Opinion
Index Number 707441 2019
01-22-2021
MIB REAL ESTATE HOLDINGS, LLC, Plaintiff(s) v. JAJ REALTY DEVELOPMENT CO. LLC Defendant(s)
NYSCEF DOC. NO. 81 Short Form Order Present: HONORABLE MARGUERITE A. GRAYS Justice Motion Dates: October 20 & 27 2020 Motion Cal. Nos. 11 & 9 Motion Seq. Nos. 1 & 2
The following papers numbered EF12 - EF79 read on this motion by defendant JAJ Realty Development Co. LLC (defendant), for summary judgment dismissing plaintiff MIB Real Estate Holdings, LLC's (plaintiff) complaint, for a declaratory judgment on defendant's first counterclaim for damages in the amount of $412,552.00, with interest from November 29, 2018, and for summary judgment on its Second, Third and Fourth Counterclaims; and separate motion by plaintiff for summary judgment on the First Cause of Action in the complaint.
| PapersNumbered | |
|---|---|
| Notices of Motion - Affidavits - Exhibits | EF12-EF67,EF70-EF72 |
| Answering Affidavits - Exhibits | EF68-EF69,EF76-EF78 |
| Reply Affidavits | EF73-EF75EF79 |
Upon the foregoing papers it is ordered that the motions are determined as follows:
This is an action to recover damages for causes of action sounding in declaratory relief, and conversion. Plaintiff has alleged that on or about December 7, 2007, plaintiff purchased a certain percentage of ownership of premises located at 1312 Beach Channel Drive, in the County of Queens (the subject premises). Plaintiff has further alleged that as a result of an error, tenants at the subject premises were advised by a letter dated December 7, 2007, that defendant, who was plaintiff's affiliate, was part owner of the subject premises. As a result beginning in or around December 2007, defendant wrongfully received and retained over $189,000.00, in rental payments from the tenants at the subject premises. Plaintiff has alleged that defendant was not entitled to retain any portion of such rental payments. Plaintiff has also alleged that since defendant had no interest in the subject premises, it was not entitled to any of the proceeds of plaintiff's subsequent sale of the premises, which sale took place on or about November 29, 2018.
In its answer, defendant has alleged various affirmative defenses and four cross-claims sounding in: (1) declaratory judgment; (2) unjust enrichment; (3) money had and received and (4) conversion. In its answer, defendant has alleged that it purchased a 37.5% interest in the subject premises, that it purchased certain percentages of ownership in various other properties along with plaintiff, and that it was entitled to the rental proceeds it received from the subject premises from December 2007, through November 2018. Defendant has further alleged that it is entitled to a portion of the proceeds of plaintiff's sale of the subject premises which took place on or about November 29, 2018.
Both parties have now moved for various relief.
First, the Court will address the branch of defendant's motion for summary judgment dismissing plaintiff's complaint, along with the branch of plaintiff's motion for summary judgment only on its First Cause of Action set forth in the complaint, as well as the branch of defendant's motion for a declaratory judgment, which is its first counterclaim. Although the parties have not specified a section of the CPLR pursuant to which either motion has been made, in order to be entitled to summary judgment pursuant to CPLR §3212, "'it must clearly appear that no material and triable issue of fact is presented'" (Matter of New York City Asbestos Litig., 33 NY3d 20, 25 [2019], quoting Glick & Dolleck, Inc. v Tri-Pac Export Corp., 22 NY2d 439, 441 [1968]).
"'Summary judgment should not be granted where there is any doubt as to the existence of a factual issue or where the existence of a factual issue is arguable'" (Matter of New York City Asbestos Litig., 33 NY3d at 25, quoting Forrest v Jewish Guild for the Blind, 3 NY3d 295, 315 [2004]). On summary judgment, "the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Matter of New York City Asbestos Litig., 33 NY3d at 25-26, quoting Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).
In support of this branch of its motion, with regard to plaintiff's First Cause of Action for declaratory relief, defendant has argued that this cause of action should be dismissed based upon the defenses of equitable estoppel, laches, statute of limitations, unclean hands, and ratification. In opposition, plaintiff has argued that the defenses of equitable estoppel and laches are inapplicable, that the statute of limitations defense does not bar recovery, that unclean hands is not appropriate on the instant motion, and that the theory of ratification also fails.
In support of the branch of its motion for summary judgment on its first counterclaim for declaratory judgment, defendant has argued that it is entitled to such relief as the evidence has demonstrated that it was part-owner of the subject premises. In support of its own motion, plaintiff has argued that the evidence demonstrated that it was the sole owner of the subject premises, and that the statute of frauds bars the enforcement of any "side agreements" that defendant has alleged existed regarding the parties' ownership of the subject premises.
First, with regard to the defense of statute of limitations, it is well settled that "[a] cause of action for declaratory relief accrues when there is a bona fide, justiciable controversy between the parties" (Zwarycz v Marnia Const., Inc., 102 AD3d 774, 776 [2013]; see Cong. Machon Chana v Machon Chana Women's Inst., Inc., 162 AD3d 635, 636 [2018]). "'A justiciable controversy must involve a present, rather than hypothetical, contingent or remote, prejudice to the plaintiff. The dispute must be real, definite, substantial, and sufficiently matured so as to be ripe for judicial determination'" (Zwarycz v Marnia Const., Inc., 102 AD3d at 776, quoting Waterways Dev. Corp. v Lavalle, 28 AD3d 539, 540 [2006]). "A dispute matures into a justiciable controversy when a plaintiff receives direct, definitive notice that the defendant is repudiating his or her rights" (Zwarycz v Marnia Const., Inc., 102 AD3d at 776; see generally Stein v Garfield Regency Condominium, 65 AD3d 1126 [2009]).
In this matter, the record contains, among other things, copies of the pleadings, a copy of a deed dated December 7, 2007, the deposition testimony and affidavit of non-party Mark Bortnick (Bortnick), a member of plaintiff, the deposition testimony and affidavit of non-party Judith Kandler, a member of defendant, the deposition testimony of non-party Jonathan Steinberg (Steinberg), the deposition testimony of non-party Glenn Reiner (Reiner), copies of two contracts of sale for the subject premises dated November 2017, two copies of contracts of sale dated December 7, 2007, a copy of a deed dated December 7, 2007, a copy of a letter from Reiner dated November 30, 2007, a copy of a letter from non-parties Alma Lombardo, as Executor of the Estate of Ingnatius N. Lombardo, and Laura Panzarella, as the Executor of the Estate of Stanley Panzarella dated December 7, 2007, a copy of defendant's "Members' Certificate," copies of closing documents for the subject premises, and copies of various correspondence between the parties' representatives.
Bortnick testified that he was the sole member of plaintiff, that he did not at any time have an understanding that he would be purchasing a percentage of ownership of the subject premises with defendant, that he provided the funding for the purchase of the subject premises, among other properties, from his personal funds, and that he did not know if defendant was involved in purchasing any portion of ownership of the subject premises Bortnick further testified that he retained non-party MSS Property Solutions Inc to manage the subject premises, and that Charles Kandler and Judith Kandler objectively (the Kandler's) were invoiced for services performed in relation to the subject premises. Bortnick testified that defendant received rental proceeds from the subject premises erroneously and that the Kandler's refused to return the funds to him. In his affidavit, Bortnick stated that he did not know the Kandler's, and he denied that he, on plaintiff's behalf, ever made any type of agreement with defendant or the Kandler's to have plaintiff initially receive full record title of the subject premises and then to subsequently transfer one-half of that interest to defendant at a later time.
Contrary to Bortnick's testimony and statements, in her affidavit, Judith Kandler stated that she was a member of defendant, that she became involved in the acquisition of ownership of a percentage of the subject premises through her business relationship with Steinberg, and that Steinberg suggested Reiner to act as the Kandler's and defendant's attorney in the real estate transaction regarding the subject premises, for which ownership purpose the Kandler's formed defendant, which he did. Judith Kandler stated that it was her understanding that plaintiff and defendant were each purchasing a 37.5% share of ownership in the subject premises, and that in anticipation of the closing, on December 6, 2007, the Kandler's provided Reiner with a check in the amount of $ 964,946.00, and that on December 7, 2007, they wire-transferred an additional $ 300,000.00, into Reiner's escrow account for the closing.
Judith Kandler further stated that defendant provided Steinberg with a "Members Certificate" which conferred upon him the full authority to close the transaction on behalf of plaintiff, that as of the date of the closing, December 7, 2007, the Kandler's began to receive, on a regular basis, rental income from, among other properties, the subject premises, and that many of the checks they received were issued by Bortnick himself. Judith Kandler stated that Bortnick subsequently hired non-party Mark Schmier (Schmier), to collect the rental income from the tenants at the subject premises, to pay operational expenses and to remit rental payments to the Kandler's.
Judith Kandler stated that Schmier regularly paid the expenses arising from defendant's ownership of the subject premises by regularly deducting from defendant's rental proceeds the costs for insurance, management fees and legal services rendered in connection with a boundary line dispute arising with respect to the premises. Judith Kandler further stated that the Kandler's were never informed that they did not have an ownership interest in the subject premises, that when Schmier informed them that Bortnick had found a purchaser for the subject premises, the Kandler's agreed to the sale, that Bortnick then sold the premises and retained the entirety of the proceeds from that sale, and that defendant is entitled to half of the proceeds of that sale.
Judith Kandler testified that it was her understanding that in order for Bortnick to have certain tax advantages, some agreement was reached with regard to the purchase of the subject premises wherein plaintiff would purchase the subject premises using the Kandler's funds, that plaintiff would own it outright, initially, and that plaintiff would later transfer a portion of the ownership of the premises to defendant, which transfer was never done.
Steinberg testified that he represented defendant at the closing on December 7, 2007, and that it was his understanding that both plaintiff and defendant would have an ownership interest in the subject premises. He further testified that he was not aware that a deed was issued at the closing of the subject premises to plaintiff alone, and that he assumed the deed would reflect that plaintiff and defendant were both involved in the transaction.
Reiner testified that Charles Kandler retained him to act as defendant's attorney in the transaction relating to the subject premises, that he recalled being told that the subject premises was being purchased by both plaintiff and defendant, and that he could not explain the differences in conflicting copies of contracts of sale which reflected that only plaintiff was purchasing a percentage of the premises from non-party David Panzarella, as Executor of the Estate of Angela Panzarella, versus copies that reflected that Bortnick and the Kandler's were purchasing it together as tenants in common. Reiner further testified that no one every questioned why defendant would be receiving a portion of the rental income from the subject premises and that his recollection was that when he spoke to Steinberg, he was told that the parties had reached some sort of an agreement to have plaintiff listed on the deed to the subject premises for tax purposes.
Based upon the above evidence, issues of fact are abundantly apparent in the record. As has been annexed to the record, a copy of one contract of sale for the subject premises dated November 2017 was between the seller David Panzarella, as Executor of the Estate of Angela Panzarella and the purchasers non-parties Charles Kandler, Judith Kandler, and Mark Bortnick, as tenants in common, for a 25% interest in the premises. A copy of a second contract of sale for the premises dated November 2017, was between the sellers Alma Lombardo as Executor of the Estate of Ingnatius N. Lombardo, who owned 25%, and Laura Panzarella, as the Execcutor of the Estate of Stanley Panzarella, who owned 25%, and the purchasers Charles Kandler, Judith Kandler, and Mark Bortnick, as tenants in common, for a total of 50% ownership in the subject premises. The letter from Reiner dated November 30, 2007, stated that Bortnick, along with others, were purchasing certain real property together.
In contrast, the copy of the first of two contracts of sale dated December 7, 2007, provided it was between sellers Alma Lombardo, as Executor of the Estate of Ingnatius N. Lombardo, who owned 25%, and Laura Panzarella, as the Execcutor of the Estate of Stanley Panzarella, who owned 25%, and the sole purchaser, plaintiff, for a total of 50% ownership in the subject premises. The copy of the second contract of sale dated December 7, 2007, provided it was between seller David Panzarella, as Executor of the Estate of Angela Panzarella, and the sole purchaser, plaintiff, for a 25% ownership interest in the premises. A copy of a deed to the subject premises dated December 7, 2007, was executed by David Panzarella, as Executor of the Estate of Angela Panzarella, to plaintiff.
The letter dated December 7, 2007, from Alma Lombardo, as Executor of the Estate of Ingnatius N. Lombardo, and Laura Panzarella, as the Executor of the Estate of Stanley Panzarella, to non-party SQKFC, Inc., advised that entity that the property was owned by plaintiff and that all rental payments were to be sent to plaintiff at its offices located in Carle Place, in Nassau County, to Steinberg's attention, and that those payments are to be allocated as follows: 37.5% to plaintiff and 37.5% to defendant.
Defendant's "Members' Certificate" designated Steinberg as defendant's manager with the power to execute all documents related to the purchase of certain real properties, including, but not limited to, the subject premises. The closing statement provides that Steinberg, a manager of defendant, was present at the closing and the statement designated defendant as a purchaser. While the closing statement provided that two contracts of sale were executed on December 7, 2007, one between sellers Alma Lombardo, as Executor of the Estate of Ingnatius N. Lombardo, and Laura Panzarella, as the Executor of the Estate of Stanley Panzarella, and plaintiff alone, the copy of the closing statement included in the record is incomplete regarding the actual terms of second such contract with David Panzarella, as Executor of the Estate of Angela Panzarella.
When all of the evidence in the record is taken into consideration, in particular, but not limited to Bortnick's testimony and statements and Judith Kandler's testimony and statements, it is apparent that neither of the parties was aware that there was a bona fide, justiciable controversy, at a minimum, until on or about the date of plaintiff's sale of the subject premises, on or about November 29, 2018. Therefore, defendant has failed to satisfy its burden as to the statute of limitations defense.
With regard to the defense of the statute of frauds, New York's General Obligations Law § 5-703, entitled "Conveyances and contracts concerning real property required to be in writing," provides the following:
"1. An estate or interest in real property, other than a lease for a term not exceeding one year, or any trust or power, over or concerning real property, or in any manner relating thereto, cannot be created, granted, assigned, surrendered or declared, unless by act or operation of law, or by a deed or conveyance in writing, subscribed by the person creating, granting, assigning, surrendering or declaring the same, or by his lawful agent, thereunto authorized by writing. But this subdivision does not affect the power of a testator in the disposition of his real property by will; nor prevent any trust from arising or being extinguished by implication or operation of law, nor any declaration of trust from being proved by a writing subscribed by the person declaring the same ... 3. A contract to devise real property or establish a trust of real property, or any interest therein or right with reference thereto, is void unless the contract or some note or memorandum thereof is in writing and subscribed by the party to be charged therewith, or by his lawfully authorized agent. 4. Nothing contained in this section abridges the powers of courts of equity to compel the specific performance of agreements in cases of part performance."
A careful review of the evidence in the record, including but not limited to Bortnick's testimony and statements, Judith Kandler's testimony and statements, Reiner's testimony, and Steinberg's testimony, has demonstrated that issues of fact exist as to whether an agreement existed between the parties in relation to the subject premises, what the agreement was between the parties in relation to the subject premises, if any such agreement did exist, as well as what the parties may have intended by any such agreement. These issues of fact preclude a finding that the terms of such an agreement, if one existed, must comply with the statute of frauds or whether terms of such an agreement removed said agreement from the statute of frauds. Therefore, plaintiff has failed to satisfy its burden as to the definitive applicability of the statute of frauds defense.
With regard to the remaining defenses of equitable estoppel, laches, unclean hands, ratification, and documentary evidence, these defenses are all grounded upon factual determinations. A careful review of the evidence contained in the record has demonstrated that, as mentioned above, a myriad of issues of fact exist in this matter, including but not limited to whether the above defenses are, in fact, applicable to the facts in this case.
Furthermore, since issues of fact exist, as mentioned above, at the very least as to the terms of any alleged agreement between the parties, as well as to whether each party provided funds toward the purchase of the subject premises and what the understanding was between the parties regarding the purpose of the funds allegedly provided, if any, an issue of fact also exists as to the ultimate issue of what the parties' respective ownership interests in the subject premises was. As such, based upon the conflicting evidence discussed above, neither party is entitled to summary judgment regarding plaintiff's first cause of action for a declaratory judgment. Likewise, and for the same reasons, defendant is not entitled to summary judgment on its first counterclaim for declaratory judgment.
With regard to the second cause of action set forth in the complaint sounding in conversion, defendant has argued that plaintiff cannot challenge or deny defendant's ownership interest in the subject premises and that since the rental income that defendant allegedly received rightfully belonged to it, as a matter of law, plaintiff does not have a claim for conversion. "A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession" (Colavito v New York Organ Donor Network, Inc., 8 NY3d 43, 49-50 [2006]) "Two key elements of conversion are (1) plaintiff's possessory right or interest in the property ... and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's rights" (id., at 50 [internal quotes and citation omitted]).
In light of the above determination that issues of fact exist, at the very least, as to the parties' ownership interests in the subject property, issues of fact also exist as to whether the elements of a conversion do, in fact, exist in this matter, to wit, whether plaintiff had the sole possessory interest in the subject premises and whether defendant interfered with plaintiff's rights (see id.). Therefore, regardless of the sufficiency of the opposition papers, defendant has failed to satisfy its prima facie burden on the branch of its motion for summary judgment dismissing plaintiff's second cause of action sounding in conversion (see Alvarez v Prospect Hosp., 68 NY2d at 324).
Defendant has also moved for summary judgment on each of its second, third and fourth counterclaims sounding in unjust enrichment, money had and received, and conversion. However, defendant has failed to satisfy its prima facie burden as to these counterclaims (see id.). With regard to the cause of action sounding in unjust enrichment, "[t]he elements of a cause of action to recover for unjust enrichment are '(1) the defendant was enriched, (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'" (GFRE, Inc. v U.S. Bank, N.A., 130 AD3d 569, 570 [2d Dept 2015], quoting Mobarak v Mowad, 117 AD3d 998, 1001 [ 2014]; see Betz v Blatt, 160 AD3d 696, 701 [2018]). As set forth above the elements of conversion are a plaintiff's possesssory right or interest in a property and defendant's dominion or interference with the property in derogation of plaintiff's rights (see Colavito v New York Organ Donor Network, Inc., 8 NY3d at 50).
"'A cause of action for money had and received is one of quasi-contract or of contract implied-in-law'" (County of Suffolk v Suburban Hous. Dev. & Research, Inc., 160 AD3d 607, 610 [2018], quoting Board of Educ. of Cold Spring Harbor Cent. School Dist. v. Rettaliata, 78 NY2d 128, 138 [1991]; see Parsa v State of New York, 64 NY2d 143, 148 [1984]; Goldman v Simon Prop. Group, Inc., 58 AD3d 208, 220 [2008]). "'The essential elements of a cause of action for money had and received are (1) the defendant received money belonging to the plaintiff, (2) the defendant benefitted from receipt of the money, and (3) under principles of equity and good conscience, the defendant should not be permitted to keep the money'" (County of Suffolk v Suburban Hous. Dev. & Research, Inc., 160 AD3d at 610, quoting Goel v Ramachandran, 111 AD3d 783, 790 [2013]; see Jetro Holdings, LLC v MasterCard Intl., Inc., 166 AD3d 594, 598 [2018]).
Inasmuch as the Court has already determined that issues of fact exist as to the ownership interests of the parties, defendant is not entitled to summary judgment on its counterclaims for unjust enrichment, money had and received, and for conversion. The court has considered the parties' remaining contentions on their respective motions and found them to be unavailing.
Accordingly, defendant's motion for summary judgment dismissing the complaint, for a declaratory judgment on its first counterclaim, and for summary judgment on its Second, Third and Fourth Counterclaims, is denied in its entirety. Plaintiff's motion for summary judgment on the first cause of action set forth in the complaint is denied. Dated: 1/22/21
/s/_________
MARGUERITE A. GRAYS
J.S.C.