Opinion
No. SC–000105–13/CA.
2013-04-25
Joyce L. McBRIDE and Pamela A. Keefe, Plaintiffs, v. Trish DISPENZA, d/b/a Ivy Thimble Quilt Shop, Defendant.
Joyce L. McBride, pro se. Pamela A. Keefe, pro se.
Joyce L. McBride, pro se. Pamela A. Keefe, pro se.
Rose & Reh, Angelo A. Rose, Esq., for Defendant.
STEPHEN D. ARONSON, J.
This small claims case presents the question whether a joint venture agreement is barred by the statute of frauds.
The plaintiffs seek $2,014 from the defendant, and a hearing was held on April 11, 2013. The undisputed evidence showed that plaintiffs are former employees of the defendant, that during the course of their employment the parties discussed (in 2009) and carried out (in 2010) a business plan to produce patterns to be sold at the defendant's quilt store and elsewhere, and that none of the proceeds of sale were divided among the parties. The plaintiffs contend, in words or substance, that the pattern project was a joint venture, with Ms. McBride contributing the artwork and quilting directions, Ms. Keefe creating the idea and sewing the samples, and Ms. Dispenza providing the packing, printing, and fabric; that the plaintiffs were led to believe by the defendant that all three of them would share equally in the proceeds of sale; that the defendant has failed and refused to give plaintiffs any financial remuneration; and that as a result the plaintiffs are owed at least $2,022 (per a written summary submitted at the hearing) plus an unspecified additional sum for a second printing of the patterns (specified on a written document submitted at the hearing).
The defendant contends, in words or substance, that the pattern project was an idea that was spawned during the course of employment; that the plaintiffs, as employees, were not entitled to share in the proceeds of the pattern sales; that the defendant incurred all of the out-of-pocket expense of the patterns; and that nothing is owed the plaintiffs. The defendant's attorney contends, in words or substance, that plaintiffs were the paid employees of the defendant and that the pattern project arose out of the parties' employment relationship; that the statute of frauds bars recovery; and that the quality of the plaintiffs' proof is insufficient to warrant recovery.
In every small claims case, the court is bound to perform substantial justice to the parties in accordance with principles of substantive law (Uniform City Court Act § 1804). In New York, some agreements are required to be in writing (General Obligations Law § 5–701). The defendant contends that plaintiffs' purported oral agreement is unenforceable because it was not to be performed within one year from the making thereof. An agreement, promise, or undertaking must be in writing if “by its terms it is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime” (General Obligations Law § 5–701 [a][1] ). However, in deciding whether an oral agreement falls within the statute of frauds, it matters not that it was unlikely or improbable that the agreement could be performed within a year; rather “[t]he critical test ... is whether by its terms' the agreement is not to be performed within a year” (Gelman v. Buehler, 91 AD3d 425 [1st Dept 2012]; revd on other grounds20 NY3d 534 [2013] ). The statute of frauds encompasses only those agreement which, by their terms, have absolutely no possibility in fact or law of full performance within one year (Foster v. Kovner, 44 AD3d 23, 26 [1st Dept 2007] ). Since neither party has contended that the alleged agreement contained any provision that directly or indirectly regulated the time for performance, the alleged agreement does not fall within the bar of the statute of frauds (Freedman v. Chemical Construction Corp., 43 N.Y.2d 260, 265 [1977] ). Also, the statute of frauds is inapplicable to an agreement to create a joint venture or partnership because an oral agreement for an indefinite period creates a partnership or joint venture at will (Pugliese v. Mondello, 57 AD3d 637, 639 [2d Dept 2008] ); Moses v. Savedoff, 96 AD3d 466, 469 [1st Dept 2012] ). The parties' alleged agreement to share in the profits, when reasonably interpreted, could have been performed within one year ( Moses v. Savedoff, id. at 469). Therefore, if there was an agreement, it was not unenforceable by reason of the statute of frauds.
A joint venture has been defined as an association of two or more persons to carry out a single business enterprise for profit, for which purpose they combine their property, money, efforts, skill, and knowledge (Poppenberg v. Reliable Maintenance Corp., 89 A.D.2d 791 [4th Dept 1982] ). The indicia of the existence of a joint venture are (i) acts manifesting the intent of the parties to be associated as joint venturers; (ii) mutual contributions to the joint undertaking through a combination of property, financial resources, effort, skill, or knowledge; (iii) a measure of joint proprietorship and control over the enterprise; and (iv) a provision for the sharing of profits and losses (Dundes v. Fuersich, 6 Misc.3d 882 [Sup Ct, New York County 2004] ). Indispensable to the creation of a joint venture is a sharing in the profits and losses of the business ( id.). The plaintiffs have the burden of proving the existence of a joint venture (DeVito v. Pokoik, 150 A.D.2d 331 [2d Dept 1989] ). A mutual promise of undertaking to submit to the burden of making good the losses must be shown ( id; Rothstein v. Tennessee Gas Pipeline Co., 174 Misc.2d 437 [Sup Ct, Kings County 1997], revd in part on other grounds259 A.D.2d 54 [2d Dept 1999] ). In my view, the credible evidence demonstrates the existence of a joint venture.
Contrary to the defendant's position at the hearing, her email transmission unequivocally evidences her intent to treat the pattern project as a joint venture:
“I have been trying desperately to figure out payment to the two of you to make it fair ... you both came up with the designs, patterns, wording, etc .... the fabric is mine, the copying is me and packaging is me ... not sure how we should handle this—this is a new territory ... please give it some thought and let me know your feelings ... I never EVER want to take advantage of your talents ...”
While this email certainly demonstrates an intention that the parties would share in the sale proceeds of the pattern project, it also indicates that the parties had no specific agreement about how they would share the sale proceeds. The defendant's email transmission dated February 18, 2010, confirms that the parties never agreed on how to share in the sale proceeds:
“As far as the contract ... WOW I never thought of that ... joanne designs her own patterns-prints them herself and I purchase from her wholesale ... but with you/pam and I it's a little different ... You two did all the work of designing but I'm providing the fabric for the samples and printing/bags, etc.... I will tell you patterns run between $4.00–$4.50 wholesale ... perhaps should we wait to see how well they take off or maybe we should protect ourselves ... after all that I gave to Pam and then to have it thrown in my face I'm almost willing to give it all to you guys so there is no hard feelings. I have been told once too many times that I take advantage of people.
You and Pam talk about it while I'm gone ... when I return we will have to have a staff mtg' to fold and package the patterns before the retreat that is for sure.”
Aside from these email transmissions there is no documentary evidence or credible testimony as to whether the parties agreed about how to share the sale proceeds of the pattern project. Nevertheless, given the fact that the parties clearly intended to pool their talents and mutual contributions; given the fact that some of the finished products were sold; given the financial contribution of the defendant to the raw materials and expenses; given the difficulty in determining the precise number of patterns sold; given the fact that the parties clearly evinced an intention to share the sale proceeds in some fashion; given the fact that the sale proceeds of the first printing of the patterns was about $2,000; given the difficulty of determining any sale proceeds of the second printing of the patterns; given the fact that the parties eventually abandoned the pattern project; given the fact that leftover patterns were disbursed to the plaintiffs at no charge; and given the totality of the circumstances, substantial justice to the parties would be accomplished by directing the defendant to pay each plaintiff $800 as her share of the proceeds of sale.
Judgment for the plaintiffs for $1,600 plus the $20 filing fee.