| Melius v Breslin |
| 2007 NY Slip Op 09564 [46 AD3d 524] |
| December 4, 2007 |
| Appellate Division, Second Department |
| Gary Melius et al., Respondents-Appellants, v Wilbur F.Breslin, Respondent, et al., Defendants, and Carmen's Plaza, LLC, et al.,Appellants-Respondents. |
—[*1] Jaspan Schlesinger Hoffman LLP, Garden City, N.Y. (Steven R. Schlesinger and Laurel R.Kretzing of counsel), for respondents-appellants.
In an action, inter alia, to recover the proceeds of a loan, the defendants Breslin RealtyDevelopment Corp., Carmen's Plaza, LLC, Carmen's Plaza Associates, Breskel Associates,Breskin Realty, East Meadow Associates, Doyle Realty, LLC, estate of Robert Frankel,Meadowridge Realty Corp., Rochester Associates, LP, Riverwood LaPlace Associates, LLC,Breskin Brooklyn Corp., Huntington Square Associates, LP, and Bay Harbour Associates, LP,appeal from so much of a judgment of the Supreme Court, Nassau County (LaMarca, J.), enteredAugust 7, 2006, as, after a nonjury trial, is in favor of the plaintiffs and against them, jointly andseverally, in the principal sum of $362,500, and the plaintiffs separately appeal from so much ofthe same judgment as, in effect, is in favor of the defendant Wilbur F. Breslin and against themdismissing the complaint insofar as asserted against that defendant.
Ordered that the judgment is modified, on the law and the facts, by deleting the provisionthereof which is in favor of the plaintiffs and against the defendants Breslin Realty DevelopmentCorp., Carmen's Plaza, LLC, Carman's Plaza Associates, Breskel Associates, Breskin Realty,East Meadow Associates, Doyle Realty, LLC, estate of Robert Frankel, Meadowridge RealtyCorp., Rochester Associates, LP, Riverwood LaPlace Associates, LLC, Breskin Brooklyn Corp.,Huntington Square Associates, LP, and Bay Harbour Associates, LP, jointly and severally, in theprincipal sum of $362,500, and substituting therefor a provision which is in favor of those [*2]defendants and against the plaintiffs dismissing the complaintinsofar as asserted against those defendants; as so modified, the judgment is affirmed insofar asappealed from, with one bill of costs payable to the defendants.
"Upon review of a determination rendered after a nonjury trial, this Court's authority 'is asbroad as that of the trial court,' and this Court may 'render the judgment it finds warranted by thefacts, taking into account in a close case the fact that the trial judge had the advantage of seeingthe witnesses' " (Betsy Meyer Assoc.,Inc. v Lorber, 42 AD3d 509 [2007], quoting Northern Westchester Professional ParkAssoc. v Town of Bedford, 60 NY2d 492, 499 [1983]). The trial court's conclusion that theplaintiffs loaned the appellants the sum of $362,500 and that the defendant Wilbur F. Breslin(hereinafter Breslin) promised to repay that sum is contrary to the weight of the credible evidenceand should not be sustained. Further, the bargain described by the plaintiff Gary Meliusconstitutes an illegal bargain which is unenforceable (see McConnell v CommonwealthPictures Corp., 7 NY2d 465 [1960]).
According to Stanley Shaw, who was the attorney for both Breslin and the plaintiffs, five orsix properties owned by Breslin's business entities (hereinafter the Breslin entities) went intoforeclosure, and the Supreme Court appointed Joseph P. Famighetti as receiver of the properties.The plaintiff Gary Melius was hired as managing agent for the receiver. By the time the trial inthis action was conducted, however, Famighetti had died.
Melius testified at the trial that he and Shaw met with Breslin at Breslin's request. Accordingto Melius, Breslin said at that meeting that if Melius did not help him out with his legal fees,Breslin would file a petition pursuant to chapter 11 of the United States Bankruptcy Code onbehalf of the Breslin entities and thereby end the receiverships. Melius claimed that he andBreslin agreed that monthly payments, each in the sum of $25,000, would be paid by Meliusdirectly to Shaw, as Breslin's attorney, based upon the fee Melius was receiving for his servicesas a managing agent. Melius claimed that terms of repayment were discussed and "whatever Iwould layout [sic] would be paid to me after the receivership was resolved."
Melius's corporation General Holding Corp. made the payments directly to Shaw's law firm.When Melius realized he "didn't have that kind of cash," he reduced the payments from the sumof $25,000 per month to the sum of $12,500 per month, and stopped the payments altogetherwhen he "became very concerned about Mr. Breslin's intentions."
At the trial, when Shaw was asked if those payments constituted a "kickback," he replied, "Ithink the word kickback was [sic] a little bit overstated." However, he acknowledged thathe characterized the payments as a "kickback" during his examination before trial.
The existence of the alleged loan is not supported by documentary evidence. Melius and hisbusiness entities did issue checks directly to Shaw's law firm—first in the sum of $25,000and later in the sum of $12,500—but there is no indication on the memo lines of thesechecks that they were paid for the benefit or on behalf of Breslin. Since the plaintiffs and Breslinwere both clients of Shaw, Breslin asserted at the trial that the payments could have beenpayments representing the plaintiffs' indebtedness to Shaw. Breslin denied that he had anyarrangement with Melius for Melius to pay his legal bills.
The documentary evidence in the record established that the checks received by [*3]Shaw's law firm from Melius were initially applied to the accountof Melius's corporation, General Holding Corp. The head of bookkeeping for the law firm, whowas identified as "Jane" at the trial, ordered that the credit to General Holding Corp. be"reversed." Shaw's secretary testified at the trial that the only time she saw "Jane" do a "reverse"was in the instant matter.
A key witness for the plaintiffs was the former chief financial officer of the Breslin entities,who testified at the trial that he acted as an intermediary between Breslin and Shaw's law firm,advising the law firm as to how Breslin was allocating the payments amongst his variousbusiness entities. However, his credibility is suspect, since he was fired by Breslin, and sued byBreslin and the defendant Breslin Realty Development Corp. for substantial damages prior to thetrial.
In view of the foregoing, the weight of the credible evidence does not support the plaintiffs'contention that Melius loaned Breslin the sum of $362,500 and that Breslin promised to repaythat sum. At best, the plaintiffs established that there was a kickback scheme, which was illegaland unenforceable (see Penal Law § 180.00; McConnell v CommonwealthPictures Corp., 7 NY2d 465 [1960]). Since Melius has unclean hands, any claim he mayhave against Breslin and/or the Breslin entities based upon the equitable remedy of unjustenrichment is barred (see Matter of Lago v 87-10 51st Ave. Owners Corp., 301 AD2d527 [2003]; Kleeger v Kleeger, 261 AD2d 587 [1999]).
The parties' remaining contentions either are without merit or need not be reached in light ofour determination. Goldstein, J.P., Fisher, Carni and McCarthy, JJ., concur.