DerOhannesian v. City of AlbanyDerOhannesian v. City of Albany
McCarthy, J. Appeal from an order of the Supreme Court (Devine, J.), entered October 10, 2012 in Albany County, which granted defеndant‘s motion to dismiss the complaint.
Plaintiff Kevin McKenna, a sergeant with the City of Albany Police Department, allegedly pointed a loaded firearm at a coworker, Shirley Morton. Based on that incident, McKenna was charged criminally. He retained plaintiff Paul DerOhannesian II to represent him. Pursuant to the collective bargaining agreement (hereinafter CBA) between his union and defendant, McKenna sought reimbursement of his defense costs from defendant. Dеfendant denied the request on the basis that McKenna‘s conduct was outside the scope of his employment, an exclusion under the CBA. McKenna was ultimately acquitted of the criminal charge. Morton then commenced a fеderal civil action and, later, a state action against, among others, McKenna and defendant. DerOhannesian represented McKenna in both civil actions. McKenna also requested reimbursement of his defense costs in the civil actions, which defendant denied, prompting McKenna to file a grievance.
In January 2009, while the grievance was pending, John Reilly, defendant‘s corporation counsel, sent a letter to DerOhannesian noting that the CBA rеquired defendant to pay defense costs while the grievance was pending and requesting a cost estimate for his services. DerOhannesian responded by sending Reilly a proposal for his firm‘s hourly rates, including $225 for partners and lesser amounts for other staff. Reilly sent a letter rejecting those rates and offering to pay a rate of $150 per hour. DerOhannesian apparently did not respond to that letter. In October 2009, DerOhannesian sent defendant a lettеr and invoice for his representation of McKenna in the federal action,
The federal action was dismissed. The state action was dismissed as against defendant, but Morton obtained a verdict against McKenna for approximately $23,000. After the civil actions concluded, the arbitrator denied McKenna‘s grievance, finding that the CBA did not require defendant to reimburse McKenna for any of his defense costs.1 Plaintiffs commenced this action alleging six causes of action to obtain payment for McKenna‘s defense costs. Supreme Court granted defendant‘s motion to dismiss the сomplaint. Plaintiffs appeal.
Initially, we reject defendant‘s contention that this action is barred by collateral estoppel. Although collateral estoppel is applicable to determinations rendered in arbitration proceedings (see Matter of American Ins. Co. [Messinger—Aetna Cas. & Sur. Co.], 43 NY2d 184, 189-190 [1977]; Matter of Kibler v New York State Dept. of Correctional Servs., 91 AD3d 1218, 1220 [2012], lv denied 19 NY3d 803 [2012]), that doctrine does not bar the present action based on the arbitration determination here. There is no identity of issues, as the issue in the grievance arbitration proceeding was the right to reimbursement pursuant to the CBA, whereas the issue in this action is the right to reimbursement based on an alleged contract or agreement separate from the CBA (see Matter of Howard v Stature Elec., Inc., 20 NY3d 522, 525-526 [2013]; Alaimo v McGeorge, 69 AD3d 1032, 1034 [2010]; see also Kaufman v Eli Lilly & Co., 65 NY2d 449, 456-457 [1985]). Additionally, DerOhannesian did not have a full and fair opportunity to litigate any issues as he was not a party to thаt arbitration proceeding nor in privity to a party (see Matter of Juan C. v Cortines, 89 NY2d 659, 667-668 [1997]). Thus, collateral estoppel does not apply here.
Nevertheless, Supreme Court did not err in dismissing the breach of contract cause of action. When considering whether to dismiss a complaint pursuant to
The complaint here alleges that Reilly‘s January 2009 letters constituted a unilateral contract whereby defendant agreed to pay DerOhannesian at the rate of $150 per hour, and that the contract became binding when DerOhannesian performed under the contract by reрresenting McKenna. Plaintiffs cannot prevail because their allegations are flatly contradicted by documentary evidence. DerOhannesian‘s October 2009 invoice billed defendant at the rate of $350 per hour for his time аnd at other rates—all higher than listed in his January 2009 estimate—for his staff. This invoice contradicts plaintiffs’ assertion that the parties had agreed on all material terms of a contract, namely a price of $150 per hour (see John Anthony Rubino & Co., CPA, P.C. v Swartz, 84 AD3d 599, 599 [2011]).2 As dоcumentary evidence refutes the allegations and establishes that no valid contract had been formed, Supreme Court properly dismissed the cause of action for breach of contract (see Tenney v Hodgson Russ, LLP, 97 AD3d at 1090).
Plaintiffs’ promissory estoppel cause of action must be dismissed for the same reason. While the complaint facially makes out a cause of action by alleging a clear promise, reasonable and foreseeable reliance by DerOhannesian and an injury based on reliance on the рromise (see Clifford R. Gray, Inc. v LeChase Constr. Servs., LLC, 31 AD3d 983, 986-987 [2006]; Fleet Bank v Pine Knoll Corp., 290 AD2d 792, 797 [2002]), the documentary evidence contradicts these allegations. In the October 2009 cover letter sent with his invoice, DerOhannesian stated that, while defendant had declined McKenna‘s request for indemnification of his legal fees, it was plaintiffs’ “understanding”
The unjust enrichment cause of action also fails. An unjust enrichment cause of action requires that defendant be enriched, at DerOhannesian‘s expense, and that equity and good conscience do not permit defendant to retain what plaintiffs seek to recover (see Georgia Malone & Co., Inc. v Rieder, 19 NY3d 511, 516 [2012]; Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011]). In the complaint, plaintiffs alleged that defendant was unjustly enriched at DerOhannesian‘s expense and that it is against equity and good conscience to permit defendant to retain the fair and reasonable value of the legal services he “performed under the cоntract to and in reliance on the promise of [defendant].” Although these factual allegations facially state a cause of action for unjust enrichment (see id.), the documentary evidence—particularly DerOhannesian‘s October 2009 cover letter—shows that DerOhannesian was aware that defendant rejected McKenna‘s request for defense costs several times and DerOhannesian did not represent him or continue his representation based on any promise by defendant. As DerOhannesian acknowledged that defendant had repeatedly rejected the requests to pay for McKenna‘s defense costs, but DerOhannesian nonetheless continued to reрresent McKenna and accrue associated legal fees, it is not against equity or good conscience to permit defendant to retain the amount of such legal fees. Thus, defendant was not unjustly enriched when it refused tо pay McKenna‘s legal costs (see Baron v Pfizer, Inc., 42 AD3d 627, 629-630 [2007]; Clifford R. Gray, Inc. v LeChase Constr. Servs., LLC, 31 AD3d at 988).
Supreme Court also properly dismissed the fraud cause of action. The elements of fraud include a misrepresentation that is false and that the defendant knows is false, made to induce the other party to rely on it, justifiable reliance on the misrepresentation by the other party, and injury (see Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 178 [2011]). Plaintiffs alleged that defendаnt falsely represented that defendant was required to pay McKenna‘s legal expenses until an arbitrator ruled on his grievance. This was not a false statement, as defendant had such an obligation under the CBA. While defendant may nоt have intended to pay for the legal services, allegations of an intention not to perform an obligation are insufficient to allege fraud (see Yenrab, Inc. v 794 Linden Realty, LLC, 68 AD3d 755, 757-758 [2009]; WIT Holding Corp. v Klein, 282 AD2d 527, 528 [2001]).3 Accordingly, the court properly dismissed the complaint.
Peters, P.J., Stein and Spain, JJ., concur. Ordered that the order is affirmed, without costs.