In a November 10, 2011 decision by Justice Bucaria, the court granted the defendants’ (the “RAIT” defendants) motion pursuant to CPLR 3211(a)(1), (a)(5), and (a)(7) to dismiss the amended complaint and the answer and interpleader complaint of the defendant/interpleader plaintiff 990 Stewart Avenue Investors, LLC (“SAI”), and because of that disposition, the court denied as moot SAI’s motion pursuant to CPLR 1006 for permission to pay certain monies into the court. SAI was formed by Plaintiff Treeline 990 Stewart Partners LLC (“Treeline”) and RAIT Atria, LLC (“RAIT”) to acquire certain property in Garden City. The Operating Agreement required all modifications thereto to be in writing. The property allegedly experienced revenue flow problems due to downturn in the economy, leading Treeline and the RAIT defendants to discuss a discounted buyout or some other modification of what Treeline claimed, and the RAIT defendants disputed, was a “loan”. Treeline alleged that the parties orally agreed that RAIT would accept a discounted payoff of the “loan,” which led Treeline to invest, to its detriment, further money into the property.
In granting the RAIT defendants’ motion to dismiss, the court found that: 1) the claim for breach of contract was precluded by General Obligations Law § 15-301(1) (written agreements expressly prohibiting oral modifications cannot be changed by oral executory agreements) because the memorandum offered by Treeline as written proof of the modification was insufficient because it made clear that all of the material terms were not then agreed to, and the requirement that modifications be in writing was not waived by an alleged course of conduct; and 2) Treeline’s claims for fraud and negligent misrepresentation could not be maintained because it “fail[ed] to allege a single fraudulent statement or negligent misrepresentation made by defendants on which [it] justifiably relied….” and, moreover, because all of the parties knew of the written modifications requirement, Treeline’s alleged detrimental reliance on oral representations could not have been justified.
Treeline 990 Stewart Partners LLC v Rait Atria, LLC, Sup Ct, Nassau County, November 10, 2011, Bucaria, J., Index No. 18904/2010