Lifshitz v Wilhelm

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Lifshitz v Wilhelm 2022 NY Slip Op 32141(U) July 5, 2022 Supreme Court, Kings County Docket Number: Index No. 120/2022 Judge: Leon Ruchelsman 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. INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 ----------------------- -------- ---- ---x BENJAMIN LIFSHITZ and REBECCA KASHANIAN, Plaintiffs, Decision and order - against - Index No. 120/2022 LEVI WILHELM, MORDECHAT GURARY a/k/a MOTTY GURARY, ZALMAN WILHELM; BNOS MENACHEM, INC~, JOBN DOES 1-10 and ABC CORPORATIONS 1-10, Defendant, - - - - - - - · - - - - - · - · - - - · - . ----·--·· -· - - ··--·-·· - July 5, 2022 · - - - - - · .X PRESENT: HON. LEON RUCHELSMAN The plaintiff has moved seeking a preliminary injunction. The de.fendants have cross-moved seeking to dismiss the lawsuit. Further, motions seeking sanctions were filed. been opposed re.specti vely. and arguments held. All motions have Papers were submitted by the parties After reviewing all the arguments thi·s court now makes the following determination. According to the complaint, on June 20, 2016, Levi Wilhelm, the owner of property located at 729 East New York Avenue in Kings County entered into a plaintiff :Benjamin Lifshitz:. contract to sell the property to the However, the actual date the contract was signed remains unclear. affect these motions. That ambiguity doe-5- not The purchase price was $600,000 and the contract required a closihg within sixty days.. Sometime in 20i 7 the parties. e.ntered into a rider wherein the closing was set for Febr\.iary 15; 2018. Oh that date there w.ere encumbrances which ma'd.e closing impossibie and therefore t.he defendant $1'.'gues that [* 1] 1 of 12 INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 pursuant to Article 21{b) {i) of the contract the seller defendant cancelled the contract. That article states that "if at the date of Closing Seller is unable to transfer title to Purchaser in accordance with this contract, or Purchaser has, other valid grounds for refusing to close, whether by reason of liens, encumbrances or other objections to title or otherwise (herei,n collectively called "Defects"), other than those subject to which Purchaser is obligated to accept title hereunder or which Purchaser may have waived and other than those which Seller has herein expressly agree·d to remove, remedy or discharge and if Purchaser shall be unwilling to waive the same and to close title without abatement of, the purchase price, then, except as hereinafter set forthi Seller shall have the right, at Seller's sole election, either to take such action as Seller may deem advisable to remove, remedy, discharge or comply with such Defects or to cance·1 this contract" (id). In addition, it is allegeo. that on August 24, 2016 the parties entered into a ninety-nine year lease for the same property for ten dollars for the entire ninety-nine year period. On February 25, 2022 Wilhelm sold the property to defendant Brtos Menachem Inc., a religious girls school. The plaintiff has .moved seeking to enj oirt the tr.ansfer of .the property to Boos Meh.achem ·on the grounds it could not have properly been sold to them and that the plaintiff is.. either the lawful tenant at the 2 [* 2] 2 of 12 INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 premises Qr is awaiting closing to assume ownership. The defendants have moved s,eeking to dismiss many of the causes of action on the grounds they fail to allege any claims. Further, as noted, motions seeking sanctions have been filed. Conclusions of Law It is well settled that upon a motion to dismiss the court must detiermine, accepting the allegations of the complaint as true, whether the party can succeed Upon any reasonable view of those facts (Strujan v. Kaufman & Kahn, LLP, 168 AD3d 1114, 9~ NYS3d 334 [ 2d Dept., 201'9]) . Further, all the allegations in the complaint are deemed true arid a:11 reasonable inferences may be drawn in favor of the plaintiff (Weiss v. Lowenberq, 95 AO3d 405, 944 NYS2d 27 [Pt Dept., 2012]). Whether the complaint will later survive a motion for summary judgment, ctr whether the plaintiff will ultimately be able to prove its claims, of course, plays no part in the determination of a pre-discovery CPLR §3211 motion to dismiss (see; Moskowitz 155 NYS3c:i 414, v. Masliansky, 198 AD3d 637, [2021]}. concerning the lease, pursuant to New York Tax Law §140l{e) any lease longer than forty-nine years is considered a 'conveyahce' .and subjec:t to taxes thereupon (New York Tax Law :§1402). Consequently, such lease must be recorded {Real E.state Investment Trusts Handbook, 6: 71, Transfe.r Ta}{.es.: Recordation Tax.es [2021]) . .There is no dispute that no such taxes cort.cei:hing 3 3 of 12 [* 3] --------------------------------·--···-·-···--·······-·········· ...... . INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 this lease were ever contemplated and the lease was never recorded. Thus, evem if the lease agreement was not a forgery and the defendant fully consented to absurd .and perhaps unconscionable lease terms the lease is unenforceable since it did not comply with the above noted tax and recording provisions. Further, the plaintiff's explanation that the lease was executed to secure the plaintiff's investment in repairs to the property does not legally avoid the statutory recording and tax payments that were required. Thus, that explanation does not cure any of the legal infirmities associated with the lease. Moreover, there is no evidence presented at .all that Bnos Menachem was aware of the existence of the lease. The complaint does allege Bnos Menachem was aware of the c::cintract entered into between the plaintiff and the defend<':l.nt, however, that knowledge, even if true, does not opviate the need to record the lease, as noted. Hence, the lease is not a basis upon which the plaintiff may pursue any claims to the premises. Next, corn::erning the contract, a contract can be deemed abandoned where one party acts in a manner inconsistent with the existence of the c:ontract and the other party acquiesces in that behavior (see, EMF General Contractiri.g Corp., v. Bisbee, 6 AD3d 45, 774 NYS.2d 39 [Pt Oept., 2004]) .. Thus, the a:bandqnmemt of a contract can only be. accomplished fhroLi.gh niut.ual as.sent of both parties (Graham v. James, 144 F~3d 229 [2d. Cir .. 199.9]). 4 4 of 12 [* 4] ~-------------------··-··--··-···-··--···-·-····--······--··-········--·······················--··············· The INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 intent to abandon need not be express and may be inferred from the conduct of the parties, however, such intent must be unequivocal and mutual (Aini v. Sun Taiyanq Co., Ltd., 762 [S.D.N.Y. 1997]). Further, the breach o.f the qontract or the 964 F.Supp failure to perform does not constitute abandonment (Carver v. Apple Rubber Products Corp., 163 AD2d 84 9, 558 NYS2d 37 9 [ 4 th Dept., 1990]}. In this case, despite the passage of time and inactivity, there hasheen no presentation of an unequivocal intent for both parties to abandon the contract. on the contrary, there are surely questions of fact whether the buyer was simply waiting for the seller to remove the encumbrances prior to closing, and fully expected to close at some point. The defendant argues that he cancelled the contract pursuant to Article 2l(b} of the contract and consequently, such contract was duly rendered vO'id enabling the sale to Enos Menachem. The plaintiff argues that article did not permit the defenciant to unilaterally cancel the contract and sell the property to Eons Menachem. A careful analysis of Article 2l(b) (i) of the contract reveals that it states that if the seller is unable to transfer title or if the buyer has other reason~ for refusi,ng to clos.e then the se.11er may cancel the contract. The article .does not piovide reasons why the sell.er is unable to transfer title an.ct only fc,cuses upon the l:>t1yer' s. reasons for re-fusing to clos.e .. 5 ________________ .. ....... [* 5] ,_,_ ,. .,,., ... . , , ... . 5 of 12 INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 Thus, the article provides reasons the buyer does not wish to close including the existence of any Liens or encumbrances, unless the buyer is obligated to accept title anyway or unless there are encumbrances "which the Purchaser may have waived" or (id) unless the seller expressly agreed to remedy such encumbrances. The article continues to state tha,t if the buyer is unwilling to waive the existence of any such encumbrances a:nd does not wish t'o close without an abatement of the purchase price then the seller has the right to cancel the contract. Thus, while it appears tll.e article expresses two distinct ways in which the seller can cancel the cont.tact, in truth, the two ways are interwoven and ,no such unilateral authority is granted to the seller to cancel the contract. This is clear upon examination of the actual cancellation procedures found in Article 21 (b) (ii) whiqh of necessity mµst be read in conjunction with Article 21 (b) (i). Article :21 (b) (ii) governs the procedures that the seller must employ to successfully cancel the contract. states that ''LE Seller elects to take action to remove; It remedy or corriply with such Defects, Seller .shall be entitled from time to tirrie, upon Notice to Purchaser, to adjourn the date for Closing hereunder for a period or periods not exceeding 60 days in the aggregate (but not extending beyond the date upon whi.ch Purcha.ser I s mort:gage cqmmitrnent, if any, shal.l expire) , and the date for .closing shall be adjourned to· a date specified by Seller 6 [* 6]- - - - - - - - · · · · · · · - · · · · · · · · · · · · · · --- 6 of 12 INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 not beyond such period. If for any rea'son whatsoever, Seller shall not hav,2 suc_ceeded in removing, remedying or complying with such Defects at the expiration of such adjourtiment{s), and if Purchaser shall still be unwilling to waive the same and to, close title without abatement of the purchase price, then either patty may cancel this contract by Notice to the other given within 10 days after such adjourned date" (id). Thus, this article provid'eS the seller with two options depending on the t:ircumstali.ces. First, if the seller is working to remedy the encurrtbtari.Ces then seller, upon notice to purchaser, may extend the closing date for a maximum period of sixty days. There really is no dispute the seller never informed the buyer of any further adjourn dates or any new closing dates arid thus cannot avail itself of this provision. Second, if the seller does not succeed in removing the encumbr:ances and the buyer is unwilling to waive the defects then any party can cancel the contract by providing ten days notice. Likewise, this option was not properly exercised by the defendant since i t nece-ssarily requires the buyer's knowledge and awareness since the buyer's ability to waive the defects without ali. abatement of the purchase price will obviate the abiJ,ity on: the part of the seller to cancel the contract. .Thus, notwithstanding Art:Lcle 21.(b) (i} a unilEi.teral cancellatiqn is not contemplated at all. Indeed, there cart be no cancellation of the' contract without express notice to the buyer 7 ---··--····-······--··-···--··-.... ···-·· .... [* 7] 7 of 12 INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 to afford the buyer the option to close in a,ny event. There is no dispute there was n,ever notice of such cancellation. Moreover, the· cancellation notice belatedly sent oh March 15, 2022 was a nullity since it was not preceded by the buyer's express ability to w;3.ive the defects. Moreover, there are further questions of fact whether in fact the seller ever cancelled the contract at all. Thus, Mr. Wilhelm admits that he could not <:::lose due to the existence of encumbrances (see, Affidavit of Levi Wilhelm, dated March 27, 2022, CJIS[ 6-8) and consequently cancelled the contract pursuant to Article 2l(b). However, Mr. Lifshitz has provided affidavits wherein he states that \\I consistently reached out to Levi to set a closing date; and Levi consistently responded as if the Contract was still valid and it was just ,a matter ,of resolving the mortgage and the earlier title defects" (see, Affidavit Of Benjamin Lifshitz; dated May 31, 2022, 'JI 31). Further, Mr. Lifshitz states that ''at no point did Levi ever cancel the Contract or request that I (id., at 9I 32). close subject to the title defects" Moreover, Mr. Lifshitz also stated that at various points during the four year delay he reached out to Mr. Wilhelm who "always had another reason to stall" (see, Affidavit of Benjamin Li.fshitz, dated March 15.; 2022 'JI 34). Further, Mr~ Lifshitz states that "Wilhelm kept telling me that the IRS tax lien was still unresolved .and that until tie clears the lien. he. 8 - 8] -[* ,_ ___ _,_,_, ______ ,. ______ ,. ___ ,, ___ _,_,_,,., .... , . .,,_ __ __ .... ,, '"'"""' ,.,.,, ... ,, ,. ',., __ 8 of 12 INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 would not be unable to close" (id at <fl 35). Again, Mr. Lifshitz stcl.tes that toward the end of 2020 he sought to set a closing date and that Mr. Wilhelm asked for more time to resolve the outstandi'rig encumbrances. Specifically, Mr. Lifshitz sates that ~we agreed to give hi~ more time to work something out with the bank so that he cot1ld sell the Property to llS cind not take a loss" (id at ':IT 35). Thus, there are clearly questions Of fact whether any cancellation ever occurred or if the parties waive;d the sixty-<:lay maximum adjournment time"""frame. Further discovery and perhaps a trial is surely necessary to resolve these factual discrepancies which indeed are the crux of the entire lawsuit. Moreover, as noted, no formal cancellation was ever forwarded to the plaintiff. Thus, the defendant is essentially arguing that there are no questions of fact the contract was duly cancelled, unilaterally, without informing the plaintiff of such cancellation and that therefore the defendant could legally sell the property to Bnos Menachem. However, questions have been presented that legally and .factually challenge those conte.ntions, Even if the defendant had the right to cancel the contract, a disputed right considering the plaintiff's contentions, there is no eyidepce at all the plaintiff was ever made ~~are bf such cancellation. The defendant argues the mere passage of time re.ndeI;ed the contract cancell.ed anq. that apparently rio notice was required. However, there i.s no legal principle that supports the 9 [* 9] --------·--·-·-·-···--··-···--··--···· ···-························-·-····-···· ...... 9 of 12 INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 cancellation of a contract by mere inaction or the unexplained passage of time. Furthermore, the complaint alleges that Brtos Menache'rn was aware o.:f the existence of this contract {see, Complaint, Tn addition, err 70). the complaint alleges that shortly after the contract was negotiated and executed Bnos Menachem sought to convince and even threaten the plaintiff to give up its rights under the contract (see, Complaint, 'JI 41-60}. While those allegations will, of coµrse_, be subject to discovery, the allegations raise questions whether Enos Mena.chem can claim they were bona fide purchasers for value enabling them to maintain the prop~rty (Fasion v. Lewis, 25 NY3d 220; 10 NYS3d 185 [2015 J) . Therefore; based on the foregoirtg; the motion seeking to dismiss any of the causes of action is denied. Turning to the motion seeking a prelim:Lnary injunction, in relevant part, CPLR §6301 allows the court to issue a prelimina:ry injunction ''in any action .. ,where the plaintiff has demanded and would be entitled to a judgment restraining de£endarit from the commission or the continuance of an act., which, i£ committed or continued during the pendency of the action, would produce injury to the plaintiff" (id). It i.s we11 established that "the party seeking a preliminary injuncti.onmust qemonstrate a probability of success on the merits, danger of .irreparable injury in the .. absence of the 10 [* 10] 10 of 12 INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 injunction and a balance of the equities in its favor" (Nobu Next Door, LLC v. Fine Arts :Housing, Inc., 4 NY3d 839, 800 NYS2d 4S [2005], see also, Ale·xandru [2d Dept., 2009]) . v. Pappas, 68 AD3d 690, 890 NYS2d 593 The Second Department has noted that "the remedy of granting a preliminary injunction is a drastic one which should be used sparingly" (Town of Smithtown v. Carlson, 20A AD2d 537, 614 NYS2d 18 [2d Pept,t 1994]). Thus, the Secorid Department has been clear that the party seeking the drastic remedy of a preliminary injunction has the burden of proving each of the above noted elements "by clear and convincing evidence" (Liotta v. Mattone, 71 AD3d 741, 900 NYS2d 62 [2dDept.,. 2010]). Considering the first prong, establishing a likelihood of success oh the merits, the plaintiff must prirn:a facie establish a reasonable probability Of success (Barbes Restaurant Inc., v. Seuzer 218 LLC, 140 AD3d 430, 33 NYS3d 43 [2d Dept,, 2016]) . Even if issu~s of fact exist, the court cah still conclude the moving party has demonstrated a likelihood of success on the merits sufficient to grant .an injunction 26 AD3d 485; {see, 810 NYS2d 216 [2d Dept., 2006]). Ruiz v. Meloney, Inde.ed, "the mere existence of an issue of fact will not itself be grounds for the denia.l of the. motion" (Arcamone-Makihano v. Bri ttoh Property Inc., 83 AD3d 623, 920 NYS2d 362 [2d Dept., 20111). This is especialiy true .wher£= the. :denial of an injunction would disturb the stc1tus quo and render the continuation of the lawsuit i1 [* 11] 11 of 12 ---·------·...... _... _____ INDEX NO. 120/2022 FILED: KINGS COUNTY CLERK 07/07/2022 11:09 AM NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 07/07/2022 ineffectual (Masj id Usman, Inc., v. Beech 140, LLC, 892 NYS2d 430 [2d Dept., 2009]). required to 68 AD3d 942, Thus, the moving party is not present "conclusive proof" of its entitlement to an injunction and "the mere fact that there indeed may be -questions of fact for trial does not preclude a court from exercising its discretion in granting an injunction" (Ying Fung Moy v. Hohi Umeki, 10 AD3d ,604, 781 NYS2d 684 [ 2d Dept., 2004]) . Of course, issues of fact will necessarily prevent the issuan'ce of ahy injunction only where the factual issues "subvert[s] the plaintiff's likelihood of success on the merits in this case to such a degree that it cannot be said that the plaintiff established a clear right to relief" {County of Westchester v. United Water New Rochelle, 32 AD3d 97 9, 822 NYS2d 287 200 6] ) . [2d Dept., Thus, the denial of the injunction and thus permitting Bnos Menachem access to the property would render the lawsuit wholly ineffectual. C:onsequently, the motion seeking an injunction is granted. The property will remain padlocked unless written consent of all parties is provided to the sheriff or upon further order of this court. Lastly, at this juncture all motions seeking sanctions are denied. So ordered. ENTER:. DATED: JUly 5, 2022 Brooklyn N.Y. Hon. Leon R JSC 12 [* 12] 12 of 12

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