Doshi et al v. Lee

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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MEET BIMAL DOSHI and BRITTANY PARISI DOSHI,
Plaintiffs,
MEMORANDUM AND ORDER
-against- 	25-CV-02131 (OEM) (LKE)
CATHERINE KIM LEE,
Defendant.
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ORELIA E. MERCHANT, United States District Judge:
This case arises out of a real estate contract dispute. Meet Bimal Doshi and Brittany Parisi
Doshi (“Plaintiffs” or “Sellers”) allege that Catherine Kim Lee (“Defendant” or “Purchaser”) acted
in bad faith to sabotage her application with the cooperative board to purchase Plaintiffs’ apartment
and assert claims for breach of contract and declaratory judgment. See generally Complaint, Dkt.
1-2 (“Complaint” or “Compl.”). Before the Court are Plaintiffs’ motion to dismiss the Complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6) and motion to strike portions of the Complaint
pursuant to Federal Rule of Civil Procedure 12(f).1
For the following reasons Defendant’s Motion to dismiss is granted in part and denied in
part and Defendant’s Motion to strike is denied without prejudice.
1 Memorandum of Law in Support of Defendant’s Motion to Dismiss, and to Strike Portions of, the Complaint, Dkt.
11-1 (“Motion” or “Mot.”); Plaintiff[s’] Memorandum of Law in Opposition to Defendant’s Motion to Dismiss
Plaintiff[s’] Complaint pursuant to Fed. R. Civ. P. 12(b)(6) and to Strike Paragraph 56 of the Complaint Pursuant to
Fed. R. Civ. P. 12(f), Dkt. 12 (“Opposition” or “Opp’n”); Reply Memorandum of Law in Support of Defendant’s
Motion to Dismiss, and to Strike Portions of, the Complaint, Dkt. 13 (“Reply”).
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BACKGROUND2
A. Parties
Plaintiffs are the owners of 99 State Street, Unit 4E, Brooklyn, New York 11201 (the
“Unit”). Compl. ¶ 20. The Unit is located within a ten-unit cooperative residential building (the
“Building”). Id. ¶ 24. The Building is self-managed by the unit owners by way of the Board of
Directors of 99 State Associates, Inc. (the “Corporation”). 	Id. ¶ 25. 	Defendant is an individual
currently residing in California. Compl. ¶ 21.
B. The Unit Purchase Process
The 	Corporation 	manages 	the 	Building, 	coordinates 	maintenance, 	and 	evaluates
prospective unit owners. 	Id. ¶ 25. 	The Corporation must approve new unit owners before the
prospective owner and unit seller may proceed to closing. Id. ¶ 29. Prospective unit owners must
submit a Prospective Buyer Application to the Corporation (the “Application”), along with a copy
of the contract of sale and supporting documentation. Id. ¶ 26. The prospective owner must also
undergo an interview process with non-interested Corporation shareholders. Id. ¶ 27.
In September 2024, Defendant began searching for an apartment to purchase in the New
York City metropolitan area. Id. ¶ 30. On October 13, 2024, Defendant submitted an offer on the
Unit after a virtual showing. Id. ¶ 32. Plaintiffs accepted her offer the next day. Id. ¶ 33.
C. The Contract
On October 18, 2024, Plaintiffs and Defendant fully executed the contract of sale for the
Unit. Id. ¶ 35; see also id., Exhibit A at 27-33, Dkt. 1-2 (the “Contract”).3 The Contract includes
riders by both Plaintiffs and Defendant. See id., Exhibit A at 34-39, Dkt. 1-2 (“Plaintiffs’ Rider);
2 The following facts are taken from Plaintiffs’ Complaint and are accepted as true for the purposes of Defendant’s
Motion. The Court recites only those facts relevant to resolving the pending Motion.
3 Page number citations to the Contract refer to the ECF PageID pagination.
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id. at 41-45, Dkt. 1-2 (“Defendant’s Rider”). 	The parties agreed on the purchase price of
$1,725,000.00. 	Id. ¶ 3. 	Plaintiff paid a deposit of $172,500.00, comprising ten percent of the
purchase price (the “Deposit”). Id. ¶ 4. The closing date was February 1, 2025. Id. ¶ 35.
The Contract specifies that “[a]ll ‘[p]roposed [o]ccupants’ of the Unit are: Purchaser.” Id.
¶ 36 (quoting Contract ¶ 1.23). Defendant represents that she was acquiring the shares and lease
for residential occupancy of the Unit solely by the proposed occupants identified in Paragraph
1.23. 	Id. (quoting Contract ¶ 4.2.1). 	Defendant confirms that she “shall not make any
representations to the Corporation contrary” to the foregoing covenant. Id. ¶ 38 (quoting Contract
¶ 4.2.5). 	Plaintiffs’ Rider provides “that the Unit will be [Purchaser’s] primary residence.” 	Id.
¶ 37 (quoting Plaintiffs’ Rider ¶ 35(e)). 	The Unit’s sale to Defendant is conditional upon “the
unconditional consent of the Corporation.” Id. ¶ 39 (quoting Contract ¶ 6.1).
The Contract provides that “Purchaser shall in good faith” submit the Application to the
Corporation and “attend (and cause any Proposed Occupant to attend) one or more personal
interviews, as requested by the Corporation.” Id. (quoting Contract ¶¶ 6.2-6.2.2). Furthermore,
“[i]f such consent is refused, or not given, due to Purchaser’s bad faith conduct[,] Purchaser shall
be in default and ¶ 13.1 shall govern.” Id. ¶ 40 (quoting Contract ¶ 6.4).
Paragraph 13.1 provides that “[i]n the event of a default or misrepresentation by Purchaser,
Seller’s sole and exclusive remedies shall be to cancel this Contract, retain the Contract Deposit
as liquidated damages and, if applicable, Seller may enforce the indemnity in ¶ 13.3 as to brokerage
commission or sue under ¶ 13.4.” Id. ¶ 41 (quoting Contract ¶ 13.1). 	Paragraph 27.1 states that
“[t]he Contract Deposit shall be deposited by Escrowee in an escrow account . . . and the proceeds
held and disbursed in accordance with the terms of this Contract” and, in the event of a dispute,
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“Escrowee may continue to hold the Contract Deposit until otherwise directed by . . . a final, non-
appealable judgment, order or decree of a court of competent jurisdiction.” Contract ¶ 27.1.
The Contract also states that Plaintiffs and Defendant waive the right to trial by jury in any
litigation arising out of the Contract. Compl. ¶ 42 (quoting Plaintiffs’ Rider ¶ 40). Additionally,
“[i]n connection with any litigation arising out of [the] Contract, the prevailing party shall be
entitled to recover all costs thereof, including, without limitation, reasonable attorneys’ fees and
disbursements for services rendered in connection with such litigation.” Id.
D. Defendant’s Application and Interview Process
On or about November 15, 2024, Defendant submitted her Application to the Corporation.
Id. ¶ 43. Defendant made additional representations in her application that Plaintiffs allege were
not included in the Contract including that Defendant’s daughter would be an additional “primary
occupant” of the Unit and Defendant would be bringing a dog and a cat. Id. ¶¶ 44-45.
The Corporation held two interviews with Defendant. Id. ¶¶ 46, 48. On December 3, 2024,
nine non-interested unit owners and shareholders of the Corporation conducted their first interview
of Defendant. 	Id. ¶ 46. Defendant stated that she planned for her eldest daughter to live in the
Unit with her, but also that her daughter may live alone in the Unit as the primary resident. Id.
¶ 47. This statement prompted the Corporation to schedule a second interview with Defendant on
January 7, 2025. 	Id. ¶¶ 48-49. After the second interview, one of the Unit owners emailed the
other Corporation members listing what “issues” would disqualify Defendant’s application: (1) “A
large, anxious dog who by applicant’s own admission ‘barks a lot’”; (2) “Buyer likely to be absent
a lot”; (3) Defendant asked for her daughter to be a co-owner; (4) Defendant asked about installing
a chair lift, which would “be a major expense, would take up a lot of space and be of no interest
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or use to the majority of shareholders”; and (5) Defendant asked about how thin the walls are and
said she and her daughter like to play loud music. Id. ¶ 51.
On January 10, 2025, allegedly “after her real estate counsel had warned her that such bad
faith would jeopardize her Deposit[,]”4 Defendant wrote to “some of the non-interested
shareholders of the Corporation with whom she had interviewed” to clarify a few issues including
that “she ‘asked questions about sound traveling through walls’ only so ‘we don’t disturb anyone’
when listening to music, and claimed that she believed ‘that once you get to know’ her dog, who
‘may bark at times, you will love her and she is not a nuisance or troubling with excessive
barking.’” Id. ¶ 56.
On January 12, 2025, the Corporation wrote to Defendant stating that “your description of
your dog in this week’s follow up did raise a new issue. 	Noise, particularly a barking dog, is
problematic,” and asked how Defendant would address this issue. 	Id. ¶ 57. 	Additionally, the
Corporation stated that it expects buyers to reside in their units, rather than for them to treat the
unit as a “pied-a-terre.” 	Id. 	Defendant responded that she did not anticipate her dog’s barking
“being a problem,” and that due to her parents’ caretaking, she would be traveling back and forth
as needed, while her daughter would be “contributing to the [cooperative] community.” Id. ¶ 58.
On January 17, 2025, the Corporation notified Plaintiffs’ real estate counsel that the
cooperative voted against approving Defendant’s purchase of the Unit, who then relayed this
information to Defendant’s counsel on the same day. Id. ¶¶ 59-60.
E. Defendant’s Alleged Default
On January 24, 2025, Plaintiffs’ real estate counsel notified Defendant’s counsel that
Defendant “is in default” of the Contract and her default was grounds for Plaintiffs to retain her
4 This allegation is the subject of Defendant’s motion to strike.
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Deposit as liquidated damages under Paragraph 13.1 of the Contract. Id. ¶ 68; see also id., Exhibit
C 	at 	50-51, 	Dkt. 	1-2 	(“Default 	Letter”).5 	Plaintiffs 	claimed 	that 	Defendant 	“‘made
misrepresentations’ to the Corporation ‘contrary to what she represented in the Contract’ and ‘did
not act in good faith in accordance with Paragraph 6.2 of the Contract.’” 	Id. (quoting Default
Letter at 50). Defendant has refused to agree to Plaintiffs’ return of the Deposit and has demanded
that Plaintiffs return the Deposit. Id. ¶ 69.
On February 12, 2025, Plaintiffs’ counsel served on Defendant’s counsel a formal Notice
of Objection, rejecting Defendant’s demand for the Deposit. Id. ¶ 70.
On February 26, 2025, Plaintiffs filed a complaint against Defendant in the Supreme Court
of the State of New York, Kings County. Notice of Removal ¶ 2, Dkt. 1; see Compl. On April 16,
2025, Defendant removed the action to this Court. See generally Notice of Removal, Dkt. 1.
LEGAL STANDARDS
A. Motion to Dismiss: Federal Rule of Civil Procedure 12(b)(6)
To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule
12(b)(6)”), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim may be deemed facially plausible if
the alleged facts allow the court to reasonably infer “that the defendant is liable for the misconduct
alleged.” 	Id. (citing Twombly, 550 U.S. at 556). 	The principle that a court must accept the
allegations in a complaint as true does not apply to “[t]hreadbare recitals of the elements of a cause
of action, supported by mere conclusory statements.” Id. (citing Twombly, 550 U.S. at 555). On
a Rule 12(b)(6) motion, the Court may consider “any written instrument attached to [the complaint]
5 Page number citations to the Default Letter refer to the ECF PageID pagination.
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as an exhibit or any statements or documents incorporated in it by reference[,]” as well as
documents “integral to the complaint.” 	Nicosia v. Amazon.com, Inc., 834 F.3d 220, 230-31 (2d
Cir. 2016) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002)).6
B. Motion to Strike: Federal Rule of Civil Procedure 12(f)
Federal Rule of Civil Procedure 12(f) (“Rule 12(f)”) provides that “[t]he court may strike
from a pleading an insufficient defense or any redundant immaterial, impertinent, or scandalous
matter.” F ED. R. C IV. P. 12(f). “In deciding whether to strike immaterial matter, ‘it is settled that
the motion will be denied, unless it can be shown that no evidence in support of the allegation
would be admissible.’” Shakima O. v. Westchester County., 12 CV 9468(VB), 2014 WL 521608,
at *5 (S.D.N.Y. Feb. 10, 2014) (quoting Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893
(2d Cir. 1976)). “Rule 12(f) motion[s are] left to the district court’s discretion.” E.E.O.C. v. Bay
Ridge Toyota, Inc., 327 F. Supp. 2d 167, 170 (E.D.N.Y. 2004).
DISCUSSION
Plaintiffs argue that Defendant purposely sabotaged her Application with the Corporation
by raising numerous issues during the interview regarding the terms of her use of the Unit that
were not set forth in the Contract. 	Plaintiffs assert two causes of action against Defendant: (1)
breach of the contract of sale and (2) declaratory judgment. 	Defendant moves to dismiss both
causes of action. 	Defendant further moves to strike a portion of the Complaint. 	The Court
addresses each motion in turn.
6 Plaintiffs attach the Contract, Plaintiffs’ Rider, and Defendant’s Rider to their Complaint. Because “[a] complaint is
deemed to include any written instrument attached to it as an exhibit,” Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004),
the Court shall herein consider the Contract and Riders.
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A. Breach of Contract Claim
Plaintiffs allege Defendant breached the contract in two ways: first by making a series of
claims in the interview process to cause the Corporation to deny her Application and second by
making misrepresentations in the Contract that she later sought to change or renege upon, both of
which demonstrate her bad faith conduct in contravention of the Contract’s Paragraph 6.4. Compl.
¶ 74. The premise of Defendant’s Motion is that Plaintiffs fail to allege a breach of contract claim
because they do not plausibly allege that Defendant acted in bad faith. Mot. at 10-16.
“To state a claim in federal court for breach of contract under New York law, a complaint
need only allege (1) the existence of an agreement, (2) adequate performance of the contract by
the plaintiff, (3) breach of contract by the defendant, and (4) damages.” Harsco Corp. v. Segui,
91 F.3d 337, 348 (2d Cir. 1996). The parties do not dispute the existence of the Contract, Compl.
¶ 73, Plaintiffs’ performance, id. ¶ 77, or damages, id. ¶ 82. Thus, Plaintiffs meet three of the four
requisite prongs. The issue is whether Plaintiffs adequately plead a breach of contract by alleging
that Defendant acted in bad faith to prevent the Corporation’s approval of her Application. 	Id.
¶¶ 74-75.
To plausibly plead breach, “a plaintiff must identify what provisions of the contract were
breached as a result of the acts at issue” so that the adverse party has “fair notice” of the claim
asserted and the nature of the alleged breach. Wolff v. Rare Medium, Inc., 171 F. Supp. 2d 354,
358 (S.D.N.Y. 2001). Consequently, a conclusory statement that an agreement was breached is
insufficient. Berman v. Sugo LLC, 580 F. Supp. 2d 191, 202 (S.D.N.Y. 2008).
Here, Plaintiffs have provided sufficient notice of the contractual provisions allegedly
breached and the nature of the breach. Plaintiffs put Defendant on notice of their claim that she
breached the contract by making misrepresentations in the Contract. 	Plaintiffs allege that, by
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making representations to the Corporation that were contrary to the representations set forth in the
Contract, Defendant breached Paragraph 4.2.5 which states that “Purchaser shall not make any
representations to the Corporation contrary to the foregoing. . . .” 	Compl. ¶ 38. 	By way of
example, Plaintiffs allege that, per Paragraph 4.2.1, Defendant represents and covenants that the
Unit would be occupied “solely by the Proposed Occupants identified in ¶ 1.23” but she does not
list her pets or her daughter as “Proposed Occupants.” Id. ¶ 36. She then notified the Corporation
in her interview process that she planned on bringing a dog and a cat and that her daughter would
be the primary occupant. Id. ¶¶ 66, 75(a), (c). Defendant also represents that the Unit “will be her
primary residence” in Plaintiffs’ Rider ¶ 35(e), Compl. ¶ 37, but then informed the Corporation
that she planned to be “‘absent a lot’ as the ‘primary caregiver’” for her parents in California, see
Compl. ¶¶ 66, 75(b). 	Plaintiffs have thereby alleged the breach and its nature—Defendant’s
misrepresentations in the Contract and her inconsistent interview statements.
Similarly, Plaintiffs have put Defendant on notice of their claim that Defendant breached
the contract by acting in bad faith. 	As an initial matter, breach of contract and breach of the
covenant of good faith and fair dealing go hand-in-hand. See Cruz v. FXDirectDealer, LLC, 720
F.3d 115, 125 (2d Cir. 2013) (quoting Harris v. Provident Life & Accident Ins., 310 F.3d 73, 80
(2d Cir. 2002)) (explaining that, under New York law, a breach of the covenant of good faith and
fair dealing is “merely a breach of the underlying contract.”). 	Plaintiffs allege that Defendant
intentionally made claims to sabotage the Corporation’s approval, thereby dooming the parties’
ability to close. 	Compl. ¶¶ 75, 77-79. 	These actions, if true, contravened Paragraph 6.2 that
Defendant act in “good faith” in submitting her Application to the Corporation, id. ¶ 78, in addition
to the implicit covenant of good faith and fair dealing. Again, Plaintiffs have sufficiently alleged
a breach of the contract on the basis of Defendant’s purported bad faith. They have put Defendant
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on notice of the alleged breach and crystalized the nature of her bad faith by alleging that she raised
various claims at the last minute in an apparent attempt to tank her pending approval with the
Corporation. See, e.g., id. ¶ 75.
Defendant suggests that the Court should adhere to a higher standard in analyzing the
plausibility of bad faith. See Mot. at 10-13 (citing Alter v. Levine, 870 N.Y.S.2d 464 (2d Dep’t
2008) (assessing bad faith at the summary judgment stage); Jangana v. Cogan, 907 N.Y.S.2d 670
(1st Dep’t 2010) (same); Khanal v. Sheldon, 953 N.Y.S.2d 550 (N.Y. Sup. Ct. 2012) (same)). But,
a higher standard is inappropriate at this early stage. 	Bad faith is an intrinsically fact-based
question, posing the need for a deeper inquiry than is permissible on a motion to dismiss. President
Container Grp. II, LLC v. Systec Corp., 467 F. Supp. 3d 158, 170 (S.D.N.Y. 2020) (“Bad
faith . . . is usually treated as a fact question that cannot be resolved on a Rule 12(b)(6) motion to
dismiss.”) (collecting cases); but see Gas Natural, Inc. v. Iberdrola, S.A., 33 F. Supp. 3d 373, 383
(S.D.N.Y. 2014) (noting that there must be “at least some assessment of whether the Complaint
has alleged facts that ‘nudge’ an assertion that a party has acted in bad faith ‘across the line from
conceivable to plausible.’” (quoting Iqbal, 556 U.S. at 680)). 	Plaintiffs have plausibly asserted
that Defendant acted in a fashion that encouraged the Corporation to disapprove her by raising a
number of issues that contradicted the Contract and the Corporation’s standards. 	Defendant’s
Motion as to bad faith is precipitous; whether or not Defendant acted in bad faith is a fact-based
question best answered by a jury.
Accordingly, Defendant’s motion to dismiss Plaintiffs’ breach of contract claim is denied.
B. Declaratory Judgment Claim
Plaintiffs’ second cause of action seeks declaratory judgment that “(a) Plaintiffs are entitled
to the retention of the Contract Deposit pursuant to sections 6.2 and 13.1 of the Contract of Sale;
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(b) Defendant has no valid claim to the Deposit that properly belongs to Plaintiffs; and (c) the
escrow agent currently holding the Deposit must forthwith transfer the Deposit to Plaintiffs.”
Compl. ¶ 96.
Defendant argues that Plaintiffs’ declaratory judgment claim is duplicative of the breach of
contract claim, which is itself insufficient as a matter of law. 	Mot. at 16-17. 	The Declaratory
Judgment Act permits a district court to exercise jurisdiction over a proposed declaratory judgment
action if an actual controversy exists. Myers Indus., Inc. v. Schoeller Arca Sys., Inc., 171 F. Supp.
3d 107, 121 (S.D.N.Y. 2016) (citing 28 U.S.C. § 2201(a)). Before reaching any questions of law
as to the declaratory judgment claim itself, a district court must first determine whether an actual
controversy exists, then whether it will exercise jurisdiction over the controversy. See id. at 122.
As previously discussed, Plaintiffs have plausibly alleged a breach of contract claim. Therefore,
the Court addresses whether Plaintiffs’ declaratory judgment claim is duplicative such that the
Court should decline to exercise jurisdiction over it.
1. 	Actual Controversy
An actual controversy arises where “the facts alleged, under all the circumstances, show
that there is a substantial controversy, between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment.” 	MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 127 (2007) (quoting Maryland Cas. Co. v. Pac. Coal & Oil Co.,
312 U.S. 270, 273 (1941)). The disagreement must have taken on a “fixed and final shape” in that
the dispute is more than hypothetical and based on “concrete allegations of fact.” See S.E.C. v.
Collector’s Coffee, Inc., 19 Civ. 4355 (VM) (GWG), 2023 WL 3575428, at *6 (S.D.N.Y. May 22,
2023) (quoting Pub. Serv. Comm’n v. Wycoff Co., 344 U.S. 237, 244 (1952)), report &
recommendation adopted, 19 Civ. 4355, 2023 WL 3862662 (S.D.N.Y. June 7, 2023). 	Plaintiffs
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and Defendant have adverse interests in the outcome of the Contract and the dispute is based on
concrete allegations of fact. As such, there is an actual controversy that the Court has discretion
to exercise its jurisdiction over.
2. 	Discretion to Exercise Jurisdiction
As to the Court’s “broad discretion” to exercise jurisdiction over actions for declaratory
judgment, the Second Circuit advises that six conditions should inform a district court’s decision:
(1) “whether the [declaratory] judgment [sought] will serve a useful purpose in
clarifying or settling the legal issues involved”; (2) “whether [such] a judgment
would finalize the controversy and offer relief from uncertainty”; (3) “whether the
proposed remedy is being used merely for procedural fencing or a race to res
judicata”; (4) “whether the use of a declaratory judgment would increase friction
between sovereign legal systems or improperly encroach on the domain of a state
or foreign court”; (5) “whether there is a better or more effective remedy,” and
(6) whether concerns for “judicial efficiency” and “judicial economy” favor
declining to exercise jurisdiction.
Admiral Ins. Co. v. Niagara Transformer Corp., 57 F.4th 85, 99-100 (2d Cir. 2023) (alterations in
original) (citing 28 U.S.C. § 2201(a)) (first quoting Niagara Mohawk Power v. Hudson River-
Black River Regul. Dist., 673 F.3d 84, 105 (2d Cir. 2012); then quoting Reifer v. Westport Ins., 751
F.3d 129, 149 (3d Cir. 2014)).
In considering the first two factors, where the issues raised in a declaratory judgment claim
are duplicative of the issues raised in the breach of contract claim, a court may decline to exercise
jurisdiction. See iGem Commc’ns LLC v. MAG DS Corp., 24cv5649 (DLC), 2024 WL 5155839,
at *2 (S.D.N.Y. Dec. 18, 2024); see also Steel River Sys., LLC v. Variant Alternative Income Fund,
803 F. Supp. 3d 290, 311 (S.D.N.Y. 2025) (“Courts reject declaratory judgment claims ‘when other
claims in the suit will resolve the same issues,’ because, under such circumstances, a declaratory
judgment will not serve any useful purpose” quoting Optanix, Inc. v. Alorica Inc., 1:20-cv-09660-
GHW, 2021 WL 2810060, at *3 (S.D.N.Y. July 6, 2021))). Claims are duplicative under New York
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law if they arise from the same facts and allege the same damages. NetJets Aviation, Inc. v. LHC
Commc’ns, LLC, 537 F.3d 168, 175 (2d Cir. 2008).
Here, resolution of the breach of contract claim would resolve whether Plaintiffs are
entitled to retain the Deposit and whether Defendant has a valid claim to the deposit. Under New
York law, damages for a valid breach of contract claim “should put the plaintiff in the same
economic position he would have occupied had the breaching party performed the contract.” Alta
Partners, LLC v. Getty Images Holdings, Inc., 165 F.4th 141, 156 (2d Cir. 2026) (quoting Oscar
Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 196 (2d Cir. 2003)). Assuming the facts in the
Complaint as true, had Defendant acted in bad faith and breached the Contract, she would have no
valid claim to the Deposit and Plaintiffs would be entitled to retain the Deposit per Paragraph 13.1
of the Contract. See Contract ¶ 13.1 (“In the event of a default or misrepresentation by Purchaser,
Seller’s sole and exclusive remedies shall be to . . . retain the Contract Deposit as liquidated
damages”); see Lim v. Radish Media Inc., 22-1610, 2023 WL 2440160, at *2 (2d Cir. Mar. 10,
2023) (affirming the district court’s dismissal of a declaratory judgment claim as “impermissibly
duplicative” of a breach of contract claim where the plaintiff’s “breach of contract claim would
resolve whether [the plaintiff] had a valid equity interest [] and the value of that interest”).
Additionally, here, resolution of the breach of contract claim would resolve whether the
escrowee would return the deposit per Paragraph 27.1 of the Contract. 	See Contract ¶ 27.1
(“Escrowee may continue to hold the Contract Deposit until otherwise directed by . . . a final, non-
appealable judgment, order or decree of a court of competent jurisdiction.”). Any concern that the
escrowee would not comply with such provision, should Plaintiffs succeed on their breach of
contract claim, is merely speculative and insufficient to distinguish the declaratory judgment claim
from the breach of contract claim. See Ambac Assurance Corp. v. U.S. Bank Nat’l Ass’n, 21-70-
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cv, 2021 WL 6060710, at *5 (2d Cir. Dec. 20, 2021) (declining to distinguish between declaratory
judgment and breach of contract claims in part because the suggestion that the breaching party
would “disregard the district court’s binding judgment as to how to apply [the] recoveries” was
“merely speculative”).
Because of the duplicity in relief between Plaintiffs’ breach of contract and declaratory
judgment claims, Defendant’s motion to dismiss Plaintiffs’ declaratory judgment claim is granted.
C. Motion to Strike
In the Complaint, Plaintiffs allege that, inter alia
On January 10, 2025, in apparent recognition that she had “blown” the interview
and perhaps attempting to avoid the readily apparent assertion that she had done so
in bad faith, after her real estate counsel had warned her that such bad faith would
jeopardize her Deposit, Defendant wrote to some of the non-interested shareholders
of the Corporation with whom she had interviewed.
Compl. ¶ 56 (emphasis added). Defendant moves to strike the clause regarding Defendant’s real
estate counsel’s advice. Mot. at 17-18. She asserts that she is prejudiced by the statement because
it is protected under the attorney-client privilege in addition to inadmissible hearsay. Id.
“Motions to strike are generally disfavored, and should be granted only when there is a
strong reason for doing so.” 	Mazzola v. Roomster Corp., 849 F. Supp. 2d 395, 410 (S.D.N.Y.
2012) (quoting In re Tronox, Inc. Sec. Litig., 9 Civ. 6220 (SAS), 2010 WL 2835545, at *4
(S.D.N.Y. June 28, 2010)). As the party asserting the attorney-client privilege, Defendant bears
the burden of establishing that the privilege applies to the challenged allegations. In re Grand Jury
Proc., 219 F.3d 175, 182 (2d Cir. 2000) (citation omitted). The attorney-client privilege applies
where: “(1) a communication between client and counsel . . . (2) was intended to be and was in
fact kept confidential, and (3) was made for the purpose of obtaining or providing legal advice.”
Lee v. Riverbay Corp., 751 F. Supp. 3d 259, 294 (S.D.N.Y. 2024) (quoting In re County of Erie,
473 F.3d 413, 419 (2d Cir. 2007)) (citation omitted). 	Furthermore, the Second Circuit has
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cautioned that evidentiary questions should be avoided at the preliminary stage of proceedings.
Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976).
Defendant has not established any portion of her burden as to attorney-client privilege and
it is not clear, based solely on the pleadings, whether privilege applies. See Lee, 751 F. Supp. 3d
at 295 (denying motion to strike because it was not clear on the face of the pleadings whether the
attorney-client privilege properly applied). At this preliminary stage and without sufficient facts,
Defendant’s motion to strike on the basis of privilege and hearsay is denied without prejudice as
premature.
CONCLUSION
For the foregoing reasons, Defendant’s Motion is granted with respect to Plaintiffs’
declaratory judgment claim and denied with respect to Plaintiffs’ breach of contract claim, and
Defendant’s Motion to strike is denied without prejudice as premature.
SO ORDERED.
/s/
ORELIA E. MERCHANT
United States District Judge
March 3, 2026
Brooklyn, New York
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