Opinion
Index 653201/2020
03-01-2022
69 PINEHURST LLC, Plaintiff, v. SIXTY NINE PINEHURST AVENUE ASSOCIATES LLC, ERIC QUOOHS, GERDA QUOOHS, CHRISTA ROHE, and STEVEN ROHE, Defendants. Motion Seq. No. 001
HON. LOUIS L. NOCK, JUSTICE.
Unpublished Opinion
MOTION DATE: 09/22/2020
DECISION + ORDER ON MOTION
HON. LOUIS L. NOCK, JUSTICE.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 were read on this motion to/for DISMISS.
Upon the foregoing documents, it is hereby ordered that defendants' motion to dismiss the complaint is granted, based upon the following memorandum decision.
Background
In this action for breach of contract, plaintiff 69 Pinehurst LLC ("plaintiff) alleges eight causes of action: breach of contract (first cause of action); breach of warranties and representations (second cause of action); conversion (third cause of action); money had and received (fourth cause of action); unjust enrichment (fifth cause of action); constructive fraudulent conveyance (sixth cause of action); actual fraudulent conveyance (seventh cause of action); attorney's fees (eighth cause of action). Defendants Sixty Nine Pinehurst Avenue Associates LLC ("seller"), Eric Quoohs, Gerda Quoohs, Christa Rohe, and Steven Rohe (the "individual defendants") move to dismiss the complaint in its entirety based on documentary evidence and failure to state a cause of action pursuant to CPLR 3211(a)(1) and (a)(7).
Pursuant to a Purchase and Sale Agreement (the "PSA") dated November 22, 2016 (NYSCEF Doc. No. 7) and Bill of Sale dated March 30, 2017 (NYSCEF Doc. No. 8), plaintiff purchased from seller all of the land, building, and improvements located at 69 Pinehurst Avenue, New York, New York (the "premises"). The individual defendants are trustees or representatives of seller's member entities. Relevant to the instant motion, the PSA provides that certain charges and liabilities should be apportioned between plaintiff and seller prior to closing (NYSCEF Doc. No. 7, Art. 11). Included among these are "real estate taxes and assessments," which were to be apportioned "on the basis of the fiscal year for which assessed" (id., §11.1 [b]). To the extent any real estate tax refund or credit "attributable to the fiscal tax year during which the Closing Date occurs [they] shall be apportioned between Seller and Purchaser" (id. at Rider, § 13.5). Seller made various representations and warranties in the PSA, all of which were merged into the deed to the Premises upon plaintiffs acceptance of same, relieving seller of any further obligation with respect to those representations and warranties save those which expressly survive closing (id., § 20.3). The prevailing party in any litigation arising out of the sale of the premises is entitled to recover its "costs and expenses, including reasonable attorney's fees" (id., § 20.14). The Bill of Sale, comparatively sparser than the PSA, simply provides that seller conveyed to plaintiff
"all of the assets and all of Seller's rights, whether at common law or otherwise, claims, including the proceeds of any claims which may or may not be assignable, and causes of action arising out of any transaction occurring on or prior to the date hereof with respect to the premises"(NYSCEF Doc. No. 8.)
Plaintiff alleges that, subsequent to closing on the property, it retained nonparty New York Water Management, Inc. ("NYWM") to perform a real estate tax audit pertaining to certain tax exemptions applicable to the premises (NYSCEF Doc. No. 6, ¶ 16). NY WM applied for a refund of a portion of real estate taxes assessed on the premises between 2013 and 2016, on plaintiffs behalf (id., ¶ 17). The New York State Department of Taxation and Finance ("DTF") updated the real estate tax account for the premises, at which point NYWM reapplied for the refund (id., ¶¶ 18-20). On August 6, 2019, DTF issued a refund check in the amount of $85,160.28, payable to seller, and mailed it to seller care of its counsel (id., ¶¶ 22-23). On of the individual defendants allegedly deposited the refund check, after which seller dissolved (id., ¶¶ 7, 24-27). Plaintiff demanded return of the check, asserting that it was entitled to the refund pursuant to the terms of the PSA and the Bill of Sale, but defendants have not done so (id., ¶ 27).
Plaintiff commenced this action by filing a summons and complaint on July 17, 2020 (NYSCEF Doc. No. 1). Defendants appeared and filed the instant pre-answer motion to dismiss the complaint.
Standard of Review
"On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction" (Leon v Martinez, 84 N.Y.2d 83, 87 [1994]). "[The court] accept[s] the facts as alleged in the complaint as true, according] plaintiffs the benefit of every possible favorable inference, and determinfing] only whether the facts as alleged fit within any cognizable legal theory" (Id. at 87-88). Ambiguous allegations must be resolved in plaintiff's favor (JF Capital Advisors, LLC v Lightstone Group, LLC, 25 N.Y.3d 759, 764 [2015]). "The motion must be denied if from the pleadings' four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law" (577 West 232nd Owners Corp. v Jennifer Realty Co., 98 N.Y.2d 144, 152 [2002] [internal citations omitted]). "[W]here ... the allegations consist of bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence, they are not entitled to such consideration" (Ullmann v Norma Kamali, Inc., 207 A.D.2d 691, 692 [1st Dept 1994]).
Discussion
Central to this dispute is the issue of who is entitled to the real estate tax refund for 2013 to 2016. Plaintiffs causes of action all seek to claim, based on a variety of legal theories, that plaintiff is the rightful recipient of the refund; if seller is the proper recipient of the refund, none of plaintiff s claims can survive. Accordingly, the Court turns first to the ownership of the refund.
The PSA provides for apportionment of real estate taxes and assessments based on the fiscal year for which they were assessed (NYSECF Doc. No. 7, § 11.1 [b]). To the extent that a real estate tax refund or credit is received after the closing, it is to be apportioned between plaintiff and seller, but only if it is attributable to the fiscal year in which the closing took place (id. at Rider, § 13.5). Other than these provisions, the PSA is silent as to entitlement to real estate tax refunds. The Bill of Sale, while not speaking specifically to real estate taxes, provides that seller conveyed to plaintiff all of its "rights, whether at common law or otherwise, claims, including the proceeds of any claims which may not assignable, and causes of action" related to the premises (NYSCEF Doc. No. 8). Defendants argue that, based on the apportionment clause in the PSA, seller, and by extension the individual defendants, are entitled to the refund because seller was assessed and paid the real estate taxes for the fiscal years for which the refund was issued. Plaintiff, relying on the bill of sale, asserts that any right seller had to the tax refund was conveyed to plaintiff as part of the sale, and the apportionment provision was merged into the Bill of Sale and no longer survives separately therefrom.
Real Property Tax Law § 726 governs the refund of real estate taxes. The statute provides that where an assessment has been found excessive, "there shall be audited and paid to the petitioner or other person paying such tax or other levy . . . the amount paid by him in excess" (Real Property Tax Law § 726[l][b]). "A property tax refund is normally made to the party who paid the tax" (Matter of Adam Jay Assoc, v Board of Assessors of County of Nassau, 62 N.Y.2d 880, 882 [1984]; see also People ex rel. Crompton Bldg. Corp. v Sexton, 264 AD 522, 523 [1st Dept 1942] ["The only one authorized to receive the refund was the Harlem Savings Bank, since it paid the taxes for the years involved"]). The right to receive a refund may, however, be assigned (Matter of Adam Jay Assoc, 62 N.Y.2d at 882 ["Accordingly, respondent is entitled to the refund as the assignee of the party who paid the tax"]). Thus, it is the terms of the PSA and the Bill of Sale, read together, that must determine whether such assignment has taken place.
When interpreting a contract, a court should not read the contract in a way that renders any provision or clause meaningless (e.g., Warner v Kaplan, 71 A.D.3d 1, 5 [1st Dept 2009]). The contract should be read as a whole, and no particular words or phrases should receive undue emphasis (Bailey v. Fish & Neave, 8 N.Y.3d 523, 528 [2007]). "An interpretation that gives effect to all the terms of an agreement is preferable to one that ignores terms or accords them an unreasonable interpretation. Therefore, where two seemingly conflicting contract provisions reasonably can be reconciled, a court is required to do so and to give both effect" (Perlbinder v. Board of Mgrs. of 411 E. 53rd St. Condominium, 65 A.D.3d 985, 986-87 (1st Dept 2009]). "The standard is necessarily flexible, varying for example with the subject of the agreement, its complexity, the purpose for which the contract was made, the circumstances under which it was made, and the relation of the parties (Cobble Hill Nursing Home, Inc. v Henry and Warren Corp., 74 N.Y.2d 475, 482-83 [1989]).
Here, the purported conflict, if one exists, is between the broad assignment or conveyance of claims and causes of action in the Bill of Sale, and the Real Estate Tax apportionment provisions of the PSA. The PSA provisions provide that real estate taxes shall be apportioned based upon the fiscal year in which they were assessed (id., §11.1 [b]). To the extent that the PSA refers to refunds issued after closing, it only applies to those attributable to the fiscal year of the closing (id. at Rider, § 13.5). Here, the parties do not dispute that the tax assessment being refunded was assessed prior to the fiscal year of the closing. To read the broad language of the Bill of Sale as assigning claims relating to the apportioned real estate taxes from earlier fiscal years would render the apportionment provisions meaningless, which cuts against plaintiffs preferred interpretation (Warner, 71 A.D.3d at 5; see also Cronos Group Ltd. v XComlP, LLC, 156 A.D.3d 54, 61 [1st Dept 2017] ["Where there is an inconsistency between a specific provision and a general provision of a contract, the specific provision controls"] [internal citations and quotations omitted]).
Moreover, the plain language of the Bill of Sale concerns claims related to the premises. As set forth above, the entitlement to a refund runs to the person who paid the tax, rather than the property upon which the tax is assessed (Matter of Adam Jay Assoc, 62 N.Y.2d at 882; c.f. Matter of HLP Properties, LLC v New York State Dept. of Envtl. Conservation, 21 Misc.3d 658, 671 [Sup Ct, NY County 2008], affd, 70 A.D.3d 469 ["However, this is not to suggest that petitioners would be entitled to a "windfall" of economic tax breaks. The tax credits, by statute, are inextricably linked to the amount expended by the parties responsible for the actual cleanup of the property"]).
As seller was entitled to the refund check at issue here, it did not breach the Bill of Sale, the PSA, or any representations or warranties set forth therein, requiring dismissal of the first two causes of action for breach of contract and breach of warranties (Harris v. Seward Park Housing Corp., 79 A.D.3d 425 [1st Dept 2010] [a breach of contract claim requires allegations of, inter alia, "defendant's breach thereof). Further, all of plaintiff s quasi-contract and conversion claims require some showing that plaintiff is entitled to possession of the refund check, and must be dismissed for that reason (e.g. State v Seventh Regiment Fund, Inc., 98 N.Y.2d 249, 259 [2002] [Conversion is the "unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights"] [emphasis added]; County of Suffolk v Suburban Hous. Dev. & Research, Inc., 160 A.D.3d 607, 610 [2d Dept 2018] [One of "[t]he essential elements of a cause of action for money had and received [is] the defendant received money belonging to the plaintiff']; IDT Corp. v Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132, 142 [2009] ["IDT does not, and cannot, allege that Morgan Stanley has been unjustly enriched at IDT's expense, because IDT did not pay the alleged fees"]). Moreover, the fraudulent conveyance claims fail because plaintiff is not a creditor of the individual defendants, and thus has no standing to bring claims against them under the Debtor and Creditor Law (Debtor and Creditor Law § 270; Paragon v Paragon, 164 A.D.3d 1460, 1462 [2d Dept 2018]). Finally, as plaintiff is not the prevailing party, the PSA does not allow it to recover its attorney's fees (NYSCEF Doc. No. 7, § 20.14).
Accordingly, it is hereby
ORDERED that the motion of defendants Sixty Nine Pinehurst Avenue Associates LLC ("seller"), Eric Quoohs, Gerda Quoohs, Christa Rohe, and Steven Rohe to dismiss the complaint herein is granted and the complaint is dismissed in its entirety as against said defendants, with costs and disbursements to said defendants as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of said defendants.
This constitutes the Decision and Order of the Court.