Court Opinion

ID: 4212469
Source: CourtListenerOpinion
Date Created: 2017-10-18 15:00:28.913948+00
Date Added: 2024-06-11T14:40:41.614878
License: Public Domain

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.
----------------------------------------------------------------------
EMILY KOMLOSSY,
                                 Plaintiff-Appellant,

                              v.                                         No.   17-834-cv

FARUQI & FARUQI, LLP, NADEEM FARUQI,
LUBNA FARUQI
                                 Defendants-Appellees,
----------------------------------------------------------------------
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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