Opinion
18039/2013
09-16-2015
Kolanu Partners, LLC, Plaintiff, v. Aaron Perry, Defendant.
Attorney for Plaintiff: Jonathan M. Davidoff Davidoff Law Firm, PLLC 228 East 45th St., Suite 1700 New York, NY 10017 Attorney for Defendant: Jarred I. Kassenoff Newman Ferrara LLP 1250 Broadway, 27th Fl. New York, NY 10001
Attorney for Plaintiff:
Jonathan M. Davidoff
Davidoff Law Firm, PLLC
228 East 45th St., Suite 1700
New York, NY 10017
Attorney for Defendant:
Jarred I. Kassenoff
Newman Ferrara LLP
1250 Broadway, 27th Fl.
New York, NY 10001
James E. d'Auguste, J.
The following papers numbered 1 to 4 read on this motionPapers Numbered
Notice of Motion, Affirmation1—2
Answering Affirmation3
Reply Affirmation4
Decision & Order
Hon. James E. d'Auguste, J.C.C.
Plaintiff Kolanu Partners, LLC ("Kolanu" or the "Sponsor") moves pursuant to CPLR Rule 2221 to renew and reargue its motion for summary judgment against defendant Aaron Perry. By decision and order dated March 11, 2015, this Court denied Kolanu's motion for summary judgment and, upon a search of the record, granted summary judgment in favor of defendant thereby dismissing the complaint. Kolanu Partners, LLC v. Perry, 46 Misc 3d 1226(A), 2015 NY Slip Op. 50308(U) (Civ. Ct., NY County 2015). Familiarity with the decision is presumed. For the reasons stated herein, Kolanu's motion is denied.
Discussion
I.Procedural Issues
Initially, the Court notes that Kolanu failed to attach the underlying summary judgment motion papers with the instant motion to reargue and renew, rendering the instant motion defective. Biscone v. JetBlue Airways Corp., 103 AD3d 158, 178—79 (2d Dep't 2012). Even though Kolanu submitted the requisite papers with its reply, it is well-settled that a deficiency "in moving papers cannot be cured by submitting evidentiary material in reply." Henry v. Peguero, 72 AD3d 600, 602 (1st Dep't 2010); see also Ritt v. Lenox Hill Hosp., 182 AD2d 560, 562 (1st Dep't 1992). Indeed, this Court "may refuse to consider [such] improperly submitted papers." Biscone, 103 AD3d at 178, quoting Loeb v. Tanenbaum, 124 AD2d 941, 942 (3d Dep't 1986); see also Sheedy v. Pataki, 236 AD2d 92, 97—98 (3d Dep't 1997) (noting that a court "should not be compelled to retrieve the clerk's file in connection with its consideration of subsequent motions").
Additionally, Kolanu failed to comply with the requirement that "[a] combined motion for leave to reargue and leave to renew shall identify separately and support separately each item of relief sought." CPLR 2221(f). Though "courts are not bound by the label appended to the motion by a party" (Vincent Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, C2221:9B) and can treat the motion under the appropriate label from the facts presented (see e.g., Dorian v. City of New York, 129 AD3d 445, 445 [1st Dep't 2015]), Kolanu's failure to properly identify these sections is not so easily rectifiable by the Court. Here, Kolanu's error is particularly problematic with respect to (1) the settlement agreement between the Board of Crossing 23rd Condominium (the "Board") and Kolanu (hereinafter, the "Settlement Agreement"), which was a result of an unrelated Supreme Court action, Crossing 23rd Condominium v. Kolanu Partners, LLC, Jonathan Davidoff and Davidoff Law Firm P.L.L.C., Index No. 151717/2013 (the "Board Action"); and (2) a decision relied upon by Kolanu entitled Kolanu Partners, LLC v. Takis Sparaggis, Index No. 157289/2013 (Sup. Ct., NY County Sep. 8, 2014) (Hagler, J.) (the "Sparaggis decision"). Because Kolanu failed to identify whether its motion is one for leave to reargue or to renew with respect to both items in its moving papers, it created an inherent inconsistency in its arguments. For example, in its moving papers, Kolanu refers to the Settlement Agreement when discussing agency principals under the section arguing that the Offering Plan did not limit its authority to collect from the Unit Owners (Pltf. Aff., ¶ 28) — this appears to be an assertion for reargument. Yet in its reply affirmation, Kolanu asserts that it seeks renewal with respect to the Settlement Agreement (Pltf. Reply Aff., ¶ 6); but then also mentions the Settlement Agreement in its discussion as a motion to reargue (Pltf. Reply Aff., ¶¶ 16—17). Kolanu continues in its reply affirmation at paragraphs 27—32 to discuss the Settlement Agreement as a basis to renew. The statute, however, is undoubtedly clear that a motion for leave to renew is based "upon new facts not offered on the prior motion." CPLR 2221(e)(2). Yet, because Kolanu also contends that the Settlement Agreement was "widely discussed" with the Court (Pltf. Reply Aff., ¶ 31), it would not be considered a fact "not offered on the prior motion," rendering renewal inapplicable. Because Kolanu does not clearly state whether the Settlement Agreement is a matter of fact that was or was not offered on the prior motion, the same could be said in reverse with respect to reargument (as a motion for leave to reargue "shall not include any matters of fact not offered on the prior motion." CPLR 2221[d][2]), rendering Kolanu's papers undoubtedly flawed as inconsistent.
While the Court may deny the motion based upon these procedural defects, the Court will continue its analysis in the interests of completeness and finality. Accordingly, the Court will consider both the Settlement Agreement and the Sparaggis decision in the discussion for leave to renew and reargue.
II.Merits
A. CPLR Rule 2221(e) Renewal
1.A motion to renew "shall demonstrate that there has been a change in the law that would change the prior determination." CPLR 2221(e)(2). Although Kolanu labeled the discussion on the Sparaggis decision as a basis for reargument (Pltf. Reply Aff., ¶ 5; see also id. at ¶ 20), the case was improperly brought before the Court in the prior motion, as it was provided after the motion was fully submitted and, therefore, could only be considered with leave of the Court (CPLR 2214[c]), for which plaintiff did not obtain. For this reason, the Court finds it appropriate to discuss the Sparaggis decision as a basis to renew.
Kolanu asserts that this Court should have reached the same result as the Sparaggis court, claiming that the ruling "should serve as precedent." Pltf. Aff., ¶ 43. "A decision of a court of equal or inferior jurisdiction is not necessarily controlling, though entitled to respectful consideration." Matter of The Nonhuman Rights Project, Inc. v. Stanley, — Misc 3d —, 2015 NY Slip Op. 25257 (Sup. Ct., NY County 2015), citing McKinney's Cons Laws of NY, Book 1, Statutes § 72(b). This Court only need "apply the law as promulgated by the Appellate Division within its particular Judicial Department"; or, in some cases, in another department, and the Court of Appeals. D'Alessandro v. Carro, 123 AD3d 1, 6 (1st Dep't 2014). Thus, the Sparaggis case would not change the prior outcome because it is not binding on this Court.
Had this Court considered Justice Hagler's ruling, it would not have been persuasive for several reasons: (1) it appears that the legal arguments upon which this Court rendered its decision were not considered by or presented to Justice Hagler when he made his ruling; and (2) Justice Hagler issued his decision from the bench based on misstatements by Kolanu's counsel regarding several contractual provisions. For example, Kolanu's counsel represented that the Offering Plan and By-Laws granted Kolanu standing to demand reimbursement from the unit owner, authorized a legal action to collect the unit owner's reimbursement payment by way of a judicial judgment, and allowed the recovery of attorneys' fees for the action. Pltf. Aff., Ex. G (Sparaggis decision hearing transcript) at 4:5—13 (counsel for Kolanu advised the Sparaggis court that numerous sections of the Offering Plan states "that . . . the unit owner will be liable to the Sponsor, only to the Sponsor"); id. at 5:9—13 (Kolanu's counsel stated, "Sponsor shall be entitled to collect its legal fees and costs in enforcing the [purchase] agreement"). Kolanu did not explain its tortured interpretation of the documents by which it reached such conclusions to the extent that it essentially rewrote the Offering Plan and By-Laws after they were filed with the Attorney General of the State of New York. As such, this Court is not persuaded that Justice Hagler's ruling should serve to alter its previous findings and conclusions that were rendered based upon the actual language of the documents (discussed infra). 2.Reasonable Justification
(i)On the issue of reasonable justification, the Court notes that "[i]t is statutorily decreed that a renewal motion shall be based upon new facts not offered on the prior motion that would change the prior determination' and that the application shall contain reasonable justification for the failure to present such facts on the prior motion.'" Henry, 72 AD3d at 602, quoting CPLR 2221(e)(3). Kolanu submits the Settlement Agreement as an exhibit in support of its present motion that was available at the time Kolanu made its motion for summary judgment, but was not submitted with those papers. Kolanu's alleged justification for failing to submit the exhibit is that it did not anticipate the aforementioned document would be an "essential" exhibit to this Court's ruling. See Pltf. Reply Aff., ¶ 31. Not only did Kolanu fail to present the Settlement Agreement in its initial papers for summary judgment, it did not even state its alleged "reasonable justification" in its moving papers on the instant motion. "Arguments advanced for the first time in reply papers are entitled to no consideration by a court." Lumbermens Mut. Cas. Co. v. Morse Shoe Co., 218 AD2d 624, 625—26 (1st Dep't 1995); see also Dannasch v. Bifulco, 184 AD2d 415, 417 (1st Dep't 1992) (Reply papers are not meant to allow the movant "to introduce new arguments in support of, or new grounds for the motion"). Indeed, the First Department routinely declines "to endorse sloppy and potentially prejudicial motion practice by entertaining facts presented for the first time in a reply affidavit to which the [nonmoving party] had no right to reply without court permission.'" Eujoy Realty Corp. v. Van Wagner Communications, LLC, 22 NY3d 413, 422—23 (2013), quoting Lazar v. Nico Indus., 128 AD2d 408, 410 (1st Dep't 1987). This Court does not find such explanation to be reasonable and does not serve as a basis for granting its motion for leave to renew.
(ii)Moreover, "[a]lthough a party seeking renewal should offer a reasonable justification for failing to present any new facts on the prior motion" (Matter of Pasanella v. Quinn, 126 AD3d 504, 505 [1st Dep't 2015]; see CPLR 2221[e][3]), courts can relax the requirement in the interests of justice (Meija v. Nanni, 307 AD2d 870, 871 [1st Dep't 2003]), "such as where liberality is warranted as a matter of judicial policy" (Henry, 72 AD3d at 602). Therefore, the Court will continue its analysis and determine whether the Settlement Agreement would, in fact, change the prior outcome. See, e.g., Vega v. Restani Constr. Corp., 98 AD3d 425, 426 (1st Dep't 2012). For the reasons that follow, the Court finds that the Settlement Agreement does not change the prior outcome.
Kolanu contends that this Court misapprehended the effect of its Settlement Agreement with the Board. Kolanu argues that the Settlement Agreement only released the Board's obligation to act as Kolanu's agent, but "Kolanu still retained its ability to demand and collect such reimbursement directly from the unit owners." Pltf. Aff., ¶ 12. In this respect, Kolanu's assertion that, pursuant to the Settlement Agreement, Kolanu revoked the agency power that it conferred upon the Board and reassigned that power directly to itself is without merit and mischaracterizes the result of the Settlement Agreement. Kolanu cannot retain an "ability" that it never had—specifically, the ability to collect reimbursement payments for tax abatement costs directly from the unit owners and the ability to maintain this action. The Settlement Agreement resulting from the Board's lawsuit merely prohibited Kolanu from forcing the Board to act as its agent and released the Board from liability to Kolanu for any failure to act as Kolanu's agent, but did not alter the terms of the original contract so as to release the Board from acting as Kolanu's agent. See Pltf. Aff., Ex. D (hereinafter "Settlement Agreement") at ¶ 3 (specifically stating that "all terms, conditions, contained in the Offering Plan and By-Laws continue in full force and effect, without abatement, waiver or lapse"). Kolanu's attempt to discharge or release the Board as Kolanu's agent by means of its Settlement Agreement with the Board does not allow Kolanu to step into the Board's shoes and collect reimbursement payments. See Wilson Sullivan Co. v. Int'l Paper Makers Realty Corp., 307 NY 20, 24—26 (1954) ("You may revoke an authority although you cannot revoke a contract."); id. ("[I]n the absence of a specific clause so providing, [a party] cannot escape his obligations under that contract."), cited with approval in FHR TB, LLC v. TB Isle Resort, LP., 865 F. Supp. 2d 1172, 1194—95 (S.D. Fla. 2011) (applying New York law).
Paragraph 1 of the Settlement Agreement reads "KOLANU AGREES THAT IT WILL NOT SEEK OR REQUIRE CONDOMINIUM'S BOARD OF MANAGERS TO ACT AS KOLANU'S AGENT TO COLLECT THE 421-A ABATEMENT FROM THE UNIT OWNERS."
While paragraph 1.2 of the Settlement Agreement states "Nothing herein is to be construed as a waiver of Kolanu's right or intent to pursue collection of the 421-a Abatement from the Unit Owners," no such right ever existed in the first place. Additionally, the Settlement Agreement specifically states that it "is for the benefit of the parties hereto and is not intended to confer upon any other person any rights or remedies hereunder." Settlement Agreement at ¶ 5.3. Because the Settlement Agreement cannot and does not affect any potential obligation of the Unit Owners, who were not parties to the litigation, paragraph 1.2 is essentially meaningless.
Kolanu's entire argument relies on the general principle of agency law that freely allows a principal to discharge its agent. This general principle, however, is inapplicable in the instant case. When an agency is discharged in contravention of a contract, it does not, as noted above, negate the contract nor does it create different rights or obligations under the contract. Cf. FHR TB, LLC, 865 F. Supp. 2d at 1194—95, citing Wilson Sullivan Co., 307 NY at 24—26 (stating that when an agency is terminated, this does not change contractual terms and obligations); see also Settlement Agreement at ¶¶ 3 and 5.3. Here, the contract, consisting of the Offering Plan and the By-Laws as incorporated by reference into the Purchase Agreement, provides for only the Board to demand and enforce reimbursement payments. Kolanu never had rights in the Purchase Agreement to enforce reimbursement payments; instead, it designated the Board with this authority. While Kolanu, as Sponsor, acquired the condominium, nowhere did it retain or grant itself "the right to enforce [Offering] [P]lan obligations." Bd. of Managers of Mason Fisk Condo. v. 72 Berry St., LLC, 801 F. Supp. 2d 30, 38 (E.D.NY 2011) (applying New York law). "To the contrary, the [Offering] [P]lan is unambiguous that only the Board can enforce the [S]ponsor's obligations." Id. Further,
[i]f the express terms of the contract preclude enforcement on certain terms, then that is a term of the contract no different than any other term. The common law may imply a right to enforce if the contract is silent, but where the contract expressly disclaims a right to enforce it in favor of some other remedy, then [the contracting party] never had such a right of enforcement.
Id. Kolanu's unilateral action, in discharging the Board as its agent, cannot operate to rewrite the Purchase Agreement and the documents incorporated by reference therein.
The Court also notes a public policy consideration, which weighs heavily against the general ability of Kolanu to discharge the Board as its agent. The public policy behind the general principle of agency law must be weighed in conjunction with the public policy behind consumer protection laws that govern statutes relating to the offering of the subject premises for sale by a sponsor. Cf. FHR TB, LLC, 865 F. Supp. 2d at 1194, citing Smith v. Conway, 198 Misc. 886, 888 (Sup. Ct., NY County 1950). Here, the terms contained in the Purchase Agreement, including the Offering Plan and the By-Laws, were submitted to the Attorney General of the State of New York subject to a statutory scheme designed to protect purchasers. Kolanu's effort to appropriate the Board's standing to collect payment from a unit owner defeats the procedural scheme set forth in both the Offering Plan and the By-Laws. Additionally, because the Offering Plan states that "unpaid amounts [are to be treated as] Common Charges" (Pltf. Aff., Ex. B at Part I, § T [hereinafter "Offering Plan"] at 135), Kolanu's attempt to appropriate the Board's power also runs contrary to statutes that specifically give the Board the power to create common-charge liens, and pursue appropriate legal action for the same and for violations of by-laws, and rules and regulations. These documents and laws effectively position the Board as the Sponsor's agent to provide a factual and discretionary safety buffer between the unit owners' obligation to reimburse the Sponsor for its tax abatement costs and the Sponsor's unfettered enforcement tactics, in which it attempted to usurp the Board's collection power. See Robert L. Haig, 4B NY Prac., Com. Litig. In New York State Courts § 77:20 (3d ed. 2014) ("Under certain circumstances, an agency is irrevocable."), citing In re Southold Dev. Corp., 173 B.R. 63, 74 (E.D.NY 1994) (applying New York law) (holding that an agency is irrevocable when it is coupled with an interest). In this instance, it is especially important for the Court to weigh these policy considerations in light of the fact that Kolanu apparently sued multiple owners other than defendant Perry—a situation that consumer protection laws were designed to prevent by requiring clear contracts.
Once an unpaid reimbursement demand is deemed a late charge, the By-Laws clearly set forth the procedure that the Board must follow to seek recovery of the defaulted payment. Pltf. Reply Aff., Ex. H (plaintiff's underlying motion papers), exhibit B (hereinafter "By-Laws") at §§ 6.3.1-6.3.3 ("Default in Payment of Common Charges; Liens for Unpaid Common Charges; Other Remedies"). Each of the procedural steps set forth in the Purchase Agreement, by virtue of the By-Laws, provide legally-prescribed safeguards and offer the defaulting unit owner notice of the default, an opportunity to resolve the dispute by offering payment, or otherwise defend its real property interest in the unit. Id. §§ 6.2.4, 6.3; see also Pltf. Aff., Ex. B (the Offering Plan) at Schedule C (same).
See Real Property Law ("RPL") § 339-l(1) ("no lien of any nature shall thereafter arise or be created against the common elements except with the unanimous consent of the unit owners"); RPL § 339-aa ("Such lien may be foreclosed by suit authorized by and brought in the name of the board of managers . . . ."); RPL § 339-z (concerning the priority of lien); RPL § 339-j (authorizing an action "maintainable by the board of managers on behalf of the unit owners or, in a proper case, by an aggrieved unit owner" for violations of the by-laws, and rules and regulations).
Accordingly, for the foregoing reasons, that branch of Kolanu's motion for leave to renew is denied.
B. CPLR Rule 2221(d) Reargue
A motion to reargue "shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion." CPLR 2221(d)(2). The branch of Kolanu's motion, pursuant to CPLR Rule 2221(d), seeking leave to reargue its motion for summary judgment does not raise any issue of fact or law that this Court overlooked or misapprehended in arriving at its prior determination, and is therefore also denied.
(1)The Settlement Agreement and Sparaggis decision
To the extent that Kolanu argues, albeit weakly, that it seeks reargument on the Settlement Agreement as if it were some "fact" offered on the prior motion, and was "allegedly overlooked or misapprehended," the Court directs the parties to the analysis above in Section II(A)(2)(ii).
See Section I, supra, noting how plaintiff inferred reargument because the Settlement Agreement was "widely discussed" with the Court. Pltf. Reply Aff., ¶ 31.
With respect to the Sparaggis decision, even if the Court granted Kolanu leave to submit late papers and did, in fact, consider the Sparaggis decision in rendering its prior decision, there is no basis for reargument. A case is not "overlooked or misapprehended" simply because it is not mentioned in a court's decision — there is no rule that a court compare, distinguish, or even refer to, every case that is provided by a litigant in support of its arguments (particularly one that is not authoritative). Given the Court's analysis above in Section II(A)(1), nothing about the Sparaggis decision would change the prior outcome even if the Court considered it as a basis for reargument.
(2)Kolanu's Remaining Arguments
First, Kolanu's contention that "the Offering Plan does not limit Kolanu's authority to collect reimbursement or its standing to sue to collect reimbursement" is misguided. Pltf. Aff., ¶¶ 23—36. This contention is based on the bald assertion that the Offering Plan's designation of the Board as the Sponsor's agent does not change Kolanu's "right to rescind or alter such appointment and reassign or appoint another party (including itself) to collect from the Unit Owners." Pltf. Reply Aff., ¶ 19. Kolanu also asserts, without any supporting language in the governing agreements, that "the terms of the Offering Plan state that the individual unit owners are directly liable to Kolanu for reimbursement." Pltf. Aff., ¶ 31. The actual language found in the Offering Plan, By-Laws, and the Purchase Agreement are addressed below.
The Offering Plan provides that "[i]n the event that a partial real estate tax exemption is granted, all Residential Unit Owners will be required to reimburse Sponsor for all of Sponsor's costs in obtaining such exemption . . . . The Residential Unit Owners' pro rata share will be collected by the Board, as agent for the Sponsor." Offering Plan at 134—35. In enforcing this obligation, the Offering Plan states that:
If any Residential Unit Owner fails to pay its pro rata share as set forth above, the Board, as agent for Sponsor, shall be entitled (and, if Sponsor so requires, shall) assess late charges and/or place a lien on such Residential Unit as if such unpaid amounts were Common Charges.
Id. at 135. Additionally, the By-Laws contain a similar provision in the event that a unit owner fails to pay its pro rata share of the Sponsor's costs, whereby the Board is permitted, as agent for Sponsor, to "assess late charges, default interest and the cost of collecting same." By-Laws at § 6.2.4. Thus, there is no ambiguity in the Offering Plan or the By-Laws to dispute that the remedy for an unpaid reimbursement is for the Board to pursue the specific relief expressly stated above. Moreover, absent said provisions in the Offering Plan and the By-Laws, there would be no obligation on the part of the Unit Owners to reimburse Kolanu for any of its costs in obtaining a tax exemption.
Contrary to Kolanu's assertion, this Court did not misapprehend the Offering Plan's incorporation in the Purchase Agreement as it relates to the Sponsor's right to seek attorneys' fees. As stated in the March 11, 2015 decision, this Court determined that the attorneys' fee provision in the Purchase Agreement did not extend to provide attorneys' fees for the legal procedures delineated in the Offering Plan as related to the enforcement of reimbursement payments. The Offering Plan only provided recovery for costs expended in collecting reimbursement from unit owners and not attorneys' fees.
Kolanu urges that it should be granted leave to reargue because "the Court incorrectly found that Mr. Perry never refused to pay a proper demand from the Board to reimburse Kolanu's [tax] abatement costs." Pltf. Aff., ¶ 40. This argument is contradicted by Kolanu's repeated assertion that it commenced its own collection tactics and assumed the Board's standing to commence this action because the Board refused to demand, collect, or enforce reimbursement payments from Perry. Accordingly, this Court adheres to its previous finding that Perry never defaulted on a proper demand from the Board.
Finally, this Court did not overlook or misapprehend Kolanu's potential recovery in quasi-contract under theories of quantum meruit and unjust enrichment. Once again, Kolanu improperly raised this issue for the first time in its reply papers, which is not entitled to any consideration by the Court. Even if the Court could disregard this defect yet again, the Court cannot guess what Kolanu takes issue with, as it failed to identify any specific "matters of fact or law allegedly overlooked or misapprehended by the court." CPLR 2221(d)(2). The Court specifically addressed these theories in its prior decision and order. See Kolanu, 2015 NY Slip Op. 50308(U) at *5—6. Even if leave to reargue could be granted on this issue, the Court adheres to its original determination in all respects, and reiterates that it found no dispute as to the existence of a contract covering the issues raised in this litigation. Accordingly, Kolanu's recovery in quasi-contract is precluded.
The Court notes that Perry has repeatedly offered to pay his pro rata share of the reimbursement costs. Kolanu, however, has apparently refused to accept Perry's payment offer and, instead, chose to continue litigating this action in an effort to secure attorneys' fees.
Conclusion
For the reasons stated above, Kolanu's motion pursuant to CPLR Rule 2221 (f), seeking leave to renew and reargue its motion for summary judgment, is denied in its entirety. This constitutes the decision and order of this Court.
Dated: September 16, 2015
____________________________Hon. James E. d'Auguste,