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Bloom v. Lugli

Supreme Court of New York, Second Department

January 16, 2013

Eliot F. Bloom, respondent.
v.
Russell Lugli, et al., appellants. Index No. 13207/09

John E. Lawlor, Mineola, (Ian Y. Park of counsel), for appellants.

Eliot F. Bloom, Williston Park, N.Y., respondent pro se.

DANIEL D. ANGIOLILLO, J.P., JOHN M. LEVENTHAL, PLUMMER E. LOTT, LEONARD B. AUSTIN, JJ.

DECISION & ORDER

In an action, in effect, to recover installment payments allegedly due under a buy-out agreement, the defendants appeal (1), as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Warshawsky, J.), dated June 28, 2011, as denied their motion for leave to amend their answer to assert 12 affirmative defenses, (2) from an order of the same court dated November 7, 2011, which granted the plaintiff's motion for summary judgment, and (3) from a judgment of the same court entered December 1, 2011, which, upon the order dated November 7, 2011, is in favor of the plaintiff and against them in the principal sum of $350, 000.

ORDERED that the appeals from the orders dated June 28, 2011, and November 7, 2011, are dismissed; and it is further,

ORDERED that the judgment is reversed, on the law and in the exercise of discretion, without costs or disbursements, the plaintiff's motion for summary judgment is denied, those branches of the defendants' motion which were for leave to amend the answer to assert the first, second, third, fourth, fifth, sixth, seventh, ninth, and eleventh proposed affirmative defenses are denied as unnecessary, and the orders dated June 28, 2011, and November 7, 2011, are modified accordingly; and it is further,

ORDERED that one bill of costs is awarded to the defendants.

The appeals from the orders dated June 28, 2011, and November 7, 2011, must be dismissed because the right of direct appeal therefrom terminated with the entry of the judgment (see Matter of Aho, 39 N.Y.2d 241, 248). The issues raised on the appeals from the orders are brought up for review and have been considered on the appeal from the judgment.

On August 15, 2006, the plaintiff and the defendant Northwestern Consultants, Inc. (hereinafter NCI), entered into a joint venture agreement for the purpose of constructing and selling 24 entry-level housing units in Bay Shore. According to the terms of the joint venture agreement, NCI was to have a 55% interest and the plaintiff was to have a 45% interest in the joint venture. Pursuant to article X 10(d) of the joint venture agreement, the plaintiff was charged with the responsibility of obtaining the required zoning and development approvals for the construction project.

By separate agreement (hereinafter the buy-out agreement), executed on October 5, 2007, the plaintiff agreed to sell his 45% interest in the development project in Bay Shore and the joint venture to NCI and the defendant Russell Lugli (hereinafter together the defendants) for the total sum of $450, 000. The parties to the buy-out agreement also agreed to amend the joint venture agreement to reflect the sale of the plaintiff's interest. The buy-out agreement provided, in relevant part, that the defendants would pay the plaintiff the $450, 000 in three installments. The first $100, 000 was paid at the time the buy-out agreement was executed. The remaining $350, 000 was to be paid in two installments of $175, 000 each, with one installment to be paid by April 1, 2008, and the other by October 1, 2008. The fourth paragraph of the buy-out agreement provided that the plaintiff would "continue to represent Russell Lugli, the Bay Shore Joint Venture and Northwestern Consultants in order to provide all legal representation necessary to complete the project with no fees to be charged." The defendants failed to pay the last two installments.

The plaintiff commenced this action by filing a motion for summary judgment in lieu of a complaint pursuant to CPLR 3213. The defendants opposed the motion on the ground, inter alia, that the plaintiff could not commence this action through the filing of a motion for summary judgment in lieu of complaint pursuant to CPLR 3213, since the buy-out agreement was not an instrument for the payment of money only. By order and judgment (one paper) entered November 19, 2009, the Supreme Court granted the plaintiff's motion pursuant to CPLR 3213 and entered judgment in his favor and against the defendants in the principal sum of $350, 000.

On appeal, this Court reversed the order and judgment, concluding that the plaintiff failed to establish that the buy-out agreement was an instrument for the payment of money only because its terms included the continued legal representation by the plaintiff of the defendants and the joint venture (see Bloom v Lugli, 81 A.D.3d 579). This Court also deemed the plaintiff's motion to be a complaint and deemed the defendants' opposing papers to be the defendants' answer. This Court further determined that the parties' remaining contentions had been rendered academic in light of the determination that the buy-out agreement was not an instrument for the payment of money only.

Shortly thereafter, the defendants moved for leave to amend their answer to assert 12 affirmative defenses alleging, inter alia, that the buy-out agreement was unenforceable because the plaintiff was guilty of self-dealing, fraud, breach of his fiduciary duties, breach of contract, and violation of the Code of Professional Responsibility.

The Supreme Court denied the defendants' motion for leave to amend their answer, reasoning that, based upon this Court's prior decision and order, the defendants' proposed affirmative defenses were either determined to be without merit by this Court or had not been raised by the defendants in opposition to the plaintiff's motion. The Supreme Court therefore concluded that, pursuant to this Court's decision and order, only one issue remained to be determined, that is, whether the plaintiff continued to provide legal services to the defendants and the joint venture in accordance with the ...


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