Tauber v Freund

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Tauber v Freund 2022 NY Slip Op 33496(U) October 7, 2022 Supreme Court, Kings County Docket Number: Index No. 530004/2021 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. 530004/2021 FILED: KINGS COUNTY CLERK 10/13/2022 11:18 AM NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 10/13/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY QF KINGS : CIVIL TERM: COMMERCIAL PART 8 -·-. -·------ ·----· -·--· -------·-- .- . -----·-. -- ·x MOSHE TAUBER, Plaintiff, Decision and order Index No. 530004/2021 - against MOSES FREUND, October 7, 2022 Defendant, ---·- .--- .--- . -----·-.: . ----·---- . -·--·---------x PRESENT: HON. LEON RUCHELSMAN The defendant has moved pursuant to· CPLR §3211 seeking to dismiss the complaint on the grounds it fails to state a cause of action. The plaintiff oppos~s the motion. by the parties and arguments held. Papers were submitted After reviewing the arguments this court now makes the following determination. According to the Verified Complaint, an agreement was executed between the plaintiff, defendant and non-party Herman Friedman in July 2:014. Pursuant to that agreement the other two parties agreed to transfer a five percent interest in an entity called HMF Holdings.LLC to the plaintiff in exchange for $225,000, Further, . "purs:uant to the Agreement, Freund and Friedman, jointly and severally guaranteed to Tauber, that the premises in which HMF was to conduct business would be fixtured and fully prepared to do business on or before August 31, 2015" (see, Verified Co~pla:Lnt, 916 [NYSCEF boa. #1]). In the eyent the premises were not so fixtureo. then the mcine.y would. be returned to the plaintiff within thirty da:ys. In September 2016 a.nether agreement was reached, a settlement agreement,. whereby [* 1] 1 of 6 INDEX NO. 530004/2021 FILED: KINGS COUNTY CLERK 10/13/2022 11:18 AM NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 10/13/2022 the two majority shareholders agreed to return the $225,000 to the plaint:iff. The ·plaintiff alleges defendant Freund never paid his share and owes $112,500. Further, the plaintiff seeks an additional ·$,60; 000 pursuant to the terms of the settlemen:t agreement and seeks ,a total of $172,500. The defendant l)as now moved seeking to dismissal the complaint on the grounds the plaintiff failed to satisfy a condition precedent. contained in the settlement agreement. The defendant also seeks to dismiss the complaint on the grounds there is another action pending and usury. As noted, the plaintiff opposes the motion. Conclusions of Law It is well settled that upon a motion to dismiss the court must determine, accepting the allegations of the complaint as true, whether the party can succeed upon any reasonable view of tho·se facts NYS3d 334 (Strujan v. Kaufrnan [ 2d Dept., .2019]) . & Kahn, LLP, 168 AD3d 1114, 93 Further, all the allegations :in the complaint are deemed true and all reasonable inferences may be drawn in favor of the plaintiff (Weiss v. Lowenberg, 944 NYS2cl 27 [Pt Dept., 2012]). 95 AD3d 4 05, Whether the complaint will later survive a .motion for summary judgment, or whether the plaintiff will ultimately be .abie to prove its claims, of course, pl,ays no part in the determination of a pre-discovery CPLR §3211 [* 2] ··············-··--···-······ 2 of 6 --------------------------------------- INDEX NO. 530004/2021 FILED: KINGS COUNTY CLERK 10/13/2022 11:18 AM NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 10/13/2022 motion to dismiss (see, Moskowitz v. Masliansky; 198 AD3d 637, 155 NYS3d 414 [20211). It is well settled that a condition pr·ece<::lent is an "act or event, other'than a:lapse of time, which, unless the condition is excused, must occur-before a duty to perform a promise in the agreement arisesrl (Oppenheimer & Company Inc. , v. Oppenheim, Appel. Dixon and Co., 86 NY2d 685, 636 NYS2d 734 [199.5]). Thus, a condition precedent is an act or an event that must occur before the .obligations of the parties become operative. If such condition is not fulfilled then the parties are excused from performing under the i:::ontract. For example where a broker maintains a contract for the commission of a fee upon closing of titl.e a condition precedent to the contract requires the title actually close (Levy v. Lacey, 22 NY2d 271, 292 NYS2d 455 [1968]). Gene:tallyf it is for the Court to decide whether a term of a contract is in.fact a condition precedent (Rooney v. Slomowitz, 11 AD3d 864, 784 ,NYS2d 189 [3 rd Dept., 2004]). must be clear from the. contract i tse1 f It the part.ies intended a provision to operate as a condition precedent (Kassv. Kass, 235 AD2d 150; 663 NYS2d. 581 [2d Dept., 19971). Therefore, if there ambiguity in the la11guage such language will not be treated as a condi tioh precedent; ( id) . Thi$ s.ettlement: agreement states that 1'in: the event. of ~he. failure of the. Purqha.sers to make any payment due hereunder to .3 [* 3] 3 of 6 ··························------------------------------------- INDEX NO. 530004/2021 FILED: KINGS COUNTY CLERK 10/13/2022 11:18 AM NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 10/13/2022 the Seller, then, the Seller shall give a written notice of default to the Purchasers. If the Purchasers fail to cure the Default within fifteen (15) business days of the giving ot such Notice of Default, then the Seller may enter a monetary Judgment against the Purchasers" (see, Settlement Agreement, 'TI 5 [NYSCEF Doc. #3] ) . Thus, the ccmdition regarding notice of default only applies where the purchasers failed to make "any payment due'' however, where payments have been made then the plain terms of the agreement do not require notice as a condition precedent. In any event there are:surely questions of fact whether the condition precedent applies. As noted, the verified Complaint asserts that payments were made by non-party Friedman. Thus, since some payments have been made, questions are raised whether such payments obviated the necessity of any condition precedent. Therefore, the Complaint Cannot be dismissed .on that basis. Next, CPLR §3211 (a) (4) provides that a motion to dismiss a lawsuit on the grounds another lawsuit is pending should be granted when "both suits arise out of the same subject matter or series of alleged w:i:-ongs;' (Aurora Loan Services LLC v. Reid, 132 AD3d 778, 17 NYS3d 894 [2d Dept., 2015]). Thus, wht=;re the rel~efs sought in the two actions are "substantially the same" then dismissal is ptope:.r (Scottsdale Insurance Company v. Indemnity Ihsurance:corb., RRG; 110 AD3d 783, Dept.,. 2Di3] ). . The; term ''substantially the same" is defined as .a 4 [* 4] 974 NYS2d 476 [2d 4 of 6 INDEX NO. 530004/2021 FILED: KINGS COUNTY CLERK 10/13/2022 11:18 AM NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 10/13/2022 cause .of action as E:Ufficiently similar to a simultaneously pending cause of action, when the ruling of one may directly conflict with the nlling of the other (see, Diaz v. Philip Morris Companies; Inc., 28:AD3d 703f 815 NYS.2d 109 [2d Dept., 2006JJ. It is true that a prior lawsuit filed in 2016 sought the same relief, however, tha,t lawsuit is no longer being pursued by the plaintiff. indeed, this is the only lawsuit in which the plaintiff is pursuing its claims. Lastly, the settlement agreement provided for a $.20,000 payment each year if the purchase price is not repaid. The de.fendant argues this constitutes usury rendering the entire settlement agreement void. However, there are surely questions whether these payments are usurious. It is well settled that usury only a,pplies to loans (Adar Bays, LLC v. Genesys ID Inc., 37 NY3d 320, 157 NYS3d 800 [2021]). The court in Adar Bays, LLC emphasized a number of factors to discern whether a particular transaction is a loan. For example, the court noted that "parties who are not directly exposed to market risk in the value of the underlying assets are likely to be lenders, not investors" (id). Moreover, the court stressed that "context, such as whether a party applied to the other f6r a lo~ri or h~d outstanding, s.epara t:e trans.act ions, helps to di st ingui sh betwe.en intent to borrow and intent to engage in .a j.oint trans.action .or exchc1.nge money for· some other .reason" 5 [* 5] 5 of 6 (id) . -Further, the court INDEX NO. 530004/2021 FILED: KINGS COUNTY CLERK 10/13/2022 11:18 AM NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 10/13/2022 acknowledged that evading usury laws is nqthing new and loans have been disguised as a "sale of choses in action" exempteci from the law (id) and that legislative changes were made "in response to the 'Vacuum' in the law that failed to deter the usurious exploitation of corporations by criminal syndicates,, and "ended the practice by 1itn.i,ting the corporate exception" (id). Thus, considering the issue in this case, a single payment, essentially a late. fee, for failing to pay back the money invested, questions remain whether such payment can be characterized as a usurious loan. It cannot be concluded as a matter of law that such payment was usury rende.ring the agreement void. Therefore, based on the foregoing the motion seeking to dismiss the complaint is denied, The parties are directed to proceed with discovery. So orciered. ENTER: DATED: October 7, 2022 Brooklyn N.Y. Hon. Leon RuchelSrhan JSC 6. [* 6] 6 of 6

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