| Bloom v Lugli |
| 2013 NY Slip Op 00167 [102 AD3d 715] |
| January 16, 2013 |
| Appellate Division, Second Department |
| Eliot F. Bloom, Respondent, v Russell Lugli et al.,Appellants. |
—[*1] Eliot F. Bloom, Williston Park, N.Y., respondent pro se.
In an action, in effect, to recover installment payments allegedly due under a buy-outagreement, the defendants appeal (1), as limited by their brief, from so much of an orderof the Supreme Court, Nassau County (Warshawsky, J.), dated June 28, 2011, as deniedtheir motion for leave to amend their answer to assert 12 affirmative defenses, (2) froman order of the same court dated November 7, 2011, which granted the plaintiff's motionfor summary judgment, and (3) from a judgment of the same court entered December 1,2011, which, upon the order dated November 7, 2011, is in favor of the plaintiff andagainst them in the principal sum of $350,000.
Ordered that the appeals from the orders dated June 28, 2011, and November 7,2011, are dismissed; and it is further,
Ordered that the judgment is reversed, on the law and in the exercise of discretion,without costs or disbursements, the plaintiff's motion for summary judgment is denied,those branches of the defendants' motion which were for leave to amend the answer toassert the first, second, third, fourth, fifth, sixth, seventh, ninth, and eleventh proposedaffirmative defenses are denied as unnecessary, and the orders dated June 28, 2011, andNovember 7, 2011, are modified accordingly; and it is further,
Ordered that one bill of costs is awarded to the defendants.
The appeals from the orders dated June 28, 2011, and November 7, 2011, must bedismissed because the right of direct appeal therefrom terminated with the entry of thejudgment (see Matter of Aho, 39 NY2d 241, 248 [1976]). The issues raised onthe appeals from the orders are brought up for review and have been considered on theappeal from the judgment.
On August 15, 2006, the plaintiff and the defendant Northwestern Consultants, Inc.(hereinafter NCI), entered into a joint venture agreement for the purpose of constructingand selling 24 entry-level housing units in Bay Shore. According to the terms of the jointventure agreement, [*2]NCI was to have a 55% interestand the plaintiff was to have a 45% interest in the joint venture. Pursuant to article X 10(d) of the joint venture agreement, the plaintiff was charged with the responsibility ofobtaining the required zoning and development approvals for the construction project.
By separate agreement (hereinafter the buy-out agreement), executed on October 5,2007, the plaintiff agreed to sell his 45% interest in the development project in BayShore and the joint venture to NCI and the defendant Russell Lugli (hereinafter togetherthe defendants) for the total sum of $450,000. The parties to the buy-out agreement alsoagreed to amend the joint venture agreement to reflect the sale of the plaintiff's interest.The buy-out agreement provided, in relevant part, that the defendants would pay theplaintiff the $450,000 in three installments. The first $100,000 was paid at the time thebuy-out agreement was executed. The remaining $350,000 was to be paid in twoinstallments of $175,000 each, with one installment to be paid by April 1, 2008, and theother by October 1, 2008. The fourth paragraph of the buy-out agreement provided thatthe plaintiff would "continue to represent Russell Lugli, the Bay Shore Joint Venture andNorthwestern Consultants in order to provide all legal representation necessary tocomplete the project with no fees to be charged." The defendants failed to pay the lasttwo installments.
The plaintiff commenced this action by filing a motion for summary judgment in lieuof a complaint pursuant to CPLR 3213. The defendants opposed the motion on theground, inter alia, that the plaintiff could not commence this action through the filing of amotion for summary judgment in lieu of complaint pursuant to CPLR 3213, since thebuy-out agreement was not an instrument for the payment of money only. By order andjudgment (one paper) entered November 19, 2009, the Supreme Court granted theplaintiff's motion pursuant to CPLR 3213 and entered judgment in his favor and againstthe defendants in the principal sum of $350,000.
On appeal, this Court reversed the order and judgment, concluding that the plaintifffailed to establish that the buy-out agreement was an instrument for the payment ofmoney only because its terms included the continued legal representation by the plaintiffof the defendants and the joint venture (see Bloom v Lugli, 81 AD3d 579 [2011]). This Court alsodeemed the plaintiff's motion to be a complaint and deemed the defendants' opposingpapers to be the defendants' answer. This Court further determined that the parties'remaining contentions had been rendered academic in light of the determination that thebuy-out agreement was not an instrument for the payment of money only.
Shortly thereafter, the defendants moved for leave to amend their answer to assert 12affirmative defenses alleging, inter alia, that the buy-out agreement was unenforceablebecause the plaintiff was guilty of self-dealing, fraud, breach of his fiduciary duties,breach of contract, and violation of the Code of Professional Responsibility.
The Supreme Court denied the defendants' motion for leave to amend their answer,reasoning that, based upon this Court's prior decision and order, the defendants' proposedaffirmative defenses were either determined to be without merit by this Court or had notbeen raised by the defendants in opposition to the plaintiff's motion. The Supreme Courttherefore concluded that, pursuant to this Court's decision and order, only one issueremained to be determined, that is, whether the plaintiff continued to provide legalservices to the defendants and the joint venture in accordance with the buy-outagreement. We agree with the Supreme Court's denial of the defendants' motion for leaveto amend their answer, but do so on different grounds.
" 'Leave to amend pleadings should be freely given provided that the amendment isnot palpably insufficient, does not prejudice or surprise the opposing party, and is notpatently devoid of merit' " (Greco v Christoffersen, 70 AD3d 769, 770 [2010], quotingGitlin v Chirinkin, 60AD3d 901, 901-902 [2009]; see CPLR 3025 [b]; Ingrami v Rovner, 45 AD3d806, 808 [2007]). "A determination whether to grant such leave is within theSupreme Court's broad discretion, and the exercise of that discretion will not be lightlydisturbed" (Gitlin v Chirinkin, 60 AD3d at 902; see Greco vChristoffersen, 70 AD3d at 770; Ingrami v Rovner, 45 AD3d at 808).[*3]
Here, the defendants' opposition to the plaintiff'smotion for summary judgment in lieu of the complaint pursuant to CPLR 3213, whichwas deemed the answer herein, contained the first, second, third, fourth, fifth, sixth,seventh, ninth, and eleventh proposed affirmative defenses. Thus, those branches of thedefendants' motion which were for leave to amend the answer to assert those proposedaffirmative defenses should have been denied by the Supreme Court as unnecessary. TheSupreme Court's interpretation of this Court's prior decision and order as havingrestricted this action to one issue concerning the plaintiff's continued legal representationas the basis for denying the defendants' motion was erroneous. This Court did not make adetermination on the merits of the defendants' affirmative defenses in finding that theplaintiff improperly commenced this action pursuant to CPLR 3213.
The remaining proposed affirmative defenses, that is, the eighth, tenth, and twelfthproposed affirmative defenses, are either palpably insufficient or patently devoid of merit(see HSBC Bank USA vPhilistin, 99 AD3d 667, 667 [2012]). Accordingly, the Supreme Courtprovidently exercised its discretion in denying those branches of the defendants' motionwhich were for leave to amend the answer to assert the eighth, tenth, and twelfthproposed affirmative defenses.
However, the Supreme Court improperly granted the plaintiff's motion for summaryjudgment. The plaintiff established his prima facie entitlement to judgment as a matter oflaw by presenting evidence of his continuing legal representation of the joint venture andthe defendants and his continuing efforts to complete the project free of charge asrequired under the terms of the buy-out agreement. In opposition, the defendants raisedtriable issues of fact as to whether the buy-out agreement should be deemed void andunenforceable on the basis of fraudulent inducement (see generally River Ridge Living Ctr., LLC v ADL Data Sys.,Inc., 98 AD3d 724, 724 [2012]) or self-dealing. The defendants submitted anaffidavit from Lugli which raised triable issues of fact as to whether the plaintiffintentionally or negligently omitted the material fact that the Town's approval of thedevelopment of the project included certain conditions and restrictions that either couldnot be met or would be significantly difficult to meet, and as to whether this informationwas kept from the defendants at the time that the buy-out agreement was executed. Thedefendants allege that the plaintiff made material misrepresentations with respect to thestatus of the project at the time that the parties entered into the buy-out agreement, aclaim which the plaintiff denies.
Accordingly, the Supreme Court improperly granted the plaintiff's motion forsummary judgment.
The defendants' remaining contentions are either not properly before this Courtbecause they were not raised in the Supreme Court or without merit. Angiolillo, J.P.,Leventhal, Lott and Austin, JJ., concur. [Prior Case History: 2011 NY Slip Op31821(U).]