Yorizzo v. Maple Corp, LLC

Full title: Jack Yorizzo, RONALD ELETTO, JALO REALTY, INC., and MAPLEWOOD COURT, INC.…

Court: Supreme Court, Westchester County

Date published: Aug 25, 2023

2023 N.Y. Slip Op. 50949 (N.Y. Sup. Ct. 2023)

Opinion

Index No. 70216/2017

08-25-2023

Jack Yorizzo, RONALD ELETTO, JALO REALTY, INC., and MAPLEWOOD COURT, INC., Plaintiffs, v. Maplecorp, LLC, ROBERT VALENTI, AMELIA VALENTI, and 1906-08 AMETHYST CONSTRUCTION CORP., Defendants.

Peter E. Sverd, Esq. Counsel for Plaintiffs The Law Offices of Peter Sverd PLLC George S. Bellantoni, Esq. Counsel for Defendants

Anar Rathod Patel, J.

Unpublished Opinion

Peter E. Sverd, Esq. Counsel for Plaintiffs

The Law Offices of Peter Sverd PLLC George S. Bellantoni, Esq. Counsel for Defendants

Anar Rathod Patel, J.

On September 7, 8, 9, 12, 13, 14, 15, 19, and 20, of 2022, the Court presided over a nonjury trial as to certain issues concerning, inter alia, breach of a commercial contract. Plaintiffs were represented by Peter Sverd, Esq. and Defendants were represented by George Bellantoni, Esq.

Plaintiff Jack Yorizzo ("Yorizzo") and his father-in-law, Plaintiff Ronald Eletto ("Eletto"), jointly own Plaintiff Jalo Realty, Inc. ("Jalo"). Plaintiff Maplewood Court, Inc. ("Maplewood"), was organized to develop and build a ten-unit condominium project and is equally owned by Plaintiff Jalo and Defendant 1906-08 Amethyst Construction Corp. ("Amethyst"). The owners of Amethyst are Defendants Robert Valenti ("Valenti") and Amelia Valenti ("Amelia"). Defendant Maplecorp, LLC ("Maplecorp") is a limited liability company owned by Valenti.

After considering the sworn testimony of the parties, the credibility of the witnesses, the documents admitted into evidence, and the parties' written post-trial submissions, the Court makes the following findings of fact and conclusions of law:

Factual and Procedural Background

This Court refers to the parties' stipulated statement of undisputed facts for a full recitation of the relevant facts. See NYSCEF Doc. No. 345.

In March 2000, Yorizzo purchased 85 Maple Street in Scarsdale, New York to be his primary residence. In June 2002, Yorizzo transferred 85 Maple Street to Jalo. In August 2002, Jalo purchased 83 Maple Street. In December 2002, Jalo purchased 87 Maple Street. With Jalo as the owner of all three plots of land ("Subject Property"), Yorizzo's intention was to develop a condominium of ten units and market them for sale.

Once Yorizzo obtained permits to develop the lots into condominium units, he attempted to sell the property, but to no avail. Yorizzo also contemplated entering into a joint venture with another party who could construct condominium units on the Subject Property in accordance with the approved plans. Yorizzo then met Defendant Robert Valenti and discussed the development of the condominium project ("Project"), with the intention of Valenti developing the Subject Property owned by Jalo. In general terms, Yorizzo would provide the land and the approvals, and Valenti would oversee construction of the condominium units.

Jalo, through its managing partner, Yorizzo, and Amethyst, through its managing partner, Valenti, agreed and entered into a Joint Venture Agreement ("JVA") on January 30, 2014. See NYSCEF Doc. No. 215 (Pl. Ex. 11). The resulting ownership provided that Jalo and Amethyst each would possess an undivided 50% interest in the Subject Property as tenants in common. In accordance with the terms of the JVA, following the closing, both Jalo and Amethyst would jointly form a new entity, Maplewood Court, Inc. Maplewood would be owned jointly and managed by Jalo and Amethyst during the construction, and the ten condominium units would be equally distributed for sale.

Pursuant to the JVA, Plaintiffs agreed to convey certain parcels of land owned by Jalo, located at 83, 85, and 87 Maple Street, Scarsdale (Town of Eastchester), and Defendant Amethyst agreed to construct the condominium units and associated site improvements. Amethyst also agreed to contribute $950,083.40 for its interest in the Project; the amount was deposited into a joint bank account at Country Bank to be utilized to finance the construction of the Project. Jalo then hired an architect and an engineer to commence development. On March 2, 2012, the Town of Eastchester approved Jalo to build ten units and merged the lots into a single lot known as 85 Maple Street.

The JVA required, in part, that Amethyst would reimburse Jalo in the amount of $100,000 for certain expenses Jalo had incurred for improving the property, and that Amethyst was to "utilize best efforts and due diligence in undertaking construction until completion." Pl. Ex. 11 at 4. The JVA was silent on a date certain for completion of the Project.

Pursuant to the JVA, Jalo and Amethyst would be equally responsible for the following expenses: property taxes, property insurance, professional fees for accounting, formation, and approval of the condominium offering plan, legal fees, and other items incidental to the Project. Said shared costs were explicitly not "deemed to include interest expenses of either of the parties, salaries, etc." Id.

Country Bank issued the first mortgage on the Subject Property to Jalo and Amethyst on January 30, 2014, in the amount of $900,000. The maturity date of the first mortgage was February 1, 2016, at which time the principal balance and accrued interest of 6% would be due and owing. As per the JVA, Jalo would be entitled to and responsible for one third of the $900,000, or $300,000, and Amethyst would be entitled to and responsible for two thirds of the $900,000, or $600,000.

The JVA was silent as to which party would claim depreciation for the condominium units. During the construction, a dispute arose as to which party would be permitted to use the expenses to claim tax deductions. Valenti does not dispute that he withheld documentation with respect to deductions from Eletto and Yorizzo because he asserted that all work performed by Amethyst entitles Amethyst to the deductions. To date, Valenti has not provided Jalo with a full accounting of all of the records and expenses in performing under the JVA. As a result of the foregoing, Jalo has been unable to prepare tax returns for Jalo and its investors.

As referenced supra, Valenti placed $950,083.40 into the Country Bank joint account to finance the construction of the Project. In January 2015, Valenti had exhausted all funds in the account and asked Yorizzo and Eletto to contribute additional money to the Project. In March 2015, Yorizzo and Eletto borrowed an additional unsecured loan of $150,000 from Country Bank to fund the Project. The maturity date of the loan was February 1, 2016, and held an interest rate of 6.25% and a default rate of 24%. In addition to the amount of $150,000 contributed by Yorizzo and Eletto, Valenti borrowed $150,000 from Country Bank.

In March 2016, the holder of the first mortgage notified the parties that the mortgage had matured and was in default because the principal balance and interest had not been paid. The first mortgage began accruing interest at a 24% rate. Country Bank took issue with the fact that, at the time the loan was taken out, the parties represented that the ten condominium units would be sold and not rented. However, at a meeting in March 2016, Valenti represented that he intended to rent his units. Shortly thereafter, Country Bank sold the underlying note to Morgan Barrington Financial, Inc. ("MBF"). In April 2016, MBF filed a Summons and Complaint and Notice of Pendency against Jalo Realty LLC, 1906-08 Amethyst Construction Corp., Robert Valenti, Amelia Valenti, Jack Yorizzo, and Ronald Eletto. ¹ Valenti then presented an opportunity for the parties to refinance the first mortgage through a private lender, Rocco Sollecito ("Sollecito"), who was a friend of Valenti and a client of previously released Defendant, Alan Singer, Esq. ("Singer"). In May 2016, Jalo and Amethyst entered into a loan commitment agreement with Sollecito to refinance the debt. The payoff amount of the Country Bank mortgage totaled $1,360,692.46.

1 Index No. 55788/2016 (Sup. Ct., Westchester Cnty., 2016). See NYSCEF Doc. No. 237.

After construction of the Project commenced, the parties attempted to obtain Certificates of Occupancy ("CO") for the Project. However, issues arose with the Town of Eastchester that prevented the issuance of COs for approximately two years. Simultaneously, the parties attempted to obtain an approved offering plan from the New York State Attorney General's Office ("AG"). Shortly after the JVA was signed, Maplewood retained the legal services of Singleton, Davis & Singleton PLLC ("Singleton") to prepare an application to test the market for Maplewood Court, as well as a condominium offering plan for the sale of homes in the proposed condominium known as Maplewood Court Condominium. In April 2014, Maplewood Court was informed that its offering plan was rejected by the AG due to concerns related to Valenti's prior alleged misconduct in another condominium project known as Hunter Bay Estates. Singleton submitted an amended offering plan, which the AG approved on January 28, 2016, for the sale and rental of the proposed units. The ten condominium units were listed for sale on May 23, 2016. COs were issued by the Town of Eastchester on July 27, 2016.

On September 30, 2016, the parties entered into an agreement ("September Agreement"), wherein, inter alia, the units were divided with five units to Amethyst (unit numbers 85, 87, 89, 101, and 103) and five units to Jalo (unit numbers 91, 93, 95, 97, and 99). NYSCEF Doc. No. 252 (Pl. Ex. 57). Amethyst was given permission to rent their units and Amethyst agreed to install the same appliances in Jalo's units as were installed in the other units within two weeks for any unit that was under contract of sale. The September Agreement further stated: "All rents collected through December 31, 2016 or upon closing and sale, whichever occurs first will be utilized to pay expenses and the balance shared between the members in proportion to their ownership percentages." Pl. Ex. 57 at 1. It is undisputed that Jalo did not receive any money or payment from Amethyst from rents collected, and Amethyst did not perform the improvements to Jalo's units, except for one refrigerator replacement.

On October 21, 2016, the parties entered into a subsequent agreement ("October Agreement") (collectively with the September Agreement, "Subsequent Agreements"), which stated, "disputes have arisen relative to contributions and responsibility for interest and other expenses and the cost of construction; and whereas the parties are desirous of resolving the said disputes." NYSCEF Doc. No. 62 (Pl. Ex. 62). Under the October Agreement, Jalo agreed to pay $595,000 in payments on the existing mortgage, which included interest through July 2016. Said payment covered any and all obligations of Jalo with reference to all disputes through October 2016. The October Agreement further provided that Valenti would sell unit number 101 for $569,000, as he had a buyer interested in the unit for that price. The October Agreement was silent as to a deadline for Valenti to sell unit number 104. The unit was never sold. At the time the October Agreement was executed, Valenti paid Yorizzo $100,000, as required under the JVA for site improvement work.

With respect to the materials and appliances used in construction, the approved plans called for the installation of Anderson 400 series double hung windows and Anderson French wood sliding doors. Valenti unilaterally installed different windows and sliding doors. Further, the garage doors installed by Amethyst were not for residential purposes, but rather were intended for limited use in storage units. There was further dispute with respect to Amethyst's choice in its use of wall sheathing. Irrespective of the foregoing, all of the units passed the building inspection.

By deed dated December 12, 2016, Jalo and Amethyst conveyed the Subject Property to Maplewood, in furtherance of the JVA. On January 13, 2017, a deed of conveyance was executed for the sale of unit numbers 85, 87, 89, 101, and 103 from Maplewood to Maplecorp. Maplecorp then became the "New Successor Sponsor" of the condominium units. Maplecorp's members are Valenti and Amelia, the same principals as Amethyst. As of September 15, 2022, Maplecorp had not sold any of its five condominium units. Maplewood (Jalo, principals Yorizzo and Eletto) sold four of their five condominium units between January 2017 and June 2017. Upon the sale of said units, a total of $653,406.71 was paid to Sollecito towards to loan of $1,400,000. Jalo continues to rent its remaining unsold unit to Carol Care, a real estate agent, who has been in contract to purchase the unit since 2017. Ms. Care is not currently paying rent, but has agreed to an adjustment for unpaid rent when she eventually purchases the unit.

The average sale price of the four units owned by Maplewood/Jalo was $560,000. The base purchase price in the original offering plan was $560,000, which was then increased to $680,000 in the first amended offering plan because the parties believed the original price was low.

According to Valenti, the final cost to construct the ten-unit condominium project was between $1.8 million and $2 million.

Allegations

Plaintiffs allege breach of contract and seek damages including: (1) costs to repair the defective and uncompleted work on the Project; (2) the differential in the cost of the materials used as opposed to the cost of the materials as specified in the JVA; (3) costs associated with the additional financing including principal and interest; (4) additional carrying costs caused by Defendants' unworkmanlike construction, deviation from the approved plans, and fraudulent misrepresentations to the AG; (4) tax penalties incurred by Plaintiffs as a result of Defendants' refusal to provide an accounting of costs and expenses which prevented Plaintiffs from filing timely tax returns; (5) all money withdrawn from the joint account by Defendants for which Defendants cannot demonstrate was used on the Project; and (6) the difference in the sales price between the units if constructed as per the plan specifications and the units as actually constructed.

With respect to Defendants' choice of construction materials, Plaintiffs allege that Defendants breached their obligations under the JVA by failing to complete the Project in a "workmanlike manner" in accordance with industry standards. Plaintiffs allege that Defendants' breach caused delays to the Project because they intentionally deviated from the products and materials as specified by the plans resulting in monetary gain to Defendants. Plaintiffs further allege that Defendants' actions caused the parties to exceed the construction budget. Plaintiffs allege that they are entitled to a damages award of $1,135,000.00. ²

2 This is the figure reflected in Plaintiffs' post-trial memorandum, which is the most recent filing. This Court notes that the figure fluctuated throughout the history of this case. This Court further notes that Plaintiffs failed to provide a breakdown of damages totaling their alleged damages award.

Defendants maintain that Plaintiffs' claims are barred by the principle of accord and satisfaction because of the subsequent September and October Agreements. In entering the Subsequent Agreements, the parties essentially reached a new agreement that the stipulated performance in the future would be accepted in satisfaction of all or part of the obligations under the original contract, and that the bargained for performance due under the new agreement was tendered. Defendants allege that the October Agreement expresses a "clear manifestation of intent by the parties that the respective responsibilities for the financing expenses, interest and the costs of construction and related expenses were made, and accepted, in full satisfaction of the claim" and that "the material terms of the accord are reasonably certain for it to be binding on the parties." NYSCEF Doc. No. 344 (Def. Post-Trial Submission) at 13. Defendants allege that their attorney, Alan Singer, testified during his deposition that the parties considered all disputes between them resolved and settled except for the outstanding water bill and the cost of the stainless-steel refrigerators. Defendants allege that the parties intended for the October Agreement to be final and binding, as is evidenced by Yorizzo's December 2016 email wherein he threatens to bring legal action against Defendants for what he contends to be Defendants' failure to honor the October Agreement. Defendants argue that the JVA was modified as a result of the parties' partial performance (under the part performance doctrine sufficient to overcome the statute of frauds), because Plaintiffs conveyed titled of one-half of the units to Defendants, and that even if the September and October Agreements do not specifically state that they amend the JVA, the conduct of the parties circumstantially proves the modification of the JVA.

Meanwhile, Plaintiffs maintain that Jalo's rights under the JVA have not been waived, superseded, amended, or altered by the September or October Agreements. Plaintiffs further allege that the September Agreement did not specifically state or provide that it "amended the JVA," and cannot be deemed a "waiver" of any right under the JVA. Further, the October Agreement did not bind Jalo or Amethyst, specifically state or provide that it amended the JVA, nor can it be deemed a waiver of any right under the JVA.

Defendants allege that Plaintiffs have failed to establish damages as a consequence of Defendants' alleged breach of the JVA. Specifically, Defendants allege that any proof of damages incurred by Plaintiffs in repairing and completing Defendants' work in the units is speculative. Defendants point out that Plaintiff Yorizzo's testimony changed in that he initially claimed he had proof of receipts and payments then alleged he did not have any such records, and then later claimed that the costs of the labor to complete the work was performed as a "favor."

Defendants further allege that Plaintiffs are unable to substantiate any damages incurred as a result of Defendants' decision to use different materials. Further, as the general contractor for the project, Defendants allege that they were entitled to "utilize its commercially reasonable judgment in the selection of materials" and that each of the units ultimately passed inspection by the Eastchester Building Department. NYSCEF Doc. No. 344 at 7. Additionally, Defendants claim that their failure to install Plaintiffs' desired materials in the construction of the units did not negatively affect the sale of the units.

Defendants further allege that Plaintiffs failed to submit proof that the parties contemplated Plaintiffs' entitlement to economic loss in the event that construction was not completed timely, and therefore Plaintiffs are unable to recover lost profits. Defendants argue that, at trial, Plaintiffs failed to offer any extrinsic evidence that the parties discussed economic loss as a potential basis for damages in the event of construction delays.

Defendants claim they are entitled to an award of damages against Plaintiffs on their counterclaims, specifically $224,451.33. This figure consists of (1) $203,204.91 in interest payments and penalties Defendants incurred as a consequence of Plaintiffs' refusal to pay their portion of the construction loan and the subsequent mortgage foreclosure action as agreed upon in the October Agreement, see Def. Ex. QQ (Expenses Incurred by Valenti due to Foreclosure) and (2) the remainder for all "soft costs" incurred by Defendants for which Plaintiffs are responsible to pay for half, less all credits Plaintiffs already paid, see Def. Ex. RR (Soft Costs Incurred by Valentin). Said soft costs include, for example, permits, liability insurance, report for the Offering Plan, and inspector fees.

Lastly, Defendants allege that Plaintiffs' claims against the individual Defendants must be dismissed because Plaintiffs failed to demonstrate that Defendants "pierced the corporate veil" and that Individual Defendants, in their status as the sole shareholders and officers of 1906-08 Amethyst Construction Corp., are not liable to Plaintiffs for the alleged actions of Maplecorp LLC or 1906-08 Amethyst Construction Corp.

Procedural History

Plaintiffs commenced this action for breach of a commercial contract with the filing of a Summons and Complaint on December 8, 2017, and named Defendants Maplecorp, Valenti, Amelia, and Amethyst, as well as Defendants Alan Singer, Esq. and Welby Brady and Greenblatt, LLP. NYSCEF Doc. Nos. 1, 2.

In July 2018, the action was discontinued against Defendants Alan Singer, Esq. and Welby Brady and Greenblatt, LLP on a motion prior to trial. NYSCEF Doc. No. 34. The Complaint sets forth thirteen causes of action against the various Defendants. The aforementioned Defendants moved (pre-answer) to dismiss the Complaint against them upon the grounds that the Complaint failed to state a cause of action, pursuant to CPLR § 3211(a)(7), and that they have a defense to Plaintiffs' claims of (1) breach of fiduciary duty and negligence and (2) fraud, founded upon documentary evidence, pursuant to CPLR § 3211(a)(1), in that the retainer agreement signed by Plaintiffs waived any conflict of interest.

The causes of action as to the remaining Defendants allege breaches of contracts, breaches of the implied covenant of good faith, fraud, breaches of fiduciary duty, unjust enrichment, account stated, piercing the corporate veil, and conversion. The initial demand by Plaintiffs was damages in the amount of $1,665,168.72. ³

3 As noted supra, Plaintiffs allege in post-trial memorandum they are entitled to a damages award of $1,135,000.00.

Issue was joined by the remaining Defendants with service of an answer in June 2018 wherein Defendants, inter alia, denied the material allegations of the Complaint and asserted two counterclaims for breach of contract as a result of Plaintiffs' alleged failure to arrange for, secure, and pay for all financing, mortgages, and loans necessary for the development and construction of the Project, and Plaintiffs' alleged failure to compensate Defendants for labor, services, and materials provided to complete and install certain upgrades relating to the condominium units. By virtue of the foregoing breaches, Defendants allege that they are owed $1,250,000.00. See NYSCEF Doc. No. 196 (7/12/21 Decision and Order on Motion) at 3.

Thereafter, the remaining Defendants made a motion for an order, inter alia, compelling arbitration, which was denied in December 2018 (Lefkowitz, J.). NYSCEF Doc. No. 58. Within the same motion, Defendants moved for an order granting the individually named Defendants summary judgement, dismissing so much of the Complaint that asserts a cause of action against them pursuant to CPLR § 3213. The aforementioned relief was also denied.

Following the completion of discovery, Plaintiffs and Defendants each moved for, inter alia, an order granting summary judgment pursuant to CPLR § 3212 (Mot. Seq. Nos. 6, 7). In a decision and order issued in July 2021 (Lefkowitz, J.), the Court denied both motions holding in part that there are triable issues of material fact issue as to: (1) whether the JVA was modified by the subsequent September and October Agreements; (2) whether the parties' performance following the Subsequent Agreements was considered partial performance so as to come within the exception to the Statute of Frauds; (3) whether Defendants provided Plaintiffs with a full and complete accounting of the funds used or expended on the Project; (4) whether or not a valid accord and satisfaction was accomplished by virtue of the parties' October Agreement; (5) whether Plaintiffs' own actions caused the Country Bank loan to go into default which, consequently, allegedly caused Defendants to incur additional expenses to refinance the loan; and (6) whether there was an oral agreement between the parties whereby Plaintiffs allegedly agreed to pay Defendants one-half of the costs and expenses for labor, material, and services purportedly expended by Defendants for upgrades to the condominium units. As such, this Court adjudicated the aforementioned issues at trial.

Trial

Plaintiffs called two witnesses: Jack Yorizzo and Ronald Eletto. Defendants called two witnesses: Alan Singer, Esq. and Robert Valenti. The relevant testimony is as follows:

Jack Yorizzo

Yorizzo is a self-described "builder" who opened his own construction company in 1998, after obtaining a college degree.

Yorizzo testified that after meeting Valenti, the two had a "handshake agreement" and Valenti started working on the project before the JVA was actually signed. Simply put, the deal required Yorizzo to put up the land and the approvals and Valenti would put up the building. Sept. 9 Tr. 49:1-3. Yorizzo believed it would cost approximately $2,000,000 to build the ten condominium units whereas Valenti believed he could build the units for $1,500,000.

Yorizzo testified that Amethyst, through Valenti, deposited $950,083.42 into an account with Country Bank on the date of closing, which was the same date the JVA was signed. The parties also agreed to take out a $900,000 loan, $300,000 of which Jalo-Yorizzo's company-was responsible for. Yorizzo testified that pursuant to the JVA, Valenti was solely responsible for the construction costs and the soft costs were to be shared equally between Jalo and Amethyst. Yorizzo stated that he was not involved in the Country Bank account with respect to the maintenance of the account, approvals, disapprovals, authorizations, directions, or withdrawals. Yorizzo maintains that Valenti was the only one who participated in the foregoing with respect to the Country Bank account. Yorizzo further testified that, although he requested an accounting for the Project multiple times, he has yet to receive the same.

With respect to the quality of the completed units, Yorizzo testified that approximately 400 potential buyers viewed the premises and did not show any interest in purchasing because "the workmanship was poor," specifically the interior trim was not straight, the paint job was terrible, the installation of the cabinets was awful, the products were inferior, and the tile was not installed in workman like fashion: ⁴

4 With respect to testimony offered by Plaintiff Yorizzo as to the purported repairs of the units and attendant costs, Defendants' counsel objected on the basis that, despite multiple requests for supporting evidence and motions to preclude Plaintiffs from offering any evidence on the issue of the costs to repair and complete construction to the units and/or strike the Complaint for spoilation of evidence, Plaintiffs have failed to substantiate the costs to repair the units. At trial, the Court reserved on the objection. Relying upon Judge Lefkowitz's July 12, 2021 Decision and Order, see NYSCEF Doc. No. 196 at 5 ("insofar as the court has determined that plaintiffs' failure to exchange the aforesaid supporting documentation has not been demonstrated to be either willful or contumacious, the imposition of sanctions is not warranted"), the Court overrules Defendants' objection, but nevertheless considers Plaintiffs' failure to offer supporting evidence and wavering positions on this issue in assessing credibility and Plaintiffs' ability to sustain a claim for damages thereto.

Q: Whose primary responsibility was it to do the building? A: Mr. Valenti. Q: Was it your job to be there every day to make sure things were running properly? A: No. Q: Whose job was that? A: Mr. Valenti. Q: Whose job was it to make sure that all the plans and specifications for the building were done in compliance with the actual plans? A: Mr. Valenti. Q: After the project was completed, do you know approximately how many people visited the units other than those who purchased? A: We had a period of time, I believe, 400 people came through without a sale. Q: And do you know why that was? A: They were not happy with

MR. BELLANTONI: I am going to object, Your Honor.

THE COURT: Overruled.

A: They were not happy with the level of construction.

Q: What does that mean?

A: The workmanship was poor.

Q: What does that mean?

A: On an interior finished spaces the trim was not straight, the paint job was terrible, the installation of the cabinets was awful. The products were some inferior. The tile was installed not in a workman like fashion.

Q: You were looking to sell units as move-in ready beautiful luxury units?

A: That is what we originally discussed. It is not in writing, but, yes, that was our agreement.

Q: And what, if anything, did you get?

A: We got rentals. We got units that were rent ready on his end, not ours, because ours were not finished. We had to go in and finish them ourselves.

Sept. 7 Tr. 73:1-74:14.

As per the parties' subsequent September and October Agreements, five of the ten units (unit numbers 91, 93, 95, 97, and 99) were transferred to Jalo. Amethyst intended to rent their five units while Jalo intended to sell their five units. The parties agreed that Amethyst would provide an accounting of the units for rent as well as the expenses for the rental units. Yorizzo testified that he had requested an accounting of the units Valenti was renting as well as the expenses of the leased unit, neither of which Valenti provided. Sept. 9 Tr. 237:13-25. Yorizzo did however receive a handwritten note from Valenti with a breakdown of expenses for Defendant's rental units in October, November, and December of 2016. NYSCEF Doc. 269 (Pl. Ex. 82). A total of $24,675 was collected by the Defendants for rent of their units during that time period. According to the October Agreement entered into by the parties, the monies were to be split equally after common expenses; in violation of said agreement, Jalo has not received any such payment from Defendants. Yorizzo further testified on direct examination that he did not believe the October Agreement amended the JVA:

Q: What was your intention behind signing this?

A: Moving the project forward, getting it done.

Q: And was it your intention by signing this document that the joint venture agreement or the September or the September agreement about altered amended or changed or superseded [ sic ] by this particular agreement?

MR. BELLANTONI: I'm going it object again.

THE COURT: Overruled.

A: No, the JV would not be amended.

Sept. 8. Tr. 216:3-12

However, Yorizzo did testify that his intention behind the October Agreement was to resolve the issues between the parties:

Q: It says, this covers any and all obligations of you and Mr. Eletto with reference to all disputes including but not limited to the construction of the condominium including professional fees and expenses to date; correct?

A: Yes.

Q: And that's why you agreed to pay another $145,000; didn't you?

A: To get this thing done.

Q: Yes, right.

A: Right.

Q: I mean, you didn't give Mr. Valenti back the hundred thousand dollar check that he gave you; correct?

A: No. Why would I do that?

Q: Exactly. And you didn't give back the title to the five units, or Jalo didn't give it back, because you followed through; correct?

A: I did, yes.

Q: Okay. You carried out the intent of the agreement; correct?

A: Yes, sir.

Sept. 12 Tr. 492:2-21

The five units transferred to Jalo were unfinished at the time the parties entered into the October Agreement. Because they were unfinished, Yorizzo testified that he hired several professionals to complete the work to prepare the units for sale. He hired Robert Giuffa, an electrician, in April 2017 to perform electrical work-specifically, repairs and installation of appliances. The electrician charged $1,000 per unit for said repairs, for a total of $5,000 for five units. Sept. 9 Tr. 250:5-251:8; 257:18-23; NYSCEF Doc. No. 270 (Pl. Ex. 83). Yorizzo further testified that he hired and paid (1) Cagg Plumbing and Heating for $1,840 per unit, for a total of $9,200 for five units. Sept. 9 Tr. 258:4-259:4; NYSCEF Doc. No. 271 (Pl. Ex. 84); (2) Ayala Carpentry, an interior finish carpenter, for $1,800 per unit, for a total of $9,000 for five units. Sept. 9 Tr. 259:18-261:18; NYSCEF Do. No. 272 (Pl. Ex. 85 ⁵); (3) Tiso Appliances, for the installation of refrigerators, stove hoods, dishwashers, washers, and dryers. Sept. 9 Tr. 262:1-269:25; NYSCEF Do. Nos. 273, 274 (Pl. Exs. 86, 87 ⁶); and (4) Dino, who repaired the broken and bent garage doors, for $950 total. Sept. 9 Tr. 273:20-276:20; NYSCEF Do. No. 277 (Pl. Ex. 90 ⁷). According to Yorizzo, he paid all the above-referenced invoices for the repairs on five units totaling $98,000, all of which was necessary and appropriate for Plaintiffs to prepare the units for sale, and all of which was incurred because of the poor work performed by Defendants. This Court notes that the Yorizzo failed to provide invoices to substantiate all of the above-referenced bills, and even for the ones for which he did submit bills, there is no proof of payment.

5 This Court notes a discrepancy in Pl. Ex. 85 in that the invoice states, "the price for the labor necessary to complete the project is $1,800.00 per unit" and despite Yorizzo's testimony that the work was performed for all five units, the amount due on the invoice is only $1,800, rather than $9,000.

6 This Court notes that Pl. Ex. 86, submitted in support of Yorizzo's testimony that he paid Tiso Appliances, is illegible. Pl. Ex. 87, a letter from Steve Hollatz, Esq., was submitted in support of the dollar amount, $4.335.00 for the appliances for unit 91 only.

7 This Court notes that Pl. Ex. 90 is an illegible, hand-written note.

Yorizzo further testified as to the plethora of issues that arose with the Town of Eastchester during the construction as well as to the issues with the AG's approval of the offering plan, both of which delayed the construction and eventual completion of the construction. Yorizzo maintains that Defendants are responsible for such delay, in part, because Valenti delayed obtaining certificates of occupancy. With respect to the damages suffered by Plaintiffs due to Defendant's delay in construction, Yorizzo testified that the Plaintiffs incurred carrying costs, consisting of homeowner's association fees and utility bills, totaling $58,249.90, plus $10,250 in taxes per year per unit, due to Defendant's 12-month delay. Additionally, Yorizzo alleges that Defendant's delay caused Plaintiffs to incur interest on the loan taken out by Jalo and Amethyst. Sept. 9 Tr. 300:1-6.

On cross-examination, Yorizzo testified that the JVA did not specify a deadline for completion of the project:

Q: Does the Joint Venture Agreement specify a date by which all ten units must be finished and completed?

A: I don't recall.

Q: Well, if I showed you the Joint Venture Agreement, could you find a date that says all units must be finished and completed by?

A: No, and I also don't think it has any kind of limit on how much money we can make either.

Q: So, in other words, there was no time of the essence or specific date by which the construction was to be finished; correct?

A: Well, we were planning to have it completed before the loan expired.

Q: My question is: Does the Joint Venture Agreement itself provide for a date by which all the units had to be finished?

A: No.

Sept. 12 Tr. 380:16-381:7

Yorizzo also conceded that he does not have proof of payment for taxes paid totaling approximately $50,000 ($10,250 per unit for one year), which Yorizzo alleges Plaintiffs were forced to pay due to Defendants' delay in construction, nor does he have proof of payment for the above-referenced repairs made to Jalo's five units:

Q: Do you have a check showing that you paid those taxes?

A: I don't know.

Q: You don't know?

A: I am sure -

Q: Did you pay by check, credit card, or cash?

A: I don't remember exactly how the taxes were paid or which account they came out of.

Q: In preparation for this trial, since that is one of the elements of your claimed damages, did you look to see if you had a check or receipt or a paid bill or anything to demonstrate that, in fact, you paid those taxes?

A: Not specifically for the taxes, no.

Sept. 12 Tr. 385:22-386:8.

Defendants' counsel elicited testimony from Yorizzo that Valenti was not required to spend a certain amount of money to complete the construction, was not limited to a time frame and that, as per the JVA, all decisions regarding construction operations shall be determined by Amethyst subject to compliance with the approved plans and building codes:

Q: In the Joint Venture Agreement, was there a certain amount of money that Mr. Valenti was required to spend to complete the construction of this project?

A: I don't believe so.

Q: And was there anything in the Joint Venture Agreement which provided for certain allowances for certain items of the construction necessary to complete the project?

A: He was just supposed to follow the approved plans.

Q: And the Joint Venture Agreement also provided that he was required to follow code as well, correct?

A: Yes

Q: And the Joint Venture Agreement also provides that, as the builder, Mr. Valenti had certain discretion in the construction of the project itself, correct?

A: What discretion exactly?

Q: Doesn't the Joint Venture Agreement provide that all decisions regarding construction operations shall be determined by Amethyst subject to compliance with the approved plans and the building codes?

A: That is in what document?

Q: The Joint Venture Agreement. Does it provide that?

A: I believe so. I think you just read it.

Sept. 12 Tr. 14:12-15:10.

Yorizzo was called as a rebuttal witness by Plaintiffs' counsel, and testified that Valenti did what he wanted to with respect to the Project (i.e., choice of materials). Yorizzo further testified on cross-examination that he thought allowing the construction loan (from Country Bank) to go into default would encourage Valenti to obtain certificates of occupancy from the town in an expedited fashion. Sept. 20 Tr. 1108:3-5.

This Court notes that counsel failed to sufficiently elicit testimony from Yorizzo with respect to whether there was an oral agreement between the parties whereby Plaintiffs allegedly agreed to pay Defendants one-half of the costs and expenses for labor, material, and services purportedly expended by Defendants for upgrades to the condominium units.

Ron Eletto

Eletto testified that he did not give Valenti consent to draw checks from the joint account and that despite multiple requests for receipts and proof of payment from Valenti, he has yet to receive the same. However, Eletto admitted on re-cross-examination by Defendants' counsel, that the JVA does not call for Plaintiff's consent, approval, or permission for Valenti to use said funds.

Defendants' counsel elicited testimony that Eletto willingly signed the September and October Agreements and that Eletto's intention behind the October Agreement was to "settle the deal," citing to Eletto's deposition testimony. See Sept. 13 Tr., 80:1-4.

This Court notes that Eletto's testimony was limited to the JVA and the Subsequent Agreements.

Alan Singer

Alan Singer is an attorney at Welby Brady & Greenblatt LLP, and former Defendant, who was initially retained by Valenti in December 2015, to resolve the dispute between Valenti and Yorizzo, the subject of this trial. Singer's testimony was limited to the offering plan to the AG's office, the parties' loan with Country Bank, the October Agreement, the common charges, and the materials used.

Singer's testimony confirmed that his office submitted the offering plan to the AG's office, followed by amendments to the offering plan, for which Maplecorp paid him a flat fee.

Singer testified that there was a dispute between Yorizzo and Valenti with respect to a water bill. Valenti had paid water bills for the entire condominium and was seeking reimbursement for half of his payments. Singer testified that Yorizzo had initially agreed to reimburse Valenti for half of the amount paid, but then reneged on his offer. As a result of Yorizzo's failure to honor the agreement, Valenti then refused to install appliances in Yorizzo's five units, as agreed to in the parties' October Agreement. However, despite the foregoing, Singer testified that after title was conveyed, pursuant to the October Agreement, all disputes except for the common charges were resolved:

Q: Following the conveyance of title, as you just explained, to your knowledge were there any open or remaining disputes between the parties at that time?

A: Not that I was aware of other than payment of the common charges.

Sept. 14 Tr. 117:16-20.

Robert Valenti

Robert Valenti, a self-described "contractor, builder, developer," has worked in the industry for approximately 45 years. Valenti testified that he met Eletto in 2013 when Valenti's son brought it to his attention that a property at 85 Maple Street was for sale. Sept. 19 Tr. 789:5-790:4. Valenti and Eletto then discussed the possibility of a joint venture and, after negotiations, entered into the JVA.

Valenti testified that at the time the parties entered into the JVA, the agreement specifically stated, "All other bills as of 'closing date' are responsibility of sellers (taxes, etc. etc.)." NYSCEF Doc. No. 306 (Def. Ex. D, JVA proposal at ¶ 2).

Valenti alleges that he had already started working on the Project when he learned that Yorizzo and Eletto had a mortgage on the Subject Property, approximately one month before closing in late Fall 2013. The parties needed approximately $300,000 to pay off the mortgage lien on the Subject Property and Valenti needed more money to complete the Project, which caused the parties to take a loan from Country Bank.

Valenti testified that he spent approximately $70,000 of his own money working on the project in Fall of 2013, prior to signing the JVA. Sept. 19 Tr. 810:13-16.

Valenti testified that the parties defaulted on their loan with Country Bank, and subsequently were liable for a 24% interest rate due to default, because Plaintiffs purposefully withheld their portion of the payment to Country Bank until Valenti obtained a certificate of occupancy. The Subject property then went into foreclosure due to the default.

With respect to the water bill, Valenti testified that he paid Suez approximately $14,000 for the water bill for all ten units and was seeking reimbursement from Yorizzo for his half, or approximately $7,000. Prior to the October Agreement, the parties agreed via email that Yorizzo would pay his half, which is why the October Agreement was silent with respect to the water bill.

Because Valenti did not receive reimbursement from Yorizzo with respect to the water bill, Valenti testified that he purposefully installed white refrigerators rather than stainless steel refrigerators in Yorizzo's four units ⁸, as set forth in the October Agreement. Valenti testified that the cost of four stainless steel refrigerators totaled approximately $6,000, which is commensurate with the amount Yorizzo owed Valenti for the water bill. Sept. 19 Tr. 878:22-880:10.

8 The parties agreed that there was no need for refrigerator installation in the unit occupied by Carol Care, unit 93.

Valenti testified that it was his belief that the October Agreement was a final agreement resolving essentially all issues and disputes between the respective parties:

Q: Mr. Valenti, do you see Plaintiff's Exhibit 62 in evidence?

A: Yes.

Q: Do you recognize that document?

A: Yes.

Q: Can you tell us what it is?

A: This is the agreement that we made on October 21st.

Q: Why was it necessary to make a second agreement when you had made an agreement about a month or so before on September 30, 2016?

A: Because that agreement didn't have who would pay what portions of whatever monies were owed.

Q: In your mind, was the October 21, 2016 agreement to be a final agreement resolving essentially all issues and disputes between the respective parties?

A: Absolutely.

Q: Is that why it was prepared?

A: Yes.

Q: Does it reference all disputes?

A: Yes.

Sept. 19 Tr. 886:1-20.

Valenti, and by default, Defendants, allege damages totaling approximately $220,000, as a result of Plaintiffs' refusal to contribute payment toward the construction loan and the ultimate default of the foreclosure proceedings that were commenced thereafter. Sept. 19 Tr. 907:16-23. This amount includes interest and work performed in the units, less monies previously provided by Plaintiffs. However, Valenti acknowledged on cross-examination, that he does not have receipts for many of the damages he alleges, primarily because the work was done by sub-contractors, who do not routinely provide receipts.

This Court notes that counsel failed to sufficiently elicit testimony from Valenti with respect to whether there was an oral agreement between the parties whereby Plaintiffs allegedly agreed to pay Defendants one-half of the costs and expenses for labor, material, and services purportedly expended by Defendants for upgrades to the condominium units.

Post-Trial Submissions

Plaintiffs

In a written summation, Plaintiffs seek judgement against Defendants totaling $1,135,000, which is the value of two condominium units now owned by Defendant Maplecorp, LLC, whereby Amethyst is the sole member.

Plaintiffs allege breach of contract and fiduciary obligations to Yorizzo, Eletto, and Jalo for failure to timely and competently perform its obligations under the JVA damaging: (1) Jalo and its investors in the amount of $317,406.71, plus interest from January 17, 2017, in extra mortgage costs, penalties, and interest; (2) $75,000 plus interest from April 25, 2015, for the direct infusion of cash paid by Jalo, over and above that required under the JVA; (3) $56,809.32 plus 9% interest from March 2017 for "cover costs" expended for appliances, repairs, and finishing of the five units allotted to Jalo; (4) $33,935.54 plus 9% interest from July 27, 2016, for substituted materials that Jalo contracted for, but were not installed by Defendants; (5) $2,207.43 plus 9% interest from September 2016, for Plaintiffs' share of the cost of staging the unit for sale; (6) $15,129.28 for Defendants' failure to account for rental income received pursuant to the September Agreement; and (7) $16,380 for Jalo's penalty as an investor due to Defendant's refusal to share the depreciation of the Project and failure to provide accounting.

In summation, Plaintiffs maintain that the JVA entered into between Jalo and Amethyst can only be wound up through an accounting and that Jalo's right to an accounting survives the termination of the JVA because the parties owe a fiduciary duty to each other.

Plaintiffs contend that Jalo is entitled to a judgment against Amethyst for breaching the JVA, and judgment against Valenti for breach of fiduciary duty. Plaintiffs specifically cite to the JVA which states in part: "any subsequent financing, mortgages, or other liens (other than taxes) shall be borne solely by Amethyst." See Pl. Ex. 11 at 7. Plaintiffs argue that any additional expenses necessary to complete the construction of the Project should be borne by Amethyst because Jalo should not be obligated for any expenses other than the $300,000 share of the $900,000 loan pursuant to the JVA.

Plaintiffs maintain that Amethyst is solely responsible for the delay in obtaining certificates of occupancy, resulting in a delay in distribution of the condominium units.

Plaintiffs further allege that Defendants are liable for $75,000, provided by Jalo during the construction to further fund the Project towards completion. Additionally, Plaintiffs maintain Defendants are liable for all costs associated with completion of Jalo's five units as well as damages for substituted materials with respect to the windows and structure of the units.

Plaintiffs maintain that Amethyst is responsible for providing an accounting to Jalo. Plaintiffs allege that Valenti withheld receipts, bank statements, and canceled checks because he felt that Jalo was trying to get all of Valenti's deductions to use for Jalo's tax deductions and to "double-dip" on the expenses incurred by the JVA. Because Jalo never received an accounting, they were unable to file accurate tax returns for the years 2016 through 2022, and unable to provide K-1's to each of its seven investors for 2017 through 2022. Plaintiffs allege that its seven investors will be penalized in the amount of $588,000, including Jalo's sum of $16,380.

Lastly, Plaintiffs insist that Jalo's rights under the JVA have not been waived, superseded, amended, or altered by the September and October Agreements, citing to the JVA's modification clause which states in relevant part, "This agreement may not be amended unless such amendment is in writing, signed by the parties, and specifically indicates that it amends this agreement." Pl. Ex. 11 at 5.

This Court notes that Plaintiffs' post-trial submission does not incorporate trial testimony and the purported calculations for their respective demands, and the calculations offered as to damages are mathematically incorrect. For example, Plaintiffs allege damages totaling "$56,809.32 plus 9% interest from March 2017 for 'cover costs' expended for appliances, repairs, and finishing of the 5 units allotted to Jalo." NYSCEF Doc. No. 346. According to Plaintiffs, this figure consists of: (1) $3,484.96 to purchase appliances; (2) $1,800 for labor of appliances, cabinets, and painting; (3) $100 for materials; (4) $1,840 for plumbing labor; (5) $1,000 for electrician; (6) $950 for garage door repair; (7) $1,440 for supervision; (8) $1,061.40 for contractor overhead; and (9) less $2,734.96 for appliances in unit 99. These figures total $8,941.40, not $56,809.32. Even assuming arguendo that Plaintiffs calculated the 9% interest, the total figure does not amount to Plaintiffs alleged total sum, and the Court declines to engage into any speculation as to what Plaintiffs are seeking.

Defendants

Defendants' written summation argues that: (1) Plaintiffs have failed to demonstrate damages as a consequence of Defendants' alleged breach of the JVA; (2) Plaintiffs claims are barred by the principle of accord and satisfaction; (3) Defendants are entitled to an award of damages against Plaintiffs on their counterclaims; and (4) Plaintiffs claims against the individual Defendants must be dismissed.

Defendants maintain that Plaintiffs' proof as to damages incurred in repairing and completing Defendants' work in the five units was speculative because there was no proof of the actual amounts spent or reasonable value of such repairs presented at trial.

With respect to Defendants' choice of materials used in construction of the units, Defendants maintain that Plaintiffs failed to demonstrate that they sustained any actual or direct damages as a consequence of Defendants' failure to install Anderson double hung silverline windows, or use particle board as opposed to plywood sheathing, or failure to install sound barriers between the walls connecting the units. Further, Defendant Amethyst, who was the general contractor for the project, was entitled to utilize its commercially reasonable judgement in the selection of materials and the construction of the units.

With respect to the time frame for completion of the Project, Defendants argue that many of the delays were beyond their control, including the AG's delay in approval of the offering plan. Defendants state that it is not uncommon to encounter delays in construction projects and the certificate of occupancy was obtained in a timely manner.

Defendants argue that the majority of costs associated with the additional financing was to pay the 24% interest and penalties that accrued as a direct result of Plaintiffs' intentional refusal to pay the construction loan, which ultimately led to mortgage foreclosure proceedings.

With respect to the Subsequent Agreements, Defendants argue that there is no question that Plaintiffs considered the October Agreement to be binding and final, citing to Yorizzo's threat towards Valenti calling for legal action for Defendant's failure to honor the October Agreement. Defendants state that the performance by the parties pursuant to the subsequent September and October Agreements amounts to partial performance under the part performance doctrine sufficient to overcome the statute of frauds, and that the same actions prove the modification of the JVA.

Legal Discussion

Under New York law, the legal consequences of a joint venture are equivalent to those of a partnership. See Gramercy Equities Corp. v. Dumont, 72 N.Y.S.2d 560 (1988). Parties to a joint venture agreement owe a fiduciary duty to the other, which is breached by concealing business dealings and failing to disclose pertinent information to the other. The stringent standard of undivided and undiluted loyalty owed to a fiduciary is an "inflexible rule of fidelity which has been enforced by the Courts with '[u]ncompromising rigidity.'" See A.G. Homes, LLC v. Gerstein, 52 A.D.3d 546, 548 (2d Dept. 2008) (internal quotations and citations omitted).

To establish the existence of an enforceable agreement, a plaintiff must establish an offer, acceptance of the offer, consideration, mutual assent, and an intent to be bound. 22 NY Jur. 2d, Contracts § 9; Kowalchuck v. Stroup, 61 A.D.3d 118, 121 (1st Dept. 2009). "The elements of a cause of action for breach of contract include the existence of a contract, plaintiff's performance or excuse for non-performance, defendants' breach, and resulting damages to plaintiff." A.D.E. Systems, Inc. v. Energy Labs, Inc., 183 A.D.3d 791, 792 (2d Dept. 2020) (internal quotations and citations omitted). A party claiming damages in a breach of contract action must demonstrate how the alleged breach of the agreement caused any injury. ERE LLP v. Spanierman Gallery, LLC, 94 A.D.3d 293, 493 (1st Dept. 2012).

"It is a fundamental principle of contract law that an award of damages should place the plaintiff in the same position as he or she would have been in if the contract had not been breached. In addition the damages may not be 'merely speculative, possible or imaginary, but must be reasonably certain and directly traceable to the breach, not remote or the result of other intervening causes.'" Wai Ming Ng v. Tow, 260 A.D.2d 574, 575 (2d Dept. 1999), citing to Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261 (1986). Plaintiff has the burden of proving damages. Coty v. Steigerwald, 291 A.D.2d 796 (4th Dept. 2002).

It is generally well settled that acceptance of a check in full satisfaction of a disputed unliquidated claim operates as an accord and satisfaction discharging the claim. See Huimin Sun v. Cai, 146 A.D.3d 760, 762 (2d Dept. 2017); Trans World Grocers v. Sultana Crackers, 257 A.D.2d 616, 617 (2d Dept. 1999). "The party asserting the affirmative defense of accord and satisfaction must establish that there was a genuine dispute regarding an unliquidated claim between the parties which they mutually resolved through a new contract discharging all or part of their obligations under the original contract. A genuine dispute requires that the debtor give notice of the dispute prior to tendering a partial payment in full satisfaction. The finding of a genuine dispute is a question of fact." Trans World Grocers, 257 A.D.2d at 617 (internal citations omitted).

Section 5-701(a) of the New York Statute of Frauds provides, in relevant part:

Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking:

By its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime;

[ ]

(10) Is a contract to pay compensation for services rendered in negotiating a loan, or in negotiating the purchase, sale, exchange, renting or leasing of any real estate or interest therein, or of a business opportunity, business, its good will, inventory, fixtures or an interest therein, including a majority of the voting stock interest in a corporation and including the creating of a partnership interest. 'Negotiating' includes procuring an introduction to a party to the transaction or assisting in the negotiation or consummation of the transaction. This provision shall apply to a contract implied in fact or in law to pay reasonable compensation but shall not apply to a contract to pay compensation to an auctioneer, an attorney at law, or a duly licensed real estate broker or real estate salesman.

NY GEN. OBLIG. LAW § 5-701(a) (McKinney 2001).

JVA and Subsequent Agreements

Here, the parties entered into a JVA on January 30, 2014. In general terms, Yorizzo would provide the land and the approvals and Valenti would take on construction of the condominium units. It is undisputed that the JVA constitutes a contract.

With respect to the Statute of Frauds argument, Plaintiffs allege that Jalo's rights under the JVA did not merge into Maplewood Court Inc. when Jalo and Amethyst conveyed title to the property on December 12, 2016, and Jalo's rights therefore survive and are actionable.

This Court addresses whether or not subsequent performance by the parties in accordance with the 2016 agreements (September Agreement and October Agreement), including the Plaintiffs' payment of an additional $295,000 in principal and interest under the mortgage-a sum over and above that required in the JVA dated January 30, 2014-coupled with Plaintiffs' conveyance of one-half of the condominium units to Amethyst Corp., amounted to conduct that modified the JVA, and which may be considered partial performance so as to come within the exception to the Statute of Frauds. See Pinkava v. Yurkiw, 64 A.D.3d 690, 692-693 (2d Dept. 2009).

Defendants maintain that the performance by the parties pursuant to the Subsequent Agreements amounts to partial performance and is therefore sufficient to overcome the Statute of Frauds. Defendants argue in their post-trial submission that "although courts have routinely invalidated oral agreements under General Obligations Law § 5-701 where they are not commemorated by a writing signed by the party to be charged, the part performance doctrine operates to take the agreement concerning the respective responsibilities to pay the principal and interest owed on the mortgage outside the Statute of Frauds." NYSCEF Doc. No. 344 at 15. Therefore, Defendants allege, that even if the Subsequent Agreements do not specifically state or provide that it amended the JVA, the conduct of the parties (specifically the assumption of payment and conveyance or title of half of the units) "circumstantially proves the modification of the JVA." Id.

To the contrary, Plaintiffs conclude that the lack of specific language (i.e., "amended," "waiver") in the Subsequent Agreements, demonstrates that Jalo's rights under the JVA have not been waived, superseded, amended, or altered by the Subsequent Agreements. Plaintiffs specifically cite to Section Five of the JVA which states, "This agreement may not be amended unless such amendment is in writing, signed by the parties, and specifically indicates that it amends the agreements." NYSCEF Doc. No. 215 at 5.

Despite the specific language of the JVA requiring specificity as to the amendment, this Court considers the actions of the parties following the entry of the Subsequent Agreements. For example, pursuant to the September Agreement, Amethyst was given permission to rent five of the units:

Q: There did come a point in time pursuant to written agreement on September 30th of 2016 between Amethyst Construction and Jalo Realty, where Amethyst was given permission to rent units 85, 87, 89, 101 and 103, correct?

A: Can I see the agreement?

MR. SVERD: Can we please present the witness with Plaintiff's Exhibit 57?

THE COURT: Of course.

(Whereupon, the Exhibit is handed to the witness.)

THE COURT: The Court is handing the witness Plaintiffs 57.

THE WITNESS: Thank you.

Q: Mr. Valenti, have you had an opportunity to review the September 30th 2016, agreement?

A: I'm doing it right now.

Q: Okay. Let me know when you're ready please.

THE COURT: The Court is also handing the witness Plaintiff's 82.

MR. SVERD: Thank you, your Honor.

(Whereupon, the exhibit is handed to the witness.)

Q Mr. Valenti, have you had a chance to review the September 30th 2016 agreement?

A: Quickly, yes. There's a lot in the agreement.

Q: But well, does your signature appear on the second page of this document?

A: Yes.

Q: And on the third page, as well?

A: Yes.

Q: Okay. Do you see where it says at paragraph number two on the first page, that Amethyst is hereby given permission to rent units 85, 87, 89, 101 and 103?

A: Yes.

Q: And did there come a point in time where any of those units were rented in or about 2016?

A: Yes.

Sept. 8 Tr. 972:3-973:14

Additionally, pursuant to the October Agreement, Valenti and Yorizzo agreed to pay $595,000 in payments on the existing mortgage, which the parties agreed would cover any and all obligations of the parties with reference to all disputes including but not limited to the construction of the Project, professional fees, and expenses through October 21, 2016. See NYSCEF Doc. No. 345, ¶¶ 133, 165, and 166; trial testimony:

MR. BELLANTONI: That is an October 21st 2016 document.

(Whereupon, the Exhibit is handed to the Court.)

Q: Okay. Does your signature appear on this document?

A: Yes.

Q: And who is this document entered into between?

A: Robert Valenti, Ron Eletto and Jack Yorizzo.

Q: And explain to the Judge, in essence, what the agreement is here?

A: The first point is that I would - I agreed after negotiations to pay $595,000.00 back to Rocco as my portion of the loan that he gave us. Mr. Valenti agreed to sell unit one for $569,000.00. Mr. Valenti would pay me the sum of $100,000.00 for what they referred to as a previous loan.

Q: Now with respect to the previous loan, explain the original joint venture agreement and that part that we overlooked, I forgot to ask you about?

A: The joint venture agreement was signed after I had already started construction. I spent over $125,000.00. As part of our negotiations, Mr. Valenti said he would have gotten that work done cheaper because he did all of the site work himself. So we agreed that he would reimburse me $100,000 for the work that I had already completed.

Q: And when you say work, are we talking about building things or are we talking about clearing and getting things ready?

A: Rock removal was a big part of it.

Q: Now, so that was originally supposed to be paid and that's addressed in this agreement dated October 21st of 2016?

A: That is correct.

Q: And did Mr. Valenti tender a check in the sum of $100,000.00?

A: He did.

Q: Okay. Did Mr. Valenti sell unit 101 for $569,000.00?

A He did not.

Sept. 8. Tr. 214:6-215:21

Further, on December 12, 2016, Jalo and Amethyst conveyed the Subject Property to Maplewood Court, Inc., by deed. NYSCEF Doc. No. 345 at 172.

Lastly, Singer testified that after the September and October Agreements were entered, all disputes other than common charges were resolved:

Q: Following the conveyance of title, as you just explained, to your knowledge were there any open or remaining disputes between the parties at that time?

A: Not that I was aware of other than payment of the common charges.

Sept. 14 Tr. 117:16-20.

Based on the foregoing and the testimony provided at trial, the Court finds that the September Agreement and October Agreement did in fact amend the JVA, and therefore is sufficient to overcome the Statute of Frauds, making the Subsequent Agreements enforceable.

Breach of JVA and/or Subsequent Agreements

Based on the Court's finding that the Subsequent Agreements are enforceable, the next question is whether or not either of the parties' actions constitute a breach of contractual obligations.

With respect to Defendants' actions, it is evident from Plaintiffs' testimony that Plaintiffs believed the quality of the work performed by Defendants was not only defective, but was below the acceptable industry standards. For example, Defendants used different materials than Plaintiffs intended to use for the Project. However, Plaintiffs failed to proffer any evidence, including documentation and/or expert evidence, of the same.

Plaintiffs further allege that Defendants exercised dilatory tactics by causing unnecessary delay to the construction and the issuance of the Certificate of Occupancy from the Town of Eastchester. However, Yorizzo admitted on cross-examination that he purposefully withheld payment on the mortgage due to Defendants delay in obtaining a Certificate of Occupancy:

Q: Mr. Yorizzo, it's your testimony that it was your intention and hope to complete this project as soon as possible, correct?

A: Yes, sir.

Q: Why then did you let the Country Bank loan go into default?

A: Because it took 18 months from when the building was substantially complete until we had a certificate of occupancy. And we tried to light a fire under Mr. Valenti to complete it.

Q: Do you think that allowing the construction loan to go into default would expedite the process?

A: We thought the threat of that would help, yes.

Q: Did you recognize that there was a chance that the default could then lead to a foreclosure action?

A: Yes, it was very serious.

Q: You recognized that?

A: Yes, sir.

Q: So would it be fair to say that there was, in your mind, a substantial risk that if the mortgage wasn't paid, that the entire project and property could be lost in foreclosure?

A: There was that risk, yes.

Q: And in fact, that almost happened, correct?

A: I don't know how far it got, sir.

Q: Well, there was a foreclosure action that was brought, correct?

A: I believe papers were filed.

Q: And the interest rate jumped to 24 percent, correct?

A: Yes.

Q: Did the foreclosure proceeding cost you and Mr. Eletto money?

A: Yes.

Q: It cost you substantial money, didn't it?

A: I believe so. I don't know the exact numbers.

Q: And it also cost Mr. Valenti money, didn't it?

A: Yes.

Q: It also cost him substantial amounts of money, correct?

A: Yes.

Q: In other words, there wouldn't have been a need to bring Mr. Sollecito into the picture for any reason, correct?

A: If Mr. Valenti finished the job in an intelligent fashion, there would have been no need.

Q: But if the loan didn't go into default, there wouldn't be the need to refinance that mortgage, correct?

A: Correct.

Sept. 20 Tr. 1107:19-1109:12

Considering the JVA, even assuming arguendo that the Certificate of Occupancy could have been issued earlier and Defendants used materials to satisfy Plaintiffs' standards, there was no testimony or evidence provided to this Court that Plaintiffs would have been left in a better position, let alone suffered any quantitative damage. Further, the JVA and the Subsequent Agreements did not specify the types of materials Defendants were required to use, nor did it specify a Project completion date. Despite testimony as to what both of parties believed to be a reasonable completion date, all agreements were silent as to a date. Additionally, the Court agrees with Defendants that, as the general contractor for the project, 1906-08 Amethyst Construction Corp. was entitled to utilize its commercially reasonable judgment in the selection of materials and construction of the units. See Holland Loader Co., LLC v. FLSmidth A/S, 313 F.Supp.3d 447, 472-473 (SDNY 2018), aff'd 769 Fed.Appx. 40 (2d Cir. 2019). The Court is further persuaded by the fact that each of the units passed inspection by the Eastchester Building Department.

Further, there was no testimony or evidence proffered at trial demonstrating that the alleged delay resulted in a decrease in revenue, or that the choice of materials resulted in a decrease in revenue-Plaintiffs' assumption of any decrease in revenue is pure speculation. For example, there was no testimony elicited or documents entered into evidence to establish industry standards, appropriate substitution of materials, or reduction in value. Therefore, this Court does not find that Plaintiffs have sustained their burden of proof and as such, Defendants are not in breach of contract with respect to the materials used and the prolonged completion of the Project. Mendez v. Meyer, 70 Misc.3d 135 (A) (NY Supp. Jan. 15, 2021) ("Plaintiff failed to establish that defendant had not performed in accordance with the retainer agreement; nor did defendant's refusal to perform services that lay outside the scope of the retainer agreement constitute a breach of contract."); Pl. Exs. 11, 57, 62.

The Court next addresses whether or not Defendants are in breach for failure to account for rental income, pursuant to the September Agreement, and failure to provide a full accounting for the Project. Plaintiffs argue that Amethyst failed to account for rental income received pursuant to the parties' September Agreement, and that Valenti and Amethyst willfully refused to share the depreciation of the project, and intentionally failed to account, resulting in Jalo and its seven investors' failure to file tax returns for the past seven years, resulting in penalties to Jalo in the sum of $16,380. During trial, Valenti testified that he offered to provide an accounting for the Project:

Q: That's right. So ultimately did you get any advice from an accountant or anyone that advised you that Jalo would not file a joint venture tax return reflecting any expenses for the construction of the project?

A: I don't understand the question.

Q: It's true that you intentionally withheld documents from Jalo because you didn't want them claiming similar expense deductions that you felt that your company was entitled to?

A: I offered to have third-party accountant look at it and clear this all up. They refused.

A: I didn't withhold the documents.

Q: So you gave them a full accounting of all of the records of the expenses?

A: No, I offered to have a third-party accountant look at them.

Q: And you did that despite the Plaintiffs asking over and over for documentation to support the expenses, correct?

A: No.

Sept. 20 Tr. 1086:17-1087:12

Plaintiff's counsel solidified the parties' agreement to have a third-party accountant when he called Eletto as a rebuttal witness:

Q: And with respect to the third-party, the proffer of a third-party accountant to review records, are you familiar with that proposition?

A: There was a brief discussion.

Q: And was there ever a third-party appointed?

A: No. I would have welcomed him.

Q: And isn't it true that - withdrawn. Can you not file tax returns despite the fact of not having any proof or receipts?

A: It would be erroneous. The answer is no.

Sept. 20 Tr. 1097:10-19

Here, the Court finds that Defendants are in breach of the September Agreement by their failure to provide an accounting for rental income, and in breach of the JVA for failure to provide an accounting for the Project ("Any liens existing as of the date of this agreement shall be borne solely by Jalo and any subsequent financing, mortgages or other liens (other than taxes) shall be borne solely by Amethyst." NYSCEF Doc. No. 215 at 7. Accordingly, this Court directs Defendants to arrange for and incur the costs of an accounting for rental income and expenses associated with the Project to be completed by a neutral third-party accountant.

With respect to the completion of Jalo's five units, Plaintiffs allege that Defendants knowingly and intentionally failed to complete the five units on the Plaintiff's ledger. Plaintiffs allege that the measure of damages for substantial defect in construction is the fair and reasonable cost of completing or correcting the contractor's performance as of the date of the breach. Brushton-Moira Cent. School Dist. V. Fred H. Thomas Assoc., P.C., 91 N.Y.2d 256 (1998) ("the proper measure of damages is the cost to repair or replace the defective panels as of the date when the work was completed and a certificate of occupancy was issued"). Jalo paid for the refrigerator, oven hood, dishwasher, and installation of the same, in four of its five units for a total alleged cost of $56,809.32. This Court finds that Defendants were in breach of the parties' September Agreement, for failure to install the same appliances in Jalo's units as were installed in the other units within two weeks for any unit which was under contract of sale. For example, Valenti testified that he purposefully did not install the agreed upon refrigerators because Defendants did not receive payment for the water bill:

Q: Did you install stoves or refrigerators in the five units that Jack and Ron decided to keep?

A: Yes.

Q: What kind of stoves and refrigerators did you install in their units?

A: The stoves were the same units I installed in my units, but the refrigerators were just a white regular refrigerator.

Q: So the stoves were all the same in all of the ten units, correct?

A: Yeah, different brands, but the same price, approximately.

Q: Why did you install white refrigerators in their units?

A: In order to get the C of O, I needed to have a refrigerator in the unit.

Q: Did Jack or Ron express their displeasure with that?

A: Yes.

Q: What did you tell them?

A: I said, pay me the water bill that you owe me and I'll give you the right refrigerators. Not the right ones, but I actually agreed in the October 21st agreement to give them higher end stainless steel appliances.

Q: Did the cost of five stainless steel refrigerators -

A: Actually, it was four, because Carol's unit, they said don't bother putting anything in there, they'll pay for it themselves.

Q: What unit number was that?

A: 93.

Q: And you're referring to Carol Care, Ron's girlfriend?

A: Yes.

Q: What was the cost to install stainless steel refrigerators in four of their units?

A: At the time, I think they were like $1,500 each. So four times 15, it's about 6 grand.

Q: So in your mind, did that equate to or equal the money that they owed you for the Suez water bill?

A: Yes.

Q: Do you know why Jack ultimately didn't pay you for the water bill?

A: I don't know.

Sept. 19 Tr. 94:22-96:10

Damages

Having established that Defendants breached the JVA and Subsequent Agreements with respect to an accounting (rental income, expenses, and taxes) and failure to complete the five units on the Project, the Court next addresses whether or not there are quantifiable damages. Plaintiffs have the burden of proving damages.

Defendants allege that the proof as to damages incurred in repairing and completing Defendants' work in the units was, at best, speculative. Defendants allege that "the proper measure of Plaintiffs' damages is the cost of completion of the construction work and the correction of defects in the Defendants' work." See Lewin v. Levine, 146 A.D.3d 768, 770 (2d Dept. 2017); NYSCEF Doc. No. 344. In Lewin, plaintiffs failed to demonstrate what portion of the $300,500 alleged damages, was attributed to work that was never done or work that was defective, resulting in plaintiff's failure to sustain actual damages. Id. Similarly, here, Yorizzo failed to provide receipts of Defendants' use of more expensive products. Even assuming arguendo, he did provide receipts, the use of sub-par products is not considered a breach of contract because the JVA did not specify the type of products or materials. Further there is no deadline by which Defendants were required to complete the work in the JVA. Therefore, Plaintiffs are wholly unable to quantify his damages.

Despite Plaintiff's inability to quantify damages, with respect to an accounting, this Court finds that Plaintiffs did prove damages resulting from Defendants' failure to provide an accounting, in that Defendants failed to perform and comply pursuant to the JVA and Subsequent Agreements. The Court next need address how to quantify said damages. The JVA entered into between Jalo and Amethyst can only be wound up through an accounting. See Hamilton Co. v. Hamilton Title Corp., 23 Misc.2d 589 (Sup. Ct. Nass. Cnty. 1960), citing to Toeg v. Margolies, 280 App. Div. 319, 321 ("The only manner in which a partnership or joint venture can be wound up is through an accounting"). As directed supra, Defendants shall provide Plaintiffs with the costs associated to complete the five units, subject to said accounting, and Defendants shall provide payment for the expenses and rental income.

Further, with respect to the costs associated with Plaintiffs' completion of four units, due to Defendants' breach of the same, Plaintiffs offered credible testimony quantifying those damages, as well as repairs and improvements made to the units. Specifically, Yorizzo testified and submitted proof that he hired an electrician to repair and install appliances, for a total of $5,000. Sept. 9 Tr. 250:5-251:8; 257:18-23; Pl. Ex. 83. Yorizzo further testified and submitted proof that he hired Cagg Plumbing and Heating for $1,840 per unit, for a total of $9,200 for five units. Sept. 9 Tr. 258:4-259:4; Pl. Ex. 84. Additionally, Yorizzo testified that he hired Ayala Carpentry, an interior finish carpenter, for $1,800 per unit, for a total of $9,000 for five units. Sept. 9 Tr. 259:18-261:18; Pl. Ex. 85. This Court notes that as referenced supra, the invoice is for $1,800, which is what the Court will award for this particular vendor. Further, Yorizzo testified that he hired Tiso Appliances, for the installation of refrigerators, stove hoods, dishwashers, washers, and dryers. Sept. 9 Tr. 262:1-269:25; Pl. Exs. 86, 87. Again, the Court will only award $4,335.00 for this vendor because Plaintiffs failed to substantiate proof of a different amount. Lastly, Yorizzo testified that he hired Dino, who repaired the broken and bent garage doors, for $950 total. Sept. 9 Tr. 273:20-276:20; Pl. Ex. 90. According to the Court's calculations, the total amount owed to Yorizzo is $21,285 ($5,000 + $9,200 + $1,800 + $4,335).

Defendant's Counterclaims for Breach of Contract

The Court next addresses the viability of Defendants' counterclaims for breach of contract as a result of Plaintiffs' alleged failure to pay their portion of the construction loan and the subsequent mortgage foreclosure action, resulting in alleged damages to Defendants totaling $224,451.33. NYSCEF Doc. No. 344 at 12. Defendant Valenti testified that he prepared a breakdown of the expenses incurred as a consequence of Plaintiffs' alleged loan default, "soft costs," and credits, and that he memorialized said breakdown the weekend before he was scheduled to offer testimony. See Def. Exs. QQ, RR.

With respect to the alleged loan default, Defendants offered no evidence, in the form of documentation or testimony, to establish the elements of a breach of contract claim with respect to Plaintiffs' alleged failure to pay their portion of the construction loan and the subsequent mortgage foreclosure action. Defendants summarily assert that they "incurred $203,204.91 in additional interest payments and penalties," see NYSCEF Doc. No. 344 at 16. Defendants not only fail to substantiate this figure, but they also do not offer any argument as to the nature of the alleged breach. Accordingly, the Court dismisses the Defendants' counterclaim for breach of contract as it relates to payment of the construction loan and mortgage foreclosure action.

Based on the JVA, the soft costs were to be divided equally between Plaintiffs and Defendants, and both Valenti and Yorizzo conceded as much during testimony. Accordingly, any failure by Plaintiffs to remit those payments constitutes of a breach of the JVA. To substantiate the "soft costs" referred to in Def. Ex. QQ, Valenti referred to Def. Ex. RR, a table he prepared prior to the October Agreement, with a breakdown of the "soft costs" and corresponding check numbers. See Def. Ex. RR. Defendant Valenti asserts that copies of the cancelled checks are included in Pl. Ex. 9, which is a compilation of bank statements and checks-many of which are illegible and there was insufficient testimony elicited to specifically identify the corresponding cancelled check to the purported expense. This Court notes that the total amount for soft costs on the exhibit is $150,042.17, but according to the Court's calculations, the amount is $150,032.17. This Court further notes that the figure for soft costs varies in that Def. Ex. QQ is $145,894.85, whereas Def. Ex. RR is $150,032.17.

However, the evidence offered at trial as to the total amount of soft costs incurred and owed is deficient. For example, Valenti testified that the amount listed for "windows" and "plywood sheathing" are the difference between the product Valenti actually used and Yorizzo's estimate in what product should have been used:

Q: On the spreadsheet that you prepared, which is now in evidence, over the weekend, you put plywood sheathing, $3,000. Is that money that you actually spent or does that represent some other number?

A: Jack said that there was a $3,000 difference and I'm giving him that in credit, to credit. Even though he shouldn't be credited, I'm giving that to him as a credit.

Q: So you're acknowledging that the plywood that you installed at the property was not what was called for in the plans, correct?

A: It's approved by the Building Department. Plans have nothing to do with it.

Q: Mr. Valenti, just try to answer the question I'm asking.

A: I did.

Q: So isn't it true that the plywood sheathing that you installed at the property deviated from the approved plans?

A: I don't know if the plans say "plywood sheathing" on them.

Q: But you did review the plan, correct?

A: Yes.

Q: And you reviewed the plan back in 2000, I believe late '13, when you were negotiating with Ron and getting familiar with the project, correct?

A: Yes.

Q Now, here we have windows on your spreadsheet. $33,000 divided by two. Where is the $33,000 coming from?

A: Jack's estimate of the difference between the windows I installed and the windows that were on the plan.

Q: It says here from plaintiffs, $75,000. What are you referring to on that ledger?

A: The check that they gave me for $75,000 for construction and soft costs.

Sept. 19 Tr. 924:4-925:11

This Court finds that based on the testimony elicited at trial, subject to confirmation by Plaintiffs that all cancelled checks are included in Pl. Ex. 9, Defendants are entitled to payment for half of the soft costs for the Project, less the costs for (1) $40,906.32 for "water meter pits," allegedly made on an American Express credit card, and (2) $32,000 "paid to JMC for loan closing with Rocco Sollecito," neither of which was sufficiently substantiated via testimony or exhibits. See Sept. 20 Tr. 1059:4-1060:15. With respect to the other costs listed in Def. Ex. QQ, this Court finds that Defendants failed to substantiate the amounts and payments thereto.

Conclusion

All other arguments raised on these motions and evidence submitted by the parties in connection thereto have been considered by this Court notwithstanding the specific absence of reference thereto.

Accordingly, it is hereby, ORDERED that Plaintiffs' causes of action for breach of contract are granted to the extent that Defendants shall arrange for and incur the costs of an accounting of: (1) all records and expenses in performing under the JVA, (2) all rents collected and credits/expenses, and (3) the Project sufficient to complete and file tax forms (e.g., Schedule K-1) to be conducted by a neutral third party. The Court further directs that any report generated by the neutral third party shall specify the amount due and owing by each of the respective parties. Defendants shall provide Plaintiffs with said accounting within ninety (90) days of entry of this Decision and Order; and it is further

ORDERED that within thirty (30) days following production to Plaintiffs of the aforementioned accounting, Defendants shall remit payment to Plaintiffs for the specified amount due and owing; and it is further

ORDERED that within thirty (30) days of entry of this Decision and Order, Defendants shall provide payment to Plaintiff Yorizzo in the amount of $21,285 as and for costs associated with the completion of four units; and it is further

ORDERED that Defendants' counterclaim for breach of contract for Plaintiffs' alleged failure to secure, to arrange for, obtain and secure financing, mortgages, and loans including any interest thereon, is denied, and it is further

ORDERED that Defendants' counterclaim for breach of contract for Plaintiffs' alleged failure to pay half of the "soft costs," is granted to the extent that, within thirty (30) days of entry of this Decision and Order, Defendants shall provide Plaintiffs with a breakdown of soft costs with corresponding check numbers and identify the cancelled checks in Pl. Ex. 9; and it is further

ORDERED that within thirty (30) days of receipt of the aforementioned breakdown and checks, Plaintiffs shall provide payment to Defendant for their half of the soft costs.