| McMorrow v Angelopoulos |
| 2014 NY Slip Op 00331 [113 AD3d 736] |
| January 22, 2014 |
| Appellate Division, Second Department |
| Charles F. McMorrow, Appellant, v MichaelAngelopoulos et al., Respondents. |
—[*1] Dickler & Roth, LLP (Himmelstein, McConnell, Gribben, Donoghue & Joseph, NewYork, N.Y. [Kevin R. McConnell], of counsel), for respondents.
In an action, inter alia, to recover damages for breach of contract and fraud, theplaintiff appeals from an order of the Supreme Court, Kings County (Pfau, J.), datedMarch 27, 2012, which denied his motion for summary judgment on the first and secondcauses of action, and, upon searching the record, awarded summary judgment dismissingthe amended complaint insofar as asserted against the defendants Silvia FragomenaAngelopoulos and S&M Realty Consultants, LLC, dismissing the second, fourth andfifth causes of action insofar as asserted against the defendants Michael Angelopoulosand Coco Realty, LLC, dismissing the third cause of action insofar as asserted againstMichael Angelopoulos, and limiting recovery on the third cause of action against CocoRealty, LLC, to the sum of $5,748.96.
Ordered that on the Court's own motion, the notice of appeal from so much of theorder as, upon searching the record, awarded summary judgment dismissing the amendedcomplaint insofar as asserted against Silvia Fragomena Angelopoulos and S&M RealtyConsultants, LLC, dismissing the second, fourth and fifth causes of action insofar asasserted against Michael Angelopoulos and Coco Realty, LLC, dismissing the third causeof action insofar as asserted against Michael Angelopoulos, and limiting recovery on thethird cause of action against Coco Realty, LLC, to the sum of $5,748.96, is deemed to bean application for leave to appeal from those portions of the order, and leave to appealfrom those portions of the order is granted (see CPLR 5701 [c]); and it is further,
Ordered that the order is affirmed, with costs.
On September 21, 2004, the plaintiff and the defendant Michael Angelopoulos(hereinafter Angelopoulos) entered into a contract of sale with respect to a certain parcelof real property (hereinafter the subject property), whereby the plaintiff agreed to sell thesubject property to Angelopoulos for the sum of $1,900,000, contingent uponAngelopoulos obtaining a mortgage commitment in the sum of $1,425,000.Angelopoulos, however, was only able to secure a loan commitment in the sum$1,237,500. The plaintiff and Angelopoulos amended the contract so as to reduce thepurchase price of the subject property to $1,650,000, and to change the identity ofpurchaser to Coco Realty, LLC (hereinafter Coco), thereby releasing and relievingAngelopoulos of [*2]all liability and obligation under thecontract of sale. An undated handwritten agreement was subsequently entered intobetween the plaintiff and Angelopoulos wherein, inter alia, it was agreed thatAngelopoulos would execute a second mortgage that was to be in favor of the plaintiff,as mortgagee, on property that Angelopoulos owned at 6602 17th Avenue in Brooklyn(hereinafter the 17th Avenue property), in the sum of $350,000 at a 10% rate of interest,amortized over a 10-year period, and payable over a 10-year period. The handwrittenagreement further provided, inter alia, that the plaintiff would pay Angelopoulos $50,000out of the proceeds of the sale in consideration of the execution and delivery of thesecond mortgage.
The closing on the subject property was held on April 5, 2005. The plaintiffrepresented in the contract of sale that the rent roll for the subject property was no lessthan $175,000 per annum but, at the time of the closing, the plaintiff only certified a rentroll of $154,512. Accordingly, the plaintiff, as the seller, and Coco, as the purchaser,entered into an agreement pursuant to which the plaintiff was to pay to Coco, eachmonth, the shortfall in the certified rent in the sum of $1,707.33, and the plaintiff was tocredit Coco at the closing for the first three months' payments in the sum of $5,122.Subsequently, on April 22, 2005, the plaintiff advanced Angelopoulos the sum of$37,650.
Angelopoulos did not execute a mortgage on the 17th Avenue property in favor ofthe plaintiff. In the fall of 2005, Angelopoulos advised the plaintiff that he would seek torefinance the mortgage then encumbering the 17th Avenue property and, according to theplaintiff, Angelopoulos agreed to tender the net proceeds of the mortgage refinancing tothe plaintiff. Angelopoulos successfully refinanced the mortgage on the 17th Avenueproperty. The plaintiff alleges, however, that he did not receive any of the proceeds fromthe mortgage refinancing. Furthermore, Angelopoulos allegedly transferred title to the17th Avenue property to the defendant S & M Realty Consultants, LLC (hereinafterSMRC), a limited liability company of which he is a member, and diluted his ownershipinterest therein by transferring 50% of the ownership interest in SMRC to his wife, thedefendant Silvia Fragomena Angelopoulos.
The plaintiff commenced this action asserting causes of action, inter alia, sounding inbreach of contract and fraud. The plaintiff thereafter moved for summary judgment onthe first and second causes of action. The Supreme Court denied the motion, and, uponsearching the record, awarded summary judgment to the defendants dismissing thesecond cause of action. Also upon searching the record, the Supreme Court awardedsummary judgment dismissing the remainder of the amended complaint insofar asasserted against Silivia Fragomena Angelopoulos and SMRC, dismissing the fourth andfifth causes of action insofar as asserted against Angelopoulos and Coco, and dismissingthe third cause of action insofar as asserted against Angelopoulos, and limited recoveryon the third cause of action against Coco to the sum of $5,748.96. The plaintiff has notchallenged the Supreme Court's decision to search the record with respect to the third,fourth and fifth causes of action. Accordingly, we do not review the propriety of theSupreme Court's use of that procedure (cf. Dunham v Hilco Constr. Co., 89NY2d 425, 429-430 [1996]).
The Supreme Court properly denied that branch of the plaintiff's motion which wasfor summary judgment on the first cause of action, which alleged breach of contract. Theplaintiff failed to eliminate all triable issues of fact as to whether the defendants breachedthe undated handwritten agreement (see generally DePasquale v Daniel RealtyAssoc., 304 AD2d 613 [2003]; see also Amusement Bus. Underwriters vAmerican Intl. Group, 66 NY2d 878 [1985]).
The Supreme Court also properly denied that branch of the plaintiff's motion whichwas for summary judgment on the second cause of action, to the extent that it allegesfraud. A cause of action alleging fraud will not lie where the only claim of fraud relatesto a breach of a contract (seeTreeline 990 Stewart Partners, LLC v RAIT Atria, LLC, 107 AD3d 788 [2013];Mendelovitz v Cohen, 37AD3d 670 [2007]). Here, the crux of the plaintiff's allegations is that Angelopoulosnot only breached an agreement to execute a mortgage on the 17th Avenue property, butthat Angelopoulos entered into that agreement with the unstated intent not to perform it.These allegations are insufficient to support a cause of action sounding in fraud (seeNew York Univ. v Continental Ins. Co., 87 NY2d 308, 318 [1995]).[*3]
To the extent that the second cause of actionalleged unjust enrichment, the Supreme Court also properly denied summary judgment tothe plaintiff on that claim. A cause of action alleging unjust enrichment is aquasi-contractual claim that is not viable where, as here, the parties entered into anexpress contract governing the subject of dispute which, here, involves the execution of amortgage on the 17th Avenue property (see Woss, LLC v 218 Eckford, LLC, 102 AD3d 860[2013]; Vescon Constr., Inc. vGerelli Ins. Agency, Inc., 97 AD3d 658 [2012]; Shovak v Long Is. CommercialBank, 50 AD3d 1118 [2008]). Moreover, to the extent that the plaintiff allegedthat Angelopoulos was unjustly enriched by the receipt of $37,650 from the plaintiff, theplaintiff failed to eliminate all triable issues of fact as to the reason for the payment. Theplaintiff alternatively claims that it was a loan or given in partial satisfaction of hisobligation to pay Angelopoulos the sum of $50,000, as per the handwritten agreement,while Angelopoulos contends that the funds were provided in accordance with theplaintiff's agreement to pay the closing costs associated with the sale of the subjectproperty.
Upon searching the record, the Supreme Court properly awarded summary judgmentdismissing the amended complaint insofar as asserted against Silvia FragomenaAngelopoulos and SMRC. These two defendants were not in contractual privity with theplaintiff (see generally CDJBldrs. Corp. v Hudson Group Constr. Corp., 67 AD3d 720 [2009]), did notmake any representations of fact to the plaintiff (see generally Smith v Ameriquest Mtge. Co., 60 AD3d1037 [2009]), and did not receive any monies from the plaintiff.
Upon searching the record, the Supreme Court also properly awarded summaryjudgment dismissing, insofar as asserted against the remaining defendants, the secondcause of action to the extent that it alleged fraud and unjust enrichment based on theplaintiff's alleged reduction of the purchase price of the subject property in anticipationof securing a mortgage interest on the 17th Avenue property, the fourth cause of action,which sought punitive damages based upon the alleged fraud, and the fifth cause ofaction, which sought injunctive relief and an award of an attorney's fee.
"The elements of a cause of action sounding in fraud are a material misrepresentationof an existing fact, made with knowledge of the falsity, an intent to induce reliancethereon, justifiable reliance upon the misrepresentation, and damages" (Fromowitz v W. Park Assoc.,Inc., 106 AD3d 950, 951 [2013] [internal quotation marks omitted]). Thegravamen of the plaintiff's causes of action is breach of contract, and the amendedcomplaint does not support a fraud cause of action (see O'Keefe v Allstate Ins. Co., 90 AD3d 725 [2011]).Since the parties entered into an express contract which governs the dispute over theexecution of a mortgage on the 17th Avenue property, the amended complaint does notsupport an unjust enrichment cause of action based upon the plaintiff's alleged reductionof the purchase price of the subject property in anticipation of obtaining a securityinterest in the 17th Avenue property (see Woss, LLC v 218 Eckford, LLC, 102AD3d at 860). Since "[a] demand or request for punitive damages is parasitic andpossesses no viability absent its attachment to a substantive cause of action such asfraud" (Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 616[1994]), the summary dismissal of the fraud cause of action mandates the summarydismissal of the request for punitive damages that was based thereon.
Upon searching the record, the Supreme Court properly awarded summary judgmentdismissing the third cause of action insofar as asserted against Angelopoulos. Theplaintiff asserted, in the third cause of action, that he is entitled to recoup the sum of$5,122, representing the first three months of payments made to Angelopoulos to makeup for the shortfall in the rent roll, and that he is entitled to the sum of $5,748,representing a shortfall in the monies owed to him at the time of closing. The contract ofsale was amended to reflect that Coco was the purchaser, and that Angelopoulos wasrelieved of all liability and obligations under the contract of sale. Therefore,Angelopoulos is not liable for any payments made to Coco or for any payments owed tothe plaintiff by Coco under that contract.
Upon searching the record, the Supreme Court correctly awarded summary judgmentto Coco dismissing so much of the third cause of action insofar as asserted against it assought to recoup the sum of $5,122 that the plaintiff credited to Coco in connection withthe rent roll shortfall. The express terms of the agreement that was executed at the time ofclosing provided that the plaintiff would credit Coco for the first three months ofpayments due for the rent shortfall in the [*4]sum of$5,122. On this record, there is no ground upon which to invalidate the plaintiff'sobligation in this regard. With respect to the allegation in the third cause of action thatCoco owes the plaintiff the sum of $5,748 by virtue of a payment shortfall at the time ofclosing, the defendants argue on appeal that this claim is precluded by the completion ofthe closing and the failure of the parties to include a provision in the sales contract or theclosing agreement indicating that issues relating to the purchase price survived theclosing, or that provided for any post-closing adjustment. Since the defendants did notseek leave to cross-appeal from that portion of the order, their argument is not properlybefore this Court.
The parties' remaining contentions either are without merit or have been renderedacademic. Skelos, J.P., Dillon, Dickerson and Austin, JJ., concur.