sixth count charges defendant with conflict of interest and
demands $1,000,000 in compensatory damages and $1,000,00
Defendant denies plaintiffs' charges and, in addition to
stating defenses, makes 3 counterclaims. The first
counterclaim seeks $2 million in damages for plaintiffs'
repudiation of the January 13, 1988 agreement. The second
counterclaim seeks $9 million for breach of the April 20, 1988
agreement caused allegedly by the filing of the legal
proceedings in Rhode Island. The third counterclaim seeks $9
million in damages and $20 million in punitive damages for
plaintiffs tortiously interfering with defendant's proposed
purchase of the Conti property, in essence by filing the legal
proceedings in Rhode Island.
The Court grants plaintiffs' motion for summary judgment
dismissing the three counterclaims, but denies that motion
with respect to plaintiffs' third cause of action.
1. The First Counterclaim
No action can lie for breach of the January 13, 1988
agreement because Rosenthall has acknowledged by sworn
affidavit in the Rhode Island proceeding that plaintiffs "at
[the April 20, 1988] meeting . . . insisted on the return of
the $100,000. I agreed that once the deal had closed, I would
return the $100,00 to them." Gellis Aff., Exh. E. ¶ 9;
Rosenthall Aff. Rosenthall does not in any way disavow or
contradict his statements in that affidavit in this proceeding.
A superseding agreement creates new contractual obligations
between the parties and supplants any prior agreement. In this
case, the April 20, 1988 agreement constituted a novation
which extinguished the January 13, 1988 agreement. The
parties' only remedy for breach is an action based on the new
agreement. See Citigifts, Inc., v. Pechnik, 112 A.D.2d 832, 492
N YS.2d 752 (App. Div. 1985), aff'd, 67 N.Y.2d 774, 500
N YS.2d 643, 491 N.E.2d 1100 (1986); Salo Landscape & Constr.
Co. v. Liberty Elec. Co., 119 R.I. 269, 376 A.2d 1379 (1977).
Accordingly, defendant's first counterclaim fails as a matter
2. The Second Counterclaim
The second counterclaim is dismissed because there are no
genuine issues of material fact as to plaintiffs' alleged
breach of the April 20, 1988 agreement. The terms of the
agreement required plaintiffs merely to wait for the closing.
Summary judgment is appropriate where the parties' obligations
under the contract are clear and unambiguous and where there
are no material disputes on the facts. See Tokio Marine & Fire
Ins. Co. v. McDonnell Douglas Corp., 617 F.2d 936, 940 (2d Cir.
1980). Defendant has raised no issue of fact nor presented any
evidence made on personal knowledge, as required by
Fed.R.Civ.P. 56(e), indicating that plaintiffs' pursuit of the
Rhode Island litigation interfered with the Omni Bank closing
on the commitment letter.
3. The Third Counterclaim
The third counterclaim is dismissed for similar reasons.
Defendant presents no proof in rebuttal of plaintiffs' proof,
consisting of the deposition testimony of Omni Bank loan
officer Joseph Perrotta, (1) that the mortgage loan commitment
was aborted because of the failure of the MAI appraisal of the
property to come close to the requirement of $4.7 million and
(2) that the Omni Bank was completely unaware of the Rhode
Island litigation. Gellis Aff., Exh. M. Indeed, there is no
showing that litigation was pending against the property. By
its terms the action only named Rosenthall and the restraining
order issued only restrained Rosenthall and the plaintiffs.
There is no showing that a lis pendens was filed against the
Conti property. Accordingly, defendant has not shown that, but
for plaintiffs' conduct, he would have fulfilled his
obligations to purchase the Conti property. Resnick v. Resnick,
722 F. Supp. 27, 38 (S.D.N.Y. 1989).
3. Count Three of the Amended Complaint
Lastly, plaintiffs seek summary judgment on their third
cause of action
which sounds in conversion. This motion is denied. Issues of
fact exist relating to the terms of the agreement reached
between the parties on April 20, 1990, including what the
obligation of defendant was if he were unable to close the
Conti deal. Plaintiffs knew the contract Rosenthall had
entered into was not contingent on obtaining financing and
that he had expended money for percolation tests and would
have mortgage commitment fees, as well as legal and related
expenses. There is no indication on this record as to how
those expenses were to be treated in the event there was no
closing. These issues of fact preclude summary judgment on
plaintiffs' claim alleging conversion.
The gist of this opinion was stated at oral argument on
October 5, 1990. Parties are to appear ready for trial on
October 15, 1990 at 9:30 a.m.
IT IS SO ORDERED.