Opinion
20901-07.
3-12-2009
KEITH BOYER, Plaintiff, v. WHITESTONE LUMBER CORP. AND BRUCE BOYER, Defendants.
Law Offices of Daniel M. Tanenbaum, Great Neck, New York, Counsel for Plaintiff. Birnbaum & Skedelsky, Esqs., Whitestone, New York, Counsel for Defendants.
Defendants, Whitestone Lumber Corp. and Bruce Boyer, move pursuant to CPLR 3212 to dismiss the complaint herein; and for an order precluding the proposed, expert trial testimony of Valerie Pinhas, Ph.D.
Plaintiff, Keith Boyer, cross-moves for an order disqualifying Defendants' counsel, Marvin D. Skedelsky, Esq.
BACKGROUND
Prior to May 2007, Defendant Bruce Boyer ("Bruce"), owned a 92% majority interest in Defendant, Whitestone Lumber Corp. ("Whitestone"), a family-owned business in which Plaintiff, Keith Boyer ("Keith"), his nephew, owned the remaining minority interests. Keith also held a 16.67% interest in the underlying real property.
Bruce and his brother Charles Keith's late father jointly owned and operated the business until Charles died in 1998 (K. Boyer EBT, p. 16).
Keith, who was a Whitestone employee until April 2007, acquired his minority interest in Whitestone shortly after his father's death when he challenged his mother's attempt to probate his father's will which left him no interest in the Whitestone business or the land (K. Boyer EBT, pp.16,18-19). According to Keith, he challenged the will because he wanted to get his "fair share" of the business while his mother was still alive. He was afraid that she might simply "hand over" her interest in the business to Bruce (K. Boyer Aff., ¶¶ 4-6; K. Boyer EBT, p. 19).
As a result of his legal challenge, a settlement was concluded and finalized, pursuant to which Keith received an 8%, minority interest in the business, as well as a 16.67% interest in the land, on which the business is currently conducted, from his mother. (K. Boyer Aff., ¶ 6; Complaint, ¶¶ 2-4).
Thereafter, on or about April, 24, 2007, Keith concedes that he physically assaulted his wife, after which the police were summoned to the lumber yard where he resided with his wife in an on-premises apartment. (K. Boyer EBT, pp. 26-27, 37-38). Upon subsequently searching the apartment, the police discovered and confiscated a large cache of weapons and ammunition (K. Boyer Aff., ¶ 12; B. Boyer Aff., ¶¶ 16-21, 25, 27; K. Boyer EBT, pp. 43-44). Keith was later charged with multiple counts of felony weapons possession (BOP ¶ 8).
Keith contends that immediately prior to his arrest, he had been abusing prescription drugs and illegal narcotics and that, in early 2007, he had been experiencing psychological problems, for which he sought treatment. According to Keith, Bruce was aware of this (K. Boyer Aff., ¶¶ 9-10, 15-16, K. Boyer EBT, pp. 26-27, 37-38).
After Keith's arrest, Bruce contends that Keith began repeatedly calling him from prison, requesting: (1) large sums of money for his defense allegedly as much as $200,000.00; and (2) assistance in locating a defense attorney (K. Boyer EBT, pp. 50-55; 60-61; B. Boyer Aff., ¶ 27).
Although Bruce agreed to assist Keith in locating an attorney (B. Boyer Aff., ¶¶ 27-28), he consistently rejected all of Keith's requests for a loan and/or for an advance against the "Plaintiff's shares of the business"(K. Boyer EBT, pp. 59-60; B. Boyer Aff.,¶ 27-29).
At his deposition, Keith testified, however, that shortly after Bruce rejected his various requests, and allegedly without any expression of consent, the Defendant thereafter changed his mind and now "was giving the . . ." [the Plaintiff] money towards a buy out, * * *" (K. Boyer EBT, pp. 59-60).
According to Bruce, however, the agreement was not a loan but rather, a sales transaction which Keith himself had affirmatively proposed. Pursuant to Keith's alleged offer, Keith would convey his minority interest in the business and land to Bruce in exchange for the money so advanced (B. Boyer Aff., ¶¶ 29-30).
Thereafter, and in alleged conformity with the understanding reached, Bruce contacted criminal defense attorney, Daniel Hochheiser, Esq. ("Hochheiser") and arranged for Hochheiser to visit Keith at Riker's Island. Bruce further agreed to arrange for the payment of Hochheiser's $65,000.00 legal fee (B. Boyer Aff., ¶¶ 32-33).
Later, on May 8, 2007, some two weeks after Keith's arrest, Hochheiser arrived again at Riker's Island with Bruce's personal check for $65,000.00 in hand (Defendants' Ex. 4). However, Hochheiser allegedly informed Keith that he could not represent him unless and until he executed certain documents (K. Boyer EBT, p. 67). Those documents included: a deed transferring Keith's ownership interest in the land to Bruce and additional papers by which his stock interest in Whitestone was to be transferred to Bruce (Defendants' Ex. 3)(K. Boyer Aff., ¶¶ 19-20; K. Boyer EBT, pp. 58, 68-71).
Keith claims that since he was allegedly still detoxing from his prior drug abuse, and because he feared the substantial prison time he could be facing, he felt he had no choice other than to sign the documents (Complaint, ¶¶ 7-9). He allegedly did so without reading them or ascertaining precisely what sort of materials they were (K. Boyer EBT, pp. 68-69-71, 75). Nor could Keith recall asking Hochheiser to explain the documents to him (K. Boyer EBT, p. 103).
After the documents had been executed, and at Keith's direction, Bruce later disbursed the remaining $110.000.00 in proceeds to the Plaintiff's wife (B. Boyer Aff., ¶¶ 32-33).
By letter dated the next day, May 9, 2007, Hochheiser wrote to Bruce's personal attorney, annexing the documents that Keith had executed the day before, advising that, "Keith understands the total purchase price is $175,000.00 . . . and instructed me to have the balance of the purchase price in the amount of $110,000.00 paid by Bruce directly to Keith's wife, Roberta Boyer." (Defendants' Ex. 2). Significantly, Keith testified that prior to his incarceration, Bruce never expressed any interest in attempting to buy out his share of the business and land (K. Boyer EBT, pp. 61-62).
At some point while Keith was still in Riker's Island where he remained incarcerated until early June 2007 both his sister-in-law and wife's attorney allegedly informed him that he had signed away his entire interest in the business, a revelation which allegedly "floored" him and left him "speechless" (K. Boyer EBT, pp. 48, 74-75, 79; Bill of Particulars [BOP] ¶ 12).
Keith later disposed of the criminal charges by pleading guilty to Class A misdemeanor in full satisfaction of the indictment handed down against him (K. Boyer EBT, p. 76).
Significantly, records produced during discovery revealed that Keith and his wife reported income for the tax years 2005 and 2006 in the approximate amount of $25,000.00 yet they made bank deposits in those years in the respective sums of $70,208.74 and $60,702.17 (Skedelsky Aff. ¶33 B; K. Boyer EBT, pp. 90-94, 100). Keith claims, however, to have "stockpiled" money his parents had given him over the years for a "rainy day," portions of which he kept in his apartment because he "did not believe in banks" (K. Boyer EBT, pp. 95, 97). Keith also testified that he had perhaps $30,000.00 located somewhere in his apartment when he was arrested, which he apparently chose not to utilize at that time to defray his expenses (K. Boyer EBT, pp. 97-99).
It is undisputed that Keith later used the remaining portion of the advance from Bruce, $72,027.07, to refinance a motor home in late August 2007 (BOP ¶ 20; K. Boyer EBT, pp. 81-84).
In November 2007, Keith commenced this action against Bruce and Whitestone alleging, in sum, that when he signed the contract documents, he was under "extreme" duress.
The complaint further avers that, at some unspecified point in time, Bruce made an affirmative offer to buy out Keith's entire ownership interest for a stated amount; that Keith then reluctantly accepted the offer because he felt that "he had no other alternatives"; that the price offered was unconscionably low; and that Bruce deliberately took advantage of a situation which he had "at least partially caused"(Complaint ¶¶ 5,7-9). There is no express statement in the amended complaint alleging that Keith lacked the capacity to enter into the subject contract at the time he signed the documents.
The complaint demands relief setting aside the conveyances and/or, alternatively, judgment directing Bruce to pay the fair market value of the property which was transferred.
The Defendants have answered, denied the allegations of the complaint and interposed various affirmative defenses and counterclaims.
Discovery has been conducted. Defendants now move for summary judgment dismissing the complaint; or, alternatively, for an order precluding certain expert testimony. Keith cross-moves for an order disqualifying Defendants' counsel, Marvin D. Skedelsky, Esq.
DISCUSSION
A. Economic Duress
It is settled that "[a] contract may be voided on the ground of economic duress where the complaining party was compelled to agree to its terms by means of a wrongful threat which precluded the exercise of its free will." Stewart M. Muller Construction Co., v. New York Tel. Co., 40 NY2d 955, 956 (1976). See also, 805 Third Ave. Co. v. M.W. Realty Assoc., 58 NY2d 447, 451 (1983); Austin Instrument v. Loral Corp., 29 NY2d 124, 130 (1971); Wujin Nanxiashu Secant Factory v. Ti-Well International Corp., 14 AD3d 352 (1st Dept. 2005); and Sosnoff v. Carter, 165 AD2d 486 (1st Dept. 1991).
Although the objectionable acts need not be criminal or illegal, they "must involve an act or a threat of action from which the person sought to be influenced is entitled to be free'." Gerstein v. 532 Broad Hollow Road Co., 75 AD2d 292, 297 (1st Dept. 1980), quoting, Kazaras v. Manufacturers Trust Co., 4 AD2d 227, 237 (1st Dept. 1957), affd, 4 NY2d 930 (1958); and Ressis v. Mactye, 108 AD2d 960, 961 (3rd Dept. 1985).
Assertions that a "party knew about and used . . . [the other party's] poor financial condition to obtain an advantage," "even when coupled with inequality" in negotiating position and "vigorous bargaining tactics" will not alone constitute duress. Gubitz v. Security Mut. Life Ins. Co. of New York, 262 AD2d 451 (2nd Dept. 1999); Niagara Frontier Transportation Auth. v. Patterson-Stevens, Inc., 237 AD2d 965, 966 (4th Dept. 1997); and Orix Credit Alliance, Inc. v. Bell Realty, Inc., 1995 WL 505891 (S.D.NY 1995). Nor can a party "be guilty of economic duress for refusing to do that which he or she is not legally required to do." Friends Lumber Inc. v. Cornell Dev. Corp., 243 AD2d 886, 888 (3rd Dept. 1997). See, Bechard v. Monty's Bay Recreation, Inc., 35 AD3d 1131, 1132 (3rd Dept. 2006); Wujin Nanxiashu Secant Factory v. Ti-Well International Corp., supra; and Lyons v. Lyons, 289 AD2d 902, 904 (3rd Dept. 2001).
"A party seeking to void a contract because of economic duress shoulders a heavy burden." International Halliwell Mines, Ltd. v. Continental Copper & Steel Indus., Inc., 544 F.2d 105, 108 (2nd Cir.1976); Jacobson v. Citi-Wide Elec. Corp., 2007 WL 5560632, at *4 (E.D.NY 2007); and Dunkin' Donuts Inc. v. Got-A-Lot-A-Dough, Inc., 2006 WL 3725340 (E.D.NY 2006).
Upon applying these principles to the facts presented, the Court agrees that Keith has failed to raise triable issues with respect to his claims of duress, unconscionability and/or lack of capacity. That is, his claims that, in substance, the "situation was so dire that . . . [he] was left without a choice except to sign" the subject documents or that he lacked the capacity to enter into the agreement do not rise to the level of economic duress. Finserv Computer Corp. v. Bibliographic Retrieval Services, Inc., 125 AD2d 765, 767 (3rd Dept. 1986).
It is undisputed that Bruce was under no legal duty to offer Keith any legal assistance or monetary support. 805 Third Ave. Co. v. M.W. Realty Assoc., supra at 453; Bechard v. Monty's Bay Recreation, Inc., supra; and Lyons v. Lyons, supra at 904. The mere fact that Bruce declined to advance Keith the requested sum of $200,000.00 is not evidence of duress or overreaching.
Nor do the facts support the assertion that Keith was so bereft of free will that he was compelled to sign anything placed before him without even inquiring into its contents (K. Boyer Aff., ¶ 23). Specifically, the record does not contain evidence demonstrating that Keith was without other options in terms of acquiring counsel or obtaining further assistance from alternative resources including his own resources. (Skedelsky Aff., ¶ 33) See e.g., Benjamin Goldstein Productions, Ltd. v. Fish, 198 AD2d 137, 138 (1st Dept. 1993). Cf., Austin Instrument v. Loral Corp., supra at 130-131. Keith's opposing affidavits and deposition are vague and inconclusive with respect to this issue. (See e.g., K. Boyer Aff., ¶ 16; K. Boyer EBT, pp. 62-65).
Moreover, the Keith's "self-imposed . . . subjective fears" about what might have occurred if he were unable to retain Hochheiser, similarly do not constitute "act[s] of duress by the Defendant cognizable in law." Joseph F. Egan, Inc. v. City of New York, 17 NY2d 90, 98 (1966); and Matter of Estate of Heric, 175 Misc 2d 601, 604 (Surr. Ct., Monroe Co., 1998). See also, Rockmore v. Antell, 2008 WL 4443951 at *5 (S.D.NY 2008). The alleged duress-inducing apprehensions identified by Keith are conclusory, speculative projections with respect to what might have taken place if he had been required to pursue alternate options with respect to the retention of counsel.
Further, Keith has not credibly alleged or established that he "was the victim of deceptive or high pressure tactics." Morris v. Snappy Car Rental, Inc., 84 NY2d 21, 22 (1994). Cf., Gillman v. Chase Manhattan Bank, N. A., 73 NY2d 1, 11 (1988).
To the extent that Keith's deposition and affidavits describe his conversations with Bruce concerning the alleged, total buy-out offer, neither evidentiary source establishes that Bruce made any overtly coercive, manipulative or threatening statements concerning this alleged proposal nor has Keith proximately linked with adequate specificity the statements which have actually been described in these materials, to his subsequent execution of the disputed documents. Cf., McGahee v. Kennedy, 48 NY2d 832 (1979); and Marotta v. Dinozzi, 287 AD2d 491 (2nd Dept. 2001).
Similarly, the brief statements attributed to Hochheiser in Keith's deposition and affidavits, are also largely neutral and informational in their tone and content (K. Boyer Dep 67; K. Boyer Aff.,¶¶ 20-21). The record does not indicate that Hochheiser actually said or did anything which "prevented [the Plaintiff] from reading the agreement or asking that its contents be explained to" him. See, K. Boyer EBT, p. 103. Morris v. Snappy Car Rental, Inc., supra at 30. See also, Citibank, N.A. v. Collins, 1991 WL 64174 (S.D.N.Y.1991).
Although Keith now asserts that he was "detoxing" once he was arrested, Hochheiser arrived with the documents some two weeks after his arrest. Keith's amended complaint does not allege that he was unable to understand the nature of Bruce's purchase proposal.
Insofar as Keith now claims "that he had no idea what he had signed" (K. Boyer EBT, p. 22, but see Complaint,¶ 8; BOP ¶ 17), the pre-litigation letter authored by Hochheiser in May 2007 which memorialized the transaction the day after it took place undermines these claims, since it expressly states that the Keith "understands the total purchase price in $175,000.00 . . . and that "the balance of the purchase price" was to be given to the Keith's wife [emphasis added].
Additionally, and despite Keith's current assertion that he was confused about the true nature of the transaction (K. Boyer Aff., ¶ 16; K. Boyer EBT, pp. 59, 66), his verified complaint depicts the relevant facts far more definitively.
Specifically, the factual theory actually advanced in the complaint is that Bruce, at some point, plainly offered to purchase Keith's entire ownership interest (Complaint, ¶ 7), and that even though the offer was supposedly unfair and exploitive, Keith nevertheless agreed to it, since he had no other choice but to do so (Complaint, ¶¶ 7-8). This pleaded theory which presupposes that Keith knew from the inception that a complete buy-out was being offered is inconsistent with his current factual claims; to wit: his claims that, (1) to the extent he knew anything, he believed he had agreed to a "partial" buy out or a loan of some sort; and (2) that, in any event, he had no idea that he had conveyed his entire interest until significantly later (K. Boyer EBT, pp. 74-75, 79). Nor is there reference in the verified complaint itself to a proposed, partial buy-out. Neither Keith's deposition nor his opposing affidavits identify or refer to a specific conversation during which Bruce ever verbally expressed his consent to such an arrangement (K. Boyer EBT, pp. 59-60).
Even assuming that duress and/or unconscionability existed, the record establishes that Keith effectively ratified the agreement about which he now complains.
Significantly, a "Plaintiff's failure to repudiate the settlement agreement in prompt fashion, as well as its acceptance of the benefits of the agreement, belies its claims of economic duress." Philips South Beach, LLC v. ZC Specialty Ins. Co., 55 AD3d 493, 494 (1st Dept. 2008). See, Austin Instrument v. Loral Corp., supra at 133; Mendel v. Henry Phipps Plaza West, Inc., 27 AD3d 375, 376 (1st Dept. 2006); Wujin Nanxiashu Secant Factory v. Ti-Well International Corp., supra at 353; In re Guttenplan, 222 AD2d 255, 257 (1st Dept. 1995); and Kranitz v. Strober Organization, Inc., 181 AD2d 441 (1st Dept. 1992). An unconscionable contract, which is voidable, can also be ratified. King v. Fox, 7 NY3d 181,193 (2006).
Putting aside the allegation that Keith was aware from the moment that he accepted Bruce's counterproposal, that he had conveyed his entire interest to Bruce (Complaint, ¶¶ 7-8), the record indicates that, at the very least, he allegedly discovered that he had sold his ownership interest at some point before he was released from prison in early June 2007 a month after he signed the contract documents (K. Boyer EBT, pp. 48, 74-75, 79).
Despite this knowledge, and although Keith claimed to be "speechless" and "floored" when he later obtained this information from his wife's lawyers and/or his sister-in-law, the record contains no evidence that Keith immediately repudiated the agreement by accusing his uncle of unfairly appropriating his ownership interest in the business and land.
Rather, with knowledge that the documents in question conveyed his interest in the property for the specific sums advanced (Complaint,¶ 8), Keith effectively ratified the arrangement by subsequently utilizing the remaining proceeds he had received some $72,027.07 for personal, nonlegal expenditures, such as to refinance a motor home in late August 2007 (K. Boyer EBT, pp. 81-83; BOP ¶ 20). See, Weil, Gotshal & Manges LLP v. Fashion Boutique of Short Hills, 56 AD3d 334 (1st Dept. 2008); Friedman v. Garey, 8 AD3d 129 (1st Dept. 2004); Lyons v. Lyons, supra at 904; Fruchthandler v. Green, 233 AD2d 214 (1st Dept. 1996); and Benjamin Goldstein Productions, Ltd. v. Fish, supra at 138. See also, King v. Fox, supra. Cf., Kaminsky v. Herrick, Feinstein LLP, 59 AD3d 1 (1st Dept. 2008).
Upon considering the relevant factors, including whether there was an "absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable" to another (Gillman v. Chase Manhattan Bank, N.A., supra at 10), the Court cannot say that the subject agreement was "so grossly unreasonable or unconscionable . . . as to be unenforceable according to its literal terms'." Id. quoting from, Mandel v. Liebman, 303 NY 88, 94 (1951). See, Butler v. Catinella, 58 AD3d 145 (2nd Dept. 2008). See gen'lly, King v. Fox, supra; Morris v. Snappy Car Rental, Inc., supra at 30; and Matter of State of New York v. Avco Financial Services of New York, Inc., 50 NY2d 383, 389 (1980).
The further contention that Keith was merely an unsophisticated high school graduate (K. Boyer Aff., ¶ 23), is belied, in part, by Keith's acute, pro-active conduct in securing an ownership interest in the business for himself. It is undisputed that he successfully became involved in his father's probate matter so that he would not later be deprived of his "fair share" of the business (K. Boyer Aff., ¶¶ 4-6; K. Boyer EBT, p. 19).
Lastly, and contrary to Keith's suggestion (Complaint, ¶¶ 5, 9), the record does not support the allegation that Bruce was responsible, in any relevant sense, for Keith's ensuing legal problems.
The Court has considered the Plaintiff's remaining contentions and concludes that they are insufficient to defeat Defendants' motion.
In light of the Court's determination dismissing the complaint, Keith's cross-motion and that branch of Bruce's motion for a preclusion order must be denied as academic.
Accordingly, it is,
ORDERED, that the motion by the Defendants, Whitestone Lumber Corp. and Bruce Boyer, for summary judgment is granted to the extent that Plaintiff's complaint is hereby dismissed and the remaining branch of the Defendants' motion is denied as academic; and it is further,
ORDERED, that the Plaintiff's cross motion is denied as academic.
This constitutes the decision and Order of the Court.