Despite lawyers repeated admonishment to get agreements in writing and signed, commercial relationships continue to be forged through informal discussions and handshake deals. Enter the treacherous Statute of Frauds. As the Second Department’s recent decision in Dimas Tower, Inc. v. North Shore Towers Apartments Incorporated, 249 A.D.3d 690 (N.Y. App. Div. 2d Dep’t 2026) reminds us, oral promises involving interests in real property are difficult to enforce, even when one party claims to have relied on that promise to their detriment.
The Case: Dimas Tower, Inc. v. North Shore Towers Apartments Incorporated, 249 A.D.3d 690 (N.Y. App. Div. 2d Dep’t 2026)
The plaintiff operated a restaurant and catering hall under a written 15-year lease at North Shore Towers. Important to note, this lease also obligated the plaintiff to renovate the leased premises. According to the complaint, the landlord orally promised the plaintiff that it could operate a separate facility known as the “VIP Room” when it became available. The parties later executed a written lease modification granting the plaintiff the right to bid on any renewal of the VIP Room license. The plaintiff alleged that, despite that agreement, the landlord steered the opportunity to an unqualified lower bidder, depriving the plaintiff of the benefit of its bargain. Pursuant to CPLR 3211(a), the landlord moved to dismiss the causes of action asserted against them. The trial court denied the motion to dismiss, and the defendants appealed.
The Court’s Decision
The Second Department rejected the plaintiff’s claim for enforcement of the alleged oral promise. Because the purported agreement concerned an interest in real property, it was barred by the Statute of Frauds unless the plaintiff could establish part-performance unequivocally referable to the contract. The plaintiff argued that its expenditures renovating the restaurant and paying rent constituted partial performance under this exception. The court disagreed, because those actions were already required under the written lease and therefore were not “unequivocally referable” to the alleged oral agreement. Conduct sufficient to overcome the statute of frauds must be explainable only by the oral agreement, not by obligations imposed under an existing written contract.
Luckily for the plaintiff, its complaint was partially saved by the parties’ written agreements. Thus, the appellate court held that the plaintiff adequately alleged a breach of the written bidding agreement based on the implied covenant of good faith and fair dealing. Although the agreement guaranteed only the opportunity to bid, the complaint sufficiently alleged that the landlord manipulated the bidding process by steering the opportunity elsewhere. The court reiterated that even where a party complies with a contract’s express terms, it may still breach the implied covenant by exercising contractual rights in a manner designed to deprive the other party of the benefits of the agreement.
The Takeaway
Dimas Tower offers two practical lessons for businesses negotiating commercial agreements. First, important commitments, particularly those involving future interests in real property, should be reduced to writing. Parties should not assume that expenditures made under an existing contract will satisfy the part-performance exception to the Statute of Frauds simply because they were undertaken with an expectation of future opportunities.
Second, written agreements do not give parties unfettered discretion in exercising their contractual rights. Even where a contract grants discretion over a bidding process or similar business decision, that discretion must be exercised in good faith. A party that manipulates the process to deprive its counterparty of the benefit of the bargain may still face liability under the implied covenant of good faith and fair dealing.
For commercial litigants, Dimas Tower reinforces two equally important principles: courts will not enforce oral promises that the statute of frauds requires to be in writing, but they also will not permit parties to use a written contract as a shield for bad-faith conduct that undermines the very bargain the contract was intended to protect.
