Opinion
Index No. 650263/2017
07-01-2024
Peter Coffin, Plaintiff, v. Padden Kerr Projects LLC, CHRISTOPHER KERR, AND KELLY PADDEN, Defendants.
The Law Office of Ellery Ireland, Brooklyn, NY (Ellery Ireland of counsel), for plaintiff. Carlinsky, Dunn & Pasquariello, PLLC., Brooklyn, NY (Antonio Pasquariello of counsel), for defendants.
Unpublished Opinion
The Law Office of Ellery Ireland, Brooklyn, NY (Ellery Ireland of counsel), for plaintiff.
Carlinsky, Dunn & Pasquariello, PLLC., Brooklyn, NY (Antonio Pasquariello of counsel), for defendants.
Gerald Lebovits, J.
On July 6, 2011, plaintiff, Peter Coffin, and defendant, Padden Kerr Projects LLC (PKP), entered into a consignment agreement for a work of art called the "Untitled steamroller music box." Plaintiff owned, created, and designed the music box. A non-party built it. PKP financed the project. The only members of PKP are co-defendants Kelly Padden and Christopher Kerr.
The agreement provided that it would terminate when PKP dissolved. The agreement further provided that upon termination, PKP must return the music box to plaintiff within five business days.
On November 4, 2014, PKP filed a certificate of dissolution with the New York Department of State.
On March 17, 2016, Kerr emailed plaintiff about PKP's dissolution to ask plaintiff how to return the music box. On March 21, 2016, plaintiff emailed Kerr to say that he did not have a place to store the music box. Plaintiff also asked Kerr to provide a condition report for damages incurred to the music box in March 2015.
On March 30, 2016, defendants' attorney mailed plaintiff a written notice of PKP's dissolution. Defendants' attorney asked plaintiff to contact his office to return the music box. All defendants are represented by the same attorney.
On April 6, 2016, plaintiff emailed defendants' attorney that once the condition report and repairs to the music box are complete, plaintiff will then discuss returning the music box. Later that evening, defendants' attorney responded to plaintiff's email. Defendants' attorney stated that the agreement does not permit plaintiff to delay return of the music box based on plaintiff's allegation of damages. Defendants' attorney further stated that if plaintiff refused to return the music box, his clients might deem the property abandoned and dispose of it.
On April 13, 2016, defendants' attorney sent plaintiff a letter by first-class mail. The letter stated that the music box would be returned to plaintiff's property at 119 Park Road, Wurtsboro, New York, on April 26, 2016. The letter further stated that if plaintiff has any questions or comments, plaintiff should contact defendants' attorney.
On April 19, 2016, defendants' attorney emailed plaintiff's attorney to speak with plaintiff's attorney. Plaintiff's attorney responded. Plaintiff's attorney gave his phone number to defendants' attorney and stated that he is free for the next hour or so. Defendants' attorney responded that he would call him in 10 minutes.
On April 22, 2016, plaintiff's attorney emailed defendants' attorney stating, "Good news! We've secured an institution willing to accept the Artwork-a children's camp located close to Mr. Coffin's Wurtsboro address." (NYSCEF No. 127.) Plaintiff's attorney further asked defendants' attorney to ask his clients to provide assurance that the music box would work when it is dropped off. Defendants' attorney responded that he and his clients would prepare a condition report. Defendants' attorney further asked plaintiff's attorney to provide a written agreement from the institution. Plaintiff's attorney responded that he "will revert as soon as the agreement is finalized." (NYSCEF No. 127.)
On April 26, 2016, Kerr delivered the music box to plaintiff's property in Wurtsboro. The music box was wrapped in a weatherproof tarp, driven onto a flatbed truck, and transported to the Wurtsboro property. The flatbed truck drove to the end of the road leading to the Wurtsboro property, after which the music box was driven off the flatbed truck and up a dirt road leading to plaintiff's property and parked. The music box was then rewrapped with weatherproof tarp.
On April 29, 2016, after Kerr delivered the music box to plaintiff's property, plaintiff prepared a condition report. The report found that the music box was missing several electrical components, such as the Kalimba, amplifier, and mixing board. The music box was designed to enable the electrical components to be taken out and stored separately. Plaintiff did not ask any defendant for the Kalimba, amplifier, or mixing board. On February 6, 2018, following at least one offer from PKP to return the Kalimba, plaintiff agreed to accept delivery. On February 13, 2018, plaintiff delivered a condition report for the Kalimba, stating that 6 of the 24 tines were broken and rusted. Plaintiff's condition report further indicated that all bolts along the top edge of the Kalimba were completely rusted.
On September 16, 2018, the non-party that built the music box inspected it. The non-party's report stated that the shape and form of the music box were in good condition, that multiple cords, wires, and hoses had been severed behind the control dashboard and throughout the engine, that these severed lines were required to start the music box, that the cuts appeared to be clean and not jagged, and that without these cuts the machine would work properly.
In January 2017, plaintiff filed a summons and complaint against defendants, pleading eight causes of action: breach of contract against all defendants, fraudulent misrepresentation against all defendants, negligence against all defendants, breach of duty of good faith and fair dealing against all defendants, breach of fiduciary duty against all defendants, trespass against Padden and Kerr individually, conversion against Padden, and unjust enrichment against Padden.
In August 2017, this court issued a written decision that dismissed the breach-of-contract claim, negligence claim, and the breach-of-fiduciary-duty claim against PKP. (NYSCEF No. 30.)
All defendants move for summary judgment against plaintiff to dismiss the claims of breach of contract, negligence, and breach of fiduciary duty. Padden and Kerr move for summary judgment to dismiss the claim for trespass. Padden moves for summary judgment to dismiss the conversion claim.
All defendants raise one counterclaim: that plaintiff has acted in bad faith. Defendants now move for summary judgment in their favor on that counterclaim.
Plaintiff opposes summary judgment. Plaintiff also cross moves for partial summary judgment on liability for three of the five causes of action: breach of contract, breach of fiduciary duty, and trespass.
DISCUSSION
Summary judgment should be granted only when the moving party shows no material and triable issue of fact as to the cause of action. (Anderson v Commack Fire Dist., 39 N.Y.3d 495, 506 [2023].) A defendant need negate but one element of a cause of action to dismiss a cause of action. (Id.) A plaintiff must show there is no triable issue of fact for every essential element of the cause of action for partial summary judgment on liability. (Id.)
I. Defendants' Request for Summary Judgment Dismissing Plaintiff's Breach-of-Contract Claim and Plaintiff's Cross-Motion for Summary Judgment on Liability on that Claim
To state a cause of action to recover damages for breach of contract, a plaintiff must allege (1) the existence of a contract, (2) plaintiff's performance pursuant to the contract, (3) defendant's breach of its contractual obligations, and (4) damages resulting from the breach. (34-06 73, LLC v Seneca Ins. Co., 39 N.Y.3d 44, 52 [2022].)
Plaintiff claims that PKP breached the contract when it filed for dissolution with the Department of State on November 4, 2014, yet failed to begin the process of returning the music box until March 17, 2016. (NYSCEF No. 155 at 5.) The agreement provided that it would terminate when PKP dissolved and that upon termination PKP must return the music box to plaintiff within five business days. (NYSCEF No. 8 at 5.)
Defendants claim that they were afforded time to wind up their LLC, distribute all assets, and pay out investors under Limited Liability Law § 703 (b). (NYSCEF No. 107 at 10.) Defendants claim that dissolution is not final until winding-up is complete. (NYSCEF No. 107 at 10.) Defendants cite Limited Liability Law § 703 (b) in their statement of facts, claiming that the statute affords PKP time to wind up itself. (NYSCEF No. 107 at 10.) That is the only time in their memorandum of law they address the issue. Regardless, it is unavailing. The statute makes clear that dissolution and winding up are two separate processes, with dissolution occurring before winding-up.
In accordance with Article 7 of the Limited Liability Law and the context of the agreement, defendants dissolved their company on November 4, 2014. Therefore, under paragraph 9 of the agreement, PKP breached the contract when it failed to deliver the music box within five business days of dissolution.
Defendants argue that plaintiff has not incurred any damage as a result of the breach. (NYSCEF No. 107 at 27, memorandum in support.) Plaintiff responds that plaintiff had lost business opportunities due to the breach. (NYSCEF No. 155 at 5.) Plaintiff cites an email as proof of business opportunities. (NYSCEF No. 118; No. 155 at 5.) The email does not offer a price or a date in furtherance of a business opportunity. It claims merely that plaintiff was able to "garner some interest," that some party "could be interested" or would be "happy to display the piece so long as they are not paying for the display." The business opportunities in the email are insufficient to constitute damages. (See Rather v CBS Corp., 68 A.D.3d 49, 59 [1st Dept 2009] [finding that plaintiff's claim for damages in a breach-of-contract action was based on insufficient and speculative "lost business opportunities."]
Defendant's motion for summary judgment to dismiss the breach-of-contract cause of action is granted.
II. Defendants' Request for Summary Judgment Dismissing Plaintiff's Breach-of-Fiduciary-Duty Claim and Plaintiff's Cross-Motion for Summary Judgment on Liability on that Claim
The elements of a cause of action for breach of fiduciary duty are "(1) defendant owed them a fiduciary duty, (2) defendant committed misconduct, and (3) they suffered damages caused by that misconduct." (Besen v Farhadian, 195 A.D.3d 548, 549-550 [1st Dept 2021].)
Both plaintiff and PKP concede that they have a fiduciary relationship with each other. (NYSCEF No. 107 at 27; No. 155 at 6.) Plaintiff alleges misconduct by all defendants after PKP failed to inform plaintiff of dissolution, engaged in self-help by abandoning the music box without permission or authorization, and put PKP's interests before plaintiff's interests. (NYSCEF No. 155 at 6.) Plaintiff does not address damages when addressing the cause of action in his opposition memorandum.
Defendants argue that they were contractually obligated to return the music box to plaintiff and that they made plaintiff aware of the time and location of delivery. (NYSCEF No. 107 at 27.) Defendants also state that they offered to pay for damages sustained to the music box throughout and even past the term of the agreement. (NYSCEF No. 107 at 31.)
A fiduciary owes a duty to protect the interests of his fiduciaries. (Birnbaum v Birnbaum, 73 N.Y.2d 461, 466 [1989].)
PKP had a duty to inform plaintiff of the material fact of dissolution. (See Salm v Feldstein, 20 A.D.3d 469, 470 [2d Dept 2005] [finding that defendant, the managing member of a company of which plaintiff is a co-member, owed a duty to disclose all material facts to plaintiff].) PKP did not protect plaintiff's interests when it failed to disclose to plaintiff that PKP dissolved.
If a breach-of-fiduciary-duty claim is based on conduct in a contract and seeks the same damage, then it duplicates the breach-of-contract claim. (Bullmore v Ernst & Young Cayman Is., 45 A.D.3d 461, 463 [1st Dept 2007].) Plaintiff's claims are based on conduct in the agreement, and plaintiff does not state whether defendants damaged plaintiff in a way different from what is detailed in plaintiff's breach-of-contract cause of action. Thus, it is duplicative of the breach-of-contract claim.
Defendant's summary-judgment motion to dismiss breach-of-fiduciary-duty cause of action is granted.
III. Defendants' Request for Summary Judgment Dismissing Plaintiff's Negligence Claim
To state a cause of action for negligence, a plaintiff must allege "(1) a duty owed by defendant to plaintiff, (2) a breach thereof, and (3) injury proximately resulting therefrom." (Pasternack v Laboratory Corp. of Am. Holdings, 27 N.Y.3d 817, 825 [2016].)
Plaintiff alleges that defendants owed a duty to plaintiff to protect the music box from damage and to store it under conditions that would not subject it to damage. (NYSCEF No. 2 at ¶ 65, 66.) Plaintiff alleges that he suffered damages because defendants breached that duty. (NYSCEF No. 2 at ¶ 68, 69.)
The agreement requires only that "during the consignment period, the Dealer shall keep the work in an indoor storage space or underneath weather-proof covering when it is not on display until the music box is sold." (NYSCEF No. 8 at ¶ 7.)
The contract created the duty that plaintiff is alleging. (NYSCEF No. 107 at 27; No. 155 at 3.) Plaintiff fails to show a legal duty bestowed on defendants outside their contractual obligations. (See Ho v Star Contrs., Inc., 209 N.Y.S.3d 32, 34 [1st Dept 2024].) Thus, the negligence cause of action is duplicative of the breach-of-contract cause of action.
Defendant's summary-judgment motion to dismiss negligence cause of action is granted.
IV. Defendants' Request for Summary Judgment Dismissing Plaintiff's Trespass Claim Against Padden and Kerr and Plaintiff's Cross-Motion for Summary Judgment on Liability on that Claim
The elements of a cause of action sounding in trespass are "the intentional entry onto the land of another without justification or permission." (Julia Props., LLC v Levy, 137 A.D.3d 1224, 1225 [2d Dept 2016].)
Kerr claims that he was justified in entering plaintiff's property. He argues that he was performing his obligation to return the music box and that permission and consent to enter plaintiff's property was inferred by the requirements of the agreement. (NYSCEF No. 107 at 34.) Kerr states that he informed plaintiff when and where he was returning the music box. Kerr further argues that plaintiff did not object to delivery when plaintiff or his attorney had the opportunity to do so. (NYSCEF No. 107 at 32, 33.) Padden claims that she did not intrude onto the property because she did not deliver the music box. (NYSCEF No. 107 at 34.) Kerr admits that he entered plaintiff's property to return the music box. (NYSCEF No. 107 at 34.)
Plaintiff maintains that both Kerr and Padden entered plaintiff's property without permission. (NYSCEF No. 155 at 7.) Plaintiff further argues that the entry was unjustified because defendants were not given express permission to enter the property. (NYSCEF No. 155 at 7.)
On March 17, 2016, Kerr sent an email to plaintiff informing him that PKP had been disbanded. (NYSCEF No. 121.) Kerr also stated that he was coordinating the delivery of the music box back to plaintiff. (NYSCEF No. 121.) Plaintiff responded to the email on March 21, 2016, that he did not have a place to store the music box at that time. (NYSCEF No. 121.) Plaintiff further stated that last March, Kerr informed him the music box was damaged. (NYSCEF No. 121.) Plaintiff did not ask for a condition report when he received notice from Kerr of damage induced to the music box last March. (NYSCEF No. 123.) On March 21, 2016, plaintiff asked for a condition report pursuant to the damages received last March and reminded Kerr that PKP was responsible to repair all damages suffered to the music box. (NYSCEF No. 121.) On April 6, 2016, plaintiff emailed Kerr that once he approves the completed repairs to the music box, he would discuss arrangements to return the music box. (NYSCEF No. 123.) Defendants' attorney responded to plaintiff in an email that the agreement does not permit plaintiff to delay delivery based on an allegation of damages and that if plaintiff refuses to cooperate, then his clients might elect to deem the property abandoned and dispose of it accordingly. (NYSCEF No. 123.)
Defendants argue that plaintiff did not cooperate with them to return the music box in good faith. (NYSCEF No. 107 at 33.) Defendants stated that plaintiff improperly conditioned the return of the music box upon plaintiff's own personal approval of the repairs. (NYSCEF No. 107 at 33.)
On April 6, 2016, defendants' attorney sent by first-class mail a notice that stated the music box would be delivered to plaintiff's address on April 26, 2016. (NYSCEF No. 125.) After receiving the notice, on April 22, 2016, plaintiff's attorney responded in an email telling defendants' attorney that he had good news-that a children's camp close to plaintiff's Wurtsboro address was willing to accept the music box. (NYSCEF No. 127.) Plaintiff's attorney did not say anything to prohibit delivery to the Wurtsboro address, though the attorney had several opportunities to do so. Furthermore, returning the music box within five business days after termination of the agreement was a contractual obligation. (NYSCEF No. 8 at 5.) On March 21, 2016, plaintiff delayed the return of the music box, making PKP unable to perform the agreement. (NYSCEF No. 121.)
When there is an agreement between consignor and consignee, under which the consignee is required to return the consigned music box to the consignor, the consignee's entrance upon consignor's property to return the consigned music box to consignor is permissive. (See Heritage Springs Sewer Works v Boghosian, 61 A.D.3d 1038, 1042 [3d Dept 2009] [finding that plaintiff's use of defendant's land to maintain sewer infrastructure under an agreement between the parties was permissive under the agreement's terms].)
Here, the agreement between plaintiff and PKP required defendant(s) to return the music box to plaintiff and, as in Heritage, the agreement between the parties did not directly address entrance into property pursuant to performing the agreement. (See Heritage, 61 A.D.3d at 1042.) The Heritage Court reached a common-sense interpretation of the agreement: That entrance onto defendant's property to perform their side of the agreement, which was to maintain the sewer system of several properties, was permissive. (Id. at 1043.) In the current case, it is a common-sense interpretation of the agreement that plaintiff need not explicitly permit return of plaintiff's property, the music box, to plaintiff's property. It is permissive under the terms of the agreement. In explaining why it dismissed the trespass counterclaim against plaintiff, the Heritage Court emphasized that plaintiffs were on notice of the construction of the sewer, even though the notice the court referred to was given several years before performance began. Here, defendant notified plaintiff of defendant's performance on multiple occasions. Plaintiff's attorney acknowledged and acclaimed at least one of these notices, which informed plaintiff of the date and location of delivery. (NYSCEF No. 127.) Kerr, moreover, acted reasonably in the return of the music box when he delivered it wrapped in weatherproof tarp to plaintiff's property.
Thus, Kerr's entrance on plaintiff's property was permissive under the terms of the agreement.
Defendant's motion for summary judgment to dismiss the trespass cause of action against Padden and Kerr individually is granted.
V. Padden's Request for Summary Judgment Dismissing the Conversion Claim Brought Against Him
Conversion occurs when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession. (Colavito v New York Organ Donor Network, Inc., 8 N.Y.3d 43, 49-50 [2006].) In addition, "[t]wo key elements of conversion are (1) plaintiff's possessory right or interest in the property and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff"s right." (Petrone v Davidoff Hutcher & Citron, LLP, 150 A.D.3d 776, 777 [2d Dept 2017].) Furthermore, "[a] cause of action for conversion requires a showing that defendant exercised unauthorized dominion over plaintiff's property to the exclusion of plaintiff's rights.... If possession of the property is originally lawful, a conversion occurs when defendant refuses to return the property after a demand." (White v City of Mount Vernon, 221 A.D.2d 345, 346 [2d Dept 1995].)
Plaintiff contends that Padden interfered with plaintiff's ownership of the music box in derogation of plaintiff's rights.
Padden argues that she did not destroy the music box when the Kalimba, amplifier, and mixing board were removed from the music box. Padden maintains that the music box was built to allow removal of these electrical components to protect them from damage. (NYSCEF No. 107 at 35.) Padden also claims that plaintiff was aware the Kalimba, amplifier, and mixing board were stored separately from the music box to protect them. (NYSCEF No. 107 at 35.) Padden further argues that plaintiff never requested the Kalimba, amplifier, or mixing board from defendant once he discovered it was missing. (NYSCEF No. 107 at 36.)
On April 26, 2016, Kerr returned the music box to outside curtilage on plaintiff's property. (NYSCEF No. 149 at ¶48.) The music box did not accompany the Kalimba, amplifier, or mixing board. (NYSCEF No. 149 at ¶49.) The music box is built so that electrical components such as the Kalimba, amplifier, and mixing board can be removed to protect them from damage sustained from being outside.
On April 29, 2016, plaintiff became aware that the Kalimba, amplifier, and mixing board were not with the music box. (NYSCEF No. 139.) Plaintiff never asked any defendant for the Kalimba, amplifier, or mixing board. Plaintiff also does not allege that he attempted to acquire the Kalimba back from any defendant once he observed it was missing. In fact, plaintiff states that PKP came to plaintiff to initiate returning the Kalimba, amplifier, and mixing board. (NYSCEF No. 152 at ¶ 60.)
Padden could not have refused to return the Kalimba, amplifier, or mixing board. Plaintiff never asked Padden for them.
Defendant's motion for summary judgment to dismiss the conversion cause of action is granted.
VI. Defendants' Request for Summary Judgment in Their Favor on Their Bad-Faith Counterclaim
Defendants allege that plaintiff acted in bad faith: That plaintiff pursued litigation for the sole purpose of causing financial harm to defendant, intentionally cut hydraulic lines on the music box to bolster claims in preparation for litigation, and failed to mitigate damages. (NYSCEF No. 107 at 37, 38.)
Defendants fail to show how plaintiff's pursuit of litigation has the sole purpose of causing financial harm. Defendants offer no evidence to show that plaintiff or someone advised by plaintiff cut the hydraulic lines on the music box.
A plaintiff has a duty to mitigate damages arising from a breach of contract. (See e.g. Mack-Cali Realty, L.P. v Everfoam Insulation Sys., Inc., 110 A.D.3d 680, 682 [2d Dept 2013].) Plaintiff does not directly address and oppose defendant's bad-faith claim in his opposition memorandum but does, through his statement of facts, dispute that plaintiff failed to mitigate damages. (NYSCEF No. 152 at ¶ 64.)
Defendants' motion for summary judgment on their bad-faith counterclaim is denied.
Accordingly, it is
ORDERED that the branches of defendants' motion seeking summary judgment dismissing plaintiff's breach-of-contract, breach-of-fiduciary-duty, and negligence claims against them are granted, and those claims are dismissed, and the branches of plaintiff's cross-motion seeking summary judgment in his favor on those claims are denied; and it is further
ORDERED that the branch of defendant's motion seeking summary judgment dismissing plaintiff's trespass claim against Padden and Kerr is granted, and that claim is dismissed, and the branch of plaintiff's cross-motion seeking summary judgment in his favor on that claim is denied; and it is further
ORDERED that the branch of defendants' motion seeking summary judgment dismissing plaintiff's conversion claim against Padden is granted, and that claim is dismissed; and it is further
ORDERED that the balance of the claims and counterclaims in the action are severed and shall continue; and it is further
ORDERED that the branch of defendants' motion seeking summary judgment in their favor on their bad-faith counterclaim is denied.