Boyarsky v. Froccaro

• Decision Date: 22 June 1987
• Docket Number: No. 1,No. 2,1,2
• Citation: 131 A.D.2d 710,516 N.Y.S.2d 775
• Parties: Joel BOYARSKY, etc., Appellant, v. James FROCCARO, et al., Respondents. (Action) Joel BOYARSKY, etc., Appellant, v. James FROCCARO, et al., Respondents. (Action)
• Court: New York Supreme Court — Appellate Division

Page 775

516 N.Y.S.2d 775

131 A.D.2d 710

Joel BOYARSKY, etc., Appellant, v. James FROCCARO, et al., Respondents. (Action No. 1)

Joel BOYARSKY, etc., Appellant, v. James FROCCARO, et al., Respondents. (Action No. 2)

Supreme Court, Appellate Division Second Department.

June 22, 1987.

Shaw, Goldman, Licitra, Levine & Weinberg, P.C., Garden City (J. Stanley Shaw and Jesse J. Levine, of counsel), for appellant.

Meyer, Suozzi, English & Klein, P.C., Mineola (Robert N. Zausmer, of counsel), for respondents.

Before THOMPSON, J.P., and BROWN, NIEHOFF and SPATT, JJ.

MEMORANDUM BY THE COURT.

In an action for a judgment declaring that the plaintiff has the sole right, title and interest to a parcel of real property pursuant to a contract executed by the parties (Action No. 1), the plaintiff appeals from an order of the Supreme Court, Nassau County (Becker, J.), dated July 3, 1985, which denied his motion for summary judgment, and in an action seeking indemnification for the payment of real estate taxes and other operating expenses of the subject property pursuant to the same contract (Action No. 2), the plaintiff appeals from an order of the same court, dated February 7, 1986, as, upon granting the defendants' motion for reargument of a decision of the same court, dated July 3, 1985, vacated its prior determination granting the plaintiff's motion for summary judgment, and denied the plaintiff's motion for summary judgment.

ORDERED that the order dated July 3, 1985, is affirmed; and it is further,

ORDERED that the order dated February 7, 1986, is reversed, on the law, the plaintiff's motion is granted, the plaintiff is awarded judgment in the principal amount of $255,328.16, and the matter is remitted to the Supreme Court, Nassau County, for the entry of an appropriate judgment; and it is further,

ORDERED that the plaintiff is awarded one bill of costs.

In 1981, the defendants James Froccaro and Anthony Scotto contracted to buy a 40-acre parcel of undeveloped land in the Village of Port Washington for $1,100,000. When their bank withdrew a mortgage commitment, Froccaro and Scotto entered into "a financial agreement to purchase said property" with the plaintiff, Joel Boyarsky, who provided the remaining funds. A partnership, the defendant Dallas Realty Company, was subsequently formed, consisting of two partners--the plaintiff Joel Boyarsky (representing a group of investors), and Michael Lester, a defendant in Action No. 1, the attorney for both parties, who acted as "nominee" of Froccaro and Scotto. It was agreed that Dallas Realty Company would take title to the subject property.

The agreement provided, inter alia, that if the property were resold, Boyarsky was to receive the first $1,600,000; the next $800,000, if the sales price was over $1,600,000 and up to $2,400,000, was to go to the defendants Froccaro and Scotto; and any excess over $2,400,000 was to be distributed 75% to Froccaro and Scotto and 25% to Boyarsky. In the event the property was not resold within 24 months from the date Dallas Realty Company (hereinafter Dallas) acquired title to the subject property, then Froccaro and Scotto were obligated to forfeit all their right, title and interest in the property to Boyarsky. The defendants were given an option to purchase Boyarsky's interest in the property for the sum of $1,600,000 within the 24-month period. Froccaro and Scotto were given the exclusive right to sell the property provided that Boyarsky received the first $1,600,000 within the 24-month period and were obligated to pay all costs incidental to the maintenance of the property, including real estate taxes, and to hold Boyarsky harmless with respect to those items.

The property was not sold within the 24-month period provided in the agreement, because an anticipated zoning change could not be obtained, nor did the defendants exercise their option to purchase Boyarsky's interest in the property for $1,600,000. Moreover, Froccaro and Scotto failed to pay real estate taxes on the property, which resulted in a $200,000 assessment and the scheduling of a tax lien sale. Upon the expiration of their rights under the original agreement, Froccaro and Scotto entered into two modified agreements with Boyarsky, which, inter alia, extended the terms of the original agreement. Boyarsky then instituted Action No. 1, alleging that he was entitled to all right, title and interest in the subject property because the defendants had not complied with the agreement. Boyarsky also instituted Action No. 2, seeking indemnification for the taxes and expenses which he had paid in order to avoid the tax lien sale.

The plaintiff argues that the agreement between the parties constitutes a partnership agreement and that the purchase was undertaken as a joint venture for the purpose of purchasing and reselling the property at a profit. The defendants allege that the transaction in question was actually a usurious mortgage loan, and that the writings between the parties were deliberately created by the plaintiff to camouflage the true nature of the transaction.

When determining whether a partnership (or a joint venture) exists, "the factors to be considered are the intent of the parties ...