Opinion
No. 69594/2016.
01-17-2017
Antonius de BOER, Plaintiff, v. Monique I. de BOER, Christopher J. O'Connell, and Harfenist Kraut & Perlstein LLP, Defendants.
Alexander E. Sklavos, Esq., The Sklavos Law Group, PC, Jericho. Monique I. de Boer, pro se. Christopher J. O'Connell, pro se.
Alexander E. Sklavos, Esq., The Sklavos Law Group, PC, Jericho.
Monique I. de Boer, pro se.
Christopher J. O'Connell, pro se.
TERRY JANE RUDERMAN, J.
| Papers | Numbered |
|---|---|
| Order to Show Cause, Affidavit | Exs. A–J 1 |
| Letter and Amended Escrow Agreement, Defendant O'Connell's | Ex. A (submitted on return date) 2 |
This motion for a preliminary injunction was brought by Order to Show Cause returnable on January 11, 2017. The plaintiff is the father of defendant Monique I. De Boer; defendant Christopher J. O'Connell is the husband of Monique de Boer. A matrimonial action is presently pending between defendant de Boer and O'Connell in Westchester County. The plaintiff seeks a preliminary injunction prohibiting the distribution of any funds from a certain escrow account, which represents the remaining proceeds from the sale of the former residence of defendant de Boer and O'Connell in Rye, New York. The parties assert that the escrowed funds represent the only marital asset.
The term "defendants" herein refers to defendants Monique I. de Boer and Christopher J. O'Connell, collectively, and not to the defendant escrowee Harfenist Kraut & Perlstein LLP. Harfenist Kraut & Perlstein LLP did not appear on this motion.
The plaintiff's affidavit in support of the motion states that the plaintiff loaned the defendants $165,000 between August, 2008 and November, 2010, of which $150,000 remains unpaid. Between November, 2014 and March 12, 2015, plaintiff loaned additional funds to the defendants, or paid the defendants' debts to third parties, in the approximate amount of $190,000. An email from defendant O'Connell to the plaintiff dated January 10, 2015, assured the plaintiff that funds loaned by him to the defendants would be "treated as a bridge loan" and repaid from the sale of the defendants' home. (Order to show cause, Ex. D.)
On March 14, 2015, the defendants executed an Escrow Agreement in which they agreed that the proceeds of the sale of their home would be "distributed in accordance with Schedule A Closing Statement," which was annexed to and made part of the agreement. The Escrow Agreement further provided that "the Closing Statement ... will be updated and revised to reflect the updated payoff amounts and funds due as of the date of the closing of the Property." (Order to Show Cause, Ex. E, at pars. 1, 2.) Among other debts which were listed for payment from the proceeds of the closing, the Closing Statement listed "Ton de Boer ... $338,072.46." (Order to Show Cause, Ex. E, Closing Statement.) The Escrow Agreement further recited that, "This agreement shall not be modified or amended except by a writing signed by both parties." (Order to Show Cause, Ex. E, at par. 8.)
In an email from defendant O'Connell to plaintiff dated March 27, 2015, O'Connell advised the plaintiff that the agreement was executed, stating that, "In essence, the agreement describes how the sale of the house will take place, and how the proceeds will be distributed at closing, including paying you back for monies owed." (Order to Show Cause, Ex. F.) In the same email, O'Connell requested that plaintiff pay a debt owed by the defendants to American Express in the amount of $16,419.35. Plaintiff asserts that after the Escrow Agreement was executed, he advanced further funds to the defendants in the total amount of $50,042.38, with the final loan being made in November, 2015. (De Boer Affidavit, at par. 12.)
On April 27, 2016, the home was sold, but no part of the debt to plaintiff was paid. Plaintiff states that upon information and belief, $412,000 remains in the escrow account. (De Boer Affidavit, at par. 23.)
The defendants appeared pro se on the return date of the Order to Show Cause. Neither of them disputed the facts alleged by the plaintiff, other than that the escrow agreement had been "superceded" by a further agreement between the defendants. This subsequent agreement, dated September 8, 2016, recites that $460,389.05 remains in escrow; that certain funds would be paid to respective counsel for the defendants in the matrimonial action; that all other funds and payments "are subject to reallocation;" and that the agreement "supercedes" the prior agreement. (Letter and Amended Escrow Agreement, O'Connell's Ex. A [received into evidence from defendant O'Connell at oral argument on the return date of the Order to Show Cause].) Plaintiff argues that he was granted an interest in the escrowed funds by virtue of the March 14, 2015 Escrow Agreement, with respect to which he is a third party beneficiary. He asserts that defendants solicited monies and used the promise of repayment in the Escrow Agreement and correspondence to encourage further loans. (Affirmation in support of order to show cause, par. 6.) He contends, in essence, that his rights should not be affected by the subsequent attempted abrogation of the Escrow Agreement by the subsequent agreement made by the defendants.
Analysis
"To obtain a preliminary injunction, a movant must establish, by clear and convincing evidence, (1) a likelihood of success on the merits, (2) irreparable injury absent a preliminary injunction, and (3) a balancing of the equities in the movant's favor." (Arthur J. Gallagher & Co. v. Marchese, 96 AD3d 791, 791–792 [2d Dept.2012] ; see CPLR 6301.) "The decision to grant or deny a preliminary injunction lies within the sound discretion of the Supreme Court." (Arthur J. Gallagher & Co. v. Marchese, 96 AD3d at 792.)
"A party asserting rights as a third-party beneficiary must establish (1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for [its] benefit and (3) that the benefit to [it] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate [it] if the benefit is lost." (Nanomedicon, LLC v. Research Found. of State Univ. of NY, 112 AD3d 594, 596 [2d Dept.2013] [internal quotation marks omitted].)
In determining third-party beneficiary status, it is permissible for the court to look at the surrounding circumstances as well as the agreement itself. (Aievoli v. Farley, 223 A.D.2d 613 [2d Dept.1996].) Here, the plaintiff has demonstrated a likelihood of success in establishing the existence of a valid contract, which specifically named him as the intended recipient of a portion of the escrowed funds, and that the benefit was sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate plaintiff.
The question arises, however, whether the parties could supercede the earlier Escrow Agreement, on which the plaintiff relies, and create a new agreement abrogating the plaintiff's entitlement to any of the escrowed funds. In this regard, there are few recent cases squarely addressing the issue. With respect to a "creditor beneficiary" in the context of a third party beneficiary, such as the plaintiff herein, cases have viewed the rights of the beneficiary as "vested," so that they may not be extinguished by the original contracting parties. (See, e.g., Ficor, Inc. v. National Kinney Corp., 67 A.D.2d 659, 660 [1st Dept.1979] [real estate contract provided seller would pay broker; broker could recover commission as third party beneficiary from seller; subsequent agreement was "insufficient to defeat the claims of plaintiff, third-party creditor beneficiaries whose rights had already vested"].)
In Stein v. Severino (41 Misc.2d 209 [Special Term, Nassau County, 1963] ), the parties stipulated in a matrimonial action to pay an attorney a fee of $2,000, whereupon the attorney withdrew his motion to determine his fee. The parties later sought to rescind the stipulation. In finding that the parties could not vacate that portion of the agreement setting the attorney's fee, the Court held:
"Parties to a contract entered into for the benefit of a third person may rescind the contract as they see fit, without the assent of the third person at any time before the contract is accepted, adopted or acted upon by him and such rescission deprives the third person of any rights under or because of such contract (Moore v. Ryder, 65 N.Y. 438 ). However, after the third person accepts, adopts or acts upon the contract entered into for his benefit, the parties thereto cannot rescind the same without his consent, so as to deprive him of its benefits (Comley v. Dazian, 114 N.Y. 161 )." (Id. at 211.)
(See also, Drioli v. Hogan, 2013 N.Y. Misc. LEXIS 5102 [Sup.Ct., Queens County] [contracting parties do not have an unrestricted right to rescind a third party beneficiary agreement].)
Here, the plaintiff is a creditor beneficiary. In addition, the facts are sufficient to infer that the plaintiff was induced to lend further funds to the defendants with the understanding that he would be paid from the proceeds of the sale of the home. The plaintiff's reliance on the agreement augers in favor of a finding that his rights became vested and not subject to later abrogation by the parties.
Plaintiff has demonstrated a likelihood of success on the merits. He has also established irreparable injury absent a preliminary injunction, in that he would likely be unable to recover on the debt if he were required to first obtain a monetary judgment and seek execution. Further, plaintiff's reliance on the agreement as an inducement for him to lend further funds to the defendants establishes a balancing of the equities in the movant's favor.
As a condition of the granting of the preliminary injunction, an undertaking in the amount of $100,000 shall be posted by the plaintiff in accordance with CPLR 6312. (Zonghetti v. Jeromack, 150 A.D.2d 561 [2d Dept.1989] [$740,000 undertaking as prerequisite to granting of relief enjoining former bookkeeper from selling or transferring any of her assets pending action in which employer alleged that bookkeeper converted sums totaling at least $740,000; posting of undertaking in amount of $100,000 would be appropriate].)
Based upon the foregoing, it is hereby,
ORDERED that the motion for a preliminary injunction is granted; and it is further,
ORDERED that no person shall make any distribution from the funds maintained in escrow by Harfenist Kraut & Perlstein LLP for the defendants Monique I. de Boer and Christopher J. O'Connell; and it is further,
ORDERED within 15 days of the uploading hereof, the plaintiff shall post an undertaking in the amount of $100,000, that the plaintiff, if it is finally determined that he was not entitled to an injunction, will pay to the defendants all damages and costs which may be sustained by reason of the injunction; and it is further
ORDERED that all parties appear in the Preliminary Conference Part on Monday, February 27, 2017 at 9:30 a.m., in room 811 of the Westchester County Courthouse located at 111 Dr. Martin Luther King, Jr., Boulevard, White Plains, New York, 10601.
This constitutes the Decision and Order of the Court.