Opinion
No. 600694/2009.
11-28-2016
WADSWORTH CONDOS, LLC, Eli Bobker, and Ben Bobker, Plaintiff, v. 43 PARK OWNERS GROUP, LLC, Mark F. Engel, Perry Finkelman, and Inwood Equities Group, Inc., Defendants.
Marc M. Coupey, Esq., New York, Attorney for Plaintiffs. David Cohen, Esq., Moritt Hock & Hamroff, LLP, Garden City, Attorneys for Defendant Inwood Equities Group, Inc. Gary N. Horowitz, Esq., David Rozenholc & Associates, New York, Attorneys for Defendants 43 Park Owners and Finkelman. Furman Kornfeld & Brennan LLC, New York, Co–Counsel for Defendants 43 Park Owners and Finkelman. Michael Roberts, Esq., Roberts & Roberts, New York, Attorney for Defendant Engel.
Marc M. Coupey, Esq., New York, Attorney for Plaintiffs.
David Cohen, Esq., Moritt Hock & Hamroff, LLP, Garden City, Attorneys for Defendant Inwood Equities Group, Inc.
Gary N. Horowitz, Esq., David Rozenholc & Associates, New York, Attorneys for Defendants 43 Park Owners and Finkelman.
Furman Kornfeld & Brennan LLC, New York, Co–Counsel for Defendants 43 Park Owners and Finkelman.
Michael Roberts, Esq., Roberts & Roberts, New York, Attorney for Defendant Engel.
JEFFREY K. OING, J.
Plaintiffs commenced this action against defendants to recover damages based on defendants' alleged breach of contract and breach of fiduciary duty in connection with a failed real estate development project. The complaint also alleges causes of action for specific performance, injunctive relief and a declaratory judgment.
Defendants 43 Park Owners Group, LLC ("43 Park"), and Perry Finkelman ("Finkelman") move, pursuant to CPLR 3212, for summary judgment dismissing the complaint. Defendants Mark F. Engel ("Engel") and Inwood Equities Group, Inc. ("Inwood") join in the motion.
Background
Plaintiff Wadsworth Condos, LLC ("Wadsworth") is a New York limited liability company formed by the Bobker Group, a real estate development business founded and run by Joseph Bobker. Plaintiffs Eli Bobker and Ben Bobker are two of Joseph Bobker's sons. Eli Bobker is the managing member of Wadsworth, and Ben Bobker holds a "beneficial interest" in it (Complaint, ¶ 3). In or around early 2005, Wadsworth acquired a Manhattan property located at One Wadsworth Terrace (the "property") for the purpose of developing a six-story residential condominium building (the "project" or the "Wadsworth project") (Complaint, ¶ 8).
Wadsworth bought the property with Carnegie Holdings, LLC, but subsequently acquired Carnegie's interest in the property. Carnegie is not a party to this action.
In July 2005, following negotiations between Joseph Bobker and Finkelman, 43 Park, a company owned by Finkelman and Engel, acquired a 20% ownership interest in the property and became a tenant-in-common with Wadsworth, which retained an 80% interest. Wadsworth and 43 Park (collectively, the "owners", or the "TIC") entered into several agreements related to the structure of the TIC and the development of the property, including a Tenants–in–Common Agreement, a Management Agreement, and an agreement regarding capital contributions (the "TIC agreements") (Horowitz Affirm., Ex. G).
According to plaintiffs, Finkelman and Engel were brought into the project because of their experience in, respectively, construction and financial management (Eli Bobker Aff., ¶ 9). Under the Management Agreement, Finkelman was responsible for all construction related activities, including applying to and negotiating with governmental authorities to obtain agreements, approvals and permits needed for the project; supervising and coordinating design and construction of improvements to the property; and providing monthly status reports to Wadsworth (Management Agreement, Bobker Aff., Ex. 2, § 2.2). Finkelman also guaranteed that construction costs for the property would not exceed $10.9 million (Id. ). Engel was responsible for handling the accounting and other financial aspects of the project (Id., § 2.3).
The owners obtained financing for the project in October 2005 from the Community Preservation Corporation ("CPC"), through a mortgage of about $13 million, to cover construction and other related costs. The term of the loan was eighteen months with a six-month extension. Inwood, a company formed by Finkelman and Engel for the purpose of providing funding for the project, provided a second mortgage of $2.5 million to pay for associated "soft costs" of the project. The Inwood loan was subordinate to the CPC loan. Eli Bobker, Ben Bobker, Finkelman, and Engel each personally guaranteed the loans.
ADG Wadsworth Construction Group LLC ("ADG"), a company owned by Finkelman, acted as the general contractor ("GC") for the project. In or around March 2006, ADG commenced construction after obtaining a "new building" work permit from the New York City Department of Buildings ("DOB"), and removed a portion of a retaining wall on the eastern side of the property. The retaining wall extends the width of the property boundary, and about four feet above ground and thirty feet below ground. The eastern side of the property runs along Wadsworth Terrace and slopes steeply down from the street. The retaining wall, above ground, provides a barrier for pedestrians against the sloping property, and, below ground, serves to support and retain the earth. The project required demolition of the above ground portion of the retaining wall to provide access to the property.Construction was halted on April 4, 2006 after a DOB inspector issued a notice of violation and a stop work order ("SWO") due to the lack of a permit to demolish the wall (Finkelman Aff., ¶ 13; Horowitz Affirm., Notice of Violation, Ex. I). The retaining wall was outside the TIC property, and was under the control and jurisdiction of the New York City Department of Transportation ("DOT"). The DOB advised ADG that it could lift the SWO and approve a demolition permit only if the DOT agreed (Id. ). The DOT would not agree to further demolition of the wall or any construction work until the owners signed a "Memorandum of Understanding" ("MOU"), which, essentially, required that the owners take responsibility for maintenance and monitoring, and any damage resulting from work on the retaining wall. Adjacent property owners also sought agreements from the owners to ensure that any damage to their properties resulting from construction activities would be the responsibility of the owners.
The TIC retained engineers and an attorney, Marc Dollinger ("Dollinger"), to confirm DOT's ownership and jurisdiction of the retaining wall, to obtain permission to remove the above-ground portion of the wall, and to negotiate an agreement with the DOT so that construction could continue (Finkelman Aff., ¶¶ 15, 19; Kallman Testimony, Horowitz Affirm., Ex. M, at 869–870). After approximately eighteen months, the owners reached an agreement with DOT and neighboring property owners, which, according to a lawyer for DOT involved in the negotiations, was not "an unusually long time given all the complications of this project and the involvement of the neighbors" (Richman Testimony, Horowitz Affirm., Ex. R, at 1877; see Horowitz Affirm., Ex. U, DOT emails [DOT permission is discretionary and decision will be made in due course and not based on the TIC's deadline] ). The MOU and an agreement with the adjoining property owners were signed on October 31, 2007, by which time, Eli Bobker testified, the owners "lost [their] financing and the project was destroyed"-the CPC loan expired on November 1, 2007, and the CPC would not extend it (E. Bobker Testimony, Horowitz Affirm., Ex. C, at 1574; see J. Bobker Testimony, Horowitz Reply Affirm., Ex. GG, at 95).
Although the owners made efforts to obtain additional financing, they were unable to get other funds (Finkelman Aff., ¶ 24; E. Bobker Testimony, Horowitz Affirm., Ex. C, at 1321–1322; see J. Bobker Testimony, Horowitz Reply Affirm., Ex. GG, at 96, 97). The owners were also unable to get a $300,000 bond required by the MOU before construction could continue (Finkelman Aff., ¶ 22; see Horowitz Affirm., DOT Letter, Ex. X). Finkelman testified that after the MOU was signed lawsuits brought by neighboring property owners further delayed construction (Finkelman Testimony, Bobker Aff., Ex. E, at 465–466).
In May 2008, two neighboring property owners filed lawsuits alleging, among other things, that the owners acted negligently and in breach of the MOU by failing to monitor the wall and correct conditions causing damage to their properties. They obtained a temporary restraining order enjoining further construction for several months. The actions subsequently settled, in late 2015 or 2016 (Barry Martin 4410 Corp. v. Wadsworth Condos, LLC, Index No .: 106129/2008; Mauer Bach Realty, LLC v. Wadsworth Condos, LLC, Index No.: 106130/2008.
According to Finkelman, in an effort to obtain additional funding, he proposed changing the plan for the project from a condominium development to a rental building (Finkelman Aff., ¶ 24; Finkelman Reply Aff., ¶ 12; Finkelman Testimony, Ex. B to Bobker Aff., at 419–420). Plaintiffs allege that Finkelman's proposal, in 2008, was made without consulting them, in violation of the terms of the Management Agreement. The proposed plans did not succeed in getting additional funding, and, Finkelman testified, the plans were never filed with the DOB (Id. at 260; Finkelman Aff., ¶ 12).
CPC commenced a foreclosure action in October 2009, and was granted a judgment, after which Inwood purchased the note and was substituted as plaintiff in the action, while remaining a defendant for purposes of its cross claims against Wadsworth and Eli and Ben Bobker for sums due under the Inwood loan. A foreclosure sale occurred, eliminating Inwood's subordinate mortgage, but its cross claims against Wadsworth and the Bobkers continued (Inwood Equities Group, Inc. v. Wadsworth Condos, LLC, 47 Misc.3d 1228(A) [Sup Ct, N.Y. County 2014] ); see also Community Preservation Corp. v. Wadsworth Condos, LLC, 37 Misc.3d 1219(A) [Sup Ct, N.Y. County 2012] ).
In addition to the foreclosure action, several other lawsuits were commenced in the wake of the project's collapse. As noted above, two adjacent property owners filed lawsuits in 2008 against the owners for negligence and breach of the MOU. In August 2008, Dollinger, on behalf of the TIC, commenced a lawsuit against several title insurance companies, and named Karl Fischer, the original architect on the project retained by Wadsworth, as a defendant. Although, according to Joseph Bobker, plaintiffs "encouraged that lawsuit at the beginning," Wadsworth then objected to Dollinger bringing the action, in particular as against the architect Karl Fischer (J. Bobker Testimony, Horowitz Reply Affirm., Ex. GG, at 354). The Court dismissed the action in 2012, and the dismissal was upheld on appeal (43 Park Owners Group LLC v. Commonwealth Land Tit. Ins. Co., 121 AD3d 937 (2d Dept 2014).
In March 2009, plaintiffs sued Dollinger for legal malpractice (the "Dollinger case"), in part based on his commencement of the lawsuit against the title insurance companies and Fischer. The Dollinger case went to trial, and a jury reached a verdict in favor of Dollinger.
Plaintiffs also commenced the instant action in March 2009. The complaint alleges that defendants, following the execution of the Management Agreement, "embarked upon a plan and scheme to freeze the plaintiffs out of any participation in the further development of the Property and to unilaterally change the scope and purpose of the development without the knowledge or consent of the plaintiffs" (Complaint, ¶ 29). Plaintiffs allege that defendants violated the Management Agreement by failing to provide periodic reports to plaintiffs and by hiring professionals, such as architects and attorneys, without plaintiffs' consent. Plaintiffs also contend that defendants violated the Management Agreement by changing the plans for the project from a condominium development to a rental building and spending substantial sums of the TIC money to do so, which "undermined the security for the CPC Mortgages and the Inwood Mortgage Loan and depleted the venture of capital which should have been reserved for the servicing of the venture's debt" (Id., ¶¶ 29–30).
While not alleged in the complaint, plaintiffs now claim that defendants violated the Management Agreement by failing, between July 2005 and March–April 2006, to get permission from DOT to remove part of the retaining wall, and failing thereafter to get a demolition permit from DOB. Further, defendants allegedly violated the Management Agreement by causing "unnecessary delays and related litigations" that took more than twenty months to resolve through the MOU (Coupey Affirm., ¶ 9), which "drove the TIC into financial ruin" and caused the project to fail (Id., ¶ 8). Plaintiffs allege that Finkelman and Engel then abandoned the project in late 2008 to early 2009 and orchestrated the foreclosure (Id., ¶ 10).
In addition, plaintiffs allege that defendants breached their fiduciary duties to them by diverting and misusing TIC funds for personal expenses and other projects of Finkelman and Engel unrelated to the Wadsworth project; by threatening plaintiffs with foreclosure if they did not provide funds to replenish the TIC funds allegedly depleted by defendants; and by causing a mechanics' lien to be placed against the property (Id., ¶ 9). Plaintiffs claim damages in the amount of $8,300,000, for "the potential loss of [plaintiffs'] interest in the Property, the diminution of the value of the Property, the misappropriation of capital on behalf of the venture, the payment of interest on the Inwood Mortgage Loan in the period when the development of the Property was improperly changed from condominium to rental, and liability under personal guarantees for the CPC Mortgage and the Inwood Mortgage" (Id., ¶ 33). Plaintiffs do not dispute that the damages they seek are for anticipated profits from the project (Horowitz Reply Affirm., ¶ 7 n. 1).
Discussion
To begin, plaintiffs acknowledge that the third cause of action for a permanent injunction is now moot (Coupey Affirm., ¶ 11). Further, as this Court previously found, the fourth cause of action for specific performance is moot; the fifth cause of action for a declaratory judgment that the Inwood mortgage is void is being addressed in the foreclosure action; and the sixth cause of action for a declaration that defendants are entitled to no credits with respect to the capital contribution, is "essentially gone" (April 24, 2015 Tr. at 7, 15). Thus, what remains are the breach of contract and breach of fiduciary duty claims.
Breach of Contract
Defendants seek dismissal of the contract claim on the ground that by plaintiffs' own admission defendants' actions did not cause the project to fail, and, therefore, they cannot be liable for plaintiffs' alleged damages based on lost profits, which are, in any event, speculative. Defendants further argue that plaintiffs themselves breached the parties' agreements by misrepresenting that the project was "shovel ready," and not informing defendants that the TIC did not have title to the retaining wall. In addition, defendants argue that the breach of fiduciary duty claim is duplicative of the breach of contract claim, that defendants did not misuse the TIC's funds, and that to the extent errors in payments have been discovered those errors have been corrected and repaid (Finkelman Reply Aff., ¶¶ 16–22, 31). Defendants contend that the claims on which plaintiffs are proceeding are not the claims pleaded in the complaint, and plaintiffs should not be permitted to amend the complaint at this juncture.
In support of their motion, defendants submit affidavits and documentary evidence, including trial testimony of Eli Bobker and Joseph Bobker in the Dollinger case, which, defendants argue, "fatally undermines" plaintiffs' claim that defendants caused the project to fail and judicially estops plaintiffs from claiming that defendants are liable for any alleged damages.
In the Dollinger case, plaintiffs argued that Dollinger's legal malpractice caused the project to fail. Eli Bobker testified in the Dollinger case that the building project "was destroyed by Matt Dollinger" in late 2007 and that plaintiffs' disputes with defendants arose after that, in 2008 and 2009 (E. Bobker Testimony, Horowitz Affirm., Ex. C, at 1573). Eli Bobker further testified that after the SWO was issued construction could not continue until an agreement with the DOT was reached and by the time the MOU was signed financing for the project was lost and the project was destroyed (Id. at 1574). He continued by testifying that defendants' alleged breaches "happened after the project was destroyed, their actions happened in 2008 ... and the CPC financing ran out in November 2007" (Id. ). Eli Bobker also testified that as he "mentioned a couple of times, any event that happened after November 1, 2007 did not contribute to the destruction of this project because the project was already destroyed on November 1, 2007" (E. Bobker Testimony, Horowitz Reply Affirm., Ex. HH, at 1579).
Joseph Bobker testified that there was no conflict between plaintiffs and defendants in 2006, and any conflict that arose later was not responsible for the lack of construction work on the property between April 2006 and October 2007 (J. Bobker Testimony, Horowitz Reply Affirm., Ex. GG, at 415). He further testified that construction did not stop in April 2006 because of defendants, but, rather, "[e]verything stopped because of Mr. Dollinger's advice" (Id. ). There was, he continued, "nothing that the builder did to stop us from progressing on the project. There was nothing that the builder did to stop construction for 18 [or 19] months" (Id. at 416). He also testified that when plaintiffs brought the instant case they were not alleging that Finkelman caused the project to fail (J. Bobker Testimony, Horowitz Affirm., Ex. Y, at 667).
"The doctrine of judicial estoppel or estoppel against inconsistent positions precludes a party from taking a position in one legal proceeding which is contrary to that which he or she took in a prior proceeding, simply because his or her interests have changed" (Festinger v. Edrich, 32 AD3d 412, 413 [2d Dept 2006] [citations omitted] ). The doctrine, "to be distinguished from collateral estoppel which assumes a full and fair opportunity to litigate the [identical] issue in the prior action ... rests upon the principle that a litigant should not be permitted ... to lead a court to find a fact one way and then contend in another judicial proceeding that the same fact should be found otherwise" (Kimco of NY, Inc. v. Devon, 163 A.D.2d 573, 574 [2d Dept 1990] [internal quotation marks and citations omitted] ).
Judicial estoppel generally does not apply where "the party did not secure a judgment in his or her favor ... [or] did not succeed in having the allegedly inconsistent position adopted in some manner by the court or tribunal in the prior proceeding" (Nomura Asset Capital Corp. v. Cadwalader, Wickersham & Taft LLP, 23 Misc.3d 1134(A) [Sup Ct, N.Y. County 2009] [citations omitted], affd 62 AD3d 581 [1st Dept 2009] ). Courts have found, however, that the underlying "policy would not be served by limiting its application to cases where the legal position at issue was ruled upon in the context of a judgment" (D & L Holdings, LLC v. RCG Goldman Co., 287 A.D.2d 65, 72 [1st Dept 2001] ). Where "the party did not obtain a favorable judgment in the earlier legal proceeding, [but] ‘plaintiff relied upon these representations in seeking relief from [this court], ... the application of this doctrine ... is thus essential to avoid a fraud upon the court and a mockery of the truth-seeking function’ " (Westwood 46 Realty LLC v. Siegert, 2013 WL 5740204 [Sup Ct, N.Y. County 2013], quoting Epic Wholesalers & Star Diamonds & Jewelry, Inc. v. J.P. Morgan Chase Bank, N.A., 31 Misc.3d 1237(A) [Sup Ct, Kings County 2011] [citations omitted] ).
Even when judicial estoppel does not apply, " ‘facts incidentally admitted during the trial or in some other judicial proceeding, as in statements made by a party as a witness' " constitute informal judicial admissions (Matter of Liquidation of Union Indem. Ins. Co. of N.Y. v. American Centennial Ins. Co., 89 N.Y.2d 94, 103 [1996] [citation omitted] ). Such judicial admissions, while "not conclusive ... are ‘evidence’ of the fact or facts admitted and may, if unrebutted and unexplained, support a motion for summary judgment" (Koslowski v. Koslowski, 245 A.D.2d 266, 268 [2d Dept 1997] ).
Plaintiffs argue that the Dollinger trial testimony does not resolve any issues as a matter of law, and that in the Dollinger case they did not claim that Dollinger was the sole cause of the project's failure, or otherwise litigate defendants' liability. Thus, plaintiffs assert they are not judicially estopped from claiming in this action that defendants' actions caused the project's failure. Their argument is unavailing.
Plaintiffs now expressly limit their claims by asserting that defendants' alleged breaches did not occur "during the period from March 2005 [sic] to October 2007 when Dollinger represented [the TIC]" (Coupey Affirm., ¶ 16), but, rather, "occurred before March 2006 (when the SWO was issued) and after October 2007 (when the MOU with the DOT was entered into)" (Id. [emphasis in original] ). Plaintiffs, thus, admittedly are not claiming that defendants caused the 18–month delay resulting from negotiations with the DOT. Instead, the essence of their claims, as set out in their opposition papers, appears to be that defendants should have known before March 2006 that the retaining wall needed to be addressed with the DOB, and that if defendants had acted sooner to get proper permits from the DOB and the DOT, there would have been no "SWO and MOU fiasco and construction delays" and no need for the lengthy negotiations with the DOT (Coupey Affirm., ¶¶ 21, 23). In addition, plaintiffs claim that defendants' mismanagement and misuse of TIC funds caused the financial collapse of the project.
All of these claims, however, are directly contradicted by the testimony of Joseph and Eli Bobker in the Dollinger case. Although plaintiffs did not prevail in the Dollinger case, and contend that they did not claim in that case that Dollinger was the sole cause of the project's failure, the Bobkers' testimony constitutes, at a minimum, judicial admissions that defendants were not responsible for the project's failure or the TIC's financial ruin. Both Eli and Joseph Bobker testified that Dollinger destroyed the project by his actions and advice following the SWO, and that Finkelman did not cause delays or otherwise cause the project to collapse.
Further, although Eli Bobker asserts that his testimony in the Dollinger case related to advice given by Dollinger after the SWO was issued, and that Finkelman's failure to get necessary permits prior to the SWO "triggered a violation that had catastrophic effects on the Project," his affidavit is inconsistent and irreconcilable with the prior testimony that plaintiffs had no disputes with defendants prior to 2008, that defendants did not cause delays leading up to the SWO, and that Finkelman did nothing to delay construction during the lengthy negotiations with the DOT. Plaintiffs also submit no evidence to show that Finkelman's actions prior to the SWO, such as applying for a permit in September 2005 and beginning construction in or around March 2006, constitute unreasonable delays.
Further, Eli Bobker testified that plaintiffs' disputes with defendants arose out of alleged breaches of the TIC agreements in 2008 and 2009. As to those alleged breaches, in view of the Bobkers' repeated, unrefuted testimony that the project was destroyed by late 2007, plaintiffs cannot show that defendants' actions during that later time period caused the project to fail. Although plaintiffs claim that defendants abandoned the project and Finkelman violated the Management Agreement by proposing to redesign the project without plaintiffs' consent, they offer no evidence that Finkelman's proposal was anything other than an unsuccessful attempt to obtain additional funding in 2008, as Finkelman attests, or that the TIC was damaged by his efforts. Nor do they proffer evidence that the mechanics' lien placed on the property in June 2008, or the inability to obtain a bond as required by the MOU, which also occurred after they lost funding for the project, contributed to the financial collapse of the project, or resulted in damages to plaintiffs.
Similarly, plaintiffs' claims that defendants breached the TIC agreements by diverting TIC funds for personal or other unauthorized uses, and that these financial self-dealings depleted the TIC's funds and made it impossible for the project to continue are unsupported by the evidence. In support of these claims, plaintiffs submit documents and other evidence purporting to show unauthorized payments by Finkelman and Engel. The evidence includes an expense statement showing payment of about $344,000 to ADG Seabreeze Construction, an entity owned by Finkelman, which, plaintiffs allege, was for drilling work on an unrelated real estate project in Brooklyn (Bobker Aff., ¶¶ 41–42; see Income & Expense Sheets, Bobker Aff., Ex. 6), Engel testimony that the TIC paid $274,000 in April 2008 for drilling work although he did not know whether the work was done (Bobker Aff., ¶ 65), and Bobker's assertion that an "Accounts Payable Report" dated August 1, 2008, which was not submitted on this motion, showed that Finkelman demanded $400,000 for payroll, insurance, accounting, legal fees, and other expenses (Id., ¶ 44). Bobker also attests that Engel paid bills unrelated to the project, such as payments for "advertising and marketing expenses" (Id., ¶ 43), and submits a statement prepared for Wadsworth showing that about $4,230 was paid for advertising in 2006, and about $32,000 was paid for legal fees in 2006 and 2007 (Bobker Aff., Ex. 12). Another statement purportedly shows advertising costs of about $1,800 incurred for ADG Seabreeze in 2008 (Id. ). Plaintiffs submit statements showing other alleged improper payments, including a $60,000 payment to the law firm representing defendants in this case (Bobker Aff., ¶ 45 and Ex. 7); payments to another law firm used by Finkelman; payments to accountants used by Engel; and fees for postage, automobile related expenses, office supplies and other miscellaneous charges (Bobker Aff., ¶¶ 46–49; Exs. 7–11).
This evidence, supra, are neither self-explanatory nor explained by Bobker or anyone else with personal knowledge, and Bobker offers no other evidence to show that the payments in question were for work done on unrelated projects or otherwise were improper. Bobker's affidavit accordingly amounts to little more than speculation that the payments were improper. Nor do plaintiffs make any showing that these payments depleted the TIC funds or resulted in the TIC's inability to make payments on its loans.
Finkelman, in reply, submits evidence that the majority of the challenged payments were project related and not unauthorized (Finkelman Reply Aff., ¶¶ 16–26). He acknowledges that the records show three charges mistakenly billed to the TIC, including the $60,000 payment to the law firm representing defendants in this case, a $1,311 payment to another law firm for personal legal fees, and $67.50 for postage (id., ¶ 31), and submits evidence that these charges were repaid to the TIC (Finkelman Reply Aff., Reports, Ex. VV).
As to remaining disputes about certain payments or management of funds, plaintiffs fail to show how they were damaged by such irregularities, namely, Engel not maintaining a separate bank account for the TIC, or not getting signatures on all checks over $10,000.
Accordingly, plaintiffs failed to raise a factual issue warranting denial of defendants' motion for summary judgment dismissing the breach of contract claim. As such, that branch of the motion seeking dismissal of the breach of contract claim is granted and it is dismissed.
Breach of Fiduciary Duty
Plaintiffs next claim that defendants' alleged mismanagement or misappropriation of TIC funds was a separate breach of fiduciary duty. While "conduct amounting to breach of a contractual obligation may also constitute the breach of a duty arising out of the relationship created by contract which is nonetheless independent of such contract" (Bullmore v. Ernst & Young Cayman Islands, 45 AD3d 461, 463 [1st Dept 2007] [citation omitted] ), "a cause of action for breach of fiduciary duty which is merely duplicative of a breach of contract claim cannot stand" (William Kaufman Org., Ltd. v. Graham & James LLP, 269 A.D.2d 171, 173 [1st Dept 2000] ).
Here, plaintiffs' claim rests on allegations that defendants failed to properly perform their duties under the TIC agreements. As to damages, they seek the same relief as that sought in their breach of contract cause of action. In fact, plaintiffs allege that no "damages [were] directly caused by" any misconduct other than defendants' alleged breach of contract (Palmetto Partners, L.P. v. AJW Qualified Partners, LLC, 83 AD3d 804, 807 [2d Dept 2011] ). Under these circumstances, plaintiffs' fiduciary duty claim is duplicative of their contract cause of action (Ullmann–Schneider v. Lacher & Lovell–Taylor, P.C., 121 AD3d 415, 416 [1st Dept 2014] ).
To the extent that plaintiffs claim that defendants colluded with each other and engaged in fraud to financially destroy the value of the property and project for their own benefit, the claim does not meet the heightened pleading requirements of CPLR 3016(b) and "is similarly redundant of the breach of contract claim, since it also seeks the same damages" (Chowaiki & Co. v. Fine Art Ltd., 115 AD3d 600, 600–601 [1st Dept 2014] ; Burry v. Madison Park Owner LLC, 84 AD3d 699, 700 [1st Dept 2011] ; Coppola v. Applied Elec. Corp., 288 A.D.2d 41, 42 [1st Dept 2001] ).
Finally, plaintiffs' informal request for leave to amend the complaint is denied given their purported new theories of liability are not supported by the evidence set forth in this record.
Accordingly, it is
ORDERED that defendants' motion for summary judgment is granted, and the complaint is dismissed in its entirety; and it is further
ORDERED that the Clerk is respectfully directed to enter judgment accordingly.
This memorandum opinion constitutes the decision and order of the Court.