| Malaty v Malaty |
| 2012 NY Slip Op 03606 [95 AD3d 961] |
| May 8, 2012 |
| Appellate Division, Second Department |
| Naguib Guirguis Malaty, Appellant, v Makram N. Malaty,Respondent. |
—[*1] Tilem & Campbell, P.C., White Plains, N.Y. (John Campbell of counsel), forrespondent.
In an action, inter alia, for equitable relief, to recover damages for breach of fiduciary dutyand fraud, and for a judgment declaring that the plaintiff is entitled to 10% of the net incomegenerated by a parcel of real property located at 338 Knickerbocker Avenue in Brooklyn, theplaintiff appeals from a judgment of the Supreme Court, Kings County (Schack, J.), datedDecember 6, 2010, which, upon a decision of the same court dated March 2, 2010, made after anonjury trial, is in favor of the defendant and against him dismissing the complaint.
Ordered that the judgment is reversed, on the law and the facts, with costs, the complaint isreinstated, the plaintiff is awarded (a) a sum equal to the proceeds of the sale, in February 2002,of a parcel of real property located at 1437-1439 DeKalb Avenue, Brooklyn, plus prejudgmentinterest at the statutory rate from the date of sale, (b) a sum equal to 10% of the net incomegenerated by a parcel of real property located at 338 Knickerbocker Avenue, Brooklyn, sinceMarch 2000, plus interest at the statutory rate from that date, and the matter is remitted to theSupreme Court, Kings County, for a determination of the amount of proceeds generated by thesale of the parcel of real property located on DeKalb Avenue, a calculation and determination ofthe plaintiff's 10% interest in the net income generated by the parcel of real property located onKnickerbocker Avenue from August 2000 until the date of entry of an amended judgment, asprovided for herein, and the entry of an appropriate amended judgment thereafter, awarding thosesums and declaring that the defendant is obligated to pay the plaintiff 10% of the net incomegenerated by the parcel of real property located at 338 Knickerbocker Avenue, Brooklyn, fromthe date of entry of the amended judgment forward.
The parties to this action are brothers. The plaintiff, who lives in Egypt, alleged that he askedthe defendant, who lives in New York, to locate and identify real property in which the plaintiff,or a corporation owned by the plaintiff, could invest. The defendant found two parcels of realproperty to purchase. The first parcel, located on DeKalb Avenue in Brooklyn (hereinafter theDeKalb property), was purchased in March 2000 by Cleopatra Real Estate Corp. (hereinafterCleopatra), a corporation owned solely by the plaintiff. The DeKalb property was sold inFebruary 2002. The second parcel of real property, located on Knickerbocker Avenue inBrooklyn (hereinafter [*2]the Knickerbocker property) waspurchased in August 2000 by Sphinx of NY Realty Corp. (hereinafter Sphinx), a corporationowned and managed by the defendant. The plaintiff alleged that the defendant failed to tenderhim the full proceeds of the sale of the DeKalb property in February 2002. The plaintiff alsoalleged that he contributed towards the purchase of the Knickerbocker property as a jointventurer with Sphinx, and that the defendant refused to tender him his share of the income fromthat property.
Following a nonjury trial, the Supreme Court dismissed the complaint, upon concluding thatthe plaintiff lacked the requisite clean hands to seek equitable relief, he failed to join a necessaryparty, and his claims were barred by the statute of frauds.
The Supreme Court erred in concluding that the plaintiff was precluded from obtainingequitable relief because he had unclean hands, as the purportedly immoral conduct ascribed tohim was not alleged to have been directed at the defendant, and the defendant was not injured bysuch conduct (see National Distillers & Chem. Corp. v Seyopp Corp., 17 NY2d 12, 15-16[1966]; Jara v Strong Steel Door,Inc., 58 AD3d 600 [2009]; Columbo v Columbo, 50 AD3d 617, 619 [2008]).
The Supreme Court also erred in determining that the plaintiff failed to join a necessaryparty. The defendant failed to demonstrate that the parties' brother, Magdi, needed to be a party ifcomplete relief was to be accorded between the plaintiff and the defendant (see CPLR1001 [a]; Spector v Toys "R" Us,Inc., 12 AD3d 358, 359 [2004]; Joanne S. v Carey, 115 AD2d 4 [1986]), or thatMagdi would be inequitably affected by a judgment in this action absent his joinder (seeMatter of Castaways Motel v Schuyler, 24 NY2d 120 [1969]; Spector v Toys "R" Us,Inc., 12 AD3d at 359).
Finally, the Supreme Court erred in holding that this action was barred by the statute offrauds. The statute of frauds does not render void oral joint venture agreements to deal in realproperty, as the interest of each joint venturer in a joint venture is deemed personalty (seeMattikow v Sudarsky, 248 NY 404, 406-407 [1928]; Fairchild v Fairchild, 64 NY471, 479 [1876]; Plumitallo v HudsonAtl. Land Co., LLC, 74 AD3d 1038 [2010]; Walsh v Rechler, 151 AD2d 473[1989]). The plaintiff is not seeking to acquire an interest in real property. Rather, as regards theKnickerbocker property, he is asserting an interest in joint venture income and assets (seePisciotto v Dries, 306 AD2d 262, 263 [2003]; Johnson v Johnson, 111 AD2d 1005,1006 [1985]; Liffiton v DiBlasi, 170 AD2d 994 [1991]), and, as regards the DeKalbproperty, he is alleging that the defendant breached his fiduciary duty in retaining the proceeds ofsale of the DeKalb property despite acting as the agent for both the plaintiff and Cleopatra.
In reviewing a determination made after a nonjury trial, the power of the Appellate Divisionis as broad as that of the trial court, and this Court may render the judgment it finds warranted bythe facts, taking into account in a close case that the trial judge had the advantage of seeing thewitnesses (see Northern Westchester Professional Park Assoc. v Town of Bedford, 60NY2d 492, 499 [1983]; OlympusServicing, L.P. v Lee, 56 AD3d 537, 538 [2008]; ProHealth Care Assoc., LLP v Shapiro, 46 AD3d 792 [2007]).Applying this standard here, the record supports the plaintiff's contention that he is entitled to ajudgment awarding him the full proceeds from the sale of the DeKalb property. Moreover, therecord establishes that the plaintiff should have been awarded a 10% interest in theKnickerbocker property from March 2000 forward.
Accordingly, we remit the matter to the Supreme Court, Kings County, for a determination ofthe amount of proceeds generated by the sale of the DeKalb property, a calculation anddetermination of the plaintiff's 10% interest in the net income generated by the Knickerbockerproperty from August 2000 until the date of entry of an amended judgment, as herein provided,and the entry thereafter of an appropriate amended judgment awarding the plaintiff those sumsand declaring that the defendant is obligated to pay the plaintiff 10% of the net income generatedby the Knickerbocker property from the date of the entry of the amended judgment forward.Angiolillo, J.P., Dickerson, Belen and Hall, JJ., concur.