Family Health Mgmt., LLC v. Rohan Devs., LLC

• Decision Date: 09 June 2022
• Docket Number: Appeal No. 15351,Index Nos. 156905/19,595797/19,Case No. 2021-02510
• Citation: 207 A.D.3d 136,171 N.Y.S.3d 44
• Parties: FAMILY HEALTH MANAGEMENT, LLC, et al., Plaintiffs–Respondents, v. ROHAN DEVELOPMENTS, LLC, Defendant–Appellant. Rohan Developments, LLC, Third–Party Plaintiff–Appellant, v. K. Zark Medical, P.C., et al., Third–Party Defendants–Respondents.
• Court: New York Supreme Court — Appellate Division

207 A.D.3d 136

171 N.Y.S.3d 44

FAMILY HEALTH MANAGEMENT, LLC, et al., Plaintiffs–Respondents,

v.ROHAN DEVELOPMENTS, LLC, Defendant–Appellant.

Rohan Developments, LLC, Third–Party Plaintiff–Appellant,

v.K. Zark Medical, P.C., et al., Third–Party Defendants–Respondents.

Appeal No. 15351

Index Nos. 156905/19

595797/19

Case No. 2021-02510

Supreme Court, Appellate Division, First Department, New York.

ENTERED June 9, 2022

Graff Law Offices, New York (Michael P. Graff of counsel), for appellant.

The Law Offices of Kenneth L. Kutner, New York (Kenneth L. Kutner of counsel), for respondents.

Dianne T. Renwick, J.P., Tanya R. Kennedy, Saliann Scarpulla, Julio Rodriguez III, John R. Higgitt, JJ.

RODRIGUEZ, J.

At issue on this appeal is whether Supreme Court properly granted plaintiffs’ motion for summary judgment on their conversion claim. Since the funds at issue were paid to defendant in contemplation of a lease that never became effective, summary judgment was properly granted, as discussed below.

Contrary to defendant's contention, it did not have a right to the $96,000 at issue, because the lease was never "signed and delivered by both Landlord and Tenant," as required for it to bind the parties. None of the versions of the lease in the record are signed by plaintiffs. The fact that various exhibits to the lease were signed by plaintiffs or its guarantors is of no moment. Communications suggesting that plaintiffs had signed or would sign the lease do not change the fact that no signed lease was ever delivered (see Hamilton v. Croman, 2015 N.Y. Slip Op. 32525[U], *8–9, 2015 WL 9999519 [Sup. Ct., N.Y. County 2015] ; see also 219 Broadway Corp. v. Alexander's, Inc., 46 N.Y.2d 506, 512, 414 N.Y.S.2d 889, 387 N.E.2d 1205 [1979] ); nor did plaintiffs ever receive keys, take possession of the premises, or pay rent (see 709 Rte. 52, Inc. v. DelCastillo, 27 Misc.3d 127[A], 2010 N.Y. Slip Op. 50581[U], *1–2, 2010 WL 1408625 [App. Term, 2d Dept. 2010] ). Although defendant eventually signed and delivered the lease, both parties’ signatures were required for the lease to be binding.

It is clear as a matter of law that the signing and delivery requirement was not waived or otherwise ineffective, because that requirement was a condition precedent to the formation of a binding lease agreement (see Felipe v. 2820 W. 36th St. Realty Corp., 20 A.D.3d 503, 504, 798 N.Y.S.2d 738 [2d Dept. 2005] ; Brois v. DeLuca, 154 A.D.2d 417, 418, 546 N.Y.S.2d 3 [2d Dept. 1989] ). Moreover, "[w]hen parties do not intend to be bound until their agreement is reduced to writing and signed, there is no contract in the interim even if the parties have orally agreed upon all the terms," and the doctrines of promissory estoppel, equitable estoppel, and part performance are not effective (see Funk v. Seligson, Rothman & Rothman, Esqs., 165 A.D.3d 429, 430, 85 N.Y.S.3d 48 [1st Dept. 2018] [internal quotation marks omitted]). Even an executed oral modification could not have been effective, because there was no underlying written agreement to modify (see Brois, 154 A.D.2d at 418, 546 N.Y.S.2d 3 ).

Moreover, a review of the applicable law demonstrates that plaintiffs established the elements of their conversion claim.

Conversion occurs "when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession" ( Colavito v. New York Organ Donor Network, Inc., 8 N.Y.3d 43, 49–50, 827 N.Y.S.2d 96, 860 N.E.2d 713 [2006] ).

"It is well settled that an action will lie for the conversion of money where there is a specific, identifiable fund and an obligation to return or otherwise treat in a particular manner the specific fund in question" ( Manufacturers Hanover Trust Co. v. Chemical Bank , 160 A.D.2d 113, 124, 559 N.Y.S.2d 704 [1st Dept. 1990], lv denied 77 N.Y.2d 803, 568 N.Y.S.2d 15, 569 N.E.2d 874 [1991] ; see Thys v. Fortis Sec. LLC, 74 A.D.3d 546, 547, 903 N.Y.S.2d 368 [1st Dept. 2010] ; Republic of Haiti v. Duvalier, 211 A.D.2d 379, 384, 626 N.Y.S.2d 472 [1st Dept. 1995] ). "Although the action must be for recovery of a particular and definite sum of money, the specific bills need not be identified" ( Thys, 74 A.D.3d at 547, 903 N.Y.S.2d 368 ; see Gordon v. Hostetter, 37 N.Y. 99, 103 [1867] ).

Thus, the first and main issue before this Court is whether the $96,000 is a "specific, identifiable fund" ( Manufacturers Hanover Trust Co. , 160 A.D.2d at 124, 559 N.Y.S.2d 704 ). As a specific amount is conceded by defendant and represented by plaintiffs’ check, this Court finds that the funds at issue are specifically identifiable.

The rules gleaned from Manufacturers Hanover Trust Co . and Thys, that "[m]oney, specifically identifiable and segregated, can be the subject of a conversion action" ( Manufacturers Hanover Trust Co., 160 A.D.2d at 124, 559 N.Y.S.2d 704 ) and that although an action for conversion of money "must be for recovery of a particular and definite sum of money, the specific bills need not be identified" ( Thys , 74 A.D.3d at 547, 903 N.Y.S.2d 368 ), can both be traced to a Court of Appeals decision from 1867, ( Gordon v. Hostetter, 37 N.Y. 99 [1867], supra ) (see Manufacturers Hanover Trust Co., 160 A.D.2d at 124, 559 N.Y.S.2d 704, citing Payne v. White, 101 A.D.2d 975, 976, 477 N.Y.S.2d 456 [3d Dept. 1984], citing Marine Midland Bank v. Russo Produce Co. , 65 A.D.2d 950, 951, 410 N.Y.S.2d 730 [4th Dept. 1978], mod 50 N.Y.2d 31, 427 N.Y.S.2d 961, 405 N.E.2d 205 [1980], citing Gordon ; Thys, 74 A.D.3d at 547, 903 N.Y.S.2d 368, citing Jones v. McHugh, 37 A.D.2d 878, 879, 325 N.Y.S.2d 102 [3d Dept. 1971], citing Gordon ). The underlying principles of Gordon, and the case law derived from it, are instructive to our analysis here.

In Gordon, which involved an action to recover damages for the conversion of embezzled money, the defendant undisputedly stole "eighty-five or ninety dollars" from the plaintiffs, who were his employers ( 37 N.Y. at 100 ). The jury rendered a verdict in favor of the plaintiffs. After reserving the case for further consideration, however, the trial court held, inter alia, "[t]hat the action, being in the nature of trover, could not be maintained without proof that certain specific property had been converted by the defendant" and that the plaintiffs "had failed to prove the conversion of any particular money, except the fifteen dollars in gold," which was the only money of which the plaintiffs "could speak with certainty" ( id. at 100–101 ). The trial court held that even though the defendant conceded to the amount taken, he was not responsible for it because the plaintiffs were unable to distinguish what was taken from other like coins and bills, making the stolen funds unidentifiable to the defendant ( id. at 101–102 ). The judgment was affirmed on intermediate appeal, and the Court of Appeals reversed, directing final judgment for the plaintiffs on the original verdict ( id. at 104 ).

The Court of Appeals observed that under the trial court's ruling, "a party appropriating [money] wrongfully would ordinarily be secure of immunity" ( id. at 102 ). Noting that "[n]o one, in the practical affairs of life, retains a specific description of each bill which comes to his hands," the Court stated that "[i]f the fact of the unlawful taking be established, and the amount converted is ascertained, the culprit cannot avail himself of his own act, in secreting or destroying the bills, as a protection against ... prosecution" ( id. ), and as the defendant had admitted the unlawful taking and the amount was conceded, "there was no occasion to prove the particulars, in which the coin and bills in question differed from all others of like denomination" ( id. ). The Court thus held that where the defendant admitted that the money that he took was plaintiffs’ money and conceded to the amount taken, "[t]he money was identified so far as was needful to determine the rights of the parties; and the plaintiffs were bound to go no further" ( id. ).

In its analysis, the Court discussed its prior decision in an action for replevin of bank bills that were not "so described" in the pleadings but corresponded in amount with the money withheld ( id. at 102–103 ). Citing with approval the earlier Court's answer to the defendant's objection that the action would not lie without further identification of the bills, the Court in Gordon affirmed that " ‘[a]ll that is necessary is[ ] that the proof should be sufficient to enable the court to give judgment for the delivery of the particular thing to which the plaintiff is entitled; and if ... delivery cannot be made ... then the value is to be collected’ " ( id. at 102–103, quoting Graves v. Dudley, 20 N.Y. 76, 80 [1859] ).

Further, the Gordon opinion discussed an earlier case from the Court of Exchequer Chamber where the defendant argued that the action for trover would not lie for money out of a bag, which could not be identified ( id. at 103 ). In that case, it was stated that "this action lies as well for money out of a bag as of corn which cannot be known" ( id. ). The Gordon Court confirmed that "[t]he doctrine of this case has since been accepted as settled law; and trover has been repeatedly held to lie for the conversion of determinate sums, though the specific coin and bills were not identified" ( id. ).

Although trover is the cause of action at issue in Gordon, over time, "[t]rover gave way slowly to the tort of conversion," and "[t]he technical differences between trover and conversion eventually disappeared" ( Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283, 288, 832 N.Y.S.2d 873, 864 N.E.2d 1272 [2007] ; see Restatement [Second] of Torts § 222A, Comment a ["The modern action for the tort called conversion is descended from the old common law action of trover"]).

Turning to more recent case law from this Department, in Manufacturers Hanover Trust Co., the plaintiff made a transfer to the defendant...