Tress v Hunte

[*1] Tress v Hunte 2013 NY Slip Op 51577(U) Decided on July 18, 2013 Supreme Court, Kings County Schmidt, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 18, 2013
Supreme Court, Kings County

Mark Tress, Plaintiff,

against

Grantley Hunte and Phonex Developers Associates, LLC, Defendants.



3039/13



Plaintiff Attorney: Seyfarth Shaw, LLP, 620 Eighth Avenue, New York, NY 10018

Defendant Attorney: The Law Offices of Richard Wright, PLLC, 80 Maiden Lane, Suite 1902, New York, NY 10038

David I. Schmidt, J.

Upon the foregoing papers, defendants Grantley Hunte and Phonex Developers Associates, LLC, move by Order to Show Cause, for an order, pursuant to CPLR 3211 (a) (1) and (7), dismissing the complaint, or in the alterative, cancelling the Notice of Pendency on the grounds that plaintiff's allegations have no relationship to the title, possession, use and/or enjoyment of the real property at issue.

Factual BackgroundPlaintiff Mark Tress (plaintiff) seeks to enforce an alleged oral agreement, which has, as its object, the purchase and management of real property. The defendant Phonex Developers Associates, LLC (Phonex) was and still is the owner of the real property known as 951 Prospect Place, Brooklyn, New York, also known as 172 Brooklyn Avenue, Brooklyn, New York (hereinafter, the Brooklyn property). Phonex is a limited liability company in which the defendant Grantley Hunte (Hunte) is the sole member. The complaint alleges that on or about November 13, 2012, the New York City Department of Buildings (DOB) issued an Immediate Emergency Declaration wherein Phonex was required to perform certain remedial work on the Brooklyn property. On or [*2]about January 22, 2013, Hunte contacted the plaintiff in an effort to sell and/or negotiate a deal regarding the property in order to avoid the DOB's declaration,. The parties met and the plaintiff offered Hunte two options, the first of which was for the plaintiff to buy the property outright. Option two involved the plaintiff and Hunte entering into a joint venture wherein both parties would be equal fifty percent members in a new limited liability company (the joint venture).

Plaintiff alleges that Hunte agreed to enter into the joint venture, and further agreed to form a new entity, ParkSide Holdings 2010 LLC (ParkSide). The plaintiff thereafter caused an Operating Agreement for ParkSide to be drafted, but it was never signed by the parties. The complaint further alleges that Hunte thereafter made representations to the DOB and the Landmark Preservation Commission that he agreed to the joint venture and that the unsafe conditions on the Brooklyn property would be remedied. The plaintiff subsequently negotiated a postponement of the DOB's emergency declaration in light of the fact that the joint venture was going forward. Plaintiff alleges that shortly thereafter, Hunte informed the plaintiff that he was in negotiations to sell the Brooklyn property to another party, and that the defendants refused to perform under the contract by executing the Operating Agreement pursuant to the joint venture.

The plaintiff subsequently commenced this action in February 2013 seeking monetary damages and/or the specific performance of the oral agreement for a joint venture to own and manage the Brooklyn property. Plaintiff alleges that he has expended time and monies engaging an engineer, expediter, legal counsel and securing a title report and payoffs for tax liens and old mortgages. In addition, the plaintiff filed a notice of pendency in connection with the Brooklyn property. Thereafter, the defendants moved pursuant to CPLR 3211 (a) (1) and (7) to dismiss the complaint and to cancel the notice of pendency.

Discussion

Defendants argue that the documentary evidence of the unsigned Operating Agreement clearly contradicts the allegations of the plaintiff. In this regard, defendants contend that they did not owe a contractual obligation to the plaintiff because a contract never existed between the parties. Defendants contend that the complaint merely alleges that Hunte agreed to enter into a joint venture in the future, but that they were still in the negotiation stages. Defendants contend that the actions by the parties constitute pre-contractual negotiation and did not rise to the level of a contractual obligation. Defendants further note that there is no indication in the complaint as to the terms (i.e., consideration, duration or contribution) of the joint venture other than the broad statement that the plaintiff and Hunte agreed to equally share in the joint venture. As such, defendants contend that the complaint fails to set forth a meeting of the minds between the parties. Defendants therefore contend that there was no contract between the parties.

Defendants further argue that plaintiff's claim for an interest in real property must fail because it is barred by the Statute of Frauds. Here, it is undisputed that there was no [*3]written agreement executed by any of the parties herein. Defendants additionally argue that defendant Phonex is not even mentioned as a party in the alleged contract (joint venture). In this regard, defendants point out that neither the complaint nor the unsigned operating agreement lists Phonex as a party to the agreement. As such, defendants argue that the complaint should be dismissed as against Phonex. Lastly, defendants further argue that the notice of pendency should be cancelled because the action is not one which has a direct relationship to the real property at issue.

In opposition, the plaintiff contends that the complaint makes out a prima facie case of partial performance of an oral contract to convey real property sufficient to avoid running afoul of the Statute of Frauds. Further, plaintiff maintains that this action is not a claim asserting an interest in an LLC, but rather is an action about specific performance of a contract to convey real property, the Brooklyn property. Plaintiff alleges that in accordance with the joint venture, he used his connections with the DOB and the Landmark Preservation Commissions to get the Emergency Declaration related to the Brooklyn property postponed and that he further expended the time and monies including legal fees in having the Operating Agreement drafted and in securing a title report and funding to payoff tax liens/mortgages on the property.

CPLR 3211 (a) (1)

A party seeking to dismiss pursuant to CPLR 3211 (a) (1) on the ground that its defense is based on documentary evidence must submit documentary evidence that resolves all factual issues as a matter of law and conclusively disposes of the plaintiff's claim (see Galvan v 9519 Third Avenue Restaurant Corp., 74 AD3d 743 [2010]; Elow v Svenningsen, 58 AD3d 674, 675 [2009]; Martin v New York Hosp. Med. Ctr. of Queens, 34 AD3d 650 [2006]; see also Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 [2002]; see Leon v Martinez, 84 NY2d 83, 88 [1994]; Long v Allen AME Transp. Corp., 43 AD3d 1114 [2007]; Sheridan v Town of Orangetown, 21 AD3d 365 [2005]).

Here, the defendants have not come forward with any documents that "conclusively refute" the plaintiff's allegations (AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 590—591 [2005]; see Reid v Gateway Sherman, Inc., 60 AD3d 836, 837 [2009]; East Hampton Union Free School Dist. v Sandpebble Bldrs., Inc., 66 AD3d 122, 125 [2009], affd 16 NY3d 775 [2011]; Greene v Doral Conference Ctr. Assoc., 18 AD3d 429, 430 [2005]). Contrary to defendants' assertion, the unsigned copy of the "Operating Agreement" of Parkside Holdings does not conclusively refute the plaintiff's allegation that defendants did in fact enter into a contract to form a joint venture. Thus, the court holds that the branch of defendants' motion which is pursuant to CPLR 3211 (a) (1) to dismiss the complaint is denied.

CPLR 3211 (a) (7)

However, that branch of defendants' motion seeking to dismiss the complaint pursuant to CPLR 3211 (a) (7) is granted. It is well-settled that on a motion to dismiss a complaint for failure to state a cause of action pursuant to CPLR 3211(a) (7), the pleading [*4]is to be liberally construed, accepting all the facts alleged in the complaint to be true and according the plaintiff the benefit of every possible favorable inference. . . ." (Jacobs v Macy's East, Inc., 262 AD2d 607, 608 [2005]; Leon v Martinez, 84 NY2d 83, 88 [1994]). The court does not determine the merits of a cause of action on a CPLR 3211 (a) (7) motion (see Stukuls v State of New York, 42 NY2d 272 [1977]; Jacobs, 262 AD2d at 608), and the court will not examine affidavits submitted on a CPLR 3211 (a) (7) motion for the purpose of determining whether there is evidentiary support for the pleading (see Rovello v Orofino Realty Co., Inc., 40 NY2d 633 [1976]).

It is axiomatic that an oral agreement for the sale of real property is unenforceable under the Statute of Frauds (General Obligations Law, § 5-703, subd 2). Part performance will render the contract enforceable only where such performance is "unequivocally referable" to the alleged agreement of sale (e.g., Burns v McCormick, 233 NY 230, 232 [1922]). Here, the plaintiff alleges that Hunte orally agreed to enter into a joint venture with him in which they would form a new entity, ParkSide Holdings, 2010, for the purpose of owning and managing the subject property. Plaintiff concedes that the contract was never reduced to writing but contends that he is entitled to specific performance of the contract and/or monetary damages based upon the doctrine of part performance, an exception to the statute of frauds (see General Obligations Law § 5-703[4]).

The court finds that an oral agreement for a joint venture, which has, as its object, the conveyance of an interest in real property from one venturer to another is a contract subject to the Statute of Frauds (see Spodek v Riskin, 150 AD2d 358 [1989]; Najjar v National Kinney Corp., 96 AD2d 836 [1983]; see also Town of Oyster Bay v Doremus, 94 AD3d 867 [2012]). However, an agreement that would otherwise be unenforceable, because of the Statute of Frauds, may become enforceable if the party seeking enforcement has performed part of the agreement. Indeed, a party's partial performance of an oral agreement conveying an interest in real property will be deemed sufficient to take that contract out of the Statute of Frauds if it is demonstrated that the acts constituting partial performance are "unequivocally referable" to the contract (Anostario v Vicinanzo, 59 NY2d 662, 664 [1983]; see also Boylan v Morrow Co., 63 NY2d 616 [1984]). "Unequivocally referable" conduct "is conduct which is inconsistent with any other explanation" (745 Nostrand Retail Ltd. v 745 Jeffco Corp ., 50 AD3d 768, 769 [2008], quoting Richardson & Lucas, Inc. v New York Athletic Club of City of NY, 304 AD2d 462, 463 [2003]). It is not enough "that the oral agreement gives significance to plaintiff's actions" (Anostario, 59 NY2d at 664). Rather, the actions alone must be "unintelligible or at least extraordinary," explainable only with reference to the alleged agreement (id., citing Burns v McCormick, 233 NY 230, 232 [1922]).

Here, the plaintiff maintains that in reliance upon the contract he expended time and monies engaging an engineer, expediter, legal counsel and in securing a title report and in securing payoffs for tax liens and mortgages related to the subject property. The plaintiff further alleges that he personally used his connections to negotiate a postponement of the Emergency Declaration that was issued by the DOB. The plaintiff alleges that he performed the foregoing acts in contemplation of the parties' agreement to form the joint venture and for the purpose of owning and managing the subject property. These actions are relied upon by the plaintiff as constituting sufficient part performance to remove the alleged oral agreement from the operation [*5]of the Statute of Frauds.

Contrary to the plaintiff's contention, however, the plaintiff's actions, negotiating a postponement of the Emergency Declaration, securing a title report, hiring an engineer/expediter, paying legal fees for drafting Operating Agreement and securing financial meansare not "unequivocally referable" to an agreement with Hunte to enter into a joint venture for the purpose of owning and managing the subject property.Although the oral agreement alleged by the plaintiff provides a possible motivation for plaintiff's actions, the performance is equivocal in that it is as reasonably explained by the possibility of other expectations. For instance, the plaintiff's actions could be explainable as the preparatory steps he performed with a view toward consummation of an agreement in the future(see Gracie Sq. Realty Corp. v Choice Realty Corp., 305 NY 271, 282 [1953]). Indeed, the hiring of an attorney, engineer, expediter, and securing funding by plaintiff are acts of a type which generally precede rather than follow the formulation of an agreement such as the one upon which the plaintiff sues. The same may be said of the act of drafting the terms of an Operating Agreement for the proposed new entity. Also, the plaintiff could have performed the above actions with the expectation that he would receive compensation other than in the form of an ownership interest in the property. Based upon the foregoing, it is clear that the plaintiff's alleged partial performance is not "unequivocally referable" to the alleged oral agreement with Hunte, and therefore provides no basis for application of an exception to the Statute of Frauds (see Anostario, 59 NY2d at 664; Town of Oyster Bay v Doremus, 94 AD3d 867 [2012]).

Additionally, the alleged oral agreement claimed by the plaintiff would fail for indefiniteness (see Joseph Martin, Jr., Delicatessen v Schumacher, 52 NY2d 105, 109-110 [1981]; 2004 McDonald Ave. Realty, LLC v 2004 McDonald Ave. Corp., 50 AD3d 1021 [2008]; Allied Sheet Metal Works v Kerby Saunders, Inc., 206 AD2d 166, 171 [1994]; Mur-Mil Caterers v Werner, 166 AD2d 565, 566 [1990]). To obtain specific performance of an agreement, the agreement must be sufficiently certain and specific so that the parties' intentions are ascertainable (see Joseph Martin, Jr., Delicatessen v Schumacher, 52 NY2d 105, 109 [1981]; Balco Dev. Corp. v Peters, 276 AD2d 729, 730 [2000]; Mocca Lounge v Misak, 94 AD2d 761, 762 [1983]). "[A]n agreement to agree, which leaves material terms of a proposed contract for future negotiation, is unenforceable" (Andor Group v Benninghoff, 219 AD2d 573 [1995]).In this regard, the complaint fails to set forth the specific terms of the alleged oral contract between the plaintiff and Hunte. The complaint merely states that the parties agreed to enter into a joint venture wherein both parties would be fifty (50) percent members in a new limited liability company. The complaint, however, fails to set forth the consideration to be paid in exchange for entering a joint venture and acquiring an ownership interest in the property, or the date on which such transfer would take place, or duration of the joint venture. Nor does the complaint set forth any terms regarding the sale/transfer of the subject property to the newly formed entity and/or the plaintiff, the purchase price for a 50 percent interest in the property, or when such sale would take effect. Consequently, the court finds that the plaintiff has failed to state a valid breach of contract cause of action. Accordingly, defendants' motion seeking to dismiss the complaint pursuant to CPLR 3211 (a) (7) is granted.

Inasmuch as the defendants have established their entitlement to dismissal of the complaint pursuant to CPLR 3211 (a) (7), the notice of pendency is hereby cancelled (see CPLR [*6]6514 [a]; Town of Oyster Bay v Doremus, 94 AD3d 867 [2012]; Coleman v Coker, 66 AD3d 812, 814 [2009]; Gallagher Removal Serv. v Duchnowski, 179 AD2d 622, 623 [1992]).

In sum, that branch of defendants' motion seeking to dismiss the plaintiff's complaint pursuant to CPLR 3211 (a) (7) is granted and the complaint is hereby dismissed. The notice of pendency is cancelled. That branch of defendants' motion seeking dismissal of the complaint pursuant to CPLR 3211 (a) (1) is denied.

The foregoing constitutes the decision, order, and judgment of the court.

E N T E R,

J. S. C.