Source: https://www.scribd.com/document/21535138/Ovitz-v-Bloomberg-L-P-2009-NY-Slip-Op-32397-U-October
Timestamp: 2019-08-18 17:17:19
Document Index: 647074446

Matched Legal Cases: ['ART10', '§ 3211', '§ 5', '§ 5', '§ 349', '§ 349', '§ 349', '§ 349', '§ 5', '§ 5', '§ 3211', 'art 10']

Ovitz v Bloomberg, L.P. 2009 NY Slip Op 32397(U) October | Lease | Cause Of Action
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Rock Springs Assoc., a New York General Partnership Richard Chwatt, a General Partner Glen Chwatt, a General Partner v. T & M Kershisnik Investment Co. John R. Kershisnik Eileen C. Kershisnik Thomas J. Kershisnik Mary J. Kershisnik, John R. Kershisnik Eileen C. Kershisnik, Counter-Claimants v. Richard Chwatt Glen Chwatt, Counterclaim-Defendants. Rock Springs Assoc., a New York General Partnership Richard Chwatt, a General Partner Glen Chwatt, General Partner v. T & M Kershisnik Investment Co. John R. Kershisnik Eileen C. Kershisnik Thomas J. Kershisnik Mary J. Kershisnik, John R. Kershisnik Eileen C. Kershisnik, Counter-Claimants v. Rock Springs Assoc. Richard Chwatt Glen Chwatt, Counterclaim-Defendants, 986 F.2d 1429, 10th Cir. (1993)
O-plan 2012-2015-def-ENG(1)
Ovitz v Bloomberg, L.P.
2009 NY Slip Op 32397(U)
Docket Number: 603692/08
Judge: Judith J. Gische
- <. r
RT OF THE STATE OF NEW YORK - NEW YORK COUNTY
4 i-4 J, C;ir&p
PRESENT: PART
Index Number : 60369212008
DVITZ, BRUCE
MOTION DATK
BLOOMBERG LP. MOTION 8 8 0 . NO.
I thlr motion to/for
Notlce of Modon/ Order to Show Cause - Affldavtts - Exhlblts ...
Anawerlng Affidavits - Exhfblts
Aeplylng Affldavits L I
... I Yes $ No
Upon the foregoing papers, It 1s ordered that thlr mottan
J*S. C.
Check one: rn FINAL DISPOSITION NON- L DISPOSITION
SUPREME COURT OF THE STATE OF NEWYORK
COUNTY OF New YORK:PART10
---------------_-_-________1____________--------------------
Bruce Ovitz, on behalf of himself and all DECISION/~RDER
others similarly situated Index No.: 603692108
-against- PRESENT:
Hon. Judith J. GischQ
Bloomberg, L.P. and Bloomberg Finance L.P., J. S.C.
Upon the foregoing papers, the decision and order of the Zourt is as follows:
This is an action arising from an automatic renewal provision in an agreement
between the parties. Plaintiff is the lessee of information services and equipment;
defendants are, collectively, the information providers. The court has before it
defendants' pre-answer motion to dismiss the complaint for failure to state a cause of
action and because plaintiff has failed to plead his negligent misrepresentation claim
with specificity. CPLR 55 321 1 (a) (7) and 3016 (b). The motion is opposed by plaintiff.
On a motion to dismiss pursuant to CPLR § 3211 et a/,the pleading is to be
afforded a liberal construction and the facts as alleged in the complaint must be
accepted by the court as true, and are to be accorded every favorable inference. Leon
994); Morone v, Morone, 50 NY2d 481 ( I 980); Beattie v,
v. Martinez, 84 NY2d 83 (I
Brown & Wood, 243 AD2d 395 (1st Dept. 1997). In deciding defendants’ motion to
dismiss, the court will consider whether, accepting all of the plaintiff’s facts, they support
the causes of action asserted. Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 634
Where fraud or misrepresentation is charged, the misrepresentation must be
pleaded in detail so as to clearly inform defendant with respect to incident complained
of and give notice of allegations plaintiff intends to prove. CPLR 3016 (b).
Facta in the complaint and arguments presented
Plaintiff presents the following facts in his complaint to support each of his claims
Plaintiff is a resident of Illinois. He entered into a subscription agreement with
Bloomberg, L.P., a Delaware limited partnership with its principle place of business in
New York, New York (“defendants” at times “Bloomberg”). Bloomberg is in the
business of providing news, financial information and services (“services”) to its
subscribers. As per plaintiffs subscription agreement with Bloomberg, made June 15,
2000 (“agreement“), defendants provided him with services, a Bloomberg desktop
terminal that delivered real time financial information to him in an electronic format, and
a magazine subscription. The agreement was for a two year term with an expiration
date of June 15, 2002. Plaintiff never specifically renewed the agreement nor was he
notified that it had been renewed. He continued to receive and use defendants
services into 2008.
On September 15, 2008 plaintiff called defendants and notified them
telephonically that he wanted to cancel his agreement. He followed up the call with
Page2of 15
correspondence to defendants dated October 7, 2008. He was advised by defendants
that this was not possible because his agreement contained an automatic renewal
provision which automatically renewed the agreement every two years. Plaintiff
contends the automatic renewal provision is unenforceable and inoperable because
defendants never called his attention to it by sending him a renewal notice, as required
under sections 5-901 and 5-903 of the General Obligations Law (“GOL 5 ”).
Despite further demands by him that the defendants cancel his agreement, they
refused do so. In correspondence dated December 15, 2009, Bloomberg threatened to
terminate plaintiffs account and take legal action “which would jeopardize your credit
standing . . .” Plaintiff alleges that Bloomberg offered him a choice between keeping
the agreement until it expired on June 15, 2010, or paying an early termination fee of
$18,720. This termination fee is equal to one year‘s worth of accelerated subscription
payments under the agreement.
Plaintiff contends that defendants’ representatives told him it was Bloomberg’s
policy not to send advance notice of the automatic renewal provision or deadline and
that defendants have conducted their business that way for over ten (10) years.
Plaintiff brings this case on his own behalf as well as on behalf of all other persons who
entered into a subscription/ service agreement with Bloomberg since November 2002.
He seeks to have this case certified (at the appropriate time) as a class action. Plaintiff
alleges that Bloomberg systematically failed to provide plaintiff and members of the
putative class with notice of the automatic renewal provisions in their agreements, as
required under GOL 55 5-901 and 5-903. He alleges further that defendants refused to
pick up their equipment when he instructed them to do so, but continued to bill him for
Page3of 15
services he did not want. Defendants then began demanding payment, harassing him
for overdue payments, and even threatening him with legal action that has damaged his
credit worthiness. Plaintiff alleges that having to pay for these services, although he
asked for them to be terminated, has unjustly enriched the defendants because the
“renewal” agreement is inoperative and unenforceable. He also alleges that
defendants’ unauthorized renewal of the agreement is a deceptive business practice,
within the consumer protection laws of New York State.
The agreement contains the following provision which applies to its duration and
“2. Term.
(a) This agreement shall be effective from the date it
is accepted by Lessor and shall remain in full force and
effect thereafter until the date that is two years after the
date that the Services are first provided (the “Term”),
unless earlier terminated during the Term or any renewal
thereof, as follows: (i) Lessor shall have the right to
terminate this Agreement at any time upon not less than
60 days’ prior written notice to Lessor and upon payment
of the charges set forth in paragraph 3 of this Agreement;
and (ii) Lessor shall the right to terminate this Agreement
at any time immediately upon written notice to Lessee in
the event of a breach by Lessee of any of the provisions
(b) The Term shall be automatically renewed for
successive two-year periods unless Lessee or Lessor
elects not to renew by giving not less than 00 days’ prior
written notice to the other. If this Agreement is so
renewed for any additional period beyond the initial
Term, the charges payable pursuant to paragraph 3 (a)
hereof for such renewal period shall be calculated at the
prevailing rates then offered by Lessor, and the Schedule
shall be considered to be amended accordingly.”
Page4of 15
GOL §§ 5-901 applies to automatic renewals of leases of personal property. It
provides that such a renewal provision is “inoperative” unless it has been “flagged” for
“GOL § 5-901.Certain provisions of leases of personal
property inoperative unless notice thereof given to
lessee. No provision of a lease of any personal property
which states that the term thereof shall be deemed
renewed for a specified additional period unless the
lessee gives notice to the lessor of his intention to
release the property at the expiration of such term, shall
be operative unless the lessor, at least fifteen days and
not more than thirty days previous to the time specified
for the furnishing of such notice to him, shall give to the
lessee written notice, served personally or by mail,
calling the attention of the lessee to the existence of
such provision in the lease. Nothing herein contained
shall be construed to apply to a contract in which
the automatic renewal period specified is one month or
GOL 5 5-903 sets forth notice requirements for leases containing automatic
renewal provisions. It provides that such provisions are “unenforceable” for a specific
period of time, unless the proper notice has been provided:
“GOL 5 5-903. Automatic renewal provision of contract
for service, maintenance or repair unenforceable by
contractor unless notice thereof given to recipient of
1. As used in this section, “person” means an
individual, firm, company, partnership or corporation.
2. No provision of a contract for service, maintenance
or repair to or for any real or personal property which
states that the term of the contract shall be deemed
person receiving the service, maintenance or repair
gives notice to the person furnishing such contract
Page5of 15
service, maintenance or repair of his intention to
terminate the contract at the expiration of such term,
shall be enforceable against the person receiving the
service, maintenance or repair, unless the person
furnishing the service, maintenance or repair, at least
fifteen days and not more than thirty days previous to the
time specified for serving such notice upon him, shall
give to the person receiving the service, maintenance
or repair written notice, served personally or by certified
mail, calling the attention of that person to the
existence of such provision in the contract.
3. Nothing herein contained shall be construed to apply
to a contract in which the automatic renewal period
specified is one month or less.”
Plaintiff claims the automatic renewal provision in his agreement is inoperative
and unenforceable because he was not notified that the agreement would be renewed
automatically unless he took action to terminate it. Plaintiff states that he should not
have to pay for defendants’ services after the expiration of the agreement on June 15,
In addition to his claims (“COA”) based upon violations of GOL 5s 5-901 and 5-
903 (lmt
COA), plaintiff alleges these other causes of action: breach of contract - good
faith and fair dealing (2ndCOA), unjust enrichment (3rdCOA), negligent
misrepresentation (4‘hCOA), and unfair and deceptive acts in violation of New York’s
General Business Law (“GBL”) § 349 (!jth
COA). Plaintiff seeks a permanent injunction
against defendants automatically renewing their service agreement in this manner, and
a declaration that these service Bloomberg agreements are unenforceable, as a matter
of law (6‘h COA).
In support of their motion to dismiss the complaint, defendants first argue that
there is no private cause of action for a violation of GOL 55 5-901 and 5-903, but even
if there is, the only consequence of a failure to notify is that the agreement is not
renewed for a definite period of time (in this case two years), but plaintiff is still
financially responsible for paying for the services he received and used. Defendants
argue further that since plaintiff continued to accept the benefits of the service
agreement beyond its expiration date (i.e. June 15, 2008),he waived the notice
requirements found in GOL $3 5-901 and 5-903, effectively ratifying the agreement to
continue his subscription. Since plaintiff was billed for the services he retained and
used, defendants deny they were unjustly enriched, but simply remunerated for they
Defendants argue that the notice requirements of GOL 55 5-901 and 5-903
cannot be read into or imputed to their agreement with plaintiff and since the agreement
itself does not contain a notice provision, they contend there are no facts to support
plaintiffs breach of contract cause of action. Defendants argue they performed their
obligations under the agreement (Le. provide services) and plaintiff has not stated what
services they withheld or failed to provide. Defendants argue that plaintiffs negligent
misrepresentation claim is not distinct from his breach of contract claim, and therefore,
this tort claim must be dismissed as well.
Bloomberg contends that the contract was made in Illinois and the services they
were provided were also provided to the plaintiff who has his business in Illinois. They
Page7of 15
argue that plaintiff has not presented any facts to support their claim that defendants
engaged in an deceptive act that misled or affected plaintiff here in New York, which
they contend is a necessary requirement for the application of GBL 5 349. A separate
argument by them is that the agreement is not for consumer goods, but business
services and, therefore, by definition, their alleged practices and acts are not consumer
In support of their motion to dismiss plaintiffs claim for a declaratory judgment,
defendants maintain that there is no justiciable controversy because plaintiff stopped
making payments after September 2008, and Bloomberg has now waived the money it
claimed was due and unpaid. They separately argue that there is no factual basis for
plaintiffs claim for a permanent injunction because he has not set forth what the
irreparable harm to him would be.
In opposition to these arguments, plaintiff argues that the protections of GOL $3
5-901 and 5-903cannot be waived and, in any event, waiver requires the
relinquishment of a known right. Plaintiff alleges he did not know the agreement was
automatically renewed for two years at a time. He contends defendants breached their
agreement by failing to act in good faith, which resulted in plaintiff being deprived of the
right to simply cancel the contract after it expired. Plaintiff argues that GBL § 349 does
apply to the facts in the complaint because the overdue bills, notices, etc., were sent
from New York and Bloomberg deceptive practices and conduct emanated in New
Page8of 15
Assuming that the allegations in the complaint are true, they support plaintiffs
claims based upon violations of the automatic renewal statutes (GOL $5 5-901, 5-903)
and the deceptive practices act (GBLS 349). Furthermore, affording the complaint a
liberal construction, plaintiff has also stated a claim for injunctive relief and a
declaratory judgment. However, the court find that plaintiff has not set forth facts to
support his claims against the defendants for breach of contract, unjust enrichment or
negligent misrepresentation. For the reasons that follow, defendants’ motion for the
preanswer dismissal of the 2”d,3rdand 4‘h COAs is granted, but denied as to the lot,
and 6thCOAs.
GOL 88 5-901 and $-9Q3(1’‘ C O N
The salutary purpose of GOL 55 5-901 and 5-903 is to prevent an unsuspecting
lessee from being trapped into a renewed service contract or personal property
agreement for a fixed period of time. Thus, by statute, an automatic renewal provision
in a lease for personal property is “inoperative,” or if it is in a service contract,” it is
“unenforceable,” unless the lessor notifies the lessee 15 to 30 days in advance of the
automatic renewal. It is well established law that there is a private right of action under
the automatic renewal statutes. Protection lndustries Core. v. DDB Needham
Worldwide, Inc., 306 AD2d 175 (1“ Dept 2003); Concourse Nursing Home v. Axiom
m i n q Group, Inc., 279 A.D.2d 271 (IstDept. 2001).
Plaintiff states the automatic renewal provision of the contract was not brought to
his attention, as required under GOL 55 5-901 and 5-903, yet Bloomberg seeks to hold
Pagegof 15
him responsible for an additional two year term under the “renewed” agreement. These
facts support a claim that the agreement was not properly renewed beyond the
expiration date of the initial term, even if plaintiff accepted Bloomberg services and
made payments to the defendants after the expiration of the initial term. Guerrero v.
West 23rdStreet R a a l t v . , 45 AD3d 403 (IatDept 2007) lv den 10 NY3d 707 (2008);
P rotection Industries CQrD. v. DDB Needham Worldwide. Inc, , 306 AD2d 175 (IatDept
GBL 6 349 KithCOA)
GBL § 349 provides that “[dleceptive acts or practices in the conduct of any
business, trade or commerce or in the furnishing of any service in this state are hereby
declared unlawful.” It is an intentionally broad statue, applying “to virtually all economic
activity.” Go$hen v. Mutual Life Ins. Co. of New Yorh, 98 N.Y.2d 314, 324 (2002). To
establish a violation of GBL § 349 the conduct complained of must be
consumer-oriented and have a broad impact on consumers at large as compared to a
private contract dispute that is unique or particular to one of the parties to the lawsuit.
New York Universitv v. Continental Ins. Co., 87 NY2d 308, 324 (1995); Oswvaqe
Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25 (1995).
Although the Bloomberg agreement is for the defendants to provide business
related information to plaintiff who is a businessman, he is nonetheless a “consumer”
within the meaning, and spirit, of the deceptive practices act because he alleges
Bloomberg deceived the “consuming public” at large, not just him. Osweao Laborers’
Local 214 Pension Fund v. Marine Midland Bank, N.A., supra; also Protection Industries
CWP. v. DDB Needham Worldwide. Inc, , 306 AD2d 175 (1Ot Dept 2003) (alarm contract
for a company). There are, apparently, numerous subscribers who receive Bloomberg
Admittedly plaintiff is an out of state resident, he had a computer terminal on his
desk at his office in Illinois, and he apparently used the information in that state. To
qualify as a prohibited act under the statute, the transaction in which the consumer is
deceived, and the deception of the consumer, must occur in New York. GBL 5 349 (h);
Goshen v. Mutual I ife Ins. Co. of New York, 98 NY2d 314, 324, 325 (2002); also Drizin
v. Snrint Corn
. L, 12 AD3d 245 (1ItDept 2004). Since plaintiff factually asserts that
Bloomberg sent him letters from its New York headquarters, and these letters stated he
owed money because the renewal agreement was effective, plaintiff has stated facts to
support his claim that the deception occurred in New York. The overdue notices and
letters threatening to take legal action against him led plaintiff to believe he either had
to make the monthly payments under the agreement, even though he notified
defendants he had terminated their services, or he had to pay an early termination fee.
Permanent lniunction and Declaratow Judqment (8th (-0
a) Permanent Injunction
“A permanent injunction is a drastic remedy which may be granted only where
the plaintiff demonstrates that it will suffer irreparable harm absent the injunction.”
Merkos L’lnvonei Chinuch. Inc. v. Sharf, 59 AD3d 403, 408 (2ndDept 2009). Such relief
is “to be invoked only to give protection for the future ... [t]o prevent repeated violations,
threatened or probable, of the [plaintiffs’] property rights.” Merkos L’lnvonei Chinuch,
bc. v. $hat-€, 59 AD3d at 408.
Until recently, Bloomberg was sending plaintiff late notices and threatening to
take legal action which could harm his credit rating. Presumably, these notices are sent
out to other subscribers who, like plaintiff, have a dispute about the expiration date of
their subscription agreement. The threat to plaintiffs creditworthiness (and the putative
class) is sufficient to establish irreparable injury that warrants the grant of injunctive
relief at the end of this case. Four Times Square Associates v. Cisna Investmente, 306
AD2d 4 , 6 (letDept 1994).
b) Declaratory Judgment
An action may not be maintained if the issue presented for adjudication involves
a future event beyond control of the parties which may never occur. CUOmo v. Lonq
Jslmd m a Co,,71 NY2d 349, 354 (1988) (internal citations omitted). However, an
action for a declaratory judgment is the appropriate remedy where there is a justiciable
controversy. Cuomo v. Lonq Island Liahtina Co., 71 NY2d at 354. Although plaintiff
made no payments to defendants after September 2008, and the defendants have
“waived” the early termination buy-out fee they had originally charged him, a justiciable
controversy stiII exists.
Breach of Contract: Good Faith and Fair Dealinq (2ndCOA)
Plaintiff has not set forth facts to support his breach of contract claim. His legal
argument is that GOL §§ 5-901 and 5-903 provide statutory requirements pertaining to
P a g e l 2 o f 15
renewals that should be implied into his agreement. Thus, he contends that if the
requirements were not met, this is a breach of the agreement. A claim for breach of an
implied covenant of good faith and fair dealing does not provide a separate cause of
action from a breach of contract claim. Consequently, the parties to an express
contract are bound by an implied duty of good faith, but if that duty is breached, it is
merely a breach of the underlying contract. Canstar v. J.A. Jones Const. Co 212 .I
AD2d 452 (IstDept 1995). Applying the law to the facts asserted by plaintiff, they do
not support a breach of contract claim against the defendants. He has not identified
any obligations of the defendants under the contract that they did not perform.
Therefore, defendants' motion for the dismissal of the breach of contract, implied
covenant of good faith and fair dealing claim is granted.
h i u s t Enrichment (3' COA)
The legal principles of restitution and unjust enrichment are based upon quasi
contract. They provide that someone should not be allowed to enrich him or herself
unjustly at the expense of another. Spallina v. Giannoccaro, 98 A.D.2d 103 (4thDept
1983). Generally, the principle of unjust enrichment applies to a situation where
someone has received the money or goods of another which is inequitable or against
good conscience for him or her to retain. Miller v. Schloss, 218 N.Y. 400, 407 (1916).
The remedy for unjust enrichment is restitution, which is essentially returning the money
or property unjustly conferred.
Plaintiffs facts support a claim that there were statutory violations of the
automatic renewal statutes. However, after the agreement expired and before he
cancelled it, plaintiff had the beneficial use of defendants' services and desktop
Page13of 15
terminal. Plaintiff provides no facts to support a claim that he was entitled to have the
continued beneficial use of defendants’ subscription services and equipment provided
by the defendants beyond the term of the agreement without having to pay for them.
Concourse Nursina Horne y. Axiom Fundins G r o w . Inc., 279 A.D.2d 271 (letDept.
2001). While defendants’ failure to comply with General Obligations Law §§ 5-901 or 5-
903 may result in the leases never having been effectively renewed for a definite term,
allowing them to be canceled by plaintiff at any time, the cited statute does not operate
to allow plaintiff to continue knowingly and willingly accept the benefit of the agreement
(i.e. services and desktop terminal, etc.) without compensating the defendants. JJJJ
Electronics Products v. Wells Farq
- 0 Financial Leasinq. Inc., 6 AD3d 397, 398 (2ndDept
2004);-ina Home v. Axiom Funana Groue. InG., supra. Therefore,
defendants’ motion for the dismissal of the unjust enrichment claim is granted.
N eaqant Misrepresentation (4thCOA)
A claim for negligent misrepresentation requires, in the first instance, a special
relationship of trust or confidence, which creates a duty for one party to impart correct
information to another. J.A.O. Acquisition Corp. v Stavitskv, 8 NY3d 144, 148, rearg
denied 8 NY3d 939 (2007); United Safetv of America, Inc. v. CongoIidated Edison Co.
of New Ywk, Inc,, 213 A.D.2d 283 (IBt
Dept 1995) (internal citations omitted). A simple
arm’s length business relationship is not of a confidential or fiduciary nature; it will not
support a cause of action for negligent misrepresentation. River Glen Asocs..
Merrill Lvnch Credit Corp., 295 AD2d 274, 275 (Iat
Dept 2002).
The facts supporting this claim are that Bloomberg sent out false bills demanding
payment although it was not entitled to collect those payments. There are no facts
Page14of 15
tending to show t h e parties had a special relationship of trust or confidence, the claim is
not pled with specificity, and the claim, in any event, Is factually indistingulshable from
the 1" COA based upon the statutory violations of GOL QQ 5-901 and 5-003.
Defendants' motion for the dismissal of the negligent misrepresentation claim is
Conclusfon
Defendants' motion for the dismissal of the complaint Is granted as to the breach
of contract (2"), unjust enrichment (3') and negligent rnlsrepresentation (4th)causes of
action. Those claims are hereby severed and dismissed. The motion is, however,
denied as to the claims based upon violations of the General Obligations Law and
General Business Law (lmt
and 5* COA). It is also denied as to plaintiffs claim for a
permanent Injunction and declaratory judgment (6'hCOA). Bloomberg's time to answer
Is hereby extended in accordance with CPLR § 3211 (f).
The prellmlnary conference wlll be held on November 12,2009 in Part 10 at
9:30 a.m. No further notlces will be sent.
Any relief requested that has not been addressed has nonet dless
considered and is hereby expressly denied. I
Page 150f 15
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