Komlossy v. Faruqi & Faruqi, LLP

17-834-cv
Komlossy v. Faruqi & Faruqi, LLP
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 18th day of October, two thousand seventeen.
PRESENT:
JOHN M. WALKER, JR.,
REENA RAGGI,
PETER W. HALL,
Circuit Judges.
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EMILY KOMLOSSY,
Plaintiff-Appellant,
v. No. 17-834-cv
FARUQI & FARUQI, LLP, NADEEM FARUQI,
LUBNA FARUQI
Defendants-Appellees,
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FOR APPELLANT: Emily Komlossy, pro se, Komlossy Law, P.A.,
Hollywood, Florida.
FOR APPELLEES: Richard W. Gonnello, Katherine M. Lenahan,
Faruqi & Faruqi, LLP, New York, New York.
Appeal from judgment of the United States District Court for the Southern District
of New York (Katherine Polk Failla, Judge).
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UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment entered on February 23, 2017, is AFFIRMED.
Plaintiff Emily Komlossy, an attorney proceeding pro se, appeals the dismissal
with prejudice of her complaint alleging, inter alia, breach of contract and unjust
enrichment by her former employer, defendant Faruqi & Faruqi, LLP (the “Firm”). We
review de novo the dismissal of a complaint for failure to state a claim, “accepting all
factual allegations as true and drawing all reasonable inferences in favor of the plaintiff.”
Trs. of Upstate N.Y. Eng’rs Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561, 566 (2d Cir.
2016); see Fed. R. Civ. P. 12(b)(6). In so doing, we assume the parties’ familiarity with
the facts and the record of prior proceedings, which we reference only as necessary to
explain our decision to affirm.
Despite Komlossy’s arguments to the contrary, the district court applied the
correct legal standards and limited its analysis to the terms of the parties’ compensation
agreement as set forth in the amended complaint. The fact that the district court reached
legal conclusions favorable to the Firm does not reflect the application of an incorrect
legal standard because the requirement that courts accept complaint allegations as true
and draw inferences in favor of the plaintiff is “inapplicable to legal conclusions.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Nor do we identify error in the district court’s determination that the oral
compensation agreement underlying Komlossy’s claims is unenforceable under New
York’s Statute of Frauds, see N.Y. Gen. Oblig. Law § 5-701(a)(1). “New York courts
generally construe the statute of frauds narrowly, voiding only those oral contracts
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‘which by their very terms have absolutely no possibility in fact and law of full
performance within one year.’” Kroshnyi v. U.S. Pack Courier Servs., Inc., 771 F.3d
93, 110 (2d Cir. 2014) (quoting D & N Boening, Inc. v. Kirsch Beverages, Inc., 63
N.Y.2d 449, 454, 483 N.Y.S.2d 164, 165 (1984)).
Employment agreements such as the one Komlossy asserts existed here are
considered at-will contracts, terminable at any time by either party. See id. Here,
however, the alleged agreement contained a provision requiring the Firm to pay
Komlossy “twenty (20) percent of any fees earned by the Firm in connection with clients
she generated.” App’x 40, Compl. ¶ 12. There was no time limitation on this
obligation to pay. Cf. Gold v. Katz, 229 A.D.2d 339, 339, 646 N.Y.S.2d 1, 1 (1st Dep’t
1996) (denying summary judgment on breach of contract claim where plaintiff offered
evidence of oral agreement providing for 10% fee to plaintiff of income generated from
matters involving particular clients while plaintiff “remained at the firm”). New York
courts have held that an oral agreement for an indefinite obligation is not enforceable.
See Martocci v. Greater N.Y. Brewery, Inc., 301 N.Y. 57, 62–63 (1950) (holding
unenforceable oral agreement to pay commissions indefinitely); accord Zupan v.
Blumberg, 2 N.Y.2d 547, 549–51, 161 N.Y.S.2d 428 (1957) (holding unenforceable oral
agreement that paid salesman “25% commission on any account that he brought in for so
long as the account was active”); cf. Cron v. Hargro Fabrics, Inc., 91 N.Y.2d 362, 369–
70, 670 N.Y.S.2d 973 (1998) (citing approvingly to Martocci in distinguishing contract
there at issue). Cron held that “when the employment relationship is terminable within
a year and the measure of compensation has become fixed and earned during the same
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period, the sole obligation to calculate such compensation will not bring the contract
within the one-year proscription of the Statute of Frauds.” Cron v. Hargro Fabrics,
Inc., 91 N.Y.2d at 370. Here, the measure of compensation was not fixed, and could not
be fixed, within one year.
In urging otherwise, Komlossy argues that she seeks fees relating to only one
client and one matter. This misapprehends the relevant Statute of Frauds inquiry,
which, as the district court correctly stated, asks “whether the [a]greement ‘by its terms’
is capable of performance within a year.” Komlossy v. Faruqi & Faruqi, LLP, No. 15
Civ. 9316 (KPF), 2017 WL 722033, at *5 (S.D.N.Y. Feb. 23, 2017) (quoting N.Y. Gen.
Oblig. Law § 5-701(a)(1)). In this context, Komlossy’s single client/matter point is
irrelevant. Komlossy does not allege separate agreements specific to certain clients; she
alleges a general employment compensation agreement. It is that agreement that falls
within the Statute of Frauds.
Insofar as Komlossy argues that one of the Firm’s partner’s recognition of the
contract removes it from the Statute of Frauds, we do not consider that argument because
Komlossy did not raise it below and does not explain the omission, and this is not a case
where review for the first time on appeal is “necessary to avoid a manifest injustice.”
Sniado v. Bank Austria AG, 378 F.3d 210, 213 (2d Cir. 2004). Notably, Komlossy does
not allege that the Firm’s partner admitted an essential element of the purported
agreement: the precise percentage of the fees she would receive as a result of procuring a
client. Where the parties generally acknowledge an oral agreement, but dispute its
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terms and conditions, the Statute of Frauds applies. See Camhi v. Tedesco Realty, LLC,
105 A.D.3d 795, 797, 962 N.Y.S.2d 660, 662 (2d Dep’t 2013).
Komlossy cannot avoid the Statute of Frauds by pleading unjust enrichment in the
alternative and, thus, the district court correctly dismissed this claim as well as that for
breach of contract. See Minichiello v. Royal Bus. Funds Corp., 18 N.Y.2d 521, 525–27,
277 N.Y.S.2d 268, 270–72 (1966); accord Morgenweck v. Vision Capital Advisors, LLC,
410 F. App’x 400, 402 n.1 (2d Cir. 2011) (summary order) (“It is well settled that under
New York law a plaintiff may not escape the Statute of Frauds by attaching the label
‘quantum meruit’ or ‘unjust enrichment’ or ‘promissory estoppel’ to the underlying
contract claim.”).
The district court also did not err in dismissing with prejudice. Komlossy did not
seek leave to amend, and “we do not deem it an abuse of the district court’s discretion to
order a case closed when leave to amend has not been sought.” Shields v. Citytrust
Bancorp, Inc., 25 F.3d 1124, 1132 (2d Cir. 1994).
We have considered Komlossy’s remaining arguments and conclude that they are
without merit. Accordingly, the judgment of the district court is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
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