Lax v Design Quest N.Y., Ltd.

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Lax v Design Quest N.Y., Ltd. 2013 NY Slip Op 31937(U) August 14, 2013 Supreme Court, New York County Docket Number: 105299/11 Judge: Manuel J. Mendez Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SCANNED ON 811912013 SUPREME COURT OF THE STATE OF NEW YORK PRESENT: - NEW YORK COUNTY PART 13 MANUEL J. MENDEZ Justice SUSAN and STEVEN LAX, Plaintiffs, -against- LUG 19 2Ol3 105299/11 08-07-2013 003 INDEX NO. MOTION DATE MOTION SEQ. NO. MOTION CAL. NO. DESIGN QUEST N.Y., LTD., RICHARD RUBENS, and BARBARA RUBENS. CLERK'S OFFICE Defendants. NEW W R K 2 The following papers, numbered 1 t o 1 were read on this motion tolfor renew motion to dismiss complaint and cross-motion for a default judgment: PAPERS NUMBERED Notice of Motion/ Order t o Show Cause Answering Affidavits - Exhibits - Affidavits cross motion 1-4 5 - 7, 8- 9 10 - 11,12 Replying Affidavits Cross-Motion: - Exhibits ... X Yes No Upon a reading of the foregoing cited papers, it is Ordered that defendants' motion pursuant t o CPLR §2221[el seeking t o renew and reargue their prior motion t o dismiss the complaint, and t o dismiss plaintiff's third cause of action for unjust enrichment, is denied. Plaintiff's motion t o enter a default judgment on the second and third cause of action asserted in the amended complaint, is denied. Defendants seek an Order pursuant to CPLR 2221[el seeking leave t o renew and reargue their motion t o dismiss the complaint pursuant t o CPLR § 321 1[a1171 for failure t o properly state a cause of action and CPLR §3016[bI, for failure t o allege their claims of fraud. Pursuant t o CPLR § 3211[a1[11,[71 defendants also seek t o dismiss plaintiff's third cause of action for unjust enrichment based on the existence of an enforceable written contract. Alternatively, defendants seek an extension of time t o serve and file an answer t o the amended complaint. Plaintiffs oppose the motion and cross-move t o enter a default judgment against the defendants on the first cause of action for breach of contract and second causes of action for fraudulent billing asserted in the amended complaint and for sanctions based on frivolous practice. Plaintiffs do not seek t o obtain a judgment on their third cause of action for unjust enrichment. Defendants motion t o dismiss was previously granted by this Court's Decision and Order entered on January 25, 2012 (Mot. Exh. 6). Plaintiffs appealed and on December 6, 2012, the Appellate Division, First Department modified the decision, reinstating plaintiff's claim for breach of contract and allowing the re-pleading of the cause of action for fraudulent billing (Cross-Mot. Exh. 5). [* 2] The resolution of an issue by the appellate court on a prior appeal is, "law of the case and is binding on the Supreme Court as well as the appellate court." No further examination of the issues can be made without a showing of subsequent evidence or a change in the law (Board of Managers of the 25 Charles Street Condominium v. Seligson, 106 A.D. 3d 130, 961 N.Y.S. 2d 152 [N.Y.A.D. 1"' Dept.,20131 citing t o JMar Serv. Ctr., Inc. v. Mahoney, Connor & Hussey, 4 5 A.D. 3d 809, 847 N.Y.S. 2d 130 N.Y .A.D. 2"d Dept., 20071). Defendants are seeking t o renew a motion t o dismiss that was based on the complaint before it was modified, and apply it t o the Amended Complaint. The December 6, 2012 decision of the Appellate Division, First Department, is law of the case. Defendants arguments were previously made before the Appellate Division and rely on documentation that existed at the time of the motion and appeal, but was not produced. Defendants have not established the existence of subsequent evidence or a change in the law. There is no basis t o renew the prior motion t o dismiss before this Court. A motion t o dismiss pursuant t o CPLR §3211[al[ll, requires that the party seeking dismissal produce documentary evidence that "utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law." Dismissal pursuant t o CPLR 9321 1[a][7], requires a reading of the pleadings t o determine whether a legally recognizable cause of action can be identified and it is properly pled. A cause of action does not have t o be skillfully prepared but it does have t o present facts so that it can be identified and establish a potentially meritorious claim (Leon v. Martinez, 84 N.Y. 2d 83, 84 N.Y. 2d 83, 614 N.Y.S., 2d 972, 638 N.E. 2d 511 119941). Unjust enrichment is a quasi-contract claim that only applies in the absence of an express written agreement (Zolotar v. New York Life Ins. Co., 172 A.D. 2d 27, 576 A.D. 2d 850 [N.Y.A.D. 1'' Dept., 19911). A party is not precluded from asserting both breach of contract and quasi-contract causes of action when there is a, "bona fide dispute as t o the existence of a contract or the contract does not cover the dispute in issue"(Joseph Sternberg, Inc. v. Walber 36'h Street Associates, 187 A.D. 2d 225, 5 9 4 N.Y.S. 2d 144 [N.Y.A.D. 1"' Dept., 19931). Plaintiff may assert a claim for both breach of contract and for unjust enrichment where the defendant prevented performance of a written agreement or money is owed outside the scope of the agreement (Loheac, P.C. v. Children's Corner Learning Center, 51 A.D. 3d 476, 857 N.Y.S. 2d 143 [N.Y.A.D. 1"' Dept., 20081). Defendants seek t o dismiss the third cause of action for unjust enrichment asserted for the first time in the amended complaint, because of the existence of the written agreement. The Appellate Division, First Department determined that there was a potential oral contract modifying the written agreement. The oral modification is the basis for the first cause of action for breach of contract. There is a basis for plaintiff's third cause of action for unjust enrichment, the money alleged t o be owed may be outside scope of the oral modification. The documentation submitted by defendants does not utterly refute the potential basis for the cause of action. Plaintiffs served the amended complaint on January 21. 2013 and by stipulation extended defendants' time t o answer until April 4, 2013. Defendants' attorneys then [* 3] moved t o be relieved as counsel. On April 3, 2013, this Court granted the motion and stayed the action for forty-five (45) days (Mot. Exh. E). Defendants' new counsel made this motion, without serving an answer t o the amended complaint. A timely motion t o dismiss a cause of action, "..extended the time t o respond t o other causes of action as well." (Chagnon v. Tyson, 11 A.D. 3d 325, 783 N.Y.S. 2d 29 [N.Y.A.D. 1'' Dept., 20041 and De Falco v. JRS Confectionary, 118 A.D. 2d 752, 500 N.Y.S. 2d 143 [N.Y.A.D. 2ndDept., 19961). A motion for default judgment, can be denied based on the defendant's demonstration of a meritorious defense and reasonable excuse for failure t o serve a timely answer (Stein v. DKA Restaurant, 297 A.D. 2d 563, 747 N.Y.S. 2d 157 [N.Y.A.D. Ist Dept. 20021 citing to, Higgins v. Bellet Constr. Co., 287 A.D. 2d 277,731 N.Y.S. 446 [N.Y.A.D. 1'' Dept.19901). Failure may be excused where there is a showing of lack of prejudice to the plaintiff from the delay (Keller v. Merchant Capital Portfolios, LLC, 103 A.D. 3d 532, 962 N.Y.S. 2d 48 [N.Y.A.D. 1'' Dept., 20131). A defendant does not have to serve a formal motion for leave to serve a late answer, if it has clearly stated a basis for the relief in opposition to the motion for a default judgment (Fried v. Jacob Holding, Inc., 2013 N.Y. Slip Op. 0555 [N.Y.A.D. 2"dDept., 20131). Plaintiffs contend that the cross-motion for a default judgment on the first and second causes of action for breach of contract and fraudulent billing, should be granted. Defendants' motion t o renew is not a motion t o dismiss and does not extend f the time t o answer. The relief sought by the defendants concerning dismissal o the unjust enrichment claim is timely, but in all other respects they are in default. Defendants have not served any Answer in this action. Defendants have not sought a further extension of time t o answer by obtaining plaintiffs' consent, or moved by Order t o Show Cause for an extension of time. The cross-motion for a default judgment on the first and second causes of action should be granted. Defendants claim that pursuant t o CPLR 321 1[fl, denial of the motion t o dismiss on the cause o action for unjust enrichment, extends the time t o answer by ten days. f To the extent that their time is extended t o answer on the cause of action for unjust enrichment, it should also be extended on the first and second causes of action. Defendants have stated meritorious defenses based on the documentation submitted t o disprove plaintiffs causes of action. Frivolity as defined by 22 NYCRR 130-1. I , requires conduct which is continued when its lack of legal or factual basis should have been apparent t o counsel or the party. CPLR §8106 permits the Court in its discretion t o award costs t o a party, the imposition of sanctions requires a pattern (Sarkar v. Pathak, 67 A.D. 3 d 606, 889 N.Y.S. 2d 184 [N.Y.A.D. 1"Dept. 20091) Plaintiffs claim that defendants knew or should have known that there was no basis for this motion and that sanctions should be issued for frivolous practice. Defendants contend the claims asserted in the motion are not frivolous. They are legitimately based on the belief that the amended complaint does not state proper causes of action. [* 4] This Court finds the defendants have not stated a basis t o renew and reargue their prior motion t o dismiss based on law of the case. Defendants have not stated a basis t o dismiss the third cause of action for unjust enrichment. The cause of action for breach of contract is based on an alleged oral modification and not the written agreement. Plaintiffs have not established a basis t o obtain a default judgment on the first and second causes of action. Defendants have stated a basis t o extend their time t o answer, even though a motion was not made seeking t o do so. The time t o answer was extended by stipulation and this action was stayed. Plaintiffs will not be prejudiced by the extension of time t o serve an answer. New counsel for the defendants has had limited time t o answer the amended complaint after the action was stayed. Defendants have stated potential meritorious defenses in their motion papers. Plaintiffs have not established a basis t o obtain sanctions for frivolous motion practice or a pattern of frivolous behavior. Accordingly, it is ORDERED that the defendants' motion pursuant t o CPLR §2221[el seeking t o renew and reargue their prior motion t o dismiss the complaint, and t o dismiss plaintiff's third cause of action for unjust enrichment, is denied; and it is further, ORDERED, that plaintiff's motion t o enter a default judgment on the second and third cause of action asserted in the amended complaint, is denied: and it is further, ORDERED that defendant is directed to serve an answer t o the complaint within 20 days after service of a copy of this Order with notice of entry; and it is further, ORDERED that plaintiff is directed t o serve a copy of this Order with Notice of Entry upon the Clerk of the Trial Support Office (Room 158) who is directed t o restore this case t o the calendar and schedule a preliminary conference, and it is further, ORDERED that counsel are directed t o appear for a preliminary conference in IAS Part 13, Room 210 at 71 Thomas Street, on October 23,'2013 at 9:30am. ENTER: 0 FINAL DISPOSITION X NON-FINAL DISPOSITION 0 DO NOT POST 0 REFERENCE Check if appropriate: Check one: [* 5]

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