FILED: NEW YORK COUNTY CLERK 11/04/2016 08:46 PM INDEX NO. 158606/2015 NYSCEF DOC. NO. 67 RECEIVED NYSCEF: 11/04/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -----------------------------------------------------------X FOWLER COURT TENANTS INC., -against FRANCIA DEBEER, Defendant. -------------------------------------------------------- -------- X Plaintiff, Index No. 158606/2015 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT S MOTION FOR SUMMARY JUDGMENT JEFFREY C. DANIELS, PC Attorneys for Defendant 4 Carren Circle Huntington, New York 11743 (516) 745-5430 1 of 10
Defendant Francia DeBeer ( DeBeer ) respectfully submits this memorandum of law in support of her motion for summary judgment pursuant to CPLR 3212(b), against plaintiff dismissing the complaint. PRELIMINARY STATEMENT Plaintiff s complaint contained two causes of action. The first cause of action seeks recovery of the sum of $103,204.68 as the balance due for a transfer fee that was incurred incident to a sale of shares and transfer of a proprietary lease of a cooperative apartment owned by DeBeer which took place on June 30, 2016. The second cause of action is to recover legal fees based on a provision in DeBeer s now canceled proprietary lease. This case qualifies for treatment under CPLR 3212(b) and, as set forth below, summary judgment should be granted for the full amount due. 2 2 of 10
FACTS The facts are as stated in the accompanying affidavit of Francia DeBeer, sworn to November 4, 2016 (the DeBeer Affidavit ), the affirmation of Victor Levin Esq. dated November 4, 2016 (the Levin Affirmation ) and the affirmation of Jeffrey C Daniels Esq. dated November 4, 2016 (the Daniels Affirmation ). ARGUMENT A. Standard for Grant of Summary Judgment CPLR 3212 (b) authorizes summary judgment, if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party. Under CPLR 3212, [i]t is axiomatic that where there are no genuine issues of material fact, summary judgment must be granted. Friedman v Pesach, 160 A.D.2d 460, 461 (1 st Dept. 1990). Once a party has made a prima facie showing that it is entitled to judgment as a matter of law, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof and admissible form sufficient to establish the existence of material issues of fact which require a trial of the action. Abrego v City of New York, 2013 N.Y. Misc. LEXIS 2169, at 4 (Sup. Ct. New York County May 14, 2013). To defeat a summary judgment motion, a party must assemble and lay bare its affirmative proof to demonstrate that genuine triable issues of fact exist. Kornfeld v NRX Techs., Inc., 93 A.D. 772, 773 (1 st Dept. 1983). [M]ere 3 3 of 10
conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient to raise a triable issue of fact. Zuckerman v City of New York, 49 N.Y.2d 557,562 (1980). Bald conclusory assertions, even if believable, are not enough to avoid summary judgment. Ehrlich v Am. Moninger Greenhouse Mfg. Corp., 26 N.Y. 2d 255, 259 (1970). [O]nly the existence of a bona fide issue raised by evidentiary facts and not one based on conclusory or irrelevant allegations will suffice to defeat summary judgment. Rotuba Extruders, Inc. v Ceppos, 46 N.Y.2d 223,231 (1978). B. The Bylaws Which Contain the Transfer Fee Provisions, Constitute A Contract Between Plaintiff and Debeer There is no doubt that the bylaws constitute a contract between plaintiff and DeBeer. In fact, each shareholder who is issued a certificate for shares and proprietary lease is bound in contract by the provisions of plaintiff s bylaws. This concept dates as far back as 1931 and is discussed in Buffalo Ass n of Fire Underwriters v Noxsel-Dimick Co., 141 Misc. 333 (Sup. Ct. Erie County Sept. 1931). In Buffalo, plaintiff Association and defendant agent sought a declaratory judgment as to the validity and enforceability of certain of the Association s bylaws. The court stated that: the defendant, by joining plaintiff Association, accepted and agreed to abide by its bylaws and the duly adopted amendments thereto. The bylaws then became and now are the contract between defendant and plaintiff. The Court of Appeals states the law that applies to the situation herein in the following language in Matter of Haebler v N.Y. Produce Exch. (149 N.Y. 414 at p.427): the bylaws were in existence when the relator became a member of the Association, and he expressly agreed and be controlled thereby. The relator had a right to become a member of this corporation, and to agree to be governed by its charter and bylaws, and when he did so they expressed the contract by which he and every other member were bound, and which measured their rights, duties and liabilities as members thereof. (Weston v Ives, 97 N.Y. 222; Belton v Hatch, 109 4 4 of 10
N.Y. 593; O Brien v Grant, 146 N.Y. 163,173 More recently, in ALH Properties Ten v 306-100 th St. Owners Corp., 191 A.D. 2d 1 (1st Dept. 1993), defendant cooperative corporation. appealed from an order of Supreme Court which granted plaintiff s motion for summary judgment, denied defendant s motion for summary judgment and enjoined defendant from refusing to deliver new stock certificates and proprietary leases to plaintiff. In discussing the issues in the case, the Appellate Division stated that: the bylaws. The bylaws of the corporation constitute a contract between the shareholders and the corporation (Procopio v Fisher, 83 AD2d 757,758). The parties rights must be adjudicated according to the unambiguous terms thereof and the words and phrases therein must be given their plain meaning. (Laba v Carey, 29 NY2d 302, 308). Thus, the bylaws govern the obligations of the parties and the remedies for a breach of C. The Remedy for Failure to Pay a Transfer Fee is Proscribed in the Relevant Bylaw Under general principles of contract law, where there is a claimed default, the court must first look to the contract document to ascertain the rights and obligations of the parties, including any proscribed remedies. Restatement of Contracts 2d Sec. 356. Here, plaintiff s remedy for a breach of the obligation to pay transfer fees is specifically found in Article V Section 4, which provides as follows: No assignment of any lease or transfer of the shares of the Corp. shall take effect as against the Corp. for any purpose until a proper assignment has been delivered to the Corp.; the assignee has assumed and agreed to perform and comply with all the covenants and conditions of the assigned leased or has entered into a new lease for the remainder of the term; all shares of the Corp. appurtenant to the lease have been transferred to the assignee, all sums due have been paid to the Corp.; and all necessary consents have been properly of obtained. 5 5 of 10
Plaintiff, instead of seeking a declaratory judgment and rescission of the transfer of the shares and lease, as specifically proscribed in its bylaws, simply brought an action for damages. There is no provision in the bylaws nor any case that allows plaintiff to cancel and terminate a certificate for shares and proprietary lease, issue a new certificate and proprietary lease to a purchaser, accept and deposit the fees tendered by seller in accordance with statements rendered without any reservation of rights and then sue the seller for unpaid sums due to an error on the part of plaintiff. Had plaintiff sued for declaratory judgment and rescission, they might have been able to rescind the transaction or deem the transaction incomplete or void by virtue of the alleged failure of defendant to pay the entire transfer fee. This is what was proscribed in the bylaws which plaintiff has ignored. As stated in ACE Sec. Corp., Home Equity Loan Trust, Series 2006-SL2 v. DB Structured Prods., Inc., 25 N.Y.3d 581, historically, courts have been: extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include. [C]ourts may not by construction add or excise terms, nor distort the meanings of those used and thereby make a new contract for the parties under the guise of interpreting the writing" (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475, 807 NE2d 876, 775 NYS2d 765 [2004] [internal quotation marks and citations omitted]) In Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 133 A.D.3d 96 (1 st Dept. 2015), the Appellate Division held: New York law has long held that contracting parties are generally free to limit their remedies. "A limitation on liability provision in a contract represents the parties' [a]greement on the allocation of the risk of economic loss in the event that the contemplated transaction is not fully executed, which the courts should honor" 6 6 of 10
(Metropolitan Life Ins. Co. v Noble Lowndes Intl., 84 NY2d 430 [1994]). Having proscribed its own remedy in its bylaws for failure to pay transfer fees, plaintiff cannot now ignore its own contract and pursue a remedy other than the one specifically provided for. Moreover, plaintiff accepted DeBeer s stock certificate and proprietary lease for surrender and cancellation which terminated any contractual relationship between them and operated as a discharge of any further liability such as in any lease surrender transaction. In the absence of fraud, plaintiff cannot claim that the certificate for shares and proprietary lease were not in fact canceled or that the check for the transfer fee was not accepted and deposited and, in fact, makes no such claim in its complaint. It is axiomatic that where a closing of title has occurred, all documents exchanged, checks accepted and deposited and no survival provisions, there is no remedy at law. No survival provisions exist either in the contract between DeBeer and her purchaser or in plaintiff s bylaws.. In any event, DeBeer fully complied with the bylaws. It was incumbent upon plaintiff and specifically, plaintiff s attorney, as its agent, to advise the parties as to all sums due at the closing. DeBeer s calculation of the transfer fee was first ignored, and then specifically rejected by plaintiff s counsel and a different figure provided, with the proviso that there will be no further invoices. DeBeer merely complied with the very explicit and strict instructions given by plaintiff s attorney who then proceeded to close the transaction and accept for cancellation DeBeer s certificate for shares and proprietary lease.. D. Plaintiff Failed To Mitigate Its Damages In Prudential Ins. Co. v. Dewey Ballantine, 170 A.D.2d 108 (1st Dep't. 1991), the 7 7 of 10
Appellate Division stated: More than 70 years ago, the New York State Court of Appeals stated that an injured party has an obligation to make a reasonable effort to minimize damages. Specifically, in Den Norske Ameriekalinje Actiesselskabet v Sun Print. & Publ. Assn., 226 NY 1, 7 [1919]), the Court of Appeals held "[t]he rule is of general and widespread application that one who has been injured either in his person or his property by the wrongful act or default of another is under an obligatory duty to make a reasonable effort to minimize the damages liable to result from such injury, and that if he does not make such reasonable effort he will be debarred from recovering for those additional damages which result from such failure". The courts of this State continue to apply this rule (see, Wilmot v State of New York, 32 NY2d 164, 169 [1973], rearg denied 33 NY2d 657 [1973]; McLaurin v Ryder Truck Rental, 123 AD2d 671, 673 [1986]). Here, even though the evidence establishes beyond question that the error in computation was made by plaintiff s attorney, plaintiff for unknown reasons has failed and refused to prosecute any claim against said attorney on her malpractice policy (as was suggested in the minutes of one of plaintiff s board meetings) to recover the sums claimed due. Such failure to mitigate damages operates as a complete bar to any recovery herein. E. Plaintiff Second Cause Of Action For Recovery Of Attorney s Fees Must Be Dismissed, As Plaintiff Is Not Claiming That DeBeer Is In Default Under Her Proprietary Lease DeBeer s proprietary lease provided, at paragraph 28, as follows: If the Lessee shall at any time be in default hereunder and the Lessor shall incur any expense (whether paid or not) in performing acts which the Lessee is required to perform, or in instituting any action or proceeding based on such default, or defending, or asserting a counterclaim in, any action or proceeding brought by the lessee, the expense thereof to the Lessor, including reasonable attorneys fees and disbursements, shall be paid to the Lessee to the Lessor, on demand, as additional rent. Inasmuch as this proceeding is not based on any provision or default of the 8 8 of 10
proprietary lease, but is rather based on a provision of Plaintiff s bylaws, there could not have been any default by DeBeer under a document which has no application to the facts at hand or this proceeding. Thus, recovery of legal fees for a default under a proprietary lease, does not lie. 9 9 of 10
CONCLUSION For the foregoing reasons, judgment should be awarded to plaintiff dismissing the complaint in its entirety. Dated: Huntington, New York November 4, 2016 JEFFREY C. DANIELS, PC By: Jeffrey C. Daniels, Esq. Attorney for Defendant 4 Carren Circle Huntington, New York 11743 (516) 745-5430 10 10 of 10