J.D. v A.D.

[*1] J.D. v A.D. 2017 NY Slip Op 50261(U) Decided on February 27, 2017 Supreme Court, Richmond County DiDomenico, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through March 2, 2017; it will not be published in the printed Official Reports.

Decided on February 27, 2017
Supreme Court, Richmond County

J.D., Plaintiff,

against

A.D., JR and D. D., Defendants.



1*****/14



Plaintiff was represented by

Andrew R. Schimler Esq.

42 Kingsbridge Ave.

Staten Island, NY 10314

Defendant Wife was represented by:

Jeremy Panzella Esq.

from the Law Firm of Menicucci Villa Celmi, PLLC.

2040 Victory Blvd.

Staten Island, New York 10314

Defendant Husband was represented by:

The Law Office of Dalia Zaza Esq.

3 School St. #303

Glen Cove, NY 11542
Catherine M. DiDomenico, J.

Procedural History

Plaintiff J. D. commenced this breach of contract action against his daughter D. D. ("Wife") and her soon to be former Husband A. D. Jr. ("Husband") for the return of $280,000 provided by him to the defendants in connection with the purchase of real property located **** Amboy Road (the "Amboy Road" property). Plaintiff and Wife contend this money was a loan to both defendants that was to be repaid to Plaintiff within six months of the closing date of that [*2]property. Defendant Husband contends it was a gift which he has no obligation to repay.

The defendants in this action are also in the process of a bitter, protracted, divorce proceeding that is currently pending before this Court. Among other issues the divorce involves allegations of domestic violence, unfit parenting, civil contempt against Husband and equitable distribution of real property, including the property at issue herein. In furtherance of this Court's Order dated November 24, 2014, the Amboy Road property was sold with the sales proceeds placed in one of the divorce attorney's escrow accounts. In this related contract action Plaintiff Mr. D. seeks judgment in his favor in the amount of $280,000 plus costs, disbursements, statutory interest running from the date of the breach and reasonable attorney's fees.

Plaintiff was represented throughout this matter by Andrew R. Schimler, Esquire. Defendant Wife was represented by Jeremy Panzella, Esquire of the law firm of Menicucci Villa Celmi, PLLC. Ms. Dalia Zaza, Esquire represented Defendant Husband. Ms. Zaza also represents Husband in the related divorce proceeding.

The Trial

After a pre trial motion for summary judgment was denied by another Judge, this matter was transferred to this Part as a proceeding related to the divorce. This matter was tried before this Court on August 5, 2016, March 2, 2016,and November 17, 2017. Plaintiff testified on his own behalf and called his girlfriend J.C. as a witness. Plaintiff also admitted documents into evidence (Pl. Exs. 1-9). Plaintiff also testified in the underlying divorce case of which notice was taken (Pl. Ex. 9). Defendant D. D. testified on her own behalf. Defendant A. D. Jr. testified on his own behalf and introduced documents into evidence (Def. Ex.1).

Factual Findings

Many of the facts relevant to this Court's decision are not disputed.

The defendants were married on March 27, 2004. They have two children who are the Plaintiff's grandchildren. Prior to commencement of this divorce action by his daughter, the defendant herein, Plaintiff had a loving and close relationship with Husband. However, this harmonious relationship turned acrimonious when Husband advised Plaintiff that he would not repay the $280,000 which is the subject of this lawsuit.

Plaintiff, defendant Wife, and J. C. all credibly testified that the parties had numerous conversations at various family gatherings concerning the need to relocate the defendant's electrical business from the marital home to another location. In accordance with these conversations, the defendants began jointly searching for a piece of property suitable for Husband's needs. The defendants asked Plaintiff to borrow $170,000 to buy a piece of residential real property from which the defendants would operate the electrical business "A.D. Electric." There is no dispute that the parties never intended to use this property as a second home. On January 4, 2012, Plaintiff wrote the requested check for $170,000. (Pl. Ex. 1). On the face of this check, in the memo section, Plaintiff wrote the words "loan to purchase house" and [*3]included the account number for the defendants' joint account. (Pl. Ex. 1). Plaintiff then wrote "for deposit only" on the back of this check and deposited it into the defendants' joint bank account as a courtesy, because he was aware that they needed the funds urgently. Plaintiff and Defendant Wife credibly testified that Husband knew these funds had been deposited into their joint account.

Despite the loan the defendants did not acquire the parcel of property. Rather than returning the $170,000 at that time, the defendants asked, and Plaintiff agreed, to allow them to retain these funds in their joint bank account to be used toward the purchase of an alternate parcel of property. The parties continued to discuss the acquisition of property and to actively look for a suitable location. In the meantime, the $170,000 received from Plaintiff remained in the defendants' joint banking account.

On or about May 19, 2012, the defendants asked Plaintiff or more money. They had located a small house on a busy street that needed renovation but which they believed was ideal for their intended commercial usage. Plaintiff agreed to allow the defendants to use the original $170,000, and agreed to loan them an additional $110,000. Plaintiff handed the defendants a second check in the amount of $110,000. On the face of this check, in the memo section, Plaintiff wrote the words "loan to D. and A. for house." (not redacted on check). This check was endorsed by the defendant "D. D." (not redacted on check) Plaintiff and Defendant Wife credibly testified that it was agreed among all parties, including Husband, that Plaintiff would be repaid the total amount of $280,000, without interest, within six months of closing on the Amboy Road property. The six-month period was necessary to allow the defendants to secure a mortgage against this property which would provide the funds necessary to pay Plaintiff back.

It is undisputed that Plaintiff tendered a total of $280,000 to the defendants. Plaintiff also concedes that he agreed to loan this money to the defendants without seeking interest on the principal. However, the parties disagree when it comes to the obligation of repayment. Husband testified that this money was a gift from Plaintiff to his daughter. He further testified that Plaintiff never sought repayment until the divorce was filed. This Court finds that Husband's testimony was patently incredible and controverted by his own written statements. On May 21, 2012, two days after the Amboy Road property purchase contract was executed, Husband texted Wife about the generosity of her father, stating:

"We will continue to grow this business and push harder. We need a new truck. Borrowing $280,000 From one of the greatest souls I ever met is a bold move and puts us closer to where we want to be" (Pl. Ex. 3). (emphasis added).

A closing was held on August 14, 2013 at which time the funds at issue were used and a deed was issued in the names of both defendants. On August 14, 2012, a few days after the closing, Husband confirmed his understanding of the terms upon which the $280,000 would be repaid to Plaintiff. Husband once again texted Wife, stating:

"We bought a property yes its wrecked yes it's scary even for me financially and physically but let's stay focused we have 6 months to fix it and get the money out to pay back [*4]your dad." (Pl. Ex. 6). (emphasis added).

The six-month period which began on the closing date of August 14, 2013 made the $280,000 principal due back to Plaintiff in February of 2013. Plaintiff credibly testified that on or about February 12, 2013, he demanded that the defendants pay him back in full. To date, no monies have been repaid to Plaintiff from either defendant. Plaintiff seeks judgment in the principal amount of $280,000 together with statutory interest, fees and counsel fees.

Applicable Law

The essential elements of any cause of action to recover damages for a breach of contract are, (1) the existence of a contract, (2) the plaintiff's performance pursuant to the contract, (3) the defendant's breach of its contractual obligations, and (4) damages resulting from that breach. See 143 Bergen St. LLC v. Ruderman, 144 AD3d 1002 (2d Dept. 2016); See also Tudor Ins. Co. v. Unithree Inv. Corp., 137 AD3d 1259 (2d Dept. 2016). The burden of proving the existence, terms and validity of a contract rests on the party seeking to enforce it. See Amica Mut. Ins. Co. v. Kingston Oil Supply Corp. 134 AD3d 750 (2d Dept. 2015).

In contrast, a defendant attempting to establish that a particular transaction was a gift, rather than a loan, has the burden of proof to show, by clear and convincing evidence, that the transaction was made with the requisite "donative intent." See Phelps v. Phelps, 128 AD3d 1545 (4th Dept. 2015). As Defendant Husband has alluded to the Statute of Frauds, it is worth noting that certain contracts must be set forth in a writing. See General Obligations Law '5-701; See also, Taranto v. Fritz, 83 AD2d 864 (2d Dept. 1981). However, an oral agreement may be enforceable so long as the terms are clear and definite and the conduct of the parties evinces mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms. See Kramer v. Greene, 142 AD3d 438 (1st Dept. 2016). An oral contract to repay a loan may be enforceable if the elements indicated above are met. See Alameldin v. Kings Castle Caterers, Inc., 53 AD3d 514 (2d Dept. 2008); See also King Serv. v. O'Brien, 206 AD2d 728 (3rd Dept. 1994).

Decision

Defendant Wife concedes that she and her Husband borrowed the money from her father. While this is not conclusive proof as to Husband, it is some evidence of the existence of a loan. Wife credibly testified that she and Husband were well aware that this loan had to be repaid in full within six months of the closing of the Amboy Road property. Her testimony, like the testimony of Plaintiff and J.C., was credible. Wife claims that Husband's claim that this money was a gift (notwithstanding the markings on each check indicating it was a loan) is in furtherance of a scorched earth litigation strategy against her and her family. Wife and Plaintiff also credibly testified that Husband agreed to repay Plaintiff the $280,000 only if Wife gave up custody of the two subject children in the underlying divorce case.

Beyond the admissions of Wife, this Court finds that Plaintiff has independently established the necessary elements of his breach of contract cause of action. Here, the contract [*5]at issue was oral in nature. Plaintiff credibly testified that he provided his daughter and son in law the combined sum of $280,000 on the condition that it be paid back within six months of the closing, without interest. While the terms of the contract were agreed to between the parties orally, both of the checks at issue clearly indicated that the amounts provided were "loans." (See Pl. Exs. 1;3). Plaintiff further established that Defendant Husband's conduct evidenced that he understood the terms, as Husband sent two text messages to Defendant Wife indicating that he knew that the amount was borrowed, and had to be paid back within six months. (See Pl. Exs. 5;6). See Burnside v. Foglia, 208 AD2d 1085 (3rd Dept. 1994). Accordingly, this Court finds that Plaintiff has established the existence of a contract by a preponderance of the evidence. See Van Wie Chevrolet, Inc. v. General Motors, LLC 145 AD3d 1 (4th Dept. 2016).

In opposition, Husband argues that the transaction at issue was actually a gift from Plaintiff to his daughter, as opposed to a loan. However, this Court finds Husband's testimony in support of this defense to be patently unbelievable, particularly in light of his own text admissions. Indeed, when asked why he would believe this money was a $280,000 gift when, in fact each check had the word "loan" written on them, he could offer no explanation other than to suggest that Plaintiff had given his daughter gifts in the past. As Husband has failed to provide any evidence of donative intent on the part of Plaintiff, his defense must fail. See In re Estate of MacGregor, 119 AD2d 909 (3rd Dept. 1986); See also Phelps v. Phelps, 128 AD3d 1545 (4th Dept. 2015). Accordingly, after listing to the testimony and considering the evidence at trial, this Court finds that the $280,000 given by Plaintiff to defendants was a loan, and not a gift as claimed by Husband.

The second element of a breach of contract action is not in dispute as both Defendants admit that they received the two checks totaling $280,000 that were deposited into their joint account. Accordingly, Plaintiff fulfilled his end of the contract by providing the funds. Plaintiff further established that the defendants herein breached the contract when they did not repay the sums loaned within the six month time period allotted, or upon his subsequent demand for repayment. Finally, the Court finds that the Plaintiff sustained damages as he has not recovered any of the amount that he loaned the parties.

Defendant Husband argues, in the alternative, that even if this Court were to find that the $280,000 given by Plaintiff to the defendants was a loan, that loan would be unenforceable under the Statute of Frauds. (Gen. Obl. Law Sec. 5-701(a). That statute provides, inter alia, that an agreement, is void unless it is reduced to a writing if by its terms it is not capable of being performed within one year's time. See General Obligations Law '5-701(a).

Defendant Husband's reliance on the Statute of Frauds is wholly unpersuasive. First, and foremost this affirmative defense was not asserted in his Verified Answer (Pl. Ex. 8) and is therefore unavailable to him. See Ryan v. Kellogg Partners Institutional Servs., 79 AD3d 447 (1st Dept. 2010). Nor has the defendant made an application to amend his answer. See Zito v. County of Suffolk, 81 AD3d 722 (2d Dept. 2011). Moreover, even if this defense was properly before this Court (which it is not), it would not prevent Plaintiff's recovery here. The credible testimony of Plaintiff and Wife coupled with Husband's own text admissions confirm that the he and Wife had six months in which to repay the debt. As this debt was payable within one year, [*6]this statute would not apply even if it were properly plead. See Weksler v. Weksler, 140 AD3d 491 (1st Dept. 2016).

Husband next argues that if this Court finds that these funds constituted a loan, then it was a loan made only to Wife for which he bears no legal responsibility. This argument is equally unpersuasive. First, the Court credits Plaintiff's testimony that the loan was intended for the defendants as Husband and Wife. In fact, the loan benefitted Husband more than Wife, as it was intended to purchase property to house his electrical business. Moreover, as this loan was given during the defendant's marriage, and it obviously benefited both defendants, it constitutes marital debt that should be shared by the parties. See Gillman v. Gillman, 139 AD3d 667 (2d Dep't. 2016).

Finally, Defendant Husband's Verified Answer raises a defense that if the Court finds that the $280,000 was a loan, then the Plaintiff somehow owes him $150,000 for expenses allegedly incurred in remodeling the property. This argument is unpersuasive. Defendant provides no legal authority supporting this novel theory that a loan from Plaintiff somehow resulted in an ownership interest such that Plaintiff would be legally responsible for "expenses" on the property. This would be akin to a bank providing a home loan and then somehow being responsible for expenses incurred by the homeowners. Moreover, when asked at trial how he arrived at the $150,000 figure he claimed that Plaintiff's counsel should "ask" his previous lawyer.

Conclusion

Plaintiff is hereby granted judgment against the defendants in the amount of $280,000 with statutory interest. Plaintiff argues that statutory interest should be calculated from the date of the breach while not clearly indicating that date. Pursuant to CPLR 5001 (a), "interest shall be recovered upon a sum awarded because of a breach of performance of a contract...". This section goes on to provide that the date from which interest shall be computed "shall be at the court's discretion." Pursuant to CPLR 5001 (b) (date from which computed) "interest shall be computed from the earliest ascertainable date the cause of action existed." As this Court finds that this loan was to be repaid within six months of the closing of the purchase of the Amboy Road property, which occurred on or about August 12, 2012, Plaintiff had a right to initiate a breach of contract action within six months of the closing date or February 13, 2103. Therefore, in its discretion, this Court finds that Plaintiff is entitled to interest at a rate of nine percent beginning February 13, 2013. See Cole v. Macklove, 64 AD3d 480 (1stDept 2009).

Plaintiff's application for "reasonable attorneys' fees" is hereby denied as attorney fees are generally not awardable in contract actions absent a clear contractual provision providing for the same. See Gotham Partners, L.P. v. High Riv. Ltd. Partnhership, 76 AD3d 203 (1st Dept. 2010). Plaintiff cites no legal authority in support of his request for counsel fees.

Plaintiff is hereby ordered to settle a money judgment on notice for the amount herein, plus statutory interest to be calculated in accordance with CPLR 5001(c). The issue of how this marital debt should be equitably distributed between the parties shall be addressed in this Court's [*7]matrimonial decision at a future date.

This constitutes the Decision of the Court after Trial, all issues raised during trial, but not specifically addressed herein are hereby denied.

Dated: February 27, 2017

Hon. Catherine M. DiDomenico

Acting Justice Supreme Court