Ramirez v. Issa: Striking Conclusory Affirmative Defenses, Policing Duplicative Counterclaims, and Allowing Faithless-Servant/Trade-Secret/Unfair-Competition Theories to Proceed at the Pleading Stage

Introduction

In Ramirez v Issa (2026 NY Slip Op 00272), the Appellate Division, Second Department reviewed a motion practice-heavy dispute arising from an alleged restaurant venture. The plaintiffs, Cesar Ramirez and Adriana Rodriguez, and defendant Moneer Issa executed a January 2022 stockholders agreement for Manhattan Fare Corp., with each side holding 50% of the shares. Manhattan Fare allegedly operated a restaurant known as Chef's Table at Brooklyn Fare, where Ramirez served as executive chef until Issa allegedly terminated him on July 1, 2023 “without cause.”

The plaintiffs sued for, among other things, breach of contract. The defendants answered with multiple affirmative defenses and counterclaims. The plaintiffs then moved under CPLR 3211(b) to dismiss affirmative defenses and under CPLR 3211(a) to dismiss several counterclaims. The core issues on appeal were (i) when affirmative defenses should be stricken as legally meritless or inapplicable, and (ii) which counterclaims were duplicative of contract claims versus independently viable (including claims invoking the faithless servant doctrine, misappropriation of trade secrets, and unfair competition).

Summary of the Opinion

The Second Department modified the Supreme Court’s order in three key ways:

It held that the plaintiffs’ CPLR 3211(b) motion should have been granted to strike the defendants’ second, fourth, fifth, and sixth affirmative defenses (statute of limitations; waiver/equitable estoppel; unclean hands; failure to mitigate), because they were either factually inapplicable or legally meritless on the record.
It held that the plaintiffs’ CPLR 3211(a) motion should have been granted to dismiss the defendants’ second counterclaim (breach of fiduciary duty) as duplicative of breach of contract and the ninth counterclaim (trespass to chattels) for insufficient pleading of physical interference.
It held that the plaintiffs’ CPLR 3211(a) motion should have been denied as to the seventh counterclaim (unfair competition), restoring it because the pleaded facts—employee solicitation and misuse of a confidential customer list to build a competing venture—fit a cognizable theory.

The order was otherwise affirmed, including: (i) the refusal to strike the “failure to state a cause of action” affirmative defense, and (ii) the survival of counterclaims for breach of contract premised on the faithless servant doctrine and for misappropriation of trade secrets, while fraud, conversion, implied covenant, and defamation were dismissed on pleading/duplicativeness grounds.

Analysis

Precedents Cited

1) Striking affirmative defenses under CPLR 3211(b)

Lewis v US Bank N.A. — Used for the allocation of burden: on a CPLR 3211(b) motion, the plaintiff must show the defense is “without merit as a matter of law,” either because it does not apply to the case’s factual circumstances or fails to state a defense.
Diaz v 297 Schaefer St. Realty Corp. (quoting Bank of Am., N.A. v 414 Midland Ave. Assoc., LLC) — Supplies the operative rule that affirmative defenses consisting of “conclusions of law without any supporting facts” should be dismissed. The court later invoked Bank of Am., N.A. v 414 Midland Ave. Assoc., LLC again to emphasize factual inapplicability as a ground to strike defenses.
Jacob Marion, LLC v Jones (quoting Mazzei v Kyriacou) — Establishes that a CPLR 3211(b) motion does not lie to strike the affirmative defense of “failure to state a cause of action,” because that would improperly test the sufficiency of the plaintiff’s own pleading. This was the basis for affirming the denial of the motion as to the first affirmative defense.
Pichichero v Falcon — Cited for the proposition that a statute of limitations defense should be dismissed when the record reflects the claims are not time-barred. Applying that principle, the court struck the defendants’ limitations defense.

2) CPLR 3211(a)(7) pleading standards for counterclaims

Stewart v Fein Such & Crain, LLP — Provides the familiar CPLR 3211(a)(7) standard: liberal construction, accept pleaded facts as true, and determine whether they fit any cognizable legal theory. This standard framed the court’s analysis of which counterclaims could survive at the pleading stage.

3) Duplicative tort/covenant claims versus contract claims

Michael Davis Constr. v 129 Parsonage Lane, LLC (quoting Heffez v L & G Gen. Constr., Inc.) — Central to dismissal of fraudulent inducement: fraud cannot lie where it is based on the same allegations as breach of contract; allegations that a party lacked intent to perform are insufficient.
Hershman v Bank of N.Y. Mellon and Gorman v Fowkes — Reinforced the conclusion that the alleged “concealed intentions” were merely a misrepresentation of intent to perform under the contract, not a distinct fraud.
Crawford v Integrated Asset Mgt. Servs., LLC and Hymowitz v Nguyen — Cited to support dismissal of conversion and implied covenant counterclaims as duplicative of breach of contract where they rest on the same facts and seek overlapping relief.
P.S. Fin., LLC v Eureka Woodworks, Inc. and Canzona v Atanasio — Applied to dismiss breach of fiduciary duty as duplicative where the claim is grounded in the same facts as a contract claim and does not plead a separate duty distinct from the contract.

4) Faithless servant, trade secrets, unfair competition, and related business torts

Parker Waichman, LLP v Mauro — Supplies the definition/setting for the faithless servant doctrine: it applies when an employee-agent breaches the duty of loyalty owed to the employer-principal. The court relied on this to hold that the defendants adequately pleaded a contract claim premised on disloyal conduct (quality reduction, employee poaching, customer list misuse).
Tri-Star Light. Corp. v Goldstein and Natural Organics, Inc. v Smith — Provided the elements for misappropriation of trade secrets and supported the conclusion that a confidential customer list can qualify as a trade secret when protected by secrecy measures and then used in breach of a duty or by improper means.
Out of Box Promotions, LLC v Koschitzki and Beverage Mktg. USA, Inc. v South Beach Beverage Co., Inc. — Underpinned reinstatement of the unfair competition counterclaim where the defendants alleged employee solicitation and misappropriation of confidential business information to build a competing enterprise.

5) Trespass to chattels and defamation pleading rules

Jackie's Enters., Inc. v Belleville and Level 3 Communications, LLC v Petrillo Contr., Inc. — Anchored dismissal of trespass to chattels for failure to allege intentional, unjustified physical interference with property in the defendant’s possession.
Starr v Akdeniz and CSI Group, LLP v Harper — Supported dismissal of defamation because the counterclaim did not allege the required publication details (when, where, manner, and to whom the statements were made).

Legal Reasoning

A. The court’s approach to CPLR 3211(b): applicability and factual support matter

The decision reflects two complementary CPLR 3211(b) principles. First, some defenses are not proper targets—most notably “failure to state a cause of action.” Invoking Jacob Marion, LLC v Jones and Mazzei v Kyriacou, the Second Department treated that defense as a procedural placeholder that cannot be struck because doing so would force the plaintiff to litigate the sufficiency of its own pleading under the wrong subsection.

Second, defenses that are conclusory or inapplicable are appropriate to strike. The court struck four defenses: the statute of limitations defense because “none of the causes of action were time-barred” on the record, and the waiver/equitable estoppel, unclean hands, and failure to mitigate defenses because they did not fit the “factual circumstances” presented. Notably, the court did not require extended discovery to remove defenses that were legally mismatched to the pleaded dispute.

B. The court policed “duplicate” counterclaims by asking whether they added a distinct duty, wrong, or injury

The opinion rigorously applied the “duplicative claim” doctrine in business disputes where contract allegations often get repackaged as torts. Fraudulent inducement failed because the alleged “false statements and omissions” were, in substance, assertions that Ramirez concealed his intent not to perform. Under Michael Davis Constr. v 129 Parsonage Lane, LLC and related cases, that is not a fraud independent of the contract—it is simply a contract-performance dispute.

The same logic drove dismissal of conversion and implied covenant claims (Crawford v Integrated Asset Mgt. Servs., LLC; Hymowitz v Nguyen) and breach of fiduciary duty (P.S. Fin., LLC v Eureka Woodworks, Inc.; Canzona v Atanasio) where the counterclaims were based on the same factual nucleus as breach of contract and did not plead a separate legal duty apart from the contractual relationship.

C. The “faithless servant doctrine” can function as a pleaded theory supporting a breach-of-contract counterclaim

The defendants framed their breach of contract counterclaim “based upon the faithless servant doctrine,” typically associated with forfeiture/disgorgement remedies for disloyal employees. Relying on Parker Waichman, LLP v Mauro, the Second Department accepted that, at the pleading stage, allegations of disloyalty (degrading restaurant quality, inducing employees to leave, and misappropriating a customer list) sufficed to state a contract-based claim tethered to employee loyalty obligations. The practical significance is procedural: even where other tort counterclaims are dismissed as duplicative, a loyalty-breach narrative may still survive if properly tied to contractual and agency-based duties.

D. Confidential customer lists: trade secret and unfair competition theories can proceed together

The court sustained a trade secret claim by applying the two-element test from Tri-Star Light. Corp. v Goldstein: possession of a trade secret and use in breach of duty or via improper means. The defendants pleaded “measures to keep the customer list confidential,” which, along with alleged improper use, was enough under Tri-Star Light. Corp. v Goldstein and Natural Organics, Inc. v Smith.

Importantly, the court also reinstated unfair competition. It treated employee solicitation plus misappropriation of confidential information to build a competing business as a cognizable unfair competition theory under Out of Box Promotions, LLC v Koschitzki and Beverage Mktg. USA, Inc. v South Beach Beverage Co., Inc.. The doctrinal message is that, at least at the pleading stage, New York courts may allow both claims to proceed where the alleged misconduct sounds in “misappropriation” and competitive diversion, even if other tort labels (fraud, conversion) are pared back as duplicative.

E. Trespass to chattels requires pleaded physical interference; defamation requires publication particulars

The Ninth counterclaim failed because trespass to chattels requires intentional, unjustified physical interference with personal property in the claimant’s possession. Citing Jackie's Enters., Inc. v Belleville and Level 3 Communications, LLC v Petrillo Contr., Inc., the court found the pleadings did not allege that type of physical interference.

The defamation claim failed on specificity: under Starr v Akdeniz and CSI Group, LLP v Harper, the pleader must identify when, where, how the statements were published, and to whom. Vague allegations of disparagement were insufficient.

Impact

Sharper motion practice around affirmative defenses: The decision encourages plaintiffs to target defenses that are demonstrably inapplicable or conclusory, while reaffirming that “failure to state a cause of action” will generally remain in the case. Defendants, in turn, should expect to plead some factual basis for defenses like waiver, unclean hands, and mitigation—especially where the case posture does not logically support them.
Reduced “tort inflation” in contract disputes: The court’s duplicativeness analysis reinforces that parties cannot transform contract grievances into fraud, conversion, fiduciary-duty, or implied-covenant claims absent a distinct duty, misrepresentation collateral to the contract, or separate injury.
Pathways preserved for loyalty and competitive-misappropriation claims: Even as it trimmed duplicative tort counterclaims, the court preserved robust avenues for defendants to plead disloyal-employee conduct (faithless servant) and competitive diversion (trade secrets and unfair competition), especially where confidential customer lists and employee raiding are alleged.
Pleading discipline for reputational and property-interference claims: Trespass to chattels and defamation remain pleading-sensitive; litigants must allege physical interference (chattels) and detailed publication facts (defamation) to survive dismissal.

Complex Concepts Simplified

CPLR 3211(b) (motion to dismiss defenses): A tool to strike an affirmative defense that either is legally invalid or does not apply to the case facts. Conclusory defenses with no facts may be dismissed. But “failure to state a cause of action” is typically not stricken under this provision.
Duplicative claims: New York courts often dismiss tort or quasi-contract claims that merely restate a breach of contract claim using different labels, particularly when they arise from the same facts and seek the same damages.
Faithless servant doctrine: A doctrine addressing employee disloyalty to an employer—often supporting remedies tied to breach of loyalty (and sometimes forfeiture/disgorgement). Here it served as the alleged basis for a contract breach theory premised on disloyal conduct.
Misappropriation of trade secrets: A claim alleging the misuse of protected confidential business information (like a customer list) where the owner took steps to keep it secret, and the defendant used it through improper means or in breach of duty.
Unfair competition (misappropriation theory): A flexible business tort that can cover taking another’s confidential information or business value and using it to compete unfairly—often overlapping factually with trade secret claims.
Trespass to chattels: A claim for intentional physical interference with someone’s personal property (e.g., damaging, dispossessing, or materially disrupting use). Mere allegations of wrongdoing without physical interference are insufficient.
Defamation pleading: Requires concrete details about the alleged statements and their publication—who said what, to whom, when, where, and how—so the defendant can meaningfully respond.

Conclusion

Ramirez v Issa is a procedural and doctrinal housekeeping decision with practical bite. It confirms that New York courts will (i) strike affirmative defenses that are conclusory or factually inapplicable, while leaving “failure to state a cause of action” intact; (ii) dismiss counterclaims that merely duplicate a breach of contract narrative; and (iii) nevertheless allow well-pleaded loyalty, trade secret, and unfair competition theories to proceed where the allegations plausibly describe employee disloyalty, confidential customer-list protection, and competitive misuse. For litigants in closely held business and restaurant/hospitality breakups, the opinion maps which claims survive early motion practice—and which are likely to be culled as redundant or under-pleaded.