Mooney v Tanabe

[*1] Mooney v Tanabe 2008 NY Slip Op 50725(U) [19 Misc 3d 1115(A)] Decided on March 26, 2008 Supreme Court, New York County Madden, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through April 10, 2008; it will not be published in the printed Official Reports.

Decided on March 26, 2008
Supreme Court, New York County

Paul Mooney, Plaintiff,

against

Kesha Tanabe and Curtis Tanabe, Defendants.



602603/07

Joan Madden, J.

In this action for damages for breach of contract, fraud and unjust enrichment, and to impose a constructive trust, defendants move for an order pursuant to CPLR 3211(a)(1), (5) and (7) dismissing the complaint on the grounds of documentary evidence, release and the statute of frauds. Defendants also seek an award of costs and sanctions for frivolous litigation pursuant to 22 NYCRR 130-1.1. Plaintiff opposes defendants' motion, and moves for an order of attachment pursuant to CPLR 6201.

The gravaman of the complaint is that defendant Kesha Tanabe ("Ms. Tanabe"), plaintiff's former fiancée, breached an oral agreement to transfer to him a 50% ownership interest in a cooperative apartment located at 531 41st Street, Brooklyn (the "Co-op") in return for his providing her with $100,000 to apply to her student loans. Specifically, the complaint alleges in or about March 2006, plaintiff and Ms. Tanabe "became involved in a romantic relationship"; in or about August 2006, plaintiff moved into the Co-op with Ms. Tanabe; and in or about September 2006, they became engaged. The complaint further alleges that in or about October 2006, plaintiff provided Ms. Tanabe with $100,000 to apply toward her student loans and "[d]espite numerous requests by Plaintiff and promises by Ms. Tanabe, the transfer of fifty-percent ownership in the Co-op shares was never effectuated." The complaint alleges that in or about January 2007, they "broke up" and ended their engagement, and that "[d]espite Plaintiff's demand that Ms. Tanabe repay the $100,000 . . . she had no intention of either repaying the $100,000 or providing Plaintiff with his fifty-percent share in the proceeds of the sale of the Co-op."

The complaint asserts three causes of action against Ms. Tanabe alone: the first cause of action for breach of contract, the second cause of action for fraud and the fourth cause of action for unjust enrichment. The third cause of action to impose a constructive trust is asserted against both defendants, Kesha Tanabe and her father, Curtis Tanabe; the complaint alleges that they both have an "ownership interest in the Co-op."The complaint seeks compensatory damages in amounts not less than $115,000 (first and fourth causes of action) and $100,000 (second cause of action), as well as punitive damages (second cause of action).

In moving to dismiss the complaint, defendants contend that on March 29, 2007, plaintiff executed a written release which constitutes a release of all claims asserted in the complaint. [*2]Specifically, defendants rely on a document dated March 29, 2007, which defendant admits he signed and executed, and which provides in its entirety as follows:

To: Kesha L. Tanabe

This is to confirm that I formally waive all rights and claims over your property and that I will not bring any legal action against you to recover any items, money or property that I have given to you or which are currently in your possession.

It is well settled that "a valid release constitutes a complete bar to an action on a claim which is the subject of the release." Global Minerals & Metals Corp. v. Holme, 35 AD3d 93, 98 (1st Dept 2006), lv app den 8 NY3d 804 (2007). Moreover, "a valid release which is clear and unambiguous on its face and which is knowingly and voluntarily entered into will be enforced as a private agreement between parties." Skluth v. United Merchants & Manufacturers,Inc., 163 AD2d 104, 106 (1st Dept 1990), app withdrawn 79 NY2d 976 (1992)(quoting Appel v. Ford Motor Co., 111 AD2d 731 [2nd Dept 1985]).The Court of Appeals characterizes a release as "a jural action of high significance without which the settlement of disputes would be rendered all but impossible." Mangini v. McClurg, 24 NY2d 556, 563 (1969); accord Toledo v. West Farms Neighborhood Housing Development Fund Co., Inc., 34 AD3d 228, 229 (1st Dept 2006)."[F]urther litigation following a release should not be permitted except under circumstances and under rules which would render any other result a grave injustice. It is for this reason that the traditional bases for settling aside written agreements, namely, duress, illegality, fraud, or mutual mistake, must be established or else the release stands.'" Id (quoting Mangini v. McClurg, supra).

Here, by the clear and express terms of the March 29, 2007 release, plaintiff agreed to waive all his rights and claims arising before its execution relating to Ms. Tananbe's "property," i.e. the Co-op apartment, and relating to any "item, money or property" that plaintiff gave her and which is in her possession, i.e. the $100,000 that plaintiff gave her. The release, therefore, operates as an absolute bar to all claims in the complaint asserted against Ms. Tanabe.

Contrary to plaintiff's assertion, the March 29, 2007 document quoted above is not an unenforceable unilateral promise not to sue, which is not supported by consideration. While it is true that a covenant not to sue differs from a release, in this instance plaintiff executed a release, since he clearly agreed to discharge claims and causes of action in existence at the time the agreement was executed . See Colton v. New York Hospital, 53 AD2d 588 (1st Dept 1976).Nor is the release invalid for lack of consideration, as under General Obligations Law §15-303, a "written instrument which purports to be a total or partial release of all claims, debts, demands or obligations," such as the release here, is valid even in the absence of consideration. See Collins v. E-Magine, LLC, 291 AD2d 350 (1st Dept), lv app den 98 NY2d 605 (2002); Mergler v. Crystal Properties Assocs Ltd, 179 AD2d 177, 180 (1st Dept 1992).

Plaintiff argues in the alternative, that even if the agreement is a release, it is not enforceable on the grounds of overreaching and fraud. To support this argument, plaintiff submits an affidavit detailing the events that occurred after his relationship with Ms. Tanabe ended, which preceded the execution of the release. Plaintiff explains that after he moved out of the Co-op in January 2007, "a number of disputes arose regarding property issues," and "[i]n a number of communications I had with Ms. Tanabe, I told her that among the issues that we would have to resolve was the $100,000 I had provided her in exchange for a 50% interest in the [*3]co-op." Plaintiff retained counsel "to contact Ms. Tanabe in order to obtain the return of both my personal property and the money owed to me by Ms. Tanabe." The attorney, Joseph DeMatteo, sent Ms. Tanabe a letter dated February 1, 2007 advising that he was representing "Paul Mooney in connection with a number of property issues that remain following the severance of your relationship,"and that she or her attorney should contact him "so that we can discuss how to amicably resolve the property issues that remain." On February 23, 2007, the attorney wrote a second letter to Ms. Tanabe, which included more specific information about the "property issues." The letter listed a number of personal property items which plaintiff claimed had "not yet been returned to him," and stated that "on October 20, 2006 Mr. Mooney provided you with $100,000 for which he was to receive a 50% interest in the apartment in which you were both living." The letter also advised that "Mr. Mooney has directed me to pursue his claims to the aforementioned property in an amicable manner, and to avoid litigation if possible."

According to plaintiff, on February 9, 2007, Ms Tanabe called him and "launched a tirade of insults and accusations." Plaintiff explains that during this time "although I was seeking the return of my property, I was still emotionally attached to Ms. Tanabe and was distraught that our marriage engagement was broken." He states that in March 2007 they began to speak again, and

Ms. Tanabe expressed that both she and her mother were terribly upset with me for hiring an attorney and threatening to sue her. Ms. Tanabe also expressed that as a result of the letters she had received from Mr. DeMatteo, and other problems she was experiencing in her life, both professionally and otherwise, that she was too stressed out to consider resuming her relationship with me. However, she told me that if I could assure her, and her mother, that I would not sue her, and somehow document this assurance, and that if I gave her some space, that she might one day reconsider having a relationship with me. She also told me that if I could give her an adequate assurance that I would not sue her, that she would make sure that I eventually got all my property back, including the $100,000. . . . As a result of the foregoing conversation, I did provide Ms. Tanabe with the March 29, 2007 document. . . . While I did type the document, it was based on language that Ms. Tanabe provided to me during our phone call, which seemed awkward to me at the time. . . . Within one week of giving Ms. Tanabe the document, she resumed intimate communications with me. . . . [I]n the beginning of April, she called me and we spent well over three hours on the phone together. Soon thereafter, we resumed dating and took a number of trips together. We also began living together again in the co-op toward the end of May.

Plaintiff admits that they broke up again in June 2007, and he moved out of the Co-op.

Even accepting plaintiff's allegations as true and according him the benefit of every possible favorable inference, as the court must on a CPLR 3211 motion to dismiss, see 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144, 151-152 (2002), he has not established overreaching or fraud in the procurement and execution of the release. Relying on the facts in his affidavit, plaintiff cites to a provision of the attorney disciplinary rules, DR 7-104(a)(1),[FN1] and [*4]asserts that Ms. Tanabe obtained the release in violation of her ethical obligations as an attorney, because she "went around" plaintiff's counsel and "induced" him to sign the release "to avoid her liability for the money and property." Plaintiff further asserts that Ms. Tanabe "asked for" the release "to ease her own stress as well as her parents' stress because Plaintiff had hired an attorney to obtain the return of his property and money" and "[a]t the same time she promised that she would repay the money and return the property."

Plaintiff's reliance on DR 7-104 is not persuasive, since plaintiff was involved in a personal and romantic relationship with Ms. Tanabe long before he hired an attorney who merely wrote two letters to Ms. Tanabe regarding the "property issues." The record reveals that after plaintiff retained counsel, he continued to initiate communications with Ms. Tanabe directly, as on March 8, 2007, he sent her the following e-mail:

Just want you to know that you will not be receiving any further communications from my attorney. I cannot and will not go to court or bring a lawsuit against the woman I love. I have many conflicting emotions about what's happened with us but I just can't do this. . . . I hope you will return some or all of my things at some point and if you don't then so be it. You may have the few things I have of yours anytime you want. You may call DeMatteo if your prefer to keep me out of this. He's always available as my agent/representative. I promise that there will be no legal action.

Thus, three weeks before executing the release, plaintiff not only assured Ms. Tanabe that his attorney would no longer be contacting her, but also explicitly promised that he would not bring any "lawsuit" or "legal action" against her.

Plaintiff's e-mail is consistent with his statements in his affidavit that in March 2007, he and Ms. Tanabe began speaking again, and she "expressed that both she and her mother were terribly upset with me for hiring an attorney and threatening to sue her." Three weeks after sending the e-mail, plaintiff executed the release. He admits that he did so because Ms. Tanabe told him that "she might one day reconsider having a relationship with me," if he gave her "adequate assurances that I would not sue her" and documented the assurances. On the day plaintiff executed the release, he also sent Ms. Tanabe an e-mail stating, inter alia, that "I hope the attached [the release] is sufficient to remove any concern in your mind of possible litigation. The language feels awkward to me and so if the words aren't right, just let me know and I'll reword it. I have deleted your phone number from my phone . . . I will not be calling you. I will wish and pray that you someday will call me." Plaintiff admits that one week later, he and Ms. Tanabe had "intimate communications," and shortly thereafter they began seeing each other again, and in May 2008, they moved in together.

While Ms. Tanabe acknowledges that she is an attorney admitted to practice in the State of New York, plaintiff does not dispute defendants' assertion that he is a sophisticated [*5]businessman.[FN2] Basically, plaintiff got what he bargained for in executing the release, since they did resume their relationship shortly after he provided her with assurances by way of the written release that he would not take any legal action against her regarding any of her property or any "item, money or property" he had given her. Under these circumstances, the record fails to show or even suggest that the release was obtained as a result of overreaching.

To set aside the release on the grounds of fraud, plaintiff must allege the basic elements of fraud: a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by plaintiff, and resulting injury. See Global Mineral & Metals Corp. v. Holme, supra at 98. Here, plaintiff fails to allege the misrepresentation of a material fact, as well as justifiable reliance. While plaintiff alleges that Ms. Tanabe orally promised to return his property, including the $100,000, such a promise related to future performance, which generally is not actionable in fraud. See Non-Linear Trading Co., Inc. v. Braddis Assocs Inc., 243 AD2d 107, 118 (1st Dept 1998).Moreover, any reliance on that oral promise was unreasonable, in light of the subject matter and purpose for which the release was given. At the time plaintiff executed the release he was fully aware of the potential claims for which he now seeks compensation, and he willingly agreed to assume the risk and forego those claims, because Ms. Tanabe would not consider resuming her relationship with him unless he provided her with documented assurances that he would not take her to court and would not assert any claims against her regarding her Co-op apartment or the money he gave her. As noted above, this was the bargain to which plaintiff freely and with full knowledge agreed, and by which he is now bound. Otherwise, as the Court of Appeals cautions, releases would not be "worth the paper they are written on." Lucio v. Curran, 2 NY2d 157, 163 (1956).

Thus, since plaintiff has failed to demonstrate sufficient grounds to invalidate the release, the claims asserted against defendant Kesha Tanabe are dismissed as barred by the release.

As to defendant Curtis Tanabe, the only claim asserted against him is the third cause of action to impose a constructive trust. This claim is legally insufficient, as plaintiff fails to allege the existence of a confidential or fiduciary relationship with Curtis Tanabe, which is an essential element of a cause of action to impose a constructive trust. See Gupta v. Tech Gem Corp., 38 AD3d 445, 446 (1st Dept 2007); Krinos Foods, Inc. v. Vintage Food Corp., 30 AD3d 332, 333 (1st Dept 2006).

That portion of defendants' motion for an award of sanctions and costs pursuant to 22 NYCRR §130.1, is denied. Under the circumstances presented, it cannot be said that the filing of the complaint warrants the imposition of sanctions and costs for frivolous conduct.

In light of the foregoing determination, the court need not address the remaining grounds for dismissal raised by defendants, and plaintiff's motion for an order of attachment pursuant to [*6]CPLR 6201 is denied as moot.

Accordingly, it is hereby

ORDERED that defendants' motion to dismiss is granted, the complaint is dismissed in its entirety, and the Clerk is directed to enter judgment accordingly; and it is further

ORDERED that plaintiff's motion for an order of attachment is denied.

DATED: March 26 , 2008ENTER:

_______________________

J.S.C. Footnotes

Footnote 1:DR 7-104(A)(1) provides in relevant part as follows:

During the course of the representation of a client a lawyer shall not . . . [c]ommunicate or cause another to communicate on the subject of the representation with a party the lawyer knows to be represented by a lawyer in that matter unless the lawyer has the prior consent of the lawyer representing such other party or is authorized by law to do so.

Footnote 2:Defendants describe plaintiff's professional and business experience as follows: "Mr. Paul M. Mooney is Chief Operating Officer and Chief Financial Officer of Exporters," and has "over 20 years of insurance industry experience and has been associated with Exporters since 1995. He was previously CFO of ERisk Holdings Inc. and prior to that was SVP Finance of the Enhance Finance Services Group Inc. Mr. Mooney was educated in Ireland and spent 13 years in public accounting with both KPMG and Deloitte & Touche before joining Enhance."