| Grand Pac. Fin. Corp. v 97-111 Hale, LLC |
| 2014 NY Slip Op 08604 [123 AD3d 764] |
| December 10, 2014 |
| Appellate Division, Second Department |
[*1]
| Grand Pacific Finance Corp., Plaintiff/CounterclaimDefendant-Appellant, v 97-111 Hale, LLC, et al., Defendants/CounterclaimPlaintiffs/Cross Claim Plaintiffs-Respondents, et al., Defendants. Eli Bobker et al.,Additional Counterclaim Plaintiffs/Additional Cross Claim Plaintiffs-Respondents;Global One Corp. et al., Additional Cross Claim Defendants-Appellants, et al.,Additional Cross Claim Defendants. |
Herrick, Feinstein, LLP, New York, N.Y. (Scott T. Toss of counsel), forplaintiff/counterclaim defendant-appellant.
Linda L. Foster, Fresh Meadows, N.Y., and Peter W. Schroth, FreshMeadows, N.Y., for additional cross claim defendant-appellant United Asian Funds,LLC (one brief filed).
Sadis & Goldberg LLP, New York, N.Y. (Jennifer Rossan andDouglas R. Hirsch of counsel), for additional cross claim defendant-appellant BeltonLee.
Schwartz, Lichtenberg LLP, New York, N.Y. (Barry E. Lichtenberg ofcounsel), for additional crossclaim defendants-appellants Global One Corp., 366Madison, Inc., and Michael Lin.
Marc M. Coupey, New York, N.Y., for defendants/counterclaimplaintiffs/cross claim plaintiffs-respondents and additional counterclaimplaintiffs/additional cross-claim plaintiffs-respondents.
In an action to foreclose a mortgage, the plaintiff/counterclaim defendant appealsfrom so much of an order of the Supreme Court, Westchester County (Smith, J.), datedMarch 28, 2013, as denied those branches of its motion which were for summaryjudgment on the complaint, striking the fourth, seventh, eighth, and ninth affirmativedefenses set forth in the amended answer of the defendants/counterclaim plaintiffs/crossclaim plaintiffs, 97-111 Hale, LLC, 100-114 Hale, LLC, and Joe Bokber, and dismissingthe first, second, and fifth counterclaims of the defendants/counterclaim plaintiffs/crossclaim plaintiffs and the additional counterclaim plaintiffs/additional cross claimplaintiffs, Eli Bobker, Ben Bobker, and Hale Club, LLC, the additional cross claimdefendant United Asian Funds, LLC, separately appeals from so much of the same orderas denied that branch of its separate motion which was for summary judgment dismissingthe first cross claim of the defendants/counterclaim plaintiffs/cross claim plaintiffs andthe additional [*2]counterclaim plaintiffs/additional crossclaim plaintiffs insofar as asserted against it, and the additional cross claim defendantBelton Lee separately appeals, and the additional cross claim defendants Global OneCorp., 366 Madison, Inc., and Michael Lin separately appeal, from so much of the sameorder as denied those branches of their separate motions which were for summaryjudgment dismissing the first and second cross claims of the defendants/counterclaimplaintiffs/cross claim plaintiffs and the additional counterclaim plaintiffs/additional crossclaim plaintiffs insofar as asserted against them.
Ordered that the order is modified, on the law, (1) by deleting the provisions thereofdenying those branches of the plaintiff/counterclaim defendant's motion which were forsummary judgment striking the fourth, seventh, eighth, and ninth affirmative defenses setforth in the amended answer of the defendants/counterclaim plaintiffs/cross claimplaintiffs, 97-111 Hale, LLC, 100-114 Hale, LLC, and Joe Bokber, and dismissing thefirst and second counterclaims of the defendants/counterclaim plaintiffs/cross claimplaintiffs and the additional counterclaim plaintiffs/additional cross claim plaintiffs EliBobker, Ben Bobker, and Hale Club, LLC, and substituting therefor provisions grantingthose branches of the motion, (2) by deleting the provision thereof denying that branch ofthe motion of the additional cross claim defendant United Asian Funds, LLC, which wasfor summary judgment dismissing the first cross claim of the defendants/counterclaimplaintiffs/cross claim plaintiffs and the additional counterclaim plaintiffs/additional crossclaim plaintiffs insofar as asserted against it, and substituting therefor a provisiongranting that branch of the motion, and (3) by deleting the provisions thereof denyingthose branches of the separate motions of the additional cross claim defendant BeltonLee and the additional cross claim defendants Global One Corp., 366 Madison, Inc., andMichael Lin which were for summary judgment dismissing the first and second crossclaims of the defendants/counterclaim plaintiffs/cross claim plaintiffs and the additionalcounterclaim plaintiffs/additional cross claim plaintiffs insofar as asserted against them,and substituting therefor provisions granting those branches of the motions; as somodified, the order is affirmed insofar as appealed from, with one bill of costs payable bythe defendants/counterclaim plaintiffs/cross claim plaintiffs and the additionalcounterclaim plaintiffs/additional cross claim plaintiffs to the additional cross claimdefendant United Asian Funds, LLC, the additional cross claim defendant Belton Lee,and the additional cross claim defendants Global One Corp., 366 Madison, Inc., andMichael Lin, appearing separately and filing separate briefs.
The Supreme Court properly denied that branch of the motion of theplaintiff/counterclaim defendant, Grand Pacific Finance Corp. (hereinafter GrandPacific), which was for summary judgment on the complaint to foreclose a mortgage.Grand Pacific met its initial burden of establishing its prima facie entitlement to ajudgment of foreclosure by producing the mortgage, the note, and evidence of default (see Emigrant Mtge. Co., Inc. vBeckerman, 105 AD3d 895, 895 [2013]; Solomon v Burden, 104 AD3d 839, 839 [2013]; Aurora Loan Servs., LLC vThomas, 53 AD3d 561, 561 [2008]). In opposition, however, thedefendants/counterclaim plaintiffs/cross claim plaintiffs, 97-111 Hale, LLC, 100-114Hale, LLC, and Joe Bobker (hereinafter collectively the Hale defendants), and theadditional counterclaim plaintiffs/additional cross claim plaintiffs, Eli Bobker, BenBobker, and Hale Club, LLC (hereinafter collectively with the Hale defendants, theBobker respondents), raised a triable issue of fact as to whether Grand Pacific acted inbad faith and engaged in oppressive and unconscionable conduct in, among other things,allegedly preventing the Bobker respondents from paying off the loan secured by thesubject mortgage unless they also paid off certain loans made by the additional crossclaim defendants Global One Corp. (hereinafter Global One) and 366 Madison, Inc.(hereinafter 366 Madison), and by interfering with the Bobker respondents' attempts toobtain funds from, or sell the subject properties to, other investors (see Nassau TrustCo. v Montrose Concrete Prods. Corp., 56 NY2d 175, 183 [1982]; City of New York v Kraus, 110AD3d 755, 756-757 [2013]; European Am. Bank v Harper, 163 AD2d 458,461 [1990]).
The Supreme Court should have granted that branch of the motion of Grand Pacificwhich was for summary judgment dismissing the Bobker respondents' secondcounterclaim, which alleged breach of a fiduciary duty arising from a joint venture orpartnership, and those branches of the separate motions of the additional cross claimdefendant Belton Lee and the additional cross claim defendants Global One, 366Madison, and Michael Lin which were for summary judgment [*3]dismissing, insofar as asserted against each of them, theBobker respondents' second cross claim, which also alleged breach of a fiduciary dutyarising from a joint venture or partnership. Similarly, that branch of Grand Pacific'smotion which was for summary judgment striking so much of the Hale defendants' eighthaffirmative defense as alleged breach of fiduciary duty should have been granted."Generally, where parties have entered into a contract, courts look to that agreement 'todiscover . . . the nexus of [the parties'] relationship and the particularcontractual expression establishing the parties' interdependency.' 'If the parties. . . do not create their own relationship of higher trust, courts should notordinarily transport them to the higher realm of relationship and fashion the stricter dutyfor them' " (EBC I, Inc.v Goldman, Sachs & Co., 5 NY3d 11, 19-20 [2005] [citation omitted],quoting Northeast Gen. Corp. v Wellington Adv., 82 NY2d 158, 160, 162[1993]; see Oddo Asset Mgt. vBarclays Bank PLC, 19 NY3d 584, 593 [2012]; First Keystone Consultants, Inc. vDDR Constr. Servs., 74 AD3d 1135, 1136 [2010]). Here, the written operatingagreements submitted in support of the motions demonstrated an intent to form a limitedliability company, not a partnership or joint venture that would have given rise to afiduciary relationship. Moreover, the members of the limited liability company did notshare control of the subject development project or responsibility for the losses, whichare elements of both a joint venture and a partnership (see Matter of Steinbeck vGerosa, 4 NY2d 302, 317 [1958]; Massey v Byrne, 112 AD3d 532, 533 [2013]; Kaufman v Torkan, 51 AD3d977, 979 [2008]; Rocchio vBiondi, 40 AD3d 615, 616-617 [2007]; Accent Assoc. v Wheatley Constr.Corp., 268 AD2d 494 [2000]). In opposition to the movants' prima facie showing,the Bobker respondents, who relied on the same operating agreements, failed to raise atriable issue of fact.
Further, Grand Pacific, Global One, 366 Madison, Lin, Lee, and the additional crossclaim defendant United Asian Funds, LLC (hereinafter United Asian), demonstrated theirprima facie entitlement to judgment as a matter of law dismissing the Bobkerrespondents' fraud claims. The evidence submitted in support of the motions established,prima facie, that the Bobker respondents could not have reasonably relied on alleged oralrepresentations concerning the mortgage, the associated note, and the operatingagreements (see Bontempts vAude Constr. Corp., 98 AD3d 1071, 1073 [2012]; Group 88, Inc. v AGA Capital NY,Inc., 59 AD3d 493, 494 [2009]; Stone v Schulz, 231 AD2d 707, 708[1996]). Additionally, "the loss of an alternative contractual bargain . . .cannot serve as a basis for fraud or misrepresentation damages" (Lama Holding Co. vSmith Barney, 88 NY2d 413, 422 [1996]; see Route 217, LLC v Greer, 119 AD3d 1018 [2014]). Thesubmissions in support of the motions also demonstrated that, contrary to the Bobkerrespondents' allegation, Grand Pacific did not fail to disclose its relationship with GlobalOne and 366 Madison. Since the Bobker respondents did not raise a triable issue of factin opposition to the movants' prima facie showing, the Supreme Court should havegranted those branches of Grand Pacific's motion which were for summary judgmentdismissing the Bobker respondents' first counterclaim, which was to recover damages forfraud, and striking the Hale defendants' ninth affirmative defense and so much of theeighth affirmative defense as alleged fraud, as well as those branches of the separatemotion of Global One, 366 Madison, Lin, Lee, and United Asian which were forsummary judgment dismissing, insofar as asserted against them, the Bobker respondents'first cross claim, which was to recover damages for fraud.
The Supreme Court also should have granted those branches of Grand Pacific'smotion which were for summary judgment striking the Hale defendants' fourth andseventh affirmative defenses, and so much of the eighth affirmative defense as allegedbreach of contract. In opposition to Grand Pacific's prima facie showing of entitlement tojudgment as a matter of law striking those affirmative defenses, the Hale defendants didnot substantiate those conclusory affirmative defenses with factual allegations(see CPLR 3013; Katz vMiller, 120 AD3d 768 [2014]), and, thus, failed to raise a triable issue offact.
The parties' remaining contentions either need not be reached in light of ourdetermination, or are without merit. Rivera, J.P., Skelos, Dickerson and Barros, JJ.,concur.