Agreement indicated that such payments were within TPC's

discretion and would only be made after TPC received all of its fees and the net profits were

reconciled and calculated. (Id. at 1, 3). However, "[alt the request of NEWHOUSE" TPC

agreed to advance Plaintiff $300,000 against the anticipated bonus for 346 Broadway. (Id. at 3).

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Plaintiff and TPC were unable to come to agreement regarding the proposed

compensation arrangements. (Complaint '1156-58). Ultimately, TPC terminated Plaintiff s

employment on January 21, 2014. (Id. at If 59),

ARGUMENT

I egal Standards

Courts afford plaintiffs favorable inferences when determining the existence of a

cognizable legal theory under Rule 3211 of the CPLR. See Ovilz v. Bloomberg L.P., 18 N.Y.3d

753, 758 (2012). However, it is also "axiomatic that factual allegations which fail to state a

viable cause of action, that consist of bare legal conclusions, or that are inherently incredible or

unequivocally contradicted by documentary evidence, are not entitled to such consideration."

Leder v. Spiegel, 31 A.D.3d 266, 267, 819 N.Y.S.2d 26, 27 (1st Dep't 2006). Plaintiff s eight

causes of action fail to state any legal theories that may survive Defendants' motion to dismiss.

Plaintiff's Breach of Contract Claim Fails

To recover on his claim of breach of contract, Plaintiff must plead (i) a contract

existed, (ii) Plaintiff s performance under the contract, (iii) Defendants' breach of the contract,

and (iv) resulting damages. See US Bank N.A. v. Lieberman 98 A.D.3d 422, 423, 950 N.Y.S.2d

127, 128-29 (1st Dep't 2012). Here, Plaintiff fails to sufficiently allege a claim for breach of

contract in his first cause of action for a multitude of reasons: (i) the alleged agreement to

convey an interest in real property is barred by the Statute of Frauds; (ii) he alleges a classic

agreement to agree in the future, and does not sufficiently allege that a meeting of the minds ever

was achieved; (iii) the language of Plaintiff s Employment Agreement is clear that bonuses are

discretionary; and (iv) even if an oral agreement was permissible and occurred, Defendants did

not breach the oral agreement. Additionally, Peebles cannot be held personally liable for an

alleged breach of contract by TPC.

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A. he Alleged Oral Agreement is Barred by the Statute of Frauds

The supposed oral agreement to provide Plaintiff a percentage of Defendants'

interest in acquired properties is barred by the Statute of Frauds and thus must be dismissed

pursuant to CPLR 3211(a)(5).

Plaintiff asserts that TPC orally agreed "to pay Plaintiff 5% of Defendants'

interest in 346 Broadway" — that is, that the alleged agreement awarded to Plaintiff a 5% interest

in real property. (Complaintil 35, 62). Yet, under New York General Obligations Law § 5-

703(1):

An . . . interest in real property . . . cannot be created, granted,assigned, surrendered or declared, unless by act or operation oflaw, or by a deed or conveyance in writing, subscribed by theperson creating, granting assigning, surrendering or declaring thesame, or by his lawful agent, thereunto authorized by writing.

Gen. Oblig. Law § 5-703(1). Defendants' interest in 346 Broadway — a property purchased for

the purposes of development — constitutes an "interest in real property." See Prnsker v. Kazan,

132 A.D.2d 507, 507, 518 N.Y.S.2d 143, 144 (1st Dep't 1987) (holding that a stock interest

constitutes an interest in real property when the only asset is realty).

Peebles' June 27, 2012 e-mail does not satisfy the writing required by the Statute

of Frauds, as it is clear by Peebles' language that he had no intention of binding TPC to the terms

of the e-mail. Indeed, he described it as "some of my initial thoughts" — clearly implying that

additional considerations might be raised in the future and that the e-mail was merely a starting

point for negotiations. (Ex. C, at 1). Because Plaintiff concedes that the parties never entered

into a "fully integrated compensation agreement," the supposed oral agreement conveying

Defendants' interest in 346 Broadway is barred by the Statute of Frauds.

Finally, it is immaterial that Peebles allegedly promised to generate a formal

writing and failed to do so. (Complaint ¶ 62). An agreement to agree is unenforceable under the

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Statute of Frauds. See La Barca v. Ahenkirch, 193 A.D.2d 586, 586, 597 N.Y.S.2d 158, 159 (2d

Dep't 1993) (rejecting contract claim based on mere negotiations where the parties intended to

enter into a "more complete and formal contract").

B. here Was No Meeting of the Minds and, Therefore, No Contract

Even if Plaintiff s breach of contract claim is not barred by the Statute of Frauds,

it still cannot survive a motion to dismiss. Plaintiff alleges that Defendants breached agreements

to (i) grant Plaintiff 5% of Defendants' interest in 346 Broadway and (ii) generate a formal

writing. (Complaint I 62). However, Plaintiff s allegations and legal precedent demonstrate that

he has no claim for breach of contract.

The discussion upon which Plaintiff relies for his claim to an interest in 346

Broadway occurred in June 2012. (Id. at III 29-31). Plaintiff requested an increased salary and

half a percentage of the purchase price for each winning Civic Center property, of which 346

Broadway would qualify, and 1% of the ownership interest in each property. (Id. at If 30, Ex. C,

at 2). He concedes that Peebles rejected his request and e-mailed "initial thoughts" in response.

(Complaint ¶ 31, Ex. C, at 1 . In relevant part, Peebles offered a counterproposal indicating that

TPC would be "comfortable" with offering Plaintiff 5% of TPC's "promote interest." (Ex. C, at

1). Plaintiff alleges that he spoke with Peebles and they agreed that Plaintiff "would receive 5%

of Defendants' interest" and Peebles would generate "a fully integrated compensation

agreement." (Complaint I 35). But nowhere does Plaintiff allege that he and Peebles agreed

regarding what constitutes "Defendants' interest" or the remaining terms addressed in Peebles'

June 27, 2012 e-mail. Indeed, he concedes that for more than one year following such e-mail

they continued to discuss additional compensation relating to 346 Broadway, including new

concessions made by Plaintiff, and the creation of a "fully integrated compensation agreement."

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(Id. at IfIf 50, 52, 59). The parties would not need a "fully integrated compensation agreement" if

their oral agreement contained all the essential terms of their agreement.

Plaintiff s allegations amount, at best, to a mere agreement to agree at a later time

— an agreement that as a matter of law cannot form the basis for a claim of breach of contract.

"Generally, where the parties anticipate that a signed writing is required, there is no contract

until one is delivered." Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce, 70

A.D.3d 423, 426, 894 N.Y.S.2d 47, 50 (1st Dep't 2010) (finding that even where the parties

executed a written summary of terms and conditions, they were not bound by the agreement

because they contemplated a future finalized agreement). See also Aksman v. Xiongwei Ju, 21

A.D.3d 260, 261-62, 799 N.Y.S.2d 493, 495 (1st Dep't 2005) (reversing lower court decision

and dismissing breach of contract claim because parties only agreed to agree). In a case

presenting similar facts to those alleged here, the First Department dismissed a claim by an

employee that he was orally promised a percentage of fees earned on work he performed. See

Schutt)) v. Speiser Krause P.C., 86 A.D. 3d 484, 485, 928 N.Y.S.2d 4, 6 (1st Dep't 2011). The

court found that the parties were unsuccessful in negotiating the terms of the employment

contract, and the fact that the parties' correspondence contemplated the creation of a new

employment contract established that (i) there was no intent to be bound until there was a signed

written contract and (ii) there was no meeting of the minds on all material terms of the

agreement. See id Throughout the Complaint, Plaintiff repeatedly states that the parties

intended to enter into a "fully integrated compensation agreement." (Complaint'r 2, 35, 51, 54,

65) "[D]efiniteness as to material matters is of the very essence in contract law. Impenetrable

vagueness and uncertainty will not do." Tribune Printing Co. v. 263 Ninth Ave Realty, Inc., 88

A.D.2d 877, 879, 452 N.Y.S.2d 590, 593 (1st Dep't 1982).

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Furthermore, Plaintiff fails to allege consideration on his part. He merely alleges

that he "performed all of his obligations pursuant to his duties" (Complaint I 64), but Plaintiff

was already obliged to perform those duties pursuant to his employment with TPC and he makes

no distinction as to what he was obligated to do differently in connection with the alleged oral

agreement. (Ex. B at 1). Indeed, Plaintiff concedes that when he took on the new role in New

York, the parties had not even discussed the terms of any such arrangement — he first did so on

June 23, 2012, at least seven months later. (Complaint I 23, 29-30). "Neither a promise to do

that which the promisor is already bound to do, nor the performance of an existing legal

obligation constitutes valid consideration." Tierney v. Capricorn Investors, L.P., 189 A.D.2d

629, 631, 592 N.Y.S.2d 700, 703 (1st Dep't 1993) (affirming motion to dismiss a contract claim

where plaintiff failed to allege consideration because he was continuing to perform the same

duties for his employer).

The parties simply never reached agreement regarding the terms of any additional

compensation that might become payable to Newhouse. ,As such, no contract ever existed, and

Plaintiff s claim for breach of contract must therefore be dismissed.

C. efendants Did Not Breach the Alleged Oral Agreement

Even if Plaintiff could rely upon an oral agreement, by the terms of the Complaint

and the documents incorporated therein, he does not assert of a breach of such agreement.

Plaintiff's description of the supposed oral agreement is vague and confusing; however, to assert

that the parties agreed upon the essential terms necessary for an enforceable contract, Plaintiff

must rely upon Peebles' June 27, 2012 e-mail because nowhere else in the Complaint is the

"interest" defined or are the other relevant terms discussed.

Peebles' e-mail, containing his "initial thoughts," indicated that "[w]e are

comfortable with an ownership interest of 5% of our promote interest for deals that you are not

11

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the procuring cause." (Ex. C, at 1). Plaintiff asserts that on June 28, 2012 the parties agreed

that Plaintiff would "receive 5% of Defendants' interest" (Complaint ¶ 35), which, must mean

that Plaintiff agreed to receive 5% of Defendants' promote interest. Indeed, Plaintiff alleges

that at the time Peebles "anticipated employing the 'promote' structure to acqtfire and develop

the 'Civic Center' properties." (Id. at I 33). However, Plaintiff concedes that a promote interest

never arose in connection with 346 Broadway. (Id. at ¶ 42, 47 .

As discussed above, the Complaint explains that in a promote structure TPC

partners with a "funding, or equity partner, to obtain most of the capital necessary to acquire the

property." (Id. at ¶ 33). Such agreement then provides for "an ownership split favoring the more

substantial equity partner until that equity investor's capital investment is repaid" and would

typically provide the equity partner with a preferred rate of return. (Id.). Following the

repayment of the investment and payment of the preferred rate, TPC's ownership split changes

more favorably and this percentage change is considered TPC's "promote interest." (Id.).

Instead of entering into a promote structure, on February 25, 2013, CCGB

executed a purchase agreement with the City of New York for 346 Broadway and did so without

an equity partner. (Id. at 11142). CCGI3 II later entered into a preliminary joint venture

agreement with an Elad-affiliated entity that provided CCGB II with certain cash payments,

reimbursement of expenses, and a 35% interest in the property. (Id. at IT 47). Because no

promote interest arose, Plaintiff cannot assert that Defendants breached the alleged oral

agreement when it declined to pay Plaintiff a percentage of the promote interest.

2 Indeed, otherwise Plaintiff s allegations make no sense. Plaintiff proposed a 0.5% ownershipinterest in the Civic Center properties, but Peebles rejected that proposal and instead offered aportion of TPC's promote. (Ex C, at 2). It is illogical that six days later he would accept aproposal granting a direct 5% interest in the property — fully ten times what Newhouse requested.

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Furthermore, Plaintiff does not — and cannot — allege that he met the vesting

conditions under the June 27, 2012 e-mail: "You would need to be employed with TPC [at the]

time of each milestone in order to receive the applicable ownership interest." (Ex. C at 1).

For all of these reasons, Plaintiff fails to adequately allege a breach of the

supposed oral agreement.

1). eebles Cannot Be Held Personally Liable for Breach of Contract

Even if the breach of contract claim were properly pled, Plaintiff fails to plead

facts upon which Peebles could be held personally liable. "[I]t is well established that officers or

agents of a company are not personally liable on a contract if they do not purport to bind

themselves individually." Georgia Malone & Co. v. Rieder, 86 A.D.3d 406, 408, 926 N.Y.S.2d

494, 496-97 (1st Dep't 2011) (affirming a motion to dismiss and finding no personal liability

where officer entered into the agreement on behalf of his company). Indeed, the general rule "is

that an officer Or director is liable when he acts for his personal, rather than the corporate

interests." Joan Hansen & Co. v. Everlast World's Boxing Headquarters Corp., 296 A.D.2d

103, 110, 744 N.Y.S.2d 384, 390 (1st Dep't 2002) (dismissing claim of personal liability for

breach of contract where plaintiff failed to allege that defendants "sought to obtain a personal

benefit, as opposed to a benefit to the corporation he represented").

The Complaint acknowledges that Peebles is the Chairman and CEO of TPC.

(Complaint ¶ 17). Plaintiff nowhere alleges that any agreement existed between him and

Peebles, rather than him and TPC — indeed, if that were the case then the claim against TPC

would have to be dismissed — or that Peebles intended to be personally bound by any agreement

with Plaintiff. Plaintiff does not allege that Peebles sought a benefit for himself rather than a

benefit to TPC. As is clear in the Employment Agreement, Plaintiff worked for TPC, not

Peebles personally (Ex. B, at 1). Similarly, the June 27, 2012 e-mail from Peebles refers to "our

13KL3 3003178.8


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company" and states that "[y]ou would need to be employed by TPC [at the] time of each

milestone in order to receive the applicable ownership interest." (Ex. C, at 1 .

Because Plaintiff does not allege that Peebles intended to be personally bound by

any agreement with Plaintiff and Peebles was acting in his capacity as Chairman and CEO of

TPC, his breach of contract claim against Peebles should be dismissed.

III. laintiffs Implied and Quasi Contract Claims Also Fail

Given that his claim for breach of contract cannot succeed, Plaintiff asks this

Court to create a contract where none exists, asserting a kitchen sink of baseless and unsupported

quasi contract and implied contract claims. None of these allegations can survive dismissal.

A. laintiffs Implied Contract Claim Must Fail

An implied-in-fact contract requires the same elements as a written contract,

including "consideration, mutual assent, legal capacity, and legal subject matter." Maas V.

Cornell Univ., 94 N.Y.2d 87, 93-94 (1999). Here, the allegations in the Complaint reveal that

there was no mutual assent. As discussed above, it is clear that the parties intended to negotiate a

written agreement that would contain all of the as-yet-unnegotiated terms of a fully integrated

agreement. Plaintiff rejected the Proposed Agreement proffered on January 9, 2014 and now

claims an implied-in-fact contract, but "[a] contract may not be implied in fact from the conduct

of the parties where it appears that they intended to be bound only by a formal written

agreement." Valeniino v. Davis, 270 A.D.2d 635, 638, 703 N.Y.S.2d 609, 612 (3d Dep't 2000)

(dismissing implied-in-fact claim where parties intended that agreement would be formalized in

writing by an attorney).

Moreover, Plaintiff seems to misunderstand the legal construct upon which he

seeks to rely. Implied-in-fact contracts "res[t] upon the conduct of the parties and not their

verbal or written words." Parsa v. Stale, 64 N.Y.2d 143, 148, 485 N.Y.S.2d 27, 29-30 (1984)

14KL3 3003178.8


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(analyzing the difference between implied-in-fact and implied-in-law or quasi contracts). "[A]

contract implied in fact contemplates not assurances or promises but conduct." Zimmer v. Town

of Brookhaven, 247 A.D.2d 109, 114, 678 N.Y.S.2d 377, 381 (2d Dep't 1998) (affirming

dismissal of implied-in-fact contract claim in part because claim was based on assurances that

defendant Town would pay expenses for plaintiff). Plaintiff s claim for breach of implied

contract merely lists "promises" allegedly made by Defendants. (Complaint ¶ 68). Indeed,

Plaintiff uses the term "promise" or "promises" six times as the basis for this claim. (Id.) He

asserts no actual conduct, but seeks to recast words as conduct. 3

In any event, Plaintiff's claim must fail given the existence of an actual express

contract covering the same subject matter as the alleged implied contract. Plaintiff s services

were covered by the valid Employment Agreement (Ex. B), and thus the implied contract claim

is precluded. See Peter Lampack Agency, Inc. v Grimes, 93 A.D.3d 430, 431, 939 N.Y.S.2d 409,

410 (1st Dep't 2012) (dismissing implied contract claim "because there exists an express

contract covering the same subject matter"); A&S Welding & Boiler Repair, Inc. v. Siegel, 93

A.D.2d 712, 712, 460 N.Y.S.2d 582, 582 (1st Dep't 1983) ("A contract cannot be implied in fact

. . . where there is an express contract covering the subject-matter involved; or against the

intention or understanding of the parties.") (internal citation omitted). Because Plaintiff was

duly compensated for the services he performed under the Employment Agreement, the

existence of that agreement bars any claim for breach of an alleged implied contract.

B. laintiff Has Not Adequately Alleged a Breach of theImplied Covenant of Good Faith and Fair Dealing

Plaintiff's third cause of action for breach of the implied covenant of good faith

and fair dealing collapses because (i) he fails to adequately allege the existence of a valid

3 Moreover, these "promises" are merely unenforceable future expectations.

15KL3 3003178.8


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agreement that gives rise to an implied covenant claim; (ii) even if an agreement is found to

exist, he does not allege that Defendants acted in a way that while not forbidden by the alleged

agreement deprived him of his rights under the agreement; and (iii) he merely repeats his breach

of contract claim in asserting the implied covenant allegations. Consequently, this claim cannot

survive a motion to dismiss.

A claim for breach of the implied covenant of good faith and fair dealing may be

pursued only where Plaintiff establishes the existence of a valid and binding contract. See

American-European Art Assocs. v. Trend Galleries, Inc., 227 A.D.2d 170, 171, 641 N.Y.S.2d

835, 836 (1st Dep't 1996) (dismissing claim where there was no valid contract). If a binding

contract exists, then the implied covenant is breached "when a party to a contract acts in a

manner that, although not expressly forbidden by any contractual provision, would deprive the

other party of the right to receive the benefits under their agreement." Jaffe v Paramount

Commc 'ns Inc. , 222 A.D.2d 17, 22-23, 644 N.Y.S.2d 43, 47 (1st Dep't 1996) (upholding

dismissal of claim where plaintiff failed to allege that defendant deprived him of any rights under

their employment agreement).

Here, Plaintiff has no valid contract from which an implied covenant could arise.

His allegations.in support of this claim focus on Defendants' "refusal to negotiate [the Proposed

Agreement] in good faith." (Complaint '1174). Courts will not impute a duty to negotiate the

terms of an agreement without "a clear set of guidelines against which to measure a party's best

efforts." Bernstein v. Felske, 143 A.D.2d 863, 865, 533 N.Y.S.2d 538, 540 (2d Dep't 1988).

Plaintiff cannot allege any such guidelines. See id. (upholding dismissal of claim for breach of

good faith and fair dealing based on a failure to come to a complete agreement that was based on

a vague letter of intent). Plaintiff is left with a claim based merely on the failure to agree, but

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there is no violation of the obligation to negotiate in good faith simply because negotiations

failed. See Mode Contempo, Inc. v Raymours Furniture Co., 80 A.D.3d 464, 465, 915 N.Y.S.2d

528, 529 (1st Dep't 2011) (dismissing claim for implied breach of good faith and fair dealing

because mere failure of negotiation does not state a claim).

Plaintiff's claim also is duplicative of his contract claim, as he simply restates that

Defendants breached the oral agreement. However, when a claim for breach of the implied

covenant of good faith and fair dealing arises from the same facts as the cause of action for

breach of contract and seeks identical damages for each alleged breach, the claim must be

dismissed. See Amcan Holdings, Inc., 70 A.D.3d at 426, 894 N.Y.S.2d at 49-50 (implied

covenant claim "was properly dismissed as duplicative of the breach-of-contract claim, as both

claims arise from the same facts and seek the identical damages for each alleged breach"); Logan

Advisors, LLC v. Patriarch Partners, LLC, 63 A.D.3d 440, 443, 879 N.Y.S.2d 463, 466-67 (1st

Dep't 2009) (upholding dismissal of claim where it was "duplicative of the breach of contract

claim because both claims arise from the same facts"). Consequently, Plaintiff s claim that

Defendants breached an implied covenant of good faith and fair dealing should be dismissed.

C. laintiff Cannot Sustain His Claims Pleaded Under 'Theories ofQuantum Meruit, Unjust Enrichment, and Promissory Estoppel

Plaintiff fails to state claims for quantum meruit, unjust enrichment, and

promissory estoppel because these claims are duplicative of the breach of contract claim. In all

three causes of action, Plaintiff merely alleges that his work benefitted Defendants and therefore

he should receive the same damages he seeks in connection with his claim for breach of contract.

(Complaint 11177-80, 82-84, 86-89). However, an "unjust enrichment claim is not available

where it simply duplicates, or replaces, a conventional contract or tort claim," and "if plaintiffs'

other claims are defective, an unjust enrichment claim cannot remedy the defects." Corsello v.

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Verizon N.Y Inc. 18 N.Y.3d 777, 790-91 (2012). See also Rogowsky v. MCGarry 55 A.D.3d

815, 816-17, 865 N.Y.S.2d 670, 672 (2d Dep't 2008) (dismissing claim for unjust enrichment

because "the underlying basis for these claims was the alleged breach of the oral agreement.").

Because Plaintiff s claims for quantum meruit and unjust enrichment completely mirror his claim

for breach of contract, these causes of action should be dismissed. Moreover, each proposed

claim fails for other, specific reasons described below.

1. laintiff Does Not Properly Allege a Claim for Quantum Meruit

To assert a claim for quantum meruit, Plaintiff must allege "the performance of

services in good faith, acceptance of the services by the person to whom they are rendered, an

expectation of compensation therefor, and the reasonable value of the services." Georgia

Malone & Co., 86 A.D.3d at 410, 926 N.Y.S.2d at 499. Plaintiff claims that he "performed

services for Defendants in the reasonable expectation that he would be compensated for his

work," Defendants "accepted the benefits" of his work, and he therefore is "entitled to recover

the reasonable value of his services for Defendants, to the extent that he has not been

compensated before." (Complaint ¶J 77-79). He also alleges that the compensation he is owed is

identical to that alleged under his breach of contract claim. (Id. at ¶ 80 .

However, "Mecovery in quantum meruit is not warranted when the services

rendered by the plaintiff were required by the terms of an express contract between the parties."

Mary Matthews Inferiors v. Levis, 208 A.D.2d 504, 506, 617 N.Y.S.2d 39,41 (2d Dep't 1994).

In Freedman v. Pearlman, 271 A.D.2d 301, 303-04, 706 N.Y.S.2d 405, 408 (1st Dep't 2000),

plaintiff alleged that he performed work for defendants for a salary and was orally promised

additional fees as well as an interest in a corporation for which plaintiff performed advisory

work. The court affirmed dismissal of this claim:

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Freedman's allegation that he performed services far greater thandefendants deserved for the compensation he actually received arenot sufficient to state a cause of action in quantum meruit wherenone of the services allegedly performed are so distinct from theduties of his employment and of such nature that it would be

unreasonable for the employer to assume that they were renderedwithout expectation of further pay.

Freedman, 271 A.D.2d at 304, 706 N.Y.S.2d at 408 (citation omitted). Similarly, here, Plaintiff

does not allege that he performed services beyond what was required by his employment with

TPC, and his claim thus fails,

Furthermore, Plaintiff knew, by the language of the Employment Agreement, that

any bonus payment made to him would be subject to TPC's discretion. (Ex. B at 1).

Consequently, he cannot claim he had a contractual right to any bonus outside of TPC's

discretion when he acknowledged this fact in writing. See Kaplan v. Capital Co. of Am., 298

A.D.2d 110, 111, 747 N.Y.S.2d 504, 506 (1st Dep't 2002) (quantum meruit claim fails where

plaintiff was aware that bonuses were discretionary). Consequently, even without the barriers

discussed. above, Plaintiff cannot proceed with his claim of quantum meruit.

2. laintiff s Unjust Enrichment Claim Fails

To state a claim for unjust enrichment, Plaintiff must allege that "the defendant

has obtained a benefit which in equity and good conscience should be paid to the plaintiff."

Corsello, 18 N.Y.3d at 790 (citations and internal quotation marks omitted). The Court of

Appeals explained that unjust enrichment "is not a catchall cause of action to be used when

others fail" and is "available only in unusual situations when, though the defendant has not

breached a contract nor committed a recognized tort, circumstances create an equitable

obligation running from the defendant to the plaintiff" Id. (citations omitted). A "typical case"

is when a defendant commits no wrongdoing, but "has received money to which he or she is not

entitled." Id.

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Plaintiff s allegations supporting his claim for unjust enrichment merely recite

that he performed work that benefited Defendants and they were unjustly enriched. (Complaint

IN 82-83). Such a claim does not rise to the "unusual" situation contemplated by the Court of

Appeals in Corsello. Instead, this is a common occurrence where Plaintiff performed his job in

connection with his employment obligations and wanted to be paid more money, even though his

salary rose quickly and exponentially throughout his brief tenure. (Ex. B; Complaint ¶J 24, 35).

Indeed, as with his quantum meruit claim, Plaintiff s unjust enrichment claim is

barred precisely because he performed under, and received compensation pursuant to, a valid

written agreement. See Zolotar v. New York Life Ins. Co., 172 A.D.2d 27, 33, 576 N.Y.S.2d 850,

854 (1st Dep't 1991) (upholding summary judgment dismissing unjust enrichment and quantum

meruit claims where employee had "fully performed under a written contract, whose existence is

undisputed, and whose terms cover the subject matter of the dispute"); Vitale v. Steinberg 307

A.D.2d 107, 111, 764 N.Y.S.2d 236, 239 (1st Dep't 2003) (dismissing unjust enrichment claims

where express contract, a compensation plan, governed the subject matter of plaintiff s claims).

As with his quantum meruit claim, there is no allegation that Plaintiff performed duties outside

of the scope of his regular employment.

3. laintiff s Promissor 7 Esto el Claim Also Fails

Promissory estoppel is "reserved for a limited class of cases based on unusual

circumstances," none of which are present in the instant matter. Tribune Printing Co. v. 263

Ninth Ave. Rea lty, Inc., 88 A.D.2d 877, 879, 452 N.Y.S.2d 590, 593 (1st Dept. 1982). It requires

a "clear and unambiguous promise on which plaintiff reasonably could have relied." Schutty, 86

A.D.3d at 485, 928 N.Y.S.2d at 4. Yet as discussed above, there was no such clear promise. The

term "Defendants' interest" is not defined and there is no allegation concerning Plaintiff s duties

under the alleged promise. The only thing that was clear was the parties' intent to negotiate a

201 1.3 3003178.8


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written, fully integrated agreement — something that never happened. Thus, Plaintiff cannot

demonstrate either the existence of a "clear and unambiguous promise" or reasonable reliance on

any such promise.

Moreover, to make a claim for promissory estoppel, Plaintiff must allege some

"prejudicial change in his position." Tierney, 189 A.D.2d at 632, 592 N.Y.S.2d at 704. Plaintiff

pleads only that he "relocated, worked diligently and otherwise performed services on

Defendants' behalf." (Complaint ¶ 87). However, the alleged oral promise concerning the

percentage interest he would earn from Defendants' activities did not occur until seven months

oiler he relocated to New York, and thus he clearly did not relocate in reliance on any such

promise. (Id. at '11123, 35). In fact, Plaintiff s supposed reliance consisted of him merely

continuing to do his job — he flatly fails to allege a prejudicial change in position. See Tierney

189 A.D.2d at 632, 592 N.Y.S.2d at 703-04 (noting that continuing to do one's job and earning a

salary cannot support a claim for promissory estoppel); Tsabbar v. Auld, 289 A.D.2d 115, 115,

735 N.Y.S.2d 31, 32 (1st Dep't 2001) (to support a claim for promissory estoppel, performance

must be "unequivocally referable to the alleged oral agreement")

Finally, Plaintiff s promissory estoppel claim cannot avoid the Statute of Frauds

unless he demonstrates that it would be "unconscionable to deny" the oral promise upon which

allegedly relied. See Ginsberg v. Fairfield-Noble Corp., 81 A.D.2d 318, 320-21, 440 N.Y.S.2d

222, 224-25 (1st Dep't 1981) (barring contract claim due to Statute of Frauds and finding that

plaintiff s decision to forego other employment based upon alleged oral promises did not rise to

the level of unconscionability necessary to overcome the Statute of Frauds). To circumvent the

Statute of Frauds, Plaintiff must allege that his "rights under the previous situation, or missed

opportunity, were so valuable that injury of Unconscionable proportions would flow from the

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failure to enforce the oral contract." Cunnison v. Richardson Greenshields Sec., Inc., 107

A.D.2d 50, 53, 485 N.Y.S.2d 272, 276 (1985). Yet, Plaintiff's alleged reliance is solely focused

on his relocation and continued work for TPC. (Complaint at 1187). Neither fact even

approaches the level of injury required to avoid the Statute of Frauds. "[I]t has been consistently

held that a change of job or residence, by itself, is not sufficient to trigger invocation of the

promissory estoppel doctrine." Cunnison, 107 A.D.2d at 53, 485 N.Y.S.2d at 276 (explaining

that the decisions based on "rosy promises" do "not put the stigma of unconscionability upon the

defendants' right to assert the Statute of Frauds.").

D. eebles Cannot Be Personally Liable forPlaintiff's Alleged Implied or Quasi Contract Claims

As discussed above with respect to Plaintiff s breach of contract claim, Peebles

cannot be held personally liable for any alleged breach of an implied or quasi contract. Plaintiff

does not allege that Peebles acted in his individual capacity, rather than as CEO of TPC, when he

directed Plaintiff to perform certain duties. Indeed, Plaintiff was employed by TPC and at all

times performed services for TPC alone. Similarly, Plaintiff does not allege that Peebles made

any promises to Plaintiff in his personal capacity, such as promising to pay Plaintiff out of his

own pocket. Consequently, Peebles cannot be held liable for Plaintiff's causes of action

sounding in implied contract, the covenant of good faith and fair dealing, quantum meruit, unjust

enrichment, or promissory estoppel. See Waldman v. Englishiown Sportswear, Ltd., 92 A.D.2d

833, 836-37, 460 N.Y.S.2d 552, 556-57 (1st Dep't 1983) (dismissing quantum meruit and unjust

enrichment claims in employment case where at all times the individual defendants were acting

on behalf of the corporate defendant in their capacity as officers of corporation); Rosenberg v.

Home Box Office Inc. 33 A.D.3d 550, 550, 822 N.Y.S.2d 921, 921 (1st Dep't 2006) (affirming

dismissal of a claim for promissory estoppel because plaintiff failed to plead a promise of a

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personal action by the individual defendant); Oladokun v. Ryan, No. 06 cv 2330 (KMW), 2011

WL 4471882, at *13 (S.D.N.Y. Sept. 27, 2011) (applying New York law and dismissing a breach

of implied contract claim against an individual defendant because implied contract was between

employee and employer).

IV laintiff s Labor Law Claim Should Be Dismissed

Plaintiff's seventh cause of action fails as a matter of law because Plaintiff does

not allege a substantive violation of the Labor Law. Labor Law § 198 sets forth the remedies

available for a breach of the Labor Law but contains no substantive provisions:

In any action instituted upon a wage claim by an employee . . . inwhich the employee prevails, the court shall allow such employeereasonable attorney's fees and, upon a finding that the employer'sfailure to pay the wage required by this article was willful, anadditional amount as liquidated damages equal to twenty-fivepercent of the total amount of the wages found to be due.

N.Y. Labor Law § 198(1-a).

The Court of Appeals has made clear that the remedies provided by Section 198

are available only in actions brought under the substantive provisions of Labor Law Article 6 and

are not available to individuals seeking recovery only under other theories, such as breach of

contract. See Gottlieb v. Kenneth D. Laub & Co., 82 N.Y.2d 457, 463 (1993). Plaintiff merely

states that "the foregoing causes of action constitute wage claims as the Labor Law defines the

term." (Complaint 1193). He nowhere alleges how or why Plaintiff s claims are based upon

substantive violations of the Labor Law or which provisions of the Labor Law Defendants

supposedly violated.

In Gottlieb, the Court of Appeals rejected the plaintiff s argument that Section

198 of the Labor Law should apply to his common law contract claim, finding that the statute

applies only to claims brought for violations of the Labor Law: "[T]he remedies provided in

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section 198 were intended to be limited to claims based upon substantive violations of the

article." Gottlieb, at 463. See also Scheer v. Kahn, 221 A.D.2d 515, 517, 634 N.Y.S.2d 148,

151 (2d Dep't 1995) (dismissing Section 198 claim because "the only causes of action based on

the Labor Law are for costs, attorney's fees, and liquidated damages which do not come under

the substantive provisions of Labor Law § 198(1-a)"). Because the Complaint does not include a

claim for a substantive violation of the Labor Law, this claim for remedies under Section 198

should be dismissed.

V. laintiff Fails to Adequately Allege the Existence of a FiduciaryRelationship, Thus His Claim for Breach of Fiduciary Duty Fails

Plaintiff's eighth cause, for breach of fiduciary duty, fails because no fiduciary

relationship existed between the parties. A claim for breach of fiduciary duty requires the

existence of a fiduciary relationship. See Batas v. Prudential Ins. Co. of Am., 281 A.D.2d 260,

264, 724 N.Y.S.2d 3, 7 (1st Dep't 2001) (no fiduciary duty arose between contracting parties).

Indeed, lilt is well settled in New York that no fiduciary obligation is owed by an employer to

an at-will employee."Weintraub v. Phillips, Nizer, Benjamin, Krim, & Ballon,

172 A.D.2d 254,

254, 568 N.Y.S.2d 84, 85 (1st Dep't 1991) (upholding dismissal of claim for breach of 'fiduciary

duty because an employer does not owe an employee a fiduciary obligation). See also Vitale

307 A.D.2d at 108, 764 N.Y.S.2d at 237 ("An employer-employee relationship providing for the

division of profits will not give rise to a fiduciary obligation on the part of the employer absent

an agreement to also share losses."). While Plaintiff asserts that Defendants caused him to

repose trust in them, and thereby somehow became his fiduciaries, his allegations support only

that he was an employee working closely with Peebles, Peebles expressed hopes for the future

such as "we're going to make a fortune together," Peebles respected Plaintiff s views, and they

had a personal relationship. (Complaint 1198). None of these allegations are sufficient to elevate

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Plaintiff s relationship with Defendants' from that of employer and employee, and supervisor

and subordinate, to that rare type of relationship that gives rise to fiduciary obligations. See

Eden v. St. Luke's-Roosevelt Hosp. Ctr., 96 A.D.3d 614, 615, 947 N.Y.S.2d 457, 459 (1st Dep't

2012) ("Neither an agreement by an employer to share profits with an employee as compensation

for the latter's services nor a contract of mere hiring and providing for compensation in a

particular manner supposedly tending to induce greater energy and faithfulness on the part of the

employee creates a fiduciary relationship between the employer and employee.").

CONCLUSION

For the foregoing reasons, Defendants respectfully request that the Court

(i) dismiss the Complaint in its entirety, with prejudice and without leave to amend, pursuant to

CPLR 3211(a)(1), 3211(a)(5), and 3211(a)(7); and (ii) grant such other relief as the Court may

deem just and proper.

Dated: New York, New YorkFebruary 17, 2015

KRAMER LEVIN NAFTALIS & FRANKEL LLP

By:Robert N. HoltzmanKatrina L. Baker

1177 Avenue of the AmericasNew York, New York 10036(212) 715-9100RHoltzman a kramerlevin.comKBaker a kramerlevin.com

Attorneysfor DefendantsR. Donahue Peebles andThe Peebles Corporation

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Daniel Newhouse v. Roy ("Don") Peebles - Motion to Dismiss

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