ARICI v. POMA (2022)

Judgment, Supreme Court, New York County (Barry R. Ostrager, J.), entered August 11, 2021, in favor of defendant upon a jury verdict in defendant's favor on plaintiff's breach of contract claim, and bringing up for review order, same court and Justice, entered May 3, 2021, which denied plaintiff's motion in limine to preclude defendant from offering evidence, inter alia, that a promissory note issued by the business he controlled replaced his payment obligations under a stock purchase agreement, and an order, same court and Justice, entered June 23, 2021, which denied plaintiff's motion pursuant to CPLR 4404 to set aside the verdict and enter judgment as a matter of law or to set aside the verdict as against the weight of the evidence and order a new trial, unanimously affirmed, with costs.

Plaintiff Adem Arici commenced this action alleging that defendant Andrew Poma breached a stock purchase agreement (SPA), pursuant to which plaintiff sold his shares in Idaho Farmers Market, Inc. (Idaho) to defendant for $1,542,000.  Plaintiff claims that defendant failed to make required payments under the SPA. At trial, defendant argued that a subsequently executed promissory note in which Idaho agreed to make the payments to plaintiff extinguished defendant's payment obligation under the SPA. The jury found in favor of defendant, thereby crediting defendant's claim that plaintiff accepted the note for the satisfaction of defendant's obligation under the SPA.

The verdict was not irrational or against the weight of the evidence (see generally Cohen v. Hallmark Cards, Inc., 45 N.Y.2d 493, 498–499, 410 N.Y.S.2d 282, 382 N.E.2d 1145 [1978]).  “The elements of a novation are a previously valid obligation, agreement of the parties to the new obligation, extinguishment of the old [obligation], and a valid new contract” (Warberg Opportunistic Trading Fund L.P. v. GeoResources, Inc., 151 A.D.3d 465, 472–473, 58 N.Y.S.3d 1 [1st Dept. 2017]).  Here, defendant, as the party seeking to prove the novation, was required to demonstrate an “unequivocal intention to extinguish [his] prior obligation ․ and to replace it with the new obligation” (Meyersohn v. Bloom, 259 A.D.2d 432, 433, 687 N.Y.S.2d 341 [1st Dept. 1999]).  Consent to the novation may be implied from the writings and the conduct of the parties (see Warberg, 151 A.D.3d at 473, 58 N.Y.S.3d 1;  Schloss Bros. & Co. v. Bennett, 260 N.Y. 243, 248, 183 N.E. 376 [1932];  Trans–Orient Marine Corp. v. Star Trading & Marine, Inc., 736 F. Supp. 1281, 1283 [S.D. N.Y.1990], affd 925 F.2d 566 [2d Cir.1991]).  Clear and convincing evidence existed here for the jury to conclude that the parties to the stock purchase agreement entered into between plaintiff and defendant intended to replace defendant's payment obligations under the agreement with a promissory note issued by the business entity defendant controlled.  The weight to be accorded affidavits and affirmations of defendant and his prior counsel in prior litigations were issues of fact for the jury's consideration.

Based on our review of the record, we reject plaintiff's contention that he did not receive a fair trial.  We have considered his remaining contentions and find them unavailing.