DePasquale v Estate of DePasquale

[*1] DePasquale v Estate of DePasquale 2006 NY Slip Op 51581(U) [12 Misc 3d 1195(A)] Decided on May 24, 2006 Supreme Court, Queens County Nelson, 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 This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 24, 2006
Supreme Court, Queens County

Daniel C. DePasquale, Plaintiff,

against

Estate of Joseph C. DePasquale, LILLIAN J. DEPASQUALE, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF JOSEPH C. DEPASQUALE, DEBRO MANUFACTURING CORP., FIESTA REALTY, INC. and SUMMIT ENTERPRISES INC., Defendants.



24123/2005

Valerie Brathwaite Nelson, J.

Plaintiff and his now deceased brother Joseph C. DePasquale (Joseph) entered into a written "Agreement of Sale" dated August 7, 2003 in which, inter alia, plaintiff sold his shares of the three corporations (Debro, Fiesta and Summit), which were jointly owned by the two brothers, to Joseph for the sum of $850,000.00. The Agreement of Sale included a provision which stated that "[t]his agreement may not be altered, amended, changed, modified, waived or terminated in any respect or particular unless the same shall be in writing signed by the party to be bound." [*2]

According to the allegations contained in the complaint: "It was understood and orally agreed to by and between Joseph and Daniel that (a) Daniel would continue to operate Debro in the same capacity as he did prior to August 7, 2003; (b) that, for all intents and purposes, Daniel was an equal shareholder to Joseph as he was prior to August 7, 2003; and (c) that in consideration of the aforestated understandings, Daniel would not be indemnified or held harmless by Joseph or Debro relative to the aforementioned HSBC loan guarantees [i.e., the guarantees to HSBC executed on March 25, 2002 by Daniel and Joseph in connection with any and all indebtedness of Debro to HSBC.']"

The complaint further alleges that this understanding "had in fact been substantially memorialized" in a handwritten agreement, dated August 6, 2003, and signed by Daniel and Joseph, which provided as follows: "(a)In regard to the contract of sale dated August 7, 2003 this agreement states that when the property of Fiesta Realty is sold the difference between $1,400,000 and the selling price will be divided equally between Joseph C. DePasquale or his estate and heirs and Daniel DePasquale or his estate and heirs."(b) When the property of Summit Enterprises is sold the difference between $100,000 and the selling price will be divided equally between Joseph C. DePasquale and Daniel C. DePasquale or their estate and heirs."(c) If the property of Fiesta Realty or Summit Enterprises are rented or leased the profit derived will be divided equally between both parties."

According to the complaint: "Immediately after the Agreement of Sale was executed on or about August 7, 2003, and on that same day, Plaintiff and Joseph C. DePasquale, in furtherance of their understandings, the written agreement of August 6, 2003 and the oral agreement as aforestated, verbally agreed that Daniel would share equally any and all profits subsequently realized by the sale of the real estate owned and operated by Fiesta and/or Summit or from the rental of any such real estate."

Joseph died on March 31, 2004 and his widow Lillian J. DePasquale (Lillian) was appointed Executrix of his estate. In June 2005, plaintiff allegedly discovered that Lillian had sold real estate owned by defendants Fiesta and Summit for over 12 million dollars. Plaintiff commenced this action in November 2005 asserting that defendants breached the handwritten contract dated August 6, 2003 (first cause of action); that defendants breached the verbal agreement of August 7, 2003 (second cause of action); for an accounting of the profits from the sale of the real estate owned by Fiesta and Summit (third cause of action); for unjust enrichment (fourth cause of action); and for constructive trust (fifth cause of action). [*3]

It is well established that in determining a motion to dismiss the complaint for failure to state a cause of action pursuant to CPLR 3211(a)(7), the pleading is to be afforded a liberal construction (CPLR 3026) and the court should accept as true the facts alleged in the complaint, accord plaintiff the benefit of every possible inference, and only determine whether the facts, as alleged, fit within any discernible legal theory (Leon v Martinez, 84 NY2d 83 [1994]; CBS Corp. v Dumsday, 268 AD2d 350 [2000]). Stated another way, "the motion must be denied if from the pleadings' four corners 'factual allegations are discerned which taken together manifest any cause of action cognizable at law'" (511 West 232nd Owners Corp. v Jennifer Rlty. Co., 98 NY2d 144, 151-152 [2002]; Polonetsky v Better Homes Depot, Inc., 97 NY2d 46 [2001]; Sheila C. v. Povich, 11 AD3d 120 [2004]; Frank v Daimler Chrysler Corp., 292 AD2d 118 [2002]).

The first cause of action relates to the August 6, 2003 handwritten agreement between the parties which determines the division of proceeds from sale or lease of the real estate owned by Fiesta and Summit. Defendants argue that the August 7, 2003 Agreement of Sale should constitute the entire agreement between the parties and that the August 6, 2003 handwritten agreement should not be considered under the parol evidence rule as a matter of law.

Defendants also seek to dismiss plaintiff's first cause of action based upon the documentary evidence, i.e., that the written agreement dated August 6, 2003 is parol evidence and cannot be used to modify the Agreement of Sale dated August 7, 2003.

A motion to dismiss a complaint based upon documentary evidence may be granted where the documentary evidence submitted resolves all factual issues as a matter of law and definitively disposes of the plaintiff's claim (see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144 [2002]; Wallach v Hinckley, 12 AD3d 893 [2004]; Ozdemir v Caithness Corp., 285 AD2d 961 [2001]).

Unless the court finds ambiguity, the rules governing the interpretation of ambiguous contracts do not come into play (see R/S Assocs. v NY Job Dev. Auth., 98 NY2d 29 [2002]; Matter of Wallace v 600 Partners Co., 86 NY2d 543 [1995]; Breed v Insurance Co. of N. Am., 46 NY2d 351[1978]). Thus, when interpreting an unambiguous contract term evidence outside the four corners of the document is generally inadmissible to add to or vary the writing (W.W.W. Associates, Inc. v Giancontieri, 77 NY2d 157 [1990]). "Extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face" (Intercontinental Planning v Daystrom, Inc., 24 NY2d 372, 379 [1969]).

Herein, the terms of the handwritten contract dated August 6, 2003, as well as the Agreement of Sale dated August 7, 2003, were clear and unambiguous (see Chimart Assocs. v Paul, 66 NY2d 570 [1986]; Teitelbaum Holdings v Gold, 48 NY2d 51 [1979]; Posh Pillows v Hawes, 138 AD2d 472 [1988]). Significantly, there was no reference to the real estate holdings in the Agreement of Sale dated August 7, 2003, and there was no reference to the shares of stock in the handwritten agreement dated August 6, 2003. In addition, the Agreement of Sale contained a provision that the Agreement could only be modified by a writing, establishing that it expressed the full agreement of the parties, and that there were no oral understandings between them. Under these circumstances, [*4]the Agreement of Sale and handwritten agreement constitute two separate agreements which can be enforced separately (see 41-41 51st St. Realty Assocs. v Tura Assocs., 207 AD2d 524 [1994]). Thus, plaintiff states a cause of action for breach of contract of the handwritten agreement and the documentary evidence submitted by defendants does not support dismissal of plaintiff's first cause of action.

Defendants also seek to dismiss the second cause of action for breach of the verbal agreement which was allegedly made contemporaneously with the written Agreement of Sale of August 7, 2003 on the grounds that it is parol evidence and cannot modify the written agreement.

Under settled New York law, parol evidence of an alleged oral agreement offered to vary the terms of the parties' written contract is only admissible if three conditions are met: (1) that the oral agreement is collateral to the written contract; (2) that it does not contradict express or implied provisions of the written contract; and (3) that the written contract, read in the light of the surrounding circumstances, must not appear to indicate that it contained the entire agreement of the parties ( Mitchill v Lath, 247 NY 377 [1928]; Potsdam Cent. Schools v Honeywell, Inc., 120 AD2d 798 [1986]; William H. Waters, Inc. v March, 240 App Div 120 [1934]). The claimed oral agreement of the parties regarding the sale of all of plaintiff's shares in Debro to Joseph clearly fails to meet the second and third of these conditions. The Agreement of Sale is directly contradictory to the alleged oral agreement which continued plaintiff's equal shareholder status in Debro despite the sale of all of his shares in that company. Thus, plaintiff's second cause of action for breach of the alleged verbal agreement fails to state a cause of action and is barred by the written Agreement of Sale dated August 7, 2003.

Plaintiff's third cause of action for an accounting of the real estate sales of the Fiesta and Summit properties adequately states a valid cause of action (see Klein v Gutman, 12 AD3d 348 [2004]).

With regard to plaintiff's fourth cause of action for unjust enrichment, the doctrine of unjust enrichment applies to circumstances in which the parties have entered into an ostensible contractual relationship but their agreement ultimately proves to be invalid or otherwise inapplicable. In the instant matter, plaintiff seeks to enforce the handwritten agreement dated August 6, 2003, which involves the sale of the real estate holdings of Fiesta and Summit. It is well settled that where there is an express contract no recovery can be had on a theory of implied contract (Unisys Corp. v Hercules, Inc., 224 AD2d 365 [1996]; H.B.L.R., Inc. v Command Broadcast Assocs., 156 AD2d 151 [1989]; Knobel v Manuche, 146 AD2d 528 [1989]). Thus, plaintiff's fourth cause of action for unjust enrichment is barred by the documentary evidence of the written agreement.

The court now turns to plaintiff's fifth cause of action for constructive trust. In order to set forth a valid cause of action for a constructive trust, four elements must be alleged: (1) a confidential relationship, (2) an implied or express promise, (3) a transfer in reliance of the promise, and (4) unjust enrichment (see Kleinman v Kleinman, 281 AD2d 459 [2001]; Maynor v Pellegrino, 226 AD2d 883 [1996]; Gottlieb v Gottlieb, 166 AD2d 413 [1990]). Herein, since there is no cause of action for unjust enrichment, there can be no cause of action for constructive trust. [*5]

Accordingly, that branch of defendants' motion which seeks to dismiss the first and third causes of action (CPLR 3211[a][1] and [7]) is denied; that branch of defendants' motion which seeks to dismiss the second, fourth and fifth causes of action (CPLR 3211 [a][1] and [7]) is granted.



Dated: May 24, 2006 ______________________

Valerie Brathwaite Nelson, J.S.C.