Cangemi v Karp
Annotate this CaseDecided on August 6, 2015
Supreme Court, Queens County
Joseph A. Cangemi, Plaintiff,
against
Harrison Karp, Defendant.
18143/2014
Robert J. McDonald, J.
The following papers numbered 1 to 8 read on this motion by defendant for an order pursuant to CPLR 3211 (a)(1) and (a)(7) dismissing plaintiff's Complaint.
Papers Numbered
Notice of Motion-Affidavits-Exhibits-Memo. of Law....1 - 5
Affirmation in Opposition-Exhibits...................6 - 7
Memo. of Law in Further Support......................8
Upon the foregoing papers, it is ordered that this motion is determined as follows:
Plaintiff commenced this action for breach of contract, unjust enrichment, and tortious interference with contract by filing ths summons and complaint on December 19, 2014. Defendant moves to dismiss plaintiff's Complaint for failure to state a cause of action for breach of contract and tortious interference pursuant to CPLR 3211(a)(7), and to dismiss plaintiff's cause of action for unjust enrichment pursuant to CPLR 3211(a)(1) based on [*2]the ground that a defense is founded upon documentary evidence.
On or about September 2, 2013, defendant entered into an agreement to loan plaintiff the sum of $500,000.00. On September 3, 2013, plaintiff executed a mortgage in connection with the loan agreement. Both parties were represented by attorney Peter Mammis. An Escrow Agreement was executed on September 11, 2013 in which Mr. Mammis created an arrangement where the loan documents were held by him in escrow pending either repayment of the loan in full or a default by plaintiff.
Plaintiff transferred ownership of the subject property located at 31-17 Ditmars Boulevard on September 3, 2013 to Ditmars Properties LLC, a New York Limited Liability Company. Defendant held an 85% share of Ditmars Properties LLC and plaintiff held a 15% share of the Ditmars Properties LLC. Plaintiff collected rent and paid a monthly payment of interest to defendant.
The Escrow Agreement provides, inter alia, the mortgage has not and shall not be recorded; upon receipt of notice from defendant that plaintiff is in default of the Note, Mr. Mammis will release all documents held in escrow to defendant; and upon notice from defendant that plaintiff has satisfied in full his obligation pursuant to the Note, Mr. Mammis will destroy all documents held in escrow. The Note provides, inter alia, plaintiff shall make a monthly interest payment in the sum of $5,833.33 to defendant; the final balloon payment consisting of the principal sum of $500,000.00 shall be paid by plaintiff to defendant on or before October 1, 2015; and if plaintiff fails to make three consecutive installment payments when due or if he fails to make the balloon payment then the shares will be released to defendant and plaintiff will waive any rights or interest in such shares and any ownership interest in the subject premises.
At some point after executing the loan documents, defendant became weary of such arrangement and commenced an action on or about March 18, 2014 in Supreme Court, Queens County under Index Number 701835/2014 against Mr. Mammis and plaintiff for reformation of the loan documents and legal malpractice. Defendant also filed a notice of pendency against the subject property, recorded the mortgage, and paid the mortgage recording tax of $14,000.00 along with the recording fees.
Subsequent to commencement of the action filed by defendant, plaintiff failed to make loan payments for May 1, 2014 and June 1, 2014. Defendant sent default notices on or about May 7, 2014 [*3]and June 1, 2014. On or about June 17, 2014, defendant also sent a notice to the tenant at the property, notifying the tenant of the default and requesting that the rent be paid directly to defendant instead of plaintiff. The tenant withheld rent after the receipt of the letter, but did not tender the rent to defendant.
Sometime thereafter, plaintiff did pay the missed payments, the mortgage recording tax, fees and $2,500.00 toward defendant's legal fees. All payments were accepted by defendant. Defendant was also notified that plaintiff had found a buyer for the property.
On or about September 17, 2014, the sale of the subject property closed and plaintiff did repay the mortgage loan. Both parties signed the Contract of Sale. Plaintiff requested a refund of interest for the month of September that was paid at the beginning of the month of September, but defendant refused.
Plaintiff then commenced this action alleging breach of contract, unjust enrichment and tortious interference with contract. In support of this motion to dismiss, defendant submits an attorney affirmation; a copy of the note, mortgage, limited liability company operating agreement of Ditmars Properties LLC, and Escrow Agreement; and a copy of the recorded deed transferring property to Ditmars Properties LLC.
In opposition, plaintiff submits an attorney affirmation; a copy of the note; a copy of the Escrow Agreement; a copy of the minutes of the first meeting of the members of Ditmars Properties LLC; a copy of the lease signed by the tenant and plaintiff; and a copy of the letter sent by defendant to the tenant directing the rent payments to be made to defendant.
It is well settled that in considering a motion to dismiss for failure to state a cause of action pursuant to CPLR 3211[a][7]), the pleadings must be liberally construed. The sole criterion is whether, from the complaint's four corners, factual allegations are discerned which taken together manifest any cause of action cognizable at law (Leon v Martinez, 84 NY2d 83 [1994]; Guggenheimer v Ginzburg, 43 NY2d 268 [1977]; Rochdale Vil. v Zimmerman, 2 AD3d 827 [2d Dept. 2003]). The facts pleaded are to be presumed to be true and are to be accorded every favorable inference, although bare legal conclusions as well as factual claims flatly contradicted by the record are not entitled to any such consideration (see Morone v Morone, 50 NY2d 481 [1980]; [*4]Gertler v Goodgold, 107 AD2d 481 [1st Dept. 1985], affirmed 66 NY2d 946, [1985]). The Court's role is limited to determining whether the pleading states a cause of action, not whether there is evidentiary support to establish a meritorious cause of action (see EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11[2005]; Guggenheimer v Ginzburg, 43 NY2d 268 [1977]; Sokol v Leader, 74 AD3d 1180 [2d Dept. 2010]).
A cause of action may be dismissed under CPLR 3211(a)(1) "only where the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 [2002]). In other words, the documents relied upon must "definitely dispose of the plaintiff's claim" (Blonder & Co. v Citibank, N.A., 28 AD3d 180 [1st Dept 2006]).
Breach of Contract
The essential elements for pleading a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of his or her contractual obligations, and damages resulting from the breach (see Dee v Rakower, 112 AD3d 204 [2d Dept. 2013]; Elisa Dreier Reporting Corp. v Global NAPS Networks, Inc., 84 AD3d 122 [2d Dept. 2011]).
Here, it is undisputed that a contract exists. Plaintiff demonstrated his performance pursuant to the contract by tendering the monthly interest payments and by ultimately tendering the balloon payment. Although defendant alleges that plaintiff breached the contract by failing to make the May 1, 2014 and June 1, 2014 payments, pursuant to the loan documents, three months of nonpayment constituted a breach. As such, plaintiff demonstrated his compliance with the contract and also demonstrated defendant's breach when defendant commenced the reformation action and filed the mortgage in direct contravention of the terms of the Escrow Agreement. Lastly, plaintiff alleged damages resulting from defendant's breach including the $14,000.00 mortgage tax and the additional financing plaintiff incurred. As such, plaintiff sufficiently pled a cause of action for breach of contract.
Unjust Enrichment
Plaintiff's complaint alleges unjust enrichment because defendant did not refund the portion of interest from September 17, 2014 through September 30, 2014. Defendant alleges that this claim is defeated by documentary evidence in that the note and mortgage each state that a payment of interest shall be due on the first of each month in the amount of $5,833.33 and there is no provision providing a refund. As such, plaintiff's claim for unjust enrichment is dismissed.
Tortious Interference with Contract
Lastly, plaintiff alleges tortious interference with contract by defendant notifying the tenant of defendant's right to collect the rent and in notifying the buyer of the property that defendant's rights were being violated by plaintiff.
To state a claim for tortious interference, plaintiff must allege defendant's knowledge of a contract between plaintiff and a third party, and defendant's intentional inducement of that third party to breach or otherwise render performance impossible resulting in damages, (see Kronos, Inc. v AVX Corp., 81 NY2d 90, 94 [1993]; Israel v Wood Dolson Co., 1 NY2d 116, 120 [1956], Washington Ave. Assoc. v Euclid Equip., 229 AD2d 486, 487 [2nd Dept. 1996]).
Regarding defendant's interference with the lease between the tenant and plaintiff, defendant knew of the contract, and directed tenant to make payments to defendant instead of to plaintiff. Accordingly, defendant intentionally induced the tenant to stop making payments to plaintiff. Although defendant argues that he was permitted to collect the rent based on plaintiff's failure to make the two monthly interest payments, pursuant to the terms of the loan documents, a breach did not occur until plaintiff failed to make three monthly payments. Additionally, plaintiff has alleged damages in that he incurred additional financing costs to pay the monthly payments pursuant to the note and mortgage because he was no longer receiving the monthly rent payments from tenant.
As to defendant's interference with the Contract of Sale, plaintiff has failed to allege how defendant's interaction with the buyer caused a breach of the contract of sale. In fact, defendant signed the Contract of Sale permitting the sale of the property to move forward. Therefore, plaintiff's claim for [*5]tortious interference with the Contract of Sale is dismissed.
Accepting the allegations in the complaint as true, according plaintiff the benefit of every favorable inference, and determining only whether the allegations fit within any cognizable legal theory, (see DeSandolo v United Airlines Inc., 71 AD3d 1073 {2d Dept.2010]; AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 58 [2005]), the Court finds that on the date this action was commenced the complaint stated a proper cause of action for breach of contract and tortious interference of contract regarding the lease between the tenant and plaintiff. Plaintiff's cause of action for unjust enrichment is disputed by documentary evidence.
Accordingly, for all of the above stated reasons, the defendants' motion for an order dismissing the plaintiff's complaint is denied except for the causes of action for unjust enrichment and tortious interference of contract with respect to the Contract of Sale with the buyer, which are dismissed as set forth above.
Dated: Long Island City, NY
August 6, 2015
______________________________
ROBERT J. McDONALD
J.S.C.
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