Kaufman v. Torkan

• Decision Date: 27 May 2008
• Docket Number: 2007-06350.
• Citation: 51 A.D.3d 977,859 N.Y.S.2d 253,2008 NY Slip Op 04838
• Parties: IVAN KAUFMAN, Respondent, v. KOUROS TORKAN et al., Appellants.
• Court: New York Supreme Court — Appellate Division

51 A.D.3d 977

859 N.Y.S.2d 253

2008 NY Slip Op 04838

IVAN KAUFMAN, Respondent, v. KOUROS TORKAN et al., Appellants.

2007-06350.

Appellate Division of the Supreme Court of the State of New York, Second Department.

Decided May 27, 2008.

In an action, inter alia, to impose a constructive trust, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Brandveen, J.), entered June 28, 2007, as denied their motion for summary judgment dismissing the complaint, to cancel a notice of pendency, and for sanctions and an award of an attorney's fee pursuant to CPLR 6514 (c) and 22 NYCRR 130-1.1.

Ordered that the order is modified, on the law, by deleting the provisions thereof denying those branches of the defendants' motion which were for summary judgment dismissing the complaint and to cancel the notice of pendency and substituting therefor provisions granting those branches of the motion; as so modified, the order is affirmed insofar as appealed from; and it is further,

Ordered that the Nassau County Clerk is directed to cancel the notice of pendency dated November 18, 2004, indexed against Section 1, Block 144, Lots 24 and 32; and it is further,

Ordered that one bill of costs is awarded to the defendants.

In late 2003 Sylvia Riese died and her waterfront property (hereinafter the subject property) was placed on the market for sale. The plaintiff Ivan Kaufman who lived just behind the subject property, placed a bid on the subject property in the sum of approximately $6.5 million. At about the same time, the defendant Kouros Torkan (hereinafter Torkan) also placed a $6.5 million bid on the subject property. After learning about Torkan's bid, Kaufman asked, through an intermediary, for Torkan to withdraw his bid on the subject property and to refrain from bidding on it in the future. Subsequently, a meeting was arranged between several business people, including Torkan and Kaufman. According to Kaufman, at the meeting, he agreed to provide Torkan with 90% of the financing he needed to purchase a commercial property in Chelsea, which Torkan intended to convert into a residential building (hereinafter the Chelsea property). In return, Kaufman would receive the first mortgage, which Torkan would repay at a prevailing interest rate, a 25% "equity kicker" in the Chelsea property, and Torkan's promise to withdraw the bid he had placed on the subject property and to not place any bids on it in the future. By contrast, according to Torkan, the discussion at the meeting centered around the purchase and development of a property in Belize, which he characterized as a "complete waste of time." He denied that there was any agreement reached between him or Kaufman, or that they even discussed the subject property or the Chelsea property. Nevertheless, Torkan acknowledged that, at some point, he withdrew his bid on the subject property. According to Kaufman, sometime between April and August of 2004, Torkan's bid on the Chelsea property was rejected. In October 2004 Torkan and his wife, the defendant Karen Torkan (hereinafter together the Torkans), purchased the subject property, going from contract to closing on a single day. As a result, Kaufman commenced this action asserting causes of action sounding in breach of a fiduciary duty under a joint venture agreement and fraud, for which he sought the imposition of a constructive trust, and also filed a notice of pendency on the subject property. After discovery concluded, the Torkans moved for summary judgment dismissing the complaint, to cancel the notice of pendency filed by the plaintiff, and for an award of sanctions and an attorney's fee pursuant to CPLR 6514 (c) and 22 NYCRR 130-1.1. The Supreme Court denied the motion.

A joint venture is "an association of two or more persons to carry out a single business enterprise for profit, for which purpose they combine their property, money, effects, skill and knowledge" (Williams v Forbes, 175 AD2d 125, 126 [1991] [internal quotation marks omitted]). "The essential elements of a joint venture are an agreement manifesting the intent of the parties to be associated as joint venturers, a contribution by the coventurers to the joint undertaking (i.e., a combination of property, financial resources, effort, skill or knowledge), some degree of joint proprietorship and control over the enterprise; and a provision for the sharing of profits and losses" (Tilden of N.J. v Regency Leasing Sys., 230 AD2d 784, 785-786 [1996] [internal quotation marks omitted]). Here, Kaufman's claim of a breach of fiduciary duty under a joint venture agreement must fail as a matter of law, since there is no provision for the sharing of losses (see Matter of Steinbeck v Gerosa, 4 NY2d 302, 317 [1958]; Latture v Smith, 1 AD3d 408 [2003]). The nature of any relationship between Kaufman and Torkan was that of lender and borrower, with the former at no risk of suffering any losses (see Rocchio v Biondi, 40 AD3d 615, 616-617 [2007]; Wiener v Lazard...