Opinion
SP 6725/07.
Decided September 29, 2008.
Ialenti Macari, LLP, Attorneys for Petitioner, Mineola, New York; Salvatore R. Bonagura, Esq., Attorney for Respondents, Floral Park, New York.
TRIAL DECISION
This nonpayment summary proceeding began with the filing of the Notice of Petition and Petition on December 17, 2007, in which Petitioner, Surinder Kaur, sought $6,900 in unpaid rent for the months of October 2007 through December 2007 from Respondents, Carmine Guida, Patricia Nicolosi, Joseph Nicolosi and Salvatore Nicolosi. At trial, the parties stipulated that the last rent paid was for September 2007, and that rent owed on behalf of the Respondent is from October 2007 through July 2007, totaling ten months rent at $23,000.
The Respondents Carmine Guida and Patricia Nicolosi stipulated on the record that they were liable for the $23,000 of back rent. However, the liability of the Respondents Joseph Nicolosi and Salvatore Nicolosi was not stipulated to, but was dependent upon proof of liability for same to be established by Petitioner at trial. The parties agree that no written lease was ever executed between the parties.
The Respondents answered the petition with a counterclaim for $44,030. The Respondents assert that the Petitioner is being unjustly enriched. The Respondents allege that when they were looking for a house to rent, the Petitioner's husband told them that if they rented the premises located at 78 New Hyde Park Road, Franklin Square, New York for four years they would then have an option to purchase the home for $480,000. According to the Respondents, the option to purchase the home was the main reason they rented the house. In Patricia Nicolosi's own words "it was the prime element." To make the house livable for the Respondents, they claim to have made $32,530 worth of improvements. These improvements were necessary for Patricia Nicolosi to use and occupy the home due to an injury to her spine, which makes her wheelchair dependent.
The Respondents had the following improvements made at the premises: new kitchen floor; landscaping of the backyard; new white PVC fencing around the house; rebuilding of the front stoop with bricks; new downstairs bathroom; and a laundry room off the kitchen.
Respondent Patricia Nicolosi testified that the renovations were done to the house for the months of February through June of 2007 and a total of $11,500 was paid in rent to Petitioner during this period. The premises were not liveable while the house was under construction. The Respondents finally moved in on July 10, 2006.
In addition, Patricia Nicolosi testified that they paid Mr. Singh or contractors "around $32,000" for the construction. However, no breakdown of the expenses was provided, nor proof of payment.
Respondents requested the lease from both Mr. Singh and Mr. Kaur, but never received a four year lease with the option to buy the house at $480,000. Finally, on Easter Sunday in 2007, Respondents met with Mr. Singh and Mr. Kaur at the rental property concerning the lease. According to Patricia Nicolosi, the following conversation took place:
A.Easter Sunday of 2007, I believe it was, I was at the dining room table with Carmine. Ms. Kaur was there and Mr. Singh was there, and Mr. Singh had given me this lease and I told him don't worry, I will fill it out, I happened to be a paralegal. I filled it out. They came Easter Sunday to supposedly sign the lease . . . Naturally, I put in the amenities that we had put in and I also put in a paragraph where it was agreed between the landlord and tenant the house premises was an option to buy at the price of $480,000. Mr. Singh objected to that. He said that should not be in the lease. And, Carmine said to Mr. Singh, Mr. Singh you promised me that you would give the lease with the option to buy at the price of $480,000 and a four-year lease and Mr. Singh turned to Carmine and said, Yes, that's what I said but it's your word against mine.
Carmine Guida also provided the following testimony which outlines the needs of the Respondents to obtain a four year lease with an option to buy at $480,000:
Q.Was there talk about specific, about the concept we are here for, was there talk about a four-year lease or option to buy?
A.Yes, the reason I asked for a four-year lease, in our condition it was impossible with our pension and Joanne's salary that we were on a budget to go over a certain amount of money. So, I said, look if I advance the money to make this place beautiful for us, we need a shower downstairs because she cannot walk up the stairs. I cannot walk up the stairs. We need a laundry room, we put outside there. We need all of these things. Will you stay at the price $480,000 without going up.
Q.You talked that day?
A.The first time by me it was said, so help me God, will you never go up on the rent, no. Okay, I say, then we take it. So, he started to do work. I gave him some cash.
Q.How much cash did you give him?
A.Each time I gave him whatever he needed to buy equipment.
Mr. Singh admitted that he verbally agreed to the four year rental and to sell the house for $480,000:
Q.Say that again?
A.He told me give me a four-year lease. I said, Okay, I give you a four-year lease, but he put a lot of things, option to buy, I buy your house after four years.
Q.Did you agree to that?
A.I agree but he put a lot of things.
Q.You agreed to sell to them for $480,000?
A.Yes.
THE COURT:You did.
Q.So the $480,000 was verbal, and the four-year lease was verbal; it was never put in writing?
A. No.
Mr. Singh also admitted that he received the following payments from the Respondents for the improvements to the house:
(A)$3,000 for the laundry room
(B)$2,500 for the bathroom
(C)$1,800 for the fence
The Respondents are also seeking $11,500 worth of back rent for the five months, February through June 2007 they paid while the renovations were being performed. Thus, the respondents claim that they detrimentally relied on the statements made by the Petitioner (through her husband who is her agent) and should be compensated for the renovations performed at the premises, plus reimbursement of the rent paid for the months they paid rent while the renovations were being done.
ISSUES
The issues to be considered by this Court are: 1) Are the Respondents Joseph Nicolosi and Salvatore Nicolosi contractually liable for the unpaid rent to the Petitioner, and 2) Are the Respondents entitled to restitution damages for the money that was invested into improving the home and the five months of rent while the renovations were ongoing.
DECISION
A. Contractual Liability of Joseph Nicolosi and Salvatore Nicolosi
At trial, the Petitioner's husband, Mr. Singh, who handled the negotiations to rent the house, admitted to only entering into negotiations with Carmine Guida. The Petitioner did not provide evidence of a contractual relationship between Petitioner and Joseph Nicolosi and Salvatore Nicolosi. Since the Petitioner failed to provide proof in evidentiary form of a contractual relationship between Petitioner and the Respondents Joseph Nicolosi and Salvatore Nicolosi, this claim is dismissed with prejudice as against them. ( See, Outrigger Construction Company, Inc., v. Bank Leumi Trust Company of New York, 240 AD2d 382, 383-4, 658 NYS2d 394 [2nd Dep't 1997]; Metropolitan Electric Manufacturing Company v. Herbert Construction Company, Inc., 183 AD2d 758, 583 NYS2d 497 [2nd Dep't 1992]).
See also, Valisa Mfg., LLC v. The 54 Group, LTD., 19 Misc 3d 1136(A), 862 NYS2d 812, 2008 WL 2150111 at 5 (Sup Ct, Westchester Cty 2008), wherein the court stated "it is well settled that one who is not party to an agreement cannot be bound by it."
B. Restitution Damages
First, the Court will consider whether the Respondents are entitled to be reimbursed for the $32,530 worth of improvements made to the home. The Court will then consider whether the Respondents are entitled to the five months of rent totaling $11,500, that was paid while the renovations occurred.
At the outset, the oral agreement for a four year lease term must be in writing to be enforceable. Both General Obligations Law § 5-703(2) and General Obligations Law § 5-701(1) require a lease agreement longer than one year to be in writing and subscribed by the party or his/her lawful agent to be charged. Thus, the four year lease is unenforceable unless one of the exceptions apply as discussed herein.
The oral option to buy the property at $480,000 is likewise barred by the Statute of Frauds General Obligations Law § 5-703(1) unless in writing, or an exception removes it from the Statute of Frauds. See, Dynamic Medical Communications, Inc. v. Norwest Trade Printers, Inc., 257 AD2d 524, 685 NYS2d 19 (1st Dep't 1999). The Court notes that Respondents have not requested any relief concerning the option to buy the house at a price of $480,000.
An action for restitution damages based on unjust enrichment requires that 1) the defendant received money, property or services belonging to or provided by the plaintiff, 2) the defendant benefitted from the receipt of the money, property or services, and 3) under principles of equity and good conscience, the defendant should not be permitted to retain the money or property or should be required to pay for the services ( Matter of Estate of Witbeck, 245 AD2d 848, 666 NYS2d 315 [3rd Dep't 1997]; Wiener v. Lazard Freres Co., 241 AD2d 114, 672 NYS2d 8 [1st Dep't 1998]).
Where a contract is unenforceable as induced by fraud, the defrauded party may recover the benefits conferred in an action in quantum meruit ( Taylor Jennings, Inc. v. Bellino Bros. Const. Co., Inc., 106 AD2d 779, 483 NYS2d 813 [3rd Dep't 1984]). See also, 61 NY Jur. 2d Frauds, Statute of § 307, wherein the following is written:
Closely allied to the principles of protection against the assertion of the statute of frauds to accomplish a fraud upon the party who has acted in reliance upon an oral contract, or the assertion of the statute as a shield to protect fraud, is the doctrine of estoppel to assert the statute. It is universally conceded that the doctrine of equitable estoppel may be invoked to preclude a party to a contract from asserting the unenforceability of the contract by reason of the fact that it is not in writing as required by the statute of frauds (Am. Jur. 2d, Statute of Frauds § 471).
An estoppel to plead the statute of frauds has been extended to a party who, by an oral agreement, induced another to enter into a pending written agreement and to accept the provisions thereof, both of which had been wholly or partly carried into execution.
At trial, the Respondents did not offer proof as to the cost of the renovations, proof of payment for the renovations, nor any increase in value to the property due to the renovations.
Respondents' failure to offer adequate proof of damages as to the $32,000 in renovations precludes recovery. See, Alpha Auto Brokers, Ltd. v. Continental Insurance Company, 286 AD2d 309, 728 NYS2d 769 (2nd Dep't 2001), wherein the court dismissed the complaint for breach of contract where the plaintiff failed to present a prima facie proof of loss:
The Supreme Court improperly denied the defendants' motion pursuant to CPLR 4401 to dismiss the complaint based on the plaintiffs' failure to establish a prima facie case. In order to recover damages for breach of contract, the plaintiffs were required to prove damages resulting from that breach, and their failure to do so was fatal to that cause of action ( see, Cramer v. Spada, 203 AD2d 739, 741; Ruse v. Inta-Boro Two Way Radio Taxie Assocs., 166 AD2d 641). Although the plaintiffs offered evidence of the cost to repair the premises, their witness also admitted that the premises was not repaired, and that no repair costs were incurred. Thus, the plaintiffs were not entitled to recover such costs ( see, Harrington v. Amica Mut. Ins. Co., 223 AD2d 222, 228; DeLorenzo v. Bac Agency, 256 AD2d 906, 907). The proper measure of damages was "the difference between the actual cash value of the property * * * just preceding the fire and the market value immediately after the fire'" ( Agostino v. Holyoke Mut. Ins. Co., 89 AD2d 573, quoting Incardona v. Home Indem. Co., 60 AD2d 749, 750). However, the plaintiffs presented no evidence as to the pre-or post-fire value of the premises.
See also, Imaging Intern. v. Hell Graphic Systems, Inc., 17 Misc 3d 1123(A), 851 NYS2d 70, 2007 WL 3227245 (NY Sup. 2007), wherein the court stated:
It is a long-standing rule that a plaintiff must prove its losses caused by fraud by a preponderance of the evidence. Schulze v. Sims Lumber Co., 14 A.D. 274, 43 N.Y.S. 463, 465 (1st Dep't 1897). "A plaintiff seeking compensatory damages has the burden of proof and should present to the court a proper basis for ascertaining the damages he seeks to obtain. They must be susceptible of ascertainment in some manner other than by mere conjecture or guess work." Dunkel v. McDonald, 272 A.D. 267, 270 (1st Dep't 1947), aff'd, 298 NY 586 (1948), overruled in part on other grounds, I.H.P. Corp. v. 210 Central Park S. Corp., 16 AD2d 461, 463-66 (1st Dep't 1962).
However, during Mr. Singh's testimony, Mr. Singh admitted on the stand that he took $7,300 from the Respondents. The $7,300 figure includes $2,500 for the bathroom, $3,000 for the laundry room and $1,800 for the backyard fence.
The Respondents did offer proof as to the motivation behind improving the house. The Respondents undertook the renovations of the home under the assumption that after four years of renting they would be able to purchase the home from the Petitioner for $480,000.
Mr. Singh admitted during trial the existence of the oral agreement that Respondents could rent the house for four years with an option to buy same at a price of $480,000. This admission removes the oral agreement from the Statute of Frauds and make the oral agreement enforceable. Thus, Respondents have the right to reside at the premises for 4 years with an option to purchase same for $480,000. See, Concordia General Contracting v. Peltz, 11 AD3d 502, 782 NYS2d 848 (2nd Dep't 2004), wherein the court stated:
The defendant's admission of the existence and essential terms of the oral agreement "[was] sufficient to take the agreement outside the scope fo the Statute of Frauds" ( Dzek v. Desco Vitroglaze of Schenectady, 285 AD2d 926, 927; see Matisoff v. Dobi, 90 NYS2d 127, 134 [1997]; Bono v. Cucinella, 298 AD2d 483, 484). Indeed, the Statute of Frauds was not enacted "to enable defendants to interpose [it] as a bar to a contract fairly, and admittedly, made" ( Morris Cohon Co. v. Russell, 23 NY2d 569, 574).
In Dzek v. Desco Vitroglaze of Schenectady, Inc., 285 AD2d 926, 727 NYS2d 814 (3rd Dep't 2001), the court upheld the enforcement of an oral agreement because of the defendant's president's admissions that an oral agreement existed:
As to defendant's Statute of Frauds defense ( see, General Obligations Law § 5-701 [a] [10]), a party's admission to the essential terms and actual existence of the alleged oral contract is sufficient to take the agreement outside the scope of the Statute of Frauds ( see, Cohon Co. v Russell, 23 NY2d 569, 575; compare, Williams v Lynch, 245 AD2d 715, appeal dismissed 91 NY2d 957 [party's admission as to certain aspects of the alleged agreement insufficient where party denied other, material terms thereof]; Tallini v Business Air, 148 AD2d 828 [party's admission as to existence of employment contract insufficient where the essential terms thereof remained in dispute]). As noted previously, Cordi admitted during the course of the tape-recorded conversation with plaintiff that defendant was to pay plaintiff $11,800 in connection with the subcontract work performed by defendant; Cordi further acknowledged the sums paid and the balance due. In our view, Cordi's statements outlining the terms of the arrangement with plaintiff are sufficient to constitute an admission and, as such, the oral agreement between the parties is not barred by the Statute of Frauds. Defendant's remaining arguments, to the extent not specifically addressed, have been examined and found to be lacking in merit.
The Court finds that Petitioner, through her agent, fraudulently induced Respondents to pay for the improvements and to pay rent during the period that the improvements were being done. Thus, Respondents are entitled to $7,300 for the improvements and $11,500 for the rent. See Moulton v. Moore, 33 AD2d 887, 307 NYS2d 562 (4th Dep't 1969).
CONCLUSION
Petitioner is entitled to the rent of $23,000 less the sum of $18,800 due Respondents. Thus, Petitioner is awarded a money judgment of $4,200 against Respondents Carmine Guido and Patricia V. Nicolosi. Petitioner may proceed to evict Respondents unless Respondents pay the $4,200, plus interest by October 31, 2008.
So Ordered: