Breach of Contract Claim Dismissed for Failure to Allege Damages

On April 29, 2021, the First Department issued a decision in AmBase Corp. v. 111 W. 57th Sponsor LLC, 2021 NY Slip Op. 02589, holding that a breach of contract claim failed for lack of allegations of damages, explaining:

[T]he SAC alleges that Sponsor failed to disclose a change to its investors as a result of this funding, as required by section 2.8(a)(3) of the Agreement. Even accepting this allegation as true, the SAC does not allege any resulting damages, and therefore fails to state a cause of action for breach of contract based on a violation of that section. Plaintiff 111 West 57th Investment LLC's equity in the Company was diluted by Sponsor's capital and shortfall contributions to the Company, which the SAC fails to allege adequately were improperly financed by third parties, not by a failure to disclose any change to investors allegedly resulting from the financing.

(Internal citations omitted).

A key element in commercial litigation is proving damages. As this decision shows, the inability to show damages can be fatal to a claim. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding proving damages.