CEDAR CAPITAL MANAGEMENT GROUP INC v. [And a Third-Party Action]. (2025)

Orders, Supreme Court, New York County (Robert R. Reed, J.), entered on or about August 9, 2023, which, to the extent appealed from as limited by the briefs, granted in part defendants’ motions to dismiss the complaint (motion seqs. # 12, 13, and 14) to the extent of dismissing the complaint in its entirety as against defendant Tom Kent (motion seq. 12);  dismissing the complaint in its entirety against defendants Brian Lillie, Tracy Lillie, EHG Equities Ltd., Lilliham Holdings Limited, eCreative Group Inc, and Three Wide Media;  dismissing the claims sounding in fraud, conspiracy to commit fraud, aiding and abetting fraud (the first through the eleventh causes of action) and unjust enrichment (the twenty-sixth causes of action) as against defendants Enterprise Holdings Group, Ltd., Enterprise Holdings Group LLC, and EHG Capital Management Ltd. (together, the Enterprise defendants) (motion seq. 13);  and dismissing the complaint in its entirety as against defendant Tim Carr (motion seq. 14), unanimously affirmed, without costs.

Supreme Court properly dismissed the breach of contract claims against Brian Lillie, Tracy Lillie, Lilliham Holdings Limited, eCreative Group Inc, and Three Wide Media, as only the Enterprise defendants are parties to the relevant contracts (see Highland Crusader Offshore Partners, L.P. v. Targeted Delivery Technologies Holdings, Ltd., 184 A.D.3d 116, 121, 124 N.Y.S.3d 346 [1st Dept. 2020]).  With respect to the defendants against whom the claims were dismissed, plaintiffs cannot rest their breach of contract claim on an alter ego theory of liability, as they have not alleged particularized facts that warrant piercing the corporate veil of those defendants (see Andejo Corp. v. South St. Seaport Ltd. Partnership, 40 A.D.3d 407, 407, 836 N.Y.S.2d 571 [1st Dept. 2007];  see also Skanska USA Building Inc. v. Atlantic Yards B2 Owner, LLC, 146 A.D.3d 1, 12, 40 N.Y.S.3d 46 [1st Dept. 2016]), and a “simple breach of contract, without more, is not a fraud or wrong that would warrant piercing the corporate veil” (Skanska USA Building, Inc., 146 A.D.3d at 12, 40 N.Y.S.3d 46).

Supreme Court also properly dismissed the fraud-based claims against all defendants.  The sparse allegations of material misrepresentations, which are focused on a characterization of the purported investments being a “scam” rather than a legitimate investment opportunity, were not sufficiently particular to allege fraud (CPLR 3016[b];  see Orange Orch. Props. LLC v. Gentry Unlimited, Inc., 191 A.D.3d 609, 609, 139 N.Y.S.3d 528 [1st Dept. 2012]).  In addition, the allegations underlying the fraud causes of action state only that defendants made general promises to meet payment obligations.  Thus, the fraud claims allege nothing more than an insincere promise to perform under a contract (see e.g. Springut Law PC v. Rates Tech. Inc., 157 A.D.3d 645, 646, 70 N.Y.S.3d 14 [1st Dept. 2018]; ID Beauty S.A.S. v. Coty Inc. Headquarters, 164 A.D.3d 1186, 1186, 84 N.Y.S.3d 449 [1st Dept. 2018]).  Indeed, the fraud claims seek damages identical to those recoverable for breach of contract (see e.g. Cronos Group Ltd. v. XComIP, LLC, 156 A.D.3d 54, 63–64, 64 N.Y.S.3d 180 [1st Dept. 2017]).

Given the plaintiffs’ failure to properly allege a cause of action for the underlying fraud, Supreme Court properly dismissed the conspiracy to commit fraud and aiding and abetting fraud claims (see e.g. Abacus Fed. Sav. Bank. v. Lim, 75 A.D.3d 472, 474, 905 N.Y.S.2d 585 [1st Dept. 2010];  Simon v. FrancInvest, S.A., 192 A.D.3d 565, 569, 146 N.Y.S.3d 9 [1st Dept. 2021]).  The unjust enrichment claim was also properly dismissed because neither party disputes that there are several contracts governing the underlying subject matter (see Allenby LLC v. Credit Suisse, AG, 134 A.D.3d 577, 579, 25 N.Y.S.3d 1 [1st Dept. 2015]).

We have considered plaintiffs’ remaining contentions and find them unavailing.