CHIRRA v. BOMMAREDDY (2005)

Order, Supreme Court, New York County (Karla Moskowitz, J.), entered on or about July 15, 2004, which, to the extent appealed from, denied the motion for summary judgment by Action # 1 plaintiff/Action # 2 defendant Chirra, Action # 1 plaintiff Lenox Pharmacy, Action # 2 defendants Lebanon Pharmacy and New Lebanon Pharmacy, and Action # 3 defendants Talamati and Balaji Pharmacy, unanimously affirmed, with one bill of costs.

 This is a contract action involving ownership of three pharmacies. The oral agreements on which the claims are based were not unenforceable, as a matter of law, on grounds of illegality.  “[T]he violation of a statute that is merely malum prohibitum will not necessarily render a contract illegal and unenforceable” (see Benjamin v. Koeppel, 85 N.Y.2d 549, 553, 626 N.Y.S.2d 982, 650 N.E.2d 829 [1995] ).   This is particularly true where there are issues as to whether appellants were attempting to utilize the illegality defense as a “sword” for personal gain rather than a “shield” for the public good (Lloyd Capital Corp. v. Pat Henchar, Inc., 80 N.Y.2d 124, 128, 589 N.Y.S.2d 396, 603 N.E.2d 246 [1992];  Charlebois v. Weller Assoc., 72 N.Y.2d 587, 595, 535 N.Y.S.2d 356, 531 N.E.2d 1288 [1988] ).

 Nor are the unjust enrichment claims barred by the illegality doctrine or the doctrine of unclean hands, since the court must consider the relative culpability, bargaining power and knowledge of the parties (see e.g. X.L.O. Concrete Corp. v. Rivergate Corp., 83 N.Y.2d 513, 611 N.Y.S.2d 786, 634 N.E.2d 158 [1994] ).   Similarly, questions of intent exist to support denial of summary judgment on the conversion and Debtor and Creditor Law claims with respect to the rights to and assets of the various pharmacies.

We have considered appellants' remaining arguments and find them without merit.