Lippo v Cruz

[*1] Lippo v Cruz 2014 NY Slip Op 50288(U) Decided on March 3, 2014 Supreme Court, Richmond County DiDomenico, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 3, 2014
Supreme Court, Richmond County

Joseph Lippo, Plaintiff,

against

Linda Cruz, Defendant.



101800/12



Plaintiff represented himself at trial. Defendant's counsel: Eric Gansberg, 36 Richmond Terrace, Staten Island NY 10301

Catherine M. DiDomenico, J.

Plaintiff, Former Husband, and Defendant, Former Wife were divorced on or about September 22, 2005 by the Hon. Rachel Adams. The parties' oral stipulation of settlement was spread on the record that date. A stipulation of oral adoption was apparently never prepared and thus the oral agreement was never signed or acknowledged by the parties.

In April of 2011, Plaintiff filed an Order to Show Cause before this Court, under the matrimonial index number (50526/2005), seeking similar relief to the relief requested in the present Breach of Contract action. On or about May 27, 2011 Husband withdrew his application on the record, without prejudice.

Plaintiffcommenced the present Breach of Contract action by the filing of a Summons and Complaint in May of 2012. Defendant filed a Verified Answer on June 6, 2012. Defendant's Answer did not include any counterclaims or affirmative defenses. On December 27, 2012, Defendant moved for Summary Judgment under CPLR '3212 on the ground that Plaintiff's complaint failed to state a cause of action. Defendant's motion for Summary Judgment was denied by a written decision of this Court dated, April 24, 2013, as Plaintiff raisedtriableissues of fact which precluded a summary ruling.

The matter proceeded to a bench trial on January 8, 2014. The trial lasted one day. Plaintiff, who was self represented at trial, testified on his own behalf and called the Defendant as a witness. Plaintiff offered three documents into evidence (Plaintiff's 1-3), however, only Plaintiff's No.1, the transcript of the divorce settlement, was admitted into evidence. At the [*2]close Plaintiff's case, Defendant, represented by Eric Gansberg Esq., made a motion for a Directed Verdict based upon an alleged failure of proof.See CPLR '4401. Defendant argued on the record that Plaintiff failed to establish a prima facie case of Breach of Contract and failed to establish damages. Defendant also asserted the affirmative defense that the contract violated the Statute of Frauds. Defendant declined to present a direct case and rested after making the application for a Directed Verdict.

Under CPLR '4401 either party may move for a Judgment, during trial, with respect to a cause of action, or upon any issue upon the ground that the moving party is entitled to a judgment as a matter of law. In order to grant a Directed Verdict, it must be established that there are notriable issues of fact which would preclude a summary ruling. See Annunziata v. Colasanti, 126 AD2d 75 (1st Dept. 1987). If made at the end of a Plaintiff's direct case, a directed verdict may only be issued if the Plaintiff failed to establish a prima facie case or failed to establish a specific issue upon which the application is made. See,Georgetti v. United Hosp. Medical Ctr., 204 AD2d 271 (2d Dept. 1994). A motion for a directed verdict is properly granted only "where the trial court finds that, upon the evidence presented, there is no rational process by which the fact trier could base a finding in favor of the nonmoving party." Martinez v. Mullarkey, 41 AD3d 666 (2d Dept. 2007).

Decision

Statue of Frauds

Defendant raises, for the first time at trial, the affirmative defense that Defendant's agreement to assume the mortgage payments, and arguably the entire real estate transaction, is voidab initio due to an alleged violation of the Statute of Frauds. Defendant argues that their agreement was placed on the record and not memorialized in writing. See NY Gen Oblig.' 5-703; see also, Barretti v. Detore, 95 AD3d 803 (2d Dept. 2012). However, Defendant's failure to raise this defense in her Verified Answer amounts to a waiver of that defense in the context of the present matter. See Ferchaw v. Troxel, 112 AD2d 13010 (4th Dept. 2013); see also, Marks v. Macchiarola, 221 AD2d 217 (1st Dept. 1995). Accordingly, the Court will not address Defendant's Statute of Fraudsargument on its merits. See Roland v. Benson, 30 AD3d 398 (2d Dept. 2006). Nor will the Court address Husband's alleged failure to mitigate damages, as that affirmative defense was also not raised in Defendant's Answer. Eskenazi v. Mackoul, 72 AD3d 1012 (2d Dept. 2010); see also, Whalen v. Kawasaki Motors Corp., U.S.A, 92 NY2d 288 (1988). Defendant's affirmative defenses, raised for the first time at trial, arehereby dismissed without prejudice to be properly plead in any future action.

Breach of Contract

Plaintiff's action sounds in contract. "To maintain an action for breach of contract, a party must show three elements: the existence of a contract, the defendant's breach of that contract, and damages." Kuzma v. Protective Ins. Co., 2013 NY Slip Op 1809 (2d Dept. 2013). [*3]

According to the terms of the parties' oral Stipulation of Settlement,which was spread on the record of September 22, 2005, and admitted into evidence attrial, Plaintiff was mandated to transfer title and deed to the former marital home located at 100 Shotwell Avenue, Staten Island, New York, to Defendant. The parties further stipulated that "the plaintiff (Wife) shall assume the mortgage to Indymac Bank and shall hold the defendant (Husband) free and harmless from any and all liability in connection with her repayment of the mortgage, and shall indemnify him from any liability." The proof at trial established this open court stipulation to be an oral contract between the parties. However, no testimony was offered at trial to establish that Indymac Bank was aware of, or consented to, this oral agreement.

Plaintiff credibly testified, and Defendant stipulated, that she failed to pay the mortgage as she agreed she would. While a good portion of the trial was dedicated to eliciting Defendant's alleged motive in not paying the mortgage, her motive is irrelevant when determining if a breach occurred. As Defendant stipulated that she did not pay the mortgage as she said she would,Plaintiff established, by a preponderance of the evidence, that a contract existed between the parties, and moreover, that Defendantbreached that contract by failing to pay the mortgage.See, A. Montilli Plumbing & Heating Corp. v. Valentino, 90 AD3d 961 (2d Dept. 2011).Accordingly, Defendant's application for a directed verdict in regard to the issue of liability is denied. As stated above, the Court has not considered Defendant's improperly plead affirmative defenses in making this ruling.

Damages

As Plaintiff established that Defendant'sfailure to pay the mortgage amounts to a breach of contract, the Court must consider Plaintiff's claim for damages. In his Verified Summons and Complaint, Plaintiff claims that Defendant'sbreach of contract has negatively affected his credit and seeks various forms of relief, including a transfer of ownership of the former marital house, and $389,000 in damages. However, despite the relief requested in his Summons and Complaint, Plaintiff testified at trial that he wishes to be awarded $34,000 in damages, a number which he concedes that he simply "came up with"(Trial Tr. P61, Jan. 8, 2014). Defendant' moves for a directed verdict on the issue of damages under CPLR '4401 on the ground that Plaintiff has not established a non speculative claim for damages.

The burden of proof is on the Plaintiff to establish damages. See J.R. Loftus, Inc. v. White, 85 NY2d 874 (1995). When determining an appropriate amount of damages in a breach of contract action the Court is authorized to award "general damages" that flow naturally and directly from the breach. See,34-35th Corp. v. 1-10 Indus. Assoc., LLC, 103 AD3d 709 (2d Dept. 2013). The Court can also award "consequential damages" if those damages were contemplated by the parties and foreseeable at the time the contract was entered into.See Panasia Estates, Inc. v. Hudson Ins. Co., 10 NY3d 200 (2008). Damages flowing from a breach of contract must be non-speculative in nature. SeeRakylar v. Washington Mut. Bank, 51 AD3d 995 (2d Dept. 2008). When determining damages, there is a requirement that the damages must be "ripe," and not premature. See TSL (USA) Inc. v. OppenheimerFunds, Inc., 977 N.Y.S.2d 638 (1st Dept. 2014).

[*4]a. Loss of Credit

Plaintiff credibly testified that he subjectively believes that Defendant's failure to pay the mortgage negatively affected his credit. Plaintiff testified that since the divorce, he has been denied loan consolidations, has been unable to obtain a small business loan, and his credit score has dropped. While Plaintiff admits that he has had at least one unrelated judgment filed against him due to an unpaid small business loan from Commerce Bank, Plaintiff claims thatDefendant's breach of contract is the sole reason for the alleged damage to his creditworthiness.

Defendant argues that Plaintiff's testimony regarding his loss of credit, and alleged resulting damages, is based upon mere speculation. This Court agrees. See, TSL (USA) Inc. v. Oppenheimer Funds, Inc. 977 N.Y.S.2d 638 (1st Dept. 2014). While Husband testified that his credit score has dropped, he failed to establish, through testimony, or documentary evidence, what his credit score was before the breach, or what it currently is. Moreover, even if he had, Husband was repeatedly advised in pre-trial proceedings that he would likely have to establish his loss of credit claim through expert testimony, as the computation, effect and valueof a particular credit score is "beyond the ken of a layperson."See, Weiner v. Lenox Hill Hosp., 88 NY2d 784 (1996); see also, Christoforatos v. City of New York, 90 AD3d 970 (2d Dept. 2011); Ivory v. International Bus. Machines Corp., 2014 NY Slip Op 1230 (3rd Dept. 2014). While Plaintiff testified as to why he believes his credit has been damaged, he did not offer any documentary evidence to prove that it had been damaged. Moreover, even assuming that Plaintiff could establish damage to his credit, he failed to show that the damage was causedby Defendant's actions, and finally, he failed to establish any actual pecuniary loss attributed to his loss of credit.See Town Sports Intl., LLC v. Ajilon Solutions, 112 AD3d 409 (1st Dept. 2013); see also, Wenger v. Alidad, 265 AD2d 322 (2d Dept. 1999). Accordingly, Wife's motion to dismiss Husband's claim for damages in relation to the alleged damage to his credit is hereby granted. Plaintiff's claim for damages is hereby dismissed, with prejudice, as speculative. See KSW Mech. Servs., Inc. v. American Protection Ins. Co., 40 AD3d 709 (2d Dept. 2007); see also,Awards.com v. Kinko's Inc., 42 AD3d 178 (1st Dept. 2007).

b.Deficiency Judgment

It is not disputed that, as a result of Defendant's failure to pay the mortgage,Indymac Bank commenced a foreclosure action against Plaintiff and Defendant on or about January 9, 2008. See Indymac Bank v. Joseph Lippo, et al., (Sup. Ct. Rich. Cty. 100118/2008). This action resulted in a Judgment of Foreclosure and Sale issued on or about July 25, 2008. It is also undisputed that the property has not yet been sold by the Lender.In fact, Plaintiff credibly testified that the property is currently being occupied by Defendant's son. Under the "election of remedies" doctrine, the property must be sold, and the proceeds of the sale applied to the mortgage, before Indymac Bank can seek reimbursement from the Plaintiff, on the note, for any deficiency. See RPAPL '1301;RPAPL '1371; see also,Copp v. Sands Point Mariana, Inc., 17 NY2d 291 (1966); Stein v. Nellen Dev. Corp., 123 Misc 2d 268 (Sup. Ct. Suffolk Cty. 1984). As Plaintiff stipulated during trial that this event has not happened, any claim for damages in relation to a potential deficiency judgment is not ripe. See Pilgrim v. Wilson Flat, Inc., 110 AD3d 973 (2d Dept. 2013); see alsoDune Deck Owners Corp. v. Liggett, 85 AD3d 1093 (2d Dept. 2011). [*5]

Accordingly, Defendant's motion to dismiss Plaintiff's claim for money damages in relation to the mortgage note is hereby granted. Plaintiff's claim that he is entitled to damages due to a possible future deficiency judgment is premature and speculative as a matter of law. SeeRakylar v. Washington Mut. Bank, 51 AD3d 995 (2d Dept. 2008); see also,StoreRunner Network, Inc. v. CBS Corp. 8 AD3d 127 (1st Dept. 2004). This dismissal is without prejudice to renewal upon a showing that there is a deficiency judgment levied, or that some other actionable damage has been established.

c.Counsel Fees

To the extent that both parties request an award of counsel fees in their pleadings, neither party has establishedany provision of the underlying contract which would permit recovery of counsel fees, and the Court is aware of none under the law. In addition, the issue of counsel fees was not raised at trial by either party, and Plaintiff was self-represented throughout the proceedings. Accordingly, the reciprocal applications for counsel fees are denied. See Melissakis v. Proto Constr. & Dev. Corp., 294 AD2d 342 (2d Dept. 2002); see also Van Name v. Applegate, 44 AD2d 726 (2d Dept. 1974).

Plaintiff's varied alternative requests for relief plead in his Summons and Complaint are hereby dismissed as they were not raised at trial, and upon review, the Court would be unable to consider them in the present Breach of Contract action. As Husband claims pecuniary loss, the proper measure of relief is monetary damages. See CadwaladerWichersham & Taft v. Spinale, 177 AD2d 315 (1st Dept. 1991).

All issues not addressed directly herein are hereby denied.

This constitutes the decision and Order of the Court.

Dated: March 3, 2014

_______________________________

Hon. Catherine M. DiDomenico

Acting Justice Supreme Court

Wife's failure to timely make mortgage payments pursuant to parties' oral stipulation of settlement of divorce was breach of contract, but claim for damages is premature as home had not yet been sold