Opinion
Index No. E2022-1968
05-23-2023
MARC DUBROVSKY, KENOZA LAKE DEVELOPMENT, LLC and KENOZA LAKE ESTATES HOMEOWNERS ASSOCIATION, Plaintiffs, v. JONATHAN BURWICK, Defendants.
Unpublished Opinion
Present: Hon. David M. Gandin, JSC
DECISION AND ORDER
DAVID M. GANDIN, J.S.C.
The following papers were read and considered on defendant's motion to dismiss and plaintiffs' cross-motion to amend the complaint:
1. Notice of Motion; 2. Affirmation in Support with Exhibits A-I; 3. Memorandum of Law; 4. Notice of Cross-Motion; 5. Memorandum of Law in Support and in Opposition; 6. Affirmation in Support with Exhibit A; 7. Affirmation in Opposition with Exhibits A-H; 8. Memorandum of Law; 9. Affirmation in Reply with Exhibits A-D; 10. Memorandum of Law in Rely; 11. Dubrovsky Affidavit.
This action arises out of an ongoing dispute between defendant and the developer of Kenoza Lake Estates, a residential community in the Town of Delaware. Plaintiff Marc Dubrovsky is the principal member of the developer Kenoza Lake Development, LLC ("the LLC") and is President of Kenoza Lake Estates Homeowners Association ("the HO A"). Defendant is a property owner and HOA member. In 2021 defendant commenced an action (Burwick v. Dubrovsky et al., E2021 -1345) seeking declaratory and injunctive relief based on claims that Dubrovsky has impermissibly controlled the HOA Board of Directors for the past seven years and has used such control to act in his own self-interest and to the detriment of the HOA members. Burwick claims that Dubrovsky illegally modified HOA bylaws and the Association's declarations to serve his own financial interests while simultaneously using his mantle as the HOA Board president to force HOA members to pay the legal fees incurred based his breach of his fiduciary duty to the development's residents. The prior action is scheduled for a nonjury trial on September 13, 2023.
Plaintiffs commenced the instant action in September 2022 asserting a breach of the covenant of good faith and fair dealing and a seeking attorney fees under a breach of contract theory. Defendant moves to dismiss for failure to state a cause of action, that a defense is founded upon documentary evidence and that the parties are litigating the same dispute in the prior action. Plaintiff cross-moves to amend his complaint.
On a motion to dismiss pursuant to CPLR § 3211(a)(7), the pleading is to be afforded a liberal construction. The Court must accept the facts as alleged in the complaint as true according plaintiff the benefit of every possible favorable inference and determine only whether the facts as alleged fit within any cognizable legal theory. See Leon v. Martinez, 84 N.Y.2d 83 (1994). To prevail on a motion to dismiss under CPLR § 3211(a)(1) the proffered documents must utterly refute the allegations in the complaint and conclusively establish a defense as a matter of law. See Shephard v. Friedlander, 195 A.D.3d 1191 (3d Dept 2021). In granting a motion to dismiss under CPLR § 3211(a)(4), "it is not necessary that the precise legal theories presented in the first action also be presented in the second action as long as the relief... is the same or substantially the same." Bd. of Managers of 1835 E. 14th St. Condominium v. Singer, 186 A.D.3d 1477,1480 (2d Dept 2020). "The critical element is that both suits arise out of the same subject matter or series of alleged wrongs." Cherico, Cherico & Assoc, v. Midollo, 67 A.D.3d 622, 622 (2d Dept 2009).
Plaintiffs' first cause of action asserting a breach of covenant of good faith and fair dealing alleges that defendant's conduct has prevented plaintiffs from completing and selling the remaining lots in the development. They claim that defendant's efforts consisted of "a pattern and practice of instigating disputes with Dubrovsky, generating conflict with other Association members and stirring up baseless claims that prevented] Dubrovsky and [the LLC] from developing the property as intended and provided for in the various bylaws, declarations and covenants governing the Estates." Plaintiffs contend that theses documents provide a "reasonable belief, understanding and expectation that [plaintiffs] would be able to complete the full buildout and sale of lots in the Estate without Burwick's interference."
"In New York, all contracts imply a covenant of good faith and fair dealing in the course of performance." 511 W. 232ndOwners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 153 (2002). The Estate bylaws and declarations are contracts between the HOA and its members as well as between the individual members themselves. See Matter of Olszewski v. Cannon Point Ass'n, Inc., 148 A.D.3d 1306 (3d Dept 2017). The covenant of good faith and fair dealing "embraces a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract." Id. The covenant, however, is not without limits and the Court will imply an obligation of good faith only in aid and furtherance of other terms of the agreement of the parties. See Singh v. City of New York, 2023 NY Slip Op 02141 (Ct App Apr. 27, 2023). The covenant cannot be used to "imply obligations inconsistent with other terms of the contractual relationship," and encompasses only those "promises which a reasonable person in the position of the promisee would be justified in understanding were included." Id., quoting 511 W. 232nd Owners Corp., at 153. "[A] party who asserts the existence of an implied-in-fact covenant bears a heavy burden, for it is not the function of the courts to remake the contract agreed to by the parties, but rather to enforce it as it exists. Thus, a party making such a claim must prove not merely that it would have been better or more sensible to include such a covenant, but rather that the particular unexpressed promise sought to be enforced is in fact implicit in the agreement viewed as a whole." Rowe v. Great Atl. & Pac. Tea Co., Inc., 46 N.Y.2d 62, 69 (1978).
Plaintiffs' first cause of action asserted by Dubrovsky in his individual capacity must be dismissed. He is not a party to the bylaws or declarations and the complaint also does not allege that he is a member of the HOA in by virtue of owning property in the Estates. Accordingly, there is no contractual obligation between him and the defendant to create an obligation of good faith and fair dealing. The complaint also fails to state a claim of breach of the covenant with respect to the LLC and the HOA. While plaintiffs' claim that the purpose of the bylaws and declarations is to "fully [develop the Estates] as intended...", the plain language of the bylaws says otherwise. The stated purpose of the bylaws is "to own and maintain the Common Areas for the benefit of the members of [the HOA]...." Moreover, plaintiffs fail to identify any specific provisions of the controlling agreements that defendant allegedly violated that deprived plaintiffs the fruits of the contracts. Based on the foregoing, the complaint fails to state a claim for breach of the covenant of good faith and fair dealing. Plaintiffs' first cause of action is based on an claimed obligation which is not contemplated by a reasonable view of the bylaws and declarations.
Defendant has also demonstrated that there is substantial identity of the parties and subject matter regarding plaintiffs' second cause of action for attorney fees between the instant and prior action. See CPLR § 3211(a)(4) The parties are identical and both actions concern the interpretation of the Estates' bylaws and declarations. In the prior action defendant challenges plaintiffs' authority under the bylaws to collect attorney fees from defendant. While the adjudication of that action would likely be dispositive of plaintiffs' attorney fees claim, it would be premature to dismiss plaintiffs' second cause of action at this juncture. See Bd. of Managers of 1835 E. 14th St. Condominium v. Singer, 186 A.D.3d 1477 (2d Dept 2020). Wherefore, it is
ORDERED that defendant's motion is partially granted in that plaintiffs' first cause of action is dismissed. It is further
ORDERED that all proceedings with respect to plaintiffs' second cause of action are stayed pending a trial of the prior action Burwick v. Dubrovsky et al, E2021-1345 which is currently scheduled for September 13, 2023. It is further
ORDERED that plaintiffs' cross-motion to amend the complaint is denied. Although leave to amend the pleadings should freely be given absent prejudice or surprise (see CPLR § 3025(b)), the attached proposed complaint, while omitting Dubrovsky as a plaintiff in his individual capacity, fails to remedy the infirmities discussed above. As the proposed amended complaint similarly fails to state a cause of action for breach of covenant of good faith and fair dealings, it is patently devoid of merit. See generally Thomson v. Watchtower Bible and Tract Socy. of New York, Inc., 198 A.D.3d 996 (2d Dept 2021). It is further
ORDERED that defendant's motion for sanctions is denied. Defendant has failed to demonstrate that plaintiffs' conduct was frivolous within the meaning of 22 NYCRR 130-1.1.
The foregoing constitutes the decision and order of the Court. The signing of this decision and order shall not constitute entry or filing under CPLR §2220. Counsel is not relieved from the applicable provisions of that rule regarding notice of entry. Pursuant to CPLR §5513, an appeal as of right must be taken within thirty (30) days after service by a party upon the appellant of a copy of the judgment or order appealed from and written notice of its entry, except that when the appellant has served a copy of the judgment or order and written notice of its entry, the appeal must be taken within thirty (30) days thereof.