JRAP ENTERPRISES INC v. ZUCARO CONSTRUCTION LLC (2021)

Upon the following papers read on this motion to dismiss and cross-motion to amend; Notice of Motion and supporting papers 11-17; Notice of Cross Motion and supporting papers 28-36; Answering Affidavits and supporting papers 38-39; Replying Affidavits and supporting papers 40; 41; it is,

ORDERED that the motion by the defendants for an order dismissing the second, third and fourth causes of action is granted; and it is further

ORDERED that the cross motion by the plaintiffs for leave to amend the complaint is denied; and it is further

ORDERED that the parties are directed to complete a preliminary conference stipulation and order and send a copy of same to chambers within 30 days after service of a copy of this order with notice of entry.

The plaintiffs allege that they entered into a joint venture agreement with the defendants to perform house-lifting services after Hurricane Sandy. The plaintiffs allege that the defendants, who entered into subcontracts with general contractors to perform the work, agreed to pay the plaintiffs 10% of the gross payments received by the defendants for each subcontract. The plaintiffs allege that they have not been compensated for more than 40 subcontracts, although they performed thereunder. The plaintiffs commenced this action to recover damages for breach of contract, breach of fiduciary duty, an accounting, breach of the implied covenant of good faith and fair dealing, quantum meruit, and unjust enrichment. The defendants move to dismiss the second, third, and fourth causes of action for breach of fiduciary duty, an accounting, and breach of the implied covenant of good faith and fair dealing, respectively. The plaintiffs oppose the motion and cross move for leave to amend the complaint.

The second cause of action for breach of fiduciary duty is based on the alleged joint venture agreement. An indispensable essential of a contract of joint venture is a mutual promise or undertaking of the parties to share in the profits of the business and submit to the burden of making good the losses (Steinbeck v Gerosa, 4 NY3d 302, 317). It is not enough that two parties have agreed to act in concert to achieve some stated economic objective (Id.) A plaintiff seeking to establish a joint venture must prove more than a simple contractual relationship, and it is insufficient for a plaintiff to allege mere joint ownership, a community of interest, or a joint interest in profitablity (Am. Talent Agency, Inc. v Joe Fletcher Presents, US Dist Ct, SDNY, Sept. 9, 2008, Sweet, J. [2008 WL 4155654] at *5 [and cases cited therein]). Intent to submit to the burden of making good the losses of the other is indispensable (Id.). Additionally, the value of services is not sufficient to satisfy the required sharing-of-losses element (Kidz Cloz, Inc. v Officially for Kids, Inc., 320 F Supp 2d 164, 172 [SDNY]).

The plaintiffs allege that they agreed “to accept the loss of being denied any compensation for the multitude of hours of uncompensated time and expenses incurred by them in performing the work ․ if the subcontracts, or any of them, were not awarded to Defendants or if Defendants were not paid for their work through no fault of their own.” The plaintiffs have failed to allege a mutual promise or undertaking to share the burden of the losses of the alleged enterprise (Mawere v Landau, 130 AD3d 986, 988). The plaintiffs’ allegations amount to nothing more than an agreement to risk losing their own expenses and the value of their own services (see Mawere v Landau, 39 Misc 3d 1229[A] at *6, affd as mod, 130 AD3d 986). The failure to allege an agreement to share losses precludes finding that there was a joint-venture agreement (Id. at 7).

In the absence of a joint-venture agreement, the plaintiffs have merely alleged a contractual relationship. It is well settled that parties engaged in an arms-length business transaction are not fiduciaries (OppenheimerFunds, Inc. v TD Bank N.A., 2014 NY Slip Op 30379[U] at * 11 [and cases cited therein]). Moreover, a claim for breach of fiduciary duty cannot be based on the same facts and theories as a breach of contract claim (Mandel Airplane Funding and Leasing Corp. v Laserline Properties II, LLC, 33 Misc 3d 1204[A] at *6). Accordingly, the second cause of action for breach of fiduciary duty is dismissed.

In the absence of a fiduciary relationship, the plaintiffs have no cause of action for an accounting (Saunders v AOL Time Warner, Inc., 18 AD3d 216, 217). Accordingly, the third cause of action for an accounting is dismissed.

The plaintiffs do not oppose dismissal of the fourth cause of action for breach of the implied covenant of good faith and fair dealing. Accordingly, it is dismissed.

The plaintiffs’ proposed amended complaint does not cure the pleading deficiencies of the original complaint. Accordingly, the cross motion for leave to amend the complaint is denied.

Elizabeth H. Emerson, J.