Oddo v Rosenhammer
Annotate this CaseDecided on September 29, 2009
Supreme Court, Queens County
Dominick Oddo, et al.
against
Richard Rosenhammer, et al.
26279/08
Duane A. Hart, J.
Plaintiffs Dominick Oddo and Barbara Oddo commenced this partition action against defendants Richard Rosenhammer and Theresanne Rosenhammer, seeking a forced sale of a parcel of real property known as 69-01 Woodhaven Boulevard, Rego Park, New York (designated as Block 3178, Lot 69). Plaintiffs Oddo, who are husband and wife, allege that they purchased the property with defendants Rosenhammer, also a married couple, on July 28, 2004, and that each couple owns 50% of the property as tenants in common with the other couple.
Defendants Rosenhammer served a joint answer denying certain allegations of the complaint, and asserting defenses based upon failure to state a cause of action, the doctrine of unclean hands, and failure to join necessary parties.
Third-party plaintiff Richard Rosenhammer commenced the third-party action against third-party defendants Dominick Oddo and Aleph Lamed Daled Corp. (Corporation), asserting a shareholder's derivative suit pursuant to Business Corporation Law §§ 626 and 720 on behalf of Corporation and seeking injunctive, declaratory and monetary relief. In the third-party complaint, it is alleged that third-party plaintiff Richard Rosenhammer and third-party defendant Dominick Oddo each own one-half of the shares of stock issued in the Corporation, and are its secretary and president, respectively, and sole directors. It is also alleged that the Corporation operates a car wash and automobile lubrication and detailing business known as "Imperial Hand Car Wash and Lube" (Imperial) at the subject premises and on two adjoining lots by virtue of three separate long-term leases (one lease per lot). It is further alleged that third-party defendant Dominick Oddo breached his fiduciary duties owing to third-party plaintiff Richard Rosenhammer and third-party defendant Corporation by commencing the partition action and engaging in self-dealing. In addition, it is alleged in the third-party complaint that notwithstanding legal title to the subject property is in the names of Dominick Oddo, Barbara Oddo, Richard Rosenhammer and Theresanne Rosenhammer, Richard Rosenhammer and Dominick Oddo agreed that the beneficial interest in the premises be held in the Corporation. Third-party plaintiff Richard Rosenhammer seeks to impress a constructive trust on the property for the benefit of the Corporation so to avoid the unjust enrichment of the Oddos and Rosenhammers. [*2]
Third-party defendants Dominick Oddo and Corporation served a third-party answer denying the material allegations of the complaint and asserting various affirmative defenses, including the statute of frauds.
Plaintiffs Oddo move for partial summary judgment, for leave to appoint a referee, to strike the affirmative defenses asserted by defendants, and to dismiss the third-party complaint pursuant to CPLR 3211 and CPLR 3212 or alternatively, to sever the third-party action. Plaintiffs Oddo assert that they do not desire to hold and use the property in common with defendants Rosenhammers any longer. Plaintiffs Oddo also assert that the property, which is horseshoe-shaped, is so circumstanced that actual partition cannot be made without great prejudice to the owners. They further assert that the parties do not own any other lands in common and there are no liens or encumbrances against the property.
Defendants Rosenhammer oppose the motion by plaintiffs Oddo on the ground that plaintiffs Oddo have brought this partition action in bad faith and as a means of compelling defendant Richard Rosenhammer to sell his interest in the Corporation to Dominick Oddo at a time when financial obligations of the Corporation are nearing an end, and before Richard Rosenhammer has had an opportunity to recoup his investment of his time and money in the business. Defendants Rosenhammer assert that Frank Oddo and Maria Oddo, the parents of defendant Dominick Oddo, helped to finance the property's purchase, by a mortgage loan to Richard Rosenhammer and Dominick Oddo, in their personal capacities, in the principal amount of $300,000.00, with interest. Richard Rosenhammer and Dominick Oddo, allegedly executed a note and a mortgage in favor of Frank Oddo and Maria Oddo, and the mortgage is unrecorded.
Third-party plaintiff Richard Rosenhammer, in addition, cross-moves for leave to amend his third-party complaint to add another cause of action against third-party defendant Dominick Oddo for breach of fiduciary duty to the Corporation based upon Dominick Oddo's refusal to authorize the Corporation's exercise of an option to purchase the property which is available to the Corporation pursuant to a lease. In the proposed additional cause of action, it is alleged that on June 10, 2009 (after the commencement of this action on October 27, 2008), at a special meeting of the board of directors and shareholders of the Corporation, third-party plaintiff Richard Rosenhammer presented a resolution authorizing the Corporation's exercise of the lease option to purchase the premises. According to the proposed additional claim, third-party defendant Dominick Oddo declined to authorize the exercise of the option in disregard of the corporation's best interest, and in furtherance of his self interest. By the proposed additional claim, third-party plaintiff Richard Rosenhammer seeks to compel the Corporation to exercise the option, or to obtain an award of damages from third-party defendant Dominick Oddo for the Corporation.
Third-party defendant Dominick Oddo opposes the cross motion, asserting that he refused to vote on the option resolution because he believes the Corporation lacks adequate funds to purchase the property, and furthermore, Richard Rosenhammer failed to apprise him of all the terms of sale. Third-party defendant Dominick Oddo further asserts that the option is unavailable to be exercised by the Corporation because the corporation is in default in payment of the base rent due thereunder, and such default has not been waived.
It is well established that 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," (Alvarez v Prospect Hosp., 68 NY2d 320, [*3]324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980]). If the proponent succeeds, the burden shifts to the party opposing the motion, who then must show the existence of material issues of fact by producing evidentiary proof in admissible form, in support of its position (see Zuckerman v City of New York, 49 NY2d 557 [1980], supra).
" A person holding and in possession of real property as joint tenant or tenant in common, in which he [or she] has an estate of inheritance, or for life, or for years, may maintain an action for the partition of the property, and for a sale if it appears that a partition cannot be made without great prejudice to the owners' (RPAPL 901[1]; see Wilbur v Wilbur, 266 AD2d 535, 536 [1999]; Ferguson v McLoughlin, 184 AD2d 294, 295 [1992] ; Bufogle v Greek, 152 AD2d 527, 528 [1989])" (Donlon v Diamico, 33 AD3d 841 [2006]).
Here, in support of their motion plaintiffs Oddo submit a copy of the pleadings, the affidavit of Dominick Oddo, and the July 28, 2004 deed to the property indicating that plaintiffs Oddo and defendants Rosenhammer are owners of the property, and that each couple is seized of and entitled to an undivided 50% interest in it as tenants in common with defendants Rosenhammer. In addition, plaintiffs Oddo offer a copy of a survey to show the configuration of the property and a title search to show whether there are any mortgages for liens of record encumbering the property. This evidence demonstrates that plaintiffs Oddo are entitled to partial summary (see RPAPL 901[1]; Duffy v Duffy, 21 AD3d 928, 929 [2005]; Dalmacy v Joseph, 297 AD2d 329, 330 [2002]).
Although the right of a tenant in common pursuant to RPAPL 901 to maintain an action for partition is subject to the equities of the parties (see Graffeo v Paciello, 46 AD3d 613, 614 [2007]), here the equities favor the position by plaintiffs Oddo (see generally Donlon v Diamico, 33 AD3d 841, 842 [2006], supra).
It is undisputed that plaintiff Dominick Oddo and defendant Richard Rosenhammer acquired the outstanding shares of stock in the Corporation on March 7, 2002, and at the time of their acquisition, the Corporation had as one of its major assets, the lease dated March 1, 1998 for the subject premises. The lease commences on March 1, 1998 and expires on February 29, 2028, and provides, among other things, an option to the Corporation, as tenant, to purchase the subject property commencing with the beginning of the 11th year of the term of the lease (2009), and extending through the end of the 12th year of the term of the lease (2010), for the purchase price of $425,000.00, payable in all cash. The lease also provides that if the option in not exercised within the time specified, then the purchase price "shall increase annually by the sum of ... $25,000.00," commencing with the beginning of the 13th year of the term of the lease. The lease further provides that "[the Corporation] shall have no right to exercise the option to purchase prior to the expiration of ten (10) years following [March 1, 1998]."
Thus, when the prior owner of the property offered the property for sale in 2004, the Corporation lacked any right under the lease to exercise the option to purchase. Nevertheless, because the Corporation was in occupancy at the time, any third-party purchaser would have taken title subject to the rights which the Corporation could have established pursuant to the lease (see generally Vitale v Pinto, 118 AD2d 774 [1986]). Plaintiffs Oddo and defendants Rosenhammer chose to buy it in their individual capacities, rather than allow the property to be sold to a third party. Plaintiffs Oddo and defendants Rosenhammer, of course, took title to it subject to the Corporation's lease, including the option to purchase (see Vitale v Pinto, 118 AD2d 774 [1986], supra). [*4]
Thus, neither plaintiff Dominick Oddo's alleged wrongful refusal to join with defendant Richard Rosenhammer to exercise, on behalf of the Corporation, the option to purchase the property, nor his alleged offer to buy out Richard Rosenhammer's shares in the Corporation, has a direct bearing on the subject matter of the partition action and, neither such refusal nor offer can serve to defeat the right of plaintiffs Oddo to seek partition (see Eller v Eller, 168 AD2d 414 [1990]).
To the extent the premises have been leased to the Corporation and are subject to a purchase option, any purchaser at a sale of the property will take the same, subject to the rights of the lessee under the lease, and the fact that the property might not bring as much as it would if it were not under the lease, is not a basis to deny the right of partition and sale. The Corporation, therefore, is not a necessary party defendant herein (see RPAPL 903). In addition, to the extent Frank Oddo and Maria Oddo are the holders of an unrecorded mortgage against the ownership interests of plaintiff Dominick Oddo and defendant Richard Rosenhammer in the property, they are not necessary party defendants either (see RPAPL 903; see Roberts v Walker, 28 AD2d 1146, 1147 [1967]).
Defendants Rosenhammer have failed to demonstrate the existence of triable issues of fact with respect to any of their defenses sufficient to defeat that branch of the motion by plaintiffs Oddo for partial summary judgment.
With respect to the branch of the motion by third-party defendants for summary judgment dismissing the third-party complaint, the first and second causes of action for breach of fiduciary duty are based upon the commencement of the partition action. The property is owned by plaintiffs Oddo and defendants Rosenhammer in their personal capacities. Because plaintiff Barbara Oddo does not desire to hold the property in common with defendants Rosenhammer, she has a right to seek partition (RPAPL 901; Notar-Francesco v Furci, 149 AD2d 490 [1989]; Rosen v Rosen, 78 AD2d 911 [1980]). Therefore, regardless of whether Dominick Oddo also sought partition, the Corporation could not have prevented the commencement, or prosecution, of the action by plaintiff Barbara Oddo. Additionally, the purchaser at any sale shall take subject to the rights which the Corporation can establish pursuant to the lease, and as a consequence, third-party plaintiff Richard Rosenhammer cannot establish any damages to the corporation due to the purported breach of the fiduciary duty. The first and second causes of action in the third-party complaint thus, fail to state a cause of action.
With respect to the third cause of action asserted in the third-party complaint based upon unjust enrichment, the alleged oral agreement between defendant Richard Rosenhammer and plaintiff Dominick Oddo that the property the property would be held for the beneficial interest of the Corporation, is barred by the statute of frauds (see General Obligations Law §§ 5-701; 5-703). Furthermore, to the extent the third cause of action is one to impress a construction trust, the third-party complaint makes no allegation that Barbara Oddo or Theresanne Rosenhammer were parties to the purported agreement, or that there was any promise by any of the parties to convey the property to the Corporation at any time (see Sharp v Kosmalski, 40 NY2d 119, 121 [1976]).
With respect to the cross motion by third-party plaintiff Richard Rosenhammer for leave to amend the third-party complaint as proposed, third-party practice is now viewed "primarily as a tool for economical resolution of interrelated lawsuits" (Cohen Agency v Perlman Agency, 51 NY2d 358, 365 [1980]). "The liability to be imposed upon a third-party defendant in a third-party action commenced pursuant to CPLR 1007 should arise from or be conditioned upon the liability asserted against the third-party plaintiff in the main action' (BBIG Realty Corp. v Ginsberg, 111 AD2d 91, [*5]93 [1985]; see also Jakobleff v Cerrato, Sweeney & Cohn, 97 AD2d 786 [1983])" (Lucci v Lucci, 150 AD2d 649, 650 [1989]). Here, the entitlement of plaintiffs Oddo to partition and sale is neither a function of, nor related to, any of the alleged wrongdoing committed by third-party defendant Dominick Oddo vis-a-vis third-party defendant Corporation. The appropriate procedural vehicle to accomplish the goals of third-party plaintiff Richard Rosenhammer on behalf of the Corporation is a separate action (see Lucci v Lucci, 150 AD2d 649 [1989], supra). That branch of the motion by third-party defendants for summary judgment dismissing the third-party complaint is granted. The cross motion by third-party plaintiff Richard Rosenhammer to amend the amended third-party complaint as proposed is denied (see Sklar v Garrett, 195 AD2d 454 [1993]; Lucci v Lucci, 150 AD2d 649 [1989], supra).
That branch of the motion for partial summary judgment in favor of plaintiffs Oddo is granted. That branch of the motion for leave to appoint a referee is granted to the extent of granting leave to appoint a referee to ascertain the rights, shares and interests of the parties in the property, to ascertain whether the property, or any part thereof is so circumstanced as to require a sale, to take proof of the parties' title and interest in the premises, to take an account of the rents, if any, collected and distributed, and of the expenses paid therefrom, and to ascertain the interest of creditors who may have liens on the undivided shares or interests of the parties in the subject property (RPAPL 915; see Wolfe v Wolfe, 187 AD2d 628 [1992]; Dunning v Dunning, 200 Misc 775 [1951]).
Settle order.
J.S.C.
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