Carlo v 310 W. 88th St. LLC

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Carlo v 310 W. 88th St. LLC 2013 NY Slip Op 30268(U) January 31, 2013 Supreme Court, New York County Docket Number: 106706/11 Judge: Joan M. Kenney Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. SCANNED ON 21712013 [* 1] SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY fE411. KENNEY PRESENT: w, PART 17 Justice INDEX NO. 1O6%6,/ MOTION DATE -V- 001 MOTION SEQ. NO. The following papers, numbered 1 to Notice of MotionlOrder to Show Cause 11 , were read on this motion tolfor - Affidavits - Exhibits Answering Affidavits - Exhibits Replying Affidavits Upon the foregoing papers, it is ordered that this motion is w 0 F CI) 3 -J 0 I- FILED FEB 07 2013 NEW YORK COUNTY CLERK S OFFICE Dated: pp3 , J.S.C. ..................................................................... 0 CASE DEPOSED 2. CHECK AS APPROPRIATE: ........................... MOTION IS: CJ GRANTED @DENIED 3. CHECK IFAPPROPRIATE: ................................................ 0SETTLE ORDER 1. CHECK ONE: 0DO NOT POST @ NON-FINAL DISPOSITION GRANTED INPART CI OTHER SUBMIT ORDER 0FIDUCIARY APPOINTMENT REFERENCE [* 2] SUPREME COURT OF THE SATE OF NEW YORK COUNTY OF NEW YORK PART 8 X --_---fl---l-----ll-_--l------------------- Index # 1 0 6 7 0 6 / 1 1 LAURA EARAFALO CARLO, As the Executrix of T h e Estate o f PHILIP CARLO, and LAURA GARAFOLO CARLO, individually, Plaintiff, DECISION & ORDER -against310 WEST 88th STREET LLC, ROBERT GANER, DOREEN MANNANICE, JOSEPH MANNANICE GANER, GROSSBACK & GANER, LLC, Aboulafia Law Firm, P.C. Counsel for Plaintiff 60 East 42nd Street, Suite 2231 New York, NY 10165 (212) 684-1422 Michelman & Robinson, LLP Counsel for Defendants - 310 West 8Srh Street, LLC, Doreen & Joseph Mannanice 800 Third Avenue, 24eh Floor New York, New York 10022 (212) 730-7700 Papers considered in review of these motions: Papers : Numbered : Notice of Motion, Affirmation, Affidavit, Exhibits, Notice of Cross-Motion, Affirmation in Support and Opposition, Affidavit in Support and Opposition, Exhibits Affidavit in Opposition to Cross Motion with Exhibits 1-15 ~~~~ Defendants seek an Order, (1) appointing a temporary r e c e i for the property located at 310 West 88'h S t r e e t , New Y o r k , New Y o r k 10024; (2) granting defendants an accounting; and (3) directing t h e individual plaintiff t o pay pendente Plaintiff cross-moves for and Order l i t e use and occupancy. granting h e r dispositive relief. FACTUAL BACKGROUND This contentious familial dispute involves the use, occupancy and ownership of a multiple dwelling, located within the City, [* 3] County a n d State of New Y o r k , known as 310 West 88th Street (the premises). The parties not only dispute who has proper title to the premises but, whether or not Philip Carlo ( C a r l o ) and his Estate (the Estate), were allegedly defrauded by defendants, prior to his death.l Carlo died on November 8, 2010. Philip Carlo's widow and Executrix (Garafolo-Carlo), alleges that defendants, Doreen Mannanice, Joseph Mannanice, Robert Ganer and his firm Ganer, Grossbach, & Ganer LLC2, exercised undue influence over Carlo while his health was deteriorating, and "conspired" with each other "to defraud [plaintiffs] of 50% of the ownership of the premises. Garafolo-Carlo I ' states that the Estate's interest in the premises was compromised and allegedly transferred "illegally," so as to dilute the Estate's 100% ownership interest. The premises was originally purchased by Carlo, and his father Frank Carlo in 1976. During the intervening years, the premises was transferred between Carlo and his f a t h e r to a corporation owned by Carlo. Thereafter, Carlo transferred his ownership of t h e property to his father, sister and her husband for reasons that a r e unclear from the papers before the Court. On February 17, 2010, 'Plaintiffs' pleading alleges a cause of action sounding in fraudulent conveyance of the premises. 2Doreen Mannanice, was Carlo's sister and Joseph Mannanice his brother-in-law. Robert Ganer was Carlo's attorney for approximately 40 years and was represented by the firm Ganer, Grossbach, & Ganer LLC, was 2 [* 4]--- Doreen and Joseph Mannanice executed yet another deed, t r a n s f e r r i n g title to the premises to C a r l o and his sister. Finally, the last deed, d a t e d August 18, 2010, transferred the premises from Doreen Mannanice and Carlo, to a limited liability company, known as 3 1 0 West 8 8 t h Street LLC (the LLC) . Notably, this last deed and the LLC' s operating agreement (the operating agreement) were both signed by Robert Ganer as attorney-in-fact for Carlo, pursuant to a power of attorney that was recorded simultaneously with the last deed. It i5 curious that Doreen Mannanice's acknowledgment and signature were notarized by R o b e r t Ganer and Carlo's acknowledgment and signature, a s signed by Robert Ganer, as attorney-in-fact, was notarized by a "Casey was equally owned by Carlo and his sister, as Ganer . The LLC evidenced by the operating agreement, identifying the members' equal ownership of the entity. It is unclear from the papers, why the premises was repeatedly deeded from and to C a r l o and various members of his family. Defendants imply that Carlo repeatedly transferred the premises because he was not credit worthy, and/or because h e was trying to insulate the premises from his creditors. ARGUMENTS Garafolo-Carlo argues that she and the Estate are entitled to summary judgment because the transfers were merely accommodations, t h e r e b y creating a constructive trust for the benefit of Carlo. 3 In [* 5] reply, defendants state t h a t the transfers were made with minimal consideration in order to minimize the tax consequences of the transfers. The motion-in-chief seeks, inter alia, the immediate appointment of a receiver, an accounting, and an award of pendente l i t e use and occupation payments from Garafolo-Carlo. The movants argue that the basis for the instant application is grounded in the f a c t that t h e mortgage payments and real estate taxes are allegedly not being paid, which if true, may put the property in danger.3 Defendants contend that Garafolo-Carlo is jeopardizing the property by collecting the r e n t s from the tenants of the premises, without distributing them to the LLC, which would presumably make the requisite payments necessary to protect the premises. Finally, defendants s e e k an award of p e n d e n t e l i t e , fair market use and occupation (U&O) payments from Garafolo-Carlo. The basis for this portion of the application suggests that because Garafolo-Carlo is "living rent free." Defendants contend that they are entitled to U&O because Garafolo-Carlo is occupying the apartment she shared with Carlo prior to his death, in violation of the terms of the operating agreement. Specifically, defendants argue that the premises were supposed to have been listed for sale and/or sold within six months of Carlo's death. According to 3Defendants also make reference to the fact that one of the tenants of the building obtained a judgment due to the LLC's failure to return a security deposit. 4 [* 6] defendants, Garafolo-Carlo does not have legal possession of t h e apartment she occupies. Plaintiffs oppose the motion-in-chief by arguing that the application is legally defective, and cross move for summary judgment to impose a constructive trust on the premises. DISCUSSION The parties' arguments in support of their: respective motions will be addressed s e r i a t i m . The first branch of the motion-in-chief seeks t h e appointment of a temporary receiver and an accounting. The party moving for appointment of temporary receiver must submit clear and convincing evidence of irreparable loss or waste to the subject property and that a temporary receiver is needed to protect the moving party's interests. See, CPLR 6 4 0 1 , which states in pertinent part: Appointment receiver "(a) and powers of temporary Appointment of temporary receiver. Upon motion of a person having an apparent interest in property which is the subject of an action in the supreme . . . court, a temporary receiver of the property may be appointed, before or after service of summons , . ., where there is danger that the property will be . . materially injured or destroyed. Orders of receivership circumstances e . g . , are appropriate only in certain (1) where there is a danger the property will be lost, removed or materially altered; or (2) mortgaged p r o p e r t y 5 [* 7] where m o r t g a g o r i s in default ( s e e CPLR 6401 [a]i Hoffman v Hoffman, 81 AD3d 601 [2nd Dept 20111). However, even where these conditions are shown to exist, the court still has discretion as to whether a receiver s h o u l d be appointed in a particular case ( i n f r a ) . Defendants contend that the mortgagee of the premises has sent default notices to the LLC because the real estate taxes have n o t been paid. It is undisputed that plaintiffs attempted to make the mortgage payments, but the bank refused to negotiate GarafoloCarlo's checks because h e r name did not match the name of the account assigned to the premises. Notably, the parties do n o t contest that Garafolo-Carlo has made good faith attempts t o pay the mortgage, among other things. It is unclear that Garafolo-Carlo has manifested a "predisposition to take unilateral action i n disregard of defendants' rights, thereby demonstrating a danger of material injury to the property" at issue. C h a l i n e E s t a t e s , Inc. v F u r c r a f t ASSOC., 278 AD2d 141, 142 (1st Dept 2 0 0 0 ) - Defendants have not c l e a r l y established that they would be irreparably harmed in the absence of an appointment of a temporary receiver (see CPLR 6301; 6401). Moreover, in the event Doreen Mannanice seriously believed that the premises was in danger of being foreclosed upon, she could have made the delinquent payments through the LLC, without prejudice to the counterclaims interposed in the instant lawsuit. Because receivership is such a drastic remedy, this Court 6 [* 8] cannot ignore t h e complexities attendant to such a decision. Simply put, the less intrusive way of preventing any injury to the p r o p e r t y can be accomplished, by merely h a v i n g plaintiffs transfer the rental income g e n e r a t e d from the premises, into defendants' attorneys' IOLA and/or escrow account, in accordance with this decision and Order. by Garafolo-Carlo This shall include any rent collections made since the commencement of this action. Immediately after the deposit of the r e n t a l payments into the escrow account, defendants' counsel shall cause all the outstanding amounts d u e to the mortgagee, t h e City of New York and the premises' vendors to be p a i d forthwith, by forwarding said funds to the LLC's bank account, or by remitting said amount directly to the premises' creditors. Defendants also seek an accounting from plaintiffs for the rents allegedly collected by Garafolo-Carlo. motion-in-chief is denied without prejudice. engaged in discovery in earnest. This branch of the The parties have not Defendants may seek this r e l i e f after discovery has been completed. The last branch of the motion seeks fair market pendente l i t e U&O payments from Garafolo-Carlo. The bases for: this portion of the application are: (1) Garafolo-Carlo has failed to pay any rent since C a r l o d i e d and (2) Garafolo-Carlo is liable for rent because she h a s failed to cooperate in the sale of the premises, in breach of the operating agreement. The papers before the Court are silent 7 [* 9] with r e g a r d to whether or not a dispossess p r o c e e d i n g has been commenced against Garafolo-Carlo. Defendants contend that Carlo and his w i f e had a lease for their apartment, with the LLC, but that lease expired. The alleged lease has not been produced. "In a holdover proceeding (emphasis added) , the landlord is entitled to seek use and occupation for the fair and reasonable v a l u e of the premises during the period of such use and occupation" (RPL 5220; RPAPL 5 7 4 9 [ 3 ] ; A r t s Society, see, Beacway O p e r a t i n g Coxp. v Concert Inc., 123 Misc2d 452 [Civ Ct NY Co 19841; 1400 Broadway Associates, v Henry Lee 499 [Civ Ct NY Co 19941). & Co. of NY, I n c . , 161 Misc2d 497, (Lease amount probative but n o t conclusive) * "Reasonable value is fair market rental and may be established by appraisal testimony based on comparable rentals or by reference to the rental history of the subject [premises] itself" (Beacway Operating Corp. v Concert Arts Society, I n c . , supra, at 4 5 4 ; York Connecting R . R . Co. v Queens Used Auto P a r t s , New 2 9 8 NY 830 [1949]; see also, Merman v The Surrey, 106 Misc2d 941 [1981]), In addition, an award for use and occupancy should reflect the current fair market rental value of the space ( R o c k - T i m e , I n c . v The Eutin Central Services Company, I n c . , N Y L J , November 2 5 , 1985, p . 13, col. 1 [App Term 1st Deptl) * Defendants have not p r o v i d e d any expert appraisal testimony for this Court to consider t o make a determination that an award of U&O is 8 appropriate. Further, the [* 10] o n l y competent evidence before. this court is an alleged rent roll for the premises that does not indicate any specific rent f o r the apartment at issue. Consequently, this branch of the motion-inchief is denied without prejudice, to be renewed in the event defendants can prove Garafolo-Carlo is holding over. Prior to making such an application, defendants may want to consider that fair market rent has been defined as what a tenant desiring, but not compelled to rent, would pay to a landlord who desires, but is not compelled to lease Socy., ( B e a c w a y Operating Corp. v Concert Asts supra, at 454). The cross motion seeks summary judgment pursuant to CPLR 3212. In essence, Garafolo-Carlo argues that she is entitled to the imposition of a constructive trust as a matter of law, because defendants have been unjustly enriched due to their own malfeasance. T h e elements necessary for the imposition of a constructive trust are a confidential or fiduciary relationship, a promise, a transfer in reliance thereon, and unjust enrichment (citation G a r a f o l o - C a r l o has not demonstrated the existence of a omitted) * confidential or fiduciary relationship between herself and the LLC. Without further discovery, it cannot be determined at this juncture whether or not a confidential/fiduciary between C a r l o and Doreen Mannanice. relationship existed The failure to establish the existence of such a fiduciary relationship also precludes summary 9 [* 11] judgment for an accounting (see A k k a y a v Prime T i m e Transp., I n c . , 45 AD3d 616, [ Z n d Dept 20071). The ultimate purpose of a constructive trust is to prevent unjust enrichment and, thus, a constructive trust may be imposed "'[wJhen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest'" A b a c u s F e d e r a l Savings Bank v L i m , 7 5 AD3d 472, 474 ( I s t Dept 2010). Similarly, to prevail on a claim of unjust enrichment, "a party must show that (1) the other party was enriched, (2) at that party's expense, and (3) that 'it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered'" Dept 20061). (Cruz v McAneney, 31 AD3d 54 [2"d The plethora of disputed issues of fact concerning, i n t e r a l i a , whether or not defendants have been unjustly enriched are numerous, and to recite them again would be redundant. In setting forth the standards for granting or denying a motion for summary judgment, pursuant to CPLR 3212, the C o u r t of Appeals noted, in A l v a r e z v Prospect Hospital ( 6 8 NY2d 320, 3 2 4 [1986] ) , the following: As we have stated frequently, 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. Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. Once this showing has been made, however, the 10 [* 12] burden shifts to the p a r t y opposing the motion for summary judgment t o produce evidentiary proof in admissible form sufficient to establish the existence of material issues of f a c t which require a trial of the action [internal citations omitted]. Adhering to the above guidance, the courts uniformly scrutinize motions for summary judgment, as well as the facts and circumstances of each case, to determine whether relief may be granted. A n d r e v Pomeroy, 35 NY2d 361, 364 ( 1 9 7 4 ) (because entry of summary judgment "deprives the litigant of h i s day in court it is considered a drastic remedy which should only be employed when there is no doubt as to the absence of triable issues"); Martin v B r i g g s , 2 3 5 A D 2 d 192, 196 ( l s tDept 1997) (in considering a motion f o r summary judgment, "evidence should be analyzed in the light most favorable to the party opposing the motion"). Conclusory allegations unsupported by competent evidence are insufficient to defeat a summary judgment motion. A l v a r e z , 68 NY2d at 324-25. In order to grant summary judgment, the movant must p r o f f e r admissible evidence to make a prima facie showing of entitlement to judgment as a matter of law by producing sufficient evidence to show t h e absence of any material issue of fact Citibank Corp., (Giuffrida v 100 NY2d 7 2 , 81 [ 2 0 0 3 ] ; Zuckerman v C i t y of N e w Y o r k , 49 N Y 2 d 557 [1980]). Garafolo-Carlo Forrest v J e w i s h Guild f o r t h e B l i n d , h a s failed to do so. 3 N Y 2 d 295, 315 [ 2 0 0 4 1 ) * Once t h e moving party has set forth its p r o o f l the burden is on the opposing party to demonstrate 11 "evidentiary facts in [* 13] admissible form s u f f i c i e n t to r a i s e a genuine, triable issue Of fact" (Mazurek v Metropolitan Museum of Art, 27 A D 3 d 227, 228 [ I s t "If there is any doubt as Dept 20061; Zuckerman, 49 N Y 2 d at 560) to the existence of a triable issue, t h e motion should be denied" (Grossman v Amalgamated Hous. Corp., Inc., 298 AD2d 224, 226 [lst Dept 20021). Defendants have satisfied their burden of showing that contested factual issues exist, t h u s precluding dispositve relief at this time. Garafolo-Carlo has failed to address or refute the negative implications raised by the affirmation of Robert Ganer, which, along with other documents annexed as exhibits to defendants' affidavits, raise factual issues with respect to the veracity or accuracy of the statements made by Garafolo-Carlo. Further, there has not been any meaningful discovery conducted by the parties prior to the filing of this summary judgment motion. Because discovery may assist the parties narrowing or (and this Court) in resolving disputed issues of fact, the summary judgment motion is denied without prejudice. Magee v County of Suffolk, 1 4 AD3d 664 (2d Dept 2 0 0 5 ) ; Perroto D e v . COKP. v S e a r - Brown Group, 2 6 9 A D 2 d 749 ( q t h Dept 2000) (denying summary judgment motion without prejudice to renew, after completion of discovery). Accordingly, the cross motion is denied. I t is therefore, ORDERED that t h e motion-in-chief is denied; and it is further ORDERED that the cross motion is denied; and it is Eurther 12 [* 14] ORDERED that plaintiffs t r a n s f e r the r e n t a l income generated from the premises, into defendants' attorneys' IOLA and/or escrow account, in accordance with this decision and Order. This shall include a n y rent collections made by Garafolo-Carlo since the commencement of this action; and it is further ORDERED that immediately following the deposit of the rental payments into the escrow account, defendants' counsel shall cause all the outstanding amounts due to the mortgagee, the C i t y of New Y o r k and the premises' vendors to be paid forthwith, by forwarding said funds to the LLC's bank account, or by remitting said amount directly to the premises' creditors. Dated: January 31, 2013 E N T E R : I 1 Hon. JoM M. Kenney J.S.C. FILED FEB 07 2013 NEW W R K COUNlY CLERK'S OFFICE 13

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