Alshawhati v Zandani

[*1] Alshawhati v Zandani 2009 NY Slip Op 52499(U) [25 Misc 3d 1240(A)] Decided on December 14, 2009 Supreme Court, Kings County Demarest, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 14, 2009
Supreme Court, Kings County

Abdo M. Alshawhati, A/K/A ABDO MOSLEH AL SHOHATEE A/K/A ABDO AL SHOHATEE, Plaintiff,

against

Abdulaqadara A. Zandani A/K/A ABUDLKADER ABDO ZANDANI A/K/A ABDO ALZANDANI, HASSAN ALI HUGRAN A/K/A HASSAN ALI HUJRAN, and 890 ROCKAWAY FOOD CORP, Defendants.



28545/07



Attorney for Plaintiff

Melvin L. Greewald, Esq.

401 Broadway

New York, NY 10013

Attorney for Defendant Hujran

Jonathan S. Roller, Esq.

26 Court Street

Brooklyn, NY 11242

Attorney for Defendant Zandani

Richard Izzo, Esq.

451 76th Street

Brooklyn, NY 11209

Carolyn E. Demarest, J.

Defendant Hassan Ali Hujran moves, pursuant to CPLR 3025(b), to amend his Answer to plaintiff Abdo Alshawhati's complaint to include a counterclaim to impress a constructive trust upon real property located at 890 Rockaway Avenue, Brooklyn, NY (the "subject premises" or "property" or "building"). For the reasons set forth below the motion is granted.

In 1987, plaintiff and defendant Zandani established a retail grocery store (the "store") in the subject premises located at 890 Rockaway Avenue, Brooklyn, NY. Plaintiff alleges that, in 1988, the owner of the building offered to sell the property to plaintiff and defendant Zandani for the price of $130,000. On August 10, 1988 title was closed and, according to plaintiff, he and [*2]Zandani paid the seller $15,000 each (totaling $30,000) towards the purchase price, with the balance of the consideration (the sum of $100,000) secured by a purchase money mortgage. Indeed, only plaintiff and Zandani are named as mortgagors on the copy of the mortgage submitted by plaintiff and subsequent mortgages, dated May 15, 1991 and January 4, 1994, name only plaintiff and Zandani as mortgagors. Defendant Hujran does not dispute that title remains only in plaintiff and Zandani's name.

Plaintiff states that he met Hujran, the alleged brother-in-law of Zandani, in 1990. It is plaintiff's contention that, at that time, Hujran purchased a one-third interest in the grocery store located on the property for $20,000 - $10,000 paid to Zandani and $10,000 paid to plaintiff. Plaintiff contends that from 1990 Hugran merely worked in the grocery store, sharing profits and contributing to the expenses, but never acquired an interest in the property.

On July 21, 2004, plaintiff, Zandani and Hujran entered into two agreements, one concerning the property and one concerning the grocery store on the premises. The property agreement provided that the three would rotate managing the property for one year each. The store agreement provided the same with respect to managing the grocery store.

Plaintiff asserts that, once he fulfilled his management obligations in 2006 under the agreements, he left the country. He claims that when he returned to the United States from an extended trip to Yemen, defendants refused to relinquish possession of the store in accordance with the store agreement. Furthermore, plaintiff claims that defendants mismanaged the store, committing numerous breaches of the store agreement and New York City operating regulations concerning cigarette sales, beer sales and other retail licenses which were under his name. He also alleges that, on December 8, 2006, he learned that defendants formed a new corporation, 890 Rockaway Food Corp., and began transferring assets of the store, which were solely in plaintiff's name, to the newly formed corporation.

Plaintiff alleges that, on July 16, 2007, defendants offered to buy plaintiff's interest in the property and the store. However, according to plaintiff, they never offered an amount for the buyout and, therefore, plaintiff subsequently commenced this action on August 3, 2007. The Complaint lists eighteen causes of action. Plaintiff claims fraud, conversion, breach of fiduciary duty, an accounting, breach of contract of the store and property agreements, unjust enrichment, and specific performance of the store agreements seeking to be allowed to resume management of the store. Plaintiff also seeks a declaratory judgment voiding any transfer of the store assets, a permanent injunction and dissolution of the partnership established by the alleged store agreement and punitive damages. Furthermore, as is most relevant to this motion, plaintiff seeks a partition and sale of the subject premises asserting that he and Zandani are the only rightful owners of the premises.

Defendants Zandani and Hujran were initially represented in this litigation by the same counsel. Through their original counsel, defendants jointly served plaintiff with an Answer on or about August 13, 2007, which did not assert any counterclaims. When it was discovered that a conflict of interest existed between the defendants, both defendants retained new counsel and Hujran now seeks to amend his Answer and assert a counterclaim to impress a constructive trust on the property.

Hujran claims a one-third interest in the property itself. He asserts that in 1988, he, Zandani and plaintiff entered into a partnership agreement prior to the acquisition of the property [*3]and that, as part of that partnership, he furnished $10,000 (one-third) of the $30,000 towards the purchase price of the subject premises in exchange for a one-third ownership interest in the property. Hujran alleges that from "the time of the purchase of the real property until the commencement of this action, [his alleged one-third interest] was recognized and acknowledged by the plaintiff in all of our dealings and interactions" (Hujran Affidavit in Support ¶ 6). He asserts that "at all times on or before August 10, 1988, the Plaintiff ALSHAWHATI and Defendant ZANDANI promised to the Defendant HUJRAN to hold a one-third interest [in] the real property and premises located at 890 Rockaway Avenue, Brooklyn, New York for the benefit of defendant Hujran if said real property was purchased by them, in their name only" (Exhibit C to Hujran Affidavit in Support, proposed amended Answer at 3). As a result, Hujran claims that plaintiff, by virtue of his denial of Hujran's alleged one-third interest, has been unjustly enriched. A hearing has been scheduled to address Hujran's claim to a one-third interest in the real property.

DiscussionHujran moves to amend the pleadings pursuant to CPLR 3025(b). "While it is true that motions for leave to amend pleadings are to be liberally granted in the absence of prejudice or surprise ... it is equally true that the court should examine the sufficiency of the merits of the proposed amendment when considering such motions" (Zabas by Zabas v. Kard, 194 AD2d 784 ( [1993]; see Lucido v Mancuso, 49 AD3d 220, 229 [2d Dept 2008]). If the amendment is "palpably insufficient" or "patently devoid of merit," the motion may be denied. (Lucido, 49 AD3d at 229). However, it is improper for the Court to require an "evidentiary showing of merit" of the proposed claim upon the motion to amend (Id.). Furthermore, leave to amend may be denied where the moving party has unreasonably delayed seeking the amendment, amending the pleading will result in prejudice or unfair surprise to the nonmovant or where the statute of limitations has run (Garza v Vico Utilities, 150 AD2d 520, 521-522 [2d Dept 1989]).

Plaintiff argues that defendant's motion should be denied because the proposed amendment insufficiently pleads the elements of a constructive trust. "The elements needed for the imposition of a constructive trust are (1) a confidential or fiduciary

relation, (2) a promise, (3) a transfer in reliance thereon, and (4) unjust enrichment" (Pereira v Glicker, 61 AD3d 948, 948 [2009]). As mentioned, Hujran alleges that he, Zandani and plaintiff entered into a partnership agreement prior to the acquisition of the property and that, as part of that partnership, he furnished $10,000 towards the purchase of the subject premises in exchange for a one-third ownership interest in the property. These allegations are not palpably insufficient inasmuch as partners generally owe each other a fiduciary duty and may assert a cause of action for the imposition of a constructive trust based upon an ownership interest in property (see A.G. Homes, LLC v Gerstein, 52 AD3d 546, 547-549 [2d Dept 2008]; see also Lester v Zimmer, 147 AD2d 340 [3d Dept 1989]). Hujran has also alleged the requisite elements of a promise, transfer of $10,000 in reliance thereon and unjust enrichment. Further investigation into the sufficiency of defendant's counterclaim is inappropriate on a motion to amend and is best reserved for a motion to dismiss (see Lucido, 49 AD3d at 229, 232). Thus, the Court finds the pleading sufficient for the purposes of a motion to amend.

Plaintiff also argues that, since the property at issue was transferred in 1988, the motion should be denied because the statute of limitations on any cause of action seeking to impose a constructive trust has long expired. Plaintiff is correct that the statute of limitations on a [*4]constructive trust is six years, generally accruing from the date of transfer of the property (CPLR 213[1]; Morando v Morando, 41 AD3d 559, 561 [2d Dept 2007] ). However, the accrual date may also be measured from the time the trustee repudiates an agreement to transfer property (Zane v Minion, 63 AD3d 1151, 1153 [2d Dept 2009]).

Hujran argues that he has enjoyed the use and ownership of the property since it was acquired in 1988 without contest from plaintiff. Indeed, when plaintiff was asked at deposition whether there are "any other owners of the building" he replied that "Hagran" is another owner and lives in 890 Rockaway Avenue (Exhibit B to Hujran Reply Affidavit, Alshawhati Deposition at 9:24-25 and 10:5). Thus, as Hujran argues, commencement of this action may be the first time plaintiff has repudiated Hujran's alleged ownership interest. Were Hujran to prove that plaintiff first repudiated Hujran's alleged ownership interest upon commencement of this action, the statute of limitations would run from the date of commencement, August, 3, 2007, and, thus, the counterclaim would be timely. As a result, defendant's motion cannot be denied on statute of limitations grounds because a consideration of the merits is necessary to decide the actual accrual date of the proposed counterclaim.

Plaintiff also argues that the motion should be denied due to defendant's delay in seeking to plead a counterclaim. The Note of Issue in this matter was filed on October 27, 2009. As plaintiff correctly points out, the Court must consider whether there has been substantial delay in seeking to add a counterclaim where the action has been certified as ready for trial (Pelligrino v New York City Transit Auth., 177 AD2d 554, 557 [2d Dept 1991]; F.G.L. Knitting Mills, Inc. v 1087 Flushing Property, Inc., 191 AD2d 533, 534 [2d Dept 1993]). However, the Court may also consider whether the movant has a reasonable excuse for delay (Id.).

As mentioned, the same attorney originally represented both Hujran and Zandani. That counsel ceased representing both defendants on or before July 28, 2009 due to the inherent conflict of interest in representing defendants with competing interests. Hujran argues that it was the need to retain new counsel which caused the delay in filing his motion to amend because it was the original counsel that failed to assert the counterclaim in defendants' Answer. Indeed, this is a plausible excuse because original counsel would have been ill-advised to assert a counterclaim for a constructive trust where the imposition of the trust would be adverse to one of his client's (Zandani's) interests. However, once Hujran retained new counsel in or around July 28, 2009, he promptly filed this motion to amend the pleadings. The Court finds that Hujran has a reasonable excuse for the delay in moving to amend because the conflict of interest prevented defendant from interposing the counterclaim in the original Answer.

Furthermore, the Court finds that plaintiff cannot claim prejudice or surprise from the delay. Plaintiff was on notice of Hujran's ownership claim from the inception of this lawsuit. As discussed, when plaintiff was deposed on March 2, 2006, inquiries were made into Hujran's ownership interest. Moreover, the claim of Hujran's one-third ownership was addressed in plaintiff's request for discovery and inspection dated November 24, 2008. Finally, plaintiff cannot claim prejudice since the issues raised in plaintiff's own claims implicate the same issues as Hujran's counterclaims, specifically, Hujran's partnership in the grocery and Hujran's role in managing the property. Therefore, the Court finds that the plaintiff has failed to establish a significant change in Hujran's position since the inception of this suit and, thus, the motion to amend the Answer is granted (see generally Yemini v Goldberg, 46 AD3d 806 [2d Dept 2007]). [*5]

The Verified Answer and Counterclaim containing defendant Hujran's claim for a constructive trust, appended to the motion as Exhibit C, is deemed served. Defendant Hujran shall file a copy of his amended Answer within five days.

The foregoing constitutes the decision and order of the Court.

ENTER,

J. S. C.