AMBASE CORPORATION v. 111 LLC (2021)

Order, Supreme Court, New York County (Eileen Bransten, J.), entered on or about January 29, 2018, which, to the extent appealed from as limited by the briefs, granted defendants' motion to dismiss so much of the cause of action for a declaratory judgment and the second cause of action for breach of contract as is based on alleged violations of sections 2.8(a)(2) and (3) by nominal defendant 111 West 57th Partners LLC's (the Company) Amended and Restated Limited Liability Company Agreement (Agreement), unanimously affirmed, with costs.

The Second Amended Complaint (SAC) alleges that defendant 111 West 57th Sponsor LLC (Sponsor) “relied on financing” from undisclosed third parties to fund its capital and shortfall contributions to the Company, in violation of section 2.8(a)(2) of the Agreement.  However, it contains no factual allegations that Sponsor “financed” such contributions through any equity arrangements proscribed by section 2.8(a)(2).  Thus, it fails to state a cause of action for breach of contract based on a violation of that section.

Relatedly, the SAC alleges that Sponsor failed to disclose a change to its investors as a result of this funding, as required by section 2.8(a)(3) of the Agreement.  Even accepting this allegation as true, the SAC does not allege any resulting damages, and therefore fails to state a cause of action for breach of contract based on a violation of that section (VLIW Tech., LLC v. Hewlett–Packard Co., 840 A.2d 606, 612 [Del. 2003]).  Plaintiff 111 West 57th Investment LLC's equity in the Company was diluted by Sponsor's capital and shortfall contributions to the Company, which the SAC fails to allege adequately were improperly financed by third parties, not by a failure to disclose any change to investors allegedly resulting from the financing.

The claim for a declaratory judgment was duplicative of the breach of contract claim (see Wells Fargo Bank, N.A. v. GSRE II, Ltd., 92 A.D.3d 535, 536, 939 N.Y.S.2d 348 [1st Dept. 2012]).