In re Dobrayel

• Decision Date: 09 December 2002
• Docket Number: Adversary No. 01-5076A.,Bankruptcy No. 01 B 21116 ASH.
• Citation: 287 B.R. 3
• Parties: In re Elias DOBRAYEL, Debtor. David Sandak, D.D.S., Plaintiff, v. Elias Dobrayel, Defendants.
• Court: U.S. Bankruptcy Court — Southern District of New York

287 B.R. 3

In re Elias DOBRAYEL, Debtor.

David Sandak, D.D.S., Plaintiff, v. Elias Dobrayel, Defendants.

Bankruptcy No. 01 B 21116 ASH.

Adversary No. 01-5076A.

United States Bankruptcy Court, S.D. New York.

December 9, 2002.

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Sweeney, Cohn, Stahl & Vaccaro, By Julius W. Cohn, White Plains, NY, for Plaintiff.

Elias M. Dobrayel, Mahopac, NY, Pro Se.

CORRECTED DECISION ON LIABILITY AND DISCHARGEABILITY AFTER TRIAL

ADLAI S. HARDIN, Jr., Bankruptcy Judge.

Plaintiff David Sandak, a dentist ("Sandak"), commenced this adversary proceeding against debtor-defendant Elias M. Dobrayel, a contractor ("Dobrayel"), (1) to establish Dobrayel's liability to Sandak in connection with Dobrayel's undertaking to construct office space for Sandak's new dental practice, and (2) for a determination that all or a portion of such liability is non-dischargeable under 11 U.S.C. § 523(a)(2). Dobrayel asserted a counterclaim against Sandak for $50,000 on account of work performed. The case was tried to the Court and, at the Court's request, plaintiff submitted proposed post-trial findings of fact based on the evidence.

Jurisdiction

The Court has core jurisdiction over this adversary proceeding under 28 U.S.C. §§ 1334(a) and 157(a) and (b) and the "Standing Order of Referral of Cases to Bankruptcy Judges" of the United States District Court for the Southern District of New York, dated July 10, 1984 (Ward, Acting C.J.).

Findings of Fact and Conclusions of Law

The following constitute the Court's findings of fact and conclusions of law under Rule 7052 of the Federal Rules of Bankruptcy Procedure.

Background Findings

Sandak signed a lease for a dental office at 10 Old Mamaroneck Road, White Plains, New York (the "Premises") in November 1997. Some time in October or November 1997 Sandak signed a contract with Serge Wisniewski ("Wisniewski") to design the interior space for the Premises for a dental office. In January 1998 the interior space of the Premises was substantially demolished in preparation for construction of Sandak's new dental office. Wisniewski produced architectural drawings dated February 6, 1998 for Sandak's dental office (the "Wisniewski Plans") consisting of sheet "1 of 3" covering interior partitions, sheet "2 of 3" entitled "plumbing plan," and sheet "3 of 3" entitled "electrical and reflected ceiling plan."

In early February 1998 Sandak was introduced to Dobrayel by Joel Blauvert, a dental equipment salesperson. Dobrayel prepared and submitted a proposal to Sandak dated February 16, 1998 (Trial Ex. 9) with a covering note asking Sandak to sign and return a copy. Although the copy of the February 16, 1998 proposal marked in evidence as Trial Ex. 9 (presumably the copy retained by Sandak) was not signed by Sandak, I find as facts that Sandak accepted the proposal, the parties operated under the proposal and the proposal constituted a binding contract between them. Accordingly, I shall refer to the proposal as the "February 16, 1998 Contract" or simply the "Contract." Several important features of the Contract merit findings as background.

The February 16, 1998 Contract stated specifically that it was "ACCORDING TO THE PLANS PROVIDED TO ME BY THE DESIGNER SERGE WISNIEWSKI DATED FEB. 6, 1998." At the trial Dobrayel produced one of the three sheets comprising the Wisniewski Plans (sheet 3 of 3) and testified that this single sheet was the only one of the three sheets comprising the Wisniewski Plans that he had received prior to preparing the February 16, 1998 Contract.¹ I reject Dobrayel's testimony on this point as incredible and find as a fact that Dobrayel received and based his February 16, 1998 proposal upon all three sheets comprising the Wisniewski Plans. Dobrayel's February 16 proposal covers all aspects of the renovation of the Premises covered by the Wisniewski Plans. Sheet 3 of 3 covered only the lighting and electrical portion of the renovation project. It is inconceivable that Dobrayel could or would have issued a contract proposal covering the entire job lacking design specifications for two-thirds of the job. Further, it would have been quite impossible for him to partially perform all phases of the renovation lacking plans and specifications for two-thirds of the project.

The February 16, 1998 Contract provided that Dobrayel would complete the entire renovation specified in the Wisniewski Plans for the sum of $118,000. The contract called for an initial payment of $39,000 and nine weekly payments of $8,777 each. In accordance with the Contract, Sandak paid Dobrayel by check $39,000 on February 25, 1998 and nine consecutive weekly payments of $8,777 commencing June 19 and concluding August 14, 1998.

The February 16, 1998 Contract provided that "THE TIME TO COMPLETE THE JOB IS 10 WEEKS STARTING THE DAY AFTER PLAN & PERMIT APPROVAL." The Wisniewski Plans were filed with the Department of Buildings, City of White Plains, on March 4, 1998 and were approved by Building Permit dated March 23, 1998. The renovation was begun by Dobrayel, but completion of the work was delayed by certain construction modification in the building which was the obligation of the landlord, including a demising wall to separate Sandak's space from the rest of the building and certain plumbing work to prevent backflow. There is no dispute that all of the delaying work obligations of the landlord were fully completed before the end of August 1998.²

While it may have delayed the renovation somewhat, the work required of the landlord did not prevent Dobrayel from commencing work on the renovation. Thus it was that by the beginning of September 1998 Dobrayel had received payment of the entire $118,000 payable under the February 16, 1998 Contract for completion of the entire renovation, but he had completed less than 60% of the work he was required to perform. Although he demanded and received from Sandak additional payments totaling $58,505 after September 1, 1998, Dobrayel did little if any additional work on the Premises and never completed the project.

As amplified below, Sandak was greatly prejudiced by the delay in completion of his office space as he embarked upon his new career. He was able to begin his practice part-time by utilizing space made available to him in the nearby office of his father, a dentist who had long engaged in the general practice of dentistry. Since this part-time arrangement was costly to Sandak in a number of respects, he was desperately anxious to complete the renovation and move into his own office space. Nonetheless, Sandak remained confident in the belief that Dobrayel would honor his contractual obligations and complete the work, for Dobrayel repeatedly promised to do so. After months of inattention and little if any progress, in August 1999 Sandak learned that Dobrayel had undertaken and completed a renovation project for another dentist to whom Sandak had introduced Dobrayel. Finally, Sandak's attorney wrote a letter dated October 7, 1999 demanding that Dobrayel complete the work. By letter dated October 9, 1999 Dobrayel replied, stating that he would not complete the job unless Sandak paid him an additional $18,600.

Persuaded by Dobrayel's attempt to extract a further $18,600 in addition to the $176,505 which he had already paid, Sandak finally came to the conclusion that Dobrayel would never complete the project. He then hired another contractor, Chris Moran. Moran completed the new dental office in accordance with the Wisniewski Plans at a total cost to Sandak of $49,252, of which $35,630 was paid to Moran and $13,622 was paid to three subcontractors who had been hired but not fully paid by Dobrayel.

Credibility

Before turning to the Court's ultimate findings and conclusions on liability for breach of contract, fraud, and dischargeability under Section 523(a)(2) and (4), it is important to note that the critical evidence bearing upon these issues was the testimony of Sandak and Moran, in support of plaintiff's claims, and Dobrayel on his own behalf in opposition.

I found Sandak to be a thoroughly credible person. Nothing in the trial evidence or in his demeanor gave rise to any doubt as to Sandak's credibility as a witness or his good faith in connection with his dealings with Dobrayel. Moreover, most if not all of Sandak's testimony on critical issues, such as Dobrayel's representations concerning the need for Contract price modifications due to changes in regulations by the White Plains Building Department, Dobrayel's continuing assurances that he would expeditiously complete the job, and the condition of the Premises in September 1998 and September 1999, were either confirmed or not contested by Dobrayel in his testimony.

Equally compelling was the credibility of Moran, whose testimony was clear, concise and, in important instances, confirmed by the photographic evidence.

By contrast, as is already evident from the text under Background Findings, above, I found Dobrayel's testimony to be unworthy of belief on many of the critical issues in the case. For example, his testimony concerning the lighting fixture housings and other physical aspects of the Premises was confounded by the photographic evidence. As noted above, his testimony that his February 16, 1998 proposal, which became the Contract, was based on only one of the three sheets comprising the Wisniewski Plans was inherently unbelievable and, in part, refuted by his own recitation in the Contract which he drafted. The importance of this point cannot be overstated, since Dobrayel's justification to Sandak in the fall of 1998 and at trial for his demands aggregating $58,505 in excess of the Contract price was predicated on his claim that the February 16 1998 Contract was based on plans that were materially different from the plans approved by the White Plains Building Department on March 23, 1998. This point is evident from questions put by the...