Doron Realty, Inc. v Thor Realty, LLC

[*1] Doron Realty, Inc. v Thor Realty, LLC 2012 NY Slip Op 51786(U) Decided on September 13, 2012 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 13, 2012
Supreme Court, Kings County

Doron Realty, Inc. and Doron Ismailoff, Plaintiffs,

against

Thor Realty, LLC, THOR EQUITIES, LLC, SINGER CONEY, LLC, H.B. SINGER, LLC, JOSEPH SITT, HERMAN H. SINGER, DAVID DAYAN, ELIE DAYAN, and XYZ CORPORATIONS 1-10, Defendants.



4262/11



Plaintiffs' Attorney: David Wolf, Esq., Steven Landy & Associates, PLLC, 270 Madison Avenue, Suite 1400, New York, NY 10016

Defendants Thor Realty, LLC, Thor Equities, LLC, Singer Coney, LLC, Joseph Sitt, David Dayan and Elie Dayan's Attorney: Joseph Lee Matalon, Esq., Matalon Shweky Elman, PLLC, 450 Seventh Avenue, 33rd Floor, New York, NY 10127

David Schmidt, J.

Defendants Thor Realty, LLC, Thor Equities, LLC, Singer Coney, LLC, Joseph Sitt, David Dayan and Elie Dayan (collectively, the Sitt defendants) move to dismiss the Third and Fourth Causes of Action, for fraud and tortious interference, respectively, as asserted against them, by plaintiffs Doron Realty, Inc. and Doron Ismailoff (together, plaintiff), pursuant to CPLR 3016 and CPLR 3211 (a) (1), (5) and (7).

Plaintiff, a licensed real estate broker, commenced this action to recover a real estate brokerage commission for services he allegedly provided in connection with the sale of several multi-million dollar parcels of commercial real property near the boardwalk in the Coney Island section of Brooklyn. For the reasons stated below, the motion is granted.

I.Factual Background

In November 2001, plaintiff entered into an "open listing" agreement with H.B. Singer LLC (H.B. Singer) under which plaintiff would show two properties located in the Coney Island section of Brooklyn to potential purchasers or lessees in exchange for a commission if plaintiff procured a sale or rental of these properties. Subsequently, on November 21, 2001, plaintiff showed these two properties and five additional properties owned by H.B. Singer to Elie Dayan (Elie) and his father, David Dayan (David). At the time, David said that he was scouting properties for his wealthy son-in-law, a shopping mall developer, who was interesting in buying several properties to build a basketball court. Plaintiff, however, did not believe that this was the [*2]intended use as it would not be a financially practical use of two valuable waterfront properties.

After the Dayans expressed interest in all of the properties, plaintiff arranged for them to meet with Herman Singer (Singer), President of H.B. Singer, the owner of the properties. The meeting occurred on November 26, 2001. During that meeting, attended by plaintiff, Singer and the Dayans, David again disclosed that his unnamed son-in-law was interested in purchasing all of the properties. The asking price was $20 million.

Plaintiff spoke to Singer during the meeting outside the presence of the Dayans and entered into an oral agreement with Singer whereby Singer agreed that plaintiff would be paid a 6% commission for any resulting sale, whether directly or indirectly, regardless of when the sale occurred. Based on assurances from Singer and the Dayans that he would be treated as broker of record, plaintiff reluctantly allowed the parties to exchange contact information and to communicate directly.

The complaint alleges that the Dayans subsequently arranged a meeting between David's son-in-law, Joseph Sitt, and Singer. At the meeting or as a result of it, Thor Realty LLC, a company controlled by Sitt, entered into an agreement to buy the properties at terms consistent with those discussed during the November 26th meeting between plaintiff, Singer and the Dayans. Singer also agreed to pay Elie a 1% consulting fee upon closing for arranging the introduction to Sitt.

Essentially, plaintiff claims that Sitt, Singer and the Dayans conspired to keep him in the dark about the agreements that were reached to avoid paying him commission for his services. To wit, when plaintiff called Singer to ask what became of his meeting with the Dayans, Singer denied that he was ever in direct contact with the Dayans or David's son-in-law. Plaintiff then called the Dayans to ascertain why no meeting ever took place between Singer and David's son-in-law. At first, David admitted that a conversation did take place and that his son-in-law offered Singer $20 million for the properties. In a follow-up conversation, David reversed himself, stating that he did not know whether a meeting took place or if an offer was made. David continued to refuse to disclose his son-in-law's identity, but reassured plaintiff that he would contact him if a deal with Singer was ever consummated.

Plaintiff further claims that he could not have discovered the fact that the Dayans were associated with Sitt, nor could he have discovered the fact that Sitt had acquired the Properties because of certain measures Sitt may have taken to prevent public disclosure of his purchases. Such purported measures include the acquisition of real property in corporate names; the use of "option agreements" that do not have to be publicly recorded; and setting closing dates well into the future.

About six months after arranging the meeting between Singer and the Dayans, plaintiff moved overseas and stopped working as a real estate broker in New York. Plaintiff alleges that in the summer of 2010, on a return trip, he learned from a leasing manager for defendant Thor Equities, LLC (another corporate entity controlled by Sitt) that Sitt and the Dayans were in-laws and that they were, in fact, acting as Sitt's agents by scouting properties for him and his businesses. Armed with this new information, plaintiff did research and discovered that Singer had sold the properties to Sitt's entities in 2006 for a recorded sale price of $19,060,000.00.It is plaintiff's contention that, based on the agreements and understandings between plaintiff, Singer and the Dayans, he is entitled to a 6% commission of at least $1,143,600.00 for [*3]his efforts in brokering the sale of the properties.

II.Procedural History

This action was commenced on February 23, 2011. In the complaint, plaintiffs pleads four causes of action. The first cause of action, for breach of contract, is pleaded only against H.B. Singer and Singer (the Singer defendants), and alleges that plaintiff had a contract with the Singer defendants, which they breached by failing to pay a 6% commission on the purchase price of the properties. Compl. ¶¶ 51-56. The second cause of action is also against the Singer defendants alone, and seeks recovery in quantum meruit for the value of the services rendered by plaintiff to the Singer Defendants. Compl. ¶¶ 58-63.

The third cause of action, for fraud, is against all defendants and is based on a number of allegedly fraudulent statements that plaintiff relied on. The Singer defendants are alleged to have committed fraud by misrepresenting their intention to pay a commission. Compl. ¶ 65. The Dayans are alleged to have committed fraud by misleading plaintiffs about their intention to acquire the property for a basketball court. As plaintiff frames it, if the Dayans had honestly disclosed that they were scouting properties for Sitt as part of a redevelopment of the entire neighborhood, plaintiff would not have been deceived when they later claimed that no agreement had been reached among the defendants. Compl. ¶ 66. The Dayans are also alleged to have misrepresented their intention to acknowledge plaintiff as the broker of record to induce plaintiff to allow the parties to exchange contact information. Compl. ¶ 67. As well, the Dayans and the Singer defendants falsely represented to plaintiff that they did not reach an agreement regarding the sale of the properties and did so for the purpose of avoiding paying plaintiff a brokerage commission. Compl. ¶ 69.

With respect to defendants Joseph Sitt, Singer Coney, LLC, Thor Equities, LLC and Thor Realty, LLC, plaintiff alleges that the actions of the Dayans are "attributable to Sitt and his businesses" on the basis of agency principles. Compl. ¶ 68. Plaintiff also alleges that Sitt "took an active role in orchestrating the Dayans' deceit" because of Sitt's business practice of using "multiple shell corporations" and the concealment of acquisitions. Id.

Finally, the fourth cause of action, for tortious interference with contract, is asserted against the Sitt defendants alone. Plaintiff alleges, inter alia, that the Sitt defendants knew of the agreement between plaintiffs and the Singer defendants to pay a 6% commission, and "intentionally and without justification" induced the Singer defendants to breach the agreement by engaging in "actions" designed to lead the Singer defendants to breach their agreement with plaintiff. Compl. ¶ 76-79.

On each cause of action, plaintiff seeks $1,143,000 .00 (the amount due under the commission agreement with H.B. Singer) in damages and other relief. Compl. ¶¶ 56, 63, 74, 81.

III.Discussion

When determining a motion to dismiss, the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory." Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, L.L.P., 96 NY2d 300, 303 (2001). The court will not accept as true factual and legal conclusions that are "either inherently incredible or flatly contradicted by documentary evidence." Ullmann v Norma Kamali, Inc., 207 AD2d 691, 692 (1st Dept 1994). [*4]

A.Fraud

To state a claim for fraud, a plaintiff must allege (i) a material misrepresentation of fact; (ii) knowledge of its falsity; (iii) an intent to induce reliance; (iv) justifiable reliance by the plaintiff; and (iv) damages. See e.g. Art Capital Group, LLC v Neuhaus, 70 AD3d 605, 608 (1st Dept 2010).

Nevertheless, even when these elements are properly plead, "[i]t is well settled that a cause of action to recover damages for fraud does not lie when the only fraud alleged relates to a breach of contract." Jim Longo, Inc. v Rutigliano, 251 AD2d 547, 548 (2d Dept 1998).

Here, plaintiff claims that he reasonably relied to his detriment on promises and representations made by defendants by providing brokerage services and putting the parties into direct contact with one another. Compl. ¶ 71. This allegation, however, goes to the heart of, and is not merely collateral to, plaintiff's breach of contract claim. See Compl. ¶¶ 52-56. As defendants correctly observe, the alleged fraud is simply the means by which plaintiff alleges the contract was breached. See Powers Mercantile Corp. v Feinberg, 109 AD2d 117, 120 (1st Dept 1985) (fraud claim duplicative when it is merely "the means of accomplishing the breach").[FN1] Accordingly, even assuming the truth of the allegations in the complaint, plaintiff cannot, as a matter of law, maintain his fraud claim, and it is dismissed.

B.Tortious Interference with Contract

As previously discussed, plaintiff's tortious interference claim alleges that the Sitt defendants tortiously induced the Singer defendants to breach their agreement with plaintiff or otherwise prevented the Singer defendants from meeting their contractual obligation to plaintiff.

In an affidavit submitted in opposition to the motion, plaintiff states his belief that the Sitt defendants and Singer defendants agreed to breach the listing agreement with the purpose that nonpayment of plaintiff's commission would serve as a set-off to the purchase price of the properties, with the Sitt defendants paying less and the Singer defendants netting more from the sale. See affidavit of Doron Ismailoff, sworn to May 27, 2011, ¶¶ 13-14.

Defendants challenge this claim on two grounds. First, defendants argue that the claim is time barred. Defendants further argue that the claim is defective for the reason that a necessary element of the claim, "but for" causation, is not adequately plead. The court addresses each argument in turn.

1. Statute of Limitations

A claim for tortious interference must be filed within three years of the original breach of contract. Sinap Corp. Inc. v Cafagno, 302 AD2d 588, 588 (2d Dept 2003).

Here, as alleged, the Singer defendants' failure to pay plaintiff a 6% commission upon closing occurred, at the latest, when the contract for the sale of the properties closed in September 2006, more than four years before the lawsuit was filed. Therefore, according to defendants, plaintiff had until September 2009 to file this cause of action, and it must now be dismissed as untimely.

In opposition, plaintiff argues that the Sitt defendants should be precluded from raising a statute of limitations defense based on the doctrine of equitable estoppel. In this regard, plaintiff [*5]asserts that the Dayans actively deceived him about their plans for the property, concealed Sitt's identity, denied that any offer had been made or accepted, and promised him that they would inform him if a sale was consummated. As a result of these deceptions, plaintiff argues, persuasively, that he was unaware of the true facts forming the basis of his claims until after the applicable time period expired. Thus, according to plaintiff, defendants should not be permitted to invoke the statute of limitations as a defense. See Zumpano v Quinn, 6 NY3d 666, 673 (2006) (barring statute of limitations defense " where it is the defendant's affirmative wrongdoing . . . which produced the long delay between the accrual of the cause of action and the institution of the legal proceeding'") (quoting General Stencils v Chiappa, 18 NY2d 125, 128 [1966]).

Although defendants contend that equitable estoppel is unavailable in the absence of fiduciary relationship, and no such relationship between the Sitt defendants and plaintiff is alleged, that is only where the wrongdoing involves a failure to disclose. Id. at 675. While, admittedly, plaintiff herein does claim that he was misled because of the Dayans' failure to identify their son-in-law, that is not the entire basis for plaintiff's estoppel argument. The Dayans also represented to plaintiff that no offer had been made as a result of any subsequent meetings or conversations and that they would keep plaintiff posted as to any developments. Plaintiff had adequately alleged that he reasonably relied on these representations and promises to his detriment. Consequently, the Sitt defendants are barred from asserting a statute of limitations defense.

2. "But For" Causation

To adequately allege a claim for tortious or intentional interference with a contract, a plaintiff must allege (1) the existence of a valid contract between the plaintiff and a third party, (2) defendant's knowledge of that contract, (3) defendant's intentional procurement of the third party's breach of contract without justification, (4) actual breach of contract, and (5) damages resulting therefrom. Israel v Wood Dolson Co., 1 NY2d 116, 120 (1956).

As well, the plaintiff must specifically allege that the contract would not have been breached "but for" the defendant's conduct. See Ferrandino & Son, Inc. v Wheaton Builders, Inc., LLC, 82 AD3d 1035, 1035 (2d Dept 2011); Washington Ave. Assocs., Inc. v Euclid Equipment, Inc., 229 AD2d 486, 486 (2d Dept 1996).

As applied to the instant action, plaintiff must plead facts showing that, but for the Sitt defendants' tortious conduct, the Singer defendants would have paid a $1 million commission to plaintiffs. Ferrandino & Son, 82 AD2d at 1035 ("Although allegations on a motion to dismiss . . . should be construed liberally, to avoid dismissal of a tortious interference with contract claim, a plaintiff must support his claim with more than mere speculation."); Burrowes v Combs, 25 AD3d 370, 373 (1st Dept 2006) (same).

Here, plaintiff does not plead facts, as opposed to offering "mere speculation" that, but for the Sitt defendants' actions, the Singer defendants would have honored their commission agreement with plaintiff. Thus, plaintiff's unsupported contention that the Sitt defendants instigated the Singer defendants' breach of their agreement with plaintiff is insufficient to state a cause of action against the Sitt defendants for tortious interference with contractual relations.

Accordingly, it is

ORDERED that defendants Thor Realty, LLC, Thor Equities, LLC, Singer Coney, LLC, Joseph Sitt, David Dayan and Elie Dayan's motion to dismiss the third and fourth causes of [*6]action of the complaint, as asserted against them, is granted.

Dated:September 13, 2012

ENTER:

_______________________

J.S.C. Footnotes

Footnote 1: Additional evidence of the redundancy of the fraud claim can be inferred from the identical amount, $1,143,000 .00, that both claims allege as damages.