Weingarten v Kopelowitz

[*1] Weingarten v Kopelowitz 2020 NY Slip Op 51260(U) Decided on October 5, 2020 Supreme Court, Rockland County Marx, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 5, 2020
Supreme Court, Rockland County

Max Weingarten, suing Individually and Derivatively on Behalf of LEO Property Holdings LLC, Plaintiff,

against

Shaul Kopelowitz, Hillcrest Acquisitions LLC, 404 Homes LLC, Autumn Brook LLC, Country Shores LLC, Stoneview Homes LLC, Liberty Homes LLC, Summer Chase LLC, Summer Chase 2 LLC, and Gateway Homes LLC, Defendants, and John Doe #1 through Jane Doe # 10, the last 10 names being fictitious and unknown to the Plaintiffs, the persons or parties intended being the occupants, tenants, persons or entities, if any, having or claiming an interest in or lien upon the premises described in the verified complaint, Doe Defendants, and Leo Property Holdings LLC, as Nominal Defendant.



036692/2019



Plaintiff's counsel:

JACOB GINSBURG, ESQ. PLLC

One Concord Drive

Monsey, New York 10952

Telephone: (845) 371-1914

Defendants' counsel:

HINMAN, HOWARD & KATTELL, LLP

700 Security Mutual Building

80 Exchange Street

P.O. Box 5250

Binghamton, New York 13902-5250 Telephone: (607) 723-5341
Paul I. Marx, J.

The following papers numbered 1 through 8 were read on: (1) Defendants' motion to dismiss and/or for summary judgment; and (2) Plaintiff's cross-motion for (a) summary judgment and/or to dismiss, (b) "judgment on the pleadings" on Defendants' fourth counterclaim and on Defendants' fifth and seventh affirmative defenses, (c) discovery pursuant to CPLR §3212(f) and CPLR §3211(d); and (d) leave to amend the Complaint:

Notice of Defendants' Motion/Affirmation of Albert J. Millus, Jr., Esq./Affidavit of

Shaul Kopelowitz/Exhibits A-D 1-3

Memorandum of Law in Support of Motion 4

Notice of Plaintiff's Cross-Motion and Opposition to Defendants' Motion/Affirmation of Max Weingarten/Exhibits A-S/Memorandum of Law 5-7

Defendants' Brief in Opposition to Cross-Motion and in Reply 8

Upon reading the foregoing papers,[FN1] it is ORDERED that the motions are disposed as follows.

BACKGROUND

Plaintiff Max Weingarten ("Weingarten"), individually and on behalf of Leo Property Holdings LLC ("LEO"), brought this action against Defendants Shaul Kopelowitz ("Kopelowitz"), Hillcrest Acquisitions LLC ("Hillcrest"), and eight limited liability companies which own property in the State of Tennessee: 404 Homes LLC, Autumn Brook LLC, Country Shores LLC, Stoneview Homes LLC, Liberty Homes LLC, Summer Chase LLC, Summer Chase 2 LLC and Gateway Homes LLC (collectively "LLC Defendants"). Plaintiff alleged claims against all Defendants pursuant to the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 USC §§ 1961 et seq., breach of contract, breach of fiduciary duty, unjust enrichment, and "concerted-action liability". Plaintiff seeks monetary damages in an amount not less than 15 million dollars, treble damages, an accounting, imposition of a constructive trust and declaratory relief. Plaintiff sues several "Doe" Defendants and names LEO as a nominal defendant.

Kopelowitz formed Hillcrest, a New York limited liability company with its principal place of business in Spring Valley, New York, through which he owns various properties in Rockland County. Kopelowitz later determined to invest in real estate in Tennessee. In [*2]furtherance of that goal, Kopelowitz formed the LLC Defendants for the purpose of purchasing multi-unit rental properties in Tennessee. As sole member of each LLC, Kopelowitz applied for and obtained financing for each LLC Defendant to separately purchase different properties in Tennessee (the "Tennessee Properties"). After obtaining the financing to purchase each property, Kopelowitz later syndicated his interests in four of the LLC Defendants [FN2] by selling 70/30 majority interests to investors.

In January 2016, Kopelowitz formed LEO as a Delaware limited liability company with the stated purpose "to own, hold, develop, lease, improve, renovate, finance, sell, mortgage, pledge, transfer, exchange, operate and manage that certain parcel of real property and the improvements thereon", to engage in other investments agreed upon by its Members and to do everything necessary to further such purposes. LEO's Operating Agreement (the "Agreement") states that Kopelowitz, Shimon Rosenman [FN3] (non-party) and Plaintiff are members of LEO, each with a 33.33% interest. Kopelowitz, Rosenman and Plaintiff agreed that Plaintiff would manage the Tennessee Properties, through LEO. Toward that end, the Agreement stated that Plaintiff would be paid a salary, although it did not specify the amount of the salary. LEO did not acquire any real property in Tennessee and is not registered to do business in that state. LEO is also not registered to do business in New York, however, its principal office is located in Spring Valley, New York.

The operating agreements of four of the LLC Defendants, Liberty Homes LLC, Summer Chase LLC, Summer Chase 2 LLC and Gateway Homes LLC, confer an indirect ownership interest in LEO. Although neither LEO nor Weingarten made any financial contribution to these LLC's (or any of the other LLC Defendants), their operating agreements, which are identical apart from the percentage of LEO's interest, provided that LEO would receive a certain percentage of "Company Cash". The agreements defined Company Cash as the cash on hand which remained after the business paid all expenses and liabilities, retained operating funds and reserves and repaid its investors. The operating agreements specified that the LLC members would receive a "Preferred Return" and thereafter LEO would receive a "Post Preferred Return" of 30%.

Similar provisions were not included in the operating agreements of the other four LLC Defendants, 404 Homes LLC, Autumn Brook LLC, Country Shores LLC, Stoneview Homes LLC. None of those LLC's provide for any monies to be paid to LEO, contingent or otherwise.

Weingarten managed the Tennessee Properties, but was later terminated from his position as property manager with LEO. Kopelowitz asserted that Weingarten's "performance was highly unsatisfactory". Kopelowitz Affidavit at ¶ 22. Kopelowitz claimed that despite Weingarten's management responsibilities for the Tennessee Properties, he spent most of his time in New York, only traveling to Tennessee about twice a month. Kopelowitz further charged that Weingarten "also spent money in a highly reckless fashion". Id. Kopelowitz asserted that, as a result, he and Rosenman relieved him of his responsibility as property manager and replaced him with The K Team, a management company based in Tennessee.

After being terminated as property manager of the Tennessee Properties, Weingarten brought this action in his individual capacity and on behalf of LEO.[FN4] Weingarten alleges that "LEO has a .35% interest, and other Members in proportion to their relative Interests have a .65% ownership interest in each of the Defendants Liberty Homes LLC, Gateway Homes LLC, Summer Chase LLC, Summer Chase 2 LLC and Stoneview Homes LLC." Complaint at ¶ 24. He further alleges that "through his 33.33% LEO interest, [he] has a pro rata ownership interest in each of the Defendants Liberty Homes LLC, Gateway Homes LLC, Summer Chase LLC." Id. at ¶ 25.

The Complaint alleges that Defendants conducted the affairs of LEO through a pattern of racketeering activity, specifically bank fraud, wire fraud and mail fraud, for the unlawful purpose of causing injury to Weingarten through his "loss of LEO as an ongoing business, loss of rents, profits, loss of investment, loss of personal credit, damage to [his] reputation with Banks and other credit provides [sic], and loss of the Tennessee Real Properties". Weingarten alleged that Kopelowitz committed bank fraud by maintaining two operating agreements for each of the LLC Defendants, one showing him as a sole member with a 100% interest in the LLC, which he used to obtain financing for the particular LLC, and a second operating agreement showing a 70/30 membership split, which he used for investors. Plaintiff alleged that Kopelowitz committed wire fraud by making and receiving wire transfers of funds used to purchase real property, pay legal fees, swap loan deposits, etc. in furtherance of the enterprise's business.

Weingarten alleges that Defendants breached the Agreement and the implied duty of good faith and fair dealing by (a) locking Weingarten out of LEO's premises and the Tennessee Properties; (b) locking "Weingarten out of the LEO Operating Accounts, refusing to contribute to Operating Expenses in order to ensure that [Weingarten's] LEO and other investments in the [LLC Defendants] would fail"; (c) "causing an ultra vires, unauthorized and illegal Wire Transfer(s), committing Bank, Wire and Mail Fraud in pursuit of the [LLC Defendants'] wrongful enterprise"; (d) "causing an ultra vires, unauthorized and illegal 'transfer' of the 'ownership, management' of LEO in violation of the Operating Agreement"; (e) "causing an ultra vires, unauthorized and illegal 'transfer' of the 'ownership, management' of [the Tennessee Properties]; (f) "causing disruption and economic loss to Plaintiff LEO's operations" through the "Wire, Bank and Mail Fraud"; (g) "[t]hrough the foregoing ultra vires, unauthorized and illegal 'vote', 'wrongful transfer' and 'transition' by prejudicing Plaintiff Weingarten, as an equal member's ability to conduct LEO's and the LLC's business"; and (h) through the "foregoing ultra vires, unauthorized and illegal conduct[, creating] Events of Default under various LEO Lender Agreements, which required that [LEO's] organizational structure be maintained". Complaint at ¶ 65(a)-(h).

DISCUSSION

Defendants' Motion

Defendants move to dismiss and/or for summary judgment or, in the alternative, for a stay of the action pending arbitration.

[*3]Lack of Personal Jurisdiction Over LLC Defendants

Defendants contend that the Court lacks personal jurisdiction over the LLC Defendants because they are all Delaware companies which own real property in Tennessee and do not conduct business, and are not registered to conduct business, in New York. Defendants' Memorandum of Law at 17, citing Laufer v Ostrow, 55 NY2d 305, 309-310 [1982]. Defendants assert that the Complaint contains no factual allegations of any acts taken by the LLC Defendants and no acts which occurred in New York.

Weingarten contends that the Court has personal jurisdiction over the LLC Defendants because Kopelowitz's control of these companies permits the Court to exercise long arm jurisdiction. Weingarten asserts that "[t]he Agreements by and between Kapolowitz [sic], LEO and the Eight Tennessee Properties, which were run through LEO and Hillside [sic] Acquisitions, businesses Kopelowitz controlled and utilized to commit RICO Fraud and the pendent state claims in the Verified Complaint are located in Rockland County New York and provide an ample basis for the 'conduct of business' basis for in personam jurisdiction in New York." Plaintiff's Memorandum of Law at ¶ 93, citing CPLR §302. Weingarten asserts that the LLC Defendants "conducted business through LEO, Hillside [sic] Acquisitions and Kopelowitz and vice versa." Id. at ¶ 95. Weingarten offers nothing to support his own ipse dixit proposition.

"Under CPLR 301 'the authority of the New York courts [to exercise jurisdiction over a foreign corporation] is based solely upon the fact that the defendant is 'engaged in such a continuous and systematic course of 'doing business' here as to warrant a finding of its 'presence' in this jurisdiction' ". Laufer v Ostrow, 55 NY2d at 309—10. The Court of Appeals explained that the test for determining whether a foreign company has a "presence" in New York, "is a 'simple pragmatic one' (Bryant v Finnish Nat. Airline, 15 NY2d 426, 432): is the aggregate of the corporation's activities in the State such that it may be said to be 'present' in the State 'not occasionally or casually, but with a fair measure of permanence and continuity' (Tauza v Susquehanna Coal Co., 220 NY 259, 267) and is the quality and nature of the corporation's contacts with the State sufficient to make it reasonable and just according to 'traditional notions of fair play and substantial justice' that it be required to defend the action here (International Shoe Co. v Washington, 326 US 310, 316, 320; see, also, Rush v Savchuk, 444 US 320, 327; World-Wide Volkswagen Corp. v Woodson, 444 US 286, 292; Frummer v Hilton Hotels Int., 19 NY2d 533, 536)." Laufer v Ostrow, 55 NY2d at 310.

Plaintiff has not shown that there is any basis for the Court to assert long arm jurisdiction over the LLC Defendants. The mere fact that Kopelowitz is a member of the LLC Defendants does not mean that they conduct business outside of Tennessee, where they own and maintain multi-unit rental properties. It would be an unimaginable stretch for the Court to find a basis to exercise long arm jurisdiction over the LLC Defendants.

Accordingly, Defendants' motion to dismiss the Complaint against the LLC Defendants is granted.

RICO Cause of Action

Defendants contend that the cause of action under RICO should be dismissed because Weingarten does not have standing to bring the claim, having failed to allege a direct injury to himself or to LEO which resulted from Kopelowitz's acts of alleged bank, wire and mail fraud. Defendants argue that any harm Weingarten might have suffered would have been derivative of any harm allegedly caused to the lending institutions to which Kopelowitz purportedly made misrepresentations. Defendants submit Kopelowitz's attestation that none of the loans are in [*4]default and that Weingarten has not articulated how the lenders were or could have been harmed by Kopelowitz using two different operating agreements and not informing the lenders of other investors, even if that had occurred. Kopelowitz attests that at the time he obtained the loans, he was the sole member of each LLC Defendant, and did not obtain investors until he had secured the loans. Kopelowitz Affidavit at ¶ 16.

Defendants contend that Weingarten has not shown a causal link between his claimed injury and Kopelowitz's alleged fraud upon the lenders from whom the LLC Defendants obtained financing to purchase the various Tennessee Properties. Defendants cite Laborers Local 17 Health & Benefit Fund v Philip Morris, Inc., 191 F 3d 229 (2nd Cir 1999), cert denied 528 US 1080 [2000], to support their argument that Weingarten cannot proceed with his claim under RICO because he has not shown that Kopelowitz's allegedly fraudulent acts against the lenders caused either he or LEO to suffer direct injury.

The Second Circuit Court of Appeals held in Laborers Local 17 that in order to establish standing to sue under RICO, a plaintiff must "[show] that the defendant's violation not only was a 'but for' cause of his injury, but was the proximate cause as well." 191 F 3d at 234 (quoting Holmes v Securities Investor Protection Corp., 503 US 258, 268 [1992]). The court reiterated the United States Supreme Court's holding in Holmes v Securities Investor Protection Corp., supra, that traditional common law notions of proximate cause were incorporated by Congress into the RICO statute. Further elaborating on proximate cause, the court stated that "one notion traditionally included in the concept of proximate causation is the requirement that there be 'some direct relation between the injury asserted and the injurious conduct alleged'." Id. at 235 (quoting Holmes, 503 US at 268). Consequently, 'a plaintiff who complain[s] of harm flowing merely from the misfortunes visited upon a third person by the defendant's acts [is] generally said to stand at too remote a distance to recover'." Id. (quoting Holmes, 503 US at 268—69, 112 S Ct 1311 (citing 1 J.G. Sutherland, A Treatise on the Law of Damages 55—56 (1883)); omitting other citations). The direct injury test is "a key element for establishing proximate causation, independent of and in addition to [substantial cause and reasonable foreseeability, which are] other traditional elements of proximate cause" that cannot substitute for direct injury. Id. at 236.

In a later case, which did not involve claims under RICO, the Second Circuit Court of Appeals noted that it has "held RICO plaintiffs to a more stringent showing of proximate cause than would be required at common law". Desiano v Warner-Lambert Co., 326 F 3d 339, 348 [2d Cir. 2003] (citing Moore v PaineWebber, Inc., 189 F 3d 165, 178, 179 [2d Cir.1999] (Calabresi, J., concurring) (explaining that "a RICO plaintiff's burden to show that his case meets the common-law requirement of proximate causation derives from the legislature's intent to impose that causation requirement, and not directly from the common law itself")).

Weingarten does not even begin to approach the required showing. He explains his "direct injury" in terms of the monetary damage he suffered as a result of being "locked out of LEO, the Eight Tennessee Properties, and [wrongfully terminated] as partner and member" when he confronted Kopelowitz about his commission of "RICO Bank, Bank Source and Wire Fraud". Plaintiff's Memorandum of Law at ¶ 91.

Applying either the standard for a motion to dismiss or the standard for summary judgment leads to the same result. The standard applicable to a motion to dismiss pursuant to CPLR §3211 requires the Court to "afford the pleadings a liberal construction, take the allegations of the complaint as true and provide plaintiff the benefit of every possible inference", EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005] (citing Goshen v Mutual Life Ins. [*5]Co. of NY, 98 NY2d 314, 326 [2002]). The standard applicable to a motion for summary judgment pursuant to CPLR §3212 requires the Court to view the evidence "in the light most favorable to the nonmoving party, and all reasonable inferences must be resolved in favor of the nonmoving party." Santiago v Joyce, 127 AD3d 954 [2nd Dept 2015] (citing Green v Quincy Amusements, Inc., 108 AD3d 591, 592; Pearson v Dix McBride, LLC, 63 AD3d 895). Plaintiff's RICO claim fails under both standards.

It is readily apparent from Weingarten's allegations that he did not suffer a direct injury from Kopelowitz's purported misrepresentations or any of the RICO predicate acts of bank, wire or mail fraud allegedly committed by Kopelowitz in furtherance of his alleged enterprise. Neither Weingarten's affirmation [FN5] nor the discovery he requests can save the RICO claim.[FN6] Further detail about Kopelowitz's allegedly fraudulent acts to obtain financing to purchase the Tennessee Properties cannot supply the causal link between such acts and the alleged injury to Weingarten or LEO, if indeed there was one.[FN7] The injury allegedly suffered by Weingarten did not arise from the fraudulent acts perpetrated upon the lending institution(s). Instead, the injury to Weingarten resulted from Kopelowitz's alleged retaliatory conduct against him personally after he told Kopelowitz that he had learned of Kopelowitz's fraudulent activity. The harm to Weingarten came thereafter when he was "locked out" of LEO and allegedly lost the profits, investments and business opportunities that flowed from his relationship with LEO, including his loss of the Tennessee Properties.[FN8]

Kopelowitz demonstrated that Weingarten's allegations of injury are far too remote from the alleged fraud to state a claim under RICO.[FN9] The causal link between the predicate acts and [*6]the injury to him are tenuous at best. Only the lending institutions to which Kopelowitz purportedly misrepresented his ownership interests in the LLC Defendants suffered the injury, if at all, which Weingarten alleged. Weingarten simply failed to make the requisite causal link to himself or LEO. "[M]ere conclusory or unsubstantiated allegations or assertions are insufficient to oppose the motion." Matter of Estate of Kraus, 208 AD2d 729, 730 [2nd Dept 1994] (citing Zuckerman v City of New York, 49 NY2d 557, 562 [1980]); see also Roosevelt Sav. Bank v Jaffee, 227 AD2d 608, 608 [2nd Dept 1996].

Accordingly, Defendants' motion for summary judgment dismissing Plaintiff's RICO cause of action is granted.

Breach of Contract

Defendants Hillcrest and the LLC Defendants move to dismiss and/or for summary judgment as to Weingarten's cause of action for breach of contract against them, because none of them were signatories to the Agreement which Plaintiff alleged was breached. Defendants' Memorandum of Law at 12 (citing Siegel Consultants, Ltd. v Nokia, Inc., No. 590221/09, 2010 WL 9067678 [Sup Ct, New York County 2010], aff'd in part, 85 AD3d 654 [1st Dept 2011], leave den 18 NY3d 809 [2012]).

Defendants move to dismiss the cause of action as against Kopelowitz, the only other party to the Agreement who is sued in the action,[FN10] on the ground that Weingarten has not alleged which provision of the Agreement was breached.

In his opposition papers, Weingarten references other agreements which he claims were breached: "Plaintiff Weingarten, through his member interest in LEO, and through his 70/30 Group Partnership and "sweat equity" Agreement (Exhibit B January 10, 2016 Business Plan Agreement) essentially had a .10 % interest in all Eight Tennessee Properties." MOL at ¶ 114. "Kopelowitz wrongfully terminated Weingarten's partnership, and pro rata member agreement in all Eight Tennessee Property LLCs ". Id. at 116. However, neither the Business Plan Agreement nor the "pro rata member agreement" were included in this cause of action as agreements which were breached. Plaintiff only alleged a breach of the (LEO Operating) Agreement.

The Agreement does not incorporate by reference or otherwise refer to either the Business Plan Agreement or the "pro rata member agreement". The Agreement contains a standard merger clause that precluded incorporating any external agreements or understandings:

10.5 Entire Agreement; Amendments. This Agreement and the agreements referred to herein constitute the entire agreement of the parties relating to the subject matter hereof, and together they supersede and replace any prior agreement or understanding between some or all of the parties pertaining thereto. Except as otherwise expressly provided for, the Agreement may not be changed or modified, except by unanimous action all of the [*7]Members.

Weingarten claimed in his papers that Kopelowitz breached the "LEO member agreement at ¶¶ 9-16". The Agreement does not continue beyond ¶ 10.8 and ¶¶ 9 and 10 are merely boilerplate provisions concerning matters such as applicable law, arbitration, and severability. Those provisions do not contain any substantive obligations.[FN11]

The Agreement does not provide for any specific real estate developments, does not reference any of the Tennessee Properties or provide that Weingarten owned any interest in the Tennessee Properties or any other properties. The Agreement does not provide any connection between LEO and the Tennessee Properties. Kopelowitz asserted that LEO's interest in the Tennessee Properties is a contingent interest in the profits of the LLC Defendants, which has not ripened because the Tennessee Properties must first distribute profits to their investors before any portion of their profits would be due to LEO and to Weingarten directly. Kopelowitz Affidavit, Exhibit D, Operating Agreement of Liberty Homes LLC at Section 4.4. In any event, there is no evidence that LEO's interest in the Tennessee Properties was terminated, reduced or in any way affected by the acts perpetrated against Weinstein.

Weingarten has not shown which provision of the Agreement was breached by Kopelowitz and the LLC Defendants cannot be liable for breach of an agreement which they did not sign and to which they were not a party. Black Car & Livery Ins., Inc. v H & W Brokerage, Inc., 28 AD3d 595, 595 [2nd Dept 2006]; La Barte v Seneca Resources Corp., 285 AD2d 974, 975 [4th Dept 2001].

Accordingly, Defendants' motion to dismiss the breach of contract cause of action against Hillcrest and the LLC Defendants is granted. Defendants' motion for summary judgment against Kopelowitz as to the breach of contract cause of action is granted.

Breach of Fiduciary Duty

Defendants move to dismiss and/or for summary judgment as to the cause of action for breach of fiduciary duty on the ground that none of the LLC Defendants or Hillcrest owed a fiduciary duty to Weingarten because they had no relationship with him, contractual or otherwise. Defendants contend that Weingarten had only an indirect relationship with the LLC Defendants when he served as property manager of the rental units owned by them "by virtue of his employment with LEO."

Defendants contend that Weingarten's claim, which can only be properly asserted against Kopelowitz, is predicated upon Kopelowitz maintaining two different operating agreements for the LLC Defendants and allegedly misappropriating monies from them to himself. Kopelowitz asserts that Weingarten's interest in the LLC Defendants is indirect through his interest in LEO, which has a contingent right to receive profits from certain LLC Defendants. LEO's interest is subordinate to the LLC Defendants' outside investors.

Weingarten contends that "Kopelowitz as the managing member of the Eight Tennessee Properties owed the Plaintiffs a fiduciary duty 'to make full disclosure of all material facts.'" MOL at ¶ 123 (citing Salm v Feldstein, 20 AD3d 469, 470 [2nd Dept 2005]). Plaintiff asserts that "the General Partner is indisputably subject to fiduciary duties to the Partnership and the Limited [*8]Partners." Id. at ¶ 122. Weingarten also contends that the non-managing members, whom he does not identify, also owed him a fiduciary duty to disclose material facts that were relevant to his interests. MOL at ¶ 123. Weingarten continues to treat Defendants as a group, contending that they were obligated to inform him of Kopelowitz's fraudulent conduct, "namely RICO Bank Fraud, Bank Source Fraud and Wire Fraud". Id. at ¶ 124. Weingarten explains that Kopelowitz's fraudulent conduct is the basis for his claim for breach of fiduciary duty. Weingarten asserts that he has established the elements of the cause of action: "(1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant's misconduct." Litvinoff v Wright, 150 AD3d 714, 715 [2nd Dept 2017].

"A plaintiff must provide evidence to establish that the alleged 'misconduct [was] the direct and proximate cause of the losses claimed' (Laub v Faessel, 297 AD2d 28, 30). There must 'be some reasonable connection between the act or omission of the defendant and the damage which the plaintiff has suffered'. (id. at 31, quoting Prosser and Keeton, Torts § 41, at 263 [5th ed.])." Greenberg v Joffee, 34 AD3d 426, 427 [2nd Dept 2006].

Weingarten's breach of fiduciary duty claim fails on the same basis as his RICO claim, because he cannot show that the harm he suffered was directly caused by Kopelowitz's bank, wire and mail fraud, which he alleges as the basis for his claim. Weingarten has not shown a "reasonable connection" between Kopelowitz's fraudulent acts and the damage Weingarten allegedly suffered. Consequently, Weingarten has not met the third prong of a breach of fiduciary duty claim to show "damages directly caused by the defendant's misconduct". Kopelowitz's alleged misrepresentations or omissions did not harm Weingarten or LEO directly.

Accordingly, Defendants' motion for summary judgment as to the breach of fiduciary duty claim is granted.

Unjust Enrichment

Defendants move to dismiss and/or for summary judgment on Weingarten's cause of action for unjust enrichment, contending that he has not shown that he, through LEO, or LEO, had anything more than an inchoate right to share in any of the profits from the Tennessee Properties.

Defendants contend that Weingarten may not maintain a cause of action for unjust enrichment simultaneous with his cause of action for breach of contract. Defendants rely on EBC I, Inc. v Goldman Sachs & Co., 5 NY3d 11, 23 [2005], to support their contention.

Weingarten asserts, "[w]ithout waiver of [the] contract claims based upon privity, alternatively, [that he has] sufficiently established a relationship between [himself] and Defendants" which provides a basis for his claim. Attempting to mirror the facts in Philips Int'l Investments, LLC v Pektor, 117 AD3d 1, 7—8 [1st Dept 2014], Weingarten contends that Defendants were aware of, and played an essential role in, the wrongful scheme to purposefully and fraudulently steal his interests in the Tennessee Properties and profit at his expense.

In Philips Int'l Investments, LLC v Pektor, the plaintiff was able to survive a motion to dismiss its unjust enrichment claim, because it alleged that the defendants "created the partnership defendants as vehicles to appropriate the venture's business opportunity of buying the viable properties." Id. at 7-8. The court found that "the partnerships, through the [defendants], knew of the alleged wrong being done to plaintiff and of their essential role in the allegedly wrongful scheme." Id.

In this case, Weingarten cannot assert a claim for unjust enrichment against Kopelowitz, because he and Kopelowitz are parties to the Agreement, the validity of which has not been [*9]challenged. As such, the Agreement governs the rights and obligations between Weingarten and Kopelowitz and provides Weingarten his only recourse regarding this matter. "[T]he existence of a valid contract governing the subject matter generally precludes recovery in quasi contract for events arising out of the same subject matter." EBC I, 5 NY3d at 23 (citing Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987]). Weingarten uses the same allegations as the foundation for both the breach of contract and unjust enrichment causes of action, alleging, for example, that Kopelowitz violated the Agreement "[b]y causing an ultra vires, unauthorized and illegal "transfer" of the "ownership, management" of LEO" and "[t]hrough the foregoing ultra vires, unauthorized and illegal "vote", "wrongful transfer" and "transition" by prejudicing Plaintiff Weingarten, as an equal member's ability to conduct LEO's and the LLC's business". Complaint at ¶ 65. Weingarten alleged that through such conduct, Defendants have been unjustly enriched at his (and LEO's) expense.[FN12] Complaint at ¶ 78. Because Weingarten's claim is predicated on the Agreement, his cause of action for unjust enrichment against Kopelowitz must be dismissed.

The remaining Defendants, Hillcrest and the LLC Defendants, are not parties to any agreement with Weingarten or LEO. Therefore, Weingarten is not prohibited from asserting a cause of action against those parties based on unjust enrichment. "Briefly stated, a quasi-contractual obligation is one imposed by law where there has been no agreement or expression of assent, by word or act, on the part of either party involved. The law creates it, regardless of the intention of the parties, to assure a just and equitable result". Clark-Fitzpatrick, 70 NY2d at 388-389 (citing Bradkin v Leverton, 26 NY2d 192, 196 [1970]).

Weingarten has no cause of action against Hillcrest, 404 Homes LLC, Autumn Brook LLC, Country Shores LLC, or Stoneview Homes LLC because none of those companies provide in their operating agreements for LEO (or Weingarten, through his percentage interest in LEO) to receive a share of their profits.

Weingarten has no cause of action against the other LLC Defendants, Liberty Homes LLC, Summer Chase LLC, Summer Chase 2 LLC and Gateway Homes LLC, because LEO's right to receive profits from those companies has not ripened. Plaintiffs are off the mark with Phillips Int'l Investments. Weingarten has not shown that the LLC Defendants were created "as vehicles to appropriate [LEO's] business opportunity of buying viable properties", as happened in Phillips Int'l Investments, 117 AD3d at 7-8. Indeed, the LLC Defendants and their real estate holdings represent business opportunities that existed before LEO was formed, some of which LEO is entitled to share, but only after the companies satisfy their liabilities and their obligations to their investors. Weingarten has not shown that any of these defendants has been unjustly enriched at his expense.

Accordingly, Defendants' motion for summary judgment as to the unjust enrichment claim is granted.

Concerted Action Liability, Constructive Trust and Declaratory Relief

Defendants move to dismiss and/or for summary judgment as to Weingarten's cause of action for concerted action liability. Defendants contend that the Complaint does not allege that [*10]the LLC Defendants did anything in concert with themselves or others. Defendants assert that the Complaint alleges that Kopelowitz made misrepresentations to the lenders who provided financing for the LLC Defendants to acquire the Tennessee Properties and appropriated the profits from those properties.

Defendants move to dismiss and/or for summary judgment as to Weingarten's cause of action for imposition of a constructive trust because he has not been unjustly enriched, having only an indirect and inchoate interest in certain of the Tennessee Properties through LEO.

Defendants move to dismiss and/or for summary judgment as to Weingarten's cause of action for declaratory relief on the ground that it is not a cause of action; instead, it is a claim for relief. Defendants request that it be dismissed along with the rest of the Complaint.

Weingarten's opposition to Defendant's contentions do not appear until page 66 of its memorandum of law, well beyond the permitted 20 pages of briefing. Accordingly, Weingarten's arguments have not been considered. Defendants' motion is unopposed with respect to these causes of action.

Defendants' motion for summary judgment as to the concerted action, constructive trust and declaratory judgment claims is granted.

Hillcrest Acquisitions LLC

Defendants move to dismiss and/or for summary judgment as to the causes of action alleged in the Complaint against Hillcrest. Kopelowitz attests that he formed Hillcrest in 2013 to purchase and own real property in Rockland County, long before he had any interest in investing in real estate in Tennessee. Kopelowitz attests that Hillcrest does not own any real property in Tennessee. He states that neither LEO nor Weingarten has any "ownership interest in, or contractual relationship, direct or indirect, with Hillcrest". Kopelowitz Affidavit at ¶ 4. Kopelowitz maintains that Hillcrest has no involvement with the Tennessee Properties or any of the allegations in the complaint. Defendants contend that there are no specific allegations against Hillcrest in the Complaint. Hillcrest is implicated only because the allegations are against "defendants" generally. Thus, defendants request that Hillcrest be dismissed from the action.

Once again, Weingarten's opposition to Defendant's contentions do not appear until page 65 of its memorandum of law, well beyond the permitted 20 pages of briefing. Again, Weingarten's arguments have not been considered.

Accordingly, Defendants' motion to dismiss the Complaint against Hillcrest is granted.

Plaintiff's Cross Motion

Weingarten cross moves for (a) summary judgment and/or to dismiss, (b) "judgment on the pleadings" on Defendants' fourth counterclaim for defamation and on Defendants' affirmative defenses requesting a stay of the action pending arbitration (fifth affirmative defense) and asserting lack of personal jurisdiction over Tennessee LLC Defendants (seventh affirmative defense), (c) discovery pursuant to CPLR §3212(f) and CPLR §3211(d); and (d) leave to amend the Complaint.

The Court cannot reach the arguments on Plaintiff's motion because the briefing does not begin until page 73 of Plaintiff's memorandum of law, well beyond the Court's 20-page limit.

Apart from the page limit, Weingarten's request to amend the Complaint cannot be considered because he failed to attach a proposed amended complaint. CPLR §3025(b) requires that "[a]ny motion to amend or supplement pleadings shall be accompanied by the proposed amended or supplemental pleading clearly showing the changes or additions to be made to the pleading."

Accordingly, Plaintiff's cross motion is denied in its entirety.

SUMMARY

It is ORDERED that Defendants' motion to dismiss the Complaint against the LLC Defendants is granted; and it is further

ORDERED that Defendants' motion for summary judgment dismissing Plaintiff's RICO cause of action is granted; and it is further

ORDERED that Defendants' motion to dismiss the breach of contract cause of action against Hillcrest and the LLC Defendants is granted; and it is further

ORDERED that Defendants' motion for summary judgment against Kopelowitz as to the breach of contract cause of action is granted; and it is further

ORDERED that Defendants' motion for summary judgment as to the breach of fiduciary duty claim is granted; and it is further

ORDERED that Defendants' motion for summary judgment as to the unjust enrichment claim is granted; and it is further

ORDERED that Defendants' motion for summary judgment as to the concerted action, constructive trust and declaratory judgment claims is granted; and it is further

ORDERED that Defendants' motion to dismiss the Complaint against Hillcrest is granted; and it is further

ORDERED that Plaintiff's cross-motion for (a) summary judgment and/or to dismiss, (b) "judgment on the pleadings" on Defendants' fourth counterclaim and on Defendants' fifth and seventh affirmative defenses, (c) discovery pursuant to CPLR §3212(f) and CPLR §3211(d); and (d) leave to amend the Complaint is denied in its entirety; and it is further

ORDERED that the Clerk is directed to enter Judgment of Dismissal in favor of Defendants.

The foregoing constitutes the Decision and Order of the Court.

Dated: October 5, 2020

New City, NY

HON. PAUL I. MARX, J.S.C. Footnotes

Footnote 1:On July 21, 2020, Plaintiff filed a Reply Affirmation of Jacob Ginsburg, Esq., replying to "Defendants' Opposition to Plaintiffs' Cross-Motions and in further support of Plaintiffs' Opposition to Defendants' Motions and in support of Plaintiffs' Cross-Motions". Plaintiff's submission constitutes a sur-reply, which is not provided for in either the CPLR or this Court's Part Rules. Accordingly, the Court has not considered it in disposing of the instant motions. Plaintiff submitted a 84-page Memorandum of Law in flagrant disregard of the Court's Part Rules, which set a 20-page limit for memoranda of law. Plaintiff's counsel did not seek the Court's permission to exceed the page limit. Accordingly, the Court considered only 20 pages of the Memorandum of Law. In the interest of justice, rather than consider only the first 20 pages of the Memorandum of Law, which contains no legal argument or authority, the Court has considered the first 20 pages of the Argument section, which begins on page 34 at ¶ 66. The affirmation of Max Weingarten exceeds the 15-page limit for affidavits and affirmations and has been given similar treatment.

Footnote 2:Kopelowitz sold interests in Liberty Homes LLC, Summer Chase LLC, Summer Chase 2 LLC and Gateway Homes LLC.

Footnote 3:At times in the papers, Shimon Rosenman's name is spelled "Roseman". The Agreement states his name as "Rosenman", above which he set his signature. Therefore, the Court adopts that spelling.

Footnote 4:Despite bringing the action in his individual capacity and on behalf of LEO, Weingarten uses the plural "Plaintiffs" to refer to himself and to LEO, although LEO is not actually a plaintiff. LEO is named in the action as a nominal defendant.

Footnote 5:As Plaintiff asserts, the Court may consider a party's affidavit or affirmation in opposition to a motion to dismiss to establish that the party has a cause of action. Cron v Hargro Fabrics, Inc., 91 NY2d 362, 366 [1998] ("In opposition to such a motion, a plaintiff may submit affidavits 'to remedy defects in the complaint' and 'preserve inartfully pleaded, but potentially meritorious claims'" (citations omitted)). However, the party's affidavit cannot inject allegations that were not alleged in the Complaint and which post-date the filing of the action, as Weingarten seeks to do in his papers by referencing the sale of Autumn Brooks in January 2020. Plaintiff's Memorandum of Law at ¶ 109. In any event, that property was not owned by one of the LLC Defendants which provided LEO with a share of its profits.

Footnote 6:Weingarten asserts that "Defendants have exclusive knowledge of relevant facts, including the Defendants closing statements, binders, wire transfer records and the like. These are needed by Plaintiffs to further oppose Defendants Motions." Plaintiff's Memorandum of Law at ¶ 86.

Footnote 7:In fact, Weingarten's claimed injuries to LEO appear to be derivative of the purported harm to him individually. The chain of causation cannot flow in that direction, as Weingarten's rights derive from his interest in LEO and not the other way around.

Footnote 8:It is unclear how any of this alleged harm could have resulted without LEO being dissolved, which it has not.

Footnote 9:Furthermore, the action is not ripe. The losses claimed by Plaintiff are presently theoretical, as his right to receive profits from the Tennessee Properties, through his membership interest in LEO, is both inchoate and contingent. The Tennessee Properties have not distributed profits to its investors, let alone made any distribution to LEO. Moreover, LEO will receive profits only if there is cash available after the investors are paid. Strasser v Prudential Sec., Inc., 218 AD2d 526, 527 [1st Dept 1995] ("The cause of action under the Racketeer Influenced and Corrupt Organizations Act is not ripe for determination. Plaintiffs' claimed losses are presently too theoretical to be fairly linked with the alleged predicate acts". (citing Miranda v Ponce Fed. Bank, 948 F2d 41, 48 [1st Cir 1991]; First Nationwide Bank v Gelt Funding Corp., 27 F3d 763, 769 [2nd Cir 1994], cert denied 513 US 1079 [1995])).

Footnote 10:The third signatory to the Leo Operating Agreement was Shimon Rosenman, who was not sued.

Footnote 11:In his opposition papers, Weingarten does not discuss the claimed breach alleged in the Complaint at ¶¶ 65(a)-(h), at least not in the portion the Court was able to consider. In any event, the Agreement does not set forth any of the obligations Weingarten claimed were violated.

Footnote 12:"Through the Fourth Cause of Action [Unjust Enrichment] Defendants' ultra vires, unauthorized and illegal acts against Plaintiffs complained of in ¶65(a)-(h) said defendants have been unjustly enriched to [sic] at Plaintiffs' expense." Complaint at ¶ 78.