Supreme Court of the State of New York, Appellate Division, Second Judicial Department

Decided on July 1, 2026

2022-01126, (Index No. 710037/14)

Cheryl E. Chambers, J.P.

Deborah A. Dowling

Lillian Wan

Elena Goldberg Velazquez, JJ.

[*1]

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the plaintiffs appeal from an order of the Supreme Court, Queens County (Leonard Livote, J.), dated December 1, 2021. The order granted the defendants' motion for summary judgment dismissing the second amended complaint and denied the plaintiffs' cross-motion, among other things, for summary judgment on the cause of action to impose a constructive trust on the defendants.

ORDERED that the order is affirmed, with costs.

As alleged in the second amended complaint, the Zeta Zeta Lambda Chapter (hereinafter the Chapter) is an alumni chapter of the Alpha Phi Alpha Fraternity. The Chapter founded the plaintiff Alpha Phi Alpha Senior Citizens Center, Inc. (hereinafter the Senior Center). In 1994, the Senior Center donated approximately $20,000 toward the purchase of a building. The Chapter established the defendant Zeta Zeta Lambda Company, Inc. (hereinafter the Company). The Company originally was established as a tax-exempt entity pursuant to Internal Revenue Code (26 USC) § 501(c)(2). The Company's original 1995 certificate of incorporation stated, in part, that the purpose of the Company was "to hold property, collect income therefrom, and to turn over the entire amount less expenses to the" Senior Center. Additionally, "[t]o ensure that the Company would be governed by and remain an agent of the [Senior] Center, the Company's bylaws" contained a so-called "governance agreement," which "required at least three-fourths (3/4) of the board of directors of the Company would be members of the Chapter in good standing."

In June 1995, the Company submitted an application to the Internal Revenue Service to become a tax-exempt entity pursuant to Internal Revenue Code (26 USC) § 501(c)(3). The Company's March 1997 bylaws provided that its board of directors shall be composed of not less than 7, nor more than 21, individuals of whom at least three fourths shall be members in good standing of the Chapter. In June 1997, the certificate of incorporation was amended to modify the Company's name and to amend the Company's purposes. The new purposes did not expressly include turning over excess rents to the Senior Center.

The plaintiffs commenced this action against the defendants, inter alia, to recover [*2]damages for breach of contract and breach of fiduciary duty. Prior to discovery, the plaintiffs moved, among other things, for summary judgment on certain causes of action, and the defendants cross-moved for summary judgment dismissing the complaint. In an order entered September 26, 2016, the Supreme Court, inter alia, denied the motion and the cross-motion.

In an order dated February 5, 2020, this Court affirmed the order entered September 26, 2016, insofar as appealed from (see Alpha Phi Alpha Senior Citizens Ctr., Inc. v Zeta Zeta Lambda Co., Inc., 180 AD3d 630). This Court determined that "[s]ince the requirement that at least three fourths of the directors shall be members in good standing of the Chapter was not set forth in the Company's certificate of incorporation, [a 2013] amendment to the bylaws to remove the requirement was permissible under N-PCL 602(f)" (id. at 632). This Court also determined that "the provision of the original bylaws which imposed that requirement is not enforceable by the Chapter as a contract," but that "the subject provision of the bylaws is merely evidence of the alleged governance agreement," and that "the failure to organize the Company so as to ensure Chapter control over director qualifications and removal raises triable issues of fact as to the existence and terms of the alleged governance agreement" (id. at 632-633). This Court also determined that "the provision of the original certificate of incorporation which stated that the Company's purpose was to turn over excess rents to the Senior Center is not enforceable by the Senior Center as a third-party beneficiary agreement," and that "the provision was merely evidence of an alleged third-party beneficiary agreement, and the record revealed triable issues of fact as to the existence and terms of this alleged agreement" (id. at 633). This Court also concluded that "[t]he remaining causes of action and cross claims all depend on the existence of the alleged governance agreement, the alleged agreement to pay excess rents to the Senior Center, or the directors' alleged status as agents of the Chapter, and there are triable issues of fact as to these issues" (id. at 634).

In September 2019, while the prior appeal was pending, the Supreme Court granted the plaintiff leave to serve a second amended complaint. In the second amended complaint, the plaintiff alleged 13 causes of action. The first 12 causes of action were substantially similar to those alleged in the original complaint and the amended complaint. The thirteenth cause of action, which was added to the second amended complaint, sought to impose a constructive trust on the defendants.

Thereafter, following discovery, the defendants moved for summary judgment dismissing the second amended complaint, and the plaintiffs cross-moved, among other things, for summary judgment on the cause of action to impose a constructive trust on the defendants. By order dated December 1, 2021, the Supreme Court granted the defendants' motion and denied the plaintiffs' cross-motion. The plaintiffs appeal.

"An appellate court's resolution of an issue on a prior appeal constitutes the law of the case and is binding on the Supreme Court, as well as on the appellate court" (New York Tile Wholesale Corp. v Thomas Fatato Realty Corp., 205 AD3d 727, 727-728). "The doctrine of the law of the case operates to foreclose re-examination of the issue absent a showing of new factual circumstances, additional relevant evidence, or a change in the law that would warrant reconsideration of the issue" (id. at 728 [citation omitted]; see Pascual v Rustic Woods Homeowners Assn., Inc., 173 AD3d 756, 757).

On the prior appeal, this Court determined that amendments to the Company's bylaws were "permissible under N-PCL 602(f)" and, in any event, a bylaw "requirement that at least three fourths of the directors [of the defendant company] shall be members in good standing of the Chapter" "is not enforceable by the [plaintiffs] as a contract" (Alpha Phi Alpha Senior Citizens Ctr., Inc. v Zeta Zeta Lambda Co., Inc., 180 AD3d at 632). Additionally, this Court determined that "the provision of the original certificate of incorporation which stated that the Company's purpose was to turn over excess rents to the Senior Center is not enforceable by the Senior Center as a third-party beneficiary agreement," as that "was not a valid and binding contract between the Chapter and the Company" (id. at 633). Here, the plaintiffs failed to demonstrate new factual circumstances, additional relevant evidence, or change of law that would warrant reconsideration of these issues.

Further, by relying upon this Court's order in the prior appeal and submitting additional evidence, the defendants established, prima facie, the absence of any agreement between [*3]the parties concerning the governance of the Company or the sharing of excess revenue, as well as the lack of any agency or fiduciary relationship between the parties. Since all of the causes of action either relied upon the existence of an agreement or the existence of a fiduciary relationship between the parties, the defendants established their prima facie entitlement to judgment as a matter of law dismissing the second amended complaint (see Zuckerman v City of New York, 49 NY2d 557, 562). In opposition, the plaintiffs failed to raise a triable issue of fact.

Accordingly, the Supreme Court properly granted the defendants' motion for summary judgment dismissing the second amended complaint. For the same reasons, the court properly denied the plaintiffs' cross-motion, inter alia, for summary judgment on the cause of action to impose a constructive trust on the defendants.

CHAMBERS, J.P., DOWLING, WAN and GOLDBERG VELAZQUEZ, JJ., concur.

ENTER:

Darrell M. Joseph

Clerk of the Court