| Reads Co., LLC v Katz |
| 2010 NY Slip Op 03425 [72 AD3d 1054] |
| April 27, 2010 |
| Appellate Division, Second Department |
| Reads Co., LLC, Appellant, v Robin Katz,Respondent. |
—[*1] Anthony A. Capetola, Williston Park, N.Y. (Robert P. Johnson of counsel), forrespondent.
In an action to recover damages for breach of a separation agreement and a so-orderedstipulation, the plaintiff appeals, as limited by its brief, from so much of an order of the SupremeCourt, Nassau County (Spinola, J.), entered May 1, 2009, as denied that branch of its motionwhich was for summary judgment on the complaint and granted that branch of the defendant'scross motion which was for summary judgment dismissing the complaint.
Ordered that the order is affirmed insofar as appealed from, with costs.
The defendant (hereinafter the wife) married Adam Katz (hereinafter the husband), the onlymember of Reads Co., LLC, the plaintiff herein, on February 19, 1989. They resided in a housewholly owned by the plaintiff. In August 2004, the husband commenced an action for a divorceand ancillary relief. On October 12, 2005, the parties entered into a separation agreementpursuant to which, inter alia, the wife would have exclusive occupancy of the marital residencefor a period of 18 months or until the husband was able to provide a replacement residence forher, whichever occurred first.
In September 2006 the husband purchased a parcel of property which he offered to the wifeas a replacement residence. At a preliminary conference held on September 28, 2006, the partiesexecuted a so-ordered stipulation whereby the wife agreed to vacate the marital residence on orbefore November 10, 2006, provided that there were no problems with the replacementresidence. However, the wife did not vacate the marital residence until December 19, 2006.
In May 2007 the husband assigned his rights in the stipulation to the plaintiff, and theplaintiff commenced this action to recover damages for breach of the separation agreement andthe stipulation. The plaintiff alleged that it incurred damages because the wife did not vacate themarital residence in a timely manner, which prevented it from selling the property. The SupremeCourt denied that branch of the plaintiff's motion which was for summary judgment on thecomplaint and granted that branch of the wife's cross motion which was which for summaryjudgment dismissing the complaint. The plaintiff appeals.[*2]
The plaintiff failed to establish, prima facie, that the wifeviolated the terms of the separation agreement and the stipulation. The language in thestipulation did not constitute a clear and unequivocal mandate directing the wife to vacate themarital residence on or before November 10, 2006. The stipulation predicated her obligation tovacate the residence upon the husband's resolution of problems with the replacement residence,and he failed to demonstrate that he discharged this obligation. Moreover, the plaintiff did notpresent evidence demonstrating that the wife unreasonably interfered with the ability of thehusband's real estate broker to show the marital residence to prospective buyers. Accordingly,the Supreme Court properly denied that branch of the plaintiff's motion which was for summaryjudgment on the complaint.
In support of her cross motion, the wife established, prima facie, that the plaintiff is notentitled to recover the damages alleged in the complaint, namely, damages for use andoccupancy, lost sales opportunities, and diminution of value, or punitive damages and attorneys'fees. The legal owner of real property is not entitled to an award for use and occupancy unlessthere also exists a landlord-tenant relationship between the parties (see Fulgenzi v Rink,253 AD2d 846, 848 [1998]; Mendoza v Rodriguez, 127 AD2d 635, 636 [1987];Jacobs v Andolina, 123 AD2d 835, 836 [1986]; Barbarita v Shilling, 111 AD2d200, 201 [1985]; Castle v Armstead, 168 App Div 466, 469 [1915], affd 219 NY615 [1916]). The wife demonstrated that no such relationship existed here between her and theplaintiff and, in opposition, the plaintiff failed to raise a triable issue of fact.
Moreover, in an action to recover damages for breach of contract, the nonbreaching partymay recover "general," consequential contract damages which are the natural and probableconsequence of the breach (Kenford Co. v County of Erie, 73 NY2d 312, 319 [1989];see Atkins Nutritionals v Ernst & Young, 301 AD2d 547, 549 [2003]). In order torecover "special" or extraordinary contract damages that do not flow directly from the breach,however, a plaintiff is required to plead that the damages were foreseeable and within thecontemplation of the parties at the time the contract was made (American List Corp. v U.S.News & World Report, 75 NY2d 38, 43-44 [1989]; see Kenford Co. v County ofErie, 73 NY2d at 319; Atkins Nutritionals v Ernst & Young, 301 AD2d at 547, 549)."A party may not recover damages for lost profits unless they were within the contemplation ofthe parties at the time the contract was entered into" and are capable of measurement withreasonable certainty (Ashland Mgt. v Janien, 82 NY2d 395, 403 [1993]). Here, theplaintiff is seeking to recover damages for lost sale opportunities and diminution in value.Consequently, such damages must have been contemplated by the husband and wife when theyentered into the separation agreement and the stipulation. The wife demonstrated that suchdamages were not contemplated. In addition, the plaintiff failed to plead that damages for lostsale opportunities and diminution in value were within the contemplation of the parties (see Yenrab, Inc. v 794 Linden Realty,LLC, 68 AD3d 755 [2009]; Atkins Nutritionals v Ernst & Young, 301 AD2d at549). Accordingly, the wife established, prima facie, that the plaintiff may not recover damagesfor lost sales opportunities and diminution in value and, in opposition, the plaintiff failed to raisea triable issue of fact.
"[P]unitive damages are not recoverable in an ordinary breach of contract case, as theirpurpose is not to remedy private wrongs but to vindicate public rights" (Tartaro v Allstate Indem. Co., 56AD3d 758, 758 [2008]). "Punitive damages are only recoverable where the breach ofcontract also involves a fraud evincing a high degree of moral turpitude, and demonstrating suchwanton dishonesty as to imply a criminal indifference to civil obligations, and where the conductwas aimed at the public generally" (id.; see New York Univ. v Continental Ins.Co., 87 NY2d 308, 315-316 [1995]; Rocanova v Equitable Life Assur. Socy. ofU.S., 83 NY2d 603, 612 [1994]). Moreover, punitive damages are available where theconduct associated with the breach of contract is first actionable as an independent tort for whichcompensatory damages are ordinarily available, and is sufficiently egregious to warrant theadditional imposition of exemplary damages (see Tartaro v Allstate Indem. Co., 56AD3d at 758-759). Here, the wife demonstrated that her conduct was not egregious, did notinvolve fraud evincing a high degree of moral turpitude, was not actionable as an independenttort, and was not aimed at the public generally. In opposition to the wife's prima facie showing,the plaintiff failed to raise a triable issue of fact.
The wife also demonstrated, prima facie, that the plaintiff is not entitled to an award of anattorney's fee as a third-party beneficiary of the separation agreement because the separationagreement was not entered into in order to benefit the plaintiff (see World Trade KnittingMills v Lido Knitting [*3]Mills, 154 AD2d 99, 103-104[1990]). The plaintiff failed to raise a triable issue of fact in opposition.
Accordingly, the Supreme Court properly awarded the wife summary judgment dismissingthe complaint. Rivera, J.P., Angiolillo, Balkin and Leventhal, JJ., concur.