Sutton Associates v. LexisNexis

196 Misc. 2d 30, 761 N.Y.S.2d 800, 2003 N.Y. Misc. LEXIS 1965
CourtNew York Supreme Court
DecidedApril 29, 2003
StatusPublished
Cited by3 cases

This text of 196 Misc. 2d 30 (Sutton Associates v. LexisNexis) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sutton Associates v. LexisNexis, 196 Misc. 2d 30, 761 N.Y.S.2d 800, 2003 N.Y. Misc. LEXIS 1965 (N.Y. Super. Ct. 2003).

Opinion

[31]*31OPINION OF THE COURT

Leonard B. Austin, J.

Introduction

Defendants LexisNexis, Reed Elsevier PLC Group and James Haggerty move for an order (a) pursuant to CPLR 3211 (a) (4), (5) and (7) dismissing the plaintiffs’ complaint, and (b) dismissing all claims against codefendant James Haggerty based on the failure to properly effectuate service of process pursuant to CPLR 3211 (a) (8) and 308 (1); alternatively, consolidating the above-captioned matter with a related action pending before this court entitled Reed Elsevier, Inc., doing business as Lexis-Nexis v Sutton Assoc.

Background

The plaintiff, Sutton Associates, Inc. (Sutton), commenced the within action alleging that the defendants LexisNexis and James Haggerty (Haggerty) made false statements with respect to the subscription rates it charged Sutton for access to certain computer-assisted research services.

Sutton’s fraud theory is predicated on allegations that Lexis-Nexis representatives, including Haggerty, falsely and fraudulently represented to Sutton that the subscription rates it intended to charge Sutton were the “best rates Lexis could offer” (amended complaint 15); that these rates were similar to those paid by similarly situated businesses; and that none of these similar businesses “were receiving a lower rate” (amended complaint fflj 26-38).

According to Sutton, Haggerty’s representations — on which Sutton claims to have relied — were “false and fraudulent when made” (amended complaint 29-30) since Sutton later allegedly discovered that comparable businesses were paying significantly less for similar services (amended complaint 32).

Moreover, Sutton contends that all the LexisNexis subscription agreements contained confidentiality provisions which “prevented Sutton from disclosing the terms of the agreement to third persons” (amended complaint 34), and that it was constrained to pass on LexisNexis’ “exorbitant fees” to its customers (amended complaint 49).

After terminating its relationship with LexisNexis, Sutton commenced the within action against LexisNexis and Haggerty, alleging causes of action for breach of contract, fraud, violation of General Business Law § 349 and declaratory relief. The amended complaint seeks relief on the same theories.

Shortly thereafter, LexisNexis commenced a related action in this court to recover $168,054.09 from Sutton based upon [32]*32Sutton’s alleged failure to make payments due and owing under the subscription agreements (defendant’s exhibit 3).

Discussion

A. General Business Law § 349

Accepting as true the facts alleged in the plaintiffs amended complaint, and affording them the benefit of every possible favorable inference (Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409, 414 [2001]; see also, 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002]; Polonetsky v Better Homes Depot, 97 NY2d 46, 54 [2001]; Leon v Martinez, 84 NY2d 83, 87-88 [1994]), the court concludes that the cause of action founded upon violation of General Business Law § 349 must be dismissed.

“General Business Law article 22-A, of which General Business Law §§ 349 and 350 are a part, is addressed to practices which ‘have a broader impact on consumers at large. Private contract disputes, unique to the parties * * * would not fall within the ambit of the statute’.” (Canario v Gunn, 300 AD2d 332, 333 [2d Dept 2002], quoting Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 [1995]; Fekete v GA Ins. Co. of,N.Y., 279 AD2d 300 [1st Dept 2001].)

The purported misconduct attributed to LexisNexis arises out of alleged misstatements with respect to prices and pricing schedules offered to a single commercial entity. These alleged wrongs do not establish that LexisNexis “engaged in acts or practices which were deceptive or misleading and which had an impact on consumers at large.” (Drepaul v Allstate Ins. Co., 299 AD2d 391, 393 [2d Dept 2002]; Korn v First UNUM Life Ins. Co., 277 AD2d 355, 356 [2d Dept 2000].) Rather, Sutton’s claims concern a private commercial dispute involving the two businesses involved in the transaction negating the applicability of General Business Law § 349. (See, e.g., Hassett v New York Cent. Mut. Fire Ins. Co., 302 AD2d 886 [4th Dept 2003]; Security Mut. Life Ins. Co. of N.Y. v DiPasquale, 283 AD2d 182 [1st Dept 2001]; Canario v Gunn, supra; Drepaul v Allstate Ins. Co., supra; Sheth v New York Life Ins. Co., 273 AD2d 72, 73-74 [1st Dept 2000].)

Thus, plaintiffs cause of action based upon General Business Law § 349 must be dismissed.

B. Fraud

The “elements of common-law fraud are a representation of a material fact, falsity, scienter, reliance, and injury.” (Kline v Taukpoint Realty Corp., 302 AD2d 433 [2d Dept 2003]; see [33]*33also, Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]; Clarke v Wallace Oil Co., 284 AD2d 492, 493 [2d Dept 2001]; Cohen v Houseconnect Realty Corp., 289 AD2d 277 [2d Dept 2001].) The reliance alleged must be justified and reasonable. (802 F Realty Corp. v American Intl. Specialty Lines Ins. Co., 295 AD2d 398 [2d Dept 2002]; Laurel Ridge v Alfredo Nurseries, 286 AD2d 710 [2d Dept 2001]; see also, 60A NY Jur 2d, Fraud and Deceit § 138.)

The material averments at issue effectively allege that, over a period of years, Sutton — an entity specializing in private investigation — purportedly relied on statements made by LexisNexis personnel that the rates offered were the “lowest” then available and that comparable rates were being paid by similarly situated businesses.

Assuming that these cryptic statements could be considered material in a commercial setting, the court agrees that, at best, they constitute nonactionable, “puffery” and/or commendatory sales representations on which a sophisticated commercial entity could not reasonably rely. (See, e.g., Bader v Siegel, 238 AD2d 272 [1st Dept 1997]; Sirohi v Lee, 222 AD2d 222 [1st Dept 1995]; see also, Dorfman Org. v Greater N.Y. Mut. Ins. Co., 279 AD2d 437 [1st Dept 2001]; Sheth v New York Life Ins. Co., supra; Reich v Mitrani Plasterers Co., 268 AD2d 256 [1st Dept 2000]; see generally, 60A NY Jur 2d, Fraud and Deceit § 34.) Moreover, irrespective of whether the rate was the “lowest available” or not, or whether comparable businesses received higher or lower rates, Sutton was not constrained to enter into additional subscription agreements if it believed the proposed fee schedule offered by LexisNexis was unfair, excessive or exorbitant.

The court notes further that Sutton’s own complaint suggests that no injury was sustained by virtue of LexisNexis’ conduct since, according to Sutton, the allegedly excessive rates charged were simply passed on to their customers (amended complaint 49).

Plaintiff’s cause of action sounding in fraud must be dismissed.

C. Breach of Contract/Implied Covenant of Good Faith

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Bluebook (online)
196 Misc. 2d 30, 761 N.Y.S.2d 800, 2003 N.Y. Misc. LEXIS 1965, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sutton-associates-v-lexisnexis-nysupct-2003.