FILED: NEW YORK COUNTY CLERK 09/06/2016 05:52 PM

NYSCEF DOC. NO. 202

INDEX NO. 652721/2014

RECEIVED NYSCEF: 09/06/2016

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK
-----------------------------------------------------------X
FCRC MODULAR, LLC and FC MODULAR,
Index No: 652721/2014
LLC (formerly known as FC+SKANSKA
MODULAR, LLC)
IAS Part 39
Hon. Judge Saliann Scarpulla
Plaintiffs,
-againstSKANSKA MODULAR LLC and RICHARD
A. KENNEDY,

ORAL ARGUMENT REQUESTED

Defendants.
------------------------------------------------------SKANSKA MODULAR LLC and RICHARD
A. KENNEDY,
Third-Party Plaintiffs
-against
FOREST CITY RATNER COMPANIES,
LLC, FOREST CITY ENTERPRISES, INC.,
JOHN DOES 1-10 AND JANE DOE,
Third-Party Defendants
-----------------------------------------------------------X
______________________________________________________________________________
DEFENDANTS/THIRD-PARTY PLAINTIFFS MEMORANDUM OF LAW IN
SUPPORT OF THEIR MOTIONS FOR LEAVE TO REARGUE, TO RENEW, AND TO
VACATE THE DECISION AND ORDER OF THE COURT DATED AUGUST 8, 2016
______________________________________________________________________________
Peckar & Abramson, P.C.
Attorneys for Defendants/
Third-Party Plaintiffs
41 Madison Avenue, 20th Floor
New York, NY 10010
(212) 382-0909

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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT .................................................................................................... 1
STATEMENT OF FACTS ............................................................................................................. 5
LEGAL ARGUMENT........................................................................................................ 8
I.

LEGAL STANDARDS .............................................................................. 8

a.

Motion to Reargue .......................................................................... 8

b.

Motion to Renew............................................................................. 9

c.

Relief from Order under CPLR 5015............................................ 11

II.

LEAVE TO REPLEAD SHOULD HAVE BEEN PERMITTED............ 14

III.

THE FACTS AND LAW DID NOT WARRANT DISMISSAL OF

SKANSKA MODULARS BREACH OF CONTRACT CLAIMS......... 17

IV.

FRAUD AND MISREPRESENTATION ................................................ 22

V.

KENNEDYS WILLIAMS v. WILLIAMS CLAIMS WERE

PROPERLY PLED ................................................................................... 23

VI.

Contempt................................................................................................... 25

CONCLUSION............................................................................................................................. 25

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TABLE OF AUTHORITIES
Page(s)
Cases
300 W. Realty Co. v. City of New York,
99 A.D.2d 708 (1st Dept. 1984).................................................................................................8
Armstrong v. Simon & Schuster, Inc.,
85 N.Y.2d 373 (1995) ..............................................................................................................23
Beal Sa. Bank v. Sommer,
8 N.Y.3d 318 (2007) ................................................................................................................18
Castor Petroleum, Ltd. v. Petroterminal de Panama, S.A.,
90 A.D.3d 424 (1st Dept. 2011)...............................................................................................16
Citimortgage, Inc. v. Guarino,
42 Misc. 3d 962 (Sup. Ct. Suffolk Cnty. 2014) .......................................................................11
Dixon v. New York Cent. Mut. Fire Ins. Co.,
265 A.D.2d 914 (4th Dept.1999) ...............................................................................................8
Epifani v. Johnson,
65 A.D.3d 224 (2d Dept. 2009) ...............................................................................................24
Givati v. Air Techniques, Inc.,
104 A.D.3d 644 (2d Dept. 2013) .............................................................................................18
Grunstein v. Silva,
2009 WL 4698541 (Del. Ch. Dec 8)..................................................................................22, 23
Guggenheimer v. Ginzburg,
43 N.Y.2d 268 (1977) ..............................................................................................................10
Halcyon Jets, Inc. v. Jet One Group, Inc.,
69 A.D.3d 534 (1st Dept. 2010)...........................................................................................6, 24
In re Holden,
271 N.Y. 212 (1936) ................................................................................................................11
HSBC Bank USA, N.A. v. Halls,
98 A.D.3d 718 (2d Dept. 2012) .............................................................................................8, 9
Janssen v. Inc. Vill. of Rockville Ctr.,
59 A.D.3d 15 (2d Dept. 2008) ...........................................................................................15, 16

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Kalir v. Ottinger,
2011 WL 6968334 (Sup. Ct., N.Y. Cnty 2011) .......................................................................10
Knutt v. Metro Int'l, S.A.,
91 A.D.3d 915 (2d Dept. 2012) ...............................................................................................24
Metro Envelope Corp. v. Westvaco,
72 A.D.2d 695 (1st Dept. 1979)...............................................................................................16
Narrowstep, Inc. v. Onstream Media Corp.,
No. CIV.A. 5114-VCP, 2010 WL 5422405 (Del Ch., Dec. 22, 2010) ....................................22
Osborn ex rel. Osborn v. Kemp,
991 A.2d 1153 (Del. 2010) ......................................................................................................18
Rovello v. Orofino Realty Co.,
40 N.Y.2d 633 (1976) ..............................................................................................................15
Ruttenberg v. Davidge Data Sys. Corp.,
215 A.D.2d 191 (1st Dept. 1995).............................................................................................18
S. & M. Amusement Corp. v. Kaplan,
127 N.Y.S.2d 638 (Sup. Ct. N.Y. Cnty. 1953) ........................................................................23
Segall v. Heyer,
161 A.D.2d 471 (1st Dept. 1990).........................................................................................9, 10
Shapolsky v. Shapolsky,
22 A.D.2d 91 (1st Dept. 1964).................................................................................................16
Slud v. Guild Properties,
6 Misc.2d 188 (Sup. Ct. Suffolk Cnty. 1952) ..........................................................................10
Universal Capital Mgmt., Inc. v. Micco World, Inc.,
No. CIV.A. N10C-07039RRC, 2012 WL 1413598 (Del. Super. Feb. 1, 2012) ......................22
Williams v. Williams,
23 N.Y.2d 592 (1969) ...................................................................................................... passim
Woodson v. Mendon Leasing Corp.,
100 N.Y.2d 62 (2003) ..............................................................................................................12
Other Authorities
CPLR 2221...............................................................................................................................1, 6, 9
CPLR 3013.....................................................................................................................................16
CPLR 3025.....................................................................................................................................15
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CPLR 3211...............................................................................................................................15, 16
CPLR 5015...........................................................................................................................1, 11, 14

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PRELIMINARY STATEMENT
Defendants/Third Party Plaintiffs Skanska Modular LLC (Skanska Modular) and
Richard Kennedy (Kennedy) (collectively Defendants) submit this Memorandum of Law in
support of their Motions for Leave to Reargue, to Renew, and to Vacate the Decision and Order
of the Court, dated August 8, 2016 (the Decision and the Order), pursuant to CPLR 2221
and CPLR 5015(a)(3). This application is three separate motions (to reargue, to renew, and to
vacate) which are being combined into one set of papers since they relate to the Order and they
rely upon the same facts and documents. The Order granted Plaintiffs FCRC Modular, LLC
(FCRC Modular) and FC Modular, LLC (FC Modular) and Third-Party Defendants Forest
City Ratner Companies LLC (FCRC) and Forest City Enterprises, Inc.s (FCE) (collectively,
Forest City) motion to dismiss all of Defendants counterclaims, third-party claims, and one
affirmative defense. It also denied, as moot, Defendants motion for civil contempt against nonparties which failed to properly respond to subpoenas duces tecum.
Skanska Modulars motion under CPLR 5015(a)(3), or via the Courts own inherent
powers, is based on the misconduct and knowing misrepresentations of Forest City, and their
counsel, Troutman Sanders LLP, in these consolidated actions which in part led to the erroneous
Decision, as explained below and in the accompanying Affirmation of Bruce D. Meller, Esq.
(Meller Affirm.). As seen in the documentary admissions from Forest City, its arguments,
from day one, to the Court have been false and contrary to the true intention of the parties
agreements, which, as presented by Skanska Modular, is that, for the B2 Project, responsibility
for the modular invention and modular design remained with Forest City. Forest Citys position
has consistently been that Skanska Modular bought the farm when it signed the Limited
Liability Agreement (LLC Agreement), when the truth of the matter is the exact opposite for
the B2 project. Nonetheless, Forest City won dismissal by advancing these false arguments.

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The facts are clear that: following Forest Citys solicitation of Skanska for participation
in a new modular business venture, the parties negotiations were going nowhere and the
transaction was in jeopardy. One of the chief impasses concerned which entity would assume
responsibility for defects that may be present in Forest Citys modular design. Forest Citys
position was that all liability should reside with the new modular company to be formed, as was
clearly set forth in the email from MaryAnne Gilmartin, CEO of Forest City to Richard Kennedy
and Joshua Kohner of Skanska, dated June 28, 2012:
Design responsibility. Seller should have design responsibility for the B2
Modules. Under the Prototype Agreement, all intellectual property rights in the
B2 Module Design are being transferred to Seller (upon the execution of the
Operating Agreement) and Seller will have verified the adequacy of such design.
As such, Owner should not bear responsibility for deficiencies in the design,
including schedule/cost impacts and warranty obligations related to such
deficiencies.
[Gilmartin Email, dated June 28, 2012, attached to Meller Affirm. as Ex. A (emphasis added)].
This email was a cut and paste which forwarded the position of Forest Citys counsel, Aaron
Abraham, whose name appears at the bottom of the email and who negotiated what eventually
became the CM Agreement on behalf of Forest City.
As previously argued, Skanska objected to this proposal since neither Skanska nor
Skanska Modular had sufficient information available to verify that Forest Citys invention was
truly as complete as Forest City had touted. Once Forest City discovered that the deal was in
danger1, it revised its position to entice Skanska to continue with the negotiations. Changing
positions, Ms. Gilmartin then said that the B2 Project would be a special one-off, whereby the
owner would retain design responsibility, not Skanska or Skanska Modular, and that subsequent
1

It will be proven later at trial, the transaction was time-sensitive to Forest City and if a deal was not reached
quickly with Skanska, then Forest Citys funding was in jeopardy. As alluded to in Ms. Gilmartins email dated
August 1, 2012 [Meller Affirm., Ex. B at pp. 1, 2], the timing of the deal was just as important as the deal points,
purportedly, Forest City had a non-negotiable deadline, and the parties had to execute a term sheet in less than one
weeks time and final documents by August 29th for the deal to work.

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modular projects would be handled differently [See Gilmartin email to William Flemming of
Skanska, dated August 1, 2012, attached to Meller Affirm. as Ex. B]. More specifically, Ms.
Gilmartins email entitled Modular Partnership stated:
My proposed deal below:
-Substantially de-risks the transaction for skanska; -Materially erodes FCRCs
return; - Requires considerably more risk acceptance on our part.
***
1. B2 owner holds a design/bid/build contract for $116.5m. In this construct
Skanska is NOT assuming design responsibility but maintains responsibility for
delegation of design responsibility for the trades based on the drawing and
specifications. Subsequent factory orders will likely require a design build
approach but B2 would be a oneoff.
2. Skanskas corporate guarantee will cover GMP cost and schedule but not
design.
***
7. FCRC outside counsel would also draft a new B2 Agreement to reflect this
new GMP structure .
[Id. (emphasis added)]. FCRCs outside counsel was Aaron Abraham, who obviously had
knowledge of this major change in Forest Citys position and the true intent of the agreements as
thereafter drafted.
Immediately, on the heels of Ms. Gilmartins August 1st email, the CM Agreement was
born and a revised design/bid/build agreement for B2 issued by August 7th, specifically including
modifications to Sections 2.4 and 2.11 to remove design responsibility from Skanska, to place
design responsibility on B2 Owner, and permitting Skanska to rely on any information provided
by B2 Owner and its Affiliates (compare 2.4, 2.11/2.12 in redlined versions at NYSCEF
Doc. Nos. 147 & 148, and 2.4, 2.11 in the August 14th version at NYSCEF Doc. No. 149,
previously provided to the Court on the underlying motion, attached to the Meller Affirm. as
Exs. H, I, J). These bargained-for rights survive in the executed CM Agreement:

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Owner Information. Contractor may rely upon and use in the performance of any
obligations under this Agreement, information supplied to it by or on behalf of
Owner and its Affiliates, providing information applicable to the Work, the B2
Project, or the Site. Contractor is not responsible for defects and/or deficiencies
in the Work attributable to Contractor's reliance upon any such information that is
incorrect, inaccurate or incomplete. Contractor, however, shall notify Owner
promptly of any inaccuracies in such information that Contractor actually
discovers so as to minimize potential delays.
[Meller Affirm., Ex. G, at 2.11; see also, id. at 2.4].
Similarly, the LLC Agreement thereafter included the CM Agreement (including 2.11)
as a contract document, to make the CM Agreement a scheduled exhibit of the LLC Agreement,
to add the CM Agreement as a capital contribution of FCRC Modular to FC+S (not Skanska),
and to place design responsibility upon B2 Owner [Meller Affirm., Ex. F, 1.1 definition of
Skanska Prime Contract, 3.1 (a)(i), 4.1(a)(i)(C), 19.6, and Exhibit D to LLC Agreement].
Thus, as to the B2 Project, the LLC Agreement was made subject to all the same caveats found
in the CM Agreement due to it being a one-off. Consistent therewith, the LLC Agreement for
the Modular Partnership also states that FC+S (i.e., the modular company) would not have
design responsibility for the B2 Project. [LLC Agreement, 3.1(a)(i), Meller Affirm., Ex. F].
From these facts, it is clear that Forest City hid the true intent of the parties from the
Court and it advanced a false interpretation of the agreements to obtain the Order.
Respectfully, the Court not only accepted Forest Citys false argument but, in dismissing
the claims and making premature findings of fact, it rendered multiple clauses of the LLC
Agreement meaningless and stripped Skanska Modular of the opportunity to present factual
evidence and otherwise pursue its claims through discovery. At a minimum, and especially if the
Court afforded Skanska Modular all favorable inferences from its allegations and searched the
four corners of the pleading for a cause of action, as required, Skanska Modular presented an
alternate reasonable (and true) interpretation of the LLC Agreement that at least created a

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question of fact that should have caused the Court to deny Forest Citys motion or, at worst,
should have entitled Skanska Modular leave to re-plead.
Briefly, the following key points warrant leave to reargue/renew:

The Court failed to address Skanska Modulars request to re-plead.

On a limited record, the Court rendered the inclusion of the CM Agreement into
the LLC Agreement meaningless based on the mere presence of a merger clause.
In doing so, the Court found that Skanska Modular could not rely on Forest Citys
misrepresentations during their negotiations concerning the B2 project. Skanska
Modular offered a viable alternative reading of the inclusion of this document
which was true and it should have been given an opportunity to pursue these
claims. Moreover, at the least, the purpose for the inclusion of the CM
Agreement into the LLC Agreement is unknown to the Court or ambiguous, and
the motion had to be denied.

The Courts reliance on law that relates to the implied duty of good faith and fair
dealing is irrelevant as the Court failed to address the express covenant of good
faith and fair dealing present in the LLC Agreement or to realize that Skanska
Modulars pleading set forth a breach of the express covenant (50 of Answer,
Counterclaims and TPC, Moran Affirm., Ex. C).

With respect to the fraud/misrepresentation claims, the Court mistakenly found

that Skanska Modular did not allege that the representations were knowingly false
when made, even though the pleading expressly alleges it. Skanska Modular also
pled with sufficient specificity under Delaware law because the
misrepresentations were ongoing in nature and endemic to the Forest City entities
as a whole. However, if there was any insufficiency, Skanska Modular should
have been permitted to cure it through re-pleading.

Kennedys Williams claim was properly pled, but to the extent the Court found
otherwise, Kennedy should have been granted leave to re-plead.

For all these reasons, the Court should grant Skanska Modulars Motion for Leave to
Reargue, Renew, and Vacate the Decision. Alternatively, Skanska Modular should be afforded
leave to re-plead, as it previously requested, in the event the Court granted the motion to dismiss.
STATEMENT OF FACTS
For the Courts reference, an accurate summary of the relevant facts may be found in
Skanska Modulars memorandum of law submitted in opposition to Forest Citys motion to

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dismiss. Pursuant to CPLR 2221, that document and the other relevant papers submitted in
connection with the motion to dismiss are attached to the Moran Affirm. and the Meller Affirm.
Importantly, the Court is referred to the Meller Affirm. for factual evidence that is relevant to the
motions to renew/vacate demonstrating Forest Citys misconduct before the Court.
As the Court is aware, prior to January 2012, Skanska was solicited2 by Third-party
Defendant FCRC to participate in a new modular business venture involving a pipeline of future
work at the Atlantic Yards Project in Brooklyn.

FCRC provided information and made

representations, both in the Opportunity Brief and continuously thereafter during the parties
negotiations, as to the supposed great value of its IP (inclusive of its modular design) and other
resources that had resulted from a multi-year and multi-million dollar research and development
effort. The transaction was premised upon the IP which was touted as a full invention ready to
be exploited by co-partners in a new business venture. It was not a mere invitation to engage in a
research and development exercise to see if the technology would work.

At bottom, the

gravamen of Skanska Modulars claims is that this IP and Forest Citys capital contributions are
worthless, not as they were represented to be, and certainly nowhere near the $9,725,000
valuation placed upon them in the LLC Agreement. [See, Decision at pp. 7-8, attached as Ex. C
to the Meller Affirm.].

Notably, as defined by the LLC Agreement, the IP exclusively

contributed by Forest City also included the modular design, the factory, factory labor pool, and
factory processes to be employed on the B2 Project [see, expansive definitions of Exclusive IP,
2

The Decision wrongly focuses solely upon the Opportunity Brief. The Opportunity Brief is but one example of a
solicitation that contained FCRCs representations as to the IP that Forest City was contributing to the transaction.
Outside of the document, misrepresentations were continuously made which Skanska Modular will detail in the
future, some of which are currently included in Skanska Modulars Answer, Counterclaims and Third-party
Complaint [see, e.g., 18, 20, 65, attached as Ex. C to Moran Affirm.]. Whether or not the Opportunity Brief is a
contract document is of no moment [Decision at p. 8, Meller Affirm., Ex. C] since misrepresentations made
outside of a contract are still actionable (i.e., fraud in the inducement). Thus, especially upon the limited record
before the Court, the Decision was incorrect in singularly focusing on the Opportunity Brief as the sole source of the
breach and misrepresentation claims and/or in finding the Opportunity Brief to be a mere business proposal or
brochure and not a contract containing any binding promises. [Id.]

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High-Rise Modular IP, Intangible Assets, and Modular Innovations in Section 1.1 of the
LLC Agreement, attached as Ex. F to the Meller Affirm.].

Reliance upon Forest Citys

representations was fundamental.

As was argued previously and is proven by the Gilmartin emails, the bargained-for
changes to the CM Agreement (and its inclusion as a contract document of the LLC Agreement)
form a key part of the transaction and were relied upon by Skanska Modular in agreeing to enter
into agreements with Forest City. The representations that were made by Forest City and its
affiliates as to the worth, value, and strength of the IP were made with the intent to pull Skanska
into the venture, and to create the impression that Skanska Modular was going to be investing in
a viable business. Skanska Modular did not believe that it would be left to handle a worthless
design, insufficient to fabricate the Project as represented in the contract documents. Indeed,
Skanska and Skanska Modular secured protection against this (through clauses such as 2.4 and
2.11 of the CM Agreement as included in the LLC Agreement) in case Forest Citys design was
deficient. When viewed in the proper context of the negotiations, the import of Section 2.11 and
of the inclusion of the CM Agreement into the LLC Agreement, making B2 a one-off, cannot
be understated and the Court erred in construing the agreements otherwise.
And yet, despite the limited record before it, the Decision made certain findings of fact
based in part upon Forest Citys misrepresentations that do not comport with the realities of the
parties negotiations and the true intent of the LLC Agreement. Specifically, Forest City has
consistently argued that it has disclaimed all liability and has no contractual responsibility for its
modular invention, when, in fact, by its own documentary admissions, Forest City knew and
agreed that the B2 Project (being the first project to employ Forest Citys modular design) was to
be different and, more specifically, that for B2, Skanska and Skanska Modular would not bear

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any responsibility for the modular design, but same would reside with Forest City. The Gilmartin
emails show Skanska Modulars arguments to be correct.
For all of the reasons that follow, the Court should grant Skanska Modulars Motions for
Leave to Reargue, to Renew, and to Vacate the Decision and Order. Alternatively, Skanska
Modular should be afforded leave to re-plead, as it previously requested.
LEGAL ARGUMENT
I.

LEGAL STANDARDS
a.

Motion to Reargue

A motion for leave to renew or reargue is addressed to the sound discretion of the
Supreme Court. HSBC Bank USA, N.A. v. Halls, 98 A.D.3d 718, 718 (2d Dept. 2012); Dixon
v. New York Cent. Mut. Fire Ins. Co., 265 A.D.2d 914, 914 (4th Dept.1999). A motion for
reargument must be based upon matters of fact or law allegedly overlooked or misapprehended
by the court in determining the prior motion, but shall not include any matters of fact not offered
on the prior motion. HSBC Bank, supra, 98 A.D.3d at 718 (citing CPLR 2221(d)(2)); 300 W.
Realty Co. v. City of New York, 99 A.D.2d 708, 709 (1st Dept. 1984).
The present motions are in part founded on the premise that the Court misinterpreted the
applicable law and/or facts (reargument), it did not afford Skanska Modular all favorable
inferences from its pleadings, ignored Skanska Modulars request to replead, overlooked the
negotiation history of Section 2.11 of the CM Agreement3/LLC Agreement and, in other part,
upon new evidence that was not before the court, i.e., the Gilmartin emails (renewal/vacate). In
this regard, the statute provides:
3

It is emphasized that the prior CM Agreement drafts were submitted to the Court on the motion [See, NYSCEF
Doc. Nos. 145 at pp. 1-4 (attached to Moran Affirm. at Exhibit B), 147, 148, and 149 (attached to the Meller Affirm.
as Exs. H, I and J)] and were addressed at oral argument. [Tr. 19:2-26; 20:2-13, attached as Ex. D to Meller
Affirm.]. The argument made then was the exact argument which is proven true by the Gilmartin emails herein
[Meller Affirm., Exs. A and B].

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(f) A combined motion for leave to reargue and leave to renew shall identify
separately and support separately each item of relief sought. The court, in
determining a combined motion for leave to reargue and leave to renew, shall
decide each part of the motion as if it were separately made. If a motion for leave
to reargue or leave to renew is granted, the court may adhere to the determination
on the original motion or may alter that determination.
CPLR 2221(f).
Respectfully, Skanska Modular seeks reargument as to its request to re-plead, the
findings that relate to the covenant of good faith and fair dealing, breach of contract,
fraud/misrepresentation, and Kennedys claims under Williams v. Williams. However, with
respect to the dismissed breach of contract and the fraudulent/negligent misrepresentation claims,
the motion is also founded upon new evidence that is being submitted to the Court.
b.

Motion to Renew

Like a motion for reagurment, a motion for renewal is subject to the trial courts
discretion, but unlike reargument, [a] motion for renewal shall be based upon new facts not
offered on the prior motion that would change the prior determination. HSBC Bank, supra, 98
A.D.3d at 718 (quoting (CPLR 2221(e)(2)). The complete passage of the portion of the CPLR
that pertains to renewal is as follows:
(e) A motion for leave to renew:
1.

shall be identified specifically as such;

2.
shall be based upon new facts not offered on the prior motion that would
change the prior determination or shall demonstrate that there has been a change
in the law that would change the prior determination; and
3.
shall contain reasonable justification for the failure to present such facts
on the prior motion.
CPLR 2221(e)(2).
In its discretion, a court may grant renewal, in the interest of justice, upon facts known
to the movant at the time of the original motion. Segall v. Heyer, 161 A.D.2d 471, 473 (1st
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Dept. 1990) (citing Pinto v. Pinto, 120 A.D.2d 337, 338 (1st Dept. 1986) (While a motion for
renewal generally must be based on newly discovered facts this rule is not totally inflexible
and a court has discretion to grant renewal even upon facts known to the movant at the time of
the original motion.) (internal citation omitted)).

However, The movant must offer a

reasonable excuse for failure to submit the additional evidence on the original motion. Id.
(citing Foley v. Roche, 68 A.D.2d 558, 568 (1st Dept. 1979)). Moreover, a trial courts grant of
renewal should conform with New York's strong public policy favoring the resolution of cases,
and the substantive motions which arise during the course of litigation, on their merits. Kalir v.
Ottinger, 2011 WL 6968334 (Sup. Ct., N.Y. Cnty 2011) (citing Framapac Delicatessen, Inc. v.
Aetna Cas. and Sur. Co., 249 A.D.2d 36, 37 (1st Dept. 1998)).
With this motion, Skanska Modular is submitting evidence that was not previously
provided to the Court, i.e., the Gilmartin emails.

Skanska Modular did not submit these

documents because motions to dismiss are devoted to the sufficiency of the pleading. Under the
relevant standard for a motion to dismiss, Skanska Modular relied on the face of the pleading.
Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275 (1977) (" the sole criterion is whether the
pleading states a cause of action, and if from its four corners factual allegations are discerned
which taken together manifest any cause of action cognizable at law a motion for dismissal will
fail."); Slud v. Guild Properties, 6 Misc.2d 188, 194 (Sup. Ct. Suffolk Cnty. 1952), aff'd 280
A.D. 1018 (2d Dept. 1952) (These agruments[sic] may be established as true on a trial, but here
the court is confined to the four corners of the complaint itself.).
Despite the limited focus on a motion to dismiss, however, it is clear that the Decision is
founded on certain findings of fact, which Skanska Modular submits were prematurely made and
based upon false arguments submitted by Forest City.

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Accordingly, the Decision has

necessitated Skanska Modular to produce this previously undisclosed material to the Court so as
to provide a full background and context for the claims that were erroneously dismissed.
c.

Relief from Order under CPLR 5015

Skanska Modular also requests relief from the Order based on the misrepresentations by
Plaintiffs/Third Party Defendants (and their counsel) in this litigation. Specifically, as made
clear in the Meller Affirm. and its exhibits, from day one, Forest City and their counsel have
made knowingly false arguments as to their prior representations concerning the IP, the modular
design, and the true intent of the parties agreements. These misstatements have misled the
Court, prejudiced Skanska Modular, and led to entry of the Order.
The court which rendered a judgment or order may relieve a party from it upon such
terms as may be just, on motion of any interested person with such notice as the court may direct,
upon the ground of: fraud, misrepresentation, or other misconduct of an adverse party.
CPLR 5015(a)(3). In contrast to its inherent powers, courts are statutorily authorized to vacate a
judgment under CPLR 5015(a)(3) for fraud, misrepresentation or misconduct of an adverse
party. Citimortgage, Inc. v. Guarino, 42 Misc. 3d 962, 966 (Sup. Ct. Suffolk Cnty. 2014) (citing
Beltway Capital, LLC v. Soleil, 104 A.D.3d 628 (2d Dept. 2013)). The fraud contemplated by
CPLR 5015(a)(3) has been held to include intrinsic fraud, which rests upon false claims or
perjury, as well as extrinsic fraud, which rests upon an impairment of a party's right to litigate.
Id. (citing Wilson v. Galicia Contr. & Restoration Corp., 10 N.Y.3d 827, 830 (2008)).
To justify a court setting aside and vacating a judgment on the ground of fraud, the fraud
complained of must have been extrinsic, that is, practiced in the very act of obtaining the
judgment in such a way that a party was prevented from fully and fairly litigating the matter. In
re Holden, 271 N.Y. 212, 217 (1936). However, beyond this, the court also holds the inherent
power to vacate its own judgments or orders which extends to cases in which the court finds that
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the interests of substantial justice so require. Woodson v. Mendon Leasing Corp., 100 N.Y.2d
62, 68 (2003) (In addition to the grounds set forth in section 5015(a), a court may vacate its own
judgment for sufficient reason and in the interests of substantial justice).
In the pursuit of obtaining a legal victory at any cost, Forest City has veiled the truth of
its own solicitations, negotiations, agreements, and statements, and has made arguments in direct
conflict with documentary evidence. Indisputably, in negotiating the B2 Project, the parties
came to the agreement that the B2 Project would be a one-off transaction, whereby the owner
would retain design responsibility, not Skanska, and that subsequent projects for the company
would be handled differently. [See, Email from MaryAnne Gilmartin to William Flemming,
dated August 1, 2012, attached to Meller Affirm. as Ex. B]. More specifically, FCRCs CEO
MaryAnne Gilmartin explicitly stated in a memo-like email, entitled Modular Partnership, that
Forest City was increasing its risk in the venture while decreasing Skanskas:
My proposed deal below:
-Substantially de-risks the transaction for skanska; -Materially erodes FCRCs return; Requires considerably more risk acceptance on our part.
****
B2 owner holds a design/bid/build contract for $116.5m. In this construct Skanska
is NOT assuming design responsibility but maintains responsibility for delegation
of design responsibility for the trades based on the drawing and specifications.
Subsequent factory orders will likely require a design build approach but B2
would be a oneoff.
[Id. (emphasis in original)].
Similarly, item 2 of Ms. Gilmartins email notes that Skanskas corporate guarantee will
not cover design issues and paragraph 7 states that FCRCs outside counsel (i.e., Aaron
Abraham) would also draft a new B2 Agreement (CM Agreement) to reflect this new GMP
structure. [Id.]. Ms. Gilmartins representation and subsequent agreement marked a significant
change in Forest Citys format of the Project and its allocation of risk among the partners to the

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modular partnership, whereby responsibility for design was accepted by Forest City. Previously,
the owner, through attorney Aaron Abraham, sought to remove itself from design responsibility
and foist that responsibility onto Skanska and/or the new modular business:
Design responsibility. Seller should have design responsibility for the B2
Modules. Under the Prototype Agreement, all intellectual property rights in the
B2 Module Design are being transferred to Seller (upon the execution of the
Operating Agreement) and Seller will have verified the adequacy of such
design. As such, Owner should not bear responsibility for deficiencies in the
design, including schedule/cost impacts and warranty obligations related to such
deficiencies.
[Email from MaryAnne Gilmartin to Richard Kennedy and Joshua Kohner, dated June 28, 2012,
attached to Meller Affirm. as Ex. A (emphasis added)].
Immediately following this major revision, Section 2.11 of the CM Agreement was
implemented in the drafts of the CM Agreement and became a fixture in that agreement, never
changing in substance again.4 This background was raised by Skanska Modulars counsel at oral
argument. [See, Tr. 19:2-26; 20:1-14, attached as Ex. D to Meller Affirm.] but not appreciated by
the Court. Section 2.11 of the executed CM Agreement is quite broad and provides:
Owner Information. Contractor may rely upon and use in the performance of
any obligations under this Agreement, information supplied to it by or on
behalf of Owner and its Affiliates, providing information applicable to the
Work, the B2 Project, or the Site. Contractor is not responsible for defects
and/or deficiencies in the Work attributable to Contractor's reliance upon
any such information that is incorrect, inaccurate or incomplete. Contractor,
however, shall notify Owner promptly of any inaccuracies in such information
that Contractor actually discovers so as to minimize potential delays.
[Meller Affirm., Ex. G, at 2.11 (emphasis added)].
Importantly, the LLC Agreement was revised to include the CM Agreement (including
2.11) as a contract document, to make the CM Agreement a scheduled exhibit of the LLC
Agreement, to add the CM Agreement as a capital contribution of FCRC Modular (not Skanska)
4

See, NYSCEF Doc. No. 147 (Design Build Agreement), 2.4, 2.12; NYSCEF Doc. No. 148 (August 7th CM
Agreement), 2.4, 2.11, and NYSCEF Doc. No. 149 (August 14th CM Agreement), 2.4, 2.11, attached as Exs.
H, I, and J to the Meller Affirm.

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to FC+S, and to place design responsibility upon B2 Owner (Moan Affirm., Ex. A, 1.1
definition of Skanska Prime Contract, 3.1 (a)(i), 4.1(a)(i)(C), 19.6, and Exhibit D to LLC
Agreement). Thus, the LLC Agreement was made subject to all the same caveats found in the
CM Agreement due to B2 being a one-off.
These matters were clearly known to Forest City and its counsel (who was a part of the
contract drafting) when Forest City advanced its arguments to disclaim all design liability in
favor of a false interpretation of the agreements. Indeed, in their brief in support of the motion to
dismiss, they make statements such as:
The IP Transfer Agreement expressly disclaims any warranty that the IP is
complete or sufficient to execute the Project.
***
Similarly, the LLC Agreement contains no provision warranting the quality of
the IP. To the contrary, the IP Transfer Agreement contains an express
disclaimer of any warranty, and does not contain any representations that the IP
is complete or sufficient to execute the Project. (Ex. G 4(a)(iv)). Thus, the LLC
Agreement could not have been breached even if the IP was deficient and
defective, as Plaintiffs allege. (Counterclaims 49(b)).
[Moran Affirm., Ex. A, Forest City Br. at 5, 14]. Moreover, FCRC made the express argument
that Forest City disclaimed any representations so as to negate design responsibility [See, Tr.
7:16-22, Meller Affirm., Ex. D]. This is wholly untrue, as is proven in the Gilmartin emails.
These tactics helped secure Forest Citys victory on the motion to dismiss. The true
intent of the parties was veiled from the Court, and a Decision was issued, at the pleading stage,
that simply fails to do justice to the facts of the dispute. As the Order was procured through
improper means, it should be vacated under the Courts own power or pursuant to CPLR 5015.
II.

LEAVE TO REPLEAD SHOULD HAVE BEEN PERMITTED

In Skanska Modulars brief opposing the motion to dismiss, it specifically requested the

opportunity to cure any defect in its pleading that the Court may have perceived. The Court did
not address this request at all, but dismissed Skanska Modulars claims outright even where the
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Court noted a lack of specificity in the allegations. This was error and Skanska Modular submits
that the Court must grant reargument and an opportunity to replead.
Pursuant to CPLR 3211(e), (termed in the CPLR as a motion to plead over), an
opponent to a motion to dismiss made under CPLR 3211(a)(7) may seek leave to replead or
plead again to address the alleged defects in the pleading. The party requesting CPLR 3211(e)
relief may simply raise this defense in its opposition (or even after a motion to dismiss has been
granted). Janssen v. Inc. Vill. of Rockville Ctr., 59 A.D.3d 15, 25-26 (2d Dept. 2008) (No time
limitation applied for filing motion for leave to replead on motion to dismiss, as plain language
of the civil practice rule governing such motions contained no such limitation.). Moreover, the
party seeking leave to replead need not submits proofs or go to great lengths to establish merit.
Id. In fact, the rule on repleader has been granted even more liberality following a 2005
amendment that eliminated the need to submit evidence to justify the leave to amend. Id.
(discussing the 2005 amendments and the Advisory Committee on Civil Practice Comments at
2005 N.Y. Legis. Ann., ch. 616, at 358). This amendment was done in an effort to comport
CPLR 3211 with the Court of Appeals decision, Rovello v. Orofino Realty Co., 40 N.Y.2d 633
(1976), which stood for the following principle (as articulated by the Janssen court):
In Rovello, the Court of Appeals determined that a plaintiff, in response to a
motion to dismiss pursuant to CPLR 3211(a)(7), is not required to submit
affidavits, as would be the case in response to a motion for summary judgment
pursuant to CPLR 3212. The Court of Appeals stated that the plaintiff was at
liberty to stand on his pleading alone, confident that its allegations are
sufficient to state all the necessary elements of a cognizable cause of action (id.
at 635, 389 N.Y.S.2d 314, 357 N.E.2d 970).
Janssen, supra, 59 A.D.3d at 25.
Such an application follows the traditional analysis under CPLR 3025 for motions for
leave to amend: motions for leave to amend pleadings should be freely granted absent

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prejudice or surprise to the opposing party, unless the proposed amendment is devoid of merit or
palpably insufficient. Janssen, supra, 59 A.D.3d at 27 (citing Smith-Hoy v. AMC Prop.
Evaluations, Inc., 52 A.D.3d 809 (2d Dept. 2008)). Moreover, where the proposed amendments
are premised on the same facts, transactions or occurrences alleged in the original pleading, the
opponent to a motion for leave to replead cannot legitimately claim surprise or prejudice. Castor
Petroleum, Ltd. v. Petroterminal de Panama, S.A., 90 A.D.3d 424, 425 (1st Dept. 2011) (citing
Janssen, supra, 59 A.D.3d at 27). Defects that may be the result of draftsmanship alone are also
sufficient to warrant an opportunity to replead. Metro Envelope Corp. v. Westvaco, 72 A.D.2d
695, 695 (1st Dept. 1979). Aside from CPLR 3211(e), leave may also be granted to replead in
the discretion of the court when a pleading is dismissed for a failure to set forth the minimal
material elements of each cause of action under CPLR 3013. See, Shapolsky v. Shapolsky, 22
A.D.2d 91 (1st Dept. 1964).
Despite Skanska Modulars request to replead in the event that the motion to dismiss was
granted [See, Moran Affirm., Ex. B, Skanska Opp. Br. at 19, fn. 11, and 25], the Court failed to
address it.

Instead it dismissed claims outright without allowing Skanska Modular the

opportunity to amplify its pleadings. For instance, with respect to Skanska Modulars breach of
contract claim, the Decision states that Skanska Modular does not allege that FCRC
Modulars total capital contribution did not have a fair market value equal to the amount of
Initial Development Costs ($9,725,000) as required by the LLC Agreement. [Meller Affirm.,
Ex. C, Decision at 7-8]. While Skanska Modular does not believe such a specific allegation was
necessary to state a claim since New York is a notice pleading state and given the entire tenor of
the cause of action is that Forest Citys IP and capital contributions were worthless, nevertheless,
leave to re-plead should be granted so Skanska Modular can expressly allege the capital

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contributions were not worth $9,725,000.

Moreover, with respect to the fraud/negligent

misrepresentation claims, the Decision states Skanska Modular does not allege the time, place,
and specific contents of the false representations, or the identity of the person making the alleged
representations or the existence of any special relationship between the parties to sustain the
negligent misrepresentation claim. [Id. at 16]. Again, while Skanska Modular asserts that it
sufficiently pled these claims with the required specificity (based upon a continuous pattern of
misrepresentations in the Opportunity Brief and thereafter), leave to re-plead should have been
granted so that further specifics could be provided. Similarly, with Kennedys Williams claim,
the Court found that Kennedys allegations as to Forest Citys malicious act of commencing this
lawsuit to be conclusory and boilerplate. [Id. at 22]. While Skanska Modular disagrees with
the Courts conclusion, it nonetheless should be afforded the opportunity to provide additional
facts, such as the personal attacks representatives of Forest City made upon Mr. Kennedys
character during the Project and Forest Citys embarrassment after it issued its press release
publicizing the civil action it commenced against Skanska, only to learn that Skanska had in fact
sued it first. Additional facts will amplify this cause of action.
Thus, Skanska Modular respectfully requests that the Court allow it to replead its first,
second, third, fourth, fifth, sixth, seventh, and eighth counterclaims/third-party claims.
III.

THE FACTS AND LAW DID NOT WARRANT DISMISSAL OF SKANSKA

MODULARS BREACH OF CONTRACT CLAIMS
The Decision is erroneous because it renders key contractual provisions of the LLC

Agreement meaningless, particularly, the entirety of the CM Agreement (including Section 2.11)
as included in the LLC Agreement. Both New York and Delaware are in accord on the relevant
contract law principles that should be applied. With respect to Delaware law:
Delaware adheres to the objective theory of contracts, i.e. a contract's
construction should be that which would be understood by an objective,
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reasonable third party. We will read a contract as a whole and we will give
each provision and term effect, so as not to render any part of the contract
mere surplusage. We will not read a contract to render a provision or term
meaningless or illusory. [A] contract must contain all material terms in order
to be enforceable, and specific performance will only be granted when an
agreement is clear and definite and a court does not need to supply essential
contract terms.
When the contract is clear and unambiguous, we will give effect to the plainmeaning of the contract's terms and provisions. On the contrary, when we may
reasonably ascribe multiple and different interpretations to a contract, we will find
that the contract is ambiguous. An unreasonable interpretation produces an absurd
result or one that no reasonable person would have accepted when entering the
contract.
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 115960 (Del. 2010) (internal citations omitted)
(emphasis added). New York law is in accord. See, e.g., Beal Sa. Bank v. Sommer, 8 N.Y.3d
318, 324 (2007) ([t]he court should construe the agreements so as to give full meaning and
effect to the material provisions A reading of the contract should not render any portion
meaningless.) (emphasis added) (citations omitted). As recognized in the First Department, a
court should avoid reading a contract in a manner that would render its terms or provisions
nugatory or mere surplusage:
The law is settled that such interpretation is not preferred and will be avoided if
possible It is a recognized rule of construction that a court should not
adopt an interpretation which will operate to leave a provision of a contract * *
* without force and effect An interpretation that gives effect to all the terms
of an agreement is preferable to one that ignores terms or accords them an
unreasonable interpretation.
Ruttenberg v. Davidge Data Sys. Corp., 215 A.D.2d 191, 196 (1st Dept. 1995) (internal citations
omitted); see also, Givati v. Air Techniques, Inc., 104 A.D.3d 644, 645 (2d Dept. 2013).
Despite these principles, the Decision has rendered Section 2.11 of the CM Agreement,
and indeed the entirety of the CM Agreement, as included in the LLC Agreement, meaningless.
The Decision found Contrary to Skanska Modular's argument, there is no provision in the LLC

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Agreement that required FCRC Modular to make a sufficient capital contribution or to provide a
sufficient factory, labor pool, or IP. [Meller Affirm., Ex. C, Decision at 7]. The Decision is
inherently flawed on both matters.
First, if Skanska Modular cannot invoke the protection of section 2.11 of the CM
Agreement, then what purpose does this provision and document have in the LLC Agreement?
Why is the CM Agreement a contract document of the LLC Agreement? Why is the CM
Agreement a capital contribution of FCRC Modular in Section 4.1 (a)(i)(D) of the LLC
Agreement? The Decision relied on the simple presence of a merger clause to effectively
remove the entire import of Section 2.11. [Id. at 8-9 (Because the CM Agreement contained this
merger clause, any purported promises or agreements made in the Opportunity Brief could not
have been binding on FCRC Modular.)].

However, Section 2.11 of the executed CM

Agreement lacks any reference that Skanska is limited in its reliance solely to contract
documents. Rather, the provision broadly allows Skanska to rely on information supplied to it
by or on behalf of Owner and its Affiliates, providing information applicable to the Work, the B2
Project, or the Site. [Meller Affirm., Ex. G, at 2.11 (emphasis added)]. Forest Citys
representations and information supplied as to the modular design (both within the Opportunity
Brief and outside of it) fairly, if not unquestionably, are information applicable to the Work, the
B2 Project, or the Site that are covered under Section 2.11 and are part of the LLC Agreement.
At the least, this is a fair interpretation of the clauses, warranting denial of the motion to dismiss.
Furthermore, on the basis of the statements made by Ms. Gilmartin of Forest City and its
counsel, Aaron Abraham, it is absolutely unjust to deny Skanska Modular the ability to rely on
such statements, or even pursue its claims, especially when FCRC has now disavowed its earlier
statements to pursue a conflicting construction [See, Meller Affirm., Exs. A and B]. At a

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minimum, based on the limited record before the Court and granting Skanska Modular all
favorable inferences, there was no proper basis for the Court to prematurely render a finding of
fact as to the Opportunity Brief and/or the information upon which Skanska Modular could rely,
when there exists a fair interpretation of the contracts to make those matters actionable.
With respect to FCRCs failure to provide sufficient capital contributions or to provide a
sufficient factory, labor pool, or IP under the LLC Agreement, the Court again renders the LLC
Agreement meaningless and illusory. A measure of quality was validly assumed by Skanska
Modular in entering into the transaction. When parties contract for a valuable exchange, it is
illogical to conclude that the parties have agreed to a defective version of what was bargained
for, or, in truth, a worthless invention. Moreover, the IP clearly should have had value within the
"fair market value equal to the amount of Initial Development Costs" ($9,725,000) as required by
the LLC Agreement and as alluded to by the Decision (at page 8). [Meller Affirm., Ex. F, LLC
Agreement 4.1(a)(i) and 1.1]. The tenor of the cause of action (if not by express words) is
that the IP is in fact worthless, and the Court was incorrect when it found that Skanska Modular
had not attacked its value [Meller Affirm., Ex. C, Decision at 7-8]. Skanska Modular contracted
for a sufficient factory, labor pool, or IP from FCRC, not inadequate versions of same. The
presumed usefulness of the IP was at the heart of transaction and venture and the reason why the
CM Agreement was included as a contract document of the LLC Agreement and protections
such as Section 2.4 and 2.11 were added.
These concepts may also be applied to the Courts findings that relate to the covenant of
good faith and fair dealing. On page 10 of the Decision, the Court dismissed the Skanska
Modular's claim for the breach of covenant of good faith and fair dealing claim in the following
manner:

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I dismiss Skanska Modular's breach of implied covenant of good faith and fair
dealing claim because the LLC Agreement contains specific provisions governing
the capital contribution, the IP, the factory, and the labor pool. "[W]here the
subject at issue is expressly covered by the contract . . . the implied duty to
perform in good faith does not come into play." Dave Greytak Enterprises, Inc. v.
Mazda Motors of Am., Inc., 622 A.2d 14, 23 (Del. Ch. 1992); NACCO Indus.,
Inc. v. Applica Inc., 997 A.2d 1, 20 (Del. Ch. 2009).
However, Skanska Modular did not make a claim based upon the implied covenant, and its
pleading claims a breach of the express covenant of good faith and fair dealing as provided in
the LLC Agreement. [Answer, Counterclaims, and TPC at 50, Moran Affirm. at Ex. C
(emphasis added); 16.6 of LLC Agreement, attached to the Meller Affirm. as Ex. F]. The
express covenant was discussed at oral argument [Meller Affirm., Ex. D, Tr. 17:12-26; 18:1-5].
The Court overlooked this fact and its discussion of cases pertaining to the implied covenant are
irrelevant. In so finding, the Courts Decision contravened the agreement and is unknowingly
endorsing disreputable commercial practices, such as those employed by a snake oil salesman
operating a bait and switch. This was a multi-million dollar business venture, premised on the
supposed value and usefulness of Forest Citys invention. It is the utmost in bad faith for Forest
City to tout its modular invention to induce a business partner, only to then deliver a wholly
deficient product to the transaction and later refer to the invention as an ongoing experiment.
[See, Answer, Counterclaim and TPC at 31, attached as Ex. C to the Moran Affirm.].
Moreover, even without the benefit of the Gilmartin emails, there exists an ambiguity
(and another plausible interpretation) as to the application of Section 2.11 and the express
covenant of good faith and fair dealing that required a denial of the motion to dismiss. Skanska
Modular respectfully requests that the Court reconsider the Decision, especially in light of the
new evidence being submitted with the Meller Affirmation, which validates Skanska
Modulars interpretation of the agreements and, at the very least, creates such an ambiguity.

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IV.

FRAUD AND MISREPRESENTATION

Simply put, the Court placed too large of a burden of specificity on Skanska Modular for

pleading fraudulent/negligent misrepresentation. Delaware law does not require exactitude or

painstaking precision to plead a fraud claim. See, e.g., Universal Capital Mgmt., Inc. v. Micco
World, Inc., No. CIV.A. N10C-07039RRC, 2012 WL 1413598, at *3 (Del. Super. Feb. 1, 2012).
As noted by the Court, only facts supporting an inference of fraud must be pled [Decision at
12]. At a minimum, such an inference exists and discovery should have been permitted to allow
Skanska Modular to further develop the facts underpinning the fraud claim. See id.
While there is a heightened pleading standard for fraud, the standard does not require
exactitude. See, Narrowstep, Inc. v. Onstream Media Corp., No. CIV.A. 5114-VCP, 2010 WL
5422405, at *13 (Del Ch., Dec. 22, 2010) (While the Complaint to some degree lacks detail
about time, place, and speaker the Court found the Complaint sufficiently apprised the
defendant of the basis for the claim.); See also, Grunstein v. Silva, 2009 WL 4698541 at * 14
(Del. Ch. Dec 8) (The Complaint must contain detail sufficient to apprise the defendant of the
basis for the claim.).

Under Delaware law, a fraud claim is adequately pleaded if it

sufficient[ly] apprise[s] the defendant of the basis for the claim. Narrowstep, 2010 WL
5422405, at *13; Grunstein v. Silva, No. CIV.A. 3932-VCN, 2009 WL 4698541, at *14 (Del.
Ch. Dec. 8, 2009) (In essence, plaintiffs are required to allege the circumstances of the fraud
with detail sufficient to apprise the defendant of the basis for the claim.). This simply requires
enough minimal information to be pleaded for the Court to plausibly infer that the elements of
fraud have been alleged. Narrowstep, supra, 2010 WL 5422405, at *14 (Therefore, I find that
Narrowstep has alleged sufficient facts for the Court to infer that the parties had a special

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relationship, similar to a fiduciary relationship, so that Narrowstep can state a claim for
equitable5 fraud.).
Here, the Court placed too high a burden on Skanska Modular with respect to its
fraud/misrepresentation claims. More than enough was laid out in the pleadings to apprise the
plaintiff and third-party defendants of the basis for the fraud claim under the notice pleading
rules of Delaware. The aspects of fraud may be plausibly inferred from the allegations that were
made. With respect to the 4th Counterclaim for fraudulent misrepresentation, the Decision was
incorrect that knowledge of falsity was not pled [Meller Affirm., Ex. C, Decision at 16]. In
actuality, paragraph 71 of the Third Party Complaint pleads that fraudulent statements were
made intentionally or recklessly with wanton disregard of Skanska Modulars rights [Ex. C,
Moran Affirm.]. This sufficiently states all the elements of the claim, and the Courts Decision
should be reconsidered.
V.

KENNEDYS WILLIAMS v. WILLIAMS CLAIMS WERE PROPERLY PLED

In the context of a libel suit, the Court of Appeals has recognized a plaintiff's right to

seek redress, and not have the courthouse doors closed at the very inception of an action, where
the pleading meets a minimal standard necessary to resist dismissal of a complaint. Armstrong
v. Simon & Schuster, Inc., 85 N.Y.2d 373, 379 (1995). Moreover, under New York law, in a
libel action, a claimant who in good faith compliance seeks to redress his pleading deficiency
and serve an amended complaint to set forth libelous statements in full is properly afforded
further opportunity to correct his pleading. S. & M. Amusement Corp. v. Kaplan, 127 N.Y.S.2d
638, 640 (Sup. Ct. N.Y. Cnty. 1953).
The Decision recognized that Williams v. Williams, 23 N.Y.2d 592, 599 (1969), sets
5

Equitable fraud is equated to negligent misrepresentation under Delaware law. See, Grunstein, supra, 2009 WL
4698541, at *14 (Unlike traditional fraud claims, negligent misrepresentation, or equitable fraud claims do not
require a knowing or intentional state of mind.).

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forth an exception to the general rule, whereby press releases and other reports will not be
protected if a party has maliciously commenced an action in order to disseminate false and
defamatory charges, and to then circulate a press release or other communication based thereon
. Halcyon Jets, Inc. v. Jet One Group, Inc., 69 A.D.3d 534, 534 (1st Dept. 2010). However,
the Decision summarily dismissed the claim on the basis that The press release at issue here
simply restates the allegations in the complaint, and is therefore protected by Section 74 as a fair
and true report of a judicial proceeding. [Meller. Affirm., Ex. C, Decision at 22]. In this
manner, respectfully, the Court fails to address all elements of Williamsi.e., the Court does not
adequately address the allegation that the action was commenced and conducted with an
improper purpose against Kennedy, thereby rendering any subsequent press release unprotected.
The Court found that Kennedy failed to allege sufficient facts to support the allegation
that the lawsuit was commenced to defame him. [Id.]. However, the claim did allege facts,
which the Court classified as boilerplate and conclusory, namely that assertion of an action
against him was "a malicious act, and brought solely for the purposes of later defaming him by
disseminating defamatory information to members of the industry in which he does business."
[Id.]. These facts, even if de minimis, should have been afforded a higher degree of acceptance
and afforded every favorable inference by the Court. See, Epifani v. Johnson, 65 A.D.3d 224,
229 (2d Dept. 2009) (The reviewing court accept[s] the facts as alleged in the complaint as
true, accord[s][the] plaintiffs the benefit of every possible favorable inference, and determine[s]
only whether the facts as alleged fit within any cognizable legal theory.) (citation omitted);
Knutt v. Metro Int'l, S.A., 91 A.D.3d 915, 917 (2d Dept. 2012).

Indeed, even Williams

(reviewing a grant of a motion to dismiss) stated that the allegations of a pleading must be
presumed as true. Williams, supra, 23 N.Y.2d at 95-96. The Court overlooked this analysis.

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Kennedy requests that the Court grant reargument as to the Williams claims or that it
grant leave to re-plead.
VI.

Contempt
To the extent reargument, renewal, and/or vacatur is granted above, the Decision should

also be reversed to allow Skanska Modulars contempt motion to be heard (see, Meller Affirm.,
Ex. E). It is not proper for, on one hand, the Court to dismiss causes of action due to lack of
factual specificity, while, on the other hand, to deny access to third party discovery which would
provide the additional factual allegations and help negate the perceived conclusory nature of
any allegations.
CONCLUSION
For each of the foregoing reasons, Defendants motions to reargue, to renew, and to
vacate must be granted.
Dated: September 6, 2016
New York, New York

#460123v7-

Respectfully submitted,
/s/Bruce D. Meller
Bruce D. Meller, Esq.
Peter E. Moran, Esq.
PECKAR & ABRAMSON, P.C.
41 Madison Avenue, 20th Floor
New York, NY 10010
Telephone: (212) 382-0909
Co-Counsel for Skanska Modular LLC
And Counsel for Richard A. Kennedy

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