Ostad v Nehmadi

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Ostad v Nehmadi 2017 NY Slip Op 32050(U) September 28, 2017 Supreme Court, New York County Docket Number: 650460/2010 Judge: Marcy Friedman Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 1] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 SUPREME COURT OF THE STATE OF NEwr YORK COUNTY OF NE\V YORK -- PART 60 DAVID H. OSTAD, Plaintift~ Index No. 650460/20 l 0 -againstBEHZAD NEHMADI and BENITA HOLDINGS, LLC, Defendants. DECISION/ORDER Plaintiff David H. Ostad (Ostad) brings this action for the imposition of a constructive tmst in connection with a real estate venture to \Vhich he allegedly contributed $400,000 in cash. Defendants Behzad Nehmadi (Nehrnadi) and Benita Holdings, LLC (Benita Holdings) move for summary judgment dismissing the Amended Complaint (complaint), pursuant to CPLR 3212, on the grounds that plaintiff's claims are barred by the statute oflimitations and statute of frauds. Although this is a post-discovery motion, defendants' motion also purports to seek dismissal of the complaint, pmsuant to CPLR 3211 (a) (7), fi.)r failure to state a cause of action. Defendants' motion also seeks sanctions pursuant to NYCRR § 130-1. l (22 NYCRR). Some of the background facts relevant to this motion were set fo1th in a prior Decision and Order of this court dated April 8, 201 l (_Qf;_i<:td_YJI~hm!i~L 2011 w'L 1420879 [Sup Ct, NY Co 2011 J [Fried, J] [vacating notice of pendencyD(the Prior Order), familiarity with which is presumed. The follm,ving facts are undisputed unless otherwise indicated. The complaint alleges that early in 2003, Nehmadi proposed an "enterprise" with Ostad (the Enterprise) to purchase a building located at 227 East 45th Street in Manhattan (the Premises), and that Nehmadi formed Benita Holdings for the purpose of acquiring the Premises on behalf of the Enterprise and for the joint benefit of Ostad and Nehmadi. (Compl., i!ii 6, 7 .) 2 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 2] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 According to Ostad, based on a relationship of trust and confidence with Nehmadi, Ostad gave $400,000 in cash to Nehmadi for this purchase, in exchange for Nehmadi's agreement to give Ostad a 10 percent interest in the Premises, (l~L ifii' 5-6,) The complaint pleads five causes of action. The first, for breach of contract, seeks an irtjunction compeliing Nebmadi to issue shares of Benita Holdings to Ostad. (Id., ii~[ 30-36.) The second seeks an accounting. (Id., ~4I 37-39.) The third seeks imposition of a constructive trust upon the Premises. (Id., ii~[ 40-43.) The fourth seeks damages for breach of fiduciary duty. (Id., enrichment. (hl, ir~ ii~ 44-45.) The fifth seeks damages for unjust 46-47,) According to Ostad, he and Nehmadi became closi:.~ friends after they first met in the 1990s. (Ostad AJf 7/7i2016 [Dkt. 208], ~ 6 [Ostad Aff].) In 2000, Ostad started a plastic surgi:.:ry practice in Ne\v York. As Nehmadi was a real estate developer, Ostad sought his expertise and assistance in opening medical offices. (Id., ili1 8-9.) In late 2000, Ostad began facing legal problems dui:.: to a medical malpractice claim. Nehmadi encouraged him to become more active in real estate ventures, (Id., if 10.) In 2000 and 2001, Nehmadi and Ostad considered or completed a number ofreal estate transactions together. .(Id., ~ii 11-14,) In February 2003, Nehmadi formed Benita Holdings to purchase the Premises which is the subject of this dispute. (Nehmadi Aff. 6/17/2016 [Dkt. 177], ii 9 [Nehmadi Aff.]; Benita Holdings Operating Agreement [Ex. A to Nehmadi Aff].) According to Ostad, Nelmmdi first asked other friends, including Sharam Kohan (Kohan), to invest in the Premises. Ostad claims that Nehmadi urgently needed funds and offered Kohan an interest in the property in exchange for a $200,000 cash payment, which Kohan declined because he lacked the money. (Ostad Aff, ~[ 16; Kohan AfI 7/6/2016 [Dkt. 210], il 5 [Kohan Aff.].) Ostad claims that Nehrnadi ultimately offered him a 1O~"o interest in the $22 miHion property, in exchange for a $400,000 contribution toward the $4 million dovvn payment. (Ostad Aff., if,l 18-19; Kohan Aff., ,] 6.) He testified that 2 3 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 3] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 Nehmadi insisted that the fonds be in cash, and that he removed that sum from a safe deposit box at Bank Leumi and brought it to his home in Old Westbury in a duffle bag, where Nehmadi picked it up. (Ostad Dep. [Ex. H to Nehmadi Aff] at 261-265, 431-434, 438.) Ost.ad's wife Mojgru1 has submitted an affidavit asserting that the two men counted the money on the kitchen table while Nehmadi explained the terms ir~r of the agreement. (Mojgan Aff 717/2016 [Dkt 209], 3-5, 7.) Ostad did not get a receipt for the cash or confirm the payment by email or other means. (Ostad Dep. at 442-443.) However, he contends that Nehmadi, in Ostad's presence, sh01ily thereafter informed a number of other individuals about the payment. and/or the agreement They included Nehmadi's wife Bita (Bita), Ostad's brother and sister, Kohan, Robin Eshaghpour and Vic Lotan. (Ostad Dep. at 267-269.) Eshaghpour testified at his deposition that he overheard Nehmadi and Ostad discussing that Ostad was going to invest cash in a midtown Manhattan building (Eshaghpour Dep. [Ex. L to Nehmadi Aff] [Dkt. 194] at 15-18.) Kohfill has submitted an affidavit stating that he \Vas present at Eshaghpour's apartment \vhen Nehmadi solicited Ostad's pruticipation and pressed him to contribute $400,000 on an expedited basis. (Kohan Aff., ~~ 6-8.) However, Ostad is not mentioned in any of the transactional documents relating to the purchase of the Premises. Rather, the operating agreement identifies three members -Nehmadi, Bita, and Uuited Equities lnc. (United). (Benita Holdings Operating Agreement, p. 1.) The operating agreement reflects that Nehrnadi held an 89~·'0 interest, Bita a 10% interest, and United a 1% interest (Id., ~ 2 -3.) The members' corn bined capita! contrfouti on vvas listed as $1, 000, and the net income \Vas to be distributed quarterly in a manner consistent with their respective ownership interests. (Id., Schedule A.) The closing of the sale of the Premises occurred on February 24-25, 2003. The closing statement indicated a purchase price of $22,650,325 and identified various loans and mortgages, 3 4 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 4] INDEX NO. 650460/2010 NYSCEF DOC. NO. 236 RECEIVED NYSCEF: 09/28/2017 including an $18,000,000 purchase money mortgage to Benita Holdings. (Closing Statement at 1-2 [Ex. M to Nehmadi Aff.],) Neither Ostad's name nor his alleged $400,000 contribution is mentioned in the document. However, Ostad claims he appeared at the closing from time to time whenever he was able to take breaks from his medical practice. He states that he spoke to one of the attorneys at the dosing, Andrew Albstein, and that aftervvards he and Nehmadi went out drinking to celebrate the deal. (Ostad Aff., ~~] 27-28.) Ostad never received copies of the closing or other transactional documents. (Ostad Dep. at 443.) He did not receive or seek a K-1 reflecting the profits he was supposed to receive from the Premises, or report them on his taxes. (Id. at 455-457.) Ostad alleges that over the next few years, he inquired about the status of his investment and Nehmadi reported that the Premises was profitable. (Id. at 448-45 l .) Nehmadi allegedly told Ostad that ht~ was depositing the profits in a Bank Leumi account in Israel, and that the money would be distributed once the Premises \Vas refinanced. (Id. at 451-452.) Ostad did not ask to see copies of the bank staternents. (Id. at 452454.) Nehmadi denies having opened an account for this purpose, and no record of an account used to hold plaintiffs profits has been identified through discovery. (Nehmadi Aff., if~ 46-51.) Despite the alleged profitability of the Premises, Ostad claims that Nehmadi called upon him to make additional contributions to a "reserve fund" and for lobbv renovations, and asserts that he ., . ultimately gave Nehmadi an additional $290,000, 'vvith $100,000 on each of two occasions and $90,000 by V¥ire trnnsfor. (Ostad Dep. at 551-564.) Ostad further claims that, after the dosing for the Premises, he and Nehmadi continued to engage in further real estate transactions. He asserts that subsequent to his purchase of a property in Florida, he learned that Nehmadi was "behind [a] loan" that he took at the dosing, and that Nehmadi was unwilling to lm.:ver a high rate of interest. (Ost.ad Aff., ~ii 31-33.) Upon this discovery ofNehmadi's betrayal of their relationship, Ostad lost trust in Nehrnadi and, in 4 5 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 5] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 March 2008, "demanded [his] 10% interest" in the transaction that is the subject of this action. mt., ii 34; CompL, 41"4! 22-23.) Nehmadi denied that Ostad had any interest (Id.) Ostad later discovered that the Premises had been refinanced frx $55 rniHion (CompL, 4j 25), and commenced this action on May 14, 2010. PIS_CUSSIQN The standards for summary judgment are well settled. The movant must tender evidence, by proof in admissible form, to establish the cause of action "sufficiently to waITant the court as _gfN~w_XQik, 49 a matter oflaw in directing judgment." (CPLR 3212[b]; ZJlS~k~gngn__y_(:_i1y_ NY2d 557, 562 [1980].) "Failure to make such sho\ving requires denial of the motion, regardless of the sufficiency of the opposing papers." CW'.ill-~SI!l~tyJ·~-~YCY~;u;kJJniY,J~-:i~~tJ~tr;,,, 64 NY2d 851, 853 [1985].) Once such proof has been offered, to defeat summary judgment "the opposing party must 'show facts sufficient to require a trial of any issue of fact' (CPLR 3212, subd. [b])." (21!.Q~erman, 49 NY2d at 562.) "On a motion for summary judgment, facts must be viewed in the light most favorable to the non-moving party." (Y~_g<'LY_R~-~lm:ii__ C_Q-1l§lr,_{\m2,, 18 NY~d 499, 503 [2012] [internal quotation marks and citation omitted],) "[I]ssue-finding, rather than issuedetermination, is key. Issues of credibility in patiicular are to be resolved at trial, not by summary judgment." (ShrJ.nirn_Y_B_Q_gt~YmJtJ19_mLC9n;,, 70 AD3d 474, 475 (1st Dept 2010], citing ;iL..C.~D-~hn Assqf,,J_ng_,__ y_Ql_q_p_~__ )\Jfg_, __(\~rt\, 34 NY2d 3 38, 341 [ 1974] [other internal citations omitted],) .Sl~!Jl!~_gfJ'.m:m!~(St?Jm.~_9fI:AIP.Jt~li_g_n~ First, defondants contend that the statute of frauds and statute of limitations bar the pleaded causes of action. A claim for breach of an oral contract for the sa.le of stock of a company whose sole asset is real estate is subject to the statute of frauds. (See Y,~J19IILCQIJJ,__Y 15?..))~Qg_st~x...StJn,Q,,, 33 AD3d 67, 70-71 [1st Dept 2006]; Pril§k~r__y __K~Z_!1n, 132 AD2d 507, 507 5 6 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 6] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 [1st Dept 1987].) There is, however, substantial authority that the statute of frauds does not bar enforcement of an oral joint venture or partnership agreement to deal in real property, because the parties' interest is in the assets and income of the enterprise and is deemed to be personalty. [lst Dept 2016]; LiYf!!JllAQ_~_y_y?-g_gjgg, 12 t AD3d 485, 486 [1st Dept 2014]; Prior Order, 2011 \VL 1420879, *4 n 2.) As discussed in the Prior Order, Ostad claims that he and Nehmadi "acted as prutners and joint venturers" and "alleges the existence of a partnership or quasi-partnership arrangement" in the Enterprise. (Prior Order, 2011WL1420879, Moreover, "a constructive trust over real property can be * 4; Compl., i!15-12,) impost.~d even where an underlying agreement is not in vvriting." (l.JiPIUfJ:fi __y_Jh.Qffi.?.~-' 70 AD3d 588, 591 [1st Dept 2010]; see f-9I~JTI.filLY_Im:~m~n, 251 NY 237, 240 [1929] ["The rule is now settled by repeated judgments of this court that the statute [of frauds] does not obstruct the recognition of a constructive trust affecting an interest in land where a confidential relation would be abused if there \Vere repudiation, without redress, of a trnst oral1y dedared"l) The standard for identifying relationships that may form the basis of a trnst is not "rigid." (Tlwm~§, 70 AD3d at 591.) That standard has been met here, as defendants do not deny that Nehmadi had an ongoing friendship with Ostad upon which Ostad could have based his trnst They also do not persuasively dispute that Nehmadi's expertise in real estate was superior to Ostad's. In upholding the denial of smnmary judgment in a similar action brought against Nehmadi by Kohan, the First Department held: "Both plaintiff and defendant Behzad Nehmadi acknowledged that they were friends, and plaintiff claims that defendants promised him an interest in certain real property, that he had made payments and expended monies in reliance of [sic] that promise, that defendants were unjustly enriched at plaintiff's expense, given that certain conveyances transferred less property to him than what he claims he was promised, Given the close friendship between plaintiff and Behzad Nehmadi and defondants' alleged superior expertise and kno\vledge of real estate, the court properly concluded that if these factual claims '\Vere proved, they could form the 6 7 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 7] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 basis for the imposition of a constructive trust" (!5,QDJJ!lYJ':J:©hxn.~~u. 130 AD3d 429, 430 [1st Dept 2015_].) On this motion, as discussed below, defendants do not submit evidence sufficient to demonstrate that the parties did not enter into a partnership or joint venture. Rather, defendants rely on affidavits which raise credibility issues that are not properly detennined on a motion for summary judgment Defendants accordingly fail to demonstrate as a 1natter of law that the breach of contract cause of action should be dismissed based on the statute of frauds. The statute of limitations is also not a bar to this action. The six year limitations period for a constructive trust and an accounting accrue, respectively, when the property is wrongfully \vithheld and when the fiduciary "openly repudiate[s]" the obligations imposed by the parties' agreement (Kohan, 130 AD3d at 429-430; Krwh~LY... Sb.{l_W, 90 AD3d 493, 496 [1st Dept 2011] [constructive trust claim "commences to rnn upon occurrence of the vvrongful act giving rise to a duty ofrestitution"l; §~£ ?lso R9.12imm_g_yJ2,~J:'., 103 AD3d 584, 586 [1st Dept 2013] [accounting].) Ostad claims that the wrongful withholding of the property alleged to have been held in trust, and the repudiation of the fiduciary relationship, occurred in March 2008 when he demanded his interest in the subject transaction. Nehmadi does not deny that he rejected Ostad's demand at that time. The court accordingly holds that these causes of action are timely, as they wt:re brought within approximately two years of the filing of the complaint The claim for breach of fiduciary duty is also timely, as plaintiff alleges, and Ndm1adi does not deny, that Nehmadi first denied the existence of a partnership in l'vfarch 2008. 1 As to the breach of contract cause of action, defendants correctly argue that the cause of action accrues at the time of the contractual breach, even if no damage occurs until later, (See 1 As the claim accrued less than lhree years prior to the filing of the complaint, the court need not determine whether the three year limitations applies for a breach of fiduciary duty that seeks primarily monetary relief(see IRLCmJ',.S M,Qfi~'!Xl ..SHmkY..P~m1.WJ1~-~x:_&;_.C~L, 12 NY3d l 32, 139-40 [2009], rearg denied l 2 NY 889), or whether this is a case where the six year !imitalions period applies. 7 8 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 8] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 pleads the constructive trust cause of action based on an alleged _breach of the agreement to give plaintiff an interest in the Premises, Defondants contend that the cause of action accrued at the time of closing, when plaintiff was excluded from any documented ownership interest in the property. (Transcript of Oral Argument [Tr,J at 7-8.) However, Ostad does not allege that defendants breached their agreement hy failing to include hirn as a member of the LLC at the time it acquired the Premises. Rather, Ostad contends that both parties intended that the property would be held in Nehmadi's name. Ostad alleges that Nehmadi agreed to "hold [Ostad's] interest in the Property in trust" for him during a period in which he was "going through a very hard time with medical malpractice lawsuits and issues relating to [his] medical license. " 2 (Ostad Aff., ii~[ 20, 22; se.§. .Hl~.c,) Tr. at 11-12, 15.) Defondants fail to submit authority that the breach for purposes of accrual of the contract cause of action occurred at a different time than the wrongful act for purposes of the accrual of the constructive trust cause of action. Defendants' re1naining arguments are directed primarily at plaintiff's claim for a constructive trust, which they asse1t lacks sufficient evidentiary support to avoid dismissal at the 2 At oral argument, defendants asserted that plaintiff should be barred from proceeding with his equitable claims by the unclean hands doctrine, given that Ostad has implied that his purpose in keeping his name offtbe operating agreement was to shield assets from potential creditors bringing malpractice claims against him, (Tr. at 20.) The comt is concerned about the appropriateness of granting equitable relief under these circumstances. However, defendants have not moved, nor provided authority in support of dismissal, on the basis of the unclean hands doctrine. The parties should be prepared to address at trial the requirements, under a substantial body of law, for application of the doctrine if it is found that a transfer was intended to frustrate creditors. (See~ ;p~~lJILYJlm:~K0 61 AD3d 817, 818 [2d Dept 2009] [stating that "tbe question of whether [defendants] knew oftbe fraudulent purpose of the transaction is inekwant" to the application oftbe unclean hands doctrine], lv denied l 3 NY3d 702; [Q§i§~lYJ'.>:l~/~.rn, 212 AD2d 55, 57-58 [1st Dept 1995] [holding that the "clean hands maxim" is available to deny relief to a litigant who transferred assets to avoid claims of creditors, even where the party invoking doctrine was not injured by the wrongful conduct]; gQ!J.t:!D.!;LXJ1Y~TI, 307 AD2d 723, 725 [4th Dept 2003] [raising the doctrine sua ;ij!_Q.!JJg where both parties agreed to a side payment to avoid higher tax liability for the plaintiff because the "basis of the action is immoral and one to which equity will not lend its aid"]; l?.ll1 ;&~ :f)}.i.Y.h?J.Qf.lW, 115 AD3d 577, 578 [1st Dept 2014] [holding that the unclean hands defense is not applicable ivhere defendants are "willing wrongdoers'"]; M-1'l)l}~}.Y.M"1lt:!t.;:, 95 AD3d 961, 962 [2d Dept 2012] [reversing the trial court's application of the unclean hands doctrine v.there the plaintifI's purported immoral conduct was not directed at, and did not cause injury to, the defendant].) 8 9 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 9] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 summary judgmen.t stage. A constructive trust may be established by proof of "(I) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon, and (4) unjust enrichment." CSJl~DtYJ5Q§J11~l§J~j, 40 NY2d 119, 121 [1976]; accord I~~jg_~;l_}~_AJ1nk~W., 114 AD3d 536, 537- 38 [1st Dept 2014].) The "constructive trust doctrine is not rigidly limited" and may be imposed "even in the absence of a confidential or fiduciary relation." (.S_irn.QIJoQf> _ _ _y _S_i.rriP.n~~' 45 NY2d 233, 241 p 978],) It is appropriately invoked whenever "property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest" (Shurm~r..YJ:fod~mJ:~~vn.~.fg_r__S.~Jf:H~lg,Jm;_,, 257 AD2d 329, 332 [1st Dept 1999].) In challenging the element of a transfer, Nehmadi does not unequivocally deny Ostad's unequivocal assertion that Ostad gave Nehmadi $400,000 in cash in a duffel bag at his Old \.Vestbury home on a night in early February 2003. Nehmadi merely asserts that he «can state without hesitation that the claim Plaintiff gave [him] money in exchange for an interest in the Company is a bold-faced iie," (Nehniadi Aff, ~ 6,) This vague statement leaves it unclear vvhether Nehmadi is denying that he ever received the cash, or just denying that the cash, when accepted, was in exchange for an interest in the Premises. Rather than clarifying the ambiguity in his ovvn testimony, Nehmadi focuses upon the alleged lack of evidence corroborating his receipt of $400,000 in cash. For example, he notes that Ostad has no receipt for the cash; that only Mojgan has come forth as an actual eyewitness to the tender of the cash; and that Mojgan's testimony is suspect both because of her status as plaintiff's \Vife and because of arguably contradictory deposition testimony about the frequency of her work in plaintiffs medical office. (Nehmadi Reply Aff. [Dkt 227], ,-r, 6-7, 19.) Nehmadi also questions Ostad's credibility, noting that in connection with his former plastic suxgery practice, Ostad was adjudged to have been "involved in the delivery of frauduknt and deceptive medical services" (P..~5'WJ~"~-~.r.~L!~h?H?,~I.Y..P..a.rlLAY.~."J~l~,~t1~"Smg~rx_,J~,{;.,, 48 AD3d 367, 367 9 10 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 10] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 [l st Dept 2008]), and that an internet arbitration panel determined that Ostad acted in "bad faith" in registering the domain "Bot.ox.net" (Nehmadi A.ff,, ~ii 17-22.) Furthermore, he argues that the witnesses who testified that Ostad had an interest in the property cannot be credited. He points out that Kohan's trial testimony in his o\.vn action against Nehmadi was found "not credible" by the judge (Nehmadi Reply A.ff,,;~ 13-15); that Eshaghpour's deposition testimony did not fully corroborate the alleged agreement; and that Eshaghpour invoked his right against self-incrimination when questioned about whether he was under the influence of illegal drugs \Vhen he overheard the pruties' discussions. (Nehmadi Aff, ~iJ 36-39.) At best, these contentions do not eliminate triable issues of fact but merely raise factual questions that vvould require the court to resolve matters of credibility, an unde1taking that is impermissible on a summary judgment motion. Given Nehmadi's failure to offer an express, unambiguous denial that he received $400,000 in cash from Ostad, or that he discussed Ostad's investment in the Premises 'vvith the multiple witnesses identified, the court does not find the claim of an agreement to be incredible as a matter of law. This conclusion is further bolstered by Nehmadi's failure to address the claim that Ostad contributed an additional $290,000 to the Premises, and his admission that on other occasions he may have received tens of thousands of dollars in cash from Ostad. (Nehmadi Dep. at 50-51 [Ex. B to Ostad A.ff].) Finally, Nehmadi argues that even if there is some facial merit to Ostad's aHegations, the action must be dismissed because, with.out documentary evidence or credible witnesses, Ostad cannot establish his claim for a constructive trust by the clear ru1d convincing evidence standard applicable at trial. 3 Relying on United States Supreme Court precedent in libel cases brought by a public figure, Nehmadi argues that "a ruling on a motion for summary judgment or for a 3 In fact, on reply, Nehmadi's sole argument pertains to the standard of proof: with his arguments regarding the statute of frauds and statute of limitation relegated to footnotes. 10 11 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 11] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 directed verdict necessarily implicates the substantive evidentiary standard of proof that would apply at the trial on the merits." (AtHi~I§:Q!}__y,Jo<i.h~ItLL-9.hPj'.,JTI_Q"-' 477 US 242, 252 [1986]<) New York courts have applied the clear and convincing evidence standard to the assessxnent of a libel defendant's motion for summary judgment. (See KiPJ>.1,';.LYNYP__HQJl3.h:rn:f? Co,, 12 NY3d 348, 353-54 [2009].) Defendants have not, however, cited any case in which the clear and convincing evidence standard of proof has been applied to summary judgment motions in other contexts, notwithstanding that a party would have the burden of proof at trial under the Dept 2015] [denying summary judgment based on factual disputes requiring credibility assessments, and reasoning that "[a]lthough defendant's ultimate burden of proving the affimmtive defense at tti_~l would be by the standard of clear and convincing evidence, this strict standard is not applied at this juncture" [internal citation omitted]; Pl_~1_tin_lmJ_Egµi_ty__/\_~1-\.'i~Pr~_, t,L_C_y_S_:PtJm~,, 2016 \VL 3221580, *3 [Sup Ct, NY Co June 7," 2016] [Bransten, J.] [holding that at the summary judgment juncture, "the Court cannot apply a burden of proof, such as clear and convincing evidence, in order to resolve fa.ctual disputes raised by the parties; the Court can only identify if such disputes exist for trial"].) Moreover, defondants have cited no authority for the proposition that witness testimony is insufficient to meet the clear and convincing standard or that a \:Vitness's alleged past history of untrustworthiness can be the basis for dispensing with a trial. 4 The court accordingly rejects defendants' contention that. a trial in this action is rendered futile by questions as to the credibility of the witnesses Ostad relies on to corroborate the agreement The court has considered defendants' remaining contentions and finds tht~m to be without 1 Indeed, even a criminal conviction does not affect a witness's competency to testify, but merely provides grounds, where relevant, for impeachment on cross-examination. (S.~!< CPLR 4513; J>m2~__y_N_~w__ Y._m:k_Cit}:_Tr.@~itAM.t)L 244 AD2d 263, 264 [Ist Dept 1997].} 11 12 of 13 [*FILED: NEW YORK COUNTY CLERK 09/28/2017 03:23 PM 12] NYSCEF DOC. NO. 236 INDEX NO. 650460/2010 RECEIVED NYSCEF: 09/28/2017 merit Accordingly, it is hereby ORDERED that the motion of defendants Behzad Nehmadi and Benita Holdings, LLC for summary judgment dismissing the complaint and for sanctions is denied. This constitutes the decision and order of the court. Dated: Ne'vv York, New York September 28, 2017 13 of 13

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