Harris v. Reagan

• Decision Date: 07 November 2019
• Docket Number: 527716
• Citation: 112 N.Y.S.3d 333,177 A.D.3d 1056
• Parties: Calvin L. HARRIS, Appellant, v. Joseph C. REAGAN, Respondent.
• Court: New York Supreme Court — Appellate Division

177 A.D.3d 1056

112 N.Y.S.3d 333

Calvin L. HARRIS, Appellant,

v.Joseph C. REAGAN, Respondent.

527716

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

Calendar Date: September 9, 2019

Decided and Entered: November 7, 2019

Bellavia Blatt, PC, Mineola (Steven H. Blatt of counsel), for appellant.

Harris Beach, LLP, Pittsford (Kelly S. Foss of counsel), for respondent.

Before: Lynch, J.P., Clark, Devine and Pritzker, JJ.

MEMORANDUM AND ORDER

Devine, J. Appeal from an order of the Supreme Court (O'Shea, J.), entered October 9, 2018 in Cortland County, which granted defendant's motion for an order permitting him to make payments into escrow.

The underlying facts are set forth in this Court's prior decision ( 161 A.D.3d 1346, 77 N.Y.S.3d 187 [2018] ). As is relevant here, this case involves a dispute over the terms of an agreement providing that, under certain circumstances, plaintiff would convey his shares in two automobile dealerships to defendant in return for monthly payments of $15,000 for 20 years. Defendant received the shares and began making the payments after plaintiff was found guilty by a jury of murdering his wife in 2007. Plaintiff successfully challenged that verdict and, after extended efforts, was acquitted in 2016. Plaintiff claims that the agreement required the return of the shares, cessation of payments and transmutation of prior payments to salary upon his acquittal, and that defendant has converted his property by retaining the shares. Defendant maintains that all of that is a fiction, that he purchased the shares and that the monthly payments are installments on the purchase price. After we reversed an order granting defendant's motion to dismiss the complaint ( 161 A.D.3d at 1348–1350, 77 N.Y.S.3d 187 ), defendant answered and counterclaimed for unjust enrichment upon the ground that, if plaintiff prevails, defendant is entitled to damages for the "salary" paid to plaintiff given that nothing of value was received in return. Defendant further moved for an order directing that he make the monthly payments into escrow. Supreme Court granted the motion, prompting this appeal by plaintiff.

We reverse. Defendant's position is that he purchased plaintiff's shares and that the monthly payments must continue until the purchase price is paid in full, while plaintiff asserts that the shares should have been returned to him after his acquittal and that the payments must continue until that transfer occurs. In other words, although there is a dispute as to the nature of the payments, defendant is obliged to make them while he possesses the shares under either party's interpretation of the agreement. His stated goal in seeking authorization to make the payments into escrow was to create a pool of money to satisfy an eventual judgment, but CPLR 2701 cannot be used to achieve that end where the parties are locked "in a disputed contract action" like this one ( Renad, Inc. v. Grana, Ltd., 127 A.D.2d 994, 995, 512 N.Y.S.2d 940 [1987] ; see Norwalk v. J.P. Morgan & Co., 268 A.D.2d 413, 416, 702 N.Y.S.2d 96 [2000] ; Rosenblat v. Seidman, 243 A.D.2d 699, 699–700, 663 N.Y.S.2d 290 [1997] ; Island Intellectual Prop. LLC v. Reich & Tang Deposit Solutions, LLC, 57 Misc.3d 195, 216, 60 N.Y.S.3d 744 [Sup. Ct., N.Y. County 2017], mod on other grounds 155 A.D.3d 542, 65 N.Y.S.3d 188 [2017] ).¹ Defendant's counterclaim for unjust enrichment does not sound in contract, but is of dubious merit given that plaintiff's entitlement to the monthly payments is governed by the terms of the parties' agreement (see Cox v. NAP Constr. Co., Inc., 10 N.Y.3d 592, 607, 861 N.Y.S.2d 238, 891 N.E.2d 271 [2008] ; Catlyn & Derzee, Inc. v. Amedore Land Devs., LLC, 166 A.D.3d 1137, 1139, 87 N.Y.S.3d 661 [2018] ). In any event, to allow defendant to invoke CPLR 2701 simply because of that claim's existence "would be too facile a way to avoid and undermine the settled" rule against using the statute "to preserve a fund for eventual execution of judgment in suits for money damages" ( Credit Agricole Indosuez v. Rossiyskiy Kredit Bank, 94 N.Y.2d 541, 548, 708 N.Y.S.2d 26, 729 N.E.2d 683 [2000] ). Defendant, as a result, failed to establish...