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

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1 SHORT FORM ORDER Present: ADVO, INC., SUPREME COURT HON. KENNETH A. DA VIS. against- STATE OF NEW YORK Justice TRIAL/lAS, PART NASSAU COUNTY Plaintiff SUBMISSION DATE: 07/11/06 INDEX No. : 15107/05 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, 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 ADVO' s lists. ADVO places incorrect addresses, " seed addresses

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 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 to defendant Rosencrans that stated, " This 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 , " Including CDS Processing, Thank you, Andy Dunhill, :24 and faxed it to defendant Rosencrans. In plaintiff' s memorandum of law, plaintiff alleges Page 2

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, (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, Defendants did not respond by October 13, 2005, as required. The instant motion was filed on October 24, 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. As to the claims against Matt Rosencrans in his personal Page 3

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 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 sources. Defendant claims in his affidavit that he never knew of Page

5 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 granted. New York' s General Business Law ~ 349 declares that Page 5

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 injunction will not issue. Neos v. Lacev, 291 A. 2d 434 (2d Dept. Page 6

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 ~ 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 New York General Business Law ~ 349, tortious interference with contract, and inj uncti ve relief. This decision constitutes the order of the court. Dated: AUG Page 7