Breach of Contract; Fraud; Motion for Summary Judgment; Renewal of Opposition; CPLR 3212 (f)
By: James Clarke | Staff Writer
Plaintiff Mme. Pirie’s Inc., controlled by Plaintiff Rosa Belleville (“Belleville”, and, collectively with Mme. Pirie’s Inc., “Plaintiffs”)), owned Mme. Pirie’s Famise Corset and Lingerie Shop (the “Shop”). Plaintiffs entered into an agreement with Defendant Keto Ventures (“Ventures”), a company wholly owned by Jessica Keto (“Jessica”). Under the agreement, Ventures agreed to purchase the Shop’s assets for $512,500, part of which was to be made in monthly installments. As security, Ventures granted Plaintiffs an interest in various Shop properties (“Collateral”). Jessica timely paid the first installment, but passed away shortly thereafter. Her sister, Defendant Jacklyn Keto (“Jacklyn’), then claimed ownership of the Shop, and Jessica’s mother, Defendant Valerie Keto (“Valerie” and, collectively with Ventures and Jacklyn, “Defendants”), was appointed as the estate’s Administrator. No further installments were paid; therefore, Plaintiffs declared a default and demanded repayment of the debt and return of the Collateral. Defendants did not comply, giving rise to this suit.
Plaintiffs applied for an order of seizure of the Collateral, which the Court granted because it was “highly likely that Plaintiffs will succeed on the merits.” Plaintiffs then moved for summary judgment based on the agreement and Defendants’ breach. Defendants opposed the motion and renewed their opposition to Plaintiffs’ application for an order of seizure, claiming t Jessica entered into the agreement because of fraudulent misrepresentations. In support, Defendants submitted an affidavit of a former Shop employee and the deposition testimony of Plaintiffs’ accountant. The affidavit alleged that Belleville misrepresented the value of the Shop’s inventory to Jessica and that she often returned from business meetings “clearly intoxicated or under the influence of some other substance.” The deposition testimony alleged the main figure used to determine the Shop’s value was Belleville’s 2012 owner benefit, which Defendants claimed was selectively disclosed to induce Jessica into the agreement, as preceding years yielded substantially lesser owner benefit.
The Court denied Plaintiffs’ motion for summary judgment on the grounds that further discovery was warranted. Under CPLR 3212 (f), a court may deny summary judgment if affidavits show facts essential to justify opposition may exist, but cannot be stated; for example, where the facts are in the exclusive knowledge of the movant and are unavailable to the opposing party. Here, Jessica’s passing coupled with the lack of witnesses present for any negotiations preceding the agreement raised material facts regarding Defendants’ claims were in the exclusive possession of Plaintiffs. The Court denied Defendants’ motion to renew their opposition to the order of seizure on the grounds that the affidavit and testimony were insufficient. On a motion to renew, facts must be established “that would change the [Court’s] prior determination.” Here, the Court held that Defendants could only show how discovery might disclose material facts through inadmissible testimony. Moreover, even if Defendants established actionable misrepresentations of fact, it remained unlikely that Jessica reasonably relied on them, given her personal knowledge of the Shop’s operations and opportunity at all times to seek relevant financial information.
Mme. Pirie’s Inc. v. Keto Ventures, LLC, Index No. 3792-14, 3/3/2015 (Platkin, J.)