J.E. Capital, Inc. v. Karp Family AssociatesJ.E. Capital, Inc. v. Karp Family Associates
Lead Opinion
—Order, Supreme Court, New York County (Alice Schlesinger, J.), entered September 21, 2000, which, in an action for unjust enrichment, insofar as appealed from, denied defendants-appellants’ cross motion for summary judgment dismissing the complaint, reversed, on the law, without costs, the motion granted and the complaint dismissed. The Clerk is directed to enter judgment in favor of defendants-appellants dismissing the complаint as against them.
On July 31,1997, plaintiff entered into a contract to purchase certain real property for $9,300,000. Seeking to assign the contract, plaintiff began discussions with the Karp defendants, who indicated that they might be interested. Although disputed by defendants, plaintiff claims that defendants orally agreed to pay $300,000 for an assignment, which, as the parties agree, required the seller’s consent. During the сourse of the negotiations between the parties and the seller, the seller granted plaintiff an extension of the contract’s closing date to September 10, 1997, with time being of the essencе. Throughout this period, at the suggestion of plaintiff, defendants and the seller were in contact with each other.
As of September 9, 1997, plaintiff had not yet effectuated the assignment to defendants. Recognizing that it would not be able to close the deal with defendants by the next day and deciding that it did not want to purchase the property itself, plaintiff unilaterally canceled its contract with the seller.
Two days later, on September 11, 1997, and after plaintiff’s principal apparently failed to return telephone calls, defendants contacted the seller to inquire as to the stаtus of the ongoing discussions concerning their assignment of the contract. At this time they discovered that plaintiff had canceled the contract without first notifying them of its intention to do so. Realizing that they would not be able to acquire the property through plaintiff and that their purchase of the property had been placed in jeopardy, on September 13, 1997, defendants again contаcted the seller, who agreed to sell them the property directly at the same $9,300,000 price. This action by plaintiff against defendants ensued.
Seeking to recover on a theory of unjust enrichment, plaintiff alleges that it provided defendants with confidential information and that defendants were unjustly enriched because plaintiff, “located a unique property, introduced * * * defendants to thе Property, performed due diligence, negotiated a contract and conferred the benefit of this unique property and
As to damages, plaintiff claims that it is entitled to $900,000, which represents the difference between the purchase price of the property and its actual market value. Alternatively, it alleges that, at a minimum, it is entitled to $300,000, which represents the amount it would have earned had it sucсessfully closed its assignment deal with defendants. Plaintiff’s claims lack merit.
No matter how viewed, and notwithstanding plaintiff’s claim to the contrary, the instant action is merely one seeking compensation fоr services rendered in negotiating the sale of the subject property (see, Freedman v Chemical Constr. Corp.,
In any event, dismissal is also warranted since plaintiff has failed to demonstrate that a benefit was unjustly conferred upon defendants at plaintiff’s expense (see, McGrath v Hilding,
As to defendants’ purported use of information compiled by plaintiff during its due diligence investigation (i.e., “the rent roll, the expenses, [and the] tenancy of the property”), this in
We also find it significant that the contract between plaintiff and the seller provided that “upon termination of this Agreemеnt, Buyer shall deliver [to seller], at Buyer’s expense, copies of all plans, surveys, test results and any other reports, summaries and memoranda resulting from, or issued or prepared in connectiоn with, the performance of [plaintiff’s] due diligence investigation of the Premises.” Having contractually agreed to provide the results of its due diligence investigation to the seller at its own expense when it terminated the contract, plaintiff cannot now complain that it would be unjust for any buyer of the property, including defendants, to use that information. The fact that defendants may have lеarned of the results of plaintiff’s due diligence investigation directly from plaintiff is without significance since they, could have legally obtained it directly from the seller (cf., Chatterjee Fund Mgt. v Dimensional Media Assocs.,
Turning to defendants’ purported use of plaintiff’s contract with the seller as a template fоr their own contract, this may not be considered a benefit for purposes of an unjust enrichment claim. Simply stated, there was nothing proprietary or confidential contained in plaintiff’s cоntract with seller that would preclude its subsequent use by anyone purchasing the subject property.
Finally, the lack of merit to plaintiff’s claim is highlighted by the damages to which it claims entitlement. Regarding damаges, plaintiff claims entitlement, not merely to the $300,000 it did not receive when the assignment was not effectuated, but to $900,000. As is evident, plaintiff could not recover $300,000 as a proper measure of damаges since that amount was only recoverable if it transferred its rights under the contract. Having unilaterally canceled the contract, it voluntarily extinguished its right to seek a fee for assignment of its contract rights. Nor could plaintiff recover the $900,000 difference between the purchase price and the actual market value of the property. To permit such a recovery would allow plaintiff to recover an amount that it would never have been entitled to
In sum, plaintiff understandably sought to make a no-risk profit by assigning its contract rights to defendants. However, when it was unsuccessful in doing so, it could have purchased the property for itself and taken advantage of the favorable purchase pricе. Its failure to do so was not the result of any wrongdoing on the part of defendants, but the result of a business decision. Having made this decision, there was nothing unjust or inequitable in defendants’ purchase of the рroperty thereafter.
Accordingly, plaintiffs complaint should be dismissed. Concur — Nardelli, J. P., Williams, Wallach and Friedman, JJ.
Dissenting Opinion
dissents in a Memorandum as follows: I would affirm for the reasons stated by Justice Schlesinger. Tо state a cause of action for unjust enrichment, plaintiff must allege that it conferred a benefit upon defendants for which it did not receive adequate compensation (Tarrytown House Condominiums v Hainje,
Whether or not the information gathered by plaintiff was confidential, аnd whether or not defendants, like any prospective buyer, could have obtained it directly from the seller, the fact is that defendants did obtain the information from plaintiff and defendant Karp Family Assоciates agreed thereafter to enter into the contract with the seller without a due diligence clause. There is no claim, contrary to the majority’s suggestion, that defendants’ use of plаintiffs information by itself unjustly enriched them or that their purchase of the property after plaintiff decided not to purchase was unjust or inequitable. The simple issue here is whether defendants were unjustly enriched if they benefitted from plaintiffs investigation, inter alia, without compensating plaintiff therefor (see, Galbreath Riverbank v Sheft & Sheft,