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Current Developments in the Commercial Divisions of the
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Posted: January 16, 2014

Contract Claim Dismissed For Failure to Plead Non-Speculative Damages

On January 2, 2014, Justice Kornreich of the New York County Commercial Division issued a decision in Saxon Technologies, LLC v. Wesley Clover Solutions-North America, Inc., 2014 NY Slip Op. 30002(U), dismissing a breach of contract claim for failure adequately to plead damages.

In Saxon Technologies, the plaintiff’s allegations included that the defendant had breached the “Non-Circumvention” clause in its vendor agreement with the plaintiff, which provided that the defendant would “not, directly or indirectly, contact, deal with or otherwise become involved with any entity introduced, directly or indirectly, by or through” plaintiff by entering into a contract directly with the plaintiff’s clients once the client’s contract with the plaintiff ended. The court dismissed the breach of contract claim, holding that:

[Plaintiff] alleges that [defendant] breached the . . . Contract by improperly negotiating with [the plaintiff’s client] to contract directly. For the purposes of this motion, the court assumes such conduct breached the . . . Contract’s Non-Circumvention clause. However, a breach alone does not entitle a plaintiff to recover; there must be non-speculative damages resulting from such breach.

Here, [the plaintiff’s client] was under no obligation to renew its contract with [the plaintiff]. This is undisputed. Rather, [the plaintiff] contends that, had [its client] not sought to contract with the defendant] directly, it would have renewed, thereby generating more fees for [the plaintiff]. This is speculative. Moreover, even if [the client’s] renewal was not speculative, the amount of damages is, since there is no way to know for how many more years [the client] would have renewed or what the fees would have been.

(Internal quotations and citations omitted).

This decision serves as a reminder that in New York, it is not just tort cases where damages are an element of the claim.

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