Opinion
500663/16
08-17-2016
Montgomery Troy LLC, Plaintiff, v. Lloyd Vassell, as Administrator of the Estate of Lloyd Hibbert, Defendant(s).
Attorney for Defendant Jason J. Rebhun, Esq. 225 Broadway, 38th Floor New York, New York 10007 (646) 201-9392 Attorney for Plaintiff Joseph Bartfield Bartfield & Knopfler, PLLC 958 East 14th Street Brooklyn, New York 11230
Attorney for Defendant Jason J. Rebhun, Esq. 225 Broadway, 38th Floor New York, New York 10007 (646) 201-9392 Attorney for Plaintiff Joseph Bartfield Bartfield & Knopfler, PLLC 958 East 14th Street Brooklyn, New York 11230 Francois A. Rivera, J.
Recitation in accordance with CPLR 2219 (a) of the papers considered on the notice of motion of defendant Lloyd Vassell, as Administrator of the Estate of Lloyd Hibbert (hereinafter Vassell) filed on February 16, 2016, for an order: (1) dismissing plaintiff Montgomery Troy LLC's (hereinafter MTL or plaintiff) complaint pursuant to CPLR 3211 (a) (3) and (7), or in the alternative; (2) dismissing the first, second and third cause of action pursuant to CPLR 3211 (a) (3) and (7) and General Obligations Law 5-701; and (3) cancelling and discharging the notice of pendency pursuant to CPLR 6514 against the property known as 871 Montgomery Street, Brooklyn, New York Block 1418 Lot 71 (hereinafter the subject property); (4) granting an award of costs and disbursements pursuant to CPLR 8106; (5) and granting an award of sanctions and attorney's fees pursuant to 22 NYCRR 130-1.1 . Notice of motion Affirmation in support Exhibits 1-3 Affirmation in opposition Exhibits A-I Affirmation in reply
On May 6, 2016, at oral argument of the instant motion, Vassell withdrew the branch of his motion seeking an award of sanctions pursuant to 22 NYCRR 130-1.1.
BACKGROUND
On January 19, 2016, MTL commenced the instant action by filing a summon, verified complaint and notice of pendency (hereinafter the commencement papers) with the Kings County Clerk's office. The complaint is verified by Ephraim Okounev as managing member of MTL.
The verified complaint alleges the following salient facts. On November 21, 2014, the Surrogates Court of Kings County issued Letters of Administration appointing Vassell as the administrator of the estate of his uncle, Llyod Hibbert (hereinafter the estate). At that time, the estate was the fee owner of certain real property located at 871 Montgomery Street, Brooklyn, New York Block 1418 Lot 71 (hereinafter the subject property).
In April of 2015, Vassel entered into an oral agreement with MTL (hereinafter the agreement) whereby MTL undertook to arrange for the clearance of a first mortgage lien encumbering the subject property in exchange for which Vassell would sign a contract to sell the subject property to MTL for $462,500.00 and then, in his capacity as the administrator of the estate, immediately apply for permission from the Surrogate's Court to convey title to the subject property to MTL for that purchase price.
It further alleges that MTL obtained a satisfaction of the first mortgage lien on the subject property, and executed and delivered to Vassell a contract and a down payment consistent with their oral agreement for the sale of the subject property. Thereafter, Vassell refused to perform his obligation under the agreement and instead attempted to sell the subject property to a third person.
The verified complaint alleges twenty-one allegations of fact in support of four causes of action. The first cause of action is for an order directing Vassell to specifically perform its obligations under the agreement to sell the subject property. The second is for a judgment declaring that the agreement is binding and that the subject property is to be held in a constructive trust. The third is for an injunction barring Vassell from selling the subject property. The fourth is for monetary damages caused by Vassell's alleged breach of the agreement.
Vassell has not interposed an answer to the complaint.
MOTION PAPERS
Vassel's motion papers consist of the affirmation of his counsel, Jason J. Rebhun, (hereinafter Rebhun); his own affidavit and three annexed exhibits. The first exhibit is a copy of the commencement papers. The second is a copy of the Letters of Administration. The third is a copy of a web page from the New York State Department of State Division of Corporations reflecting that MTLfirst came into being on June 18, 2015.
MTL has opposed the motion with an affirmation of its counsel, Joseph Bartfield (hereinafter Bartfield) and nine exhibits labeled A through I. Exhibit A is described as pages from a May 10, 2015 title commitment on the subject property. Exhibit B, C, D and E are described as e-mails from defendant's counsel to plaintiff's counsel. Exhibit F is a copy of the Letters of Administration. Exhibit G is described as a satisfaction of the first mortgage procured by the plaintiff on the subject property. Exhibit H is described as a contract of sale of the subject property by Vassell, as administrator of the estate, to LHU Development LLC for $395,000.00. Exhibit I is described as Vassell's amended petition to the Surrogate Court of Kings County seeking permission to sell the subject property to LHU Development LLC for $395,000.00.
Vassel has replied to MTL's opposition papers with Rebhun's affirmation.
LAW AND APPLICATION
Dismissal Pursuant to CPLR 3211 (a) (3)
CPLR 3211 (a) (3) provides that a defendant can seek dismissal of a complaint on the ground that the plaintiff lacks the "capacity," i.e., the power, to appear before the court. Vassell seeks dismissal of the complaint pursuant to CPLR 3211 (a) (3) on the basis that MTL did not exist in April of 2015, when it allegedly entered into the oral agreement with Vassell. Limited Liability Law § 203 (d) provides in pertinent part that a limited liability company is formed at the time of the filing of the initial articles of organization with the department of state or at any later time specified in the articles of organization, not to exceed sixty days from the date of such filing. The Court finds that the web document submitted by Vassel is a government record maintained and kept by the State of New York Department of State Division of Corporations on its official government web site. The information contained on the web document is an exception to the hearsay rule under CPLR 4518 (a), business records exception and under State Technology Law § 306 (see Brown v SMR Gateway 1, LLC, 22 Misc 3d 1139[A], 2009 NY Slip Op 50516[U], [Sup Ct, Kings County 2009]). Vassell has submitted competent evidence establishing that the initial date that Montgomery Troy LLC filed papers with State of New York Department of State Division of Corporations was on June 18, 2015.
Vassell has established that MTL did not come into being until June 18, 2015 and, therefore, did not exist in April of 2015. As a general rule, a purported entity which is not yet in legal existence cannot take title to real property (Lehlev Betar, LLC. v Soto Development Group, Inc., 131 AD3d 513 [2nd Dept 2015] citing Kiamesha Dev. Corp. v Guild Props., 4 NY2d 378, 389 [1958]). However, New York has recognized that an unincorporated entity can take title or acquire rights by contract if it is a de facto corporation (Kiamesha Dev. Corp. v Guild Props., 4 NY2d at 388—389 [1958]). "Under very limited circumstances, courts may invoke the de facto corporation doctrine where there exists (1) a law under which the corporation might be organized, (2) an attempt to organize the corporation and (3) an exercise of corporate powers thereafter" (Lehlev Betar, LLC. v Soto Development Group, Inc., 131 AD3d 513 [2nd Dept 2015] citing Matter of Hausman, 13 NY3d 408, 412 [2009]). The de facto corporation doctrine is equally applicable to LLCs (Matter of Hausman, 13 NY3d at 412).
"Limited Liability Company Law § 203 provides three specific requirements to form an LLC: (1) preparation of the articles of organization; (2) execution of the articles of organization; and (3) the filing of the articles of organization with the State" ( Id.).
It is undisputed that in April of 2015, Limited Liability Law § 203 (d) was an existing law under which MTL could be organized. Vassell's documentary evidence established that on July 18, 2015, MTL succeeded in organizing itself as an LLC. It also establishes that MTL existed as an LLC at the time it commenced the instant action. Apart from the pleadings and the letter of administration, Vassell has proffered no other documents in support of this branch of its motion.
Vassell has not established that MTL lacks the capacity to commence and prosecute the instant action. Nor has Vassell conclusively established that MTL was not a de facto limited liability company in April 2015, at the time of its alleged oral agreement with Vassell. Accordingly, Vassell's motion to dismiss the complaint pursuant to CPLR 3211 (a) (3) based on MTL's lack of capacity must be denied. Dismissal Pursuant to CPLR 3211 (a) (7 )
Vassell has also moved to dismiss the complaint pursuant to CPLR 3211 (a) (7) and the Statute of Frauds.
General Obligations Law § 5-703 (3) and (4) provides as follows:
3. A contract to devise real property or establish a trust of real property, or any interest therein or right with reference thereto, is void unless the contract or some note or memorandum thereof is in writing and subscribed by the party to be charged therewith, or by his lawfully authorized agent.
4. Nothing contained in this section abridges the powers of courts of equity to compel the specific performance of agreements in cases of part performance.
On a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7) for failure to state a cause of action, the court must afford the complaint a liberal construction, accept all facts as alleged in the complaint to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87 [1994]).
A court may consider evidentiary material submitted by a defendant in support of a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7) (see CPLR 3211[c]; Sokol v Leader, 74 AD3d 1180, 1181 [2nd Dept 2010]). "When evidentiary material is considered" on a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7), and the motion has not been converted to one for summary judgment, "the criterion is whether the [plaintiff] has a cause of action, not whether he [or she] has stated one, and, unless it has been shown that a material fact as claimed by the [plaintiff] to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it ... dismissal should not eventuate" (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1997]; see Sokol v Leader, 74 AD3d at 1181—1182 [2nd Dept 2010]).
Vassell contends that MTL's action for specific performance and for an injunction are based on an oral agreement to sell real property and must fail as a matter of law pursuant to the Statute of Frauds. The elements of a cause of action for specific performance of a contract are that the plaintiff substantially performed its contractual obligations and was willing and able to perform its remaining obligations, that defendant was able to convey the property, and that there was no adequate remedy at law (see Piga v Rubin, 300 AD2d 68 [1st Dept 2002]). Specific performance may be awarded only where there is a valid existing contract for which to compel performance (Rojas v Paine, 101 AD3d 843 [2nd Dept 2012] citing Roland v Benson, 30 AD3d 398, 399 [2nd Dept 2006]).
Courts of equity do, however, have the power to "compel the specific performance of agreements in cases of part performance" (General Obligations Law § 5—703 (4); Sivos v Eppich, 78 AD3d 1360 [3rd Dept 2010] citing Messner Vetere Berger McNamee Schmetterer Euro RSCG v Aegis Group, 93 NY2d 229, 235 [1999]). A party's partial performance of an alleged oral contract will be deemed sufficient to take such contract out of the statute of frauds only if it can be demonstrated that the acts constituting partial performance are unequivocally referable to said contract (Sivos v Eppich, 78 AD3d 1360 [3rd Dept 2010] citing McDermott v Town of Goshen, 207 AD2d 612, 614 [3rd Dept 1994]).
MTL's complaint has alleged an oral agreement which it had partially performed by expending funds sufficient to satisfy the first lien encumbering the subject property. MTL contends that its partial performance takes the oral agreement outside of the statute of frauds because its conduct is unequivocally referable to its oral agreement with Vassell.
A court may consider affidavits of the plaintiff to remedy deficiencies in its pleadings. MTL did not submit an affidavit from any of its members. Rather MTL submitted an affirmation of Bartfield, its counsel which demonstrated no personal knowledge of the fact alleged in MTL's complaint. It therefore has no probative value (Feratovic v Lun Wah, Inc., 284 AD2d 368, 369 [2nd Dept 2001]).
Vassell has submitted his own affidavit disputing the existence of any agreement with MTL. More particularly, Vassell has averred that all allegations in the complaint claiming that in April 2015, he had any communication with MTL, or anyone on MTL's behalf, about a sale of the subject property, or that he entered into any agreement regarding same, is a complete fabrication. The disputed facts alleged in the complaint, are presumed to be true (CPLR 3211 (a) (7); Leon v Martinez, 84 NY2d 83, 87 [1994]) and Vassell's sworn allegations of fact to the contrary do not conclusively establish that any essential fact alleged in the complaint is not a fact at all.
The Court cannot find as a matter of law that MTL's partial performance was not unequivocally referable to its oral agreement with Vassell. In sum, Vassell has not established that MTL does not have a cause of action. Accordingly, its motion to dismiss the complaint pursuant to CPLR 3211 (a) (7) must be denied (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1997]). Accordingly, MTL may go forward with its claim and Vassell has thirty days from the date of the notice of entry of the instant decision and order to answer the complaint. Cancelling the Notice of Pendency
CPLR 6514 provides the procedural vehicle for canceling a notice of pendency with the mandatory grounds set forth in section (a) and the discretionary grounds set forth in section (b). CPLR 6514 (a) provides in pertinent part that any aggrieved person may move for cancellation of a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519.
Vassell has moved to cancel the notice of pendency pursuant to CPLR 6514 (a) based solely on his expectation that the complaint would be dismissed pursuant to CPLR 3211 (a). It was not, therefore, this branch of his motion is denied.
Costs and Disbursements Pursuant to CPLR 8106
CPLR 8106 provides that costs upon a motion may be awarded to any party, in the discretion of the court, and absolutely or to abide the event of the action. CPLR 8101 provides that the party in whose favor a judgment is entered is entitled to costs in the action, unless otherwise provided by statute or unless the court determines that to so allow costs would not be equitable, under all of the circumstances (CPLR 8001). The party to whom costs are awarded is entitled to recover reasonable and necessary expenses as are taxable according to course and practice of the court, by express provision of law or by order of the court (CPLR 8301[a]). Vassell has not obtained a judgment in his favor and is, therefore, not entitled to costs pursuant to CPLR 8101or disbursements pursuant CPLR 8001. The Court in an exercise of discretion declines to award cost in connection with the instant motion pursuant to CPLR 8106.
CONCLUSION
Lloyd Vassell's motion for an order dismissing Montgomery Troy LLC's complaint pursuant to CPLR 3211 (a) (3) is denied.
Lloyd Vassell's motion for an order dismissing Montgomery Troy LLC's complaint pursuant to CPLR 3211 (a) (7) is denied.
Lloyd Vassell's motion for an order dismissing the first, second and third cause of action pursuant to CPLR 3211 (a) (3) and (7) and General Obligations Law § 5-701 is denied.
Lloyd Vassell's motion for an order cancelling and discharging the notice of pendency pursuant to CPLR 6514 is denied.
Lloyd Vassell's motion for an order granting an award of costs and disbursements pursuant to CPLR 8106 is denied.
The foregoing constitutes the decision and order of this Court. Dated: August 17, 2016 Hon. Francois A. Rivera J.S.C.