Malaty v Malaty
Annotate this CaseDecided on March 2, 2010
Supreme Court, Kings County
Naguib Guirguis Malaty, Plaintiffs
against
Makram N. Malaty, Defendant.
48103/03
Plaintiff
Enedina Pilar Sanchez, Esq.
Astoria NY
Defendant
Tilem & Campbell, LLP
Peter H. Tilem, Esq.
White Plains NY
Arthur M. Schack, J.
In this action between two brothers, plaintiff NAGUIB GUIRGUIS
MALATY (NAGUIB) seeks: equitable relief directing defendant MAKRAM N. MALATY
(NICK) to turn over to plaintiff all ownership operation and control of the premises located at
338 Knickerbocker Avenue, Brooklyn, New York, which plaintiff alleges he owns as the sole
shareholder of a corporation known as "Sphinx of New York Real Estate Corp."
(SPHINX NEW YORK); money damages of $150,000.00, which plaintiff alleges he
gave to defendant for SPHINX NEW YORK's purchase of 338 Knickerbocker Avenue,
Brooklyn, New York; money damages of $217,000.00, which plaintiff alleges is owed to him as
the sole shareholder of a corporation known as "CLEOPATRA REAL ESTATE CORP."
(CLEOPATRA), as a result of CLEOPATRA's sale of the premises located at 1437-1439 De
Kalb Avenue, Brooklyn, New York; and, punitive damages of $1,000,000.00 for defendant's
[*2]willful conduct against plaintiff.
The Court conducted numerous pre-trial conferences and conferences during the course of the trial with counsel for both plaintiff and defendant. A bench trial was conducted on six days - August 9, 2007, October 15, 2007, November 5, 2007, September 23, 2008, September 24, 2008 and November 3, 2008. After numerous post-trial conferences with opposing counsel, I ordered counsel for the opposing parties to submit proposed findings of fact, conclusions of law and any other submissions they desired the Court to review. Both sides submitted papers to the Court in December 2009. I reserved decision. After a review of the trial transcript, all the evidence presented at trial, and all papers submitted for review, I make the following findings of fact and conclusions of law.
Findings of fact
Plaintiff claims that he is
the owner of two corporations, SPHINX NEW YORK
and CLEOPATRA, and 338 Knickerbocker Avenue, as well as the former owner of
1437-1439 De Kalb Avenue, are against the weight of the credible evidence. Further, plaintiff's
claims of real estate ownership fail to comply with the Statute of Frauds for real estate, codified
in General Obligations Law (GOL) § 5-703 (1).
The three main witnesses at the trial were plaintiff, defendant, and their nonparty brother, MAGDI MALATY (MIKE). There is a history of personal animus by plaintiff NAGUIB and nonparty MIKE against defendant NICK. It is undisputed that NAGUIB and MIKE no longer have any relationship with NICK and in the past their sibling disputes have led to arrests and criminal and civil cases between and among them in various courts in the United States and Egypt. The testimony of NAGUIB and MIKE, as well as the evidence, must be evaluated in the context of the personal animosity and litigation between the MALATY brothers.
The only other witness at the trial was Marilyn Garcia, the former owner of 338 Knickerbocker Avenue. Ms. Garcia attended the August 18, 2000 closing for her sale of 338 Knickerbocker Avenue to "Sphinx of NY Realty Corp." (SPHINX NY). The Court notes that the August 18, 2000-deed (recorded at Reel 4983, Page 1255 in the Kings County Office of the City Register, on October 12, 2000) is to SPHINX NY, not SPHINX NEW YORK, the corporation alleged in the complaint as having purchased 338 Knickerbocker Avenue. Also, the closing statement indicates that the purchaser was SPHINX NY and the corporate kit presented in evidence was for SPHINX NY, not SPHINX NEW YORK.
Ms. Garcia testified that she owned 338 Knickerbocker Avenue from the late 1970's until 2000 [8/9/07 tr., p.100]. Further, she negotiated with NICK and sold the building to NICK because she moved to Florida and found it difficult to be an absentee landlord [8/9/07 tr., pp.102 - 103]. The following colloquy took place [8/9/07 tr., p. 103, line 20 - p. 105, line 15]:
Q. Was Makram Malaty, the person you know as Nick, was he present at
the closing?
A. He was present. Yes.
Q. Was he the purchaser at the closing? [*3]
A. Yes.
Q. Was there anyone else there that was a purchaser at the closing?
A. No.
Q. Did you ever deal with anyone else?
A. No.
THE COURT: Are you familiar with the Sphinx Realty Corporation of
New York?
THE WITNESS: They were the corporation, his corporation that he
purchased the building under.
Q. Did you ever show the - - withdrawn. Did you ever meet Nick's
brother Naguib?
A. Who is Naguib? I know his brother - - his only bother that I know is
Mike who used to work in the store with him.
THE COURT: Mike I take it being Magdi.
MR. TILEM [Defendant's counsel]: Right.
Q. Do you know if Mike's true name is Magdi Malaty?
A. I don't know. I know him as Mike.
THE COURT: Do you know a third brother named Naguib?
THE WITNESS: No.
THE COURT: You never met him before?
THE WITNESS: No.
Q. And, therefore, as far as you know, he never was in your building or
looked at your building?
A. No.
MS. SANCHEZ [Plaintiff's counsel]: Who's he?
THE COURT: Naguib.
Q. Do you know Mike Malaty?
A. Yeah, he worked for Nick.
Q. And how do you know Mike Malaty?
A. Because I had my business in the building at 338 Knickerbocker. I
owned an insurance agency and he was my next door neighbor for many
years. So I know him and that's how I know Nick. And Mike used to [*4]
work for Nick in the store.
THE COURT: So they're neighbors, business neighbors?
THE WITNESS: Neighbors, correct.
Defendant NICK testified that he was the President and sole shareholder of CLEOPATRA
[8/9/07 tr., p. 5] and the source of funds for the down payment on the 338 Knickerbocker
Avenue property was from his business, Nick's Electronics [11/5/07 tr., p. 9]. Further, he claimed
that various checks he received from plaintiff and used for the purchase of 1437-1439 De Kalb
Avenue were gifts [8/9/07 tr., p. 25]. NICK also testified that plaintiff NAGUIB sent him
$150,000.00 from Egypt, through their mother's Citibank account in New York, at the time
SPHINX NY purchased 338 Knickerbocker Avenue, but the money was not for the purchase of
338 Knickerbocker Avenue [8/9/07 tr., pp. 35 -
36].
NICK testified that he did not have any agreements with his brother NAGUIB with respect to the purchase of real estate. He answered questions about this [11/5/07 tr., p. 39, line 8 - p. 40, line 17]:
Q. Did your brother, NAGUIB, give you any money to use to purchase
this property, Cleopatra Real Estate?
A. No.
Q. Did you have any agreement with your brother to - - withdrawn.
Did you have any written agreement with your brother to share the
profits or the rents or the income from Cleopatra Real Estate?
A. No.
Q. Did you have any oral agreement with your brother to share the profits,
the rents or any of the income from Cleopatra Realty?
A. No.
Q. Now with respect to Sphinx of New York Real Estate, did your brother,
Naguib, select this property?
A. No.
Q. Did your brother give you any money with which to purchase the
property?
A. No.
Q. Did you have any written agreement between you and your brother,
Naguib, for you to share any of the income of the profits or rents with him?
A. No.
Q. Did you have any oral agreement with your brother, Naguib, with [*5]
which to share - - in which your were to supposed to share any of the rents,
income or profits?
A. No.
Q. Did you have the agreement that your brother, Naguib, was going to
own any part of either Cleopatra Real Estate or Sphinx of New York Real
Estate?
A. No.
Q. Did you have any agreement that he was going to own any part of
either of the buildings that were purchased by Cleopatra Real Estate or
Sphinx of New York Real Estate?
A. No.
Moreover, NICK testified [9/23/08 tr., p. 94, lines 12 - 23]:
Q. Now, Mr. Malaty, did you ever have an agreement with your brother
Naguib to invest money in real estate on his behalf?
A. No.
Q. Did you have any oral understanding, oral, not written understanding
that you would invest any money on his behalf to purchase real estate?
A. No.
Q. And was anything ever written down about any kind of agreement to
make investments on his behalf?
A. No.
The corporate records of SPHINX NY, the purchaser of 338 Knickerbocker Avenue, and CLEOPATRA, the former owner of 1437-1439 De Kalb Avenue, were presented in evidence.The Court found that these corporate records had little or no value. The Court observed that "it's established that the corporate minutes of both corporations, to put it mildly, are a shambles" [8/7/09 tr., p. 48, lines 4 -6].
During defendant Nick's testimony, when the CLEOPATRA corporate records were presented to the Court, by NICK's counsel, the following was placed on the record [8/9/07 tr., p. 41, line 8 - p. 43, line 6]:
Q. With regard to - - let me ask you this, Mr. Malaty. Who is the owner
of 100 percent of the shares of Cleopatra Realty?
A. I am the owner of the shares.
Q. And is there anything in the corporate book that would indicate that
you are the owner of 100 percent shares of Cleopatra Realty? [*6]
A. Yes.
Q. What is that?
A. The Cleopatra Real Estate shareholders. I have it.
MR. TILEM: For the record, your Honor, my client has opened up the
corporate book and showed me a stock certificate.
THE COURT: Can I see that?
MR. TILEM: Yes.
THE COURT: I think we're going to cut to the chase. All right. That's a
stock certificate which has been shown to the Court showing that Makram
Malaty owns 200 shares of Cleopatra Real Estate, Corp., no par. There's a
scrawl or signature. I don't know who the president is. It's slightly
different actually. Might have been the same person who is the secretary.
Who issued the stock certificate? And I want to be clear for the
record, that with respect to the stock registration ledger, which I can look
up in connection to the business incorporation, there are no entries. So
this might as well be likened to Charmin or Scott, take your pick. That's
what it is worth from a legal point of view. This corporation has no bylaws
attached, never filed Sub-Chapter S. I don't know what the tax situation
was as a corporation.
Furthermore, the incorporation form according to this was never
signed, the statement of incorporation. They're boilerplate. There are
boilerplate bylaws. It also has a section to attach the receipt, certificate of
incorporation and receipt from the New York State Department of State,
not here. All I know is there's a stock certificate. Big deal. There's a seal..
I don't know if there's anything from New York State . . .
So as far as I'm concerned, there is no proof that this corporation
ever existed. So this is worth whatever it's worth, which, at this point in
time, is not too much.
Further, during NICK's testimony, when the SPHINX NY corporate records were
placed in evidence, the following was placed on the record [8/9/07 tr., p. 45, line. 22
- p. 47, line 15]:
THE COURT: So at least we have a certificate of incorporation.
Sphinx has one from the New York State Department of State, [*7]
Division of Corporations. The fact that there's a filing for an incorporation - -
Sphinx appears was incorporated. All right. Sphinx was incorporated in
June, looks like June 20th of 2000.
THE WITNESS: This is tax ID form.
THE COURT: This is meaningless. Did you get its from the IRS?
THE WITNESS: Yes.
THE COURT: You have the IRS document?
THE WITNESS: I still have to put it.
THE COURT: You don't have it. All it is is there's an application, SS-4
application signed by Makram Malaty, June 26, 2000 for an ID number.
That's all it is. Doesn't mean you have one. Who knows when this was
even filled out. But the point is, the corporate kit shows or appears to
show Mr. Malaty issued himself twenty shares and that's it.
Anybody else get the other 180 shares? Did anybody else get the
180 shares?
THE WITNESS: I understand it's twenty. Four pages, five pages. Each
one is twenty shares.
THE COURT: Did anyone else or was anyone else issued shares?
THE WITNESS: No.
THE COURT: Because I looked at the stock register and there is no entry
on the stock register. There is, according to the minutes and the bylaws
boilerplate, somebody wrote in the word Sphinx on the first page. A note
too that somebody filled out form minutes of the first meeting of the Board
of Directors held on June 26, 2000, 3 p.m. at 228 Montrose Avenue,
Brooklyn, New York. The following directors constituting a quorum were
present, totally blank. The meeting was called to order and blank was called
to act as chairman and blank as secretary of the meeting. No shares issued.
No signature.
These minutes are worthless. I take judicial notice that they're
worthless and that there are no minutes of anything. It is what it is.
Plaintiff NAGUIB was not able to testify that he had any written agreement with NICK to invest in any real estate venture. With respect to the De Kalb Avenue property, plaintiff's [*8]counsel asked NAGUIB the following question and elicited the following answer [8/9/07 tr., p. 50, lines 6 - 14]:
Q: Mr. Malaty can you please tell the Court what was your arrangement
with your brother Makram Malaty, with regard to the property on De Kalb
Avenue in Brooklyn?
A: I had an agreement with Makram and Magdi Malaty as well, my second
brother, that I would be sending them money in order for them to buy me
a house, a building or house, a building in order to invest this money.
Thus, plaintiff alleged that he had a contract not only with defendant but with MIKE. For
reasons unknown to the Court, MIKE was not named in the instant action as a
defendant.Further, the following colloquy took place during plaintiff NAGUIB's
cross-examination [10/15/07 tr., p. 54, line 21 - p. 55, line 9]:
Q. With regard to now Cleopatra Realty and the property in De Kalb
Avenue, do you have any written evidence of any agreements between you
and your brother that you are an owner or the owner of the property on De
Kalb Avenue or of Cleopatra Realty Corporation?
A. I take the money which was my money, and I went and I bought the
property. There was no agreement. I was the owner and I was the owner
of the money.
THE COURT: But there's nothing in writing, that's the question. Is there
anything in writing?
THE WITNESS: There's nothing in writing. Between whom and whom?
Are we partners? We are not partners. I am the sole owner, all right.
A similar colloquy about the lack of any written agreement for the De Kalb Avenue
property took place during plaintiff NAGUIB's cross-examination [10/15/07 tr., p. 48, line 15 -
p. 50, line 1]:
Q. So the question is do you have any written evidence to show that that
statement in the complaint that you're a one hundred percent shareholder
of Cleopatra Real Estate Corporation?
A. All the payment made for De Kalb company were issued from me and
from my bank account. Anyone else who claims otherwise, let him show
me the proof. Anyone who paid any money, let him show me.
THE COURT: That's not the question. The question is not that people are [*9]
going to show you. The question is do you have any documentation
evidencing the fact that you are the sole shareholder of Cleopatra Real
Estate Corporation. It's that simple.
A. He was managing along with my other brother all the affairs of the
business.
THE COURT: Let's try a third time.
Do you have any piece of paper that shows that you are the sole
shareholder of Cleopatra Real Estate Corporation?
THE WITNESS: He took all the papers from the house and went away.
THE COURT: Let's assume he took all the papers from the house. At
any time was there a piece of paper that said you are the sole shareholder
of the Cleopatra Real Estate Corporation?
THE WITNESS: I trusted them, both of them, and I did not look, so - -
THE COURT: I'm just trying to get a simple yes or no answer.
Is there a piece of paper either existing now or previously existing
that show you own, you're the sole shareholder of Cleopatra Real Estate
Corporation? That's all I want to know.
THE WITNESS: I cannot remember that at the present time.
With respect to the Knickerbocker Avenue property, the following exchange took place [8/9/07 tr., p. 58, line 23 - p. 59, line 14]:
Q: Mr. Malaty, what was your arrangement with your brother with regard
to the property at Knickerbocker Avenue?
A: I came to an agreement with him to give him $160,000 as a part - - as a
portion for my participation in the purchase of the property on Knickerbocker.
THE COURT: Is this agreement to give him $160,000 in writing?
THE WITNESS: I sent him $40,000 - -
THE COURT: That's not my question.
Is there a written agreement, I will give Makram Malaty $160,000
to buy investment property on Knickerbocker Avenue?
THE WITNESS: No, was not a written agreement.
Plaintiff NAGUIB testified that he gave his brother NICK $160,000.00 in checks and money orders for the Knickerbocker Avenue property by using MIKE as a conduit to deliver them [8/9/08 tr., pp. 92 -93]. Plaintiff, when asked if he had copies of these money orders, [*10]answered, "All the evidence, all the copies were stolen from my mother's house" [8/9/07 tr., p. 92, lines 12 -13]. Plaintiff NAGUIB testified that he told his original counsel that he was the sole shareholder of "Sphinx of New York Real Estate" [8/9/07 tr., p. 93] but could not produce a stock certificate because "all these proofs are with Makram. And I have confidence in him. He's the one who has all these things" [8/9/07 tr., p. 94, lines 5 -7]. Further, Plaintiff NAGUIB testified during his cross-examination, that did not have any written agreement with defendant NICK about investing in the Knickerbocker Avenue property. NAGUIB testified as follows, during his cross-examination [10/15/07 tr., p. 35, line 7 - p. 36, line 3]:
Q. Dr. Malaty, do you have any evidence, any written agreement that you
own an interest in 338 Knickerbocker Avenue? . . .
A. I paid $160,000.
THE COURT: The question is do you anything in writing, correct, Mr.
Tilem?
MR. TILEM: That is correct your Honor.
A. I am the president of this house.
THE COURT: You're not answering the question.
A. And I have a paper.
THE COURT: Please answer the question.
Do you have something in writing to show that you're one of the
owners of that property?
THE WITNESS: The whole transaction was between brothers. That's
why I did not pay much attention on having a paper, a written paper.
Moreover, plaintiff NAGUIB also testified during his cross-examination [10/15/07
tr., p. 46, line 7 - p. 47, line 6]:
Q. Paragraph four of your complaint says that in 2000 the plaintiff, you,
"directed the defendant to purchase a property in the name of Sphinx of
New York Real Estate Corporation, premises known as 338 Knickerbocker
Avenue, Brooklyn, New York."
Is that statement true or false?
A. If this is mentioned in the complaint, then it should be true.
Q. Okay. So, you specifically told your brother to purchase 338
Knickerbocker Avenue?
A. We agreed, both of us, to buy this place.
Q. So, then are you saying that what's written in paragraph four is not [*11]
true?
A. What is written?
Q. That in 2000 "the plaintiff directed the defendant to purchase a property
in the name of Sphinx of New York Real Estate Corporation, premises known
as 338 Knickerbocker Avenue, Brooklyn, New York?"
A. It was an agreement, an agreement between him and me.
Q. Okay, do you have anything in writing that you have an agreement with
your brother Makram to purchase 338 Knickerbocker Avenue together, yes
or no?
A. I answered previously that we are brothers and that there are no written
papers between us.
The following colloquy took place when plaintiff NAGUIB, testified about using MIKE as a middleman to transmit move money to NICK [8/9/07 tr., p. 94, line 8 - p. p. 96, line 7]:
Q: Let me ask you, sir, you indicated that - - I'm sorry. I don't recall your
testimony. How much in money orders do you claim that you provided at
the closing for 338 Knickerbocker? Just in money orders.
A. I thought it's 150,000, but it's 120,000.
THE COURT: I'm curious, for the moment. Why did you use all these
different money orders? I'm perplexed.
THE WITNESS: Magdi took care of these things, these issues, and I was - -
THE COURT: So Magdi's the middleman. You gave the money to Magdi.
Are you saying that you gave the money to Magdi and then Magdi gave the
money to Makram?
THE WITNESS: I gave the money to Magdi and Magdi gave Makram the
money orders.
THE COURT: But you said earlier that you made an agreement orally with Makram, that you gave him $160,000 toward the Knickerbocker purchase,
correct?
THE WITNESS: Yes.
THE COURT: So why didn't you give him $160,000 in one check? Why
are you going through a middleman? [*12]
THE WITNESS: I don't know, but that's what happened, your Honor.
THE COURT: You don't know. It's very perplexing.
Q. In what form did you give Magdi Malaty the money.
MS. SANCHEZ: Objection, your Honor.
THE COURT: Overruled.
A. Each time I come to the U.S., I come to the U.S., I visit the U.S. or
my mom come to visit to me or Magdi come to visit me in Egypt, when
Makram comes to see me, I send them whatever money I have - -
THE COURT: Were these cash transaction?
THE WITNESS: - - in order to invest them.
THE COURT: When you gave the money to Makram or Magdi were they
cash transactions or were they checks or money orders?
THE WITNESS: Any amount of money that I would save and I had in
Egypt in cash or whatever and the amount of money that I save in Egypt
I give it hand - - from hand-to-hand to my brother when he comes to visit.
THE COURT: Magdi or Makram?
THE WITNESS: Magdi, Makram, my mother, myself.
Plaintiff NAGUIB gave evasive answers on cross-examination about whether or not he paid income taxes for income earned in the United States. He answered the following question [10/15/07 tr., p. 17, line 25 - p. 18, line 5]:
Q. Do you know how many years, for how many years you paid income
taxes to the United States?
A. I never preoccupied myself with these matters but I am confident
that Magdi was making all the necessity for that. But, I do not remember
at the present moment any dates. That's all.
Defendant NICK testified in his redirect, at the November 5, 2007 proceedings, that he used the power of attorney given by NAGUIB to him to invest in the Knickerbocker Avenue and De Kalb Avenue properties in an effort to hide his assets from his wife during their divorce proceedings. He claimed that the third brother, MIKE, suggested this to him [11/5/07 tr., p. 114] and then turned on him in Family Court proceedings about visitation with his daughter [11/5/07 tr., p. 115].
Further, defendant NICK, on his recross, admitted that he used NAGUIB's name on bank [*13]accounts and documents with respect to CLEOPATRA and SPHINX NEW YORK. He answered the following question [9/23/08 tr., p.78, line 15 - p. 79, line 2]:
Q. And why did you do that?
A. I go back to 1996. Since I got sick, I went to the mental institution.
My brother Naguib Malaty, he take over my business, completely, all my
finance, and they were about to take me back again to Egypt during my
episodes. And they have some cash money business reported under their
names and they move part of it to Egypt, and they kept part under their
name. They give me power of attorney to have access to my money.
Naguib, he give me power to have my money in his name in Citibank
account. I deposited it and I withdraw. And when I start to feel okay at
the end of 2002, I start to get back again my money, my finance, and he
start to give me this kind of lawsuit.
Plaintiff called the third brother MIKE as a witness. MIKE admitted that he testified against his brother NICK in both Criminal Court and Family Court [9/24/08 tr., pp. 152 - 161]. Further, he admitted that he no longer communicates with NICK [9/24/08 tr., p. 156]. It is clear that MAGDI is biased against his brother NICK.
Plaintiff NAGUIB asks this Court for equitable relief and comes to the Court with "unclean hands." While alleging an oral agreement with defendant, it appears that he was possibly engaging in money laundering and evading payment of income tax on his earnings. His evasive testimony, reliance on his brothers, and claims that NICK stole checks and money orders demonstrate a lack of credibility. Further, NAGUIB is unable to overcome the burden of establishing a contract for the purchase of real estate, pursuant to the Statute of Frauds, GOL § 5-703.
Defendant NICK's testimony about hiding assets from his wife during a messy
matrimonial proceeding, by using CLEOPATRA and SPHINX OF NY and
plaintiff's power of attorney given to him to move money, might be of questionable morality, but
the Court finds this to be a credible explanation. The burden of proof is on plaintiff NAGUIB to
demonstrate that he has a contract or contracts with defendant NICK, which plaintiff NAGUIB
failed to meet. Therefore, judgment is granted to defendant NICK and the instant action is
dismissed.
Conclusions of Law
First,
Plaintiff NAGUIB, in his first cause of action, seeks equitable relief
directing defendant NICK to turn over to him all ownership operation and control of
the premises located at 338 Knickerbocker Avenue, Brooklyn, New York, which plaintiff alleges
he owns as the sole shareholder of SPHINX NEW YORK. However, "the party seeking equity
must do equity, i.e., he must come into court with clean hands (Grosch v Kessler, 256
NY 477 [1931]; [*14]Haskins v Thomajan, 99 AD2d 463
[2d Dept 1984]; Muscarella v Muscarella, 93 AD2d 993 [4d Dept 1983])." (Pecorella
v Greater Buffalo Press, Inc., 107 AD2d 1064, 1065 [4d Dept 1985]. It is clear that plaintiff
NAGUIB regularly sent large sums of cash to the United States from Egypt and claims not to
understand the tax consequences. He is an educated man and a dentist in Cairo. Thus, his
testimony flies in the face of common sense and logic. Plaintiff NAGUIB lacks the requisite
clean hands to seek equitable relief. "When equitable relief is sought, moral
considerations of fundamental importance require that the litigant come into court
with clean hands.'" (Tepfer v Berger, 119 AD2d 668, 669 [2d Dept 1986]).
Second, Plaintiff answered the following question, as recited above [8/9/07 tr., p. 50, lines 6-14] about his alleged contract with respect to the De Kalb Avenue property:
Q: Mr. Malaty can you please tell the Court what was your arrangement
with your brother Makram Malaty, with regard to the property on De Kalb
Avenue in Brooklyn?
A: I had an agreement with Makram and Magdi Malaty as well, my second
brother, that I would be sending them money in order for them to buy me
a house, a building or house, a building in order to invest this money.
However, for some reason brother MIKE was not made a party to this action when
he should have been a defendant. Therefore, nonparty brother MIKE as a party to an alleged
contract is a necessary party to the instant action. Plaintiff has failed to join a necessary party.
(CPLR § 1001). Therefore, the complaint must be dismissed. "The court may at any stage
of a case and on its own motion determine whether there is a nonjoinder of necessary parties."
(Lezette v Board of Ed., Hudson City School Dist., 35 NY 272, 282 [1974]). (See Jim Ludtka Sporting Goods, Inc. v
City of Buffalo School Dist., 48 AD3d 1103, 1003-1104 [4d Dept 2008]). "The
plaintiff's duty to the Court is to bring in all
parties necessary to a complete determination and the court should aid him."
(Clark v Flinn & Co., 230 AD 698, 699 [3d Dept 1930]).
Finally, plaintiff has failed to comply with the Statute of Frauds for real estate contracts. GOL § 5-703 (1) states:
An estate or interest in real property, other than a lease for a term not
exceeding one year, or any trust or power, over or concerning real
property, or in any manner relating thereto, cannot be created, granted,
assigned, surrendered or declared, unless by act or operation of law, or
by a deed or conveyance in writing, subscribed by the person creating,
granting, assigning, surrendering or declaring the same, or by his [*15]
lawful agent, thereunto authorized by writing. But this subdivision
does not affect the power of a testator in the disposition of his real
property by will; nor prevent any trust from arising or being extinguished
by implication or operation of law, nor any declaration of trust from
being proved by a writing subscribed by the person declaring the same.
More than one hundred years ago, the Appellate Division, Second Department
(Hagedorn v Lang, 24 AD 117, 118-119 [1898]) could have been discussing plaintiff's
claims when
it instructed:
The purpose of the Statute of Frauds is sufficiently indicated by
its title. It is a statute against frauds. It was designed to prevent
litigation over oral agreements, where the terms are always dependent
upon the uncertain and varying memory of witnesses. This evil was to
be remedied by the reduction of the terms of the contract to writing, so
that the parties might not misunderstand the particulars of the contract
which they were making; that no one might be induced to enter a court
of justice to vex the peace of his opponent without clear and definite
evidence of the terms of the contract which formed the ground of
action, equally accessible to both parties and to the court; and that
perjury might not be invited to sustain a claim which never had any
real existence.
Moreover, with respect to plaintiff's claims, "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." (Spodek v Riskin, 150 AD2d 358, 359 [2d Dept 1989]). It is clear that plaintiff NAGUIB failed to demonstrate that he had any agreement, written or even oral, with defendant NICK about the subject Knickerbocker Avenue and De Kalb Avenue properties.
Plaintiff's counsel argues, in her post-trial brief, that GOL § 5-703 (4) applies to the instant action. GOL § 703 (4) states, "[n]othing contained in this section abridges the powers of courts of equity to compel the specific performance of agreements in cases of part performance." She claims that the action of defendant NICK in using a power of attorney from plaintiff NAGUIB and the convoluted financial transactions between the parties demonstrates partial performance. However, to find partial performance, "[t]he performance must be unequivocally referable to the agreement." (Messner Vetere Berger McNamee Schmetterer Euro RSG Inc. v Aegis Group PLC, 93 NY2d 229, 235 [1999]). (See Mackenzie v Croce, 54 AD3d 825 [2d Dept 2008]). However, there are no written or oral agreements between plaintiff NAGUIB and defendant NICK in the instant action. Moreover, the Court found that plaintiff NAGUIB comes [*16]to the Court with unclean hands and cannot be the beneficiary of equitable relief. The Appellate Division, Second Department, in Urgo v Patel (297 AD2d 376, 378, [2002], quoting Messner Vetere, instructed that "[a]n agreement which violates the statute of frauds may be enforceable where there has been part performance unequivocally referable' to the contract by the party seeking to enforce the agreement."
Also, to find partial performance, "the actions alone must be unintelligible or at least
extraordinary,' [and] explainable only with reference to the oral agreement (Anostario v
Vicinanzo, 59 NY2d 662, 662 [1983]; quoting Burns v McCormick, 233 NY 230,
232 [1922]; see Adelman v Rackis, 212 AD2d559, 561 [2d Dept 1995])." (Pinkava v Yurkiw, 64 AD3d 690,
692 [2d Dept 2009]. (See Nicolaides v Nicolaides, 173 AD2d 448 [2d Dept 1991]). None
of the possibly nefarious financial transactions between the parties is "unequivocally referable"
to any written or oral agreements between the parties.
Conclusion
Accordingly,
it is
ORDERED, that after conducting a bench trial in the instant action and reviewing the trial
transcript, all of the evidence presented at trial, and the post trial briefs submitted,
judgment is granted to defendant MAKRAM N. MALATY and the instant action is
dismissed.
This constitutes the Decision and Order of the Court.
ENTER
___________________________
HON. ARTHUR M. SCHACKJ. S. C.
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