| Mills v Chauvin |
| 2013 NY Slip Op 01300 [103 AD3d 1041] |
| February 28, 2013 |
| Appellate Division, Third Department |
| Gregory S. Mills, Respondent-Appellant, v Robert J.Chauvin, Appellant-Respondent. |
—[*1] McNamee, Lochner, Titus & Williams, PC, Albany (G. Kimball Williams ofcounsel), for respondent-appellant.
Per Curiam. Appeals (1) from an order of the Supreme Court (Hoye, J.), entered May17, 2011 in Saratoga County, which, among other things, partially granted plaintiff'scross motion for summary judgment, (2) from the judgment entered thereon, and (3)cross appeals from a judgment of said court, entered December 6, 2011 in SaratogaCounty, upon a decision of the court partially in favor of plaintiff.
Plaintiff, Gregory Mills, and defendant, Robert Chauvin, are two experiencedattorneys who shared both a friendship and a professional/business relationship. Thoselongstanding relationships deteriorated and gave rise to this action involving threedistinct matters—the sale of a parcel of real property in the Town of Clifton Park,Saratoga County (hereinafter the Crescent Road property), a fee-sharing agreement in apersonal injury case (hereinafter the contingency fee) and an investment in a real estatedevelopment project in Virginia (hereinafter the Amelia Village project).The Crescent Road Property[*2]
In 1998, the parties formed a partnership andtook ownership of a commercial office building located on Crescent Road in the Town ofClifton Park, Saratoga County.[FN1] Mills leased office space in the building for his law practice and paid rent and expensespursuant to such lease. In March 2008, after Chauvin decided, for a variety of reasons,that he no longer wished to maintain his ownership of the Crescent Road property, theparties agreed that Mills would purchase Chauvin's one-half interest in such property andthey executed a purchase and sale agreement establishing a purchase price of$261,176.67 and a closing date of April 15, 2008. The closing was delayed and, in a July2, 2008 correspondence to Mills, Chauvin declared that time was of the essence and thatthe closing had to occur on or before July 15, 2008. Mills was unable to make financialarrangements to purchase the property by that date and Chauvin ultimately declared Millsto be in breach of the parties' agreement and, as a result, that such agreement was nulland void.The Contingency Fee
In connection with his law practice, Chauvin was retained by an injured party torepresent him in a personal injury action. After Chauvin succeeded in establishing thedefendants' liability in such action, he and Mills agreed that Mills would act as theattorney in the damages phase of the action. Mills thereafter tried the case to a verdictand, ultimately, a settlement was procured in excess of $2 million, from which Chauvinwas entitled to a contingency fee. Mills and Chauvin did not have a written agreementwith respect to how the contingency fee would be allocated between them and a disputearose with regard thereto.The Amelia Village Project
Chauvin was an investor in the Amelia Village project. Over a course of time, Millsmade multiple monetary payments to Chauvin—totaling $395,750—whichChauvin claims were investments in the project and Mills claims were loans. Ultimately,Mills requested that Chauvin return the payments he had advanced. In connectiontherewith, Chauvin executed a promissory note in April 2008 that obligated him to payMills $395,750. However, Chauvin later challenged the validity of the promissory noteand claimed that Mills was not entitled to a return of his investments.
With the foregoing as background, we now turn to the litigation that followed. Basedupon Chauvin's refusal to close on the sale of the Crescent Road property, Millscommenced this action for specific performance of the parties' purchase and saleagreement. Chauvin filed an answer to the complaint with various counterclaims,including a claim based on Mills' alleged breach of an agreement between the partieswith respect to the Amelia Village project. Chauvin also sought a determination that thepurchase and sale agreement relating to the Crescent Road property was null and voiddue to Mills' failure to tender performance on the closing date established by Chauvin inhis time of the essence demand, and requested that he be granted the equitable remedy ofa partition of that property. Finally, Chauvin sought an accounting of their partnershipand, more specifically, an examination of the rents collected and expenses paid inconnection with the Crescent Road property.[*3]
Mills subsequently filed an amended complaintadding three causes of action—the first for recovery of a one-third share of thecontingency fee that Chauvin collected in connection with the personal injury action, andthe second and third to recover the payments Mills had made with respect to the AmeliaVillage project, based upon claims of breach of contract and unjust enrichment,respectively. In response, Chauvin added a counterclaim seeking a declaration that Mills'share of the contingency fee should be determined based upon quantum meruit.
After substantial discovery, Chauvin moved for an order pursuant to Judiciary Law§ 474 declaring that Mills' portion of the contingency fee should be determined ona quantum meruit basis. Mills cross-moved for summary judgment on his claims forspecific performance of the parties' agreement for the sale of the Crescent Road property,for recovery of his one-third share of the contingency fee and for enforcement of theAmelia Village project promissory note. In an order entered May 17, 2011, SupremeCourt denied Chauvin's motion and partially granted Mills' cross motion to the extent thatit granted summary judgment to Mills on his claims for specific performance of theCrescent Road agreement and for one third of the contingency fee. Chauvin appeals fromthat order and from the judgment entered thereupon.
The action proceeded to a nonjury trial with respect to the parties' remaining claimsand counterclaims. At the conclusion thereof, Supreme Court found that Chauvin had notmet his burden of proof on his counterclaims, that the promissory note was valid andenforceable and that Mills was entitled to recover pursuant to its terms. Chauvin nowappeals from the judgment entered upon that decision.[FN2] For the reasons that follow, we affirm Supreme Court's order and judgments in theirentirety.
We turn first to Supreme Court's order granting Mills' cross motion for summaryjudgment on his claim for specific performance with respect to his purchase of theCrescent Road property. As the movant, Mills had the burden of establishing, as a matterof law, that he was ready, willing and able to perform under the parties' purchase and saleagreement and that Chauvin was unwilling to convey the property (see HuntingtonMin. Holdings v Cottontail Plaza, 60 NY2d 997, 998 [1983]; Nehmadi v Davis, 95 AD3d1181, 1185 [2012]; Bayly vBroomfield, 93 AD3d 909, 911 [2012]). It is well established that, where acontract for the sale of real property does not specify that time is of the essence, "theseller may unilaterally convert the contract into one making time of the essence by givingthe buyer 'clear, unequivocal notice' and a reasonable time to perform" (Highbridge Dev. BR, LLC vDiamond Dev., LLC, 67 AD3d 1112, 1114 [2009], quoting ADC Orange, Inc. v Coyote Acres,Inc., 7 NY3d 484, 490 [2006]; see Whitney v Perry, 208 AD2d 1025,1026 [1994]). " 'What constitutes a reasonable time for performance depends upon thefacts and circumstances of the particular case' " (Malley v Malley, 52 AD3d 988, 990 [2008], quotingBen Zev v Merman, 73 NY2d 781, 783 [1988]), but the relevant factors include,among others, "the presence or absence of good faith, the experience of the parties andthe possibility of prejudice or hardship to either one, as well as the specific number ofdays provided for performance" (Ben Zev v Merman, 73 NY2d at 783).Although the [*4]question of reasonableness is generallyone of fact (see Bossert vFratalone, 28 AD3d 852, 853 [2006]), "where the facts are undisputed, what is areasonable time becomes a question of law, and the case is appropriate for summaryjudgment" (Hegeman vBedford, 5 AD3d 632, 632 [2004]; see Spagna v Licht, 87 AD2d 626,627 [1982]).
In support of his cross motion, Mills submitted, among other things, a copy of theparties' March 2008 real estate contract, the parties' deposition testimony, his ownaffidavit and various items of correspondence. The real estate contract indicated that theclosing would be "on or before April 15, 2008," but did not include any languageindicating that time was of the essence. However, in a July 2, 2008 correspondence,Chauvin declared time to be of the essence and stated that a closing would have to occur"on or before July 15, 2008." Mills acknowledged receipt of Chauvin's letter by email onJuly 8,[FN3] and indicated that he would be unable to refinance the mortgage by that date, but wouldattempt to secure financing to complete the sale by then. In various communicationsbetween July 9 and July 15, the parties continued to argue about other terms of the saleand aspects of their partnership. On July 15, Mills sent a fax to Chauvin, informing himthat there was an unexpected delay in obtaining the funds for payment, but assured himthat the funds would be available on July 18. On July 17, Chauvin sent a fax in which hedeclared Mills to be in breach of contract and that the agreement was null and void. Millsresponded by fax the same day that he would be ready to perform on July 18.
In his affidavit, Mills alleged that he was ready, willing and able to perform hiscontractual obligations on July 18, 2008, but that Chauvin unreasonably and inexplicablyrefused to complete the transaction. Mills explained that, when Chauvin suddenlydemanded that the parties close in July 2008, he was not able to secure financing througha lending institution to complete the purchase in the short period of time provided, butwas willing to use his personal funds to do so and notified Chauvin of his intention toproceed in such a manner. Mills submitted a copy of a cashier's check made payable toChauvin dated July 18, 2008. He alleged that he appeared at Chauvin's office with suchcheck on July 18 and was prepared to close, but Chauvin refused. Based on thisevidence, Mills made a prima facie showing of his entitlement to summary judgment,shifting the burden to Chauvin to produce evidentiary proof in admissible form sufficientto raise a material issue of fact (see Fallati v Mackey, 31 AD3d 879, 880 [2006], lvdenied 7 NY3d 711 [2006]).
In opposition, Chauvin submitted, among other things, a fax dated July 11, 2008,which informed Mills of the time at which the closing was to take place and another fromJuly 15, notifying Mills that he was not willing to extend the closing date. In hisaffidavit, he averred that Mills was not ready, willing and able to close on July 15 and,further, that even if he had agreed to extend the closing date to July 18, Mills was stillnot ready, willing and able to perform his obligations as he had not refinanced themortgage on the property in order to relieve Chauvin of liability thereon.
Supreme Court found that Chauvin's July 2, 2008 correspondence declaring that timewas of the essence did not include a specific closing date, as required (see ADCOrange, Inc. v Coyote Acres, Inc., 7 NY3d at 490), and concluded that Chauvin'sJuly 11 communication specifying the July 15 closing date did not provide a reasonableamount of time for Mills to make [*5]the necessaryfinancial arrangements in order to close. Considering the relevantfactors—particularly, the lack of any clear explanation by Chauvin for his abruptdeclaration that time was of the essence after the parties had been cooperatively workingtoward a closing date for several months, the prejudice to Mills as a result of the limitedamount of notice given to him, and the lack of any record evidence regarding what harmwould come to Chauvin if Mills did not close by July 15—the undisputedcompetent evidence before Supreme Court supports its conclusion that the noticeprovided by Chauvin was unreasonable as a matter of law (see Malley v Malley,52 AD3d at 990; Weintraub vStankovic, 43 AD3d 543, 544 [2007]; compare 2626 Bway LLC v Broadway Metro Assoc., LP, 85AD3d 456, 457 [2011]).
We also reject Chauvin's argument that Mills was not ready, willing and able toperform on July 18, 2008 because he had not obtained financing to remove Chauvin'sname from the mortgage. We need only note that the purchase and saleagreement—which was drafted by Chauvin, an experienced real estateattorney—did not include any requirement that Mills do so at the time of closing.Accordingly, even viewing the evidence in a light most favorable to Chauvin, as thenonmoving party (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; U.W. Marx, Inc. v Koko Contr.,Inc., 97 AD3d 893, 894 [2012]), he failed to demonstrate the existence of triableissues of fact, and Supreme Court properly granted Mills' cross motion for summaryjudgment on his claim for specific performance.
We next address Mills' cross motion for summary judgment on his claim regardingthe contingency fee. As the movant, Mills bore the initial burden of demonstrating theexistence of an enforceable contract (see generally Alvarez v Prospect Hosp., 68NY2d at 324) which, in turn, requires that there be "an objective meeting of the minds,"and "a manifestation of mutual assent sufficiently definite to assure that the parties aretruly in agreement with respect to all material terms" (Matter of Express Indus. &Term. Corp. v New York State Dept. of Transp., 93 NY2d 584, 589 [1999];accord Robison v Sweeney, 301 AD2d 815, 817 [2003]). When a writteninstrument is unambiguous, the question of the parties' intent may be determined as amatter of law (see Wolfe vIrving Tissue, Inc., 95 AD3d 1628, 1630 [2012]; Brighton Inv., Ltd. v Har-Zvi,88 AD3d 1220, 1222-1223 [2011]).
Here, in support of his cross motion, Mills submitted, among other things, hisaffidavit and deposition testimony, as well as supporting documentation, includingcopies of communications between the parties. Mills avers that, when he first becameinvolved in the personal injury action, the parties agreed that he would be entitled to onethird of the contingency fee that Chauvin would receive. Mills further alleged that, onMarch 12, 2008, the parties met to discuss a possible resolution of the outstanding issueswith respect to the Crescent Road property, the Amelia Village project and thecontingency fee. Mills then sent Chauvin an email to memorialize the agreements theyhad reached at that meeting. In the email, Mills wrote, as pertinent here, that "we agreedthat [Mills] would be entitled to [one third] of [the contingency] fee . . .whenever it is received." Mills also submitted Chauvin's email response dated March 17,2008, confirming that such statement was accurate. In our view, the foregoing wassufficient to satisfy Mills' prima facie burden of demonstrating his entitlement tosummary judgment on this claim and to shift the burden to Chauvin to establish theexistence of material issues of fact.
In response, Chauvin points to the remainder of his March 17, 2008correspondence—in which he stated, among other things, that "[e]verything onyour annexed March 12, 2008 e-mail is correct and acceptable with the exception of thereference in Amelia to the payment from [the Crescent Road property and thepersonal injury action]" (emphasis added)—and claims that he [*6]had only agreed to the one-third fee as part of a globalsettlement offer, contingent upon resolution of the issues surrounding the Crescent Roadproperty and the Amelia Village project. In our view, it is obvious from the plainlanguage of his response that Chauvin was only correcting the reference in Mills' letter tothe manner in which Chauvin would reimburse Mills for the money he had advanced forthe Amelia Village project. Based upon our review of the record, we conclude that thecommunications between the parties on March 12 and March 17 were " 'sufficiently clearand concrete' to establish [the parties'] intent" to reach an enforceable agreement(Brighton Inv., Ltd. v Har-Zvi, 88 AD3d at 1222, quoting Williamson v Delsener, 59AD3d 291, 291 [2009]; seeCapital Dist. Enters., LLC v Windsor Dev. of Albany, Inc., 79 AD3d 1424,1426 [2010])—and, in fact, unambiguously established a meeting of the minds (see Newmark & Co. Real EstateInc. v 2615 E. 17 St. Realty LLC, 80 AD3d 476, 477-478 [2011]) that Chauvinwould pay Mills one third of the contingency fee—independent of their resolutionof the other matters.
Chauvin also asserts that, even if the parties did reach an agreement that Mills wouldreceive one third of the contingency fee, such an agreement would violate the formerCode of Professional Responsibility, which governed the parties' sharing of thisfee.[FN4] However, it is undisputed that the client in the personal injury action agreed that Millswould be involved in such action and was informed that Mills' involvement would notaffect the client's ultimate recovery. It is also undisputed that Mills "actually contributedto the legal work" in the personal injury action (see Benjamin v Koeppel, 85NY2d 549, 556 [1995]; compare Hirsch v Bashian & Farber, LLP, 79 AD3d 971,971 [2010]). As to how Mills' contribution to the client's representation should bequantified, the Court of Appeals has held that, "[i]n the realm of fee-sharing disputes,'courts will not inquire into the precise worth of the services performed by the parties' "(Samuel v Druckman & Sinel,LLP, 12 NY3d 205, 210 [2009], quoting Benjamin v Koeppel, 85 NY2dat 556). Moreover, it would be unjust to allow Chauvin to use the rules governingattorney conduct against Mills to argue that their "fee-sharing agreement and theobligations thereunder must be voided on ethical grounds, when [Chauvin] freely agreedto be bound by and received the benefit of the same agreement, particularly where, ashere, there is no indication that the client was in any way deceived or misled"(Samuel v Druckman & Sinel, LLP, 12 NY3d at 210). As a result, we find nopublic policy reason or other basis to invalidate the parties' fee-sharing agreement anddetermine Mills's fees based on quantum meruit. Accordingly, Supreme Court properlygranted summary judgment to Mills on his contingency fee claim.[*7]
We now turn to the issues resolved by SupremeCourt after trial. Initially, we reject Chauvin's claim that Supreme Court erred inconcluding that the April 2008 promissory note was enforceable. Chauvin does notdispute that Mills had previously paid him $395,750 in connection with the AmeliaVillage project, that he signed the promissory note promising to repay that amount toMills, or that he tendered the note to Mills for the purpose of providing documentation toMills' lending institution in support of Mills' application for financing of the purchase ofthe Crescent Road property. Instead, Chauvin claims that the promissory note was notenforceable because it was not given to secure a debt and, therefore, lacked consideration(see UCC 3-306 [c]).
In this regard, Mills testified that, when the parties met on March 12, 2008 to discussthe issues between them, they agreed that Chauvin would repay Mills all of the moneythat Mills had contributed to the Amelia Village project and that the promissory noteconfirmed their agreement.[FN5] On the other hand, Chauvin claims that the payments that Mills made to the AmeliaVillage project were investments that could not be returned when Mills withdrew fromthat project, and that the promissory note was not intended to be a promise of repayment,but was drafted in an attempt to reach a global settlement of all the disputes between theparties existing at that time.
The record amply supports Supreme Court's finding that the consideration for thepromissory note was the $395,750 that Mills had provided to Chauvin in connection withthe Amelia Village project and that the promissory note represented security forChauvin's antecedent obligation to repay such funds (see UCC 3-303 [b]). Thenote itself—which was drafted by Chauvin, signed by him, notarized andtransmitted to Mills (see UCC 3-104)—clearly states that it was executedin return for a loan received by Chauvin and "contain[ed] an unconditional promise ororder to pay a sum certain in money" (UCC 3-104 [1] [b]). In addition, Mills took thenote as a holder in due course (see UCC 3-302 [1]). Based upon our independentevaluation of the evidence and, "giving due deference to the trial court's credibilitydeterminations concerning witnesses" (Fabi v Hayes, 97 AD3d 1049, 1050 [2012], lvdenied 20 NY3d 855 [2013]), we conclude that Supreme Court's determination thatChauvin failed to establish a bona fide defense of lack of consideration is supported bythe record (see Friends Lbr. v Cornell Dev. Corp., 243 AD2d 886, 887 [1997];see generally Green Apple Mgt.Corp. v Aronis, 95 AD3d 826, 827 [2012]; compare American Realty Corp. of NY v Sukhu, 90 AD3d792, 793 [2011]).
Supreme Court's dismissal of Chauvin's counterclaims does not require extendeddiscussion. As to the Crescent Road property, Chauvin alleged that Mills had failed tocollect rent and other obligations from the tenants and sought an accounting. However,there was no written partnership agreement that allowed the partners to call for anaccounting (see Partnership Law § 44 [2]), and the record does notestablish that Mills breached his fiduciary duty to Chauvin with respect to the partnership(see Goldman v Rio, 62AD3d 834, 835 [2009]; Adam v Cutner & Rathkopf, 238 AD2d 234, 242[1997]) or that other circumstances existed that warranted an accounting (seePartnership Law § 44). As Supreme Court found, the evidence at trial [*8]established that Chauvin was active in the partnership andits financial affairs, and there was no evidence to suggest that Chauvin was excluded byMills therefrom. As a result, we agree that Chauvin failed to demonstrate his entitlementto a formal accounting (see Partnership Law §§ 43-44).
Nor dowe discern any reason to disturb Supreme Court's determination that Mills had noobligation to pay additional rent for the extra space his law office leased at the CrescentRoad property. There was no written agreement reflecting any such obligation. To thecontrary, the evidence demonstrated that the purpose of the partnership was to produce atax deduction and not to generate any taxable income, and that the amount of rent paid byMills was consistent with such purpose. Further, we defer to Supreme Court's credibilitydeterminations in rejecting Chauvin's testimony that the parties had an oral agreement forthe payment of additional rent by Mills, particularly in view of the fact that Mills hadoccupied the extra space in the office building for many years without making any suchpayment.
Finally, the record supports Supreme Court's finding that Chauvin agreed to Mills'withdrawal from the Amelia Village project and, therefore, Chauvin's relatedcounterclaim was properly dismissed. To the extent not specifically addressed herein,Chauvin's remaining claims have been reviewed and found to be without merit.
Rose, J.P., Spain, Stein and McCarthy, JJ., concur. Ordered that the order andjudgments are affirmed, with costs to plaintiff.
Footnote 1: Although Chauvininitially purchased the property himself, he later executed a deed that reflected that bothparties had an equal interest therein through the partnership.
Footnote 2: Although Mills alsocross-appealed from that judgment, he has abandoned such cross appeal by failing toaddress it in his brief (seeMatter of Amedore v Peterson, 102 AD3d 995, 996 n 2 [2013], lvdenied 20 NY3d 1006 [2013]).
Footnote 3: According to Mills,because of the July 4th holiday, he did not receive Chauvin's communication until July 8.
Footnote 4: As applicable here, theformer Code of Professional Responsibility provided that a lawyer could not divide alegal fee with another lawyer who was not a member of his or her law office, unless: "(1)The client consent[ed] to employment of the other lawyer after a full disclosure that adivision of fees [would] be made. (2) The division [was] in proportion to the servicesperformed by each lawyer or, by a writing given the client, each lawyer assume[d] jointresponsibility for the representation. (3) The total fee of the lawyers [did] not exceedreasonable compensation for all legal services they rendered the client" (former Code ofProfessional Responsibility DR 2-107 [a] [22 NYCRR former 1200.12 (a)]; seegenerally Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.5 [g]).
Footnote 5: Mills' March 12, 2008email to Chauvin regarding the parties' meeting also referred to their agreement that Millswould be repaid for "the $395,750 that [Mills had] advanced to date."