Murphy v. CWR Mfg. of Cent. N.Y., LLC

188 A.D.3d 1587

137 N.Y.S.3d 225

Carol J. MURPHY, as Successor-in-Interest and Executrix for the Estate of James A. Murphy, Deceased, Plaintiff-Respondent,

v.CWR MANUFACTURING OF CENTRAL NEW YORK, LLC, and Sean A. Murphy, Defendants-Appellants.

553

CA 19-00630

Supreme Court, Appellate Division, Fourth Department, New York.

November 13, 2020

BOUSQUET HOLSTEIN, PLLC, SYRACUSE (JAMES L. SONNEBORN OF COUNSEL), FOR DEFENDANTS-APPELLANTS.

BARCLAY DAMON LLP, SYRACUSE (JON P. DEVENDORF OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

PRESENT: SMITH, J.P., TROUTMAN, WINSLOW, BANNISTER, AND DEJOSEPH, JJ.

MEMORANDUM AND ORDER

It is hereby ORDERED that the amended order so appealed from is unanimously modified on the law by denying the cross motion in part and reinstating the 8th through 10th counterclaims, and as modified the amended order is affirmed without costs.

Memorandum: In 2009, Sean A. Murphy (defendant) and his father, James A. Murphy (decedent), formed defendant CWR Manufacturing of Central New York, LLC (CWR). Defendant and decedent each owned 50 percent of CWR and, under an operating agreement executed by defendant and decedent, decedent was the manager of CWR. CWR paid rent for its use of a portion of a building located on property owned by plaintiff, who was decedent's wife and defendant's step-mother. In 2013, decedent died and, pursuant to the terms of the operating agreement, defendant was entitled to purchase decedent's interest in CWR. Plaintiff, as decedent's successor-in-interest, and defendant, however, could not agree on a price. Thus, pursuant to the terms of the operating agreement, plaintiff and defendant agreed to hire an outside accountant to determine the fair and reasonable value of decedent's interest in CWR. Upon receipt of the accountant's valuation of decedent's interest in CWR, defendant attempted to pay that amount to plaintiff, but plaintiff rejected defendant's payments.

Thereafter, plaintiff commenced this action against defendants for, inter alia, breach of contract, unjust enrichment and an accounting. Defendants' second amended answer asserted 10 counterclaims. Defendants now appeal from an amended order that, inter alia, granted plaintiff's cross motion for summary judgment dismissing the counterclaims. We conclude that plaintiff is entitled to summary judgment dismissing the first through seventh counterclaims, but we agree with defendants that Supreme Court erred in granting those parts of plaintiff's cross motion seeking summary judgment dismissing the 8th through 10th counterclaims, and we therefore modify the amended order accordingly.

The court properly granted the cross motion with respect to the first and second counterclaims, which are based on allegations that CWR made an overpayment of rent to plaintiff.

Plaintiff submitted evidence that, while there was no formal written rental agreement, a verbal agreement existed before the decedent's death, and that defendant was the building manager and acquiesced to the terms of the verbal agreement. We conclude that the evidence of defendant's ratification of the rent agreement bars defendants' counterclaims for breach of fiduciary duty and "unjust enrichment/restitution" arising out of the rent agreement (see generally 13th & 14th St. Realty LLC v. Board of Mgrs. of the A Bldg. Condominium , 132 A.D.3d 561, 561, 17 N.Y.S.3d 867 [1st Dept. 2015] ; Benedict v. Whitman Breed Abbott & Morgan , 110 A.D.3d 935, 937, 973 N.Y.S.2d 341 [2d Dept. 2013] ), and defendants failed to raise a triable issue of fact (see generally Zuckerman v. City of New York , 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ).

The court also properly granted the cross motion with respect to the third through...