Opinion
2015–3430
05-05-2017
Lucien GALARNEAU, Jr., Plaintiff, v. Robert D'ANDREA, Faust D'Andrea, Joseph D'Andrea, Marie Grace Manz, as Trustee of the Robert A. D'Andrea and Theresa J. D'Andrea Family Trust dated May 19, 2015, and Domenic R. D'Andrea, as Trustee of the Robert A. D'Andrea and Theresa J. D'Andrea Family Trust dated May 19, 2015, Defendants.
For Defendants: Lippes Mathias Wexler Friedman, LLP (By: Thomas D. Latin, Esq.), 54 State Street, Suite 1001, Albany, New York 12207 For Plaintiff: Hodgson Russ, LLP (By: Richard L. Weisz, Esq.), 677 Broadway, Suite 301, Albany, New York 12207
For Defendants: Lippes Mathias Wexler Friedman, LLP (By: Thomas D. Latin, Esq.), 54 State Street, Suite 1001, Albany, New York 12207
For Plaintiff: Hodgson Russ, LLP (By: Richard L. Weisz, Esq.), 677 Broadway, Suite 301, Albany, New York 12207
Richard E. Sise, J.
In October 2013 plaintiff met with defendants Robert D'Andrea and Joseph D'Andrea to discuss the possible sale of a parcel of real property located on Crescent Avenue in Saratoga Springs. The parcel, approximately 166 acres, was then owned by Robert and Joseph, together with their brother Faust, as tenants in common. Plaintiff alleges in the verified complaint that at the meeting he entered into a verbal agreement with Robert and Joseph, on behalf of all three brothers, that he would purchase the property for $4,000,000 with the closing to take place at a mutually agreeable time after the City of Saratoga Springs re-zoned the property so as to increase the permissible building density. Plaintiff also alleges that the D'Andrea brothers agreed to hold a promissory note for the full purchase price to be paid with interest at 1% per annum which would begin to accrue after plaintiff obtained the necessary approvals for the development of the property. According to plaintiff, partial payments on the note were to be made as lots were sold. On the day after the meeting plaintiff sent a letter to Robert and Joseph outlining the basic terms of the agreement. Plaintiff asserts that he did not require a written agreement, choosing instead to rely on the verbal agreement.
It is not entirely clear from the papers submitted whether Robert has since deeded his interest in the property to the Robert A. D'Andrea and Theresa J. D'Andrea Family Trust.
Thereafter, plaintiff began to pursue development of a residential community at the property putting together aspects of site plan development and actively participating in efforts to have the property re-zoned. Despite plaintiff's efforts, with the participation of Robert and Joseph, the City Council voted on April 14, 2015 against re-zoning the property. Plaintiff alleges that shortly after the vote Robert and Joseph told him that they wanted to consider other offers for the property. According to plaintiff, and based on his belief that the re-zoning could still be accomplished, he advised Robert and Joseph that he was agreeable provided he was given a right of first refusal. Plaintiff contends that they agreed but in September 2015 he was told to stop working on the project as the brothers were discussing another offer. When plaintiff subsequently notified the D'Andrea brothers that he was electing to exercise the right of first refusal, he was told they were not bound by it and had no intention of honoring the right of first refusal. On November 18, 2015 plaintiff filed a notice of pendency and, on the same day, commenced this action in which he alleges causes of action based on breach of contract, equitable estoppel, promissory estoppel, negligent misrepresentation, fraud, unjust enrichment and for a vendee's lien. Defendants have now moved for summary judgment dismissing the complaint in its entirety.
The proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact ( Winegrad v. New York Univ. Med. Center , 64 NY2d 851, 853 [1985] ). The evidence produced by the movant must be viewed "in a light most favorable to the nonmoving party and accord that party the benefit of every reasonable inference from the record proof, without making any credibility determinations" ( Black v. Kohl's Dept. Stores, Inc. , 80 AD3d 958, 959 [3d Dept. 2011] [citations omitted] ). Once the moving party has satisfied its burden, "the opposing party must then submit proof in admissible form sufficient to create an arguable question of fact requiring a trial" ( Vielhauer v. Dick Corp. , 224 AD2d 792 [3d Dept. 1996] ). As the limited function of the court on a motion for summary judgment is issue finding, the decision must be based upon the facts and not upon the pleadings ( McIntyre v. State of New York , 142 AD2d 856 [3d Dept. 1988] ).
In an affidavit by Joseph D'Andrea, submitted in support of the motion, he maintains that plaintiff agreed to purchase the 166 acre property for $4,000,000.00. However, according to Joseph, no other terms of a sale were agreed upon and he contends that his co-owner brothers did not have the authority to make any arrangements on his behalf. Joseph concedes that he agreed to cooperate in pursuing the application to re-zone the property but only as an accommodation to plaintiff. He denies having agreed to make the sale contingent upon the re-zoning, to selling the property with no money down, to a purchase money mortgage at a 1% interest rate or to be paid as lots were sold. According to Joseph, he expected to enter into a written contract of purchase and sale and he denies having agreed to give plaintiff a right of first refusal.
Defendants also submitted a transcript of the deposition testimony of Robert D'Andrea. His testimony is consistent with the statements of his brother Joseph: the parties agreed to a purchase price of $4,000,000.00 but no other terms; he agreed to assist in pursuing the zoning change but it was never made a part of an agreement and he denied agreeing to give plaintiff a right of first refusal.
BREACH OF CONTRACT
Defendants first argue that the two causes of action for breach of contract, seeking specific performance and money damages, should be dismissed inasmuch as any purported agreement fails to satisfy the statute of frauds. " General Obligations Law § 5–703 (3) provides, in relevant part, that a contract to devise real property will be barred by the statute of frauds ‘unless the contract or some note or memorandum thereof is in writing and subscribed by the party to be charged therewith, or by his [or her] lawfully authorized agent’ " ( Sivos v. Eppich , 78 AD3d 1360, 1361 [3d Dept. 2010], quoting General Obligations Law § 5–703 [3 ] ). Here, defendants Robert and Joseph D'Andrea deny having signed an agreement with plaintiff for the sale of the Crescent Avenue property. Plaintiff contends, however, that the signed deposition transcript of Robert D'Andrea, in which he acknowledged that the parties had agreed to a purchase price, is sufficient to take the case out of the statute of frauds. The transcript, however, is not a contract nor is it a note or memorandum thereof. Rather it is a printed record of oral testimony. To the extent that the testimony represents an admission of the actual existence of an alleged oral contract, which may be sufficient to take the agreement outside the scope of the statute of frauds ( Dzek v. Desco Vitroglaze of Schenectady Inc. , 285 AD2d 926 [3d Dept. 2001] ), a party's admission as to certain aspects of an alleged agreement is insufficient where the party denies other, material terms ( Williams v. Lynch , 245 AD2d 715 [3d Dept. 1997], appeal dismissed 91 NY2d 957 ; see also Tallini v. Business Air , 148 AD2d 828 [3d Dept. 1989] [party's admission as to existence of employment contract insufficient where the essential terms thereof remained in dispute] ). Robert and Joseph, however, have both denied having agreed to the payment terms and re-zoning contingency which are material terms of the contract alleged by plaintiff. Consequently, their admission, as to an agreement on the purchase price, does not take the case out of the statute of frauds.
Plaintiff's other argument that a signed cover letter of an attorney, which accompanied a billing invoice sent to plaintiff, is a sufficient part of a written memorandum is also without merit. The attorney was retained by plaintiff and has not been shown to be an agent of defendants with written authorization to convey an interest in real property (see Spodek v. Riskin , 150 AD2d 358 [2d Dept. 1989] citing General Obligations Law § 5–703 [1 ] ).
Insofar as plaintiff asserts a claim based on a breach of the alleged right of first refusal, that claim is also subject to the requirements of the statute of frauds ( McCormick v. Bechtol , 68 AD3d 1376 [3d Dept. 2009] ). Defendants deny offering a right of first refusal and plaintiff has not offered either a writing conforming to the requirements of the statute, or proof of an exception taking the matter out of the statute.
Plaintiff also argues that in this case the statute of frauds is satisfied by partial performance (see General Obligations Law § 5–703 [4 ] ). "Partial performance of an alleged oral contract will be deemed sufficient to take such contract out of the statute of frauds only if it can be demonstrated that the acts constituting partial performance are unequivocally referable to said contract" ( Bowers v. Hurley , 134 AD3d 1191, 1193 [3d Dept. 2015] [citations and quotation marks omitted] ). "A plaintiff's ‘actions alone must be unintelligible or at least extraordinary, explainable only with reference to the oral agreement’ " ( Sivos v. Eppich , 78 AD3d 1360, 1361 [3d Dept. 2010], quoting Anostario v. Vicinanzo , 59 NY2d 662, 664 [1983] ). Here, plaintiff engaged in site planning and efforts to have the property re-zoned, which included participation by defendants Robert and Joseph D'Andrea, and claims to have spent approximately $200,000.00 in pursuing those efforts. Viewing the record in a light most favorable to plaintiff and giving him the benefit of every reasonable inference, the allegation that he pursued site development and re-zoning, and expended considerable funds in doing so, presents sufficient evidence from which a trier of fact might conclude that plaintiff's conduct is explainable only by a reference to the oral contract (see Sivos v. Eppich , 78 AD3d 1360 [3d Dept. 2010], plaintiff built home on property she claimed defendant promised to transfer to her; see also Bowers v. Hurley , 134 AD3d 1191 [3d Dept. 2015], defendant joined efforts to gain agency approval to expand mining operation referable to agreement to extend the life of a mining lease). Part performance, however, only applies to overcome the defense of the statute of frauds with respect to the cause of action for specific performance of the contract ( Stainless Broad. Co. v. Clear Channel Broad. Licenses, L.P. , 58 AD3d 1010 [3d Dept. 2009] ). Therefore, the cause of action for breach of contract for which money damages are sought is not preserved by allegations of part performance.
FRAUD
"Fraud is established where a defendant knowingly misrepresents a material fact, someone justifiably relies upon that misrepresentation, and the plaintiff is thereby injured" ( Roche v. Claverack Coop Ins. Co. , 59 AD3d 914, 918 [3d Dept. 2009] [citations omitted] ). However, "a cause of action for fraud does not arise where the ‘alleged fraud relates directly to plaintiff's cause of action for breach of contract’ " ( New York State Workers' Compensation Bd. v. Marsh U.S.A., Inc. , 126 AD3d 1085, 1088 [3d Dept. 2015], quoting Brumbach v. Rensselaer Polytechnic Inst. , 126 AD2d 841, 843 [3d Dept. 1987] ). Here, the causes of action for fraud are based on allegations that defendants misrepresented their intent to sell the property to plaintiff and to provide a right of first refusal. Inasmuch as those allegations do not involve representations which are collateral or extraneous to the terms of the alleged agreement (see Gerber v. Empire Scale , 147 AD3d 1434 [4th Dept. 2017] ), and as plaintiff has failed to invoke a legal duty independent of that encompassed by the contract (see Egan v. New York Care Plus Ins. Co. , 277 AD2d 652 [3d Dept. 2000] ), the causes of action for fraud are not cognizable and are subject to summary disposition.
UNJUST ENRICHMENT
"The elements of an unjust enrichment claim are that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered" ( Delaware County v. Leatherstocking Healthcare, LLC , 110 AD3d 1211, 1213 [3d Dept. 2013] [internal quotation marks and citation omitted] ). This cause of action is based on the effort made, and the expenses incurred, by plaintiff in pursuing the zoning change. Defendants correctly argue that they have not been enriched by plaintiff's actions in this regard as the zoning change was denied. The argument made by plaintiff in opposing dismissal of this cause of action essentially concedes the point by arguing that he believes the zoning change will be granted, and premising any potential gain by defendants on that possibility.
NEGLIGENT MISREPRESENTATION
A claim for negligent misrepresentation requires proof that defendants had a duty, based upon some special relationship with plaintiff, to impart correct information, that the information given was false or incorrect and that the plaintiff reasonably relied upon the information provided ( Kurtz v. Foy , 65 AD3d 741 [3d Dept. 2009] ). Here, defendants contend that there was no special relationship between them and plaintiff. "A special relationship may be established by ‘persons who possess unique or specialized expertise, or who are in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified’ " ( Mandarin Trading Ltd. v. Wildenstein , 16 NY3d 173, 180 [2011], quoting Kimmell v. Schaefer , 89 NY2d 257, 263 [1996] ). Robert admits to knowing plaintiff prior to their dealings regarding the property but maintains that he did not know plaintiff well, had only run into him a few times in the past thirty years and never had so much as lunch or a cup of coffee with plaintiff. Though plaintiff alleges in the complaint that there was a personal relationship of trust between the parties, he has not offered anything more in response to the motion. Even assuming the truth of the nature of the relationship as alleged in the complaint, those allegations alone are insufficient to impose a duty on defendants so as to support a claim for negligent misrepresentation and plaintiff has offered nothing more in response to the motion.
EQUITABLE ESTOPPEL/PROMISSORY ESTOPPEL
Plaintiff has also pleaded causes of action based on principles of equitable estoppel and promissory estoppel. "The doctrine of equitable estoppel is designed ‘to prevent the infliction of unconscionable injury and loss upon one who has relied on the promise of another’ " ( Stainless Broad. Co. v. Clear Channel Broad. Licenses, L.P. , 58 AD3d 1010 [3d Dept. 2009] quoting American Bartenders School v. 105 Madison Co. , 59 NY2d 716, 718 [1983] ). A claim based on promissory estoppel requires proof of a clear and unambiguous promise upon which plaintiff reasonably relied to its detriment ( Clifford R. Gray, Inc. v. LeChase Constr. Servs., LLC , 31 AD3d 983 [3d Dept. 2006] ). In instances such as this, where the doctrine is invoked to preclude a party from invoking the statute of frauds, the promisee must show that unconscionable injury resulted ( AHA Sales, Inc. v. Creative Bath Prods., Inc. , 58 AD3d 6, 20–21 [2d Dept. 2008] ). An unconscionable injury by definition must be an injury beyond that which flows naturally from the non-performance of the unenforceable agreement ( Merex A.G. v. Fairchild Weston Sys., Inc. , 29 F3d 821, 826 [2d Cir. 1994], cert denied 513 U.S. 1084 [1995] ) and that is, under the circumstances, so egregious that it would be unconscionable to allow the defendants to invoke the statute of frauds ( Buddman Distributors, Inc. v. Labatt Importers, Inc. , 91 AD2d 838 [4th Dept. 1982] ). The circumstances offered by plaintiff show only expectation damages that follow in the normal course from the alleged breaches and do not rise to the level of an unconscionable injury.
VENDEE'S LIEN
"[T]he execution of a contract for the purchase of real estate and the making of a part payment gives a contract vendee equitable title to the property and an equitable lien in the amount of the payment" ( Polish Natl. Alliance of Brooklyn v. White Eagle Hall Co. , 98 AD2d 400, 405 [2d Dept. 1983], citing Elterman v. Hyman , 192 NY 113 [1908] ). Here, as defendants correctly point out, even assuming the existence of a contract, plaintiff has not made any payment toward the contract price and consequently, does not have a vendee's lien.
Accordingly, it is
ORDERED, that the motion for summary judgment is granted except with respect to the cause of action seeking specific performance based on breach of contract.
This constitutes the decision and order of the Court. The original decision and order is returned to the attorney for defendants. A copy of the decision and order and the supporting papers have been delivered to the County Clerk for placement in the file. The signing of this decision and order, and delivery of a copy of the decision and order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of that rule respecting filing, entry and notice of entry.
SO ORDERED.