UNDERWOOD v. URBAN HOMESTEADING ASSISTANCE HAB INC UHAB (2021)

Order, Supreme Court, New York County (Lynn R. Kotler, J.), entered November 25, 2019, which, to the extent appealed from as limited by the briefs, granted the motion of defendants Urban Homesteading Assistance and UHAB Housing Development Fund Corporation (collectively UHAB) to dismiss the complaint as against them, and denied plaintiffs’ renewed motion for a default judgment against defendant 544 East 13th Street Housing Development Fund Corp. (544 East), unanimously affirmed, without costs.  The appeal, insofar as it related to defendants Nicky Scott, Isabel Dawson, and Gregory Dawson was withdrawn at oral argument.

The complaint fails to state a cause of action for tortious interference with contract, as plaintiffs have not alleged that they were parties to a contract with a third party with which UHAB interfered (see Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94, 595 N.Y.S.2d 931, 612 N.E.2d 289 [1993]).  Nor do plaintiffs state a prima facie cause of action for tortious interference with business relations or economic advantage, as the essence of the claim involves actions directed not at plaintiffs but at third parties (see Carvel Corp. v. Noonan, 3 N.Y.3d 182, 192, 785 N.Y.S.2d 359, 818 N.E.2d 1100 [2004]).  Here, the threats and misrepresentations which plaintiffs allege occurred were directed at themselves and not at any third party.

To state a claim for fraudulent inducement, a plaintiff must allege a false representation, made for the purpose of inducing another to act on it, and that the party to whom the representation was made justifiably relied on it and was damaged (see Perrotti v. Becker, Glynn, Melamed & Muffly LLP, 82 A.D.3d 495, 498, 918 N.Y.S.2d 423 [1st Dept. 2011]).  Here, plaintiffs have alleged that the individual defendants, who were co-residents of their apartment building, made misrepresentations on which plaintiffs relied in moving out of the building to permit renovations, based on the representation that they would be able to purchase shares to the cooperative in which they resided at an insider price.  Contrary to plaintiffs’ argument, however, the allegations in the pleadings that the tenants were agents of the building's owner are insufficient.  An agency relationship “results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act” (L. Smirlock Realty Corp. v. Title Guar. Co., 70 A.D.2d 455, 464, 421 N.Y.S.2d 232 [2d Dept. 1979]).  Because the pleadings are devoid of any factual allegations showing that UHAB consented to any tenants acting on their behalf, the fraudulent inducement claim was properly dismissed.  To the extent plaintiffs’ claim rests on apparent authority, such a claim requires a showing that plaintiffs “relied upon the misrepresentation of the agent because of some misleading conduct on the part of the principal – not the agent” (Hallock v. State of New York, 64 N.Y.2d 224, 231, 485 N.Y.S.2d 510, 474 N.E.2d 1178 [1984] [internal citations and quotation marks omitted]), which has not been alleged here.

As for plaintiffs’ allegation that UHAB–HDFC was unjustly enriched by its having sold the apartment at issue on the open market, UHAB submitted documentary evidence refuting that claim (see CPLR 3211[a][1]).  The Nominee Agreement, pursuant to which the interest in plaintiffs’ apartment building was sold to defendant B & N Housing LLC, states unequivocally that any profits from sales of any interest in the building belonged to B & N and not to UHAB–HDFC.  This precludes any viable claim for unjust enrichment.

Finally, plaintiffs’ renewed motion for a default judgment against 544 East was properly denied absent any allegations to support a viable claim against that defendant (see Charmon v. Pavy, 153 A.D.3d 493, 494, 59 N.Y.S.3d 435 [2d Dept. 2017]).  Assuming plaintiffs’ nonconclusory allegations are true, the claims against 544 East fail for the same reasons as the claims against UHAB.