SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF DUTCHESS X JON FELLS -against- Plaintiff, COMPLAINT Index No.: CHAUNCEY MAGGIACOMO Defendant. X Plaintiff, by its attorney, Jeff Feigelson, Esq., at all times mentioned, upon information and belief, alleges: PRELIMINARY STATEMENT 1. This is a case where CHAUNCEY MAGGIACOMO (the Defendant ) took advantage of JON FELLS (the Plaintiff ), a long-time friend of over 25 years who was about to lose his home in foreclosure. The Plaintiff was desperate for someone to help him save his house a house that had hundreds of thousands of dollars of equity. The Defendant volunteered to help the Plaintiff but the Defendant s real intention was to steal the equity in the Plaintiff s house for himself. The Defendant has accomplished his goal and the Plaintiff commences this action to fight this injustice. PARTIES 2. The Plaintiff is an individual residing in Dutchess County, New York. 3. The Defendant is an individual residing in Dutchess County, New York. 4. The Plaintiff and the Defendant have been close friends for over 25 years.
FACTS 5. From on or about 1998 until February 2, 2008, the Plaintiff was the sole owner of approximately 27 acres of land located at 61 E. Dorsey Lane, Town of Hyde Park, New York (the Property ), which Property is also known as Section 6163, Block 2, Lot 693779. During such time, the Plaintiff had his principal residence at the Property. 6. The existing buildings located at the Property contain two structures a house containing two residential apartments and a cottage which served as the Plaintiff s principal residence. 7. During the Plaintiff s ownership of the Property, the Plaintiff obtained a mortgage from an institutional lender, Accredited Home Lenders (the Lender ). 8. In calendar year 2006, as a result of an illness, the Plaintiff defaulted under the mortgage and the Lender commenced a foreclosure action. 9. The Plaintiff was desperate to save the Property from foreclosure. Many individuals approached the Plaintiff with the promise of helping the Plaintiff keep his house. During the fall and winter of calendar year 2007, the Defendant volunteered to assist the Plaintiff. Since the Plaintiff trusted Defendant, the Plaintiff decided that working with the Defendant would be the most prudent course to follow. The Plaintiff and the Defendant discussed the following two options: either having (i) the Defendant make a mortgage loan to the Plaintiff which would pay off the existing Lender or (ii) Defendant acquire title to the Property at the foreclosure sale on behalf of the Plaintiff and the Defendant. 2
10. The Plaintiff s desperation and his trust in the Defendant is evidenced by the following email which was sent by the Plaintiff to the Defendant on or about October 11, 2007: CHAUNCEY COULD YOU CHECK WITH THE FRIENDS AND PEOPLE THAT YOU KNOW BECAUSE THIS IS SOMETHING THAT I CAN T GET OUT OF BY MY SELF I HAVE TRIED..I WOULD BE WILLING TO PAY $100,000 DOLLARS TO SOME BODY THAT CAN HELP ME OUT OF THIS SITUATION THAT I M IN AND TURN HOUSE OVER TO THEM AS SECURITY IN DEAL BUT IT HAS TO BE SOMEBODY GOOD SO I M PROTECTED AS THIS PROPERTY IS THE KEY TO MY FUTURE. PLEASE IF YOU CAN PUT SOME TIME INTO THIS AS MY LAWYER NEEDS TO CALL THE GROUP OF INVESTORS THAT HAVE LOAN AND TELL THEM BEFORE WE GO TO COURT AGAIN. THANK YOU IN ADVANCE YOUR FRIEND ALWAYS JON!!! 11. The following are excerpts from an email sent by the Defendant to the Plaintiff on or about October 29, 2007: jon time is so important if we do this how long will it take the credit union to approve me?... you may need 4K to 5K a month to maintain property while you try to refinance 12. On or about December 2007, the Defendant agreed to make a mortgage loan to the Plaintiff which would pay off the existing Lender. This agreement was reflected in a writing between the Plaintiff and the Defendant dated on or about December 11, 2007, a copy of which is attached hereto as Exhibit A. 13. After consulting an attorney, for various legal reasons, the Plaintiff and the Defendant decided it would be more advantageous if the deal was structured so that the Defendant actually purchased the Property at the foreclosure sale (and not before foreclosure sale) on behalf of the Plaintiff and the Defendant. 3
14. On or about late December 2007, the Plaintiff and the Defendant entered into an agreement (the Contract ) whereby the Defendant would purchase the Property at the foreclosure sale for the benefit of both the Plaintiff and the Defendant. The Plaintiff and the Defendant agreed that (i) the Plaintiff would continue to collect rent from the existing tenants, (ii) the Plaintiff would continue to maintain the Property, (iii) the Plaintiff would pay the Defendant an amount each month equal to the carrying costs relating to the Property, including without limitation, the real estate taxes, insurance, estimated maintenance costs and the debt service payment that the Defendant would incur on the mortgage it would obtain to purchase the Property, (iv) the Defendant would hold legal title to the Property but that the Plaintiff would retain an equitable interest in the Property and (v) that the Defendant would hold legal title to the Property for up to two years at which time the Defendant would sell the Property to either the Plaintiff or a third party, and Defendant would receive an amount equal to all of its out-of-pocket costs plus up to a $100,000 profit. 15. Prior to the foreclosure sale, the Plaintiff and the Defendant jointly attended one or more meetings with prospective mortgage lenders in order to determine whether the Defendant could obtain mortgage financing for its bid at the foreclosure sale. The Plaintiff cooperated in any way he could to make sure the Defendant knew everything about the Property. As a result of such cooperation, the Defendant learned that the fair market value of the Property greatly exceeded the amount due to the existing Lender. In determining this value, the Plaintiff delivered various appraisals to the Defendant indicating the Property had hundreds of thousands of dollars of equity. Additionally, the Plaintiff delivered to the Defendant a copy of a contract which was previously executed 4
by a developer on or about 2006 for the Property which had a purchase price of $2.4 million (which contract was subsequently terminated). The Defendant was also became aware that another developer had previously offered Plaintiff $2.24 million for the Property. 16. On or about the date of the foreclosure sale, there was approximately $475,000 due under the mortgage. 17. On or about the date of the foreclosure sale, the fair market value of the Property far exceeded the amount owed to the existing Lender. 18. On or about January 2, 2008, the Defendant was the winning bidder at the foreclosure sale with a bid of $483,515. 19. On or about February 2, 2008, the Defendant obtained legal title to the Property pursuant to the terms of a deed from the court appointed referee. 20. Subsequent to the Defendant obtaining title to the Property, pursuant to the terms of the Contract, (i) the Plaintiff collected rent from the tenants located at the Property, (ii) the Plaintiff continued to maintain and make repairs to the Property, including without limitation, building a stone wall and snowplowing at the Property, (iii) the Plaintiff incurred various expenses with respect to the common areas of the Property, including the utility bill for certain common areas of the Property and the garbage bills for the Property and (iv) the Plaintiff paid $6,000 per month to the Defendant as an estimation of the Defendant s carrying costs and as a partial reimbursement for the downpayment put down by the Defendant to purchase the Property. 21. Subsequent to the Defendant obtaining title to the Property, each time that the Plaintiff made its monthly payment to the Defendant, the Plaintiff accompanied such 5
payment with a letter to the Defendant confirming that such money is going towards the Plaintiff s repurchase of the Property. A copy of one of such letters is attached hereto as Exhibit B. Additionally, each check signed by the Plaintiff and delivered to the Defendant contains the following notation on the check: for my re-purchase of 61. E. Dorsey Lane. Unbeknownst to the Plaintiff, when depositing such checks, the Defendant crossed out such notation and inserting the following: For Rent. 22. To suggest that the Plaintiff agreed to pay rent of $6,000 per month is ridiculous. The fair market rent for the Property is no more than $3,000 per month. No rational person would pay rent of $6,000 per month for the Property. As set forth above, the Plaintiff paid $6,000 to the Defendant each month not as rent, but as the amount which he agreed to pay under the Contract. 23. Between January 2, 2008 and April 2008, the Defendant told the Plaintiff numerous times that the Defendant has no interest in dealing with the Property and that the Plaintiff should be the one who deals with and negotiates with any prospective purchasers. At the same time that Defendant is telling this to the Plaintiff, the Defendant is scheming to cut out the Plaintiff and is secretly soliciting and negotiating with developers, including Toll Brothers, to see if they are interested in purchasing the Property. 24. On or about April 2008, the Defendant informed the Plaintiff that (i) the Contract would not be put in writing, (ii) the Contract was terminated and no longer in effect and (iii) the Plaintiff s only interest in the Property was that of a tenant with respect to one of the units at the Property. 6
25. After the Defendant informed the Plaintiff that the Defendant would not be complying with the Contract, the Plaintiff put a stop order payment on the most recent $6,000 check he gave the Defendant. A copy of the stop order payment is attached hereto as Exhibit C. 26. As a result of the stop order payment, the Defendant filled out a criminal complaint with the Dutchess County Sheriff s department. Deputy Merritt from the Dutchess County Sheriff s Department has informed the Plaintiff that the Plaintiff will be arrested shortly. 27. The fear, betrayal and desperation felt by the Plaintiff is reflected in the following excerpts from an email dated April 27, 2008 from the Plaintiff to the Defendant: AS YOU KNOW I TRUSTED YOU VERY MUCH AND FELT YOU WOULD NOT TAKE ADVANTAGE OF ME HOW CAN A FRIEND TAKE $6,000 PER MONTH AND ASK HIS FRIEND OF 26 YERS TO CALL IT RENT?... I HAVE ALWAYS LOOKED UP TO YOU AS A PERSON WITH HIGH REGARD FOR AL YOU DO THIS WHOLE THING HAS BEEN VERY TROUBLING TO ME AS I REALLY THOUGHT YOU WOULD HELP ME. $100,000 FOR A FRIEND TO HELP OUT ANOTHER FRIEND WHO WAS IN TROUBLE WHO WATCHED HIM GROW UP NEXT TO PROPERTY ON SOUTH AVENUE IS A LOT OF MONEY, AND I WAS NOT ASKING YOU TO DO IT FOR FREE. CHAUNCEY PLEASE CAN YOU DO SOMETHING FOR ME AS I NEED YOU. HOW WOULD YOU FEEL IF YOU AKSED ME TO HELP YOU OUT OF A PROBLEM LIKE THIS AND YOU ASKED ME TO HOLD DEED TO PROPERTY AND YOU WERE MAKING PAYMENTS TO ME MONTHLY, AND ON OTHER SIDE I WAS TRYING TO SELL YOUR PROPERTY THAT YOU ASKED ME TO HOLD FOR YOU, I WILL TELL YOU HOW YOU WOULD FEEL. YOU WOULD BE SICK AND WOULD CRY.. AGAIN I KNOW YOU KNOW RIGHT FROM WRONG AND YOU KNOW IN YOUR HEART WHAT IS HAPPENING IS WRONG 7
IF YOU HAVE NO PLANS TO LET ME BUY BACK MY PROPERTY AS WE AGREED YOU HAVE TO LET ME KNOW ASAP. I M VERY SCARED RIGHT NOW AND ONLY YOU CAN PUT MY MIND AT EASE, AS I WOULD HAVE NEVER EVER HAVE PUT YOU THROUGH ALL OF THIS, IT FEELS LIKE I M DYING EVERYDAY (emphasis added) 28. On or about June 3, 2008, the Defendant delivered a copy of a 3 day notice to vacate the Property. A copy of such notice is attached as Exhibit D. FIRST CLAIM FOR RELIEF (CONTRACT CLAIM) 29. Plaintiff repeats and realleges the allegations set forth in Paragraphs 1-28 above as if realleged fully herein. 30. As a result of the Defendant s breach of its obligations under the Contract, Plaintiff has been damaged in an amount to be determined at trial. SECOND CLAIM FOR RELIEF (FRAUD CLAIM) 31. Plaintiff repeats and realleges the allegations set forth in Paragraphs 1-30 above as if realleged fully herein. 32. The Defendant fraudulently represented to the Plaintiff that he was entering into the Contract and that the Contract was in full force and effect. 33. The Defendant s representations to the Plaintiff regarding the existence of the Contract were false. 34. The Defendant knew that the Property had significant equity and the Defendant made such representations regarding the existence of the Contract to deceive Plaintiff. 35. As a result of the Defendant s representations, the Plaintiff forego other opportunities it had to save the Property from foreclosure. 8
36. The Plaintiff believed the Defendant s representations regarding the existence of the Contract and acted in reliance of such representations. 37. The Plaintiff has been injured by its reliance on such representations. 38. As a result of the Defendant s fraudulent representations and actions, the Plaintiff has been damaged in an amount to be determined at trial. FOURTH CLAIM FOR RELIEF (SPECIFIC PERFORMANCE) 39. Plaintiff repeats and realleges the allegations set forth in Paragraphs 1-38 above as if realleged fully herein. 40. The Plaintiff is ready, willing and able to continue (i) performing its obligations under the Contract and (ii) paying the carrying costs associated with the Property. 41. But for the Defendant s willful termination of the Contract, the Defendant has the ability to perform its obligations under the Contract. 42. The Plaintiff asks for an order requiring the Defendant to comply with the Contract. THIRD CLAIM FOR RELIEF (CONSTRUCTIVE TRUST) 43. Plaintiff repeats and realleges the allegations set forth in Paragraphs 1-42 above as if realleged fully herein. 44. The Defendant had a confidential and fiduciary relationship with the Plaintiff. 45. The Defendant would receive an unjust enrichment if the Contract is terminated. 9
46. The Plaintiff requests that an order be issued that the Property is an asset of a partnership that is held by the Defendant in trust for the benefit of the Plaintiff and the Defendant. WHEREFORE, the Plaintiff demands judgment against the Defendant in an amount determined at trial and/or an order requiring the Defendant to comply with the terms of the Contract and/or an order that the Property is an asset of a partnership that is held by the Defendant in trust for the benefit or Plaintiff and Defendant, together with any further and additional relief that the Court deems just and proper. Dated: Wassaic, New York June 6, 2008 JEFF FEIGELSON, ESQ. Attorney for Plaintiff Office Address: 303 North Tower Hill Road Wassaic, New York 12592 Tel. (845) 677-3819 10
Affidavit STATE OF NEW YORK ) COUNTY OF DUTCHESS ) JON FELLS, being duly sworn, deposes and says: I am the plaintiff in this action. I have read the foregoing complaint and the complaint is true to the knowledge of deponent, except as to the maters therein stated to be alleged on information and belief, and that as to those matters I believe them to be true. JON FELLS Sworn to before me this day of June, 2008 Notary Public 11
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF DUTCHESS X JON FELLS -against- Plaintiff, Index No. CHAUNCEY MAGGRACOMO Defendant. X SUMMONS AND COMPLAINT JEFF FEIGELSON, ESQ. ATTORNEY FOR PLAINTIFF 303 NORTH TOWER HILL ROAD WASSAIC, NEW YORK 12592 (845) 677-3819 FAX (212) 401-4787 12
EXHIBIT A 13
EXHIBIT B 14
EXHIBIT C 15
EXHIBIT D 16