Preferred Constr., Inc. v. Patriot Org. Inc.

Full title: Preferred Construction, Inc., ROBERT DALE AND SANDRA DALE, Plaintiffs, v…

Court: Supreme Court, Suffolk County

Date published: Jul 30, 2019

64 Misc. 3d 1222 (N.Y. Sup. Ct. 2019)

2019 N.Y. Slip Op. 51229

117 N.Y.S.3d 467

Opinion

622609-18

07-30-2019

PREFERRED CONSTRUCTION, INC., Robert Dale and Sandra Dale, Plaintiffs, v. PATRIOT ORGANIZATION INC., Patriots Organization II, Inc., and Jonathan Singer, Defendants.

FORCHELLI DEEGAN TERRANA LLP, Attorneys for Plaintiffs, 333 Earle Ovington Blvd., Suite 1010, Uniondale, New York 11553 LA REDDOLA, LESTER & ASSOCIATES, LLP, Attorneys for Defendants, 600 Old Country Road, Suite 230, Garden City, New York 11530

Elizabeth H. Emerson, J.

FORCHELLI DEEGAN TERRANA LLP, Attorneys for Plaintiffs, 333 Earle Ovington Blvd., Suite 1010, Uniondale, New York 11553

LA REDDOLA, LESTER & ASSOCIATES, LLP, Attorneys for Defendants, 600 Old Country Road, Suite 230, Garden City, New York 11530

Elizabeth H. Emerson, J.

Upon the following papers read on this motion to dismiss and cross-motion to disqualify counsel ; Notice of Motion and supporting papers 6-30 ; Notice of Cross Motion and supporting papers 31-44 ; Answering Affidavits and supporting papers 45-49 ; Replying Affidavits and supporting papers; it is,

ORDERED that the motion by the defendants for an order partially dismissing the complaint is granted to the extent that the third, fourth, fifth, seventh, twelfth, fourteenth, sixteenth, eighteenth, twentieth, twenty-second, twenty-fourth, and twenty-sixth causes of action are dismissed and the eleventh, thirteenth, fifteenth, seventeenth, nineteenth, twenty-first, twenty-third, and twenty-fifth causes of action are dismissed insofar as they seek attorney's fees; and it is further

ORDERED that the motion is otherwise denied; and it is further

ORDERED that the cross motion by the plaintiffs for disqualification of the defendants' counsel, Robert LaReddola, is denied.

The plaintiffs, Robert Dale and Sandra Dale, are the owners of the plaintiff Preferred Construction, Inc. ("Preferred"), a construction contracting company. The defendant Jonathan Singer is an officer of the defendants Patriot Organization Inc. and Patriots Organization II, Inc. (collectively "Patriot"), which are general contracting companies.

The plaintiffs alleges the following facts in the complaint: In the summer of 2016, Preferred and Patriot agreed to create a joint venture to increase their joint bonding capacity, which helped them to bid on public contracts. While Preferred agreed to contribute financial resources, Patriot agreed to contribute skills and expertise in general contracting. The parties agreed to the following: (1) that both would share in the management and control of the joint venture, (2) that Patriot would be responsible for procuring and managing new contracts, (3) that Preferred would be responsible for the day-to-day management on the work sites, (4) that they would cross-indemnify one another and jointly bond, bid, and perform public contracts, (5) that each party would receive 50% of the net profits of the joint venture and share in the liability and operating expenses, (6) that Preferred could bid on subcontractor work for the joint venture's projects, and (7) that, if Preferred was awarded such a subcontract, any payment due to Preferred pursuant to the subcontract would be paid separate, apart, and in addition to its share of the joint venture profits. Since September 2017, upon the request of Patriot, Preferred agreed that only Patriot would be named as the general contractor on all joint-venture contracts. A total of 21 contracts were procured and performed under the joint venture. Patriot did not pay Preferred its share of the joint-venture profits for 18 contracts in which Patriot was named as the general contractor. Patriot also did not pay Preferred for work done pursuant to eight subcontracts between Patriot and Preferred.

In November 2017, Preferred suggested to Patriot that they discuss the future of the joint venture and document their existing relationship in a written agreement. The record reflects that Patriot retained Robert LaReddola as counsel in or about November 2017. An email dated November 29, 2017, sent by defendant Singer to LaReddola is the first email indicating that LaReddola was representing the defendants. In that email, Singer stated, "Jonathan Singer and Robert Dale will both own 50% of Patriot and 50% of Preferred Construction, Inc." In February 2018, Preferred met with Patriot and Patriot's counsel expecting that the counsel would provide it with a written agreement regarding the joint venture. However, at that meeting, no such written agreement was provided. Rather, Patriot proposed terms which differed materially from the terms previously discussed between the parties and their previously adopted course of doing business. Following the meeting, Preferred retained its own counsel. Both parties met several times to resolve the issue. On June 6, 2018, the plaintiffs' attorney emailed a document entitled "Outline of Business Plan" to LaReddola, who revised it and renamed it "Outline of Business Profit Sharing Plan Annual Duration." On June 20, 2018, defendant Singer emailed LaReddola's proposed revisions to the plaintiffs. Several emails were exchanged between the parties, and LaReddola was copied on some of them. Neither the plaintiffs' "Outline of Business Plan," nor defendants' revision thereto, "Outline of Business Profit Sharing Plan Annual Duration," were signed by the parties. Since August 2018, Patriot has excluded Preferred from the joint venture. The defendants move to partially dismiss the complaint, and the plaintiffs cross move to disqualify the defendants' attorney, Robert LaReddola, on the ground that he is a necessary witness on a significant issue of fact in this action. The plaintiffs contend that LaReddola was aware of the parties' joint venture and that Preferred was not a mere subcontractor of Patriot.

Disqualification of Counsel

Disqualification of an attorney is a matter that rests within the sound discretion of the trial court ( Zutler v. Drivershield Corp. , 15 AD3d 397 ). A party's entitlement to be represented in ongoing litigation by counsel of its choosing is a valued right that should not be abridged absent a clear showing that disqualification is warranted (Id ., citing S & S Hotel Ventures Ltd. Partnership v. 777 S.H. Corp ., 69 NY2d 437, 433 ). The advocate-witness rule requires an attorney to withdraw from pending litigation if the attorney is likely to be a witness on a significant issue of fact (Rules of Professional Conduct [ 22 NYCRR 1200.0 ] rule 3.7). Disqualification is warranted if the attorney's testimony is necessary ( Id . 445-446 ; Congregation Talmud Torah Ohev Shalom R. Morris Develson v. Sorscher , 69 AD3d 898, 899 ; Zutler v. Drivershield Corp ., supra ). Any doubt concerning the necessity for the attorney's testimony should be resolved in favor of disqualification ( Zagari v. Zagari , 295 AD2d 891, 891-892 ).

The court finds that the plaintiffs have failed to sustain their burden of demonstrating that the testimony of LaReddola will be necessary. The record reflects that LaReddola was not acting as the attorney for the defendants in 2016 when the plaintiffs allege the agreement for the joint venture was made. The plaintiffs have failed to show that LaReddola was retained by the defendants prior to November 2017 and that he had knowledge of the creation of the alleged joint venture between Preferred and Patriot. Although LaReddola revised the plaintiffs' "Outline of Business Plan" by deleting much of the contents thereof, he did not change the substance of the document. He merely streamlined it. Moreover, LaReddola's revisions were done more than a year and a half after the alleged creation of the joint venture. The court finds that, under these circumstances, the plaintiffs have failed to establish that LaReddola has exclusive personal knowledge of the issue that cannot be provided by other witnesses (see Adams v. Village of Keesville , US Dist Ct., NDNY, Aug. 8, 2008, Treece, J., at *13 [ 2008 WL 3413867 ], citing Zutler , supra ). Accordingly, the cross motion is denied.

Statute of Frauds

The defendants contend that the first eight causes of action, which are based on the alleged joint-venture agreement, are barred by the statute of frauds ( General Obligations Law § 5-701[a][1] ). General Obligations Law § 5-701 (a) (1) provides that an agreement, promise, or undertaking is void unless embodied in a writing or writings and signed by the party to be charged if, by its terms, it is not to be performed within one year from the making thereof. The defendants contend that the alleged joint-venture agreement was not in writing and could not possibly be performed within one year of its making because both the public-improvement contracts between Patriot and various municipalities and the subcontracts between Preferred and Patriot contained written guarantees extending the time for performance one or two years after final completion of the work. In support thereof, the defendants rely on Unicorn Enterprises, Ltd. v. Stonewall Contr. Corp. (232 AD2d 404 ), a Second Department case that held an alleged oral joint-venture agreement consisting of an agreement to perform and share in the profits from a State construction contract, which contained several multi-year warranty provisions, was barred by the statute of frauds because it was incapable of being performed within one year.

It is well settled that, on a motion to dismiss pursuant to CPLR 3211, the court is to liberally construe the complaint, accept the alleged facts as true, give the plaintiff the benefit of every possible favorable inference, and determine only whether the alleged facts fit within any cognizable legal theory (see , Leon v. Martinez, 84 NY2d 83, 87-88 ). Under CPLR 3211(a)(1), dismissal is warranted only if the documentary evidence submitted utterly refutes the plaintiff's factual allegations, conclusively establishing a defense to the asserted claims as a matter of law ( Id . at 88 ). In assessing a motion under CPLR 3211(a)(7), however, the court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint, and the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one (Id .). When extrinsic evidence is considered, the motion should not be granted unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it ( Guggenheimer v. Ginzburg , 43 NY2d 268, 275 ).

Applying these principles, the court finds that the plaintiffs have set forth sufficient factual allegations to survive dismissal of their claim for breach of the alleged oral joint-venture agreement, and that claim is not defeated as a matter of law by the statute of frauds. The statute of frauds is generally inapplicable to an agreement to create a joint venture ( Foster v. Kovner , 44 AD3d 23 ). Absent a definite term of duration, an oral agreement to form a joint venture for an indefinite period creates a joint venture at will, which may be dissolved at any time without liability for breach of contract (Id .). Unicorn Enterprises (supra ), upon which the defendants rely, is distinguishable from the facts of this case. It involved only one construction project that was known to the parties when they formed the joint venture. The plaintiff and the defendant became coventurers only after the plaintiff prepared a preliminary bid for the project and discovered that it was not able to obtain the required bonds. Here, the alleged agreement did not cover any specific contract or contracts, but was simply an agreement to bid on public contracts together to increase the joint bonding capacity of the parties. The individual contracts on which they would bid were not identified when the parties entered into the purported joint-venture agreement. Moreover, the subcontracts between Patriot and Preferred were not part of that agreement. In any event, even if the statute of frauds applies, the defendants have failed to establish as a matter of law that there is no writing sufficient to satisfy it.

It is well established that the statutorily required writing need not be contained in a single document, but may be furnished by piecing together other, related writings ( William J. Jenack Estate Appraisers & Auctioneers, Inc. v. Rabizadeh , 22 NY3d 470, 477 [and cases cited therein] ). Signed and unsigned writings can be read together to satisfy the statute, provided they clearly refer to the same subject matter or transaction and contain all of the essential terms of a binding contract ( Post Hill, LLC v. E. Tetz & Sons, Inc. , 122 AD3d 1126, 1127 ). At least one writing establishing a contractual relationship between the parties must be signed by the party to be charged (Id .; William J. Jenack Estate Appraisers & Auctioneers, Inc. v. Rabizadeh , 99 AD3d 270, 274, revd on other grounds 22 NY3d 470 ). An email sent by a party, under which the sending party's name is typed, can constitute a writing for purposes of the statute of frauds ( Newmark & Co. Real Estate Inc. v. 2615 E. 17 St. Realty LLC , 80 AD3d 476, 477 ). Moreover, parol evidence may be used to connect the separate documents and to show that there was acquiescence by the party to be charged to the contents of the unsigned writings ( Crabtree v. Elizabeth Arden Sales Corp. , 305 NY 48, 55 ). The emails and other documents submitted by the plaintiffs, taken together, raise a significant factual dispute as to whether there is a writing sufficient to satisfy the statute of frauds. Accordingly, the court declines to dismiss the second cause of action for breach of the alleged oral joint-venture agreement.

The defendants seek dismissal of the first cause of action for an accounting, the sixth cause of action for breach of fiduciary duty, and the eighth cause of action for a constructive trust on the ground that all of these cause of action require the existence of a fiduciary relationship and, in the absence of an enforceable joint-venture agreement, no fiduciary relationship existed between the parties. Until it is conclusively determined that the alleged oral joint-venture agreement is barred by the statute of frauds, the court declines to dismiss these causes of action.

The third cause of action for unjust enrichment/quantum meruit, the fourth cause of action for promissory estoppel, the fifth cause of action for fraud, and the seventh cause of action for conversion are duplicative of the second cause of action for breach of the alleged oral joint-venture agreement. Even if that agreement is unenforceable under the statute of frauds, it cannot be the basis of another action ( 61 NY Jur 2d Frauds, Statute of § 322 ). The necessity of a writing may not be circumvented by recasting the action as one seeking damages for unjust enrichment or quantum meruit ( Behrman v. Red Flower, Inc. , 61 Misc 3d 1217[A] at *5 [and cases cited therein] ). A claim for promissory estoppel may not be maintained when the alternative claim for breach of contract is barred by the statute of frauds unless the circumstances make it unconscionable to deny the promise upon which the plaintiff relied ( Marvin Inc. v. Albstein , 386 F Supp 2d 247, 254 [SDNY] ). An unconscionable injury must be one beyond that which flows naturally from the non-performance of the unenforceable agreement (Id .). The plaintiff does not allege any such injury and, in fact, alleges the same damages as for breach of the joint-venture agreement. A mere refusal to perform an oral agreement within the statute of frauds is not such a fraud as will justify a court in disregarding the statute ( Nasso v. Bio Reference Labs., Inc. , 892 F Supp2d 439, 449 ). Finally, conversion is not alleged when, as here, the claim merely alleges an obligation to pay the plaintiffs money that they are owed ( Bahiri v. Madison Realty Capital Advisors, LLC , 30 Misc 3d 1208[A] at *2 [and cases cited therein] ). Accordingly, the third, fourth, fifth, and seventh causes of action are dismissed.

Quantum Meruit

The defendants seek dismissal of the twelfth, fourteenth, sixteenth, eighteenth, twentieth, twenty-second, twenty-fourth, and twenty-sixth causes of action on the ground that they are duplicative of the eleventh, thirteenth, fifteenth, seventeenth, nineteenth, twenty-first, twenty-third, and twenty-fifth causes of action for breach of eight written subcontractor agreements between Patriot and Preferred. When, as here, there is no dispute as to the existence of a contract and the contract covers the dispute between the parties, the plaintiff may not proceed upon a theory of quantum meruit as well as seek to recover damages for breach of contract (see , Alamo Contract Builders v. CTF Hotel Co. , 242 AD2d 643 ). Accordingly, the twelfth, fourteenth, sixteenth, eighteenth, twentieth, twenty-second, twenty-fourth, and twenty-sixth causes of action are dismissed.

Attorney's Fees

The defendants seek dismissal of the eleventh, thirteenth, fifteenth, seventeenth, nineteenth, twenty-first, twenty-third, and twenty-fifth causes of action for breach of contract insofar as they seek attorney's fees. The plaintiffs do not oppose this branch of the defendants' motion. Accordingly, it is granted.

Conclusion

The defendants' motion to partially dismiss the complaint is granted to the extent of dismissing the third, fourth, fifth, seventh, twelfth, fourteenth, sixteenth, eighteenth, twentieth, twenty-second, twenty-fourth, and twenty-sixth causes of action and the eleventh, thirteenth, fifteenth, seventeenth, nineteenth, twenty-first, twenty-third, and twenty-fifth causes of action insofar as they seek attorney's fees. The plaintiffs' cross motion to disqualify the defendant's counsel is denied.