M. Levine, New York, for appellants.
Berlandi Nussbaum & Reitzas LLP, New York (Peter W. Smith
of counsel), for respondents.
Renwick, J.P., Mazzarelli, Moskowitz, Kapnick, Webber, JJ.
Supreme Court, New York County (Geoffrey D.S. Wright, J.),
entered July 5, 2016, which, to the extent appealed from as
limited by the briefs, granted plaintiffs' motion to hold
defendants in civil contempt to the extent of directing
defendants to tender $1, 176, 840.00 to plaintiffs on or
before July 11, 2016, unanimously reversed, on the law and
the facts, without costs, and plaintiffs' motion denied.
Order, same court Justice, and entry date, which denied
defendants' motion to dismiss, unanimously reversed, on
the law, without costs, and the motion granted. The Clerk is
directed to enter judgment dismissing the complaint as
against defendants Ian S. Peck and Arts Capital Group LLC.
Order, same court and Justice, entered on or about August 8,
2016, which, in effect, granted defendants' motion for
leave to reargue their motion to dismiss and plaintiffs'
motion for civil contempt, and, upon reargument, adhered to
its earlier determinations and effectively dismissed, sua
sponte, defendants' claim for legal fees, unanimously
reversed, on the law, without costs, to reinstate
defendants' claim for legal fees, and the appeal from the
order otherwise dismissed, without costs, as academic.
Court improvidently exercised its discretion when it found
defendants to be in contempt of the court's order dated
January 6, 2016 (see Matter of Lipsig [Manus], 139
A.D.3d 600, 600-601 [1st Dept 2016]). The January 6, 2016
order clearly contemplated a potential settlement, and
directed defendants to bring in a check and releases for a
settlement conference on January 21, 2016. On January 20,
2016, plaintiffs unequivocally informed defendants that they
would not sign any release of their claims, and would merely
use the check as a set-off of the amounts allegedly owed to
them. Defendants were, therefore, justified in not bringing
in the check and releases, given plaintiffs' position and
the fact that no settlement would occur.
Supreme Court did not fashion a remedy contemplated by the
Judiciary Law (see Judiciary Law § 753;
Pitterson v Watson, 299 A.D.2d 467, 468 [2d Dept
2002]). Instead, the court improperly used the contempt
motion to, sua sponte, grant partial summary judgment to
plaintiffs, without providing proper notice to the parties of
its intent to do so (see Wiesen v New York Univ.,
304 A.D.2d 459, 459 [1st Dept 2003]; see also
Pitterson, 299 A.D.2d at 468).
Court also erred in denying defendants' motion to
dismiss. Plaintiffs' claim seeking removal of Patriot and
Bluefin should have been dismissed, as the documentary
evidence shows that plaintiffs failed to provide proper
notice pursuant to section 7(d) of the Participation
Agreements (see U.S. Bank N.A. v DLJ Mtge. Capital,
Inc., 141 A.D.3d 431, 432 [1st Dept 2016]). The notices
plaintiffs rely upon are insufficient.
breach of contract claim, as alleged against defendants Ian
S. Peck and Art Capital Group, LLC (Art Capital), should have
been dismissed, as these defendants were not parties to the
Participation Agreements or the Settlement Agreement, and the
amended complaint does not allege that either defendant
intended to be bound by these agreements (see Savoy
Record Co. v Cardinal Export Corp., 15 N.Y.2d 1, 4
; Shugrue v Stahl, 117 A.D.3d 527, 528 [1st
Dept 2014]). Plaintiffs' request for attorneys' fees
also should have been dismissed, since the Participation
Agreements do not entitle plaintiffs to legal fees and the
amended complaint provides no other basis for an award of
fees (see U.S. Underwriters Ins. Co. v City Club Hotel,
LLC, 3 N.Y.3d 592, 597 ).
breach of fiduciary duty claim should have been dismissed as
duplicative of the breach of contract claim (NYAHSA
Servs., Inc., Self-Ins. Trust v Recco Home Care Servs.,
Inc., 141 A.D.3d 792, 794 [3d Dept 2016]). Moreover,
plaintiffs do not allege any factual basis for a finding that
Ian S. Peck or Art Capital owe any fiduciary duty to
Court should have dismissed the deceit claim and the
"fraud and deceit" claim, because the claims rest
solely on the alleged breach of the Participation Agreements
(see Hotel 71 Mezz Lender LLC v Mitchell, 63 A.D.3d
447, 448 [1st Dept 2009]; Ullmann v Norma Kamali,
Inc., 207 A.D.2d 691, 692-693 [1st Dept 1994]).
gross negligence claim should have been dismissed as
duplicative of the breach of contract claim (see New York
Univ. v Continental Ins. Co., 87 N.Y.2d 308, 316 ;
Pacnet Network Ltd. v KDDI Corp., 78 A.D.3d 478, 479
[1st Dept 2010]). Moreover, "claims based on negligence
or grossly negligent performance of a contract are not
cognizable" (Pacnet, 78 A.D.3d at 479 [internal
quotation marks omitted]).
conversion claim also should have been dismissed as
duplicative of the breach of contract claim (see M.D.
Carlisle Realty Corp. v Owners & Tenants Elec. Co.
Inc., 47 A.D.3d 408, 409 [1st Dept 2008]).
existence of express contracts - the Participation Agreements
and Loan Documents - bars the unjust enrichment claim
(Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70
N.Y.2d 382, 388 ; Allenby, LLC v Credit Suisse,
AG, 134 A.D.3d 577, 579 [1st Dept 2015]).
plaintiffs' allegation of a fiduciary relationship is
directly refuted by the Participation Agreements, which were
arm's length business transactions that did not create
any fiduciary duty, and there are no special circumstances
warranting an accounting in the interest of justice, the
accounting claim should have ...