Contract Claim Fails Because Plaintiff Was Not Party to Contract and Because Plaintiff Failed to Allege Underlying Facts Showing Breach

On August 21, 2024, Justice Margaret A. Chan of the New York County Commercial Division issued a decision in Tandym Group, LLC v. Mission Staffing Inc., Index No. 655839/2023, granting defendants' motion to dismiss claims for breach of a purported nonsolicitation and confidentiality agreement on the grounds that (i) plaintiff was not a party to the purported agreement, and (ii) plaintiff failed to allege "which, if any, clients were purportedly solicited or interfered with by defendants," or "what, if any, confidential information was misappropriated," explaining:

Although the Complaint avers that restrictive covenants to which Herman agreed arose from an agreement between Herman and Tandym , the documentary evidence supplied by defendants--which Tandym does not dispute--establishes that the Agreement is between Herman and an entity called Execu / Search, not Tandym. Nothing in the Complaint suggests that that Execu / Search and Tandym are the same entity or that Tandym otherwise succeeded or retained Execu / Search's rights under the Agreement. Accordingly, as alleged, there is no basis to conclude or infer that Tandym has contractual privity with Herman under the Agreement so as to allow Tandym to sustain its breach of contract and tortious interference with contract claims (see Perma Pave Contr. Corp. v Paerdegat Boat and Racquet Club, Inc., 156 AD2d 550, 551 [1st Dept 1989] [holding that a party may not assert a claim to recover damages for breach of contract against party with whom it is not in privity]; Naderi v N. Shore-Long ls. Jewish-Health Sys., 2014 WL 840417, at *3 [Sup Ct, NY County, Feb. 28, 2014], affd 135 AD3d 619 [1st Dept 2016] [holding that plaintiff failed to adequately demonstrate any contractual relationship between parties, and thus failed to establish the existence of a valid contract]; see also MidAmerica Prods., Inc. v Derke, 33 Misc3d 1209[A], at *3 [Sup Ct, NY County, 2010] [dismissing breach of restrictive covenant claim when there were "[nlo allegations that [defendants] entered into noncompetitive covenants with plaintiffs"]).

In an effort to avoid this conclusion, Tandym asserts for the first time in its opposition that it was "formerly known as Execu I Search Group prior to a rebranding in June 2022." This stray assertion--which appears in a footnote--fails resuscitate Tandym's claims. As an initial matter, to the extent Tandym is seemingly attempting to amend its Complaint to rectify the defect established by defendants' documentary evidence, it is not permitted to informally amend its complaint through its opposition brief. . . . At any rate, Tandym's bare, unsupported assertion, without more factual support or context, fails to establish the necessary privity for it to maintain a breach of contract claim under the Agreement.

. . .

Even if, however, privity was established, dismissal of the Complaint, as currently pleaded, would still be warranted. Though the Complaint largely focuses on defendants' purported solicitation of five employees as part of its recitation of factual allegations, a careful review of Tandym's Agreement-based causes of action reveals that they do not actually target defendants' purported solicitation of employees. Rather, as noted above, Tandym's claims are premised solely on a purported solicitation of "clients," as well as the misappropriation of unspecified confidential information. As the master of its complaint, Tandym is entitled to focus on whatever conduct it so chooses in support of its claims. But upon focusing on the solicitation of clients and misappropriation of confidential information, Tandym then fails to supply any critical details in support, including which, if any, clients were purportedly solicited or interfered with by defendants, or what, if any, confidential information was misappropriated. Without these critical details, Tandym's claims plainly fail to provide adequate notice of the transactions, occurrences, or series of transactions or occurrence at issue.

This case focuses on two very important principles. First, a plaintiff must be a party to the contract on which it brings suit. And if the plaintiff's name has changed, or the plaintiff succeeded to the rights of the original signatory to the contract, this should be spelled out in the complaint. Second, while a plaintiff need not plead a contract claim with particularity, it must provide some underlying factual information to give adequate notice to defendants of the transactions or occurrences that give rise to its claim. Boilerplate, conclusory allegations will not suffice.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning litigating a contract claim at the pleading stage.