First Department Decisions Address Use of Emails As "Documentary Evidence" For Motion to Dismiss

On August 28, 2014, the First Department issued decisions in Amsterdam Hospitality Group, LLC v. Marshall-Alan Assoc., Inc., 2014 NY Slip Op. 06007, and Art & Fashion Group Corp. v. Cyclops Production, Inc., 2014 NY Slip Op. 06008, addressing the use of email correspondence as "documentary evidence" for purposes of a motion to dismiss.

One unique feature of New York State motion practice is that, in addition to the motion to dismiss for failure to state a cause of action, the CPLR permits a motion to dismiss on the "ground that . . . a defense is founded upon documentary evidence." CPLR 3211(a)(1). Amsterdam Hospitality Group and Art Fashion Group are commercial cases (the former a fraud action brought against an executive search firm and the latter an action for breach of an oral joint venture agreement) in which the defendants filed 3211(a)(1) motions based on email correspondence between the parties that allegedly refuted the claims. As the majority observed in Amsterdam Hospitality Group, the New York courts "have grappled with the issue of what writings do and do not constitute documentary evidence, since the term is not defined by statute":

Judicial records, such as judgments and orders, would qualify as documentary, as should the entire range of documents reflecting out-of-court transactions, such as contracts, deeds, wills, mortgages, and even correspondence. (David D. Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3211:10 at 22). To qualify as "documentary," the paper's content must be "essentially undeniable and . . ., assuming the verity of [the paper] and the validity of its execution, will itself support the ground on which the motion is based. (Neither the affidavit nor the deposition can ordinarily qualify under such a test)" (id.).

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As Professor Siegel recognizes, "even correspondence" may, under appropriate circumstances, qualify as documentary evidence. In our electronic age, emails can qualify as documentary evidence if they meet the "essentially undeniable" test.

(Citations omitted) (emphasis added).

In Amsterdam Hospitality Group, the court denied a 3211(a)(1) motion to dismiss claims for fraudulent and negligent misrepresentation, concluding that the emails submitted by the defendant in support of the motion were not sufficiently conclusive to "utterly refute" the plaintiff's factual allegations:

The emails in this particular case, aside from being not otherwise admissible, are not able to support the motion to dismiss. The "documentary evidence" here . . . do not, standing on their own, conclusively establish a defense to the claims set forth in the complaint. While they may indicate that Bowd put defendants [N.B. it appears this should read "plaintiff"] on notice of potential employment restrictions, other letters indicate that Bowd had, in fact, accepted the offer of employment days before he sent the emails in question. Because defendant has not "negated beyond substantial question" the allegation of reasonable reliance, and the submissions raise factual issues concerning the circumstances and communications underlying plaintiff's hiring of Bowd, it cannot be concluded that plaintiff has no causes of action for fraudulent and negligent misrepresentation.

Justice DeGrasse dissented, concluding that "documentary evidence consisting of an email sent by Bowd to plaintiff 19 days before Bowd was hired negates the element of justifiable reliance as a matter of law."

In Art Fashion Group, the First Department unanimously affirmed the denial of a motion to dismiss a claim for breach of an oral joint venture agreement, ruling that the emails submitted by the defendants in support of the motion did not "definitively refute plaintiffs' claim":

There is no merit to defendants' assertion that the emails show, as a matter of law, that no joint venture agreement was reached and that the parties were merely engaging in preliminary negotiations. Even where the parties acknowledge that they intend to hammer out details of an agreement subsequently, a preliminary agreement may be binding.

Although some parts of the emails suggest that all of the details of the joint venture were not fully agreed upon, the emails, when read in their entirety, do not conclusively refute plaintiffs' allegations that an oral joint venture agreement had in fact been reached. For example, a November 3, 2009 email states that "359 is already operating in AFG's [office] space" (emphasis added) and was expected to be "cashflow positive by the end of 2009." This same email talks about "formalizing the establishment of . . . 359 Productions," suggesting that it was already in existence. Furthermore, in a May 1, 2010 email, plaintiffs' representative Federico Pignatelli addresses defendant Michael Jurkovac as "[p]artner," makes reference to "stabiliz[ing] the [c]ompany," and expresses concern about two managerial changes within the past year.

In a May 13, 2010 email, written six months after the initial email submitted by defendants, Pignatelli informs Jurkovac of his decision "not to proceed anymore with 359P." Contrary to defendants' contention, this statement does not unequivocally establish that no joint venture agreement had been reached in the first place. It can just as easily be read as indicating Pignatelli's decision to terminate an already-established joint venture. The email also discusses 359P's overhead and notes issues about the extent of the work that was brought into 359P, both of which are consistent with plaintiffs' claim that a joint venture had been formed. The emails also make reference to other communications, not produced by defendants, identifying issues with 359P's staff. Thus, it is clear that the emails submitted present only a partial picture of the interactions between the parties.

Finally, although defendants contend that they did not intend to proceed with the alleged joint venture until they executed a formal written agreement, no such express reservation is contained in any of the emails. Because the emails in question fail to definitely refute plaintiffs' claim that the parties had reached an oral joint venture agreement, dismissal at this stage is not warranted.

(Citations omitted) (emphasis added).

Motions to dismiss based on "documentary evidence" are a useful tool for seeking early dismissal of infirm claims that because of artful pleading may not be easily susceptible to a motion to dismiss based solely on the face of the complaint. However, as these cases illustrate, CPLR 3211(a)(1) is not a means to file an accelerated summary judgment motion. Although in appropriate circumstances email correspondence can form the basis for a motion to dismiss based on "documentary evidence," where the correspondence is inconclusive or requires further factual development, the motion should be denied.