Supreme Court, Kings County

Decided on March 23, 2026

Index No. 500772/2018

Francois A. Rivera, J.

[*1]

The following is the decision, order, and judgment after a non-jury trial in the instant action brought by Elias N. Fotinos (hereinafter the plaintiff) against SSW Funding LLC, SSW Funding LLC 2, SSW Funding LLC 3, Moses Sasson, Vanick Holdings, LLC., a/k/a Vanick Holdings Corp., a/k/a Vanick Property Management, a/k/a Vanick Holding LLC Management a/k/a Vanick Holding LLC, Property Management, Vito C. Grippo, Elite Land Services LLC, Golam Mowla, Faizun Mowla, Ira Waltuch, Elite Insurance Agency, Inc., Stephen Siegel, Esq., Robert O'Connor, Robert O'Connor and Associates and Heath Gurinsky, Esq., (hereinafter the defendants).

BACKGROUND

On January 12, 2018, the plaintiff Elias N. Fotinos (hereinafter the plaintiff) commenced the instant action by filing a summons and verified complaint (hereinafter the commencement papers) with the Kings County Clerk's office (KCCO).

On February 14, 2018, defendant Golam Mowla, initially proceeding pro se, interposed and filed an answer with the KCCO.

On June 21, 2023, defendant Faizun Mowla interposed and filed a verified answer with the KCCO. The verified answer asserted twenty-four denominated affirmative defenses.

The verified complaint alleges the following facts about the defendants. Defendant Moses Sasson is the owner of defendant SSW Funding, LLC, SSW Funding LLC 2, and SSW Funding LLC 3. Defendant Vanick Holdings, LLC is also known as Vanick Holdings, Corp., Vanick Property Management, Vanick Holdings LLC Management, and Vanick Holdings LLC Property Management. Defendant Vanick Holdings, LLC is located at several addresses, including the home of defendant Vito C. Grippo in Jackson, New Jersey, the South Holmdel Road address in Holmdel, New Jersey, and the Freehold, New Jersey address. Vanick Holdings, LLC operates as a property management company.

Vito C. Grippo was a resident of Jackson, New Jersey and is an officer of Vanick Holdings, LLC. Defendant Vito C. Grippo is currently incarcerated in a federal prison within the State of New Jersey for conspiracy to commit wire fraud and mortgage fraud. Defendant Elite Land Services, LLC is a title company.

Defendant Ira Waltuch was employed by or the owner of Elite Land Services, LLC. He prepared the title commitment and recorded the deed on behalf Elite Land Services, LLC. Defendant Golam Mowla and Faizun Mowla (hereinafter collectively the Mowla defendants) are the original owners of the subject property. Golam Mowla and Faizun Mowla did sell, convey, and transfer title of the subject property to Vanick Holdings, LLC.

Defendant Stephen Seigel, Esq. represented Vanick Holdings LLC. in the July 13, 2011, closing of the subject property between Defendant Vanick Holdings LLC. and Elias N. Fotinos.

Defendant Robert O'Connor was the owner of Robert O'Connor and Associates. Robert O'Connor and Associates held themselves out as an entity specializing in loan balance reduction service. The plaintiff hired defendant Robert O'Connor and Associates to negotiate a reduction in the principal amount of the loan on the subject property. Defendant Heath Gurinsky, Esq. represented Elias N. Fotinos at the subject closing of the sale of the property on July 13, 2011.

The verified complaint contains one hundred and sixty-four allegations of fact in support of four causes of action. The first cause of action is for fraud and misrepresentation asserted against Vanick Holdings, LLC., Vito C. Grippo, Elite Land Services, LLC Ira Waltuch, Elite [*2]Insurance Agency, Inc., Golam Mowla and Faizun Mowla, SSW Funding LLC, SSW Funding LLC 2, SSW Funding LLC 3, Robert O'Connor and, Robert O'Connor and Associates. The second cause of action is for breach of contract asserted against Stephen Seigel, Esq., Vanick Holdings, LLC., and Vito C. Grippo. The third cause of action is for constructive trust and unjust enrichment asserted against Golam Mowla and Faizun Mowla. The fourth cause of action is for legal malpractice asserted against Heath Gurinsky, Esq.

The verified complaint has alleged the following salient facts, among others. The subject property is located at 637 Crescent Street, Brooklyn, New York. The subject property was originally owned by and is presently owned by the Mowla defendants.

On July 12, 2011, the Mowla defendants sold, transferred, and conveyed the title of the subject property to defendant Vanick Holdings LLC. for $225,000.00. On July 13, 2011, defendant Vanick Holdings, LLC, sold, transferred, and conveyed the title of the subject property to the plaintiff Elias N. Fotinos for $444,501.00.

Defendant SSW Funding LLC., SSW Funding LLC 2, and/or SSW Funding LLC 3 funded the sales transaction of July 12, 2011, between the Mowla defendants and Vanick Holdings, LLC. Those funds were to be disbursed to Bank of America/Bank of New York on or about July 12, 2011, for payment of an outstanding lien or mortgage on the subject property. Defendant SSW Funding LLC., SSW Funding LLC 2, and/or SSW Funding LLC 3 did in fact disburse those funds to Bank of America/Bank of New York; however, Bank of America/Bank of New York returned the funds to defendant SSW Funding LLC., SSW Funding LLC 2, and/or SSW Funding LLC 3 because the transaction between defendant Golam Mowla and defendant Faizun Mowla and defendant Vanick Holdings, LLC., was never originally approved by Bank of America/Bank of New York. Defendant SSW Funding LLC., SSW Funding LLC 2 and/or SSW Funding LLC 3 is currently in possession of the funds returned by Bank of America/Bank of New York. By virtue of the returned funds and unbeknownst to plaintiff, the subject property was never sold, transferred, or conveyed to defendant Vanick Holdings, LLC., on July 12, 2011.

On July 13, 2011, defendant Vanick Holdings, LLC., fraudulently sold, transferred, and conveyed the title of the subject property to Elias Fotinos for $444,501.00. Contour Mortgage is the mortgagor for the July 13, 2011, transaction whereby plaintiff signed a Note securing the loan transaction. Contour Mortgage funded this transaction.

Defendant SSW Funding LLC., SSW Funding LLC 2, and/or SSW Funding LLC 3 is currently in possession of two (2) payoffs on the subject property; the first payoff is from the closing on July 12, 2011, and the second payoff is from the closing on July 13, 2011. At the time of the second closing on July 13, 2011, defendant Elite Land Services, LLC., provided a Title Report prepared by defendant Ira Waltuch. The Title Report showed clean title on the subject property. The Title Report did not show any liens or unsatisfied mortgages on the subject property. Defendant Elite Insurance Agency, Inc provided title insurance coverage to defendant Elite Land Services, LLC for the second closing of the subject property on July 13, 2011. Defendant Heath Gurinsky, Esq., represented the plaintiff in the sale and the closing of the subject property on July 13, 2011. Defendant Heath Gurinsky, Esq., represented to plaintiff that the subject property was cleared for sale.

The plaintiff hired defendant Robert O'Connor and defendant Robert O'Connor and Associates (hereinafter together the O'Connor defendants) upon the recommendation of Defendant Ira Waltuch and on behalf of defendant Golam Mowla and defendant Faizun Mowla to negotiate a reduction in the principal amount of the loan on the subject property. The plaintiff [*3]paid the O'Connor defendants $2,500.00 to negotiate a reduction on the principal amount of the loan on the subject property. The O'Connor defendants told The plaintiff that Bank of America/Bank of New York approved a payoff amount of $118,410.00 for the short sale of the subject property on January 23, 2014. The O'Connor defendants represented to the plaintiff that the short sale of the subject property did not go through because Bank of America/Bank of New York demanded a higher payoff. The O'Connor defendants ceased communication with the plaintiff between June and July 2015. The O'Connor defendants represented to the plaintiff's father that defendant Robert O'Connor and Associates would refund $2,500.00 to the plaintiff. The plaintiff never received a refund of $2,500.00 from the O'Connor defendants.

RELEVANT PROCEDURAL HISTORY

By notice of motion filed on April 4, 2018, under motion sequence number one, defendant Heath Gurinsky, Esq. moved for an order dismissing the action as asserted against him as time-barred and for lack of personal jurisdiction.

By order dated June 7, 2018, and filed with the KCCO on June 19, 2018, the Court granted Heath Gurinsky's motion and dismissed the action as asserted against him with prejudice on default based on the plaintiff's failure to appear or oppose the motion.

By notice of renewed motion filed on April 16, 2019, under motion sequence number three, the plaintiff moved for an order pursuant to CPLR 3215 granting the plaintiff a default judgment against Moses Sasson, Elite Land Services, LLC, Robert J. O'Connor and Associates, SSW Funding LLC, SSW Funding LLC 2, SSW Funding LLC3, Stephen Siegel, Esq., and Faizun Mowla for their failure to appear or answer the complaint.

By order dated June 13, 2019, and filed with the KCCO on June 17, 2019, the Court granted the plaintiff's motion under sequence number three for a default judgment against Moses Sasson, Elite Land Services, LLC, Robert J. O'Connor and Associates, Ltd, SSW Funding LLC, SSW Funding LLC 2, SSW Funding LLC3, Stephen Siegel, Esq., and Faizun Mowla for their failure to appear or answer the complaint and referred the matter for an inquest.

On June 1, 2021, the plaintiff filed a Note of Issue with Certificate of Readiness with the KCCO.

By order dated June 15, 2023, and filed with the KCCO on June 20, 2023, and with consent, the court vacated the default judgment against defendant Faizun Mowla and granted her fifteen days to interpose an answer. The Court also clarified that the inquest of the defaulting defendants would occur at the time of trial.

On June 21, 2023, defendant Faizun Mowla, interposed and filed a verified answer with the KCCO. The verified answer included twenty-four denominated affirmative defenses.

By order dated and filed with the KCCO on October 4, 2024, the Court scheduled an inquest to be held on damages against the defaulting defendants.

By order dated October 9, 2024, on consent of the parties, the summary judgment motion and cross-motion by the plaintiff by the Mowla defendants filed under motion sequence number nine and ten, respectively, were withdrawn.

By order dated November 21, 2024, the Court severed and ordered the plaintiff and the Mowla defendants to trial on February 24, 2025.

By decision and order dated November 27, 2024, issued at the conclusion of the inquest on the defaulting defendant, the Court discontinued the action solely as against Stephen Siegel, one of the named defaulting defendants. The Court also awarded the plaintiff damages against the defaulting defendants jointly and severally in the total amount of one million six hundred [*4]seventy-three thousand eight hundred forty one dollars and fifty-two cents ($1,673,841.52) consisting of damages in the amount of one million one hundred fifteen thousand eight hundred ninety four dollars and thirty-five cents ($1,115,894.35) and punitive damages in the amount of five hundred fifty-seven thousand nine hundred forty seven dollars and seventeen cents ($557,947.17) against the defaulting defendants jointly and severally. The Court directed the plaintiff to file a proposed judgment referencing the November 27, 2024 Order, for the sustained total damages award of $1,673,841.52 by January 15, 2025, for filing and entry by the Judgment Clerk.

By order dated February 26, 2025, issued during the non-jury trial upon the unopposed request by the plaintiff, the action was discontinued as to defendants Vanick Holdings LLC, Vanick Holdings Property Management, Vito C. Grippo, and Ira Waltuch only.

By order dated April 7, 2025, issued during the non-jury trial upon the unopposed request by the plaintiff, the action was discontinued as to defendants Robert O'Connor individually and Elite Insurance Agency only.

By order dated April 7, 2025, after both parties had rested on the non-jury trial, the Court ordered the return date of July 11, 2025 for the parties' submission of their respective proposed findings of fact and conclusions of law.

On April 10, 2025, the Clerk entered a judgment against the following defendants: SSW Funding LLC, SSW Funding LLC 2, SSW Funding LLC 3, Moses Sasson, Elite Land Services, LLC, and Robert O'Connor and Associates.

Based on the procedural history, the first cause of action for fraud and misrepresentation as asserted against Vanick Holdings, LLC. and Vito C. Grippo is dismissed; the second cause of action for breach of contract as asserted against Stephen Seigel, Esq., Vanick Holdings, LLC., and Vito C. Grippo is dismissed; and the fourth cause of action for legal malpractice asserted against Heath Gurinsky, Esq is also dismissed.

THE TRIAL

Plaintiff Elias Fotinos (hereinafter "Fotinos" or the plaintiff) testified at trial dates February 25, February 26, and February 28 of 2025. Kristin Kowalski (hereinafter "Kowalski") testified on trial dates February 28 of 2025, March 3, March 17, and March 19 of 2025. Defendant Golam Mowla testified on trial dates March 24, March 25, March 28 of 2025, and April 1 of 2025. Defendant Faizun Mowla testified on trial dates April 1 and 7 of 2025.

FINDINGS OF FACT

In 2008, Golam Mowla and Faizun Mowla purchased the real property known as 367 Crescent Avenue, Brooklyn, New York (hereinafter the subject property) and were its co-owners prior to the 2011 closing.

The subject property was a multi-dwelling residential property containing three apartments on the basement, first, and second floors.

On or about 2010, the Mowla defendants sold the subject property to Vanick Holdings LLC (hereinafter the 2010 closing).

The Mowla defendants were represented by their personal attorney Loaknauth "Raj" Sobhai since on or about 2010 through on or about 2014.

Ms. Kowalski was employed by defendant Vanick Holdings LLC (hereinafter Vanick) from on or about 2007 to 2011.

Ms. Kowalski was acquainted with the Mowla defendants as she assisted in the transfer of the deed to the subject premises from the Mowla defendants to Vanick Holdings LLC.

On July 13, 2011, the plaintiff purchased the subject property from defendant Vanick Holdings LLC (hereinafter the 2011 closing) for a purchase price of $485,000.00.

The plaintiff financed the purchase for the 2011 closing by obtaining a mortgage from Wells Fargo for approximately $444,501.00.

The 2011 closing occurred at Vanick's office, and each side was represented by their respective counsel, Vanick by Stephen Siegel and plaintiff by Heath Gurinsky, Esq.

Plaintiff's attorney Gurinsky ordered a title search from defendant Elite Land Services LLC hereinafter Elite) on the subject property.

Prior to this 2011 closing, plaintiff had not met either of the Mowla defendants.

Plaintiff's attorney Gurinsky relied on Elite's representations that plaintiff was clear to close on the subject property before proceeding to the 2011 closing.

Plaintiff's understanding through communications with attorney Gurinsky was that title was "clear of any liens" and that the plaintiff could proceed to the 2011 closing.

At the 2011 closing, plaintiff received a clear title or title insurance to the subject property.

After the 2011 closing, plaintiff gave his father Michael Fotinos (hereinafter plaintiff's father or Fotinos's father) a power of attorney to financially or legally maintain the subject property while he was away at school.

On or about August 2012, plaintiff's counsel Heath Gurinsky was notified by Bank of America ("BOA") that there was an encumbrance to the subject deed.

Plaintiff's attorney Gurinsky promptly contacted the Mowla defendants' attorney Loaknauth "Raj" Sobhai (hereinafter Sobhai) stating that at the time of the 2011 closing from Vanick to plaintiff, the title was clear and showed no open mortgages and requested the Mowla defendants to amicably resolve the payoff of their BOA mortgage on the subject premises.

After attorney Gurinsky sent the letter to the Mowla defendants' attorney Sobhai, regarding the BOA mortgage issue, attorney Gurinsky ceased working on the matter.

On or about October 15, 2012, the Mowla defendants executed an authorization for O'Connor defendants to negotiate the settlement of the BOA mortgage default and BOA lien on their behalf.

During 2012, the Mowla defendants met with Ms. Kowalski, Fotinos's father, and Ira Waltuch approximately three times at their attorney Sobhai's law office about resolving the BOA lien.

On or about November 12, 2012, Ms. Kowalski received a status letter from O'Connor defendants that stated a settlement was reached with BOA concerning the BOA lien.

After this letter dated November 12, 2012, plaintiff obtained a loan from SSW for $225,000.00 to pay off the BOA settlement amount.

Plaintiff obtained the loan to pay off the BOA mortgage default because the Mowla defendants did not have the money.

According to the representation made by defendant O'Connor to Ms. Kowalski and defendant Waltuch, the settlement fell through because BOA would not complete the short sale unless the subject deed was returned to the Mowla defendants.

On or about January 31, 2013, Ms. Kowalski and Fotinos's father met with Golam Mowla and his attorney Sobhai to attempt to comply with BOA's request for tax documents from the Mowla defendants to resolve the BOA lien.

After the meeting on January 31, 2013, the short sale to settle the BOA encumbrance fell [*5]through again. This time, BOA required $225,000 instead of the $118,000 previously negotiated by O'Connor to settle the BOA encumbrance.

On or about June 14, 2013, plaintiff Fotinos's father and Ms. Kowalski appeared at the law office of attorney Sobhai to meet with the Mowla defendants and their attorney Sobhai. The plaintiff was not represented by counsel at the meeting.

At this June 14, 2013 meeting, defendant Waltuch advised plaintiff in the presence of the Mowla defendants, their attorney Sobhai, Ms. Kowalski, and Fotinos's father, that BOA would not perform the short sale to resolve the BOA mortgage default because the deed was in plaintiff's name and not in the Mowla defendants' names.

At this June 14, 2013, meeting, attorney Sobhai orally represented that the deed would go back to the plaintiff after the completion of the short sale by his clients, the Mowla defendants.

On or about June 14, 2013, plaintiff transferred the deed to the subject property back to the Mowla defendants without any consideration so that they could pay off their BOA mortgage and remove their encumbrance from the subject property (hereinafter the 2013 closing).

To effectuate the short sale with Bank of America to pay off or resolve the BOA mortgage default amount, plaintiff obtained a loan from SSW in 2012 to fund the transaction for approximately $225,000.00. The plaintiff's understanding on or about June 14, 2013, was that O'Connor and Waltuch would deliver the money from the SSW loan proceeds to pay off the BOA mortgage.

At the end of the 2013 closing, plaintiff approached Mr. Mowla in front of Fotinos's father, Ms. Kowalski and attorney Sobhai and asked, "will you do the right thing and transfer the deed back?" Defendant Golam Mowla responded, "yes" and plaintiff and defendant Golam Mowla shook hands.

Defendant Golam Mowla testified that as of 2014, his understanding was that he had "to give the deed back to Mr. Fotinos son after the Bank of America loan is resolved." Defendant Golam Mowla further testified that because the BOA loan was not resolved he did not return the deed.

Ms. Kowalski assisted with plaintiff's maintenance of the subject property after the July 2013 purchase, and she maintained the business records associated with that 2011 closing.

The 2013 closing was conducted by attorney Sobhai at his law office and the plaintiff proceeded with the 2013 closing without counsel.

The first cause of action for fraud and misrepresentation and the third cause of action for constructive trust and unjust enrichment as asserted against the Mowla defendants were the sole remaining causes of action for resolution at trial.

In the trial brief of his counsel, plaintiff withdrew his request to void the deed and withdrew his request to have the deed to the subject property returned to him. Plaintiff based this decision on the fact that mortgagees, Bank of America, and Wells Fargo were not parties to the instant action.

Based on the foregoing, plaintiff has limited his remedy exclusively to monetary damage.

LAW AND APPLICATION

The Court reserved decision on two oral motions that the Mowla defendants made during the trial. The defendants had moved pursuant to CPLR 4401 for a judgment dismissing the action based on the plaintiff's failure to establish the essential elements of his claims. The defendants also asked for a missing witness charge based on the plaintiff's failure to call his father, Michael Fotinos as a witness. The defendants repeated the motions in their post-trial [*6]memorandum.

"A motion pursuant to CPLR 4401 or 4404 for judgment as a matter of law may be granted only 'where the trial court finds that, upon the evidence presented, there is no rational process by which the fact trier could base a finding in favor of the nonmoving party'" (Caliendo v Ellington, 104 AD3d 635, 636 [2d Dept 2013], citing Szczerbiak v Pilat, 90 NY2d 553, 556 [1997]). "In considering such a motion, 'the trial court must afford the party opposing the motion every inference which may properly be drawn from the facts presented, and the facts must be considered in a light most favorable to the nonmovant'" (Hamilton v Rouse, 46 AD3d 514, 516 [2d Dept 2007], citing Szczerbiak v Pilat, 90 NY2d 553, 556 [1997]).

Here, the plaintiff did make a prima facie showing of the each of elements of the causes of action asserted in the complaint to warrant a determination by the trier of fact. The motion to dismiss the action pursuant to CPLR 4401 or 4404 is therefore denied.

"An 'uncalled witness' or 'missing witness' charge instructs a jury that it may draw an adverse inference based on the failure of a party 'to call a witness who would normally be expected to support that party's version of events'" (DeVito v Feliciano, 22 NY3d 159, 165 [2013], citing People v Savinon, 100 NY2d 192, 196 [2003]). "The preconditions for this charge, applicable to both criminal and civil trials, may be set out as follows: (1) the witness's knowledge is material to the trial; (2) the witness is expected to give noncumulative testimony; (3) the witness is under the 'control' of the party against whom the charge is sought, so that the witness would be expected to testify in that party's favor; and (4) the witness is available to that party (DeVito v Feliciano, 22 NY3d 159, 165-166 [2013], citing People v Savinon, 100 NY2d 192, 197 [2003]).

Here, the plaintiff did not call his father as a witness and offered a doctor's note in support of this decision. All the elements for determining whether a missing witness charge should be considered were present. However, the adverse inference which may be applied is permissive not mandatory. Based on the evidence elicited, the court chooses not to draw an adverse inference against the plaintiff for failing to call his father a witness.

In plaintiff's post-trial memorandum, plaintiff sought the striking of Golam Mowla's answer and affirmative defense of fraud. Plaintiff contends that defendant Golam Mowla admitted to giving false deposition testimony in 2021 wherein he stated only his wife Faizun Mowla's signature was forged on the 2010 deed. At trial, defendant Golam Mowla asserted that his signature was also forged on the 2010 deed. Plaintiff contends that for his false and contradictory deposition and trial testimony on the issue of plaintiff's claims of fraud and unjust enrichment, defendant Golam Mowla's answer and defense of fraud should be stricken and a default judgment against defendant Golam Mowla and in favor of plaintiff should be granted. The plaintiff cites CDR Creances S.A.S. v Cohen, 23 NY3d 307, 321 [2014] for this proposition. In CDR Creances S.A.S., the Court of Appeals held that where a court finds, by clear and convincing evidence, conduct that constitutes fraud on the court, the court may impose sanctions including the striking of the pleadings and entering default judgment against the offending parties to ensure the continuing integrity of our judicial system (CDR Creances S.A.S. v Cohen, 23 NY3d 307, 321 [2014]).

Here, the Court was not clearly convinced that Golam Mowla was intending to defraud the Court. The conflicting and contradictory testimony was evaluated solely as it pertained to the credibility of Golam Mowla's on trial testimony and does not warrant the extreme sanction sought by the plaintiff.

[*7]Claim for Fraud

"The essential elements of a cause of action sounding in fraud are a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" (Spector v Wendy, 63 AD3d 820, 821 [2d Dept 2009], citing Orlando v Kukielka, 40 AD3d 829, 831 [2d Dept 2007]). "The plaintiff must show not only that he actually relied on the misrepresentation, but also that such reliance was reasonable" (Spector v Wendy, 63 AD3d 820, 821-822 [2d Dept 2009]). "The 'standard of proof for establishing fraud is clear and convincing evidence'" (Clarke v Wallace Oil Co., 284 AD2d 492, 493 [2d Dept 2001], quoting Cavell v Sialiano, 279 AD2d 599, 599 [2d Dept 2024]).

On June 14, 2013, plaintiff transferred the deed to the subject property back to the Mowla defendants without any consideration so that they could pay off their Bank of America mortgage and remove their lien from the subject property (the 2013 closing). At the end of the 2013 closing, plaintiff approached Mr. Mowla in front of Fotinos's father, Ms. Kowalski and attorney Sobhai and asked, "will you do the right thing and transfer the deed back." Defendant Golam Mowla responded, "yes" and plaintiff and defendant Golam Mowla shook hands. Defendant Golam Mowla testified that as of 2014, his understanding was that he had "to give the deed back to Mr. Fotinos son after the Bank of America loan is resolved." Defendant Golam Mowla further testified that because the BOA loan was not resolved, he did not return the deed.

At the time of the 2013 closing, the Mowla defendants and the plaintiff thought that they had an agreement whereby the plaintiff would transfer the subject property to the Mowla defendants for the sole purpose of paying off the BOA mortgage encumbrance on the subject property. They further believed that after the BOA mortgage encumbrance was removed, the Mowla defendants would then return the subject property back to the plaintiff.

It is noted that the agreement was not reduced to a writing and was not enforceable under a breach of contract theory as it violated the statute of frauds (see General Obligations Law § 5-703; see Toobian v Golzad, 193 AD3d 778, 781 [2d Dept 2021]). However, the "statute of frauds is not a defense to a . . . constructive trust" (Toobian v Golzad, 193 AD3d 778, 781 [2d Dept 2021]). It is further noted that the plaintiff entered into the agreement unrepresented by counsel and under the mistaken and unjustified impression that attorney Sobhai, the Mowla defendants' counsel, was also representing the plaintiff at the 2013 closing.

What the Mowla defendants and the plaintiff did not consider or agree upon was what would happen after the subject property was transferred to the Mowla defendants if the BOA mortgage was not cleared. Although this potential outcome was not directly discussed between the plaintiff and the Mowla defendants, there was no reasonable basis for the Mowla defendants to believe that they could keep the subject property when the BOA mortgage encumbrance was not cleared.

The Mowla defendants had already conveyed the subject property to Vanick Holdings LLC in 2010. After the 2010 conveyance they made a claim of criminal fraud against Vito Grippo, the owner of Vanick Holdings LLC, based on the surrounding circumstances of the conveyance. While Vito Grippo was ultimately convicted and sentenced to prison on federal charges for mortgage fraud, the Mowla defendants were not named in the underlying indictment. As of 2010, the Mowla defendants no longer had title to the subject property. There was no logical or reasonable basis for them to believe that the failure to clear the BOA mortgage lien on the subject property, for whatever reason, somehow gave them the right to keep the subject [*8]property.

The plaintiff was not involved in the Mowla defendants' decision to convey the property to Vanick Holdings LLC. The Mowla defendants were aware of the BOA encumbrance, their own mortgage arrears, and the risk of losing the property through foreclosure. The Mowla defendants' conveyance of the subject property to Varrick Holdings LLC, under the persuasive encouragement of Vito Grippo, was with the desire to avoid foreclosure and to salvage whatever equity remained.

It is more likely than not that Vito Grippo defrauded them and used his control of Varrick Holdings LLC to do so. However, any fraud perpetrated by Vito Grippo in obtaining title to the subject property from the Mowla defendants occurred without the plaintiff's knowledge and involvement and before the plaintiff purchased the subject property from Vanick Holdings LLC.

It was the plaintiff who came to the Mowla defendants with the plan on how to clear the BOA mortgage encumbrance. It was not an idea thought up by the Mowla defendants. The idea was presented to the plaintiff by Waltuch at the June 14, 2013 meeting. Waltuch advised the plaintiff in the presence of the Mowla defendants, their attorney Sobhai, Ms. Kowalski and Fotinos's father, that Bank of America would not perform the short sale to resolve the BOA mortgage default because the deed was in plaintiff's name and not in the Mowla defendants' names.

The plaintiff had accepted Waltuch's assessment, agreed with the suggested strategy, and advised Mowlas' counsel that he was willing to use that strategy. The plaintiff did so without counsel of his own, without the benefit of a written agreement, and on the strength of a handshake, and an ambiguous utterance by the Mowla defendants.

The plaintiff's evidentiary submission did not clearly and convincingly establish that the Mowla defendants made any material misrepresentation upon which plaintiff reasonably relied when the plaintiff conveyed the subject property to them. Nevertheless, it was unfair and unjust for the Mowla defendants to refuse to return the subject property when the BOA encumbrance was not cleared. The refusal, however, was not based on a preconceived plan to deceive or defraud the plaintiff. Rather it was the Mowla defendants taking an opportunistic and unfair advantage of the situation when the BOA loan was not cleared.

Claim for a Constructive Trust

"Generally, a constructive trust may be imposed when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest" (Fakiris v Fakiris, 192 AD3d 993, 993-994 [2d Dept 2021], citing Creamer v DaCruz, 185 AD3d 547, 547 [2020], quoting Sharp v Kosmalski, 40 NY2d 119, 121 [1976]). "To obtain the remedy of a constructive trust, a party is generally required to establish four factors, or elements, by clear and convincing evidence: (1) a confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance thereon, and (4) unjust enrichment flowing from the breach of the promise" (Daniels v Ruggiero, 230 AD3d 563, 565 [2d Dept 2024], citing Delidimitropoulos v Karantinidis, 186 AD3d 1489, 1490 [2d Dept 2020]). A party must establish these elements by clear and convincing evidence (see Ali v Rahaman, 224 AD3d 721, 722 [2d Dept 2024]).

"'A constructive trust is the formula through which the conscience of equity finds expression'" (Toobian v Golzad, 193 AD3d 778, 781 [2d Dept 2021], quoting Ubriaco v Martino, 36 AD3d 793, 794 [2d Dept 2007]). "However, since it is an equitable remedy, a constructive trust is 'necessarily flexible to accomplish its purpose'" (Toobian v Golzad, 193 [*9]AD3d 778, 781 [2d Dept 2021], citing Counihan v Allstate Ins. Co., 194 F3d 357, 361 [2d Cir 1999]). The requirements are "not to be rigidly applied" with the "ultimate purpose of a constructive trust" being "to prevent unjust enrichment" (Broderson v Parsons, 106 AD3d 677, 679 [2d Dept 2013]). "Therefore, these factors are guidelines, not inflexible elements" (Toobian v Golzad, 193 AD3d 778, 781 [2d Dept 2021], citing Delidimitropoulos v Karantinidis, 186 AD3d 1489, 1490 [2d Dept 2020]).

"A fiduciary relationship is 'necessarily fact-specific' and is also 'grounded in a higher level of trust than normally present in the marketplace between those involved in arm's length business transactions'" (Oddo Asset Mgt. v Barclays Bank PLC, 19 NY3d 584, 593 [2012], quoting EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). "A fiduciary relationship may exist when one party reposes confidence in another and reasonably relies on the other's superior expertise or knowledge, but not in an arm's-length business transaction involving sophisticated business people" (Saul v Cahan, 153 AD3d 947, 949 [2d Dept 2017], citing Guarino v North Country Mtge. Banking Corp., 79 AD3d 805, 807 [2d Dept 2010]). A familial or marital relationship is not required to establish a fiduciary or confidential relation (see Sharp v Kosmalski, 40 NY2d 119, 121 [1976]).

Here, the plaintiff made a prima facie showing of entitlement to some form of equitable relief. The facts supported issuance of an order vacating and nullifying the deed conveying the subject property from the plaintiff to the Mowla defendants and for an order directing the return of the subject property to the plaintiff. However, the plaintiff made clear that he was not seeking this form of equitable relief, but rather solely monetary damages. Plaintiff had claimed that the Mowla defendants permitted the subject property to deteriorate, increased their mortgage amount, and caused judgment liens to be filed against the subject premises to the point where the subject property has been rendered worthless or a liability physically and financially. Plaintiff further claimed that the subject property was in such disrepair that the costs to repair and/or renovate exceeded its value.

The plaintiff had stated that he was not seeking equitable relief, but solely monetary damages. However, the imposition of a constructive trust is an equitable remedy thus rendering the plaintiff's assertion of a claim for imposition of a constructive trust as perplexing. Furthermore, the return of the subject property back to the plaintiff would at the very least repair at least some of the damage caused by the Mowla defendants' refusal to return the property.

In any event, the plaintiff's evidentiary submission did not establish a confidential or fiduciary relationship between the plaintiff and the Mowla defendants. The 2013 closing was an arm's length transaction and not one amongst friends or parties with a confidential relationship. It did establish an agreement between them. It also established a lack of a meeting of the minds on the outcome in the event the BOA loan was not cleared. As already indicated, it was unjust and unfair for the Mowla defendants to believe that they could keep the subject property if the BOA loan was not cleared. The transfer of the subject property by the plaintiff to them was for no consideration. The conveyance to the Mowla defendants was under no circumstances intended to be a gift to them.

Claim for Unjust Enrichment

To state a cause of action to recover damages for unjust enrichment, a plaintiff must show that "(1) 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'" (Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011], citing Citibank, N.A. v [*10]Walker, 12 AD3d 480, 481 [2d Dept 2004]; see City of Long Beach v Agostisi, 221 AD3d 776, 779 [2d Dept 2023]).

The plaintiff's evidentiary submission established that the plaintiff was relying on the promise of the Mowla defendants to return the subject property to the plaintiff and that the plaintiff transferred the property to them relying on that promise. It also established that the Mowla defendants were unjustly enriched by the wrongful refusal to convey the property back to the plaintiff. The question now becomes how to remedy the plaintiff's damages by the Mowla defendants' wrongful conduct.

Damages

There was no evidence elicited of the market value of the subject property either before or after June 14, 2013. This would have been an important and useful fact in determining the equity that the plaintiff had and lost by the Mowla defendants' refusal to return the subject property. By eliminating the remedy of returning the subject property and limiting damages solely to money, the analysis turns to determining the proper measure of monetary damages.

The Mowla defendants were paid a total of $27,000.00 in anticipation of their cooperation in resolving the BOA lien in 2013 as follows. On or about January 2013, plaintiff wired $15,000 to their attorney Sobhai with $5,000 meant to be for the attorney Sobhai and $10,000.00 to be for the Mowla defendants. Thereafter, plaintiff wired another $12,000 to attorney Sobhai. It would be unjust for the Mowla defendants to keep these funds since, in fact, they did not fully cooperate and improperly kept the subject property.

To effectuate the short sale with Bank of America to pay off or resolve the BOA mortgage default amount, plaintiff obtained a loan from SSW in 2012 to fund the transaction for approximately $225,000.00. It was the plaintiff's understanding on or about June 14, 2013 that O'Connor and Waltuch would deliver the money from the SSW loan proceeds to pay off the BOA mortgage. The plaintiff contends that he obtained the loan in the amount of $225,000 to pay off the BOA mortgage because the Mowla defendants did not have the money. He further contends that since this total loan amount was solely for the benefit of the Mowla defendants it should be part of the assessment of damages against them. However, there was no evidence of where these funds wound up. Nor was there evidence that the Mowla defendants either obtained, kept, or used these funds in any way. Thus, plaintiff failed to establish that the Mowla defendants were unjustly enriched by improperly keeping these funds.

Plaintiff claims that the Mowla defendants took the rent payments from the tenants at the subject premises since on or about 2012 and diverted it from plaintiff. The plaintiff did establish that as of January 2013, the Mowla defendants collected approximately $20,000 in rent payments. This amount should be paid back to the plaintiff.

Plaintiff also claimed that he lost approximately $398,850.00 in rent due to the Mowla defendants' interference with his ownership rights. There was, however, no credible evidence to support this contention. Instead, the plaintiff pointed to the first footnote in his post- trial memorandum to support this claim. The footnote referred to certain findings made in an inquest in which the Mowla defendants were not a party. These findings made at the inquest were not proven at the instant bench trial and are not admissible to prove plaintiff's claim for this alleged component of damage.

The plaintiff contends that because the plaintiff was unable to collect rent payments from the tenants he defaulted on his mortgage with Wells Fargo and as a result was damaged in the [*11]approximate amount of $485,000.00. The plaintiff's evidentiary submission did not make a prima facie showing that the Mowla defendants proximately caused this alleged amount of damage.

The plaintiff did suffer a total loss of the original purchase price of $444,501.00. The plaintiff's claim of loss rental income was not substantiated. The plaintiff has contended that by refusing to return the property, the Mowla defendants were able to encumber the subject property further. The plaintiff, however, did not make a prima facie showing of the amount of the alleged additional encumbrance on the subject property.

Plaintiff contends that the Mowla defendants' alleged fraud inflicted a mental toll on the plaintiff, his family, and friends which merits a separate award of damages in the amount of $252,000.00. As previously stated, the plaintiff, however, did not clearly and convincingly establish that the Mowla defendants defrauded him. Moreover, "damages recoverable for fraud do not include emotional distress" (Barrett v Huff, 6 AD3d 1164, 1167 [4th Dept 2004], quoting Jeffrey BB. V Cardinal McCloskey School & Home for Children, 257 AD2d 21, 24 [3d Dept 1999]). This claim for damages is therefore denied.

Plaintiff also seeks punitive damages in the amount of $252,000.00 based on the Mowla defendants' false testimony at trial and/or deposition and their actions and/or omissions that proximately damaged plaintiff's injuries. "Punitive damages are not to compensate the injured party but rather to punish the tortfeasor and to deter this wrongdoer and others similarly situated from indulging in the same conduct in the future" (Ross v Louise Wise Servs., Inc., 8 NY3d 478, 489 [2007]; see Spata v Town of Islip, 56 NY2d 332, 338-339 [1982]).

"Punitive damages are permitted when the defendant's wrongdoing is not simply intentional but 'evince[s] a high degree of moral turpitude and demonstrate[s] such wanton dishonesty as to imply a criminal indifference to civil obligations'" (Ross v Louise Wise Servs., Inc., 8 NY3d 478, 489 [2007], quoting Walker v Sheldon, 10 NY2d 401, 405 [1961]). "The misconduct must be exceptional, 'as when the wrongdoer has acted maliciously, wantonly, or with a recklessness that betokens an improper motive or vindictiveness . . . or has engaged in outrageous or oppressive intentional misconduct or with reckless or wanton disregard of safety or rights'" (Ross v Louise Wise Servs., Inc., 8 NY3d 478, 489, quoting Sharapata v Town of Islip, 56 NY2d 332, 335[1982]; Ng v Asquared Group, Inc., 219 AD3d 1341, 1344 [2d Dept 2023]).

Here, the defendants' wrongful refusal to return the subject property is not the type of exceptional misconduct sufficient to support an award for punitive damages.

In sum, the court agrees with the Mowla defendants that the claim for fraud and the claim for imposition of a constructive trust should be dismissed. However, the claim for unjust enrichment should not be dismissed. The plaintiff has established entitlement to damages on the theory of unjust enrichment.

The Mowla Defendants' Affirmative Defenses

The Mowla defendants did not establish any one of the twenty-four affirmative defenses alleged in their respective answers.

CONCLUSION

Defendants Golam Mowla and Faizun Mowla are jointly and severally liable in damages to plaintiff Elias N. Fotinos in the total amount of $491,501.00, (consisting of $20,000.00 for lost rent, $27,000.00 paid for their cooperation, and $441,501 for the total loss of plaintiff's deposit [*12]in purchasing the subject property).

The foregoing constitutes the decision, order and judgment of this Court.

ENTER:

J.S.C.