DECISION AND ORDER On March 24, 2020, plaintiffs Dealer Services 2.0, LLC, Lotus Fine Dining, Inc., Lotus on Hudson, Inc. and Lotus Group of USA, LLC contracted with defendant for certain payroll and human resources services.1 Plaintiffs each executed separate but identical contracts, with these contracts requiring them to provide defendant with “[d]ata includ[ing], but…not limited to: a. Payroll data; b. Tax forms and information; c. Immigration forms and information; d. Job descriptions; e. Employee lists; f. Employee files; g. Application materials; and h. Information regarding terminated employees.” Defendant was then required to maintain certain reports based on this data, which “[r]eports included, but were not limited to: a. Payroll records and reports including those pertaining to: paid time off, monthly, quarterly and annual summary reports, and final payroll records for terminated employees; b. Tax filings and reports including: 940, 941, W-2s, W-3s, W-4s, & NYS-45; and c. Employee-related information and documents including: I9′s and related documentation, job descriptions, employee applications, employee files, and other documents in [defendant's] online onboarding portal.” On June 24, 2021, plaintiffs terminated their respective contracts with defendant. According to Ash Anand — plaintiffs’ Chief Executive Officer — “[Defendant] made some of the [d]ata and [r]eports available to [plaintiffs] for a limited period of time. However, during this limited period, [plaintiffs were] unable to recover all of [their d]ata and/or [r]eports which [defendant] had in its possession or was required to create.” Anand further states as follows: “Beginning in September 2021, [plaintiffs] made multiple requests for access to the [d]ata and [r]eports. “[Defendant] initially refused to provide [plaintiffs] access to the [d]ata and [r]eports unless [plaintiffs] paid [defendant] substantial fees for copies[. Defendant] then ignored subsequent requests from [plaintiffs] for access to the [d]ata and [r]eports.” On December 20, 2021, defendant responded in writing and advised plaintiffs to obtain the requested information from the Internal Revenue Service. Plaintiffs thereafter commenced this conversion action against defendant on February 16, 2022. Plaintiffs allege that they have “a possessory right or interest in the [d]ata and [r]eports[, that] Keena has dominion over the [d]ata and [r]eports[, and that] Keena has interfered with [their] right of possession of the [d]ata and [r]eports.” Issue has now been joined with defendant asserting two counterclaims, one for counsel fees and another for unjust enrichment. Presently before the Court is (1) plaintiffs’ motion by Order to Show Cause for an Order directing defendant to return the data and reports; (2) defendant’s motion to dismiss the action based upon documentary evidence (see CPLR 3211 [a] [1]); and (3) plaintiffs’ cross motion to dismiss defendant’s second counterclaim based upon failure to state a cause of action (see CPLR 3211 [a] [7]). The motions and cross motion will be addressed ad seriatim. Turning first to plaintiffs’ motion for an Order directing defendant to return the data and reports, this motion is — in essence — seeking a preliminary injunction whereby defendant is restrained from retaining the data and reports pending the conclusion of the action. This is, of course, the ultimate relief sought in the action, with the wherefore clause of the complaint “seek[ing] a Judgment from [the] Court [o]rdering [defendant] to return all of [plaintiffs' d]ata and [r]eports immediately.” It is by now well established that a preliminary injunction should not be granted, absent extraordinary circumstances, where plaintiff would receive the ultimate relief sought in the action (see Egan v. New York Care Plus Ins. Co., 266 AD2d 600, 601 [3d Dept 1999]; see also Montgomery v. 215 Chrystie LLC, 201 AD3d 503, 503 [2d Dept 2022], lv dismissed 38 NY3d 1125 [2022]; Matter of Boening v. Nassau County Dept. of Assessment, 200 AD3d 973, 974 [2d Dept 2021]; Berman v. TRG Waterfront Lender, LLC, 181 AD3d 783, 784-785 [2d Dept 2020]). Here, defendant has submitted the affidavit of Christina Gerarde in opposition to the motion. Gerarde, who serves as “an employee, shareholder, officer and member of [defendant's] board of directors,” states as follows: “[P]laintiffs by their CEO allege that they were ‘unable to recover all of [their d]ata and/or [r]eports which [defendant] had in its possession or was required to create.’…However, [the CEO] does not state why plaintiffs were unable to accomplish this. [Defendant] provided plaintiffs’ employees or representatives access through [its] web portal known as ‘Prism’ for plaintiffs to obtain just the information and reports that they seek to obtain in this action. In addition, staff from [defendant] provided PDF and Excel reports, including payroll and similar reports now requested by plaintiffs, directly to employees or plaintiffs in the days and weeks following plaintiffs’ termination of its contracts with [defendant].” In support of these statements, defendant has submitted copies of several email exchanges between Chantal DeShaw, plaintiffs’ Operations Manager, and Brian Lamos, defendant’s IT/Payroll Manager, spanning from June 9, 2021 to June 29, 2021. One such exchange occurred on June 21, 2021, at which time DeShaw sent Lamos an email with a series of questions relative to when and how plaintiff could gain access to the data and reports maintained by defendant. Lamos responded that same date, with his answers to each question appearing in red. This email exchange read as follows, with the red text appearing in bold for purposes of this Decision and Order: “We are good to discontinue payroll after this week’s payroll…. However, I have several questions on different reports that we will need in the meantime: 1. How long after will I have access to [defendant's] portal to view employee details information? Client level web access will be removed August 1st, 2021. 2. Last Payroll I will need each employees['d]etailed paystub info (Vouchers-info that I can export as a company as a whole)? We can email you a PDF of the last direct deposit pay stub for each person that is paid in the last pay run for each company. 3. Can you provide us a report that includes everything below in excel format? Most of that information below can be exported. I will give you what I can. Employee Name Social Security Number Federal Tax Withholding State Tax Withholding Pay Date Check/Advice Company ID Employer ID Work State, Postal Code Weeks Worked…. 4. PTO detailed balances for all employees. Ending balances will appear on the pay stub for each person in the last pay run. Those stubs will be emailed to you in PDF form. 5. Our 2nd quarter 940, 941 and NYS 45 will be filed by [defendant] — how do I obtain those once processed in July? These will be available on the employer portal during the month of July once they are completed.” Indeed, plaintiffs do not deny having access to defendant’s web portal until August 1, 2021 — and no explanation is provided with respect to why they were unable to obtain the desired data and reports prior to that date. In this regard, the Court must note that plaintiffs canceled their contracts with defendant because they established their own payroll processing company — Lotus Payroll Services — which also subscribes to Prism. As such, plaintiffs are obviously familiar with the web portal and able to locate desired information. Based upon the foregoing, the Court cannot find extraordinary circumstances to warrant the granting of a preliminary injunction awarding the ultimate relief sought in this action. Plaintiffs’ motion for an Order directing defendant to return the data and reports is therefore denied. Briefly, the Court notes that plaintiffs have failed to demonstrate their entitlement to a preliminary injunction in any event. To establish entitlement to a preliminary injunction a plaintiff is required “to demonstrate a likelihood of success on the merits, irreparable harm if the injunction is not granted and that the balance of the equities is in its favor” (Sync Realty Group, Inc. v. Rotterdam Ventures, Inc., 63 AD3d 1429, 1430 [2009]; see CPLR 6301; Nobu Next Door, LLC v. Fine Arts Hous., Inc., 4 NY3d 839, 840 [2005]; Emerald Green Prop. Owners Assn., Inc. v. Jada Developers, LLC, 63 AD3d 1396, 1397 [2009]). In view of the discussion hereinabove, plaintiffs have failed to demonstrate a likelihood of success on the merits. The Court is further unpersuaded that plaintiffs will suffer irreparable harm in the absence of an injunction, and the balance of the equities does not appear to be in plaintiffs’ favor. In this regard, Gerarde estimates that it would cost approximately $18,000.00 for defendant “to recreate the literally thousands of documents plaintiffs seek.” Turning now to defendant’s motion, defendant seeks dismissal of the action based upon documentary evidence (see CPLR 3211 [a] [1]). To that end, “‘[a] motion pursuant to CPLR 3211 (a) (1)…may be properly granted only if the documentary evidence utterly refutes the plaintiff’s factual allegations, conclusively establishing a defense as a matter of law. To qualify as documentary evidence, the evidence must be unambiguous and of undisputed authenticity’” (Koziatek v. SJB Dev. Inc., 172 AD3d 1486, 1486 [3d Dept 2019], quoting Calhoun v. Midrox Ins. Co., 165 AD3d 1450, 1450 [3d Dept 2018] [internal quotation marks, brackets and citations omitted]; see Doller v. Prescott, 167 AD3d 1298, 1299 [3d Dept 2018]). “‘Materials that clearly qualify as documentary evidence include documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable’” (Koziatek v. SJB Dev. Inc., 172 AD3d at 1487, quoting Ganje v. Yusuf, 133 AD3d 954, 956-957 [3d Dept 2015] [citations omitted]; see Midorimatsu, Inc. v. Hui Fat Co., 99 AD3d 680, 682 [2d Dept 2012], lv dismissed 22 NY3d 1036 [2013]). Here, defendant has submitted copies of each of the plaintiffs’ respective contracts,2 all of which provide as follows: “Termination of this Agreement shall relieve [defendant] of all of its obligations hereunder except for any unpaid wages, payroll taxes and benefit costs hereunder, for which it has received payment from [plaintiffs].” According to defendant, this provision relieves it of any obligation to provide plaintiffs with the requested data and reports. Plaintiffs, on the other hand, contend that the parties’ contracts “do not state that [defendant's] obligations outside the scope of the contracts cease when the contracts are terminated, and the contracts are largely silent regarding the storage and return of [p]laintiffs’ data” [emphasis in original]. According to plaintiffs, the contracts “do not indicate that [defendant] would gain, or that [p]laintiffs would lose, ownership over [p]laintiffs’ data by dint of [p]laintiffs’ data being stored in [defendant's] system,” and the contracts therefore “do not preclude [p]laintiffs’ tort claim for conversion.” “While a cause of action alleging conversion cannot be predicated upon a mere breach of contract, the contracting party may also be held liable in tort where the conduct which constitutes a breach of contract also constitutes a breach of a duty distinct from, or independent of, the breach of contract” (Connecticut N.Y. Light. Co. v. Manos Bus. Mgt. Co., Inc., 171 AD3d 698, 699 [2d Dept 2019]; see Key Bank of N.Y. v. Grossi, 227 AD2d 841, 844 [3d Dept 1996]). Here, plaintiffs do not allege that defendant breached the contracts. Rather, plaintiffs allege that defendant breached its duty to return plaintiffs’ data and reports following termination of the contracts — and plaintiffs are correct that the contracts are silent insofar as the return of data and reports is concerned. Under the circumstances, the Court finds that plaintiffs have succeeded in alleging a conversion cause of action distinct from any breach of contract. Defendant’s motion to dismiss based upon the termination clause is therefore denied, with this clause pertaining solely to defendant’s obligations under the contract. With respect to plaintiffs’ cross motion, plaintiffs seek dismissal of defendant’s second counterclaim based on the failure to state a cause of action (see CPLR 3211 [a] [7]). “[T]he standard to be applied on a motion [of this type] is both familiar and well settled — ‘[the Court] must afford the complaint a liberal construction, accept as true the allegations contained therein, accord the plaintiff the benefit of every favorable inference and determine only whether the facts alleged fit within any cognizable legal theory’” (Rodriguez v. Jacoby & Meyers, LLP, 126 AD3d 1183, 1185 [2015], lv denied 25 NY3d 112 [2015], quoting He v. Realty USA, 121 AD3d 1336, 1339 [2014] [internal quotation marks and citation omitted]; see Torrance Constr., Inc. v. Jaques, 127 AD3d 1261, 1263 [2015]; Snyder v. Brown Chiari, LLP, 116 AD3d 1116, 1117 [2014]). Here, plaintiffs contend that defendant’s second counterclaim — which alleges unjust enrichment as a result of the anticipated cost of producing the requested data and reports — is based solely on “hypothetical future occurrences” and thus fails to state a cause of action. Indeed, “[t]o recover on a theory of unjust enrichment, there must first be enrichment” (Axel Johnson, Inc. v. Arthur Andersen & Co., 830 F Supp 204, 211 [SDNY 1993]; see Milman v. Denniston, 271 App Div 988, 988 [1947], app dismissed 297 NY 470 [1947]). Even accepting the allegations contained in the second counterclaim as true and according defendant the benefit of every favorable inference, to the extent that defendant has not yet born the cost of producing the requested data and reports — and may never bear that cost — it has failed to state a cause of action for unjust enrichment. Plaintiffs’ cross motion to dismiss defendant’s second counterclaim is therefore granted. Counsel are hereby directed to appear for a preliminary conference on June 20, 2023 at 11:00 A.M. at the Warren County Courthouse in Lake George, New York. Alternatively, in lieu of a conference, counsel may submit a proposed Preliminary Conference Stipulation and Order to the Court more than 48 hours prior to the scheduled conference date.3 Therefore, having considered NYSCEF document Nos. 1 through 6, 9, 13 through 25, 27 through 30, and 33 through 36, and oral argument having been heard on May 19, 2023 with Daniel S. L. Rubin, Esq. appearing on behalf of plaintiffs and Louis U. Gasparini, Esq. appearing on behalf of defendant, it is hereby ORDERED that plaintiffs’ motion for an Order directing defendant to return the data and reports is denied in its entirety; and it is further ORDERED that defendant’s motion to dismiss the action is denied in its entirety; and it is further ORDERED that plaintiffs’ cross motion is granted and defendant’s second counterclaim is dismissed. ORDERED that the parties shall appear for a status conference on June 20, 2023 at 11:00 A.M. at the Warren County Courthouse in Lake George, New York. Alternatively, in lieu of a conference, counsel may submit a proposed Preliminary Conference Stipulation and Order to the Court more than 48 hours prior to the scheduled conference date. The original of this Decision and Order has been filed by the Court. Counsel for plaintiffs is hereby directed to serve the Decision and Order with notice of entry in accordance with CPLR 5513. Dated: May 22, 2023
