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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: January 12, 2020

Alleged Lack of Documentary Evidence Referring to an Oral Contract Insufficient Basis for Dismissing Claim Alleging Such a Contract

On December 19, 2019, Justice Schecter of the New York County Commercial Division issued a decision in Ripka v. Stenzler, 2019 NY Slip Op. 33688(U), holding that an alleged absence of documentary referring to an oral contract was an insufficient basis for finding that no such contract existed, explaining:

Defendants seek dismissal of the declaratory judgment and breach of contract causes of action, which are based on the allegation that Stenzler orally agreed to prove plaintiff with a 10% stake in Rumble, based on certain emails and text messages that they chose to submit that refer only to the 3% equity swap and not to any promise of a 10% equity stake. Such communications, however, do not definitively prove that Stenzler never made the 10% equity promise. Thus, even if the court were to consider them as admissible documentary evidence, they do not utterly refute plaintiffs allegations.

The argument that any oral agreement would have been reflected in the universe of emails that defendants chose to submit on this motion is not a valid basis to dismiss a complaint under CPLR 321 l(a)(l). Defendants have not cited a single case where a complaint was dismissed with such a showing. Of course, had one of the emails contained an admission by plaintiff that he never reached an agreement for a 10% stake, that would be another matter. Here, however, defendants simply ask this court to infer that plaintiffs claims are not plausible based on their cherry-picked submissions. While they protest that plaintiff could have refuted their evidentiary showing with other emails in his possession, plaintiff has no obligation to do so. This is not summary judgment; there is no burden shifting on a motion to dismiss. On the contrary, defendants bear the entire burden of proving that the documentary evidence utterly refutes plaintiff’s factual allegations, conclusively establishing a defense as a matter of law.

Of course, there may not be any dispositive documentary evidence. That is inherently a feature of many alleged oral agreements. Whether documentary evidence ultimately suggests the existence of an oral agreement is a question of fact. While the statute of frauds is meant to guard against dubious oral agreement claims, defendants do not claim the statute of frauds applies. Simply put, defendants cannot procure dismissal of a claim based on an alleged oral agreement by proving that such agreement is not reflected in writing.

(Internal quotations and citations omitted).

While commercial contract usually are written, in many circumstances, it is permissible for contracts to be oral instead of in writting. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under an oral contract.

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Posted in Commercial, Contracts
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