Hermandad Y Asociados, Inc. v Movimiento Misionero Mundial, Inc.

[*1] Hermandad Y Asociados, Inc. v Movimiento Misionero Mundial, Inc. 2009 NY Slip Op 50500(U) [22 Misc 3d 1138(A)] Decided on March 6, 2009 Supreme Court, New York County Solomon, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 6, 2009
Supreme Court, New York County

Hermandad Y Asociados, Inc., Plaintiff,

against

Movimiento Misionero Mundial, Inc. a/k/a the Worldwide Missionary Movement, Inc., Ismael Trinidad, and The South Bronx Overall Development Corporation, Defendants.



100211/06



Plaintiff was represented by Barak P. Cardenas, Esq., of Jaffe & Asher, LLP, 600 Third Ave, New York, NY 10016, tel. no. (212) 687-3000. Defendants were represented by Leonard Benowich, Esq., 1025 Westchester Ave, White Plains, NY 10604, tel. no. (914) 946-2400.

Jane S. Solomon, J.

INTRODUCTION

In an action for breach of contract and tortious interference with contract, defendants move to dismiss. The motion is granted for the reasons set forth below.

FACTS

Defendant Movimiento Misionero Mundial, Inc. a/k/a The Worldwide Missionary Movement, Inc. (the "Church") is a non-profit religious corporation that owned a parcel of land located at 1769 Fort George Hill, New York, New York (the "Property"). Defendant Ismael Trinidad ("Trinidad") is an employee and deacon of the Church. Defendant The South Bronx Overall Development Corporation ("SoBro") is a non-profit organization dedicated to promoting economic development in New York City.[FN1] Kevin Powell ("Powell") worked for SoBro and also was a principal of Faith Works International ("FWI").

In 2004, the Church approached SoBro about the possibility of developing the Property into a mixed use building consisting of residential condominium units and facilities for the Church. In June 2004, the Church, SoBro, and FWI entered into a non-binding letter of intent entitled "Draft Transaction Summary" ("DTS"), in which the parties agreed, inter alia, that the Church would convey the Property to SoBro. SoBro agreed to incorporate the following spaces into the development, which would be conveyed back to the Church after construction: an 800 seat church; a baptistery; a multipurpose space; a space with a kitchen for a cafeteria/restaurant; 2 two bedroom apartments; and a four bedroom apartment for the Church's Pastor.

Under the DTS, it was also agreed: (a) that SoBro would enter into a joint venture or [*2]management consultant agreement with FWI, whereby FWI would provide project coordination assistance and related services, including the marketing of the residential units; and (b) that FWI would hire Trinidad to provide documentation and communication services related to the project. Powell signed the DTS on behalf of FWI, and another person signed for SoBro.

As part of the proposed deal, SoBro was to assume the existing $250,000 mortgage on the Property, which was to be paid off by the end of 2004. The mortgage was not satisfied by the end of 2004, and the Church's bank charged the Church a fee of $15,000 to extend the repayment deadline.

Powell became a principal of Hermandad Y Asociados, Inc. ("Hermandad") after its formation in October 2004 and negotiated a new deal with the Church, whereby Hermandad (and not SoBro) would be the developer of the Property. Hermandad, by Powell, entered into an option agreement with the Church, pursuant to which Hermandad obtained "the exclusive option and right" to develop the Property. (Option Agreement, attached as Exh. 3 to Affirmation of Leonard Benowich in Support of Motion to Dismiss ("Benowich Affirmation"), ¶ 1.) In exchange, Hermandad agreed to pay a portion of the Church's mortgage extension fee.

As contemplated, on January 19, 2005, Hermandad and the Church then entered into a formal contract giving Hermandad the exclusive right to develop the Property according to virtually the same terms envisioned under the proposed deal with SoBro (the "Contract"). This time, the Church was to convey the Property to Hermanded in return for Hermandad's satisfaction of the existing mortgage by December 2005. Hermandad was to pay 50% of the Church's monthly mortgage payment until satisfaction. The first of such payments was due upon execution of the Contract. In the Contract, Hermandad represented that it was "skilled in construction and [had] special knowledge of working with religious institutions on property development projects." (Contract, attached as Exh. 2 to Benowich Affirmation, ¶ 13(a).) Hermandad also was obligated to continue to work with the Church's chosen architect, JFT Architect International ("JFT"), and represented that it would "continue to work with [SOBRO] and/or other institutions on the project analysis and development activities." (Contract, ¶ 13(b).) Hermandad also agreed to retain and pay Trinidad for his services.

After signing the Contract, Hermandad, again by Powell, entered into a co-development agreement with Empowerment Business Ventures, Inc. ("EBV") (the "CDA"). In that agreement, the parties designated a new architect and EBV promised to satisfy the Church's mortgage and pay Hermandad's 50% share of the Church's monthly mortgage payments. SoBro was not mentioned in the CDA as having any involvement in the project, contrary to the DTS and the Contract. It is noteworthy that Hermandad made no representation in the CDA that it was "skilled in construction," even though it made that representation in the Contract. In the CDA, such a representation was made only by EBV.

After execution of the Contract, Hermandad sent checks to the Church for its share of the Church's mortgage payment for the months of February, March, April, and May, but while payment was due by the 5th of each month, Hermandad's checks were all delivered to the Church after the mortgage payments were already required to have been made. When Hermandad attempted to pay its share of the June mortgage payment with a check dated July 21, 2005, the Church refused to accept it. Finally, in August 2005, EBV delivered a check in the amount of $7,500 to the Church for Hermandad's share of the June, July, and August mortgage payments, [*3]but the Church did not deposit or cash it.

In September 2005, the Church terminated the Hermandad Contract, asserting that Hermandad fraudulently induced the Church into entering into the Contract and that Hermandad had breached the Contract. The Church subsequently entered into a new agreement with SoBro for SoBro to purchase and develop the Property. The Church transferred the Property to SoBro after obtaining the approval of the Supreme Court under Religious Corporation Law § 12.[FN2]

In January 2006, Hermandad commenced this action, asserting a breach of contract claim against the Church and a tortious interference claim against Trinidad and SoBro. The original complaint sought specific performance on the breach of contract claim and $1 million in damages on each cause of action. On August 28, 2007, I dismissed the specific performance claim. In February 2008, Hermandad moved to amend its complaint. The motion was withdrawn after the parties entered into a stipulation permitting Hermandad to serve an amended complaint (the "Amended Complaint"). In the stipulation, Hermandad expressly agreed to allow Defendants to either answer or make a motion to dismiss in response.

In the Amended Complaint, Hermandad alleges, as its first cause of action, that the Church breached the Contract by, inter alia, interfering with Hermandad's development rights. In the second cause of action, Hermandad asserts that SoBro and Trinidad "tortuously" interfered with the Contract by making several allegedly false representations about it. Hermandad seeks $5.2 million and punitive damages for its loss of the business opportunity.

DISCUSSION

Defendants move to dismiss, arguing that: (1) the Contract was invalid and unenforceable under Religious Corporation Law § 12; (2) the Church properly terminated the Contract because Hermandad materially breached it; and (3) the allegations in the Complaint do not constitute tortious interference with the Contract. Hermandad opposes the motion, arguing that it violates the single motion rule in CPLR 3211(e), that it should be denied under the law of the case, and that Hermandad has properly stated its causes of action.

Single Motion Rule/Law of the Case

Hermandad argues that two prior motions made by

Defendants and addressed to Hermandad's original complaint bar Defendants from making the instant motion addressed to the Amended Complaint. SoBro previously moved for summary judgment, and the Church and Trinidad also moved to dismiss in a separate motion. My rulings on the prior motions addressed to the original complaint are not law of the case as to this motion, and the single motion rule is not applicable. Moreover, Hermandad stipulated that Defendants could move to dismiss the Amended Complaint.

Breach of Contract

Hermandad correctly argues that its contract with the Church was validly made. Religious Corporation Law § 12 does not prohibit a church from contracting to sell its property; [*4]it only prohibits the actual conveyance of church property without judicial approval.

However, Defendants correctly contend that Hermandad materially breached the Contract. As a result, the Church was excused from performance. Under New York law, it is axiomatic that in order to prevail on a breach of contract claim, a plaintiff must establish all of the following four elements: (1) the existence of a valid contract; (2) plaintiff's performance of the contract; (3) defendant's material breach of the contract; and (4) resulting damages. See e.g., Noise in Attic Productions, Inc. v. London Records, 10 AD3d 303 (1st Dept. 2004); Furia v. Furia, 116 AD2d 694 (2nd Dept. 1986). Thus, unless a plaintiff has performed the contract pursuant to its terms, the plaintiff has not established all of the required elements for sustaining a breach of contract claim, even if the other elements are satisfied.

Hermandad materially breached the Contract by failing to timely pay its share of the Church's mortgage payment, by failing to continue to work with JFT, and by failing to continue to work with SoBro and/or other institutions on project analysis and development activities. With respect to Hermandad's obligation to pay 50% of the Church's mortgage payments, the checks were all delivered after the Church's mortgage payments were required to have been made. Further, the Church was within its rights when it rejected Hermandad's attempt to pay its share of the Church's June payment with a check dated July 21st and when it did not deposit or cash EBV's subsequent check.

With respect to JFT, the fact that a new architect for the project was designated in the CDA shows that Hermandad breached its obligation to continue to work with JFT. With regard to the provision requiring it to work with SoBro and/or other institutions, Hermandad did not continue to work with SoBro and/or any other institutions that were involved in the project prior to the signing of the Contract. Instead, it engaged the services of a new firm, EBV, to assist it with the development of the Property.

Upon Hermandad's material breaches of the Contract, the Church was excused from future performance. Accordingly, Hermandad cannot show performance on its part or a material breach of contract on the part of the Church. Hermandad's breach of contract claim must be dismissed.

Tortious Interference with Contract

Under New York law, the elements for tortious

interference with contract claims include: (1) existence of a valid contract; (2) defendant's knowledge of the contract; (3) defendant's intentional procurement of a breach of the contract; and (4) resulting damages.

Moreover, it is well settled that to maintain this claim, a plaintiff must properly allege that there was an actual breach of the contract. NBT Bancorp Inc. v. Fleet/Norstar Fin. Group, Inc., 87 NY2d 614, 620 (1996). Here, as explained above, there was no breach of the Contract by the Church. Accordingly, Hermandad's tortious interference with contract claim against SoBro and Trinidad should be dismissed as a matter of law.

In light of this finding, the Court need not address other issues raised by the parties, such as whether SoBro or Trinidad are incidental beneficiaries of the Contract or whether they may assert a viable economic justification defense to the tortious interference claim. Finally, Hermandad's demand for punitive damages should be denied because there is no support for it.

CONCLUSION [*5]

Accordingly, it hereby is

ORDERED that Defendants' motion to dismiss the Complaint is granted and the Complaint is dismissed; and it further is

ORDERED that the Clerk shall enter judgment accordingly with costs and disbursements as taxed.

Dated:March6, 2009

ENTER:

________________

J.S.C.

Footnotes

Footnote 1: The Church, Trinidad, and SoBro will be collectively referred to as "Defendants."

Footnote 2: The application was made to Justice Phyllis Gangel-Jacob and was granted by Order dated June 28, 2006.