| Griffith v Michael Arounian PLLC |
| 2022 NY Slip Op 50858(U) [76 Misc 3d 1209(A)] |
| Decided on August 2, 2022 |
| Civil Court Of The City Of New York, Kings County |
| Edwards, J. |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected in part through January 31, 2023; it will not be published in the printed Official Reports. |
Keino Griffith,
Plaintiff(s)
against Michael Arounian PLLC; 819 Logan Street LLC, Defendant(s) |
The decision and order after trial before me on June 16, 2022 is as follows:
Plaintiff, acting pro se, commenced this action to recover damages in the amount of $28,500.00 for a breach of an escrow agreement. Plaintiff entered into a contract to purchase the property located at 819 Logan Street, Brooklyn, NY 11208 from the defendant, 819 Logan Street LLC. Michael Arounian, PPLC served as the attorney for 819 Logan Street LLC and escrow agent. An undated escrow agreement ("Agreement") was created post-closing to ensure that seller removes the open vacate order and three building violations. The agreement provided that when the vacate order and the listed violations are removed, the escrow funds may be released to the seller. According to plaintiff, only one of three violations were removed from the property. The plaintiff was self-represented and produced his wife as a witness. Defendants relied on the testimony of Mr. Arounian as its sole witness.
Plaintiff brought this action against two defendants: Michael Arounian PLLC, as the escrow agent, and, 819 Logan Street, LLC, as the seller. In its decision dated March 11, 2022, this Court found that Mr. Arounian violated his fiduciary duty as the escrow agent when he released the escrow funds without the consent of the purchaser. The Court further ordered Mr. Arounian to deposit the entire amount held in escrow with the clerk of the court. Mr. Arounian complied with the Court's order and deposited a check with the clerk in the amount of $20,000.00 on June 16, 2022. A party paying money into court pursuant to the direction of the court is discharged thereby from all further liability to the extent of the money so paid in (CPLR 2601[a]).
To the court's knowledge, other than its role as an escrow agent and attorney for the seller, Michael Arounian PLLC has no interest and is not a party to the purchase and sale agreement. It was named in this suit because it was holding the escrow funds and then released it to the seller without authorization from the purchaser. Unless it is determined that Mr. Arounian is an officer of 819 Logan Street LLC, he has no other role in this lawsuit. The remaining claims by plaintiff are only asserted against 819 Logan Street LLC. The Court does not find that plaintiff would be prejudice by the removal of Michael Arounian PLLC as a defendant. Therefore, the Court finds that Mr. Arounian has satisfied the order of the Court and discharges him as a party pursuant to CPLR 2601. Accordingly, 819 Logan Street LLC is the only remaining defendant in this case (CPLR 1006 [f]).
Plaintiff reported to the police that his home was entered into without his consent by unknown individuals. He surmised that those individuals included a building inspector. On the same day of the alleged break-in, one of the three building violations was cleared by the Department of Buildings. Plaintiff states that the incident occurred while he was at work, and his new neighbors alerted him to the fact that someone had entered his home. The plaintiff noticed that his construction tools were missing following the break-in and he made a police report. Plaintiff claims that the estimated cost of replacing the stolen tools is $5,000.00. In support of his claim, plaintiff submitted a listing on the Home Depot website to substantiate the cost of the tools. Plaintiff also provided a police report dated March 26, 2018. Testimony identifying the perpetrator of this purported crime was lacking. The court declines to speculate that defendant 819 Logan, LLC, its agents or assignees was the cause of this loss. Thus, plaintiff is not entitled to a money judgement against the defendant in the amount of $5,000.00 for the tools that were allegedly stolen.
Plaintiff contends that the work on the house he purchased from defendant was incomplete. At the time of the closing, the plaintiff credibly testified that he was unable to do pre-closing inspection. The plaintiff and his wife credibly testified that post-closing, he was not given a copy of the correct keys to the home he just purchased. After the plaintiff climbed through the basement window, he discovered that the seller failed to install French doors separating the dining room from the living room and that wood flooring was not complete. There were numerous text messages and emails between the parties submitted for the court's consideration as to the post- closing discussions about the French doors and repairs that were still needed. At trial, it was revealed that those conversations occurred between Mr. Griffith, Mr. Arounian, and one of the principals of the corporation identified as Roy. Plaintiff claims that it will cost $3,500.00 to complete the installation of the doors and floor.
The parties attempted on March 26, 2018 to finalize the terms of an agreement regarding the post-closing repairs for the floors and doors. Mr. Arounian, defendant's attorney at the time, proposed that his client would finish the floors on March 26, 2018 and provide a $1,200.00 credit to the plaintiff for the doors. In addition, Mr. Arounian requested that plaintiff grant the [*2]inspector access on March 26, 2018. Plaintiff then made a counteroffer for a $1,500.00 credit for the doors instead of $1,200.00. There was no evidence presented at trial that there was a meeting of the minds on the costs of repair. Therefore, the court finds that there was no express agreement between the parties regarding the post-closing repairs. As such, the plaintiff cannot recover the funds claiming breach of contract. However, plaintiff may recover the funds based on unjust enrichment as a quasi-contract theory of recovery (IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 142 [2009]).
A cause of action under a quasi-contract theory "only applies in the absence of an express agreement, and is not really a contract at all, but rather a legal obligation imposed in order to prevent a party's unjust enrichment" (Clark-Fitzpatrick, Inc. v Long Is. R. Co., 70 NY2d 382 [1987]). To establish unjust enrichment, plaintiff must show: "(1) that the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered" (see Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011]); Lebovits v Bassman, 120 AD3d 1198 [2d Dept 2014]).
Here, plaintiff credibly testified that the doors and floor pieces were supposed to be installed before closing and that he was not provided with the correct keys to conduct a pre-closing walkthrough of the property. At the time of closing, plaintiff was unaware of the defect to the floors and doors. There is no dispute that plaintiff, as the purchaser under the real estate transaction, paid the full contract price to defendant. Based on the conversations between the parties, the defendant acknowledged that the promised work was not done. Therefore, the Court finds that defendant would be unjustly enriched if it was to retain the entire purchase price paid by the plaintiff under the real estate transaction without compensating plaintiff for the incomplete work. Although the parties could not agree on the financial terms for the post-closing repairs, defendant did acknowledge that the work was not done and should be completed. Thus, plaintiff has established that defendant was enriched at his expense, and it would be against equity and good conscience to permit the defendant to retain the full benefit without compensating the plaintiff for the incomplete work.
In an unjust enrichment case, the plaintiff can only recover "the reasonable value of property, services and benefits actually conferred upon defendant[ ] (Baliotti v Walkes, 115 AD2d 581, 581 [2d Dept 1985]). It appears from the correspondence between the parties on March 25- 26, 2018, the reasonable cost to install the doors and complete the floor is $3,500.00. Thus, plaintiff is entitled to the $3,500.00 for the purpose of completing the floors and doors.
Plaintiff contends that he should receive the $20,000.00 in escrow because defendant did not remove all the violations on the property. According to the Agreement, $20,000.00 was to be held in escrow pending the removal of the open vacate order and the three violations; and, following the removal of the vacate order and violations, the funds may be released to the seller. According to the testimony from Mr. Arounian, the escrow funds were released in January 2019, despite there being two remaining violations on the property. The plaintiff credibly testified that one violation was removed on March 26, 2018.
This claim involves contract interpretation (see Brady v VIL Realty LLC, 29 Misc 3d 1217[A] [Sup Ct 2010]). The plain language of the escrow agreement states that $20,000.00 will [*3]be held in escrow until the open vacate order and violations are removed, and, once the vacate order and violations are removed, the funds will be released to the seller. Therefore, in complying with the terms of the contract, the funds should have remained in escrow until the removal of all the violations by the seller. The defendant is not entitled to the entire escrow fund because all the violations were not removed from the property. The defendant asserts that plaintiff frustrated its performance under the contract by not granting access to the inspectors. The Court is not persuaded by defendant's argument that its purpose was frustrated under the contract. The defendant's sole witness did not provide the court with credible testimony surrounding the circumstances of the attempts to correct the violations. A party may be excused for failure to perform when the fundamental purpose of the contract is frustrated by events beyond the contracting parties' control (see Kel Kim Corp. v Cent. Markets, Inc., 70 NY2d 900 [1987]). The doctrine of frustration of purpose is not available where the event that prevented performance was foreseeable and provision could have been made for its occurrence (see Rebell v Trask, 220 AD2d 594 [2d Dept 1995]). As such, the Court finds that it was foreseeable that parties may disagree on when the inspector would have access to the property or how many attempts defendant would have to make before performance would be excused.
The Court finds that plaintiff is entitled to the cost to remove the two remaining violations on the property. After the calculation of the costs, the remainder of the escrow funds, less the cost to remove the violations, should be released to defendant. However, not enough information on the estimated cost to remove the two violations is before the Court. The plaintiff is in possession of the premises. When the violations are removed, he may make an application to the court detailing the costs of removal and requesting compensation for the same from the escrow funds being held.
Accordingly, Michael Arounian PLLC is removed as a party to this action. Plaintiff is entitled to a money judgment in the amount of $3,500.00 to complete the post-closing repairs to the floor and installation of the French doors. The plaintiff may make an application to the court for the release of funds on notice to the defendant upon removal of the violations.
This Constitutes the Decision and Order of the Court.
Date: August 2, 2022