Zeltser v Kukolev

Supreme Court, Richmond County

Decided on March 13, 2026

Index No. 151188/2023

Ronald Castorina, Jr., J.

I. Statement Pursuant to CPLR § 2219 [a]

The Court has considered the papers submitted in connection with Motion Sequence Nos. 007, 008, and 009, including Plaintiff's Notice of Motion, supporting affirmations, Statement of Material Facts, memorandum of law, and exhibits; Defendants' affirmations in opposition and memorandum of law; Plaintiff's reply; Plaintiff's motion to cancel the notice of pendency and for sanctions; Defendants' opposition and cross-motion. All submissions on NYSCEF have been reviewed in their entirety, and the Court has considered the arguments advanced both in writing and at oral argument conducted on March 12, 2026.

II. Findings of Fact

This litigation arises from a deteriorated personal and business relationship between Plaintiff Roman Zeltser and Defendant Natalia Kukolev, and concerns the ownership, improvement, possession, and claimed equitable interests in the real property known as 228 Slater Boulevard, Staten Island, New York (the "Property").

The documentary evidence establishes that on or about August 7, 2019, Plaintiff acquired fee simple title to the Property for the purchase price of $685,000. The deed reflects Plaintiff as the sole grantee, and no other individual or entity is identified as holding title. The mortgage encumbering the Property is solely in Plaintiff's name. The record does not contain any written instrument executed at closing or thereafter conveying a present legal interest in the Property to Kukolev or to Hammerbilt Inc.

In connection with the purchase transaction, a bank "gift letter" was executed by Kukolev in the amount of $17,000. That letter states, in substance, that the funds were a bona fide gift and that there was no obligation, express or implied, to repay the sum. The language is unconditional and contains no reference to ownership participation, equity contribution, deferred conveyance, or joint tenancy. The gift letter was submitted as part of the mortgage underwriting process.

Several months after the closing, in November 2019, Hammerbilt Inc. was incorporated. The submissions reflect that Plaintiff and Kukolev each hold a fifty percent (50%) ownership interest in the corporation. The corporate formation documents and materials provided to the Court do not reflect that the Property was transferred to Hammerbilt, contributed as capital, listed as a corporate asset, or pledged as collateral for corporate purposes.

The record further reflects that corporate funds were advanced to Plaintiff in connection with renovations and improvements to the Property. Deposition testimony submitted on the motions characterizes those advances as loans. There is no written agreement converting those advances into equity in the Property, nor is there any deed transferring title from Plaintiff to the [*2]corporation. The absence of any written conveyance or corporate resolution treating the Property as corporate-owned remains undisputed in the record presented.

Following the departure of tenants in 2021, Kukolev took up residence at the Property. It is undisputed that she did so without payment of rent. On February 15, 2022, Plaintiff revoked permission for Kukolev to remain in the Property. Kukolev did not vacate at that time and continued in possession until October 2024, when she was removed pursuant to a court order issued in a separate landlord-tenant proceeding.

In this action, Defendants assert counterclaims for breach of contract, unjust enrichment, conversion, breach of fiduciary duty, accounting, and judicial partition. The gravamen of these counterclaims is the assertion that, notwithstanding record title, the parties agreed to share ownership in the Property and that financial contributions were made in reliance upon that understanding.

On December 1, 2025, Defendants filed a Notice of Pendency pursuant to CPLR 6501 in connection with their partition claim, asserting that the judgment demanded would affect title to the Property.

The procedural history further demonstrates that Plaintiff has sought sanctions pursuant to 22 NYCRR § 130-1.1 on multiple occasions during the pendency of this litigation. Those applications were denied. No prior order in this action contains an express finding that Defendants engaged in frivolous conduct as defined by Rule 130. Plaintiff nevertheless renewed his request for sanctions in Motion Sequence No. 009.

These motions are now before the Court for determination.

III. Conclusions of Law

A. Motion Sequence No. 007 - Summary Judgment

Summary judgment is an extraordinary procedural device that should be granted only where the movant establishes entitlement to judgment as a matter of law through evidentiary proof in admissible form sufficient to eliminate any material issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]). If the movant fails to make this prima facie showing, the motion must be denied regardless of the sufficiency of the opposing papers (see Ayotte v Gervasio, 81 NY2d 1062 [1993]).

The Court must view the evidence in the light most favorable to the non-moving party and must afford that party every favorable inference (see Negri v Stop & Shop, 65 NY2d 625 [1985]). The Court's function on a motion for summary judgment is limited to issue-finding; it may not weigh credibility or resolve factual disputes (see Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395 [1957]; Ferrante v American Lung Assn., 90 NY2d 623 [1997]).

Here, Plaintiff relies primarily upon record title and the absence of a written conveyance. While record title is a powerful evidentiary fact, it is not dispositive where equitable claims are asserted. The Court of Appeals has recognized that issues concerning the intent of parties, the character of financial transfers, and the existence of oral agreements are generally inappropriate for resolution as a matter of law (see Rotuba Extruders v Ceppos, 46 NY2d 223 [1978]; Glick & Dolleck v Tri-Pac Export Corp., 22 NY2d 439 [1968]).

The character of the $17,000 transfer, notwithstanding the language of the gift letter, and the character of subsequent corporate advances, are matters that turn upon intent, reliance, and [*3]surrounding circumstances. The Court cannot determine, as a matter of law on this record, whether those transfers were gifts, loans, equity contributions, or part of a broader understanding.

Accordingly, triable issues of fact exist, and Motion Sequence No. 007 is DENIED.

B. Statute of Frauds - General Obligations Law § 5-703

General Obligations Law § 5-703 [1] requires that a contract for the conveyance of an interest in real property be in writing and subscribed by the party to be charged. The statute exists to prevent fraud in land transactions (see Crabtree v Elizabeth Arden Sales Corp., 305 NY 48 [1953]). However, equity may intervene where strict application of the statute would itself work an injustice. Part performance removes an oral agreement from the Statute of Frauds only where the conduct alleged is unequivocally referable to the agreement (see Burns v McCormick, 233 NY 230 [1922]; Anostario v Vicinanzo, 59 NY2d 662 [1983]). Conduct is unequivocally referable only if it is unintelligible or extraordinary in the absence of the alleged agreement (see Messner Vetere Berger McNamee Schmetterer Euro RSCG v Aegis Group, 93 NY2d 229 [1999]).

Financial contributions, standing alone, are not necessarily unequivocally referable to a conveyance of real property, as they may be equally consistent with loans or gifts (see Anostario, supra). Whether the conduct alleged by Defendants satisfies this stringent standard cannot be resolved on the present record without weighing credibility and intent.

Constructive trust likewise remains an equitable doctrine designed to prevent unjust enrichment (see Sharp v Kosmalski, 40 NY2d 119 [1976]; Simonds v Simonds, 45 NY2d 233 [1978]). The elements, to wit: confidential relationship, promise, transfer in reliance, and unjust enrichment, are flexible guideposts rather than rigid prerequisites (see Bankers Sec. Life Ins. Socy. v Shakerdge, 49 NY2d 939 [1980]). A constructive trust is the formula through which the conscience of equity finds expression. In the words of Judge Cardozo: "When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest; equity converts them into a trustee".

Given the intertwined personal and business relationship between the parties, and the allegations of reliance, dismissal of equitable claims solely on Statute of Frauds grounds is not warranted at this juncture.

C. Notice of Pendency - CPLR § 6501

CPLR § 6501 authorizes a notice of pendency in any action in which the judgment demanded would affect title to, or the possession, use or enjoyment of, real property. The Court of Appeals has made clear that the validity of a notice of pendency is determined by the nature of the relief demanded in the pleading, not by an evaluation of the likelihood of success (see 5303 Realty Corp. v O & Y Equity Corp., 64 NY2d 313 [1984]). Courts must avoid converting a motion to cancel into a premature adjudication of the merits (see Da Silva v Musso, 53 NY2d 543 [1981]).

In entertaining a motion to cancel, the court essentially is limited to reviewing the pleading to ascertain whether the action falls within the scope of CPLR § 6501. In conjunction with this concept, the complaint filed with the notice of pendency must be adequate unto itself; a subsequent, amended complaint cannot be used to justify an earlier notice of pendency (see Van [*4]Tuyl v New York Real Estate Security Co., 153 App Div 409 [1912], affd no opn sub nom; Carnegie Trust Co. v New York Real Estate Security Co., 207 NY 691 [1913]).

The same considerations that require strict compliance with the procedural prerequisites also mandate a narrow interpretation in reviewing whether an action is one affecting "the title to, or the possession, use or enjoyment of, real property" (CPLR § 6501). Thus, a court is not to investigate the underlying transaction in determining whether a complaint comes within the scope of CPLR § 6501. Instead, in accordance with historical practice, the court's analysis is to be limited to the pleading's face.

Here, Defendants assert a claim for judicial partition under RPAPL § 901. A partition judgment necessarily affects title. Whether Defendants ultimately establish co-tenancy is a matter for trial. Cancellation of the Notice of Pendency at this juncture is therefore DENIED.

D. Fiduciary Duty and Closely Held Corporations

In closely held corporations, shareholders owe one another fiduciary duties akin to those owed among partners (see Matter of Kemp & Beatley, 64 NY2d 63 [1984]). Allegations that corporate funds were advanced in connection with the Property implicate potential issues of fiduciary obligation, accounting, and corporate opportunity (see Alexander & Alexander of NY v Fritzen, 147 AD2d 241 [1st Dept 1989]).

The mere advancement of corporate funds does not automatically convert individually owned real property into corporate property. However, whether such advances were consistent with fiduciary obligations or were made pursuant to a broader understanding cannot be determined as a matter of law on this record.

E. Motion Sequence No. 009 - 22 NYCRR § 130-1.1

Motion Sequence No. 009 is a cross-motion sounding in opposition to Plaintiff's motion sequence No. 008 which sought multiple forms of relief, including a branch requesting sanctions pursuant to 22 NYCRR § 130-1.1. The Court addresses that branch separately.

Rule 130 permits the Court, in its discretion, to award costs in the form of reimbursement for reasonable attorney's fees resulting from frivolous conduct (see 22 NYCRR § 130-1.1 [a]). Conduct is frivolous if it is completely without merit in law and cannot be supported by a reasonable argument for extension, modification, or reversal of existing law (see 22 NYCRR §130-1.1 [c] [1]).

Sanctions and fee awards are extraordinary remedies. They are not intended to punish unsuccessful advocacy or to chill good-faith legal argument (see Levy v Carol Mgmt. Corp., 260 AD2d 27 [1st Dept 1999]; Marx v Gurwin Jewish Geriatric Ctr., 148 AD3d 696 [2d Dept 2017]).

During oral argument, it became evident that counsel did not fully distinguish between egregious conduct warranting sanctions and substantial disagreement over legal theory. Sanctions motions should be reserved for the most serious abuses of the judicial process. The indiscriminate or reflexive invocation of Rule 130 is counterproductive and undermines the collegiality required within the practice of law.

The Court expressly finds, pursuant to 22 NYCRR §130-1.2, that the branch of Motion Sequence No. 008 seeking sanctions was completely without merit in law within the meaning of Rule 130-1.1 [c] [1] and is therefore DENIED. The renewed sanctions application followed [*5]prior denials and was unsupported by new evidence or intervening authority. Defendants were required to incur legal expenses directly resulting from the need to oppose that branch of the motion.

The Court's response is measured and proportionate, with respect to Defendant's prayer for relief in Motion Seq. No. 009, seeking inter alia sanctions against Plaintiff's counsel. No monetary sanction payable to the Lawyers' Fund is imposed. Instead, the Court awards costs in the form of reasonable attorney's fees solely to the extent such fees were directly and exclusively incurred in opposing the sanctions branch of Motion Sequence No. 008.

The award shall not encompass fees incurred in connection with any other branch of the motion. Defendants shall submit detailed affirmations of services segregating billing entries attributable solely to opposing the sanctions request. Any time entries reflecting work on multiple branches shall be reasonably apportioned.

This award is compensatory, not punitive, and is narrowly tailored to the expenses resulting from the frivolous conduct identified herein.

IV. Conclusion and Decretal Paragraphs

Accordingly, it is hereby:

ORDERED that Motion Sequence No. 007 is DENIED;

ORDERED that Motion Sequence No. 008 is DENIED;

ORDERED that Motion Sequence No. 009 is GRANTED solely to the extent that Defendants are awarded reasonable attorney's fees as costs pursuant to 22 NYCRR § 130-1.1 [a], limited strictly to those fees directly resulting from Plaintiff's sanctions request in Motion Seq. No. 008;

ORDERED that no monetary sanction payable to the Lawyers' Fund for Client Protection is imposed;

ORDERED that Defendants shall submit affirmations of services consistent with the limitations set forth herein within twenty (20) days of service of this Order with notice of entry;

ORDERED that Plaintiff may respond by affirmation within ten (10) days thereafter, or response deemed waived;

ORDERED that the amount of the award shall be fixed by further order of the Court.

This constitutes the Decision and Order of the Court.

Dated: March 13, 2026

Staten Island, New York

HON. RONALD CASTORINA, JR.

JUSTICE OF THE SUPREME COURT