Vista Pointe, LLC v Waterfront Resorts, Inc.

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Vista Pointe, LLC v Waterfront Resorts, Inc. 2019 NY Slip Op 33878(U) December 11, 2019 Supreme Court, Queens County Docket Number: 719165/2018 Judge: Leonard Livote Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] QUEENS COUNTY CLERK 12/19/2019 10:54 AM INDEX NO. 719165/2018 NYSCEF DOC. NO. 91 RECEIVED NYSCEF: 12/19/2019 FILED DEC 1 9 2019 COt.JNTV Cl.l!RK QU t:~N !i Short Form Order COUNTY NEW YORK SUPREME COURT - QUEENS COUNTY Present: HONORABLE LEONARD LIVOTE IA Part 33 Justice x VISTA POINTE, LLC, Index Number 7 19165 20 18 Plaintiff, -- against -WATERFRONT RESORTS, INC., KINGS USA GROUP, INC., CHOY UN LAM, indi vidually, CH ING LAM, indi vidually, CATHAY BA K , CATHAY GENERAL BANK CORP., Moti on Seq. No: 2 Date May 7 20 19 x The fo llowing papers EF numbered below read on this motion by defendant Cathay Bank and defendant Cath ay General Bancorp. fo r, inter alia, an order pursuant to CPLR 32 l l(a)(7) dismissing the complaint against them . Papers Numbered Notice of Motion - Affidavits - Exhibits ............. ... ... ....... ..... .... ..... ... .. 39-48 Notice of Cross Motion - Affidavits - Exhibits .. .. ...... ........................ . Answering Affidavits - Exhibits ........ ... .... ...... ..................... ... ........ .. ... 67-68,70-75 Reply Affidav its ..... ............ ...... .... .... .. ... ......... ... .. ..... ......... .. ...... ... ........ 79-81 Memoranda of Law............................................ ..... ... ... ...... ... ...... ... ..... 40,69,78 Upon the foregoing papers it is ordered th at: The branch of the motion which is for an order pursuant to CPLR 32 1 I(a)(7) dismissing the complaint aga inst defendant Cathay Bank and defendant Cathay General Bancorp is granted. The branch of the motion which is for an order pursuant to CPLR 32 1l (a)( I) dismissing the complain t against defendant Cathay Bank and defendant Cathay General Bancorp is denied as moot. The 1 of 7 [*FILED: 2] QUEENS COUNTY CLERK 12/19/2019 10:54 AM NYSCEF DOC. NO. 91 INDEX NO. 719165/2018 RECEIVED NYSCEF: 12/19/2019 branch of the moti on which is for an order pursuant to 22 NYCRR 130-1 .1 imposing costs and attorney"s fees upon the plainti ff is denied. I. The Allegati ons Of The Complaint Defendant Choy Ling Lam (Choy) and defendant Ching Lam (C hing) are offi cers and shareholders of defendant Waterfront Resorts, fn c. (Waterfront) and defendant King USA Group (King). (These four defendants are collectively referred to herein as the debtor defendants or the defendant debtors.) The debtor defendants engage in real estate acquisitions, constructi on, development, management, and financing. On January 6, 20 13, plainti ff Vista Pointe, LLC (VP) and defendant Choy entered into a contract of sale and lease agreement whereby the latter leased premises known as I 09-09 I 51h Avenue, College Point, Queens, New York from the former fo r a term of twelve months. Plainti ff VP gave defendant Waterfro nt and defendant Choy (its president) the option to purchase the property for $8,210,000 at the end of the lease term On January 18, 20 14, defendant Waterfront and defendant Choy agreed to purchase the property, which they intended to develop, from the plaintiff fo r $8,2 10,000 . On March I 0, 20 14, de fendant Choy and defendant Ching executed two prom i sory notes, the first in the amount of$ 1,750.000 and the second in the amount of $750,000. whi ch they used to pay part of the purchase price for the property. The two prom i sory notes also gave VP the right to purchase units/apartments in the development at a discounted price. In March, 2014, defendant Waterfro nt and defendant Kings ·'merged equi ty'. and subsequentl y obtai ned refinancing for the developed property from defendant Cathay Bank and defendant Cathay General Bancorp (collectively Cathay). In September, 20 15, plainti ff VP, defendant Waterfront, and defendant Kings entered into negoti ations concerning the purchase by the plainti ff from the defendants of certain un its within the condominium development. By letter dated June 18, 20 18. pl aintiff VP gave notice to the debtor defendants that it was exercising its option to purchase the units. The debtor defendants commi tted breached of contract by refusing to allow plainti ff VP lo purchase units in th e condomin ium. II. Discussion A. CPLR 321 1(a)(7) 2 2 of 7 [*FILED: 3] QUEENS COUNTY CLERK 12/19/2019 10:54 AM NYSCEF DOC. NO. 91 INDEX NO. 719165/2018 RECEIVED NYSCEF: 12/19/2019 The complaint asserts six causes of action, and all except the first are asserted against defendant Cathay, among others. Defendant Cathay has moved for, inter alia, an order pursuant to CPLR 32 11 (a)(7) dismissing the complaint aga inst it. In determini ng a motion brought pursuant to CPLR 32 11 (a)(7)," the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plainti ff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory *** ." ( Antoine v. Kalandrishvili, 150 AD3d 94 1,94 1 [2d Dept 20 17]; 1-155 Washington Ave. Assocs. v. Rose & Kiernan, 260 AD2d 770, 770-77 1 [3d Dept 1999]; Esposito-Hilder v. SFX Broadcasting Inc, 236 AD2d 186 [3rd Dept. l 997. ) ·'Although the facts pleaded are presumed to be true and are to be accorded every favorable inference, bare legal conclusions as we ll as factua l claims natty contrad icted by the record are not entitled to any such consideration, nor are legal conclusions or factual claims wh ich are inherently incredi ble entitled to any such considerati on ***:' (Everett v. Eastchester Police Dep't, 127 AD3d I 13 I. 11 32 [2"d Dept 20 15 1 [internal citations and quotation marks omitted]; Cruciata v. O'Donnell & Mclaughlin, Esqs., 149 AD3d I 034 [2"d Dept 2017].) Since defendant Cathay seeks to dismiss the compl ai nt with prejudice, the court notes that ·'when a mot ion to dismiss is predicated on a claim of fai lure to state a cause of action, the plaintiff must be afforded an opportunity to seek leave to rep lead within the prescriptions of CPLR 32 11 (c)." ( Varo, Inc. v. Alvis PLC, 26 1 AD2d 262, 267 [I st Dept 1999]: see, also, Prosthetic Home Servs., Inc. v. Fidelis Care of New York W. Region, 154 AD3d 1283 [4th Dept. 20 17].) Moreover, a dismissal for fa ilure to state a ca use of action is genera lly not on the merits and wi ll not be given res judicata effect. ( In re Hock. 125 AD3d 722 [2"d Dept. 20 15].) 8. The Second Cause of Action The second cause of acti on alleges the fo llowing: Defend ant Cathay "prov ided refin ancing directly to the Defendants Waterfront Resorts, Inc. and King USA Group ,"' but "willfully fai led to provide fo r and require" that the debtor defendants "pay [their] fin ancial obligations owed to Vista Pointe, LLC under the two promissory notes executed" by the defendant debtors. The debtor defendants fai led to make required payments due on the promissory notes from the funds provided by defendant Ca thay, and the debtor defendants presently owe the plaintiff $2,500,000. In other words, the second cau e of action alleges that defendant Cathay fai led to noti fy plaintiff VP of the closing of constructi on fin ancing and then disbursed funds to the debtor defendants without ensuring that they paid the promissory notes given to the plai ntiff. 3 3 of 7 [*FILED: 4] QUEENS COUNTY CLERK 12/19/2019 10:54 AM NYSCEF DOC. NO. 91 INDEX NO. 719165/2018 RECEIVED NYSCEF: 12/19/2019 It is clear to ne ither the attorney for defendant Cathay nor to this court what type of cause of acti on the plaintiff intended to plead aga inst defendant Cathay. The possibili ties of contract and negligence suggest themselves. "The essential elements of a cause of action to recover damages for breach of contract are ( 1) the existence of a contract, (2) the plaintiffs performance pursuant to the contract, (3) the defendant's breach of its contractual obligations, and (4) damages resultin g from th e breach***." (Starker v. Trump Vil!. Section 4, Inc., 162 AD3d 946 [2 11d Dept 20 18] ; All Seasons Fuels, Inc. v. Morgan F uel & H eating Co., 156 AD3d 591 [ 2nd Dept 20 17].) In the case at bar, th ere was no contract or agreement between defendant Cathay and plaintiff VP. "It i ax iomati c that ' [w] ithout [an] agreement ... there can be no contract [and][w]ithout a contract there can be no breach of the agreement' ***.,. (Schajfe v. SimmsParris, 82 AD3d 867, 868[2nd Dept 20 11 ], quoting Franklin v. Carpinello Oil Co., 84 AD2d 613, 6 13 [Yd Dept 198 l ].) Defendant Cathay was not a signatory to any contract between the plaintiff and the debtors defendants. (See, Balk v. 125 W. 92nd St. Corp., 24 AD3d 193, 193 [ Ist Dept 2005] [ ·'S ince the individual defendants are not signatories to the proprietary lease, the only agreement specifically identified by plaintiffs, no cause of action for breach of contract can be asserted aga inst them ***." 1.) Plaintiff VP did not show that it was a third party beneficiary of a contract between defendant Cathay and the debtor defend ants. ·'Parties asserting third-party beneficiary rights under a contract must establish ( I) the existence of a valid and binding contract between other parties, (2) that th e contract was intended fo r [their] benefi t and (3) that the benefit to [them] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate [them] if the benefit is lost.' " (Mendel v. Henry Phipps Plaza West, Inc., 6 NY3d 783 , 786 [2006], quoting Burns Jackson Miller Summit & Spitzer v. Lindner, 59 NY2d 3 14, 336[ 1983].) Plaintiff VP did not allege sufficient facts supporting the e elements. (See. Howard Sav. Bank v. Le/con P'ship, 209 AD2d 4 73 [2nd Dept 1994 ]. [ Contractor was not third-party benefici ary of provisions of building loan agreement outlining rights and obligations of developer and lender]. ) Plaintiff VP did not adequately allege a cause of action for negligence aga inst defendant Cathay . .. It i settled th at a duty of reasonab le care owed by a tortfeasor to a plaintiff is elemental to any recovery in negligence***.·· (Mig/ino v. Bally Total Fitness of Greater New York, inc., 92 AD3d 148, 159[ 2nd Dept 20 13]. ) Plaintiff VP had no relati onshi p with defendant Cathay that would give rise to a duty of care. The court can discern no other cognizable cause of acti on sounding in tort. 4 4 of 7 [*FILED: 5] QUEENS COUNTY CLERK 12/19/2019 10:54 AM NYSCEF DOC. NO. 91 INDEX NO. 719165/2018 RECEIVED NYSCEF: 12/19/2019 C. The Third Cause Of Action The third cause of acti on alleges the fo llowing: Defendant Cathay and the debtor defendants '·willfully Worked in Concert to conceal the location, day and time of the refi nanc ing closing to advert making the required payments due Plaintiff under the two Promissory Notes at the time of th e closi ng of the refinan cing acquired *** ," [The defendantsl Worked in Concert and have perpetrated Fraud through its Deceptive Practices over Plaintiff by will full y concealing information and ceasing all communications and negotiations with Plaintiff involving it Right to Purchase units/apartments in the development and by concealing the identi ty of individuals Purchas ing said apartments***." A cause of action ba ed on fraudulent concealment requires a plaintiff to allege ·' ( I) a misrepresentation or an omission of material fact whi ch was fa lse and known to be fal se by the defendant, (2) the misrepresentation was made for the purpose of inducing the plaintiff to rely upon it, (3)j ustifi ab le reliance of the plaintiff on the misrepresentation or material om ission, and (4) injury,[ and] in addition, a cause of acti on to recover damages for fraudulent concealment requires ... an allegation that the defendant had a duty to disclose material inform ati on.'· ( Ozelkan v. Tyree Bros. Envtl. Servs., 29 AD3d 877, 878 [2nd Dept 2006] [internal citati ons and quotation marks omitted] ; Bannister v. Agard, 125 AD3d 797, [ 2nd Dept 2015].) The plainti ff' s complaint does not allege a basis fo r imposing a duty on defendant Cathay to make any disclosures to the plaintiff. (See, Bannister v. Agard, supra.) The plaintiff' s vague allegations of acting in concert or in a conspiracy do not suffice to save the third cause of action. (See , JP Morgan Chase Bank, N A. v. Hall, 122 AD3d 576, 580 [2nd Dept 2014] [·'Considering their status as lender and assignee, respectively, it cann ot be inferred that RHF or Wells Fargo was aware of the alleged fraudulent scheme and agreed to "cooperate" by issuin g a loan and allowing the funds issued to be distributed to, among others, the other third-party defendants"]; Marren v. Nathan, 2 AD3d 230 [ Isi Dept 2003].) Plaintiff VP did not adequately allege a cause of act ion und er General Business Law §349. General Bu iness Law § 349 ··Deceptive acts and practices unlawful,'" a broad consumer protection statute, declares unlawful "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnish ing of any service in this state." (General Business Law§ 349[a]; see, North State Autobahn, Inc. v. Progressive Ins. Group Co., 102 AD3d 5 [2nd Dept 20 12].) '·The elements of a cause of action to recover damages for deceptive business practices under General Business Law§ 349 arc th at the defendant engaged in a deceptive act or practice, th at the challenged act 5 5 of 7 [*FILED: 6] QUEENS COUNTY CLERK 12/19/2019 10:54 AM NYSCEF DOC. NO. 91 INDEX NO. 719165/2018 RECEIVED NYSCEF: 12/19/2019 or practi ce was consum er-oriented, and that the plai ntiff suffered an injury as a result of the deceptive act or practice:· (Valentine v. Quincy Mut. Fire Ins. Co., 123 AD3d I 0 11 , I0 15 l2nd Dept 20 14]; Na/ash v. A ff state Ins. Co., 137 AD3d I 088 [2nd Dept. 20 l 6].) "A pa rty claiming the benefit of General Busi ness Law § 349 must, as a threshold matter, charge conduct th at is consumer ori ented," i.e. , conduct that has a broad impact on consumers at large." (JP Morgan Chase Bank, NA. v. Haff, 122 AD3d 576, 58 1 [2 11 d Dept 20 14][internal quotati on marks and citati on omitted] ). In the case at bar, the dispute between the parties does not in volve consumer-oriented conduct. D. The Fourth Cause of Acti on The fourth cause of action i labeled "Unconscionable Conduct and Deceptive Behav ior in Business Practices Displayed by [the defendants]." The fourth cause of action is comprised of a jumbl e of allegations making reference to, inter alia, frau dulen t concealment, decepti ve business practices, and '·Unconscionable nature." As discussed above, the complaint does not adequately state causes of acti on for fraudul ent concealment and violation of General Business Law §349, and as fa r as unconscionable conduct is concerned, ·· [t] he doctrine of un conscionability is to be used as a shield, not a sword, and may not be used as a bas is for affirm ati ve recovery. Under both the UCC and common law, a court is empowered to do no more than refuse enforcement of the unconscionab le contract or clause ***." (Super Glue Corp. v. Avis Rent A Car Sys., Inc., 132 J\ D2d 604, 606, [2nd Dept 1987]; Fortune Limousine Serv., Inc. v. Nextel Commc 'ns, 35 AD3d 350 l211ct Dept 2006].) E. The Fifth Cause Of Action The fifth cause of action, labeled .. Bad Faith of [the defendants],,. is dupl icati vc of the prior causes of acti on and fa iIs to state a claim agai nst defendant Cath ay. F. The Sixth Cause Of Acti on The sixth cause of acti on is labeled ·'Punitive Damages Against [the defendants]." There is no independent cause of acti on for puni tive damages, and a demand fo r punitive damages is not viable absent its attachm ent to a substantive cause of action. (Podesta v. Assumable Homes De v. II Corp., 137 AD3d 767, [2nd Dept 20 16].) Plainti IT VP has no substantive cause o f acti on aga inst defendant Cathay. Accordingly, the motion is granted and it is, 6 6 of 7 [*FILED: 7] QUEENS COUNTY CLERK 12/19/2019 10:54 AM NYSCEF DOC. NO. 91 INDEX NO. 719165/2018 RECEIVED NYSCEF: 12/19/2019 Ordered, that the action is dismissed as against defendants Cathay Bank and Cathay General Bancorp. This constitutes the Order of the Court. Dated: December 11 , 20 19 FILED DEC 1 9 2019 7 7 of 7

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