Deer Consumer Prods., Inc. v Little (2011 NY Slip Op 51691(U))

Deer Consumer Prods., Inc. v Little

2011 NY Slip Op 51691(U) [32 Misc 3d 1243(A)]

Decided on August 31, 2011

Supreme Court, New York County

Edmead, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

In this action for defamation, defendant Seeking Alpha Ltd. ("SAL") moves to dismiss the Complaint pursuant to CPLR 3211(a)(1) and (7), based on documentary evidence and failure to state a cause of action.

Factual Background

Plaintiff, a manufacturer and seller of small home appliances, sues defendants Alfred Little ("Little') and SAL for defamation, alleging that Little authored several defamatory reports as part of an overall scheme to drive down the price of plaintiff's common stock in order to profit on short sales. The reports were published on SAL's website, seekingalpha.com.^[FN1] [*2]

In support of dismissal, SAL argues that it cannot be held liable for defamation. The Communications Decency Act ("CDA") §509 (47 U.C.S. §230) ("Section 230") immunizes an interactive computer service provider, such as SAL, from tort liability for third party content published on its website, whether or not the internet service has kept editorial control, has selected, revised, removed, reposted or altered the allegedly defamatory content of third parties, or has performed some other "traditional editorial functions" of a publisher.

Plaintiff's allegations concede that SAL did not author the reports at issue. Plaintiff does not allege that SAL was part of Little's alleged scheme. Rather, plaintiff alleges that SAL "published" "false and defamatory" reports on SAL's website.

SAL contends that according to the affidavit of its Chief Operating Officer Avrom Gilbert ("Gilbert's Affidavit"), SAL's website is a free online source that publishes third party commentary, reports, articles, and analysis about U.S. financial markets, and functions as an open discussion forum or virtual bulletin board for any third party user and contributor. Its content is primarily written by third-party contributors. Third-party contributors can post their content directly on the website as a blog, as a reader's comment to an existing post, or as commentary to be selected for publication as an article. Third-party posts that SAL selects to publish as articles may be edited by SAL for clarity and consistency, and do not change or interfere with the substance of the author's argument or viewpoint. SAL's editorial process consists of no more than selecting the articles for publication, editing for clarity and consistency, and organizing and tagging them so that they could be easily found.

Of the five alleged reports at issue, two were articles selected and edited in accordance with SAL's editorial principles, which are posted on its webpage. One of the articles and part of the other were removed from the website after plaintiff disputed the content, even though plaintiff opted not to participate in the website's article dispute process. The third report was a blog post not selected or edited by SAL and no longer exists on the site. The remaining two alleged "reports" in issue were not published on SAL's website; they were accessible through the website by clicking on a link (to a third-party website) in a reader's comment posted directly by Little.

In opposition, plaintiff argues that it was improper for SAL to submit Gilbert's Affidavit, and the Court should not accept SAL's distinction between the types of reports for the purposes of determining the present motion. SAL's submission of Gilbert's Affidavit is an improper attempt to convert defendant's motion to dismiss under CPLR 3211(a)(7) into a motion for summary judgment. An affidavit submitted at this stage in litigation is not properly considered to refute the allegations in the complaint. Courts do not consider affidavits to be "documentary evidence," and they are therefore "insufficient as a matter of law to grant" a motion to dismiss.

Plaintiff also argues that it has stated a claim for defamation per se. On March 9, 2011, SAL published the false statement that plaintiff's "management misappropriated $11 million in company funds through a questionable land purchase." On March 18, SAL published a report which stated that Little and his "legal team" had been unable to locate a copy of the land use certificate and claimed that this was proof that the "certificate is a fraud." Also, the "March 21st Report," edited and published by SAL, contained statements identical to those in the March 18th [*3]Report. Such statements constitute a direct and false attack on the reputation of plaintiffs management by imputing fraud, and are defamatory per se. According to the complaint, these statements were known to be false when they were made, were published without privilege or authorization to numerous persons, as part of a scheme to manipulate the market.

Moreover, an issue exists as to what extent SAL solicited and shaped the articles it selected, edited, and published under the name "Alfred Little." Although an interactive computer service cannot be held liable for content created and developed solely by another party, caselaw holds that a website may be held independently liable as an "information content provider" if it was "responsible in part, for the creation or the development of information." Courts have held websites liable as "information content providers" where the website exercised sufficient editorial control of the content of an offending posting or actively solicited the selected content. Courts have declined to dismiss suits without first permitting sufficient discovery to determine the extent of apparent publisher's involvement with the development of the content. Dismissal is inappropriate because the Complaint alleges that defendant was "responsible in part, for the creation or the development of information" of the defamatory Alfred Little articles, which Gilbert's Affidavit does not deny. The CDA does not provide blanket immunity to websites that publish third-party content, where such a defendant was responsible for developing defamatory information.

SAL was aware of the identity of the person or persons published under the name "Alfred Little," and was in communication with "Alfred Little" about the content of the articles it selected to publish. Discovery is warranted to ascertain the communications and business relationship between SAL and "Alfred Little," the involvement of SAL's editorial staff in developing the challenged content, why SAL continues to publish articles by "Alfred Little," despite the disconnect between the public information provided about the alleged author, and whether SAL is involved in the scheme to manipulate the public market for plaintiff's common stock. Even if discovery were to show that SAL was not directly involved in the creation or development of the challenged reports, the CDA does not protect SAL as a publisher that employs an editorial staff.

Plaintiff asserts that no court has extended the CDA to business news and information websites that employ editorial staffs like SAL, but dismisses claims only against pure internet service providers that merely provided a public forum for others and that do not exert substantial control over the content posted by others, i.e., public message boards (like consumer comment websites), public sales and exchange websites (like Craigslist and eBay), large service providers (like AOL, Yahoo!, and Google), and social networking websites (like Facebook and MySpace).

SAL's editorial staff actively selects and edits the articles to be posted. The editors maintain communications with each of the authors they select to publish and work with these authors to ensure that articles "conform to SAL's standards of rigor clarity and integrity."

SAL confirms that its staff edits the articles for "impact. SAL is a for-profit website that established its business model on the reliability of the articles selected by its editorial staff for publication. SAL purports to be "the premier website for actionable stock market opinion and analysis" and is a featured source of financial information on such widely-used investment platforms and websites as e*Trade and Yahoo! Finance. SAL repeatedly touts the reliability of the authors that its editors select for publication. And SAL's editors "directly communicate with [*4]every potential contributor" and research their authors sufficiently to determine "an author's honesty and rigor." SAL's stated goal is to separate its authors "from the mass of mediocre

and often manipulative free financial content on the Internet."

Plaintiff also requests that, should the court determine that dismissal is warranted, such dismissal should be granted without prejudice and with leave for plaintiff to replead its claim against SAL.

In reply, SAL argues that the claim that SAL reviewed and edited, and published on its website reports "authored by" Little mirror allegations dismissed by courts as protected by Section 230. Plaintiff does not dispute the applicable test that confirms SAL as a Section 230 "interactive computer service" entitled to immunity. Section 230's protection extends to (i) for-profit, (ii) professional (iii) news and information publishers with (iv) editorial staffs. Section 230 immunity is unaffected by any promotion or vouching for third-party content on its site, even when it knows and compensates the contributor (activities that exceed the conduct alleged of SAL). Congress had made a policy choice to provide "immunity even where the interactive service provider has an active, even aggressive role in making available content prepared by others. The Complaint, and counsel's opposing affirmation, allege no facts at all that would indicate that SAL authored Little's "reports" in whole or in part, or was involved in any way in creating or developing their content.

Also, discovery is not permitted, as the CDA was intended to insulate website operators from incurring substantial costs in protracted litigation. The federal cases from jurisdictions outside of New York cited by plaintiff are inapplicable. Plaintiff makes no factual allegations that SAL was involved in developing the challenged content or was part of any alleged scheme to manipulate plaintiff's common stock. Discovery is not permitted on mere speculation. Nor does caselaw permit plaintiff to search through SAL's files in the hopes of finding a cause of action not alleged to date. Section 230 immunity is unaffected by whether or how well an interactive computer service knew a third party author, the number of postings that the author made, or even if the author had a relationship with the service, received compensation from it and was actively marketed by it, none of which is alleged here.

And, courts accept and consider movants' affidavits on a 3211(a)(7) dismissal motion, and has affirmed dismissal where, as here, a Section 230 challenge is made to a defamation claim. And, as it is undisputed that the Court, on a CPLR 3211(1) or (7) dismissal motion, may consider documents referred to in a Complaint, such as documents from SAL's website, even if the pleading fails to attach them. Indeed, plaintiff has itself proffered the same three documents that the Gilbert Affidavit submits.

Furthermore, the Complaint does not allege that defendants acted with "actual malice," as required by a publically traded corporation such as plaintiff.

And as plaintiff cannot assert a viable claim against SAL, its request for leave to amend should be denied.

Pursuant to CPLR 3211 (a)(l), a party may move for judgment dismissing one or more causes of action asserted against him on the ground that "a defense is founded upon documentary evidence." Thus, where the "documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law," dismissal is warranted (Leon v Martinez, 84 NY2d 83, [*5]88, 614 NYS2d 972, 638 N.E.2d 511 [1994]). The test on a CPLR 3211(a)(1) motion is whether the documentary evidence submitted "conclusively establishes a defense to the asserted claims as a matter of law" (Scott v Bell Atlantic Corp., 282 AD2d 180, 726 NYS2d 60 [1st Dept 2001] citing Leon v Martinez, 84 NY2d 83, 88, supra; IMO Indus., Inc. v Anderson Kill & Olick, P.C., 267 AD2d 10, 11, 699 NYS2d 43 [1st Dept 1999]).

If any question of fact exists as to the meaning and intent of the document, based on the documentary evidence presented to the court, a dismissal pursuant to CPLR §3211(a)(1) is precluded (see Khayyam v Doyle, 231 AD2d 475 [1st Dept 1996]).

In determining a motion to dismiss a complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the Court's role is ordinarily limited to determining whether the complaint states a cause of action (Frank v DaimlerChrysler Corp., 292 AD2d 118, 741 NYS2d 9 [1st Dept 2002]). The standard on such a motion is not whether the party has artfully drafted the pleading, but whether deeming the pleading to allege whatever can be reasonably implied from its statements, a cause of action can be sustained (see Stendig, Inc. v Thom Rock Realty Co., 163 AD2d 46 [1st Dept 1990]; Leviton Manufacturing Co., Inc. v Blumberg, 242 AD2d 205, 660 NYS2d 726 [1st Dept 1997]). When considering a motion to dismiss for failure to state a cause of action, the pleadings must be liberally construed (see, CPLR § 3026), and the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit into any cognizable legal theory" (Nonnon v City of New York, 9 NY3d 825 [2007]; Leon v Martinez, 84 NY2d 83, 87-88, 614 NYS2d 972 [1994]). Where the parties have submitted evidentiary material, including affidavits, or where the bare legal conclusions and factual allegations are "flatly contradicted by documentary evidence" the pertinent issue is whether claimant has a cause of action, not whether one has been stated in the complaint (see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; R.H. Sanbar Projects, Inc. v Gruzen Partnership, 148 AD2d 316, 538 NYS2d 532 [1st Dept 1989]; Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81, 692 NYS2d 304 [1st Dept 1999], affd 94 NY2d 659, 709 NYS2d 861 [2000]; Kliebert v McKoan, 228 AD2d 232, 643 NYS2d 114 [1st Dept], lv denied 89 NY2d 802, 653 NYS2d 279 [1996]). While affidavits may be considered on a motion to dismiss for failure to state a cause of action, if the motion is not converted to a 3212 motion for summary judgment, they are generally intended to remedy pleading defects and not to offer evidentiary support for properly pleaded claims" (Nonnon v City of New York, 9 NY3d 825 [2007] [emphasis added]). As to affidavits submitted by the defendant/respondent, "[a]ffidavits submitted by a respondent will almost never warrant dismissal under CPLR 3211 unless they "establish conclusively that [petitioner] has no [claim or] cause of action" (Lawrence v Miller, 11 NY3d 588, 873 NYS2d 517 [2008] citing Rovello v Orofino Realty Co., 40 NY2d 633, 636 [1976]).

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

. . . .No cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section. [*6]

An "interactive computer service" is defined as "any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server . . . . (47 U.S.C. §230(f)(2)). And an "information content provider" is defined "means any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service." (47 U.S.C. §230(f)(3)).

"Congress has made a different policy choice by providing immunity even where the interactive service provider has an active, even aggressive role in making available content prepared by others. In some sort of tacit quid pro quo arrangement with the service provider community, Congress has conferred immunity from tort liability as an incentive to Internet service providers to self-police the Internet for obscenity and other offensive material, even where the self-policing is unsuccessful or not even attempted" (Finkel v Facebook, Inc., No. 102578/09, 2009 WL 3240365, 2009 NY Misc. LEXIS 3021 [Sup. Ct. NY Co. 2009]).

Thus, Section 230 bars "lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial functions — such as deciding whether to publish, withdraw, postpone, or alter content" (Shiamili, supra at 2011 WL 2313818 at *5, 2011 NY LEXIS 1452 at *10).

Shiamili is instructive. In Shiamili, plaintiff Christakis Shiamili ("Shiamili"), CEO of Ardor Realty Corp. ("Ardor") sued the Real Estate Group of New York, Inc. ("TREGNY") for defamation. Plaintiff and TREGNY both sold and rented New York City apartments. It was alleged that TREGNY "allegedly administer[ed] and [chose] content for' a publicly accessible website — a blog' — dedicated to the New York City real estate industry" (id. at *2), and published defamatory statements about plaintiff on the website. The Court stated that a website is generally not a "content provider" with respect to comments posted by third-party users, and rejected plaintiff's contention "that defendants should be deemed content providers because they created and ran a website which implicitly encouraged users to post negative comments about the New York City real estate industry." Also, there was no allegation that defendants actually authored the statements. Further, there was no allegation that "the defamatory comments were posted in response to any specific invitation for users to bash" plaintiff. Thus, the Court of Appeals held that Section 230 immunized the defendant since the complaint alleged only that the operator published and edited content authored by a third party (see also Reit v Yelp!, Inc., 29 [*7]Misc 3d 713, 716, 907 NYS2d 411, 413 [Sup. Ct. NY Co. 2010] [that defendant selected certain posts it maintains on its website "can be considered the selection of material for publication, an action quintessentially related to a publisher's role'"]).

Upon information and belief, . . . SAL is the owner and publisher of a web site entitled "Seeking Alpha", www.seekingalpha.com. According to the information published by SAL on that web-site, SAL reviews and edits all reports published on the Seeking Alpha website.

On March 9, 2011, defendant SAL first published a false and defamatory report concerning DCPI, entitled "Deer Consumer Products: 'DEER in the Headlights'", that was authored by defendant Little (the "March 9' Report"). . . .

On March 17, 201 1, defendant SAL published a report, entitled "The Problems With Deer Consumer Products", authored by defendant Little (the "March 17' Report"). The March 17' Report again falsely stated that DCPI's "management misappropriated over $12 million on two recent land purchases."

On March 21, 2011, defendant SAL published a report, entitled "Another Reason to Short Deer Consumer", authored by defendant Little (the "March 21' Report"). . . .

During at least the period from March 9, 2011 through March 25, 2011, defendant Little authored and defendant SAL published false and defamatory statements concerning [plaintiff's] acquisition of certain land use rights in AnHui Province. . . .

Defendant Little authored and defendant SAL published these false and defamatory statements without sufficient factual bases for making these false and defamatory statements. . . .

The remaining paragraphs explain the alleged defamatory nature of the reports and the effects they had on plaintiff's common stock.

"Courts engage in a three part inquiry when determining the availability of immunity under the CDA, i.e., [i] whether Defendant is a provider of an interactive computer service; [ii] if the postings at issue are information provided by another information content provider; and [iii] whether Plaintiff's claims seek to treat Defendant as a publisher or speaker of third party content'" (Gibson v Craigslist, Inc., Slip Copy, 2009 WL 1704355 [SDNY 2009]). [*8]

Based on a plain reading of the four corners of the Complaint,^[FN2] SAL is an interactive computer service. The allegedly defamatory content was, according to the Complaint, supplied solely by a third-party information content provider, to wit: Little, and was not authored by SAL. And, plaintiff's complaint solely alleges claims that SAL is a publisher.

To be considered "documentary," evidence must be unambiguous and of undisputed authenticity (Fontanetta v Doe, 73 AD3d 78, 898 NYS2d 569 [2d Dept 2010] citing see Siegel, Practice Commentaries, McKinney's Cons. Laws of NY, Book 7B, CPLR C3211:10, at 21—22; Philips South Beach, LLC v ZC Specialty Ins. Co., 55 AD3d 493, 867 NYS2d 386 [1st Dept 2008] (documentary evidence "apparently aims at paper whose content is essentially undeniable and which assuming the verity of its contents and the validity of its execution will itself support the ground on which the motion is based")). SAL's "About Seeking Alpha" page describes the defendant as: "the premier website for actionable stock market opinion and analysis, and vibrant, intelligent finance discussion. We handpick articles from the world's top market blogs, money managers, financial experts and investment newsletters - publishing approximately 250 articles daily." (Exh. A) (Emphasis added). On its page entitled "Become a Contributor," SAL instructs potential contributors to "Simply click on one of the many "Submit Article" buttons throughout the site, or click on the 'Author Board' option in your Seeking Alpha toolbar (at the bottom of your browser for logged-in users). When you have finished composing your post, select Submit Premium Article', 'Submit Article' or 'Post Instablog'" (Exh. B). And, on its page entitled "Editorial Principles," SAL explains that it selects "articles from credible authors and edit them for clarity, consistency and impact." The page further states that SAL's "editors follow the following criteria in deciding whether or not to accept an article for publication:

Plaintiff does not challenge the authenticity of the documents submitted by SAL, and such documents demonstrate, unambiguously, that SAL does not author the articles, or request that the contributors submit articles containing negative or harmful content. There is no indication from these documents that SAL imputs any information of its own into the articles submitted for publication.

That SAL seeks to reach the most "affluent and engaged users" and "handpick[s] articles" and contributors, and requires the contributors, whose identities are known to SAL, to adhere to SAL's compliance standards, do not make SAL "another information content provider." Such functions are "traditional editorial functions" of a publisher, rendering SAL immune from liability. [*9]

In opposition, plaintiff failed to submit any evidence or allegation indicating that SAL is anything other than a publisher of third party content on its website. Plaintiff's own submissions show that SAL selects, edits, and organizes the articles written by others, namely "investors who describe their personal approach to stock picking and portfolio management . . . ." (Opposition, Exh. A). While plaintiff contends that courts have held websites liable as "information content providers," there are no allegations, and the documents submitted by plaintiff fail to indicate, that SAL actually produced or specifically encouraged the development of offensive content (cf. F.T.C. v Accusearch Inc., 570 F.3d 1187, 1199 [10th Cir. 2009] (stating that a publisher is "responsible" for the development of offensive content only if it in some way specifically encourages development of what is offensive about the content]; Hy Cite Corp. v badbusinesssbureau.com, L.L.C., 418 F Supp 2d 1142, 1148-49 [D. Ariz. 2005] (denying motion to dismiss where plaintiff alleged that "wrongful content appears on the Rip-off Report website in editorial comments created by Defendants and titles to Rip-off Reports, which Defendants allegedly provide; plaintiffs alleged that Defendants "produce original content contained in the Rip-off Reports" and "solicit individuals to submit reports with the promise that individuals may ultimately be compensated for their reports."); Fair Housing Council of San Fernando Valley v Roommates.Com, LLC, 521 F.3d 1157 [9th Cir. 2008] (website owner's "work in developing the discriminatory questions, discriminatory answers and discriminatory search mechanism is directly related to the alleged illegality of the site")). There is simply no allegation that SAL created or developed the alleged defamatory statements and ideas contained in the defamatory report. The allegations in the Complaint indicate that the contributors, and not SAL, are solely responsible for creating the information in the articles that are published, including the reports at issue.

Further, contrary to plaintiff's contention, discovery is unwarranted to uncover SAL's actual involvement in the creation of the alleged defamatory reports. This is not an instance where the movant is seeking summary judgment or alleged that defendants actually wrote any part of the offending material (cf. Ben Ezra, Weinstein, & Co. v America Online Inc., 206 F3d 980, 983-84 [10th Cir 2000]; Whitney Information Network, Inc. v. Xcentric Venture, 199 Fed.Appx. 738, 744 [11th Cir 2006] (defendants allegedly "rewrote consumer complaints submitted by third parties to make it appear that . . . the company complained of . . .was "ripping off" customers"; "included the addition of words such as "ripoff," "dishonest," and "scam"; and "fabricated entire consumer complaints"); Carafano v Metrosplash.com Inc., 207 FSupp2d 1055, 1063, 1067 [CD Cal 2002] (summary judgment denied under the CDA where defendant allegedly contributes to the content of the profiles by asking specific questions with multiple choice answers and specific essay questions, and members "cannot post any other additional information even if he/she desires"), aff'd 339 F3d 1119 [9th Cir 2003]).

Further, plaintiff's application for leave to amend the Complaint is denied. While it is "fundamental that leave to amend a pleading should be freely granted, so long as there is no surprise or prejudice to the opposing party" (Kocourek v Booz Allen Hamilton Inc., 925 NYS2d 51 [1st Dept 2011] citing CPLR 3025[b] and Solomon Holding Corp. v Golia, 55 AD3d 507, 868 NYS2d 612 [2008]), "to conserve judicial resources, an examination of underlying merits of the proposed causes of action is warranted" (Megaris Furs, Inc. v Gimble Bros., Inc., 172 AD2d 209 [1st Dept 1991]). "[A] motion for leave to amend a pleading must be supported by an affidavit of [*10]merits and evidentiary proof that could be considered upon a motion for summary judgement" (Zaid Theatre Corp. v Sona Realty Co., 18 AD3d 352, 355 [1st Dept 2005]). A proposed pleading that fails to state a cause of action or is plainly lacking in merit will not be permitted (Eighth Ave. Garage Corp. v H.K.L. Realty Corp. et al., 60 AD3d 404 [1st Dept 2009]; Hynes v Start Elevator, Inc., 2 AD3d 178, 769 NYS2d 504 [1st Dept 2003]; Tishman Constr. Corp. v City of New York, 280 AD2d 374 [1st Dept 2001]; Bencivenga & Co. v Phyfe, 210 AD2d 22 [1st Dept 1994]; Bankers Trust Co. v Cusumano, 177 AD2d 450 [1st Dept 1991], lv dismissed 81 NY2d 1067 [1993]; Stroock & Stroock & Lavan v Beltramini, 157 AD2d 590 [1st Dept 1990]).

The First Department has denied motions to amend on the grounds that the amended pleadings are non-existent or conclusory (see e.g. Sirohi v Lee, 222 AD2d 222, 223 [1st Dept 1995] [stating that the plaintiff's cross motion to amend the thirteenth cause of action was properly denied because the proposed amendment was devoid of merit and because plaintiff failed to furnish the proposed amended pleading]; Abbott v Herzfeld & Rubin, P.C., 202 AD2d 351, 352 [1st Dept 1994]["Leave to replead was properly denied, plaintiffs not having provided proposed new pleadings supported by evidence as on a motion for summary judgment"]; Hickey v National League of Professional Baseball Clubs, 565 NYS2d 65, 66 [1st Dept 1991]), citing Walter & Rosen, Inc. v Pollack, 101 AD2d 734, 735 [1st Dept 1984]). Here, plaintiff's opposition fails to attach the proposed amended complaint, or contain factual allegations supporting a legally cognizable claim against SAL for defamation.

ORDERED that the motion by defendant Seeking Alpha Ltd.to dismiss the Complaint pursuant to CPLR 3211(a)(1) and (7), based on documentary evidence and failure to state a cause of action, is granted.

This constitutes the decision and order of the Court.

Dated: August 31, 2011_______________________________________

ORDERED that the motion by defendant Seeking Alpha Ltd.to dismiss the Complaint pursuant to CPLR 3211(a)(1) and (7), based on documentary evidence and failure to state a cause of action, is granted.