Opinion
027704/2010
05-17-2013
Daniel Callahan, Plaintiff(s) v. Brian K. Coventry, Defendant(s)
Timothy Joseph Daly Esq Attorney for Plaintiff Brian Coventry Defendant, Pro se
Timothy Joseph Daly Esq Attorney for Plaintiff
Brian Coventry Defendant, Pro se
Andrew G. Tarantino, J.
NATURE OF THE CASE
Plaintiff commenced this action against his former brother-in-law for repayment of twenty thousand dollars ($20,000.00) which Plaintiff allegedly loaned to Defendant. Defendant alleged that the monies were a gift given to his family to pay family expenses because of an unfortunate business crisis. The case was transferred to this Court pursuant to NY Civ. Pract. Laws & Rules §325(d). A trial without jury was conducted.
TESTIMONY
Plaintiff's first witness was John Braddock. Braddock was familiar with Defendant in Fall 2007. Braddock worked at a small investment bank and explained that Defendant telephoned him for a loan. According to Braddock, Defendant asked to borrow twenty thousand dollars ($20,000.00); he also told Braddock that Plaintiff was loaning him forty thousand dollars ($40,000.00). Braddock testified that he had loaned money to Defendant before and explained that he had become "fed up" loaning money to Defendant. However, relying upon Defendant's assertion that the Plaintiff was also intending to loan Defendant money, Braddock loaned Defendant the twenty thousand dollars ($20,000.00). Submitted into evidence was a promissory note, signed by Defendant and dated October 24, 2007, wherein Defendant promised to repay twenty thousand dollars ($20,000.00) before November 10, 2007. According to Braddock, the twenty thousand dollars ($20,000.00) remains unpaid by Defendant.
Plaintiff next called Deborah Callahan, Plaintiff's wife. Ms. Callahan explained that when Defendant telephoned, she gave the call to her husband who then continued the conversation with the Defendant. Admitted into evidence was a copy of the personal check written and signed by Deborah Callahan, payable to Kelly Coventry and dated October 19, 2007, in the sum of twenty thousand dollars ($20,000.00). The check was endorsed by Kelly Coventry and deposited into what was identified as Kelly and Brian Coventry's joint bank account. Kelly Coventry is Deborah Callahan's sister. In response to being asked why the check was made payable to Defendant's former wife, Ms. Callahan stated emphatically that she "would not give a loan to Brian."
Plaintiff's next witness was Kelly Coventry, Defendant's former wife. Defendant immediately objected to Ms. Coventry's testimony upon the basis of spousal privilege. After a brief recess, the Court sustained the objection and Plaintiff called the next witness.
Plaintiff called the Defendant, Brian Coventry, to testify. Defendant described the money as "financial assistance" to his family. He denied it was a business transaction and first asserted it was a gift. According to Defendant, the money was used to pay mortgage arrears, groceries, and other family expenses. As explained by Defendant, the sudden need for financial assistance was the result of an arbitration award against him in the sum of seven hundred thousand dollars ($700,000.00). Following the arbitration, Defendant was approached to settle the award by payment of a lump sum of forty thousand dollars ($40,000.00). He further explained that the settlement had to be paid by October 22, 2007, or Defendant would lose his broker's license. Defendant denied that he ever promised Callahan that he would repay him. Defendant added that Callahan did not approach him about any repayment until after nearly a year.
By way of cross-examining himself, the Court permitted Defendant to testify. He introduced into evidence a copy of a report wherein it showed that Defendant's broker's license was never suspended. To explain why he was the subject of the arbitration, Defendant submitted into evidence a press release issued by the U.S. Attorney's Office, dated April 12, 2012. The press release announced indictments against two individuals who orchestrated a one million dollar ($1,000,000.00) investment scheme. The two individuals were the CEO and Manager of Lempert Brothers International by which Defendant had been employed between 2004 and 2006. As for the money from Callahan, the Defendant insisted that it was a gift for "family assistance." He explained that the money was used to pay household expenses which freed up money for him to settle the arbitration award. He continued that it was "a wealthy family helping a family in need." Ultimately, however, while on the witness stand, the Defendant acknowledged that the money was a loan to his family.
Plaintiff's last witness was the Plaintiff, Daniel Callahan. He explained that in October 2007, Kelly Coventry telephone Plaintiff's home, but then Defendant got on the telephone. Defendant told Callahan he need forty thousand dollars ($40,000.00) quickly, and that he would be able to repay it in February 2008. Plaintiff did not have Defendant sign a promissory note, but only insisted that he be paid back as agreed with no interest. In Plaintiff's words, "I don't give gifts." In February 2008, Plaintiff telephoned Defendant and asked for the money without success. He again telephoned Defendant in April 2008, after tax time, again without success.
The Court reserved decision.
ANALYSIS
In what the Court can only surmise as an attempt to characterize the Defendant as a "dead beat," the Court finds that Braddock's testimony offered little to the analysis of the issues raised in this case. The only fact that Braddock contributed was that Defendant continued to also owe Braddock $20,000.00. But, Braddock was not a party to this action.
This case raised the following issues:
1) Whether the Plaintiff's claim was barred by the Statute of Frauds?
2) Whether a contract existed between Plaintiff and Defendant Brian Coventry whereby Plaintiff loaned monies to Coventry with a promise to repay, and which Defendant failed to repay?
3) Whether the Plaintiff failed to name a necessary party?
First, the Court will address the spousal privilege raised by Defendant during trial. NY Civ. Pract. Laws & Rules (CPLR) § 4502 states in pertinent part that
"A husband or wife shall not be required, or, without consent of the other if living, allowed, to disclose a confidential communication made by one to the other during marriage."The elements for the Privilege of Marital Confidences are (a) a communication, (b) induced by the marital relationship, (c) made in confidence, (d) during the marriage, if it is, (e) not waived and (f) not subject to an exception. Poppe v. Poppe, 3 NY2d 312, 165 N.Y.S.2d 99, 144 N.E.2d 72 (1957). In order to qualify for privileged treatment, the exchange between the spouses must have been "induced by the marital relation and prompted by the affection, confidence and loyalty engendered by such relationship." Poppe v. Poppe, id. Thus, not all "daily and ordinary exchanges" between spouses will qualify; the privilege encompasses only "those which would not have been made but for the absolute confidence in, and induced by, the marital relationship." People v. Melski, 10 NY2d 78, 217 N.Y.S.2d 65, 176 N.E.2d 81 (1960). These are preliminary questions of fact for the court, requiring determination on a case-by-case basis. Matter of Vanderbilt, 57 NY2d 66, 453 N.Y.S.2d 662, 439 N.E.2d 378 (1982). For example, under New York law, a wife would not be compelled to answer deposition questions concerning communications with and knowledge or awareness derived from her husband about business matters involved in a lawsuit, absent showing by party moving for discovery order that information sought did not involve communications made in confidentiality of marital relationship; movant had simply asserted conclusorily that wife's conversations were not privileged merely because they concerned business matters and had even failed to submit deposition questions for which answers were sought. Atlantic Richfield Co. v. Triad Petroleum, Inc., 113 F.R.D. 686. (1987).
In the instant case, there was no dispute that the monies paid from Plaintiff to Defendant's former-spouse were deposited into the Defendant's joint bank account and, as such, became marital property. Clearly any inquiry of the Defendant's former wife about the nature of the monies would have involved those communications between the Defendant and the former wife about how they planned to use the marital funds. This Court could not consider any such discussion to be less than communications induced by the marital relationship and made in confidence during the marriage. Therefore, because Plaintiff failed to evidence an exception to the rule and only asserted mere conclusory assertions that the confidence did not apply, the Court sustained the objection in favor of the Defendant. Although the Court prohibited only the testimony about communications between the former wife and the Defendant, the Plaintiff elected to release the former wife as a witness without eliciting any testimony about non-privileged communications.
Next is the issue of the Statute of Frauds. General Obligations Law 5-701, states, in pertinent part, that
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.
An alleged oral agreement to pay money in installments is an "agreement that is not to be performed within one year," subject to the Statute of Frauds, when the installment payment obligation exceeds one year. 72 Am.Jur.2d, §24, Statute of Frauds, July 2010. However, where the time of payment under the agreement is indefinite or dependent upon a contingency that may happen within one year, the agreement does not fall within the "agreement not to be performed within one year" provision. Id. The Court of Appeals has interpreted this section as barring those agreements that "have no possibility in fact and law of full performance within one year." ABKCO Music v Montague, slip opinion, (SupCt, NY County, 2008). As long as the agreement may be "fairly and reasonably interpreted" such that it may be performed within a year, the Statute of Frauds will not act as a bar however unexpected, unlikely, or even improbable that such performance will occur during that time frame. Id. Where there is absolutely no possibility in fact and law of full performance by both parties within one year, the Statute of Frauds bars enforcement of an oral contract. Americana Petroleum Corp. v Northville Industries Corp, 200 AD2d 646, 606 N.Y.S.2d 906 (2d Dep't 1994). The statute continues, at 5-701(3)(c), that
There is sufficient evidence that a contract has been made if the party against whom enforcement is sought admits in its pleading, testimony or otherwise in court that a contract was made.While the absence of a writing may have precluded the Plaintiff from enforcement of the purported agreement, the Defendant while testifying eventually acknowledged to the Court that the subject monies were a loan to his family. Thus, the Court finds that the Plaintiff is not barred by the Statute of Frauds.
After having established that the money was a loan, the Court must determine if there was a contractual agreement breached by the Defendant. The elements of a cause of action for breach of contract are: (1) formation of a contract between the parties: (2) performance by plaintiff; (3) defendant's failure to perform; and (4) resulting damage. Furia v. Furia, 116 AD2d 694, 498 N.Y.S.2d 12 (2d Dept 1986). A contract is formed when there are at least two parties with legal capacity to enter into a contract who give their mutual assent to the terms of a contract and there is consideration. 2 PJI 3d 4:1 at 638 (2011); see, Maas v. Cornell University, 94 NY2d 87, 93, 699 N.Y.S.2d 716 (1999). Mutual assent is often referred to as "a meeting of the minds" of the parties on all essential terms of the contract. 2 PJI 4:1 3d at 639 (2010); Matter of Express Industries and Terminal Corp. v. New York State Dept. of Transportation, 93 NY2d 584, 693 N.Y.S.2d 857 [1999]; Farago v. Burke, 262 NY 229 (1933), Arliss v. Herbert Brenon Film Corporation, 230 NY 390 (1921). The manifestation of mutual assent must be sufficiently definite to assure that the parties are truly in agreement with respect to all material terms. New York Matter of Express Industries and Terminal Pt. of Transportation v. New York State Department Transportation, supra. The central issues regarding whether the parties had entered into a binding contract are: (1) meeting of the minds (mutual assent to the terms of the agreement by the parties); (2) definiteness (does the agreement establish the intention of the parties with sufficient certainty as to be enforceable by a court); and (3) consideration (was there a bargained for exchange of something of value between the parties). 28 New York Practice Series, Contract Law § 2:1. See also, T.H. Cheshire & Sons, Inc. v. Berry, 37 Misc 3d 1220(A), Slip Copy, 2012 WL 5512544 (Table) N.Y.Co.Ct.,2012. November 13, 2012.
It was clearly evident that the Plaintiff loaned the money to the Defendant's former wife. Plaintiff's check was made payable to Defendant's former wife who then endorsed the check for deposit into her marital account. Also, Plaintiff's wife unequivocally testified that she "would not give a loan to Brian." One is left to surmise that which often occurs in most families engaged in divorce; in-laws often seek from the ostracized non-family spouse that which their family member could not through the divorce. In the instant case, the Defendant's former wife's sister and family were seeking repayment from Defendant the money loaned to Defendant's former wife. This Court cannot find the formation of a contract made by the Defendant in light of the loan being made to Defendant's former wife. Further, the Court could not discern a meeting of the minds between the Plaintiff and Defendant. Although Plaintiff stated the money was to be repaid by the following February, the Defendant testified that his family would repay the money when they would be so able. Supporting Defendant's position was his uncontroverted testimony that Plaintiff had previously made such loans to Defendant's family which were only repaid when family funds were available. Having found neither an agreement, nor a meeting of the minds, the Court cannot find that the Defendant failed to perform any agreement. Not having established all of the elements required to establish a breach of contract, this Court cannot hold that one occurred.
Assuming, arguendo, that the Court determined that a contract was formed and breached by Defendant, the Court could not grant judgment in favor of the Plaintiff under these facts and circumstances. CPLR § 1001 states, in pertinent part, that:
"persons who ought to be parties if complete relief is to be accorded between the persons who are parties to the action or who might be inequitably affected by a judgment in the action shall be made plaintiffs or defendants."CPLR §1003 states:
Nonjoinder of a party who should be joined under CPLR section 1001 is ground for dismissal of an action without prejudice unless the Court allows the action to proceed without the party under the provisions of that section.CPLR 1001(b) provides that in determining whether to allow the action to proceed, the court shall consider:
1. whether the plaintiff has another effective remedy in case the action is dismissed on account of the nonjoinder; 2. the prejudice which may accrue from the nonjoinder to the defendant or to the person not joined; 3. whether and by whom prejudice might have been avoided or may in the future be avoided; 4. the feasibility of a protective provision by order of the court or in the judgment; and 5. whether an effective judgment may be rendered in the absence of the person who is not joined.For example, a motion to dismiss for failure to join necessary parties was properly denied where none of the parties defendant sought to have joined was necessary for complete relief to be accorded between the persons who were parties to the action, nor would any be inequitably affected by a judgment in the action. Flanagan v. Board of Ed., Commack Union Free School Dist., 56 AD2d 574, 391 N.Y.S.2d 180 (2 Dept. 1977).
In the instant case, this Court holds that the Defendant's former wife was a necessary party for complete relief to be accorded between the persons who are parties to this action. This Court is aware that pursuant to the Domestic Relations Laws of New York, equitable distribution in a divorce is based upon such factors as assets, liabilities, marital property, non-marital property, and such. In concluding a divorce, the assets and liabilities are then apportioned between the spouses either by agreement or by Court determination. In the instant case, Plaintiff's monies were paid to the Defendant's former wife and deposited into the joint marital account. No evidence was submitted to this Court, either by the Plaintiff, or by way of the Defendant's former spouse's testimony, or through Defendant, how the apparent debt to the Plaintiff was addressed in the divorce. For example, based upon the equitable distribution factors, the former spouse may be liable for this debt. If so, then granting judgement against Defendant for that same debt would circumvent the divorce judgment, and would be unjust and improper. As such prejudice would accrue to the Defendant. In comparison, the Court finds that effective remedies will remain if the Plaintiff wished to pursue the action further.
By reason of the foregoing, it is hereby
ADJUDGED, that the Plaintiff's action was not barred by General Obligations Law 5-701; and it is further
ADJUDGED, that the Plaintiff failed to establish by the fair preponderance of the credible evidence that a contract had been formed and that Defendant breached that contract; and it is further
ADJUDGED, that the Defendant's former spouse was a necessary party to this action for complete relief to be accorded between the persons who were parties to the action; and it is further
ORDERED that the action is dismissed without prejudice.
This constitutes the decision and order of the Court.
ENTER
_____________________________________
Judge