ROSSI MARKETING GROUP INC v. THE MALIN GROUP INC THE NICHE COLLECTIVE INC (2026)

Bailey Duquette P.C., New York (David I. Greenberger of counsel), for appellant-respondents.

Manteau Downes LLP, New York (Marie–Sophie Revault of counsel), for respondents-appellants.

Order, Supreme Court, New York County (Arthur F. Engoron, J.), entered on or about March 10, 2025, which granted so much of the motions of defendant Ciaran McGuigan and defendants The Malin Group, Inc., The Malin Soho LLC, The Malin Williamsburg LLC, The Malin West Village LLC, The Malin Park Ave South LLC, The Malin Nashville LLC, The Malin South Gulch LLC, The Malin East Austin LLC, and The Malin Savannah LLC (collectively, the Malin defendants) as sought to dismiss the causes of action for aiding and abetting breach of fiduciary duty (as against the Malin defendants), unfair competition (as against all defendants), misappropriation of skills and expenditures (as against McGuigan), misappropriation of ideas (as against McGuigan), unjust enrichment (as against all defendants), and promissory estoppel (as against McGuigan), and denied so much of the motion as sought to dismiss the causes of action against McGuigan for fraud, breach of fiduciary duty, and breach of contract, unanimously modified, on the law, to deny the motion as to the causes of action for unfair competition and misappropriation of ideas, and those causes of action reinstated, and otherwise affirmed, without costs.

Plaintiff Robert Rossi and his wholly owned company, plaintiff Rossi Marketing Group, Inc. (Marketing), in their respective capacities as a cofounder and a shareholder of nominal defendant The Niche Collective, Inc., allege that McGuigan and his affiliate companies the Malin defendants induced plaintiffs' participation in launching The Niche, and then stole Rossi's business ideas and contacts, as well as The Niche's logo, marketing materials, and interior design plans for the purpose of secretly developing and launching a competing enterprise called The Malin.  According to plaintiffs, McGuigan, the owner of an upscale furniture company, approached Rossi, a hospitality entrepreneur, about converting McGuigan's showroom into a premium coworking space.  Rossi then proposed the idea of working with hotels to create coworking spaces in upscale locations offering additional amenities.  The parties decided to pursue the venture together, with plaintiffs contributing their industry expertise and relationships in the hospitality market to identify locations and McGuigan providing capital and furniture.

In March 2018, Rossi identified available space at the William Vale Hotel in Brooklyn, leading to meetings with the hotel, the creation of a full-scale model for the location, and a photoshoot to generate marketing materials.  On June 12, 2018, nonparty Fettle Design Ltd. submitted an interior design proposal for the project's furniture layout.  The parties also explored opportunities in Nashville, Tennessee, including discussions with the Fairlane Hotel.

On July 18, 2018, Rossi, McGuigan, and nonparty Richard Langthorne incorporated The Niche under Delaware law.  All three served on its board of directors, with Rossi as treasurer, McGuigan as president, and Langthorne as secretary.  Marketing and McGuigan each held a 44% ownership interest in The Niche, while Langthorne held the remaining 12% interest.  On September 27, 2018, nonparty Base Design S.P.R.L. submitted a proposal for The Niche's branding, including its logo.  According to plaintiffs, the parties' development efforts continued through 2019, and included meeting with a public relations firm regarding a potential engagement, securing the domain name www.theniche.com, developing content for the website, entering into a three-month consulting agreement with nonparty Hawke Media LLC, and engaging a consultant to prepare financial projections for the business.

On October 29, 2019, unbeknownst to plaintiffs, McGuigan incorporated defendant The Malin Group, Inc., the Malin defendants' holding company, which eventually operated under the name The Malin.  From November 2019 until March 2020, there were active discussions between Rossi and McGuigan about The Niche wherein McGuigan, through both emails and texts, purportedly concealed the dissolution of The Niche or the incorporation of The Malin Group, Inc.

McGuigan continued working on The Niche's launch into early 2020, engaging in negotiations with the William Vale Hotel and finalizing that location's layout.  However, in Spring 2020, the launch was delayed due to financial constraints experienced by McGuigan's furniture store because of the COVID–19 pandemic.  Even though the launch was postponed, Rossi and McGuigan continued their discussion with the William Vale Hotel.  Eventually, however, McGuigan's communications stopped.

On November 1, 2021, defendants opened their first Malin location in Soho, allegedly based on The Niche's business concept.  On June 23, 2022, Rossi discovered defendants' business and later learned that the Malin defendants had three locations in New York, including the William Vale Hotel and a location in Nashville, Tennessee, with two additional locations projected to open in New York.

Rossi alleges that the design, appearance, and aesthetics used on The Malin's website were nearly identical to the ones used on The Niche's website, to the extent of using the material provided to The Niche by Hawke Media and Fettle Design.  According to plaintiffs, the same agencies and design firms utilized by The Niche were engaged by defendants.  Also, according to plaintiffs, during the time The Malin launched its operations, McGuigan remained a director and officer of The Niche, as he never resigned from those roles.

On June 14, 2024, plaintiffs commenced this action, with Marketing asserting, in relevant part, causes of actions for:  (1) breach of fiduciary duty (against McGuigan);  (2) aiding and abetting breach of fiduciary duty (against the Malin defendants);  (3) unfair competition (against all defendants);  (4) unjust enrichment (against all defendants);  and (5) breach of contract (against McGuigan);  and Rossi and Marketing asserting claims against McGuigan for (6) fraud;  (7) misappropriation of ideas;  (8) misappropriation of skills and expenditures;  and (9) promissory estoppel.  Defendants moved to dismiss the complaint.

As a threshold matter, Delaware law governs Marketing's causes of action for fraud, breach of fiduciary duty, aiding and abetting that breach, and breach of contract to the extent the causes of action arise from or depend on The Niche's internal affairs (see Eccles v Shamrock Capital Advisors, LLC, 42 NY3d 321, 339 n 12 [2024] ).  New York law otherwise applies to the causes of action for unfair competition, unjust enrichment, misappropriation of skills and expenditures, misappropriation of ideas, and promissory estoppel.

The court properly rejected defendants' argument for dismissal of the complaint under CPLR 3211(a)(1).  In support of their motion to dismiss, defendants submitted The Niche's certificate of dissolution, which was filed with Delaware's Secretary of State more than three years before the commencement of this action, along with the prior written consent of The Niche's board and shareholders.  In opposition, plaintiffs alleged that their signatures on the written consents were forged and that they were unaware of The Niche's dissolution until defendants' motion.  Thus, defendants' documentary evidence, including The Niche's certificate of dissolution, the written consents, and text messages between Rossi and McGuigan concerning the execution of a dissolution document, does not utterly refute the allegation that plaintiffs, as director and shareholder, consented to the dissolution (see ECD N.Y. Inc. v. 616 First Ave. Dev. LLC, 187 AD3d 600, 601 [1st Dept 2020];  VXI Lux Holdco S.A.R.L. v. SIC Holdings, LLC, 171 AD3d 189, 193 [1st Dept 2019] ).

Moreover, defendants fail to proffer documentary evidence conclusively establishing that plaintiffs' claims would not be subject to tolling under Delaware law, which recognizes a toll of the three-year statute of limitations based on certain doctrines, including fraudulent concealment or equitable estoppel (see Weiss v. Swanson, 948 A.2d 433, 451 [Del Ch 2008] ).  The evidence fails to utterly refute defendants' claim of equitable tolling, which tolls a statute of limitations “for claims of wrongful self-dealing, even in the absence of actual fraudulent concealment, where a plaintiff reasonably relies on the competence and good faith of a fiduciary” (id.).  Plaintiffs allege that until Rossi discovered the existence of The Malin in or about June 2022, McGuigan continued to engage in activities consistent with The Niche as an active entity.

The court also properly rejected defendants' argument for dismissal of the complaint under CPLR 3211(a)(3).  Marketing has capacity to sue for breach of fiduciary duty and breach of contract against McGuigan, as those claims are direct and seek relief for harm to Marketing rather than The Niche.

Plaintiffs' fraud cause of action and Marketing's breach of contract and breach of fiduciary duty causes of action were properly permitted to proceed.  The court correctly found that the breach of fiduciary duty cause of action was timely under the six-year statute of limitations, as the fraud allegations are essential to that cause of action (see Continental Indus.  Group, Inc. v Ustuntas, 211 AD3d 601, 604 [1st Dept 2022] ).  The complaint alleged that McGuigan misrepresented his commitment to The Niche with the intention of inducing plaintiffs to contribute their industry expertise and relationships while concealing his plan to divert The Niche's business opportunities and materials.  These allegations, together with those concerning the forged dissolution, sufficiently state the causes of action for fraud and breach of fiduciary duty against McGuigan (see Bernstein v. Kelso & Co., 231 A.D.2d 314, 321–322 [1st Dept 1997];  Schroeder v. Pinterest Inc., 133 AD3d 12, 22–23 [1st Dept 2015] ).

Marketing also sufficiently stated a cause of action for breach of contract, as McGuigan's obligation to manage The Niche's affairs under the bylaws constitutes a contractual obligation (see e.g. Boilermakers Local 154 Retirement Fund v Chevron Corp., 73 A3d 934, 939 [Del Ch 2013];  Airgas, Inc. v Air Prods.   & Chemicals, Inc., 8 A3d 1182, 1189, 1194–1195 [Del 2010] ).  The complaint also sufficiently alleges that McGuigan was still an officer and director of The Niche at the time of the alleged breach (see Schroeder, 133 AD3d at 23).  There is no allegation that McGuigan ever resigned his position or relinquished his ownership interest, and defendants' dissolution documents do not show otherwise as a matter of law at this early stage of the litigation.

The court properly dismissed the aiding and abetting breach of fiduciary duty cause of action against the Malin defendants, as “[a] defendant knowingly participates in the breach of fiduciary duty when [they] provide[ ] ‘substantial assistance’ to the fiduciary, which occurs ‘when a defendant affirmatively assists, helps conceal or fails to act when required to do so, thereby enabling the breach to occur’ “ (Schroeder, 133 AD3d at 25, quoting Kaufman v. Cohen, 307 A.D.2d 113, 126 [1st Dept 2003] ).  The complaint does not allege that the Malin defendants participated in or enabled the breach but instead alleges that they came upon and exploited the opportunities developed by The Niche after the breach occurred.  This allegation is insufficient.

The court properly dismissed the unjust enrichment cause of action.  With respect to the Malin defendants, plaintiffs failed to allege a relationship that could have caused reliance or inducement (see Schroeder, 133 AD3d at 26).  With respect to McGuigan, although an unjust enrichment cause of action may proceed in the alternative to a breach of contract theory (see Vays v. 139 Emerson Place, 94 AD3d 480, 482 [1st Dept 2012] ), as alleged here, it is duplicative of the fraud and breach of fiduciary duty causes of action (see Corsello v. Verizon N.Y., Inc., 18 NY3d 777, 790 [2012] ).

The court also properly dismissed the promissory estoppel cause of action against McGuigan.  The cause of action does not rely on any duty independent of McGuigan's contractual obligations under The Niche's bylaws, and fiduciary duties arising from his role as a director and officer (see Schroeder, 133 AD3d at 33).

However, the court should not have dismissed Marketing's unfair competition cause of action against defendants and plaintiffs' misappropriation of ideas cause of action against McGuigan, which are timely under the six-year limitations period applicable to fraud-based claims (CPLR 213[8] ).

Marketing stated a cause of action for unfair competition against defendants by alleging defendants engaged in “the bad faith misappropriation of a commercial advantage which belonged exclusively to” plaintiffs (Valkyrie AI LLC v. PriceWaterhouseCoopers LLP, 233 AD3d 460, 460 [1st Dept 2024] ).  Specifically, Marketing alleged that the Malin defendants used the logo, designs, and aesthetics developed for The Niche at their locations and on their website and Instagram, and that McGuigan was a founder and shareholder of The Malin Group, Inc., the other Malin entities' holding company (see id;  Schroeder, 133 AD3d at 30).

The cause of action against McGuigan for misappropriation of plaintiffs' skills and expenditures, which is a subset of New York's unfair competition law, was properly dismissed as it is duplicative of the cause of action for unfair competition.

Plaintiffs sufficiently pleaded the misappropriation of ideas cause of action, which requires a showing of “a legal relationship between the parties in the form of a fiduciary relationship, an express contract, implied contract, or quasi contract;  and ․ an idea that is novel and concrete” (Schroeder, 133 AD3d at 29–30).  The complaint states that Rossi proposed a novel concept of partnering with hotels to create premium coworking spaces offering additional amenities, and that the parties thereafter formed The Niche, serving as its directors and officers, roles through which McGuigan was able

to exploit Rossi's idea (see CBS Corp. v. Dumsday, 268 A.D.2d 350, 353 [1st Dept 2000] ).