N.Y.Sup.,2010.
Coco Investments, LLC v. Zamir Manager River Terrace, LLC
Slip Copy, 26 Misc.3d 1231(A), 2010 WL 761237 (N.Y.Sup.), 2010 N.Y. Slip Op. 50332(U)
Hogan & Hartson LLP, Baltimore (Lauren S. Colton of counsel), for Coco Investments, LLC, Leonid Redensky and
3212 [b] ). “The proponent of a summary judgment motion must make a prima facie showing of entitlement to
judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case” (
The LLC Agreement provides that “the rights and obligations of the parties under this Agreement shall be governed
by … law of the State of Delaware” (affidavit of Asher Zamir [Apr. 4, 2008], exhibit A [LLC Agreement] § 10.13
[Applicable Law] ). For a breach of contract claim, “the plaintiff must demonstrate: first, the existence of the con-
tract, whether express or implied; second, the breach of an obligation imposed by that contract; and third, the result-
“The Manager shall be under a fiduciary duty to conduct the affairs of the Company in the best interests of the
Company and the Members, including the safekeeping and use of all assets for the exclusive benefit of the Com-
pany and the Managers shall not employ such funds or assets in any manner except for the exclusive benefit of the
Company.”
charge and/or at greatly reduced rates, and went as far as to waive utilities for many of these tenants (affidavit of Ira
D. Cohen [June 6, 2008] ¶ ¶ 57-60, exhibit 8). Defendants have also made large charitable contributions to numer-
ous charities under the name of the Company, and have charged to the Company unexplainable expenses. For exam-
ple, defendants donated $25,000 to the Central Park Conservancy on October 4, 2007. (Id. ¶ 61, exhibit 9.) As the
project is not located near Central Park, it is unclear how a donation using company assets benefits the project or its
kers, their efforts to sell the space, the bid received, etc. Thus, whether defendants acted in the Company’s best inter-
ests or engaged in self-dealing is an issue of fact for trial.
“Conduct by an entity that occupies a fiduciary position ... may form the basis of both a contract and a breach of
fiduciary duty claim” ( RJ Assoc., Inc. v. Health Payors’ Org. Ltd. Partnership, HPA, Inc., 1999 WL 550350, *10,
A fraud claim should be dismissed as redundant when it merely restates a breach of contract claim, i.e., “where it
alleges that a defendant did not intend to perform a contract with a plaintiff when he made it” ( Gordon v. Dino De
claim” ( First Bank of the Ams. v. Motor Car Funding, Inc ., 257 A.D.2d 287, 291–292 [1st Dept 1999] ). Unlike a
misrepresentation of future intent to perform, “a [mis]representation of present fact … collateral to, but which was
the inducement for the contract[,]” is not duplicative of the breach of contract claim ( Deerfield Communications
Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954, 956 [1986] ).
less communications technology, which plaintiff would not have otherwise done, and defendants never intended to
meet contractual obligations, did not sufficiently state a fraud claim] ); see also Tristate Courier & Carriage, Inc. v.
Berryman, 2004 WL 835886, *11, 2004 Del Ch LEXIS 43, *44-46 [Del Ch 2004] [dismissing fraud claim where
plaintiff alleged that defendant executed agreement when he had no intention of abiding by non-competition cove-
nant contained in agreement] ). “Couching an alleged failure to comply with the [LLC] Agreement as a failure to
tiff alleged that defendants fraudulently induced him to enter into LLC agreement by misrepresenting their experi-
ence and likely success of endeavor in which he was investing] ). “Even drawing all reasonable inferences in favor
of plaintiff, poor performance in one venture and better results in a later venture does not reasonably imply that de–
fendants made false representations about their experience” ( id., 2004 WL 2694916, *3, 2004 Del Ch LEXIS 151,
*10). “Predictions about the future cannot give rise to actionable common law fraud. Nor can expressions of opin-
disclaimer provisions regarding the speculative and risky nature of their investment. The Subscription Agreement
provides that nobody from the Company has “expressly or implicitly represented” to plaintiffs that “past perfor-
mance or experience” of the Company’s representatives “in any way indicates predictable results” (affidavit of Asher
Zamir [Apr. 4, 2008], exhibit B [Subscription Agreement] § 5[i] [No Representations By Company] ). It further
states that plaintiffs acknowledge their investment is “speculative” which “involves a substantial degree of risk of
3212 [b] ). “The proponent of a summary judgment motion must make a prima facie showing of entitlement to
judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case” (
The LLC Agreement provides that “the rights and obligations of the parties under this Agreement shall be governed
by … law of the State of Delaware” (affidavit of Asher Zamir [Apr. 4, 2008], exhibit A [LLC Agreement] § 10.13
[Applicable Law] ). For a breach of contract claim, “the plaintiff must demonstrate: first, the existence of the con-
tract, whether express or implied; second, the breach of an obligation imposed by that contract; and third, the result-
“The Manager shall be under a fiduciary duty to conduct the affairs of the Company in the best interests of the
Company and the Members, including the safekeeping and use of all assets for the exclusive benefit of the Com-
pany and the Managers shall not employ such funds or assets in any manner except for the exclusive benefit of the
Company.”
charge and/or at greatly reduced rates, and went as far as to waive utilities for many of these tenants (affidavit of Ira
D. Cohen [June 6, 2008] ¶ ¶ 57-60, exhibit 8). Defendants have also made large charitable contributions to numer-
ous charities under the name of the Company, and have charged to the Company unexplainable expenses. For exam-
ple, defendants donated $25,000 to the Central Park Conservancy on October 4, 2007. (Id. ¶ 61, exhibit 9.) As the
project is not located near Central Park, it is unclear how a donation using company assets benefits the project or its
kers, their efforts to sell the space, the bid received, etc. Thus, whether defendants acted in the Company’s best inter-
ests or engaged in self-dealing is an issue of fact for trial.
“Conduct by an entity that occupies a fiduciary position ... may form the basis of both a contract and a breach of
fiduciary duty claim” ( RJ Assoc., Inc. v. Health Payors’ Org. Ltd. Partnership, HPA, Inc., 1999 WL 550350, *10,
A fraud claim should be dismissed as redundant when it merely restates a breach of contract claim, i.e., “where it
alleges that a defendant did not intend to perform a contract with a plaintiff when he made it” ( Gordon v. Dino De
claim” ( First Bank of the Ams. v. Motor Car Funding, Inc ., 257 A.D.2d 287, 291–292 [1st Dept 1999] ). Unlike a
misrepresentation of future intent to perform, “a [mis]representation of present fact … collateral to, but which was
the inducement for the contract[,]” is not duplicative of the breach of contract claim ( Deerfield Communications
Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954, 956 [1986] ).
less communications technology, which plaintiff would not have otherwise done, and defendants never intended to
meet contractual obligations, did not sufficiently state a fraud claim] ); see also Tristate Courier & Carriage, Inc. v.
Berryman, 2004 WL 835886, *11, 2004 Del Ch LEXIS 43, *44-46 [Del Ch 2004] [dismissing fraud claim where
plaintiff alleged that defendant executed agreement when he had no intention of abiding by non-competition cove-
nant contained in agreement] ). “Couching an alleged failure to comply with the [LLC] Agreement as a failure to
tiff alleged that defendants fraudulently induced him to enter into LLC agreement by misrepresenting their experi-
ence and likely success of endeavor in which he was investing] ). “Even drawing all reasonable inferences in favor
of plaintiff, poor performance in one venture and better results in a later venture does not reasonably imply that de–
fendants made false representations about their experience” ( id., 2004 WL 2694916, *3, 2004 Del Ch LEXIS 151,
*10). “Predictions about the future cannot give rise to actionable common law fraud. Nor can expressions of opin-
disclaimer provisions regarding the speculative and risky nature of their investment. The Subscription Agreement
provides that nobody from the Company has “expressly or implicitly represented” to plaintiffs that “past perfor-
mance or experience” of the Company’s representatives “in any way indicates predictable results” (affidavit of Asher
Zamir [Apr. 4, 2008], exhibit B [Subscription Agreement] § 5[i] [No Representations By Company] ). It further
states that plaintiffs acknowledge their investment is “speculative” which “involves a substantial degree of risk of