544 W. 157th St. Hous. Dev. Fund Corp. v. Alliance Prop. Mgmt. & Dev., Inc., Index No. 104203/2012
| Decision Date | 22 November 2013 |
| Docket Number | Index No. 104203/2012 |
| Citation | 2013 NY Slip Op 33429 |
| Parties | 544 WEST 157th STREET HOUSING DEVELOPMENT FUND CORPORATION, Plaintiff v. ALLIANCE PROPERTY MANAGEMENT AND DEVELOPMENT, INC., Defendant |
| Court | New York Supreme Court |
DECISION AND ORDER
I. BACKGROUND
Plaintiff and defendant entered a Management Agreement under which defendant was to perform services as a managing agent for plaintiff's building. In this action for breach of that contract, breach of defendant's fiduciary duty as a managing agent, an accounting, and delivery of plaintiff's documents and other, unspecified personal property, plaintiff moves to dismiss defendant's affirmative defenses and counterclaim, based on their failure to state a defense or claim. C.P.L.R. § 3211(a)(7) and (b). Defendant cross-moves to amend its answer to include further factual allegations supporting its affirmative defenses and further counterclaims based on breach of contract, an account stated, services performed, quantum meruit, and unjust enrichment, in addition to its original counterclaim for attorneys' fees. C.P.L.R. § 3025(b).
II. APPLICABLE STANDARDS
C.P.L.R. § 3 025(b) permits amendments to an answer as long as they do not unfairly surprise or otherwise substantially prejudice plaintiff, McGhee v. Odell, 96 A.D.3d 449, 450 (1st Dep't 2012); Kocourek v. Booz Allen Hamilton Inc., 85 A.D.3d 502, 504 (1st Dep't 2011); Jacobson v. McNeil Consumer & Specialty Pharms., 68 A.D.3d 652, 655 (1st Dep't 2009); Thompson v. Cooper, 24 A.D.3d 203, 205 (1st Dep't 2005), and the proposed answer and counterclaims, as alleged, are meritorious. A.L. Eastmond & Sons, Inc. v. Keevily, Spero-Whitelaw, Inc., 107 A.D.3d 503 (1st Dep't 2013); McGhee v. Odell, 96 A.D.3d at 450; Humphreys & Harding, Inc. v. Universal Bonding Ins. Co., 52 A.D.3d 324, 326 (1st Dep't 2008); Shulte, Roth & Zabel, LLP v. Kassover, 28 A.D.3d 404, 405 (1st Dep't 2006). Defendant bears the burden to demonstrate the merits of the proposed amendments through admissible evidence. Greentech Research LLC v. Wissman, 104 A.D.3d 540, 541 (1st Dep't 2013); MBIA Ins. Corp. v. Greystone & Co., Inc., 74 A.D.3d 499, 500 (1st Dep't 2010); Humphreys & Harding, Inc. v. Universal Bonding Ins. Co., 52 A.D.3d at 326; Shulte, Roth & Zabel, LLP v. Kassover, 28 A.D.3d at 405.
The court may dismiss affirmative defenses already pleaded if they are without merit. C.P.L.R. § 3211(a)(7) and (b). Upon plaintiff's motion to dismiss defendant's affirmative defenses, however, it is not defendant's burden to establish its defenses by admissible evidence, but plaintiff's burden to establish that the defenses are legally inapplicable. 534 E. 11th St. Hous.Dev. Fund Corp. v. Hendrick, 90 A.D.3d 541, 542 (1st Dep't 2011); Rosenzweiq v. Givens, 62 A.D.3d 1, 7 (1st Dep't), aff'd, 13 N.Y.3d 774, 775-76 (2009); Vita v. New York Waste Servs., LLC, 34 A.D.3d 559 (2d Dep't 2006); Santilli v. Allstate Ins. Co., 19 A.D.3d 1031, 1032 (4th Dep't 2005). To defeat plaintiff's motion to dismiss affirmative defenses, defendant only need allege the factual elements of its defenses, whether in its answer or verified proposed amended answer or as supplemented by affidavits or other admissible evidence. 534 E. 11th St. Hous. Dev. Fund Corp. v. Hendrick, 90 A.D.3d at 542; Willett v. Lincolnshire Mgt., 302 A.D.2d 271 (1st Dep't 2003); 49-50 Assoc. v. Free-Tan Corp., 248 A.D.2d 128, 129 (1st Dep't 1998); Vita v. New York Waste Servs., LLC, 34 A.D.3d at 559-60.
III. THE MERITS OF DEFENDANT'S PROPOSED AMENDED AFFIRMATIVE DEFENSES
Defendant's original answer included six affirmative defenses. First, plaintiff fails to state a claim. Second, an unnamed party caused plaintiff's damages. Third, plaintiff's laches, unclean hands, waiver, and estoppel bar its claims. Fourth, defendant disputes the amount plaintiff claims. Fifth, plaintiff breached its duty of good faith and fair dealing. Sixth, plaintiff failed to mitigate damages. No factual allegations in the original answer support these defenses.
Defendant's proposed amended answer verified by its president, however, specifically alleges that plaintiff breached the parties' Management Agreement, which plaintiff's president authenticates, when plaintiff terminated the agreement withoutcause, even after defendant complied with plaintiff's notice to cure a claimed breach. Defendant further claims that plaintiff's breach caused defendant to incur damages, including expenses defendant already had paid for services to be performed under the contract, had plaintiff not terminated the contract. Defendant separately alleges that plaintiff failed to retrieve its personal property from defendant despite its attempt to return the property to plaintiff.
These factual allegations provide a basis for defendant's first and fourth affirmative defenses that plaintiff fails to state a claim and that defendant disputes the amount plaintiff claims and thus support those defenses' merits. C.P.L.R. § 3025(b); McGhee v. Odell, 96 A.D.3d at 450; MBIA Ins. Corp. v. Grevstone & Co., Inc., 74 A.D.3d at 5 00; Pier 59 Studios, L.P v. Chelsea Piers, L.P., 40 A.D.3d 363, 366 (1st Dep't 2007); Thompson v. Cooper, 24 A.D.3d at 205. See Bernstein v. Freudman, 136 A.D.2d 490, 492-93 (1st Dep't 1988). As plaintiff concedes, the first affirmative defense, that plaintiff fails to state a claim, whether for breach of contract, breach of fiduciary duty, an accounting, or delivery of personal property, remains viable until all other defenses fail or plaintiff prevails on its claims. Id. See, e.g., Rosenzweig v. Givens, 62 A.D.3d at 7, aff'd, 13 N.Y.3d at 775-76; Cromwell v. Le Sannom Bldg. Corp., 177 A.D.2d 372 (1st Dep't 1991); Smith v. Kinsey, 50 A.D.3d 1456, 1457 (4th Dep't 2008); Santilli v. Allstate Ins. Co., 19 A.D.3dat 1032.
The factual allegations supporting plaintiff's failure to mitigate damages, however, relate only to plaintiff's claim for delivery of its personal property, which seeks only injunctive relief and not damages. Plaintiff's duty to mitigate damages is to make efforts to diminish the monetary losses plaintiff claims from defendant's breach of the Management Agreement or breach of any fiduciary duty. E.g., Assouline Ritzl LLC v. Edward I. Mills & Assoc., Architects, PC, 91 A.D.3d 473, 474 (1st Dep't 2012); LaSalle Bank N.A. v. Nomura Asset Capital Corp., 47 A.D.3d 103, 107-108 (1st Dep't 2007). Plaintiff's failure to retrieve its personal property despite defendant's attempt to return the property to plaintiff is unrelated to the claimed breach of contract or fiduciary duty. Therefore defendant's sixth affirmative defense that plaintiff failed to mitigate damages, as alleged, is inapplicable.
Defendant's second affirmative defense in its proposed amended answer lacks merit because no factual allegations identify the nonparty or culpable conduct beyond defendant's control that caused plaintiff's claimed damages. 170 W. Vil. Assoc. v. G & E Realty, Inc., 56 A.D.3d 372, 373 (1st Dep't 2008); 49-50 Assoc. v. Free-Tan Corp., 248 A.D.2d at 129; Robbins v. Growney, 229 A.D.2d 356, 358 (1st Dep't 1996); Plemmenou v. Arvanitakis, 39 A.D.3d 612, 613 (2d Dep't 2007). See Humphreys &Harding, Inc. v. Universal Bonding Ins. Co., 52 A.D.3d at 326; Shulte, Roth & Zabel, LLP v. Kassover, 28 A.D.3d at 405; Cardona v. Cruz, 271 A.D.2d 221, 222 (1st Dep't 2000). As plaintiff points out, such a person or entity would have usurped defendant's position as the managing agent.
Despite defendant's minimal burden, its third affirmative defense is likewise bereft of any evidentiary detail. This defense merely relies on defendant's letter to plaintiff dated June 5, 2012, which claimed compliance with plaintiff's Notice to Cure, and to which plaintiff never responded, without delineating the cure or any contractual or other requirement that plaintiff respond to defendant's correspondence. Absent any facts specifying either party's act or omission, how it met or failed to meet the party's obligations, or how it worked to defendant's detriment, defendant fails to support any part of defendant's third affirmative defense: laches, unclean hands, waiver, or estoppel. 49-50 Assoc. v. Free-Tan Corp., 248 A.D.2d at 129; Robbins v. Growney, 229 A.D.2d at 358. See A.L. Eastmond & Sons, Inc. v. Keevily, Spero-Whitelaw, Inc., 107 A.D.3d 503; Sabo v. Alan B. Brill, P.C., 25 A.D.3d 420, 421 (1st Dep't 2006); Cardona v. Cruz, 271 A.D.2d at 222.
First, any damages defendant may have incurred were due to plaintiff's wrongful termination of the parties' contract and therefore would be recoverable under the contract, as defendant alleges in its proposed counterclaim for breach of contract.Plaintiff's failure to respond to defendant's correspondence is just part of that alleged breach, to which the equitable defenses of laches, unclean hands, and estoppel do not apply. Garber v. Stevens, 94 A.D.3d 426, 427-28 (1st Dep't 2012); Benjamin v. Madison Med. Bldg. Condominium Bd. of Mgrs, 66 A.D.3d 510, 511-12 (1st Dep't 2009).
Second, even if an equitable defense were applicable, defendant has not pointed to, nor does the court discern, a single factual allegation of any element of laches, unclean hands, estoppel, or waiver in defendant's answer, its proposed amended answer, or its president's affidavit. Willett v. Lincolnshire Mgt., 302 A.D.2d 271; 49-50 Assoc. v. Free-Tan Corp., 248 A.D.2d at 129; Robbins v. Growney, 229 A.D.2d at 358. See 170 W. Vil. Assoc. v. G & E Realty, Inc., 56 A.D.3d at 372-73; Plemmenou v. Arvanitakis, 39 A.D.3d at 613; Petracca v. Petracca, 305 A.D.2d 556, 567 (2d Dep't 2003). From the few facts recited, the implication closest to laches is that plaintiff unreasonably delayed by never responding to defendant's cure claimed June 5, 2012. Yet plaintiff...
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