Opinion
11292 Index 651555/17
03-19-2020
QUATTRO PARENT LLC, Plaintiff–Respondent, v. Zaki RAKIB, Defendant–Appellant.
Gregory Zimmer, New York, for appellant. Becker, Glynn, Muffly, Chassin and Hosinski LLP, New York (Jesse T. Conan of counsel), for respondent.
Gregory Zimmer, New York, for appellant.
Becker, Glynn, Muffly, Chassin and Hosinski LLP, New York (Jesse T. Conan of counsel), for respondent.
Renwick, J.P., Gische, Mazzarelli, Webber, Singh, JJ.
Order, Supreme Court, New York County (Andrea Masley, J.), entered on or about January 23, 2019, which, to the extent appealed from as limited by the briefs, granted plaintiff's motion for summary judgment as to liability, unanimously affirmed, with costs.
Plaintiff made a prima facie showing of defendant's liability for breach of a contract, based upon defendant's failure to pay $7.5 million, as required pursuant to the terms of the parties' Transaction Agreement, in exchange for a majority interest in plaintiff, after approval was received from the relevant Brazilian regulatory agency (see Gordon v. Schaeffer, 176 A.D.3d 431, 110 N.Y.S.3d 691 [2019] ; VisionChina Media Inc. v. Shareholder Representative Servs., LLC, 109 A.D.3d 49, 58, 967 N.Y.S.2d 338 [2013] ).
The motion court correctly rejected defendant's misrepresentation-based defense and counterclaims, as the valuation report on which defendant allegedly relied was a nonactionable projection of future profitability (see ESBE Holdings, Inc. v. Vanquish Acquisition Partners, LLC, 50 A.D.3d 397, 398, 858 N.Y.S.2d 94 [1st Dept. 2008] ; Sidamonidze v. Kay, 304 A.D.2d 415, 416, 757 N.Y.S.2d 560 [1st Dept. 2003] ).
At a minimum, defendant's position on plaintiff's board placed him on notice of the need to investigate the discrepancy between the third-party valuation projections and the company's financials, which he failed to do (see ACA Fin. Guar. Corp. v. Goldman, Sachs & Co., 25 N.Y.3d 1043, 1044, 10 N.Y.S.3d 486, 32 N.E.3d 921 [2015] ; MP Cool Invs. Ltd. v. Forkosh, 142 A.D.3d 286, 291–292, 40 N.Y.S.3d 1 [1st Dept. 2016], lv. denied 28 N.Y.3d 911, 47 N.Y.S.3d 227, 69 N.E.3d 1023 [2016] ).
The motion court also correctly rejected defendant's unilateral mistake-based defense and counterclaim, because there was no showing of fraud or other wrongdoing (see generally Angel v. Bank of Tokyo–Mitsubishi, Ltd., 39 A.D.3d 368, 369–370, 835 N.Y.S.2d 57 [1st Dept. 2007] ) and because defendant could not reasonably have relied on the alleged false representations (see Dousmanis v. Joe Hornstein, Inc., 181 A.D.2d 592, 593, 581 N.Y.S.2d 327 [1st Dept. 1992] ). A court of equity may also rescind a contract for unilateral mistake if the failure to do so would enrich one party at the other's expense, and the parties can be returned to the status quo without prejudice ( Gessin Electric v. 95 Wall Assoc., 74 A.D.3d 516, 520, 903 N.Y.S.2d 26 [1st Dept. 2010] ). Here, however, there are no specific allegations of unjust enrichment in the answer and counterclaims. Nor has defendant raised any argument that the status quo can be restored now that plaintiff has ceased doing business.
We have considered defendant's remaining arguments and find them unavailing.