BEAST INVESTMENTS LLC v. Jimmy Donaldson, Third-Party Defendant-Respondent. (2025)

Order, Supreme Court, New York County (Jennifer Schecter, J.), entered May 30, 2024, which, to the extent appealed from as limited by the briefs, granted the motion of counterclaim defendant Beast Investments, LLC and third-party defendant Jimmy Donaldson to dismiss Virtual Dining Concepts, LLC (VDC), Celebrity Virtual Dining, LLC (CVD), and Virtual Dining Operations, LLC's (together, Virtual Dining) counterclaims for breach of the implied covenant of good faith and fair dealing (third counterclaim), tortious interference with contract (fifth counterclaim), and tortious interference with prospective business advantage (sixth counterclaim), unanimously affirmed, with costs.

Supreme Court correctly granted the motion to dismiss the fifth counterclaim.  For Virtual Dining to succeed on its counterclaim for tortious interference with contract, it must show a breach of contract (see NBT Bancorp v. Fleet/Norstar Fin. Group, 87 N.Y.2d 614, 620–621, 641 N.Y.S.2d 581, 664 N.E.2d 492 [1996]).  Here, however, Virtual Dining fails to make any such allegations that nonparty Social Supply Co. breached its agreement with CVD to supply marketing services.  Thus, so much of the fifth counterclaim as alleges that Donaldson tortiously interfered with that contract was properly dismissed (see e.g. Lama Holding Co. v. Smith Barney, 88 N.Y.2d 413, 425, 646 N.Y.S.2d 76, 668 N.E.2d 1370 [1996];  Williams v. Citigroup, Inc., 104 A.D.3d 521, 522, 962 N.Y.S.2d 96 [1st Dept 2013]).

Nor can the counterclaim for tortious interference with contract against Donaldson be based on the allegations that Beast Investments breached the letter agreement with VDC. “[O]nly a stranger to a contract ․ can be liable for tortious interference with a contract” (Koret, Inc. v. Christian Dior, S.A., 161 A.D.2d 156, 157, 554 N.Y.S.2d 867 [1st Dept. 1990], lv denied 76 N.Y.2d 714, 564 N.Y.S.2d 718, 565 N.E.2d 1269 [1990]).  Virtual Dining alleges that Beast Investments is Donaldson's alter ego.  Thus, he is not a stranger to the letter agreement.

In addition, the tortious interference with contract counterclaim is duplicative of the counterclaim for breach of the Endorsement and Services Agreement (see e.g. Allerand, LLC v. 233 E. 18th St. Co., L.L.C., 19 A.D.3d 275, 277–278, 798 N.Y.S.2d 399 [1st Dept. 2005]).

The sixth counterclaim for tortious interference with prospective business advantage was also correctly dismissed because such a claim requires either that Donaldson's conduct amounted to a crime or an independent tort, or that he acted with the sole purpose of malice (see 534 E. 11th St. Hous. Dev. Fund Corp. v. Hendrick, 90 A.D.3d 541, 542, 935 N.Y.S.2d 23 [1st Dept. 2011];  see also Carvel Corp. v. Noonan, 3 N.Y.3d 182, 190, 785 N.Y.S.2d 359, 818 N.E.2d 1100 [2004]).  Virtual Dining does not allege that Donaldson committed a crime.  Nor did he commit the tort of defamation, as his tweets were opinions (see Silverman v. Clark, 35 A.D.3d 1, 16, 822 N.Y.S.2d 9 [1st Dept. 2006]).  Virtual Dining also does not allege that Donaldson acted “for the sole purpose of inflicting intentional harm on” it (Carvel Corp., 3 N.Y.3d at 190, 785 N.Y.S.2d 359, 818 N.E.2d 1100).  Rather, it alleges, “in an effort to pressure Virtual Dining into transferring to him part of [its] interests in MrBeast Burger, Donaldson bullied Virtual Dining on social media.”

Furthermore, the court correctly dismissed the third counterclaim for breach of the implied covenant of good faith and fair dealing as duplicative of the contract counterclaims (see e.g. MBIA Ins. Corp. v. Merrill Lynch, 81 A.D.3d 419, 419–420, 916 N.Y.S.2d 54 [1st Dept. 2011]).