Klein v. Signature Bank, Inc.
| Decision Date | 20 April 2022 |
| Docket Number | (Index 502382/18),2019-05081 |
| Parties | Yoel Klein, et al., appellants, v. Signature Bank, Inc., et al., respondents (and a third-party action). |
| Court | New York Supreme Court |
Berg & David PLLC, Brooklyn, NY (Gordon Speckhard and N. Dean Boyer of counsel), for appellants.
Meyner and Landis LLP, New York, NY (David B. Grantz of counsel) for respondent Signature Bank, Inc.
Levine & Associates, P.C., Scarsdale, NY (Michael Levine of counsel), for respondent Joel Horowitz.
FRANCESCA E. CONNOLLY, J.P., LINDA CHRISTOPHER, JOSEPH A ZAYAS, LARA J. GENOVESI, JJ.
DECISION & ORDER
In an action, inter alia, to recover damages for breach of contract, the plaintiffs appeal from an order of the Supreme Court, Kings County (Sylvia G. Ash, J.), dated February 20 2019. The order, insofar as appealed from, denied those branches of the plaintiffs' motion which were for summary judgment on the issue of liability on the causes of actions to recover damages for breach of contract against the defendant Signature Bank, Inc., and for leave to amend the complaint to assert (1) amended causes of action to recover damages for breach of contract and violation of the plaintiffs' right to stop payment pursuant to UCC 4-403 (proposed 1st and 9th causes of action), (2) a cause of action to recover damages for negligence (proposed 2nd cause of action) against the defendant Signature Bank, Inc., (3) causes of action to recover damages for breach of fiduciary duty (proposed 11th cause of action) and breach of contract (proposed 12th and 13th causes of action), and for a declaratory judgment (proposed 20th cause of action) against the defendant Joel Horowitz, and (4) a cause of action to impose a constructive trust (21st cause of action) against Christa Lynn, LLC, and granted those branches of the cross motion of the defendant Signature Bank, Inc., which were for summary judgment dismissing the causes of action to recover damages for breach of contract and violation of the plaintiffs' right to stop payment pursuant to UCC 4-403 against it.
ORDERED that the order is modified, on the law and the facts, by deleting the provision thereof denying those branches of the plaintiffs' motion which were for leave to amend the complaint to assert causes of action to recover damages for breach of fiduciary duty (proposed 11th cause of action) and breach of contract (proposed 12th and13th causes of action), and for a declaratory judgment (proposed 20th cause of action) against the defendant Joel Horowitz, and to assert a cause of action to impose a constructive trust (21st cause of action) against Christa Lynn, LLC, and substituting therefor a provision granting those branches of the plaintiffs' motion; as so modified, the order is affirmed insofar as appealed from, with one bill of costs to the defendant Signature Bank, Inc., payable by the plaintiffs.
The plaintiffs, Yoel Klein and Joel K Holdings, LLC (hereinafter JK Holdings), commenced this action against the defendants, Signature Bank, Inc. (hereinafter the bank) and Joel Horowitz, inter alia, to recover damages for breach of contract. The plaintiffs alleged, inter alia, that in late 2017, Klein borrowed from Horowitz the sum of $1 million. The plaintiffs alleged that as collateral for the loan, Klein proffered to Horowitz two checks for $500, 000 each, both dated December 28, 2017. The checks were written on an account of JK Holdings at the bank. According to the complaint, Klein and Horowitz agreed that Klein would repay the loan prior to December 28, 2017, and that Horowitz would then destroy or return the two checks after the loan was paid. The complaint further asserted that Klein and Horowitz subsequently agreed that the loan could be repaid in installments, with the final balance due on January 18, 2018.
The complaint further alleged that Klein repaid the loan prior to the agreed-upon date, but that on January 19, 2018, Horowitz deposited the checks into a personal account at the bank, and then immediately transferred the subject funds to his business account in the name of Christa Lynn, LLC (hereinafter Christa Lynn), at the bank. Moreover, it is alleged that the bank refused the plaintiffs' stop payment request in connection with the checks or to return to the plaintiffs the disputed funds.
As against the bank, the complaint alleged, inter alia, that based on a prior course of conduct, the bank breached its "implied" agreement with the plaintiffs by failing to contact Klein for his "authorization" or "verification" prior to allowing Horowitz to deposit the two checks and then transfer the subject funds to the Christa Lynn account. The complaint further alleged that the bank violated UCC 4-403 in failing to honor Klein's subsequent requests to stop payment of the two checks. The complaint also asserted causes of action against Horowitz, inter alia, to recover damages for breach of contract in connection with the cashing of the checks and the transferring of the funds into the Christa Lynn account.
The plaintiffs moved, inter alia, for summary judgment on the issue of liability on the breach of implied contract cause of action against the bank and for the bank's alleged breach of the parties' contract in failing to execute the plaintiffs' stop payment order. Further, the plaintiffs sought leave to amend the complaint to assert, inter alia, a cause of action to recover damages for negligence against the bank and amended causes of action to recover damages for breach of contract and for violation of the plaintiffs' right to stop payment pursuant to UCC 4-403 () against the bank. The plaintiffs additionally sought leave to amend the complaint against Horowitz to assert causes of action, inter alia, to recover damages for breach of contract and breach of fiduciary duty, and for a declaratory judgment relating to a prior real estate venture between Klein and Horowitz, and to assert a cause of action against Christa Lynn to impose a constructive trust. The bank cross-moved, among other things, for summary judgment dismissing the breach of contract causes of action and the UCC stop-payment cause of action against it.
In an order dated February 20, 2019, the Supreme Court, inter alia, denied those branches of the plaintiffs' motion which were for summary judgment on the issue of liability on the breach of contract causes of action against the bank, and granted those branches of the bank's cross motion which were for summary judgment dismissing the breach of contract causes of action and the UCC stop-payment cause of action against it. The court also denied that branch of the plaintiffs' motion which was for leave to amend the complaint.
The Supreme Court properly denied those branches of the plaintiffs' motion which were for summary judgment on the issue of liability on the breach of contract causes of action, and properly granted those branches of the bank's cross motion which were for summary judgment dismissing the breach of contract causes of action and the UCC stop-payment cause of action against it.
"To recover damages for breach of contract, a plaintiff must demonstrate the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of its contractual obligations, and damages resulting from the breach" (All Seasons Fuels, Inc. v Morgan Fuel & Heating Co., Inc., 156 A.D.3d 591, 594; see Ramirez v Donado Law Firm, P.C., 169 A.D.3d 940, 943).
Parol evidence may be admissible to supplement the terms of a written contract only where the written contract is ambiguous. "The threshold question of whether a contract is unambiguous, and the subsequent construction and interpretation of an unambiguous contract, are issues of law within the province of the court" (NRT N.Y., LLC v Harding, 131 A.D.3d 952, 954; see W.W.W. Assoc. v Giancontieri, 77 N.Y.2d 157, 163). "'A contract is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion'" (Selective Ins. Co. of Am. v County of Rensselaer, 26 N.Y.3d 649, 655, quoting Greenfield v Philles Records, 98 N.Y.2d 562, 569 [internal quotation marks omitted]).
The plaintiffs contend that the prior course of dealing between the plaintiffs and the bank created an implied obligation for the bank to obtain verification or authorization from Klein prior to depositing or cashing certain checks written on his accounts or the account of JK Holdings. However, the business account agreement governing the account of JK Holdings provided that it could not be "explained or supplemented" by any prior or contemporaneous course of dealing between the parties, that any prior course of dealing would not constitute an implied waiver of the bank's rights, and that...
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